POILIEVRE’S “BUILDING SLOGANS NOT HOUSING” ACT
Jennifer Robson
When you’re falling behind in a contest, it can be tempting to try to emulate your main competitor. But that approach may not work out the way you hope. In the 1980s, faced with declining market share compared to Pepsi, Coca-Cola tried to introduce “New Coke” to offer a product that tasted more like Pepsi. It was an epic failure. Sometimes imitation isn’t a great idea in a contest. As your mother used to say to you, “if your friends were all jumping off a cliff, would you do it too?”
A federal governing party, falling behind in the polls, might be forgiven for thinking that the way to reverse their fortunes is to outdo Conservatives with something in the same tenor but more meaty, bigger and better than the Building Homes Not Bureaucracy Act.
This is the private member’s bill introduced by Conservative leader Pierre Poilievre. It’s the one and only piece of legislation Mr. Poilievre has introduced in Parliament since the last election or even the one before that. What does it do?
Well, first it adds some clarity to the commitments Mr. Poilievre had been making in a series of social media videos and in his September speech to the party faithful about using federal spending power to incentivize so-called “gatekeepers” at other orders of government to remove obstacles preventing residential construction. To be fair, we now have an emerging political consensus, including the NDP and the governing Liberals, that federal infrastructure dollars should be used to leverage local housing changes. But the details matter and different parties might have varying comfort levels in how far they would take the federal spending power. Mr. Poilievre appears to be willing to go all out to push at jurisdictional limits, an unusual position for the leader of a conservative movement more often associated with subsidiarity over centralization in Canadian federalism.
Mr. Poilievre’s bill would set a new national target for completed new housing units equivalent to a 15% annual increase over the current federal fiscal year, with an expectation of ongoing increases in subsequent years. The new target would apply only to selected communities listed as “high cost” in the schedule of the legislation. These include some of the usual suspects when it comes to high housing costs, like Toronto and Vancouver, but there are 20 other cities listed. Laval and Longueuil are included, Quebec City is not. Calgary is included, Edmonton is not. This list comes close but doesn’t quite follow the members of the Federation of Canadian Municipalities Big City Mayors’ Caucus. The legislation implies that it has used a formula that relates a “benchmark home price” (not defined) to “median household income” (not defined) in the municipality. But it also doesn’t follow the geography for how household income or local housing indicators are publicly reported by Statistics Canada, the Canada Mortgage and Housing Corporation, the Canadian Real Estate Association, or even third-party sources like Teranet’s House Price Index. This makes it kind of impossible to validate the list of 22 in this bill. Given the impact of the rest of the legislation, there should be a transparent threshold to decide whether a local community might be included or removed from its application.
But let’s set that issue aside for a moment because the Building Homes bill has a lot in it to unpack if we’re seeing it as a recipe for new policy.
The proposed legislation would tie selected federal spending to annual changes in the volume of new housing units completed. The legislation names three specific forms of federal transfers to municipalities that could be clawed back if the national housing target isn’t met. These are:
The Canada Community Building Fund, previously known as the Gas Tax Fund.
GST rebates to municipalities and municipal organizations recognized by the Canada Revenue Agency as public service bodies.
Federal payments for transit projects.
The Canada Community-Building Fund is a legislated $2.2 billion statutory program indexed at 2% per year for municipalities. This fund currently disburses $2.4 billion per year for 19 different types of municipal infrastructure. This federal money isn’t paid directly to individual cities. Instead it flows, using an allocation-based approach under bilateral agreements, to provinces, territories, First Nations, and two municipal associations. For this legislation to work, those agreements would have to be reopened because currently, there’s nothing in them that says housing outcomes are a condition of funding. Furthermore, the feds would need to make the actual recipients of the money (provinces, territories, First Nations and municipal associations) party to enforcing the new condition on the participating local communities in their jurisdiction. How willing will provinces like Alberta, Saskatchewan and Quebec be to enforce new federal rules they didn’t agree to on the municipalities they already control?
Turning to the second example, GST rebates are payable by the Canada Revenue Agency (CRA) to municipalities and para-municipal bodies like police service boards, public libraries, transit authorities, and local tourism boards. When municipalities or recognized local authorities pay GST on the purchase of goods and services (other than those that are exempt, or zero-rated), they can claim a 100% rebate on the GST paid because they are a public service body. This is because the GST is a value-added tax and public activities, carried out by public bodies, are not taxable persons carrying out activities in a competitive market. If Mr. Poilievre’s bill were passed into law, it would represent a major change to a longstanding principle of taxation. Moreover, different parts of municipalities might, for a wide range of reasons, have separate GST reporting and rebating relationships with the CRA. In some cases, para-municipal bodies (like TransLink, which runs transit in the Greater Vancouver Area), might not even belong to one single municipality. If a given city on this bill’s naughty list fails to meet its housing target, should the local police services board also miss out on its GST rebate, even though it plays no role whatsoever in local housing decisions? Will no one gatekeep the federal gatekeepers?
The third pool of infrastructure funding that the bill aims to turn into a housing incentive is federal transit funding. The Government of Canada currently runs a $250 million fund for rural transit, a $2.75 billion fund for conversion from diesel to electric buses, a $400 million fund for active transit projects (like bike lanes and multi-use paths) and is consulting on a proposed new $3 billion permanent transit fund. Here, the legislation (at section 8 paragraph 2) proposes that all federal transit funding would be paid into a trust for a given transit project “only after the prescribed number of high-density housing units is built and substantially occupied on all available land within a prescribed zone around the transit stations included in the transit project.” I’m going to take on good faith that Mr. Poilievre doesn’t expect high density housing to be built, sold and occupied before he hands over money for a bike parking station on a multi-use path, so let’s imagine that the legislation might be amended to clarify that this would only be for projects coming out of the new permanent transit fund. The legislation doesn’t define the transit projects it applies to, but that new fund might fund transit systems that don’t have light-rail or subway stations and certainly many cities on the bill’s list don’t have subways or light-rail. Would a big “park ‘n ride” be considered as a “transit station”? The legislation can’t say.
But there’s a more fundamental issue of how the money in federal infrastructure programs flows. In previous programs, sponsors of projects apply to the program for a contribution of federal dollars towards the eligible costs of a project. These things are almost always cost-shared with at least the provinces and maybe also the project sponsor (like, for example TransLink in Metro Vancouver). The federal share of the money for infrastructure on major projects is governed by a contribution agreement that spells out the maximum the feds will put in, what the federal money can be used for (and not used for), and when it will be paid – which is usually when the parties submit receipts for completed works. So, by the time the federal government gets the bill for a transit project the work to build it is likely done. Mr. Poilievre’s bill would mean each of those contribution agreements would now have extra conditions, on all available lands (to be defined), for housing construction and occupancy. In his own riding in Ottawa, that could mean no federal money for phase 3 of the O-train unless the Rideau Transit Group, the City of Ottawa and the Province of Ontario find a way to build the transit, get someone to build the homes, and get someone else (maybe a real estate broker?) to successfully market them for sale or rent, on all land that the federal government might point to on a project map. Those third parties (the housing developers and real estate brokers), who aren’t part of the agreement and won’t receive any federal funding, would make or break the deal. Exactly how is a city official in the local transit planning office supposed to force a developer to build faster or a real estate agent to move units faster so that the city and province can finally get some of their money back for a transit project they already completed? In the meantime, the bills for the transit project have to be paid and the local and provincial governments would be left holding the bag. What if you’re punishing municipal bureaucrats for gates they don’t keep?
On top of this, a lot of federal infrastructure money, including the Housing Accelerator Fund (more on this one in a moment) is application-based. It isn’t just automatically allocated to cities, they have to apply to access it for eligible projects. What happens if one of the “high cost” cities subject to this legislation decides it just isn’t worth it to apply for federal money? How should we expect the to sticks work if the carrots aren’t appealing?
Moreover, what if the provincial government, to whom they are beholden, forbids them from entering into direct funding agreements with the Government of Canada? Under Quebec’s legislation M-30, municipalities can’t be independent parties to an agreement with the Government of Canada and require provincial consent. I can’t really see a government in Quebec (and maybe neither in Alberta or Saskatchewan) getting on board with the kinds of federal conditionality that the bill will introduce.
Which brings me to one last key feature of the proposed Building Homes bill, a promise to use the Housing Accelerator Fund (HAF) to reward cities that successfully see their housing supply increase above their legislated target. With a maximum promised incentive of $100 million per eligible city and 22 cities listed in the bill, this proposed legislation would create an important new contingent liability for the HAF program. When it comes to sound management of public funds, you have to plan and account for your contingent liabilities by making sure you have enough money to cover them. So, absent any new money into the HAF, this bill would effectively reduce the HAF by 55%, leaving just $1.8 billion available for cities to apply for. The program is closed for new applications. I don’t know if Longueuil or Laval applied (likely not, see my earlier point about M-30), but we know that both London, Brampton and Calgary did and they are all on the “high cost” city list in the Building Homes bill. So did Charlottetown, which is not. Under Mr. Poilievre’s proposed legislation, London, Brampton and Calgary might be eligible for up to a $100 million bonuses each, leaving less in the fund for Charlottetown.
To be clear, the current federal approach of negotiating for higher housing commitments and local policy change, as a condition of funding a city has applied for, seems largely consistent with the federal spending power. The conditions are consistent with the stated purpose and intent of the program and cities have a choice about whether or not to participate.
Now, I’m no constitutional lawyer, but I have to imagine a province might have a good case here to seek relief if the rules on the legislated Canada Community-Building Fund and GST rebates for public bodies suddenly change. I think they might also feel that the proposed conditions attached to federal spending on transit infrastructure go a step too far in trying to regulate in an area of exclusive provincial jurisdiction. Some provinces, including two that are core to Mr. Poilievre’s political ambitions, have already sent strong signals of a renewed intention to rigorously defend provincial jurisdiction and they might be keen to test that new posture in winnable cases.
The Building Homes bill is, for now, just a private member’s bill that hasn’t even been put up yet for debate in the House of Commons so there’s no real risk that it could, on its own, trigger some new constitutional kerfuffle. But if other parties were to do something rash and decide this is a cliff they too need to dive off, and especially a party that has care and control of government law-making and spending, well that just might. One almost suspects that is kind of the key point of the bill – daring the other team to try to compete by following suit. You can almost hear it jeer “Go ahead, try New Coke!”. The legislation might well be renamed the “Building Slogans, Not Viable Housing Solutions Act”. It’s a shame because, what we really need are a lot more viable solutions to a real housing challenge in our decentralized federation.
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ABOUT THE AUTHOR:
Jennifer Robson - Jennifer is Program Director and Associate Professor of Political Management at Carleton University where she teaches in Public Policy and Research Methods. Prior to joining Carleton, Jennifer Robson was director of policy for the non-profit SEDI (now Prosper Canada) and worked in the federal public service. Between 1994 and 2000, she worked in several political (exempt staff) roles. Her primary areas of research are at the intersection of household finances, particularly for lower and modest-income people, and the design and implementation of public programs including tax policy, financial capability and financial services, income security and household liquid savings. Jennifer holds a BA Hon. Psychology (Ottawa), MA Political Science (Carleton), and Ph.D. Public Policy (Carleton).
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