Paul Sullivan: Another Groundhog Day for B.C. housing affordability

Photo credit: Chung Chow

The iconic Groundhog Day movie – centred on a single day that repeats over and over for a beleaguered weather reporter played by comic Bill Murray – has nothing on B.C.’s provincial government, which has continued to make similarly repetitive housing promises over decades.  The people in power change, as do the groundhogs, as these adorable creatures have a short lifespan of only two to three years.

Forty-four years ago, when the Social Credit Party was in power, then-minister of municipal affairs Bill Vander Zalm proposed legislation in 1979 to speed up housing permitting and zoning at municipal levels. Coincidentally, the elder Pierre Trudeau was prime minister. Vander Zalm subsequently resigned under a scandal.

Former 1990s-era B.C. premier Glen Clark of the NDP – who also resigned under a scandal with a low 21-per-cent approval rating – promised he’d not step into municipal jurisdiction in his letter to the Union of BC Municipalities (UBCM) in 1996. Later on, Clark’s former housing minister Mike Farnworth, now currently minister of public safety, voted to scrap a 2003 BC Liberal bill that would have overridden municipalities’ housing and land-use development authority, and reduce red tape. That bill elicited strong opposition from municipalities, the NDP and the UBCM, and support from various homebuilding groups, chambers and the Business Council of BC, in a lively debate viewable in the B.C. Legislature archive.

Fast forward to 2023, the same Glen Clark, who also spent hundreds of millions on fast ferries that got sold for scrap metal, wants to run BC Housing. Its CEO Shayne Ramsay recently quit under questionable, even shoddy, accounting practices over a nearly $2 billion budget. A separate audit concealed by this provincial government since November 2018 found financial irregularities by a main housing funding beneficiary, Atira Women’s Resource Centre, where only “7.5 per cent of its budget went to actual services to people,” concluded the Times Colonist. The former BC Housing CEO and Atira Housing CEO are long-time spouses.

B.C. residents are noticing this clear lack of housing progress amidst billions of their tax dollars being spent. Eight-five per cent of us believe the current government is doing a “poor or very poor job” on housing affordability, according to a poll by Angus Reid.

To be fair, few governments over the last few decades have been housing heroes. But, we can be somewhat cynical, when after six years in power, the new premier and former housing minister David Eby is now also promising to bust through those municipal logjams on housing approvals with
the Housing Supply Act. Oddly, the younger Justin Trudeau is now prime minister, and just introduced a foreign buyer ban on real estate in Canada, while welcoming record levels of immigrants – 437,000 in 2022. A little over half of those immigrants are considered “economic,” such as skilled workers or business investors. The rest are in family reunification (parents or grandparents), refugee or humanitarian categories.

Regardless of their immigration label, we keep throwing more people at our housing crisis, on top of additional health-care and school shortages. Are governments bulk buying new tents for the growing street encampments as more people are unable to find housing? The federal government admitted spending $4.5 billion on “housing programs” with no success measurements. The New York Times blared: “Did Billions in Spending Make a Dent in Homelessness? Canada Doesn’t Know.”

Back in B.C., the current provincial government’s shiny new Housing Supply Act wants to see municipal housing targets set. It will require even more reports, and it vaguely promises to step in by appointing an adviser or by issuing a directive based on new home achievements. The province and municipalities certainly don’t agree on the housing numbers. Inevitably, this bill too faces challenges.

Why do we need more “reports”? Grim housing data already exists from the Metro Vancouver Regional Growth Strategy and it confirms chronically low municipal housing completions in our Lower Mainland cities. Only the City of North Vancouver met their committed target, according to an April 2022 Homebuilders Association Vancouver analysis of available Metro Vancouver and Statistics Canada data. 

Any real action by government might actually threaten the real estate sector’s billions in tax revenue. Both residential and commercial property owners
pay billions in real estate taxes, including through the property transfer tax. And the first-time buyer property transfer “tax break” – available only to those buying homes at $500,000 or below – means only 44 homes out of 2,289 in Vancouver qualify.

Former BC NDP premier Mike Harcourt criticized the current NDP for its additional school tax being a “tax on tax,” one that’s paid annually by those acquiring land to build affordable, multi-family apartment housing. Who then pays that tax when the homes are eventually built and sold? You do, in the purchase price.

Commercial builders even pay a federal GST of 5 per cent on each new purpose-built rental apartment that ultimately gets embedded in the monthly rent. Commercial owners also pay “air taxes” levied by governments on imaginary, unbuilt homes (and their development potential) above shops.

No wonder the B.C. government recently bragged about its $5 billion surplus. B.C., after all, has long meant “bring cash.”

More young people are losing hope of saving enough for a down payment, and are seeing their take-home pay shrink through growing income and payroll taxes. Real estate finance professor Andrey Pavlov sums it up: “Current government policies prevent people from earning and keeping a good income.”

So where did all those affordable housing taxes go anyway? Most went to “general revenue,” which allows government to spend the money on whatever they like. They significantly grew government staffing and salaries on all levels, enabling a number of public servants to own not one but multiple homes and investment properties. Public-sector growth accounted for 86 per cent of new jobs in Canada since the pandemic. Three out of every four net jobs created in B.C. were government jobs. The largest share of homeowners in B.C. (and Nova Scotia) worked in the public administration sector, which comprises federal, provincial and municipal governments, according to Statistics Canada.

As we welcome 2023, Vancouver again claims some of the highest rents and home prices in Canada. Lacking the production value of the Groundhog Day film, I’ve created my own little Instagram video capturing all the political promises we’ve seen over the years, starring a young woman who eventually becomes a senior, still waiting for that affordable housing.

We must create communities today, not years away. To do that, here’s my simple, five-point checklist of solutions:

  • Reduce “fees and taxes” for homebuilders; 
  • Remove red tape;
  • Mandate building approval times;
  • Incentivize rent-to-own agreements; and
  • Pre-approve building designs.

Let’s hope next year’s Groundhog Day (Feb. 2, 2024) has a different and happier ending.

Paul Sullivan (@propertytaxpro) is a B.C. property tax expert and Ryan LLC principal who appeals commercial and residential property taxes. The deadline to appeal a 2023 property assessment is Jan. 31, 2023.