The recent federal budget has drawn criticism from a British Columbia expert who argues it fails to adequately address the nation's housing crisis. While the budget allocates significant funds to housing and infrastructure, one finance professor contends the measures are insufficient and potentially counterproductive.
Key Takeaways
- The federal budget allocates $7 billion over five years to the Build Canada Homes program, part of a total $25 billion for housing investment this fiscal year.
- An expert estimates that achieving the goal of 500,000 new homes annually would require $2.5 trillion in construction costs alone.
- While some tax measures like GST relief for first-time buyers are seen as helpful, they are not considered a "magic bullet" for the market.
- The budget also includes $54 billion for "core public infrastructure" over five years.
Insufficient Funding for Housing Goals
Andrey Pavlov, a professor of finance at Simon Fraser University's Beedie School of Business, stated that the $25 billion allocated for housing this fiscal year is "a drop in the bucket." He calculated that meeting the government's target of 500,000 new homes annually would necessitate approximately $2.5 trillion for construction costs alone, not including land and infrastructure expenses.
Pavlov argued that the budget's measures might even hinder progress. He believes that instead of introducing new programs, the government should focus on removing obstacles such as red tape and high taxes that inflate the cost and risk of housing projects. He suggested that policies should encourage investment, including capital from abroad.
Mixed Reactions to Budget Measures
While Pavlov expressed strong reservations, other perspectives offered a more nuanced view. Adil Dinani, a principal at Royal LePage West Real Estate Services, acknowledged that the budget "won't be a magic bullet" but pointed to specific policy items, like GST relief for first-time buyers, as potentially inducing additional activity.
Dinani also suggested that the government could consider leveraging public sector job adjustments and immigration policies to manage housing demand. The budget does mention "workforce adjustment and attrition to return the size of the public service to a more sustainable level."
Infrastructure Investments
Beyond housing, the budget committed $54 billion to "core public infrastructure," including water, wastewater, and transit projects. This is part of a broader five-year infrastructure commitment totaling $115 billion. However, some developers have voiced concerns about rising fees for water and liquid waste infrastructure upgrades, with some experiencing increases of up to 235% in recent years.
