Canada’s main political parties say they are putting your pocketbook at the top of their agendas, with varying promises to help make everything from housing to food to mobile phone bills more affordable.
Affordability was already a concern for many Canadians before the pandemic hit, but Covid-19 lockdowns and supply-chain constraints exacerbated many of the existing problems.
That is particularly the case for a housing market made ever hotter by a pandemic that drove more Canadians to want bigger homes and bigger yards, which expanded housing demand issues from mostly big cities to suburbs and even many parts of rural Canada, too.
Inflation in July hit 3.7%, the highest annual increase in more than a decade, driven in part by hikes in the prices of gas and food. Those costs are in part being driven by reopening of economies driving up demand, and ongoing supply-chain constraints.
But Statistics Canada’s housing replacement cost index, which is tied to the cost of building a new home, was one of the biggest drivers. It rose almost 14%, the highest increase since 1987.
The Canadian Real Estate Association said the average price of buying a house jumped almost 26% between June 2020 and June 2021.
“There is a cost of living crisis in Canada right now,” Conservative Leader Erin O’Toole says in an ad he posted Tuesday to Twitter.
Experts across Canada point to supply constraints as the main driver of housing costs, and it’s a problem that is years in the making.
“My take is that there has been less-than-adequate housing construction over the past five decades,” said Murtaza Haider, a professor of real estate management at Ryerson University in Toronto.
All three main national parties have now pushed out promises to try to restrict foreign buyers from purchasing housing in Canada — the NDP plan a 20% tax on housing purchases by non-Canadians or permanent residents, while both the Liberals and Conservatives plan some type of ban on new foreign ownership for two years.
To build more housing the NDP promised 500,000 new “affordable” homes built in 10 years, the Conservatives say they’ll get one million new homes built in just three years, while the Liberals said they will “build, preserve, or repair” 1.4 million homes in four years.
None of the parties provided many specifics on how they intend to do it, and Haider is skeptical there can be a rush to massively increase new home builds in the next year or two as building material shortages continue, not enough trained tradespeople are available to do the work, and there is no sign demand will let up.
Haider said all three levels of government have to join forces to solve this one because there are barriers created by municipal, provincial and federal policies. That includes lengthy and complicated zoning issues, provincial development policies and federal government interest rate policies.
Haider said he is intrigued by the Conservatives’ promise to allow developers who sell existing rentals to defer capital gains taxes if they reinvest the profits to build new rentals. Construction of rental units is a particular problem in Canada’s housing affordability issue, he said.
Related to housing costs, the federal Liberals announced Tuesday that they would, if elected, introduce a First Home Savings Account, combining features of an RRSP and a TFSA, to help young Canadians build a downpayment faster. They would also double the First-Time Home Buyers’ Tax Credit.
The parties aren’t just going after housing costs, though.
NDP Leader Jagmeet Singh, campaigning Wednesday in Windsor, said he would help ease affordability anxiety by forcing mobile phone companies to cut consumer rates.
Singh didn’t say how that could happen indicating only it can be done if a government is courageous enough to “stand up to” telecom giants.
Singh said Trudeau promised to cut cellphone bills by 25% in the 2019 election, and instead Singh said prices have gone up. The Liberals say they’re making progress on it.