Feds to reduce housing spending by half, build only 26,000 homes: Budget watchdog

Spending on housing programs will be more than halved over the next four years with the federal government’s $13 billion housing initiative leading to the construction of just 26,000 new homes, according to a new report from the parliamentary budget officer (PBO).

The budget watchdog’s report specifically looks at Premier Mark Carney’s new housing agency, Build Canada Homes, and how it and other programs will contribute to new housing construction between now and 2029-30.

The report concludes that the $9.8 billion the federal government is spending on housing initiatives in 2025-26 will drop to just $4.3 billion annually by 2028-29, a 56 percent drop.

That annual drop in funding, the PBO says, is largely due to the expiration of funding for programs such as the Housing Accelerator Fund, the Affordable Housing Fund and the Canada Housing Benefit.

SEE | Report debated in the House of Commons:

Poilievre and Carney argue over PBO housing report

During question period Tuesday, Conservative Leader Pierre Poilievre questioned Prime Minister Mark Carney about the parliamentary budget officer’s report that the projects are expected to build fewer homes than promised.

Announced cuts in the budget, such as the elimination of the secondary loan initiative and other “programs that do not directly increase the supply of housing or target Canadians in need” are also contributing to the decline in funding, the PBO says.

The PBO report assumes four envelopes of housing finance will expire or be reduced over the next four years. They include:

• Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC) housing spending will rise from $550 million this year to $350 million in 2028-29.
• Canada Mortgage and Housing Corporation (CMHC) spending will rise from $6.16 billion this year to $2.16 billion in 2028-29.
• Housing, Infrastructure and Communities Canada funding will fall from $770 million this year to zero in 2028-29.
• Indigenous Services Canada Housing funding will fall from $1.36 billion to $310 million by 2028-29.

Government officials speaking on background told CBC News it is incorrect to assume that because these programs have an expiration date, they will not be extended or completed.

“Without going into technical aspects, a series of decisions will have to be made between now and 2028-29,” Finance Minister François-Philippe Champagne said on Tuesday.

“No decisions are made for 2029 in 2025.”

SEE | Champagne says the PBO report needs “a little nuance”:

‘We have what we need’ to boost housing, Champagne says in response to PBO report

The Office of the Parliamentary Budget Officer on Tuesday released its report on the government’s Build Canada Homes plan, projecting a decline of more than $5 billion in federal spending on housing programs through 2028-29. Finance Minister François-Philippe Champagne said there are still “a number of decisions” to be made on housing during that time.

In a report released in August, the PBO said Canada needs to build 690,000 new housing units by 2035, in addition to those already being built, to meet housing needs across the country.

To address that housing gap, Carney announced during the election campaign he would found Build Canada Homes to act as a developer and oversee housing construction in Canada.

The agency was launched with what was described as an “initial investment of $13 billion” to provide financing and land, attract investment and help developers get projects off the ground.

Tuesday’s report says that between now and 2029-30, Build Canada Homes will spend $7.3 billion of the $13 billion on grants, loan awards, contributions to provincial programs and community supports for low-income rentals.

The remaining $5.7 billion, according to the PBO, will be used to fund programs.

SEE | Housing Minister says there will be more spending:

Minister responds to PBO report showing cuts to housing spending: “This is just the beginning”

Responding to Tuesday’s housing report from the Office of the Parliamentary Budget Officer, Housing Minister Gregor Robertson characterized the federal budget’s $13 billion housing investment as “just initial capitalization,” adding that another $51 billion for housing-related infrastructure over 10 years is “designed to attract private investment.”

“[Build Canada Homes] “It should be expected to make a modest contribution to housing supply and affordability,” the report says, based on allocated funding and design.

That modest contribution, the PBO says, would lead to the construction of just 26,000 new units over the next five years, 13,000 of which would be affordable housing for low-income households, or about 3.7 percent of the housing gap the PBO identified in August.

Housing Minister Gregor Robertson says he is pleased the PBO is investigating housing, but warned the tax watchdog is not taking into account the impact the government’s housing policy will have on private investment in house building.

“We have only the initial capitalization in the budget of $13 billion. We also have $51 billion in infrastructure to enable housing, that is, overall, a significant investment designed to attract private investment,” he said.

“This is just the beginning and we’re going to deliver a lot of affordable housing and we’re going to leverage a lot of investment from across Canada to get it done.”