The Trudeau government has been striving for more cooperation. The prime minister has charged the Conservative Party with seeking to bully municipalities, a description I'm sure Mr. Poilievre appreciates. Their response was to go for a carrot instead of a stick. Their offering is the Housing Accelerator Fund (HAF). If municipalities reach housing targets, the HAF will provide them fresh money instead of hiding already existing monies.Although on appearances the two policies seem to be somewhat different, they are really not. For all intents and purposes, withholding regular infrastructure money against deciding not to provide cash through a new program is the same method. Each calls for good behavior in return for money. One comes with an application form and is just more courteous than the other.Liberals should realize, in my opinion, that they can brandish at non-cooperative communities their carrot like a stick. Being a mushy moderate neoliberal who doesn't really care who runs governments (as long as they're not genuine communists or fascists), I desire decent public policy from all sides. Actually, I want them vying with one another on housing policy to surpass one another. Recent events point to this maybe occurring.The opening shot of Stanley Kubrick's venerable 2001: A Space Odyssey caught me in memory last week. The dawn of man is here. A hostile clan drives a group of hominins from their drinking spot. I won't try to explain some science fiction-y stuff; later on one of the hominids discovers he can use a mound of bones to destroy objects while excavating. You are aware of what they accomplished. They returned to their watering place!
Though it's not totally different, that might.
not at first sound exactly like what happened this week. The Conservative Party aims to occupy government. They came upon housing policy as a weapon to grab. Up until the new housing minister discovered his weapon, they seemed to be poised to own the housing policy file uncontested. Not among a heap of bones but rather among a stack of documents.Why the HAF counts?Looking at the HAF carrot the proper way, it resembles a stick quite a bit. After all, once they have their disappointing entries, there is no justification they cannot rely on municipalities to do more. New housing minister Sean Fraser seems to be accomplishing exactly that. He is working with the carrot-stick. A bone sometimes is more than just a bone. A carrot might not be exactly that sometimes.This is not only intellectual; it is pragmatic. The just revealed agreement with London, Ontario could have seemed unimpressive. Over three years, the arrangement is supposed to result in an extra 2000 homes. Ten years' housing target for London is 47,000 units. Stated differently, 4700 a year. A recent analysis claims they are running approximately half that pace. So let us suppose 2350. Let's round the new commitment down to 650 units annually (an increase of around 27 percent), as 2000 does not divide smoothly by three. That comes to 3000 units annually, almost equal to 64 percent of their aim.
Let us now apply the Conservative approach.
to London. Beginning with the same 2350 units, we will add 15 percent. That comes to almost 353 more units. That comes to 2703 units in the first year. Let us now include fifteen percent for year two. That provides a greater annual increase—roughly 405 units—by means of compound interest. At 3108 yearly units right now. Year three is producing 3573 units. Three years later, the CPC plan would theoretically produce 9,484 units instead of 9000 from the Liberal proposal. Though both strategies seem to fall short of London's aims, the CPC has an advantage here especially with continuous annual 15 percent hikes.Though less effective generally, the CPC strategy might be more successful in some areas. The Conservative plan, for example, would apply to 22 cities, but even tiny towns qualify for the HAF. This allows the LPC control over more local governments. Given that development will also have to quicken in small towns as well, this is absolutely vital.One other issue is permanence. The CPC is trying to call the Liberal plan bureaucratic. After all, just setting goals is easier than specifying criteria. The difficulty is that a change of government could throw towns off even if they manage to reach those targets for a few years. Alternatively by a recession, for that matter. If homebuilding drops for reasons unrelated to municipal control, it seems doubtful the federal government would cut infrastructure funds. On the other hand, the Liberal approach has been to encourage towns to consent to liberalize their zoning rules. Stated differently, they are consistently hobbling the zoning gatekeepers permanently.
Eliminating the HST is major business.
The second, more widely reported recent policy change is the decision to eliminate the HST from purpose-built rental properties. To put it plainly, especially right now, this is a major thing.The main housing policy issue facing Canada is that building enough units in sufficient locations is illegal. Tightening financial circumstances creates a second, more transient issue. Building is far more costly given the fast rise in interest rates to fight inflation and the very tight employment market. Many builders have thought about stopping projects as they wait for expenses to drop. In many circumstances, eliminating the HST makes the arithmetic easy. Although there are fair arguments on the tax treatment of housing in general, if we wish to stop a slowdown in housing construction—let alone boost housing starts—we must make sure that housing development isn't collateral damage from our inflation battle.Strangely, the Conservative Party argues that it should only apply to buildings where the average rental price is below market rate whereas the Liberals intend a clean HST cut for purpose-built rentals. This is a perplexing stance. Surely Conservatives should agree if the Liberals wish to reduce taxes. especially in cases when those taxes are paid on something we all agree we need more of And what became of supply-side economics?All things considered, CPC strategy may produce more building of homes than the Liberal proposal. More thorough investigation than you would find in a column would be needed for that. The fact that this isn't clear right away raises issues, though. Being the party of more homes is difficult when your strategy doesn't clearly show improvement.Poilievre and co. need to devise a more terrifying strategy because the housing minister seems to be strolling about waving his carrot-stick at towns and cutting levies. Should you be the bullies, then be the ones acting as such!
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