27 January 2009

Billions for new housing, but not for those who need it most

Michael Shapcott of the Wellesley Institute has completed the first article in a series which he intends to write on today's budget and how it affects people who are the most vulnerable to the economic downturn.


BILLIONS IN NEW HOUSING DOLLARS, BUT WHO REALLY BENEFITS: Federal budget 2009 promises to deliver billions upon billions of dollars over the next two years in new housing investments – the single biggest amount of new housing spending in more than two decades.... [M]ost of the new dollars will flow quickly to people who already own their home and want to re-pave their driveway, or cottagers who want to add a new sun deck. The hundreds of thousands who will experience homelessness this year won’t get a single penny in desperately needed new programs and services; and the three million Canadian households who are precariously housed (a modern-day record) will have to wait to see if the much smaller dollars being offered to them will actually make it through a complicated set of federal-provincial-territorial negotiations including a cost-sharing requirement.

WHO’S LEFT OUT: Hundreds of thousands of Aboriginal people living in urban, rural and remote parts of Canada who bear a major burden of homelessness and housing insecurity won’t get a single penny in new housing help. People with physical or mental health concerns who require supportive housing have been offered a mere $75 million for the entire country – an amount that will fund only a handful of new homes. The bottom line: The biggest dollars will go to those who need the least help; and the people who are facing the biggest housing challenges are left to wait for a small share of the overall spending...

THE DRIVEWAYS AND DECKS TAX CREDIT: The federal budget puts the two-year cost of this tax credit at $3 billion. But their numbers don’t add up. The budget documents say a tax credit of up to $1,350 will be offered to an estimated 4.6 million households. That puts the cost of the tax credit as high as $6.2 billion. But whether it’s $3b or $6b or somewhere in between, the tax credit is designed to help homeowners renovate their kitchen or bathroom or basement; add new carpeting or hardwood floors; build a deck or a fence or an addition to their home; add a new furnace or water heater; paint the interior or exterior of the house; resurface the driveway; or lay new sod. Some of the improvements may have an energy or environmental benefit (the feds set up a separate $300 million fund for energy efficiency), but most of the list are cosmetic improvements. Great for the renovation business, but at a time when a record number of Canadians are precariously housed, is this the smartest use of federal tax dollars? Homeowners make up about two-thirds of Canadian households, and their annual incomes are about double those of renters, on average. Homeowners already receive generous tax subsidies from the federal government. Federal Finance Minister Jim Flaherty reported earlier in January that the annual tax break to homeowners is more than $11.5 billion – that’s five and one-half times more than the less than $2 billion in current federal housing support for lower income Canadians.

LESS HELP FOR THOSE THAT NEED IT THE MOST: The driveways and decks tax credit is up to three times bigger than the entire investment set aside for lower-income Canadians who are suffering the most. An even bigger concern – virtually the entire $2 billion in affordable housing investments will have to be cost-shared with the provinces and territories following negotiations...

Read the whole thing.

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