Spending on housing programs will decline by more than half over the next four years with the federal government’s $13-billion signature housing initiative leading to the construction of just 26,000 new homes, a new parliamentary budget officer (PBO) report says.
The budget watchdog’s report specifically looks at Prime Minister Mark Carney’s new housing agency, Build Canada Homes, and how it and other programs will contribute to the construction of new homes between now and 2029-30.
The report concludes that the $9.8 billion the federal government is spending on housing initiatives in 2025-26 will decline to just $4.3 billion annually by 2028-29, a drop of 56 per cent.
That annual funding drop, the PBO says, is due in large part to the expiry of funding for programs such as the Housing Accelerator Fund, the Affordable Housing Fund and Canada Housing Benefit.
Cuts announced in the budget, like the scrapping of the secondary suite loan initiative and other “programs that do not directly increase housing supply or target Canadians in housing need” also contribute to the funding decline, the PBO says.
The PBO report assumes four envelopes of funding for housing will expire or shrink over the next four years. They include:
Government officials speaking on background told CBC News it’s wrong to assume that because these programs have an expiry date, they won’t be extended or topped up.
“Without getting technical, there’s a number of decisions that will have to be taken from now until 2028-29,” Finance Minister François-Philippe Champagne said Tuesday.
“You don’t take decisions for 2029 in 2025.”
‘We have what we need’ to boost housing, Champagne says in response to PBO report
In a report released in August, the PBO said Canada needs to build 690,000 new housing units by 2035, on top of what is already being built, to meet housing needs across the country.
To address that housing gap, Carney announced during the election campaign that he would establish Build Canada Homes to act as a developer overseeing the construction of housing in Canada.
The agency was launched with what was described as an “initial investment of $13 billion” to provide financing and land, attract investment and help builders get projects off the ground.
Tuesday’s report says between now and 2029-30, Build Canada Homes will spend $7.3 billion of the $13 billion on grants, loan concessions, contributions to provincial programs and community supports for low-income rentals.
The remaining $5.7 billion, the PBO says, will be used for financing programs.
Minister responds to PBO report showing cuts to housing spending: ‘This is just the beginning’
“[Build Canada Homes] should be expected to make a modest contribution towards housing supply and affordability,” the report said, based on its allocated funding and design.
That modest contribution, the PBO says, would lead to the construction of just 26,000 new units over the next five years, 13,000 of which would be affordable homes for low-income households — or about 3.7 per cent of the housing gap the PBO identified in August.
Housing Minister Gregor Robertson says he is pleased the PBO was looking into housing, but warned that the fiscal watchdog is not taking into consideration how much of an impact the government’s housing policy will have on private investment in homebuilding.
“We have just the initial capitalization in the budget of $13 billion. We also have $51 billion of housing-enabling infrastructure, so combined, a significant investment that’s designed to attract private investment,” he said.
“This is just the beginning and we’re gonna deliver a ton of affordable housing and we’re going to leverage a lot of investment from across Canada to get that done.”
