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Introduction
The Canadian government spends money on social housing through the Canada Mortgage and Housing Corporation (CMHC). The CHMC has for a long time played a key role in implementing the governments objective of investing in the housing market in order to provide affordable housing to Canadians. Over the last few decades, the government has made significant investments in affordable housing by spending billions of dollars.
In addition, it has fulfilled its objective by acting as an oversight authority over the Canadian housing industry. As a result, Canada is recognized as one of the countries with the most affordable and quality housing systems in the globe today. The government has spent a lot of money toward achieving the goal of quality and affordable housing. For example, since 2006, it has invested more than $19 billion in the housing industry. People who have benefited from federal investments in housing include aboriginal people, people with disabilities, low-income workers, and immigrants.
The governments funding is disbursed through initiatives and programs such as Investment in Affordable Housing (IAH), Affordable Housing Initiative (AHI), The Affordable Housing Center (AHC), and Existing Social Housing. CMHC offers numerous mortgage loan insurance products to Canadians and has been successful for many years primarily due to government backing. CMHC has several securitization programs that facilitate the issuance of money to borrowers in order to support the governments commitment to affordable housing for all Canadians. In the past 25 years, Canadas population increased by 30% and federal investment on social housing declined by 46%.
Federal government spending on social housing
As mentioned earlier, the Canadian government has spent a lot of money on social housing over the decades. The government main objective is to provide quality and affordable housing to Canadian citizens especially those in the low-income class. According to government reports, approximately 80% of Canadians are able to access quality and affordable housing because of government initiatives that invest money in housing projects. This section of citizens affords quality housing without direct assistance from government institutions.
The other 20% gets direct assistance from the government, community organizations, and non-profit organizations. The monetary contribution made by the government is proof of its commitment to provide affordable housing. According to federal statistics, more than $2 billion is spent annually for housing. This money is spent on various programs and initiatives whose goals and objectives support those developed by the government. For example, the government funds programs that focus on temporary shelter assistance, supportive housing, and transitional housing.
Investments in housing assistance
The government has made several investments toward affordable and quality social housing over the years. The greatest investments have been made between 2001 and 2015. The funding has evolved over time as different initiatives and programs have been created and disbanded to pave way for better ones. The government has always made it a priority to invest in the housing sector in order t provide sustainable, affordable, and quality housing to its citizens in order to address problems such as homelessness and poor housing.
As mentioned earlier, Canada is among the countries that have been identified for quality housing programs. Examples of programs and initiatives that have facilitated the governments investment in social housing include Investment in affordable housing (IAH), Affordable Housing Initiative (AHI), existing social housing, First nation housing, Affordable Housing Center, and Canadas Economic Action Plan. In all these initiatives, the governments investment is cost-matched by provinces and territories.
Investment in Affordable Housing (IAH)
The government invests in social housing through several initiatives and programs such as the Investment in Affordable Housing (IAH). Through this program, the federal government collaborates with provinces and territories to provide affordable, suitable, sustainable, and quality housing to low-income citizens ( Investment in Affordable Housing par. 2). This program funds initiative that includes construction and renovation of houses, homeownership funding, shelter allowances, provision of knowledge and expertise, and rent supplements.
In addition, it offers accommodation to victims of family violence. Territories and provinces use money from the IAH to enhance independent living, preserve the quality of affordable housing, increase the affordability and availability of quality housing, and increase the supply of affordable housing to citizens ( Investment in Affordable Housing par. 2). The IAH has a budget of $2 billion that will facilitate the acquisition of sustainable housing to citizens over several years until 2019 ( Investment in Affordable Housing par. 4).
Table 1: National IAH funding ( National IAH Funding Table par. 3).
Under this program, the entities that collaborate with the government are responsible for the development of program design and delivery of housing services. The IAH plays the role of facilitating investments by territories and provinces on affordable housing in ways that meet the needs of people residing within their jurisdictions. The program supports amenities such as house construction, shelter allowances, accommodation, and house renovation.
The program has assisted more than 217,000 households since its creation in 2011. Through this program, the federal government gave $100 million to the province of Nunavut for the funding of affordable housing projects ( Investment in Affordable Housing par. 4). The population of Canada is rapidly growing and as a result, the housing needs of the people are rising. In order to respond to the rising needs, the government extended the IAH program to March 2019. The CMCH is working together with territories and provinces in order to ensure that the program serves as many people as possible for the remaining three years.
The program has assisted many people especially persons with disabilities and seniors. For example, between 2011 and 2014, the program helped more than 14, 500 households ( Investment in Affordable Housing par. 6). In addition, it helped 1, 422 households that were experiencing problems related to family violence. During this period, the federal government invested more than $716 million while investments from territories and provinces amounted to more than $782 million ( Investment in Affordable Housing par. 8).
The IAH program is evidence of the governments commitment to providing quality, sustainable, and affordable housing across Canada. The joint initiative has helped thousand of households and individuals address their housing challenges and goals. The programs services help to reduce wait times for acquisition of houses by individuals. The program has been a success because Service Managers have the freedom to choose certain program components that suit them best ( Investment in Affordable Housing par. 9).
For example, they can choose to participate in new rental construction, renovation, rent supplements, or home repairs depending on the housing needs of their customers. The program has had immense economic benefits to provinces and territories because it has facilitated the creation of more than 8,600 jobs. This was achieved within the four years of its operation after its founding. The IAH program supports other government initiatives to provide affordable housing. For example, it supports Ontarios Long-Term Affordable Housing Strategy (LTAHS) that aims to address peoples housing problems in different communities.
How IAH works
The IAH pools together funding from the government of Canada and the territories as well as provinces. The funding that IAH gets from the government was in past years given through the Affordable housing initiative and several other social housing programs. The government created the program because of the realization that the territories and provinces were in a better position to identify and address the housing problems of Canadians easily and more effectively.
In that regard, provinces and territories entered into bilateral agreements with CMCH. Through those agreements, they cost0match the investment made by the government and as a result, have the freedom to choose the programs that they deem most appropriate for addressing housing needs within their jurisdictions. Provinces and territories have the flexibility to invest in a wide range of initiatives and programs because people have different housing needs and therefore, require varied services.
Governments funding before creation of IAH
Before the creation of IAH, the government funded social housing through various programs and initiatives. These initiatives were short term and were later disbanded to allow for the formation of the IAH.
Affordable Housing Initiative (AHI)
The Affordable Housing Initiative (AHI) program was developed by the Federal government in 2001 with the main aim of providing off-reserve affordable housing ( Affordable Housing Initiative par. 3). Through this program, the government works together with provinces and territories to achieve its affordable-housing goals. During the programs creation, federal, provincial, and territorial representatives developed bilateral Affordable Housing Program Agreements that are still applicable today. Contributions that are made through this program are given in different forms including grants and subsidies.
Table 2: national AHI funding between 2001 and 2011 ( National IAH Funding Table par. 3)
The first phase of the AHI (2001) provided $680 million for the construction of new housing units and renovation ( Affordable Housing Initiative par. 5). Governments funding for each housing unit was supposed to be an amount that did not exceed $25,000. The second phase (2003) involved an investment of $320 million that was aimed at funding housing projects in low-income communities. Groups of people that were considered for the second phase included Aboriginal people, persons with disabilities, and registered immigrants.
The second phase offered funding that was limited to $75,000 for each unit. In 2008, the government invested $1.9 billion that was spread over five years ( Affordable Housing Initiative par. 7). The money was directed toward housing and projects that aimed to eradicate homelessness among low-income citizens. In 2011, the government in collaboration with the territories and provinces gave $1.4 billion ( Affordable Housing Initiative par. 10). This money was awarded through the Affordable Housing Framework that lasted between 2011 and 2014.
Table 3: Government funding through the AHI program ( Affordable Housing Initiative par. 2).
The Affordable Housing Center and renovation programs
The Canadian Mortgage and Housing Corporation (CMHC) uses the Affordable housing Center to offer housing solutions to community members across Canada. It offers knowledge, financial assistance, and expertise regarding the various aspects of house acquisition such as financing. The main aim of the AHC is to provide affordable and quality housing without long-term subsidies from the federal government. In addition, the group works with existing social housing groups by offering knowledge and financial assistance in order to enhance the longevity of their housing initiatives and projects. The Center provides Seed Funding and Proposal Development Funding to citizens across the country.
Before the creation of the IAH, the government had invested a lot of money toward renovation programs. This funding lasted for forty years (1973-2011). The main objective of the funding was to preserve and improve the quality of existing housing especially in low-income communities. These programs were feasible because the government had entered into various agreements with provinces and territories to share the costs of renovation programs.
In other areas, the costs of the renovations were catered for by the CMHC. The renovation programs were not as effective as the IAH. More than 860,000 housing units were renovated before the renovation programs were disbanded after the creation of the IAH. The government provides federal funding toward the repair and renovation of housing units built between 1946 and 1993. According to government statistics, CMHC provides financial assistance to more than 600,000 households that live in existing social housing units.
Canadas Economic Action Plan
Another avenue through which the government invested in social housing was through Canadas Economic Action Plan (CEAP). This program included a one-time federal investment that was to run over a period of two years before it was disbanded. The government offered $2 billion towards the initiative to create new housing and renovate existing units. A large percentage of this funding came from territories and provinces. The program was a success because in addition to improving the living conditions of many people across Canada, it created thousands of jobs that had great economic impact.
The stimulus phase of this program included huge investments that supported numerous companies engaged in construction and renovation businesses. Nearly $2 billion was provided for the program, with provincial and territorial governments contributing $1.5 billion ( Canadas Economic Action Plan: A Final Report to Canadians par. 4). This program aims to construct and renovate 16,500 units for vulnerable households and individuals. The government also gave $150 million for renovations. The stimulus phase involved an investment of more than $400 million over a period of two years ( Canadas Economic Action Plan: A Final Report to Canadians par. 5).
This money was used to fund housing projects in First Nations communities and benefited more than 500 communities. The government invested an additional $200 million in Northern communities. Municipalities supported governments efforts by investing $2 billion in low-cost loans ( Canadas Economic Action Plan: A Final Report to Canadians par. 5). The program gave $2.3 million to The Prince Albert Community Housing Society (PACH) in support of the construction of affordable housing units for seniors. $600,000 was used to fund new housing projects in First Nations and Northern Housing. Gateway Cooperative received $169,000 funding for the construction of a 28-unit housing project.
The Economic Action Plan 2015 included funding on social housing to address the housing needs of vulnerable Canadians and reaffirm the governments commitment to affordable social housing. Through this program, the government works together with provincial and territorial governments and not-for-profit organizations, and community organizations. According to the initiative, the government plans to spend about $2.3 billion annually over the next four years million ( Investment in Affordable Housing: Economic Action Plan par. 3).
This investment will come from different collaborators. For instance, CMHC will give $1.7 billion while First Nation will give about $170 million ( Investment in Affordable Housing: Economic Action Plan par. 4). This money will be used for construction, renovation, and repair of new and existing housing units across Canada. In 2013, Economic Action Plan promised to give $253 million annually in order to support and extend the services of the IAH program to 2019 million ( Investment in Affordable Housing: Economic Action Plan par. 4).
In addition, the initiative made a commitment to give $119 million annually over a period of five years to support and extend the tenure of the Homelessness Partnering Strategy until 2019 million ( Investment in Affordable Housing: Economic Action Plan par. 4). The Homelessness Partnering Strategys main objective is to assist homeless individuals shift from shelters into affordable housing through government assistance. The CMHC offers direct lending services to in order to augment governments investments. For example, more than $1.126 billion was awarded to individuals in the form of loans to take care of their housing needs.
Decline in federal housing funding
According to Federal-Ontario Funding Agreements and Public Accounts, federal spending for social housing will decrease significantly in the future. For example, in the province of Ontario, federal spending is projected to be $267 million less that it is today in a few years. In addition, it is projected that the funding will decline to zero by the year 2033. This decline in federal funding is a national issue that has caused panic among many Canadians.
In 2013, representatives from provincial and territorial governments held a meeting to find a way to get additional funding from the federal government. This was necessary because federal investments on past housing programs have been very effective and successful. Since 2003, government funding has aided in the construction of 17,000 new rental units that have been taken up mainly by low-income families. In addition, more than 263, 000 repairs and renovations have been done and 81,000 individuals have received financial assistance in the form of rental and down payment supplementation (Shapcott par. 4).
Decline in federal funding was evident after the release of the 2012 federal budget. The budget did not provide additional funding for affordable social housing. Instead, it proposed $131 million cuts to Canada Mortgage and Housing Corporation to take effect between 2012 and 2015 (Shapcott par. 4). Afterwards, the government would cut $102.2 million annually. The biggest federal cuts in housing were made in the 2011/2012 fiscal year. The cuts accounted for a 39% decline in federal spending. The cuts were as follows:
Table 4: federal budgetary cuts 2011-2013(Shapcott par. 3)
In the 2012/2013 fiscal year budget, several cuts were made. National housing repair and renovation programs funding was cut by 22% (Shapcott par. 4). The government gave $29 million down from $37 million year that was given the previous year. The federal on-reserve housing program experienced a 2% cut in funding of $153 million down from $156 million the previous fiscal year (Shapcott par. 4). These cuts were implemented with disregard to the rising demand for affordable housing across the country.
Rising inflation was one of the main reasons for federal cuts on social housing investments. In 2012, CMHC projected that federal funding would fall to $1.7 billion in three years (Shapcott par. 4). This would account for a 43% decrease in government investment. These cuts have far-reaching social and economic implications because fewer houses are affordable to the rapidly growing populations of low-income Canadians. In 2012, CMCH reported that the number of g[-households that had benefited from federal assistance had dropped by 14% since 2007 (Shapcott par. 4).
Demand for social housing is growing as the government continues to implement more budgetary cuts. For example between 2001 and 2012, the number of households awaiting federal assistance has increased to 158, 500. In Ontario, 15% of households need affordable housing urgently despite the decline federal investment that is compelling workers to use more than 30% of their earnings to access affordable housing (Shapcott par. 4).
Conclusion
The Canadian Government has made great investments toward providing affordable and quality housing through the Canada Mortgage and Housing Corporation (CMHC). The government has provided funding through programs and initiatives such as the Affordable Housing Initiative (AHI), Investment in Affordable Housing (IAH) and Canadas Economic Action Plan, and renovation programs. The government has funded social housing through the Economic Action Plan for several years.
However, the time-limited program has not done enough to address the problem of homelessness in Canada. In the past decade, federal investment on social housing programs and initiatives has been on the decline owing primarily to inflation and harsh economic times. In the past two decades, federal housing investments have declined significantly by a factor of about 46%. This decline has been caused mainly by budgetary cuts and shrinking housing programs. Despite the decline in federal investments, several new investments have been implemented.
They have not been effective n addressing the housing problem in Canada because they were time-limited. The downward trend continued after these time-limited programs and initiatives ended. Federal budgetary cuts have compelled many citizens to use a large percentage of their income on rent. This is exposing them to a high risk of homelessness. Affordable housing means that households spend less than 30% of their gross income on housing. The government has made significant investments toward creating affordable, quality, and sustainable housing. However, the problem has not been effectively solved because many households spend more than 30% of their incomes on rent.
Works Cited
Affordable Housing Initiative 2016. Web.
Canadas Economic Action Plan: A Final Report to Canadians 2012. Web.
Investment in Affordable Housing (IAH) 2016. Web.
Investment in Affordable Housing: Economic Action Plan 2015. Web.
National IAH Funding Table 2016. Web.
Shapcott, Michael. Erosion of Housing, Homelessness Spending Continues, as Latest federal Spending Estimates are Released. 2012.
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