Affordable Housing Belongs In The Budget
Date Published: January 15, 2009
Publisher: National Post
Author: Tim Hearn
There's never a shortage of ideas for spending taxpayer dollars and no doubt Finance Minister Jim Flaherty is learning that lesson in spades these days.
Minister Flaherty has reasonable criteria for stimulus to help weigh his options: timeliness, impact, appropriate size, limited duration and contribution to long term goals.
But which stimulus options will achieve the greatest return on investment (ROI)?
One prime candidate is affordable housing. The Calgary Homeless Foundation, along with other organizations across the country, has proposed a $2.5-billion federal investment to create 30,000 to 50,000 units across the country.
The foundation asserts that by investing in affordable housing -- including home ownership, rental, supportive housing and renovation projects -- the federal government could stimulate recession prone industries, directly support Canada's most vulnerable citizens and ultimately reduce costs to the Canadian taxpayer.
The proposal clearly meets all of Minister Flaherty's criteria. The economic impact of affordable housing investment is nearly immediate. The impact would be multiplied because affordable housing would attract provincial, private sector and philanthropic investment -- levering as many as two additional dollars for every federal dollar for a total injection of over $7.5-billion. And this is an investment in quality of life for low and moderate income Canadians, which would leave enduring community assets as a legacy.
Yet the proposal goes beyond meeting the general criteria to be a clear ROI winner. For starters, it leaves more money within Canada than other suggested stimuli targeting the construction industry, with 80% of residential construction costs remaining in Canada. The construction industry employs more than one million Canadians, and each new home built creates four to six years of employment for Canadian workers. (As I write this, Statistics Canada reported a decline in full-time employment in December and attributed the decline to job losses in construction.) Furthermore, the benefits of this investment would accrue to communities nationwide, not just in one region or province.
An affordable housing investment would provide direct support to lower income and homeless Canadians -- targeting those in greatest need. More than 1.4 million Canadian households lived in Core Housing Need (a direct measure defined by the CMHC using Canada Census data) in 2001, with one in every 10 Canadian households facing housing affordability issues. As many as 300,000 Canadians experience homelessness every year.
Lower income and fixed income Canadian households will be particularly vulnerable in a recession. Renters, female lone-parent families, seniors, immigrants and Aboriginal households will face higher risk of losing their homes. Investing immediately in affordable housing will ensure that our most vulnerable Canadians weather the impacts of these uncertain economic times.
But what makes the business case for this investment are the numbers. Right now homelessness rings up an annual cost to taxpayers of $4.5-billion. Research and recent Canadian experience proves that affordable and supportive housing is five times less expensive than current institutional responses to homelessness and about half the cost of emergency shelters.
A $2.5-billion affordable housing investment would pay for itself if one third of the units built were targeted to house our homeless neighbours.
To illustrate , Calgary's per capita share of $2.5-billion would be approximately $78-million, so 1,560 new affordable units could be created at $50,000 per unit. The average annual cost of system use (hospital, corrections, police, shelters, etc.) by a homeless person in Calgary is estimated at about $100,000. If we created 520 homes for homeless Calgarians (one third of the total units) we would save taxpayers $21-million per year. The savings would pay for the $78-million investment within four years. I would add that more than 50% of the homeless population in Calgary already has employment.
An economic stimulus that actually saves taxpayers' money is a winner for all! I strongly encourage Minister Flaherty to put affordable housing on the top of his priority list. It's clearly worthy of inclusion in this year's budget.
Tim Hearn is the immediate past chairman and CEO of Imperial Oil Limited. He currently chairs the Board of Directors of the Calgary Homeless Foundation.
©Copyright 2008. Funders Together to End Homelessness. All rights reserved.
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