Housing Policy for Shared Prosperity

Speaking Notes for Evan Siddall, President and Chief Executive Officer, Canada Mortgage and Housing Corporation 

OECD Policy Forum on Social Policy, Social Policy for Shared Prosperity: Embracing the Future

Montréal, Québec

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Introduction

I was challenged to enter public service in 2011 by my friend and former colleague, Mark Carney, after 20 years as an investment banker — a strange mutation of our capitalist system. Mark responded to a challenge I had issued him by explaining what he was doing to avert another financial crisis. Leaning across the table intently, he then demanded to know what the [heck] I was doing. His devotion to public service was a lantern for me, guiding me onto the path where we all find ourselves today.

I remember an October 2011 interview when Mark was Governor of the Bank of Canada. He made headlines by calling the Occupy Wall Street movement of those days “entirely constructive,” the inevitable consequence of increasing inequality.

Now Governor of the Bank of England, Mark Carney continues to speak of our responsibility to address the needs of the disenfranchised. Again 18 months ago, he warned of the growing sense of “isolation and detachment” among people who feel left behind by globalization. He observed that trade and technology have favoured the “superstar and the lucky.” “But what,” he asked, “of the frustrated and frightened?”

Indeed, what of them?

Elections worldwide seem more unpredictable, and could be early signs of deeper social unrest. Some of this seems to stem from a growing sense of disenfranchisement from those who are losing ground. Policies like free trade and labour mobility have led to overall economic growth, but globalization has winners and losers — with consequences we must not ignore. History is marked with events involving the frustrated and the frightened. We need to take care of these people.

Unrest in the 21^st Century

Thomas Piketty’s book, Capital in the 21^st Century, captured the zeitgeist of our time when it was published in 2013. Piketty argued that inequality is not an accident. It is, he concluded, inherent to capitalism and can only be reversed through state action. He argued that when economic growth is low, wealth accumulates more quickly from returns to capital than on returns to labour. Said another way, investing is more valuable than working.

Piketty warned of a “patrimonial capitalism,” a modern aristocracy or oligarchy where inherited wealth becomes increasingly dominant. He raised alarms about the very future of democratic capitalism.

Labelled a “political and theoretical bulldozer” in the French press, the book has sold over 1.5 million copies, was a New York Times bestseller and is being made into a documentary film. Not bad for a rather turgid bit of economics.

It is now five years since Piketty’s book was published. And it’s been 76 years since the political economist Joseph Schumpeter warned that “Capitalism inevitably and by virtue of the very logic of its civilization creates, educates and subsidizes a vested interest in social unrest.” I don’t subscribe to this deterministic view. But rising inequality among OECD countries is an increasing politico-socioeconomic problem.

As Ministers of OECD nations responsible for social policy, you are meeting here in Montreal to discuss this very concern: how to address the increasing inequality that threatens the fabrics of western society. How can we use social policy to promote shared prosperity?

I know you take this responsibility seriously. It is serious.

Housing in the 21^st Century

Returning to Piketty, his prognosis — a two per cent wealth tax, garnered the swift attention of capitalists and commentators the world over. Many critics have emerged, and Piketty himself has refuted some aspects of his famous work.

One particularly effective critic was a young MIT graduate student named Matthew Rognlie. Rognlie argued against Piketty’s return on capital argument. Instead, he criticized Piketty for ignoring capital depreciation and argued further that “surging house prices are almost entirely responsible for growing returns on capital.”

Our own research at CMHC, published this past February, found that income and wealth inequalities accounted for a significant portion of the variation in house prices in Toronto. Inequality itself is causing house prices to accelerate. This is abetted by natural and imposed supply restrictions, especially those that suppress more dense housing and intense land usage.

Put simply, Rognlie’s and CMHC’s analyses show that housing has become part of a broader social problem: rising inequality, likely the challenge of our time.

And so, we are going to do something about it in Canada.

Our Minister of Global Affairs, the Honourable Chrystia Freeland, offered an apt assessment of Canada’s place in the world. Saying we have the world’s “cleanest dirty sheets,” Minister Freeland declared that Canada could be an example to others. And of course, we would do it with suitable modesty.

On housing at least, I think we present well-laundered dirty sheets. Their stains are a reminder of the state of housing of our Indigenous populations, in particular. There are parts of Canada we simply don’t recognize as first world or even equivalent to a developing country. We needn’t look beyond coastal Labrador, Northern Ontario or even some inner cities for malnutrition, infectious disease, suicide and other tragedies that befall our vulnerable citizens.

Yet, we can offer the hope Governor Carney called for. By far the most striking experience I have had as CEO of CMHC occurred on a visit to the Tsartlip First Nation in British Columbia. I sat across from a dour and imposing member of council who had very little to say. As we got up to leave, however, he interjected with a story about his family.

This massive man was reduced to tears as he thanked me for his home, which was built with CMHC's support. He said that the house was turning point for his family: it was a place for Sunday dinners, for his daughters to study, and a source of great pride for him as a father. That powerful moment between two fathers drove home just how important housing is to our well-being.

Canada is a multicultural country comprised of many ethnicities, languages, religions and beliefs. It’s not perfect, but people feel like they belong, like they can have a fair shot, that their children can receive a solid education and good health care. Canada, in sum, believes in inclusion — maybe as much as any country in the world can.

And housing is where we start.

Canada’s National Housing Strategy

The organization I have the honour of leading — Canada Mortgage and Housing Corporation, or CMHC — has a mission to help Canadians meet their housing needs. This is different from meeting their housing wants, which is a role for the private sector.

We are 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. This gives us a rather comprehensive view of issues across the housing continuum — from homelessness to homeownership.

It was because of this breadth of knowledge and expertise that CMHC was tasked two years ago with developing Canada’s first-ever National Housing Strategy.

As you’ve no doubt heard and read in the media, housing is becoming increasingly unaffordable in many parts of Canada, particularly our major cities, some of which rank among the most expensive in the world. The National Housing Strategy has been created precisely to diminish the inequities that we see growing in our communities daily — to close the gap between the “haves” and “have nots.”

We have deliberately invested the Strategy with values for which Canada is known, like tolerance, diversity and social inclusivity. By that, I mean that people, not buildings, are at the heart of our program design. As Harvard sociologist Matthew Desmond writes in his Pulitzer Prize winning book Evicted, “The home is the wellspring of personhood. It is where our identity takes root and blossoms ...”

If housing has aggravated our inequality problem, affordable housing can also help provide a solution. The answer lies in more and faster supply. The federal government recognized this and has taken historic steps to begin to address the problem in partnership with other orders of government and the private and non-profit sectors.

A National Conversation on Housing

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 view. Close to 500 formal submissions were also received from individuals and organizations, and thousands more Canadians contributed insights online.

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, women, disabled people, newcomers and low-income earners.

At the same time, we maintained ongoing discussions with our provincial and territorial colleagues, who 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. 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. Specifically, we looked at recent programs in Germany, Austria, Ireland, Australia, New Zealand, the U.K. and the U.S.

Human Rights-Based Approach

Our policy team took these insights and crafted our response to housing affordability challenges in Canada, in order to advise Minister Duclos. A driving force behind this work has been our conviction that housing is a vehicle for building stronger, more resilient and inclusive cities.

Our first-ever National Housing Strategy — $40 billion over 10 years — marks the beginning of a new era for housing in Canada. And it has been built on a human rights-based approach to housing. It focuses, firstly, on our most vulnerable citizens: Canadians who need housing the most: women and children fleeing family violence, seniors, Indigenous peoples, people with disabilities, those dealing with mental health and addiction issues, the LGBTQ2 community, veterans and young adults. It also means that the strategy is based on four principles of international human rights — inclusion, participation, non-discrimination and accountability.

We want to protect this approach and continue building on it over the long-term. We are therefore currently amidst national consultations on right to housing legislation that would safeguard our housing strategy and keep it on governments’ agendas for generations to come.

By signing the International Covenant on Economic, Social and Cultural Rights, Canada made a promise to the world — and to Canadians — that we would progressively realize a right to housing. This is a promise the Government takes very seriously.

Our National Housing Strategy 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.

The goals of our plan are both ambitious and measurable — to reduce chronic homelessness in Canada by 50 per cent and remove more than 530,000 households from housing need. Our plan will create 100,000 new housing units, repair and renew more than 300,000others, and maintain some 385,000 community housing units.

Over the past few weeks, Minister Duclos and his colleagues have been rolling out the major pillars of the strategy. In April, the Government announced funding to protect the affordability of community (or social) housing.

We also announced that we had reached a landmark multilateral housing partnership agreement with the provinces and territories. This agreement includes the blueprint for the Canada Housing Benefit, a $4 billion initiative which will provide affordability support directly targeted to families and individuals in housing need. Delivered by the provinces and territories beginning in 2020, it will provide relief to some 300,000 low-income families.

Just a couple of weeks ago, Minister Duclos launched the National Housing Co-Investment Fund, a $13.2 billion fund of grants and loans that will create 60,000 new affordable homes and repair and renovate up to 240,000 existing ones. This represents 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. Rather than dictating the housing of the future, we have created a fund to incent innovation and the joint work of all us in the affordable housing sector.

As a “co-investment” fund, it has partnership at its core. Our goal is to have provinces and territories, community housing providers, municipalities, the private sector, and Indigenous governments and organizations working with the federal government to identify solutions that meet the needs of their communities.

The Co-Investment Fund is an ambitious initiative. It will prioritize projects that go above and beyond mandatory requirements for affordability, energy efficiency and accessibility. We have specific targets to support survivors of violence, seniors and people living with developmental disabilities, among others. And we will aim for a target of at least 33 per cent of investments to support the unique housing needs of women and girls.

Finally, to stretch this investment even further, the federal government, through CMHC, is making some $200 million worth of federal lands available to community housing providers at a discounted or no cost.

The Strategy also includes a number of mechanisms and processes to support the human rights-based approach I mentioned earlier — and to bring to the table voices that have previously been marginalized. For example, a new Federal Housing Advocate will delve into the systemic barriers to affordable housing, and to advise us on how to break them down. We will also be creating a new National Housing Council to advise the federal government on housing policy, and a Community-Based Tenant Initiative to ensure that organizations that represent marginalized populations can advocate on their behalf. A major public engagement campaign will be launched in 2020 to address discrimination and stigmatization around social housing.

As I mentioned earlier, one of the stains on Canada’s dirty sheets is the unacceptable conditions in which many Indigenous people live — on First Nations reserves, in northern communities and in cities across the country. Reconciling the wrongs of the past, and ensuring a better future for Indigenous people, is a key priority for the current Government.

And housing is key part of that better future, one in which Indigenous people will have the same opportunities as others to share in Canada’s prosperity. To that end, the federal government is working with national Indigenous organizations on a distinction-based approach specific to each of our Indigenous Peoples — First Nations, Inuit and the Métis Nation. 

Through this work, which is being led by Indigenous Services Canada, the Government is supporting the development of housing solutions that are grounded in the principles of self-determination, reconciliation, respect, co-operation and partnership. And these are backed by long-term investments in housing, totalling $1.5 billion over 10 years specifically for First Nations, Inuit and Métis housing. 

Conclusion

No Marxist, I believe in our system of democratic capitalism. I want to protect it. But it seems that capitalism, in some circumstances, cannot effectively police itself. Rising inequality may be a form of cancer on our system: we are being attacked from within.

Governments have a duty to respond. And in Canada, one of the frontiers we have chosen for our response is housing. And it can work. I expect CMHC to meet or exceed the targets the Government has issued us under our National Housing Strategy. We are motivated to ensure that every Canadian has a place to call home — and that they can afford.

I’d like to end by quoting Matthew Desmond again. In Evicted, he writes:

“We can start with housing, the sturdiest of footholds for economic mobility. A national affordable housing program would be an anti-poverty effort, human capital investment, community improvement plan, and public health initiative all rolled into one.”

I would add that housing is also a launching pad for economic prosperity. Housing has been responsible for widening the gap between rich and poor. In Canada, we will embrace housing to ensure it is at the centre of the solution, not part of the problem.

Thank you for inviting me today. I am inspired by your agenda and proud to be part of this vital work. The western world is counting on it.