Better know a talking point

Why is the CMHC commenting on an NDP bill?

The Conservative issued a bulletin on Wednesday morning to warn that Bill C-400, an NDP MP’s bill calling for a national housing strategy, would cost a minimum of $5.5 billion per year.

C-400, as a private member’s bill, can’t include “financial provisions” unless the government consents. According to the summary of the bill, its purpose is ”to require the Minister responsible for the Canada Mortgage and Housing Corporation to consult with the provincial ministers of the Crown responsible for municipal affairs and housing and with representatives of municipalities, Aboriginal communities, non-profit and private sector housing providers and civil society organizations in order to establish a national housing strategy.” (With the Conservatives voting against, the bill was defeated Wednesday evening.)

So how does the Conservative party conclude that the cost is $5.5 billion per year? The party’s release cites “Human Resources and Skills Development Canada.” I enquired with the office of Human Resources Minister Diane Finley. Ms. Finley’s office directed me to the Canadian Mortgage and Housing Corporation. CMHC did, in fact, publish a “backgrounder” on C-400. That backgrounder states “the proposed bill C-400 would cost Canadians over $5.5 billion per year in rental subsidies alone.” The backgrounder goes on for another 684 words, none of which explain that estimate.

So I asked the CMHC: How had this estimate been calculated? To what in the bill did it refer? And how often did the CMHC provide analysis of legislation and private members’ bills?

Wednesday night, the CMHC sent along the following.

Why a crown corporation like CMHC, who’s supposed to be a non-partisan organisation, posted a backgrounder on Bill C-400?

CMHC provided information on potential costs of the Bill. Most of the the information in the backgrounder is located elsewhere on our website under the ‘Affordable Housing in Canada’ link (http://www.cmhc.ca/en/inpr/afhoce/afhoce_021.cfm)

The preparation and review of cost estimates on proposed opposition bills is necessary so that the government can make informed decisions. This is not partisan activity.

C-400 Costing Methodology

Bill C-400 calls for a national housing strategy designed to ensure that the cost of housing in Canada does not compromise an individual’s ability to meet other basic needs, including food, clothing and access to health care services, education and recreational activities.

The bill does not specify who would provide funding for the implementation of the Act, or the duration and limit of funding that would be required. This could expose the Government to significant financial risk and could place additional financial pressure on provinces and territories through possible implications for health and social assistance programs.

It is estimated that it could cost some $5.45 billion annually in additional funding to provide housing that would ensure low-income households are able to meet other basic needs.

To calculate this estimate, HRSDC’s Market Basket Measure (MBM) was used to assess subsidy costs required to implement parts of Bill C-400.

The MBM is an estimate of the costs of basic household needs, including: shelter, food, clothing, transportation, and other items.

Components of the MBM can be compared to household incomes drawn from the 2006 Census (the most recent data currently available), to determine whether a household can afford shelter without compromising non-shelter needs and then to identify subsidy needed to rent a dwelling. The estimated number of households requiring subsidy in the table below represents households that would not have enough income left over after paying non-shelter costs, to cover their housing costs.

The estimate was then adjusted to account for changes since the 2006 Census, including: 1) inflation; 2) growth in the number of dwellings; and 3) historical changes in the incidence of housing need.

The CMHC estimates that there are 1,140,844 households in need of assistance, that those households would require an average subsidy of $4,776 and that that means a total cost of $5,448,670,944.

So what is that number? That is, theoretically, how much it would cost to ensure every low-income household in Canada could afford to pay for housing without sacrificing basic needs. The Conservative party release presumes that that expense would be covered entirely by the federal government. When the Conservatives signed a funding deal with the provinces in 2011 it was predicated on matching funds.

Is that a lot of money? Depends on your perspective, I suppose.

Is this what the NDP is proposing? Nope. As it stands, the NDP isn’t proposing anything more specific than the formulation of a strategy to ensure access to affordable housing. Could that strategy end up including something like a subsidies to the poorest 1,140,844 households in Canada? Maybe. It is for the NDP to articulate what they would do and how much it would cost.

Missing from the CMHC’s response was any explanation of the agency’s history of analyzing and costing legislation. I’ve asked again and will report back as soon as I receive a response. (The NDP is unimpressed with the CMHC’s involvement in this case.)

The New Democrats tabled two previous versions of C-400, the earliest dating back to November 2006, and enacting legislation was a commitment the New Democrats made in their 2011 platform. C-304 was tabled in February 2009 and passed at second reading in September 2009. A scan of the CMHC’s news releases for 2009 shows nothing labelled as a “backgrounder” on that bill.

The Conservatives attempted to protest that C-304 required a Royal Recommendation—ie. that it dealt with government spending. At the time, Libby Davies, the bill’s sponsor responded as follows.

While a national housing strategy may be cause for spending, it may or may not be new spending and the spending may come from any level of government. It must be stated that the development of such a strategy is in itself not cause for spending.  




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Better know a talking point

  1. Isn’t this something that Kevin Page should be on top of? Of course formulating a strategy doesn’t cost any money, but implementing any strategy would obviously cost money.

    • Well, fortunately the defeated bill did not require the government to implement the strategy, only to formulate one.

    • And when Page comes back and says that the government is overestimating the cost of formulating a strategy by about $5.5 billion?

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