It is human nature to blame others for our problems.
Plenty of finger pointing has occurred in relation to the national housing crisis — a crisis that has made buying or renting a house unaffordable for many, and really uncomfortable for most others.
The origins of this housing crisis began in the years Pierre Trudeau (Justin’s pop) started accumulating deficits.
Annual deficits became structural under Conservative Brian Mulroney. The Conservatives were defeated.
Mulroney’s introduction of GST on all goods and services helped alleviate the deficit but seemed to kill his chances of re-election.
When the Chretien Liberals were elected in 1991, the deficit was entrenched. Interest on debt took a huge chunk of the federal budget.
One in every four dollars spent by the feds paid interest on the debt.
Today the federal government spends about seven cents of every dollar on interest. The national debt increased from $30 billion in Mulroney’s last year to $2.12 trillion — seven times the old level.
When Jean Chretien came to power in 1991, he vowed to end the annual deficit and reduce the debt.
He was successful in eliminating the deficit but one cut he made was Canada Mortgage and Housing Corporation involvement in building affordable housing.
CMHC became a mortgage lender and mortgage guarantor and implemented what national housing policies Canada had.
Before the feds handed back responsibility for adequate and quality housing to the provinces, the standard financing formula for a public housing was five per cent from the municipality, 25 per cent provincial, 70 per cent CMHC funds.
After the handover projects, they were funded on a case by case basis often with lower than market interest rates to builders if some units were low rent costs.
The end of CMHC’s massive involvement in housing left important gaps in housing policy by various provinces.
Immigration numbers have accelerated the affordable housing crisis.
Too many buyers and renters chasing the static supply have resulted in outrageous home and rent prices.
Canada averaged 339,000 immigrants a year for the last five year with 500,000 expected every year until 2028.
The country needs a high level of immigration to keep the economy humming and replace retiring workers.
Statistics Canada projects a need for 350,000 new housing units annually by 2030 to reach the 2003-04 level of affordability.
For the last decade Canada has built around 200,000 units a year.
That leaves a shortfall of 150,000 units a year with a need to finance them and a skilled labour force to build them.
Canada was already way behind. A Fraser Institute study found Canada ranks last among G7 nations for the number of housing units per 1,000 people.
In the long run Chretien’s reduction of CMHC involvement in housing was a bad choice.
It took over 25 years to develop the housing crisis; resolving it could take a generation.
Ron Walter can be reached at ronjoy@sasktel.net
The views and opinions expressed in this article are those of the author, and do not necessarily reflect the position of this publication.
