Speaking Notes for Evan Siddall, President and Chief Executive Officer, Canada Mortgage and Housing Corporation
Australian Housing and Urban Research Institute (AHURI) National Housing Conference 2017
Note: This presentation was delivered by video.
In both Canada and Australia, our Indigenous predecessors worshipped the land, nature and space that we take for granted. Yet space remains what both our countries are known for.
Yours is perceived by many as a largely sunburnt country. Ours is known for the forested expanses of the Canadian Shield, the white-capped Rocky Mountains and the tundra of the far north.
Our wildlife reflects the land. Canada boasts populations of wolves and grizzly bears, herds of caribou and the solitary polar bear venturing onto the ice in search of seal. In turn, Bill Bryson wrote about Australia’s spiders:
“No one knows, incidentally, why Australia's spiders are so extravagantly toxic; capturing small insects and injecting them with enough poison to drop a horse would appear to be the most literal case of overkill. Still, it does mean that everyone gives them lots of space.”1
Lots of space. We have a bit fewer than four people per square kilometre in Canada; you have just a few more than three. India, by contrast, has over 445. China has nearly 150 people per square kilometre. Among countries with populations of over 10 million people, we are the two least densely populated.
Source: World Bank – https://data.worldbank.org/indicator/EN.POP.DNST?end=2016&locations=IN-CA&start=2016
Population densities for selected countries
|population density (person/km^2)|
Space can offer safety, allowing us to put room between ourselves and others and to build shelters against the elements, not to mention spiders and other threats. But enclosed spaces can also be isolating: to the disabled, seniors, the mentally ill – many of our most vulnerable citizens. Amidst all of this wide open space, we have determined that housing policy – closed spaces – can help build a better, stronger, more inclusive society.
I have been asked to speak about the development of Canada’s first ever National Housing Strategy, which was announced by our government just last week. Our people and place-based Strategy targets moving 530,000 households out of housing need. We aim to offer our most vulnerable citizens the safety of shelter, as well as promoting their fuller inclusion in Canadian society.
Aside from our shared awareness of the value and threat of space, we have much in common that goes beyond our shared heritage as English colonies. In particular, I’d like to offer a brief comparison of our housing systems.
A World Apart / Similar Challenges
On the one hand, there is much we share in common, not all of it positive. Let’s begin with the good news. Both countries have healthy rates of homeownership. For many Canadians – and I’m certain this also holds true for Australians – a home is the single most important investment they will ever make; a storehouse of personal wealth and economic security. Secure housing also results in very powerful social outcomes, but more on that later.2
Sources: Statistics Canada (Census of Canada), Eurostat, U.S. Bureau of the Census, Australia Bureau of Statistics (ABS.Stat), Statistics New Zealand (2013 Census QuickStats about housing, Statistics Japan (2013 Housing and Land Survey)
Homeownership rates in selected countries
(Unless otherwise indicated)
|New Zealand (2013)||65%|
But the dream of homeownership may be fading for some. Housing affordability has become a serious problem in our major cities, a factor that may help explain why homeownership rates have been declining. This is not a phenomena specific to Canada and Australia, but is being experienced in other industrialized economies as well.
House price growth in selected Australian and Canadian metropolitan areas
The latest Demographia International Housing Affordability Survey ranks Sydney as the world’s second most unaffordable city, after only Hong Kong.3 Vancouver holds the third spot on this worrisome list. Melbourne also finds itself in the top 10 unaffordable cities, and Toronto is number 13.
Another recent report – this one from the Bank for International Settlements – determined that Canada has seen the fastest house-price growth among G20 economies.4 Australia was third on this list.
Real house price index – Canada, Australia, U.S. and U.K.
The combination of high housing costs and historically low interest rates have contributed to another problem that threatens our countries’ financial stability: high levels of household debt.
Although residential mortgage arrears rates remain low and credit scores are strong in Canada, the high level of household debt, at 175 per cent of disposable income, remains a vulnerability. And household debt levels are even higher in Australia.
Sources: Reserve Bank of Australia, Australian Prudential Regulation Authority, Financial Conduct Authority, FDIC, Canadian Bankers Association
Canadian arrears rate has been the most stable and among the lowest
|Canada||United States||United Kingdom||Australia|
Ratio of household debt-to-income for Canada, U.K, U.S. and Australia
In its October 2017 Financial Stability Review, the Reserve Bank of Australia noted that “household balance sheets and the housing market remain a core area of interest.”5 The same holds true in Canada.
Both countries benefit from proactive micro- and macro-prudential regulation. And for the most part, mortgage activity is addressable via concentrated activity among large banks: the top four Australian banks now hold about 83 per cent of outstanding mortgages, while Canada’s biggest four banks hold about 63 per cent of outstanding mortgages.
Source: Building Societies & Bank of England (data retrieved from Building society but data is actually from Bank of England) – https://www.bsa.org.uk/statistics/mortgages-housing,Statistics Canada – http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/fin21-eng.htm, Federal Reserve – https://www.federalreserve.gov/data/mortoutstand/current.htm, Reserve Bank of Australia- https://www.rba.gov.au/statistics/tables/
Mortgage credit growth in Canada has been less volatile
|Canada||United States||United Kingdom||Australia|
Heart of a World-Class Housing System
We face similar housing challenges, but our housing finance systems are markedly different – and have been since the late 1970s, when the mortgage loan insurance function in Australia was privatized through the sale of the Housing Loans Insurance Corporation, an organization that was loosely based on the CMHC model.6
The question is: “Does it matter?” After all, both countries emerged from the global financial crisis with reasonably strong economies, despite the fact that our housing finance systems are significantly different.
I’m not here to argue which is better. But let me tell you a little about the Canadian system, in which CMHC plays a key stabilizing function.
CMHC is a unique entity in the world of housing policy and housing finance. We play multiple roles in Canada’s housing system, conducting commercial operations, providing the federal investment in housing assistance, undertaking housing market analysis and research, and serving as the Government’s advisor on housing policy issues.
CMHC is the result of some real alchemy – and it works. Our mission is to help Canadians meet their housing needs. This is different from meeting their housing wants, which is a role for the private sector. Our vision is to be the heart of a world-leading housing system. That ambitious vision sounds rather un-Canadian, doesn’t it?
CMHC’s legislative mandate has two complementary aspects: we are expected to facilitate access to housing while also contributing to the stability of Canada’s financial system.
One of the key ways we do this is through our housing finance activities. Our mortgage loan insurance and securitization programs are cornerstones of Canada’s stable and efficient housing finance system. This role – and our presence in every part of the country and all forms of housing – makes us a systemically important financial institution in Canada.
Explicit vs. Implicit Government Support: “Moral Hazard”
Canada’s government-backed mortgage loan insurance and securitization frameworks make for a substantial government presence. By comparison, the Australian government’s presence in the mortgage market is largely limited to regulatory oversight and consumer protection.
Whereas our government’s exposure to housing finance risk is explicit, in Australia this exposure is implicit. As a result, while Canada had most of its crisis response framework in place, Australia was compelled to introduce additional temporary and permanent financial support programs in the midst of the crisis. This was also true in the U.K. and the U.S., whose governments also maintained a more implicit role in housing finance pre-crisis. I worry about the potential for moral hazard lying behind implicit, unstated government support that everyone knows will serve as a safety net in a crisis.
In the midst of these financial instabilities and affordability challenges, we have decided to put housing closer to the centre of our fiscal policy in Canada.
Canada’s National Housing Strategy
Since the global recession, we have undergone a significant transformation at CMHC, so that we are ready for the next economic shock and also to deliver on the Government’s commitment to ensure that Canadians have access to housing that meets their needs and that they can afford. This is the vision for Canada’s first-ever National Housing Strategy,7 which was launched by Prime Minister Trudeau on November 22nd, National Housing Day in Canada.
Like Australia, Canada is a federal state, where responsibility for housing lies primarily with another level of government – the provinces and territories in Canada, and state governments in Australia. So you can appreciate the challenges we faced in developing a Strategy that aims to achieve transformational national change while respecting the jurisdictional responsibilities set out in our Constitution.
Not to mention our goal of encompassing the entire housing spectrum in the Strategy – from homelessness to homeownership. And working with new and non-traditional partners, in a whole-of-government approach.
But somehow we made it, thanks in no small part to a shared belief that affordable, stable housing is a launching pad for success no matter where you live in Canada. And I am proud of the role CMHC played in balancing the interests of many to fashion a plan that will focus on those most in need.
The process of developing a National Housing Strategy started in June 2016, after a successful meeting of federal, provincial and territorial ministers responsible for housing – the first in a decade, at which CMHC was tasked with leading a national conversation on housing.
This, in itself, was a huge undertaking. Over a four-month period, we held roundtables with hundreds of experts and stakeholders to seek their views on what should and should not be included in the Strategy. Close to 500 formal submissions were also received from individuals and organizations.
We heard from thousands of individual Canadians through a dedicated web site and an award-winning social media campaign.
We supported Indigenous groups in carrying out their own consultations, met with the mayors of Canada’s biggest cities, and held focus groups with people who had experienced housing challenges – the homeless, disabled people, newcomers and low-income earners.
At the same time, we maintained ongoing discussions with our provincial and territorial colleagues, who have played an integral role in helping to shape the Strategy, from developing the vision statement and outcomes to setting out key principles that will guide how we will work together over the next 10 years.
And we looked to the experiences of other countries, including Australia. CMHC undertook a review of international housing policies and initiatives in social and rental housing, homeownership assistance and self-sufficiency to identify approaches and funding models that could be relevant for Canada. In addition to Australia, we looked at recent programs in Germany, Ireland, New Zealand, the U.K. and the U.S.
All of this work culminated in the release of a “What We Heard” report by the federal Minister responsible for housing, the Honourable Jean-Yves Duclos, just over one year ago, on National Housing Day 2016.
From there, our policy team took the best ideas and key themes we heard and began to articulate the diverse and innovative measures that were announced last week.
In doing this work, as I noted earlier, it was important to respect jurisdictions – this was a given. But the Government of Canada has also been very clear that it wants to re-establish a federal leadership role in housing, and that CMHC will be the vehicle for doing so.
It’s important to understand that we were starting from a long period of a leadership void at the federal level – a time when CMHC’s role in direct program delivery was largely restricted to supporting federally administered housing co-operatives and First Nations housing providers. Important work, but hardly a federal leadership role. In our absence, the social housing space – what you call state housing in Australia – has been occupied primarily by the provinces and territories, which are responsible for administering about 80 per cent of the social housing stock in Canada.
A 10-Year, $40 Billion Plan
This will change significantly under the National Housing Strategy. The 2017 federal budget included a historic long-term fiscal commitment of more than $11 billion over 11 years to ensure that Canadians have access to housing that meets their needs and that they can afford.
The actual economic impact will be much greater. With matching provincial and territorial funding for some elements of the Strategy, as well as the value of low-cost loans to housing developers, municipalities and non-profits, and anticipated funding from these partners for joint initiatives, we estimate that total investments arising from the National Housing Strategy will be nearly $40 billion.
The NHS is a key element of the Government of Canada’s plan to make new investments in social infrastructure – things like affordable housing and early learning and child care – to help strengthen the middle class, promote growth and give all Canadians the opportunity to succeed.
From a purely economic perspective, research has shown that investments in housing have a higher short-term multiplier effect on the economy compared with other measures, such as personal or corporate tax cuts.8
Importantly, a 2012 study by the Mowat Centre at the University of Toronto noted that each $1 increase in residential building construction investment generates an increase in overall GDP of more than $1.50 as the investment continues to multiply through the economy. Downstream costs to society – for healthcare, social services and the justice system, for example – are also reduced.9
But of course the impact goes far beyond economics. The Mowat Centre study drew clear linkages between affordable housing and positive socio-economic outcomes. When people have good housing, they tend to have better health.10 And healthy children and teens living in stable home environments have better educational outcomes.11
Results and Delivery
Let me turn to the Strategy itself, which aims to be game-changing in scope and impact.
Recently released Census data tell us that about 1.7 million Canadian households are in housing need, spending more than 30 per cent of their before-tax income to access acceptable, local housing.
While the proportion of households in core housing need has remained stable over the past 10 years, at around 12 per cent, conditions have worsened in some parts of the country, notably the Prairies and Ontario. It’s also worth noting that Canada’s two largest metropolitan areas – and most expensive real estate markets – had the highest proportion of core housing need in 2016, with Toronto at 19.1 per cent and Vancouver at 17.6 per cent.
As noted, we are targeting a reduction of 530,000 households in housing need. The Strategy will also will help cut chronic homelessness in half over this period. And we aim to repair 300,000 affordable housing units and build 100,000 new affordable homes across the country.
These are ambitious targets, and we intend to meet them. Success will be incentivized, and our progress will be measured and publicly reported through the results.ca web site. Adopting the teachings of Sir Michael Barber, the British architect of “deliverology,”12 Prime Minister Trudeau has created a new “results and delivery” unit within PCO. Led by my colleague, Matthew Mendelsohn, the unit collects data and reports directly to the Prime Minister and Canadians on whether the Government’s goals and promises are being met – including, in our case, data on housing need, homelessness and other indicators.
I won’t go into detail on each element of the Strategy – the complete policy document is available at placetocallhome.ca for those of you who are interested. I will, however, touch on some of the Strategy’s key pillars and innovations. As I’ve said before, the Strategy has social inclusion at its heart, an idea that I believe to be profoundly Canadian.13
Right to Housing
First and foremost, the Strategy is based on the premise that all Canadians deserve safe, adequate and affordable housing. It sets out a vision for housing in Canada, that:
“Canadians have housing that meets their needs and that they can afford. Affordable housing is a cornerstone of sustainable, inclusive communities and a Canadian economy where we can prosper and thrive.”
Through the NHS, and consistent with our commitments under the International Covenant on Economic, Social and Cultural Rights, the federal government will recognize and progressively implement every Canadian’s right to access housing that meets their needs and that they can afford.
Adopting a human rights-based approach to housing is an important step that will enable the NHS vision to become a reality. Within the next year, the federal government will introduce legislation to promote a human rights-based approach to housing. Future governments will be obligated to maintain a National Housing Strategy that prioritizes the housing needs of the most vulnerable. In addition to the accountability measures I mentioned a moment ago, the legislation will also require that a report be tabled in Parliament every three years outlining progress achieved in meeting the Strategy’s targets and outcomes.
The NHS aims to respond to the housing needs of the most vulnerable Canadians, including seniors, Indigenous peoples, survivors of family violence, people with disabilities, refugees, veterans, people dealing with mental health issues and those experiencing homelessness. It focuses on actions that will help eliminate systemic barriers, diminish inequity and promote social inclusion.
Social Housing Renewal
For the past 60 years, social housing has been the backbone of Canada’s response to housing challenges. This valuable but ageing asset needs to be preserved for future generations.
Over the next decade, the Government of Canada will be providing $4.8 billion in funding for reinvestment in social and public housing. This funding is sufficient to protect and regenerate the existing supply of community-based housing across Canada, as well as expand the supply.
The NHS will also promote the growth of inclusive and diverse communities that are accepting and welcoming, that attract business and investment, and where people want to live and work. Affordable housing in these communities will be located close to necessary supports and amenities, from public transit and jobs to daycares, schools and healthcare. Moreover, the housing will be in the form of mixed-income and mixed-use projects, which people from all walks of life will be able to call home.
These goals will be achieved through the new National Housing Co-investment Fund, which will provide access to up to $16 billion in loans and contributions to enable other levels of government and the private and not-for-profit sectors to build new affordable housing, preserve the existing affordable housing supply, and develop solutions to persistent challenges across the housing continuum.
It is also our primary contribution to new housing supply, the strongest antidote to the persistent demand pressures that are driving prices higher and preventing Canadians from being able to buy or rent affordable housing.
The Co-investment Fund represents the next generation of housing, with a view to making communities more accessible and inclusive, and improving life outcomes for low-income and vulnerable people. Projects will need to meet basic criteria to be considered for funding support. For example, they must have at least 20 per cent accessible units or universal design features, be at least 25 per cent better than energy codes or past performance, and meet minimum affordability requirements. Financial incentives will be offered for projects that exceed these minimum requirements.
Canada Housing Benefit
Another major innovation under the National Housing Strategy is the Canada Housing Benefit, a $4 billion initiative to be launched in 2020. We will be asking provinces and territories to co-design and co-fund this initiative, which will provide affordability support directly targeted to families and individuals in housing need.
The Canada Housing Benefit is expected to provide an average of $2,500 per year to each benefit recipient. It will be delivered by the provinces and territories, with support from municipalities and other partners, so that relief from high shelter costs can be delivered quickly and the Benefit can be responsive to local housing needs and priorities. Importantly, program designs must mitigate the potential for inflationary impacts, in part by prioritizing the community housing sector and through careful targeting.
Data and Research: Evidence for the Future
The NHS also emphasizes enhanced research and data collection to help us better understand Canada’s housing markets, fill data gaps and promote economic stability. Over the next 10 years, $241 million will be invested in closing data and research gaps. We will be introducing new data collection tools, launching demonstration projects and housing solution labs to unlock further possibilities for housing research, and encouraging more housing-related research outside government to diversify information sources and perspectives.
This work will be supported by a Memorandum of Understanding CMHC recently signed with Statistics Canada to bring together our expertise and work collaboratively to fill data gaps. This includes supporting the development of a new Canadian Housing Statistics Program, which will make its first release – on foreign ownership in Toronto and Vancouver – next month.
Addressing Poverty and Vulnerable Communities
Homelessness is a serious problem in many Canadian communities. Next April, a new program will be launched under the NHS. The redesigned program will maintain a Housing First approach and will be responsive to local challenges faced by vulnerable groups, such as veterans, youth, women and their children fleeing violence, LGBTQ2 communities and Indigenous peoples.
On the subject of Indigenous peoples, it is clear that the status quo is unacceptable. Special attention and unique approaches are needed to improve housing outcomes for First Nations, Inuit and Métis people, who face the worst housing conditions in Canada.
This is a priority for the Government, which is working with Indigenous organizations and leadership to co-develop distinct strategies for each of the three groups. These plans should be finalized with Indigenous partners early next year and will support their vision of self-determination while leading to better social and economic outcomes for their communities.
Role of Housing as a Policy Tool
In Canada, we have come to see housing policy as a vehicle for social inclusiveness. Again, this is a trait – inclusiveness – we share with Australia, two countries founded by immigrants. Without dismissing the discrimination and marginalization that exist in any society, there is nonetheless an inherent opportunity for tolerance that accompanies immigration.
This newer theme emerged from the Habitat III conference in Quito last year.14 If we think of housing more as a function – shelter – and less as a form, then we think in terms of people instead of bricks and mortar.
I believe Canada can, and indeed should, be a beacon for the world on the merits of social inclusivity. As our foreign minister, the Honourable Chrystia Freeland, has said, Canada is “one of the cleanest dirty sheets in the world right now.”15 Housing is a vehicle for building stronger, more resilient cities. This has been a driving force behind our work on Canada’s National Housing Strategy.
It is vitally important that housing be a source of strength for our communities and for our economy. The National Housing Strategy offers a vision for the Canada of tomorrow as a place where families thrive, where children learn and grow, where parents find the stability to succeed in the job market, and where the elderly live in dignity. It is community renewal on a national scale.
Returning to the idea of our wide open spaces, and its two polarities of safety and isolation, we hope that housing can help provide safety and dignity to all Canadians. Ultimately the goal is help us all be free to live our dreams. And housing rests at the centre.
As Matthew Desmond writes in his beautiful book, Evicted:16
“The home is the center of life. It is a refuge from the grind of work, the pressure of school, and the menace of the streets. We say that at home, we can ‘be ourselves.’ Everywhere else, we are someone else. At home, we remove our masks.
The home is the wellspring of personhood. It is where our identity takes root and blossoms, where as children, we imagine, play, and question, and as adolescents, we retreat and try. As we grow older, we hope to settle into a place to raise a family or pursue work. When we try to understand ourselves, we often begin by considering the kind of home in which we were raised.”
And that, my friends, is why housing truly matters.
I am indebted to numerous colleagues at CMHC – too many to mention – for their work on our National Housing Strategy. I am especially grateful for the outstanding work of the Housing Needs division over the past year, with the help of teams in Assisted Housing, Legal, Finance, Insurance, Securitization, Risk and Public Affairs.
1 Bill Bryson, 2000. In A Sunburned Country, Crown/Archetype, 2000.
2 Evan Siddall, 2015. “Why Housing Matters,” (speech to the Board of Trade of Metropolitan Montréal) 3 December 2015.
3 Wendell Cox and Hugh Pavletich, Rating Middle-Income Housing Affordability, 13th Annual Demographia International Housing Affordability Survey: 2017, Performance Urban Planning, 2017.
4 Madeleine Op’t Hof and Robert Szemere, “Global developments in residential property prices – first quarter of 2017,” Monetary and Economic Department, Bank for International Settlements, August 2017.
5 Financial Stability Review, October 2017. Reserve Bank of Australia, 12 October 2017.
6 Neil Mohindra, 2010. Mortgage Finance Reform: Protecting Taxpayers from Liability, Studies in Insurance Policy, Fraser Institute, February 2010.
7 Canada’s National Housing Strategy, 22 November 2016.
8 Department of Finance Canada, 2016. Growing the Middle Class, Annex 2, pp 254-256, 22 March 2016.
9 Noah Zon, Melissa Molson and Matthias Oschinski, 2014. “Building Blocks: The Case for Federal Investment in Social and Affordable Housing in Ontario,” Mowat Research #98, School of Public Policy and Governance, University of Toronto, September 2014.
10 David Hay. 2005. Housing, Horizontality and Social Policy. Canadian Policy Research Networks, Family Network, 2005.
11 Selected references include:
Evan Siddall, 2015. “Why Housing Matters,” (speech to the Board of Trade of Metropolitan Montréal) 3 December 2015.
Canada Mortgage and Housing Corporation, 2013. “Building Families’ Futures and Opportunities Through Habitat Homeownership,” Research Highlight, Socio-economic Series 13-004, April 2013.
Charles Waldegrave and Michaela Urbanová, 2016. Social and Economic Impacts of Housing Tenure, Report for the New Zealand Housing Foundation, Family Centre Social Policy Research Unit, November 2016.
12 Michael Barber, Paul Kihn and Andy Moffit, 2011. Deliverology 101: A Field Guide for Educational Leaders, Corwin Press, 2011.
13 Evan Siddall, 2017. “No Solitudes: A Canadian National Housing Strategy,” (speech to the Canadian Club of Toronto) 1 June 2017.
14 The New Urban Agenda was adopted at the United Nations Conference on Housing and Sustainable Urban Development (Habitat III) in Quito, Ecuador, in October 2016. It was endorsed at the 68th Plenary Meeting of the 71st Session of the General Assembly held in December 2016.
15 “Adam Radwanski, 2017. “Meet Chrystia Freeland, the woman defining Canada’s foreign role,” The Globe and Mail, 12 August 2017.
16 Matthew Desmond, 2016. Evicted: Poverty and Profit in The American City, Crown, 2016.