How remarkable. How bizarre. And, I suppose, how predictable, too.
A federal-provincial panel on our housing challenges, led by a dyed-in-the-wool NDPer but featuring rock-solid free-marketers, has recommended measures ripped from the playbook of rock-solid government interventionists.
You’d think we’d be off to smooth sailing, what with an insider like Joy MacPhail at the helm and a load of smarty-pants in the engine room.
Only, get this, the rock-solid interventionist governments dismissed the two most striking proposals before the ink had dried on the panel’s report.
What? Huh?
The Canada-British Columbia Expert Panel on the Future of Housing Supply and Affordability laboured for two years at the behest of the Justin Trudeau and John Horgan governments.
The panel could not have been more blue-chip, given the need for credibility on any proposals. The opportunity for boldness could not have been better, given the profound systemic reviews on many frontiers under way during the pandemic.
And the environment could not have been more open to urgent change, given the chronic circumstance of housing unaffordability and its widening gulf from attainability in an inequitable society.
But no. The panel has been treated instead like fratboys on a bender in the countryside tipping political sacred cows grazing in the fields.
Mind you, if you’re going to take aim at true reform in the housing sector, the panel couldn’t have found more nervy targets.
It aimed at the provincial government and recommended the elimination of the annual Homeowner Grant that takes some of the sting out of the tax on properties outrageously valued.
It aimed at the federal government and recommended some sort of review of the exemption under capital gains tax for our principal residences. Just a review, mind you – not an elimination, not even a recommendation on a certain percentage or amount. Just, yes, a review. A look-see.
No dice in either case.
Within hours, the two boldest of the 23 recommendations were deigned non-starters by the federal finance minister and provincial housing minister. Some insiderish questions one might ask: Did the panel warn these ideas were being discussed and adopted as proposals? If not, why not? If so, and it knew they’d be trying to fly lead balloons, why propose them?
But should we be surprised at the preservation of the status quo? These two ideas each are what the experts call political third rails. Combined, they are skydiving while holding your N95 mask above your head to lighten the landing.
Fair enough, but let’s look at this not from the perspective of the advisees but from the perspective of the advisers.
It is a modern-day astoundment that these measures could emerge from a panel comprising a couple of sage business economists (Jock Finlayson and Helmut Pastrick), a leading developer (Brian Macauley), a not-for-profit housing leader (Jill Atkey) and a savvy veteran executive (Sue Paish) without them being cloaked in chloroform over their breathing passages. What their wisdom should tell us is that the situation is nearing irreparable limits.
A bulging basket of Canadian cities is following Vancouver and Toronto into an envelope of impossibility. It seems pointless to talk to anyone under the age of 35 about this strange world in which someone actually owns a home, pays for a mortgage to a lender instead of rent to an owner, and achieves over time a secure asset upon which retirement income might be based.
If the panel was designed to put the housing Humpty Dumpty together again, thanks to the nay-sayers in Victoria and Ottawa, there remains a yolk and busted shells at the bottom of the wall.
Some of its proposals are more achievable, but even then, their intersection with politics makes for a messy marriage.
For instance, the Community Amenities Contributions (CACs) that developers fork over to municipalities when rezoning is necessary have become a form of financial dependence in building parks, creating childcare facilities and staging public art. The panel wants transparency on what they’ll cost, but in places like Vancouver, the whole point is to keep them a mystery to give the city an upper hand as projects are proposed. Hard to see any political outfit wanting to part ways with that advantage.
The panel recognized the economic and political imbalance of owning and renting. Apart from its dead-on-arrival proposal to quash the homeowner grant, it recommended benefits to renter households – tax credits or deductibility on rent paid, for instance, and a tax-free savings account (TFSA) for renters above and beyond the currently available one for Canadians, pegged to the same amount of tax relief homeowners receive.
Will that be a sore point for the treasury? You bet, but like the panel’s ideas to dramatically expand the supply of community and affordable housing, tax dollars are the fuel for any effort to mitigate what the market has wrought.
The questions now are of political will. The pandemic has waylaid public finances, and very soon the recent blanketing of the economy will require the most difficult choices governments have made in memory on paths to pursue. Politicians will find they have to disappoint, even alienate along the way. The hornet’s nests are soon to stir.
Kirk LaPointe is publisher and editor-in-chief of Business in Vancouver and vice-president, editorial, of Glacier Media.
