Ottawa’s housing plan isn’t bold enough to deal with the issue of chronic undersupply
Chrystia Freeland bought a brand new pair of shoes last week, as is tradition for the finance minister when the government introduces a budget, and Canadians are wondering what sort of tracks Freeland the Liberal-NDP “agreement” will be leaving on their day-to-day lives. The 304-page document has a lot to unpack, and plenty of policy changes that will impact consumers.
On the positive side, the federal government has repealed the excise tax on non-alcoholic beer. Yes, you read that right, there was a sin tax on alcohol-free beer. This is a big win for health-conscious consumers, and those who advocate for the principles of harm reduction. Alcohol-free beer doesn’t carry the same risks as traditional beer, so it was always nonsensical that the government would sin-tax these products.
Unfortunately though, the federal government’s smart approach to harm reduction and risk-based tax policy took a quick U-Turn on the topic of vaping. The federal government will implement a new tax on vaping at $1 per 2mL for vape liquid containers less than 10mL; $5 for containers larger than 10mL; and $1 for every additional 10 mL. This is incredibly problematic from a harm-reduction perspective because vaping products are a useful tool for smokers trying to quit, and 95 per cent less harmful than cigarettes according to Public Health England. Scaling taxes up on vaping liquids makes these reduced-risk products more expensive, and thus less attractive for smokers trying to quit. The harder we make it for smokers to access vape products, the more likely they are to continue smoking, and no one wins in that scenario.
On housing affordability, which is the most pressing issue for millennial Canadians, the Liberals are a day late and a dollar short. Unfortunately for millennials priced out of the housing market, like myself, the government’s housing plan is not bold enough to effectively deal with the issue of chronic undersupply.
They’ve proposed a ban on blind bidding, which has already been shown to have no impact on prices and does nothing to increase supply. Their foreign-buyer ban is yet another policy that is attempting to tinker with demand, without addressing supply. And while some of Ottawa’s response will allow for consumers to save more, like the Tax-Free First Home Savings Account, these tax policy changes also do nothing to increase the supply of housing.
The only supply side policy the federal government has announced is its earmark for communities that grow at a quicker pace than the historical average. The government’s own estimate forecasts that this could result in 100,000 new homes by 2025, but the problem is that Ontario alone needs another 650,000 new homes just to get to the national average, which wouldn’t be much to celebrate considering that Canada ranks dead last in the G7 for housing units per 1,000 people.
And while a rate increase will certainly help dampen unprecedented home price inflation, the real policy solution here is zoning reform. The federal government could have quite easily tied federal funding for affordable housing and public infrastructure to density goals, with zoning reform as the core mechanism to achieve it. This would be broadly similar to the recent childcare agreements which involve the transfer of federal dollars in exchange for a set of provincial deliverables. On housing, it looks like millennial consumers will be left waiting — at least until 2025 when the Liberal-NDP agreement expires — for meaningful policy change.
Originally published here