Canada to launch $6B housing infrastructure fund, will need provincial buy-in

The federal government is launching a new $6 billion “Canada Housing Infrastructure Fund” meant to speed up construction and upgrade key components needed to support building more homes such as waste and water infrastructure.

Prime Minister Justin Trudeau announced the funding on Tuesday, alongside Housing Minister Sean Fraser in Dartmouth – to the sound of protesters chanting in the background – as the Liberals’ pre-budget spending pledge tour continues. 

According to the Prime Minister’s Office (PMO), the fund will include $1 billion for “urgent infrastructure needs” such as improving wastewater, stormwater, and solid waste systems.

The remaining $5 billion will be set aside for the yet-to-be-negotiated agreements with provinces and territories.

The federal government will require provinces and territories to commit to a series of actions meant to increase Canada’s housing supply in order to access this funding.

Among the requirements:

• 
  Municipalities have to allow more “missing middle” homes such as duplexes, triplexes, and townhouses;
• 
  A three-year freeze will have to be implemented on increasing development charges for municipalities with populations larger than 300,000;
• 
  Incoming changes to the National Building Code aimed at supporting more accessible, affordable, and environmentally-friendly housing options will have to be adopted; and
• 
  o Permitting pre-qualified or “as-of-right” construction, where developments conform to existing building and zoning approvals and don’t require discretionary approval, for the federal housing design catalogue. 

As for the timing of this new funding, provinces will have until Jan. 1, 2025 to secure a deal with the federal government, while territories will have until April 1, 2025.

“If a province or territory does not secure an agreement by their respective deadline, their funding allocation will be transferred to the municipal stream,” reads the PMO release accompanying Trudeau’s announcement.

Beyond this new fund, Trudeau is also committing to top-up the existing $4 billion “Housing Accelerator Fund” with an additional $400 million which the federal Liberals say will allow more municipalities to get in on the initiative meant to reduce red tape and speed up new construction.

To date, nearly 180 agreements have been signed across Canada to fast-track more than 750,000 new homes. The Liberals estimate the added funding will help speed up the construction of 12,000 new homes over the next three years.

“This is how we’ll address the shortage of housing options for Canadians. And this is how we’ll make it fairer for younger generations, who feel like they’re falling behind because housing costs are too high,” Trudeau said. “We’re making a lot of progress cutting red tape to fast-track the construction of hundreds of thousands of homes, but we want to go even faster.”

Trudeau also gave municipalities a head’s up on Tuesday that, in order to access long-term public transit money through a forthcoming new fund, they will have to “take action that will directly unlock housing supply.”

Specifically, municipalities are being told to:

• 
  Eradicate mandatory minimum parking requirements within 800 metres of a high-frequency transit line and allow high-density housing in this space instead;
• 
  Allow high-density housing within 800 metres of post-secondary schools; and
• 
  Complete a “housing needs assessment” for all communities with a population greater than 30,000.

The minority Liberals have been making housing affordability a key focus of their targeted spending plans over the last year, amid an ongoing housing crunch and heightened political pressure to address the issue.

In the fall, the Canada Mortgage and Housing Corp. estimated that in order to restore affordability to the market, 3.5 million new housing units need to be built across the country by 2030

Housing, including assistance for renters and younger Canadians trying to enter the market, is expected to once again be a core element of the April 16 federal budget, which Trudeau and his team have been trying to frame as focused on “fairness.” 

Fraser said that in a few weeks he will be “publishing a plan to address Canada’s national housing crisis,” which will include three pillars: building more homes, supporting Canada’s most vulnerable, and making it easier to rent or to buy a home.

“Between now and then we’re going to be rolling out specific policies to highlight how we’re going to achieve this,” he said Tuesday.

Facing reporters’ questions about promising yet another federal budget initiative requiring premiers’ buy-in, Trudeau said his government is “stepping up” because Canadians need more help than any one level of jurisdiction is currently able to provide.

“We’re there to work to encourage provinces and municipalities to be as ambitious as possible,” the prime minister said.

How long for affordability impact?

As for how the federal government plans to finance what’s expected to more than one dozen pre-budget announcements, Trudeau said the Liberal spending plan balances fiscal responsibility with investing in Canadians, and that the full costing will be made clear in the budget. 

Asked about the initial pushback from some provinces, Fraser said in an interview on CTV News Channel’s Power Play that provinces “can choose to negotiate or not negotiate” but his hope is that “by putting a federal incentive on the table, we’re going to be able to make progress.”

“I think it’s premature to declare what an outcome may be,” he said. “The reason that we wanted to spell out the detail was not out of a sense of paternalism, but out of a need to move quickly to address the national housing crisis.”

The minister was also asked, but could not say specifically, when he thinks the various housing measures in the works will start to make homes more affordable, saying it will depend on the market.

“The measures we’ve introduced are already starting to have an impact. Some of them will take a few years … but that’s no excuse to delay beginning with them,” Fraser said, conceding that “it may be the better part of a decade” before a level of affordability comparable to those experienced by past generations is restored.

In statements reacting to the latest Liberal housing pledge, both the NDP and Conservative housing critics expressed reservations about the tangible impact of Trudeau’s plans.

NDP MP Jenny Kwan said Canadians “can’t trust those who created this mess to fix it.”

“Developers who recently bought off an affordable housing complex in Dartmouth have served renoviction notices to about 1,000 tenants so they can jack up rent,” she said. “The Liberal government’s efforts to build affordable homes have not even offset the loss of affordable rental homes.”

Conservative MP Scott Aitchison said the housing accelerator fund that the prime minister is now topping up, “hasn’t built a single home.”

“Today’s photo op won’t result in building the homes Canadians need. Canadians can’t live in Liberal photo ops or announcements,” Aitchison said.