What We Know So Far About the Federal Government’s $13 Billion Housing Project

Explainer

Prime Minister Mark Carney announced his government’s Build Canada Homes (BCH) initiative on Sept. 14, with some details released and others still undetermined.

With $13 billion in federal funding to start, BCH aims to construct an initial set of 4,000 units across six federally-owned sites in Dartmouth, N.S.; Longueuil, Que.; Ottawa; Toronto; Winnipeg, Man.; and Edmonton, with construction expected to start next year.  The government says additional build phases to construct more housing units are planned for future phases up to 45,000 units on these lots.

It’s the latest in a long history of housing initiatives from Ottawa, and a key part of the Carney Liberals’ election campaign. This time, the government is directly acting as the builder, rather than just allocating funds.

What the Government Says About New Program

BCH has been created as a special agency within Housing, Infrastructure and Communities Canada under the leadership of CEO Ana Bailão, a former Toronto city councillor and deputy mayor.

According to Carney, the program will accelerate the construction of affordable housing units for low-income and middle-class Canadians by catalyzing private developers to build homes that regular Canadians can afford. It aims to double the current rate of construction to around 500,000 new homes built per year.

The program will use prefabricated modular home and mass timber technology, as well as oversee 463 hectares of federal land where new housing can be built. This includes incorporating the Canada Lands Company’s portfolio of 88 properties into BCH, lots which Ottawa says have been found appropriate for building housing on.

Carney says the program will focus on speeding up construction through the use of public land, reducing development risks, and streamlining approvals, as well as incorporating prefabricated modular units to lower costs and shorten building timelines and prioritizing the purchase of Canadian-made materials such as lumber, steel, and aluminum where feasible.

In addition, as previously promised by Carney, the federal government plans to eliminate GST on new homes sold for $1 million or less. As of now, the legislation has passed second reading and is being assessed in committee.

Housing Minister Gregor Robertson said in a Sept. 15 interview with CTV that Ottawa should play a crucial role in housing, and blames a lessening of government involvement in past decades for Canada’s housing troubles.

“I think it’s a key responsibility of the federal government. It hasn’t been for about 30 years since the mid-90s. And that’s what’s got us into the housing crisis that we have today. It’s decades of not building enough non-market housing,” Robertson said.

Robertson pointed to higher levels of non-market housing and government intervention in many European nations as a model for Canada to follow, saying that the Carney government is especially focused on getting affordable housing for the “missing middle” who can’t currently afford a home.

He said the $13 billion in funding will create a “one-stop shop” for housing development in Canada, attracting private capital, and catalyze and revitalize Canada’s construction industry.

What Does the Opposition Say?

Conservative Leader Pierre Poilievre has made it clear that he sees Carney’s term as a failure in every category, including housing and cost-of-living. Past Liberal measures such as the Housing Accelerator Fund have been criticized by the Conservatives as full of red tape and ineffective.

Addressing his Conservative caucus Sept. 14, Poilievre said that under Carney, there have been increasing “costs, crime, and chaos,” and said that Carney’s solutions to housing will not be effective.

The Conservative housing platform at the time of the last election focused on cutting taxes, speeding up permitting, reducing red tape, and incentivizing municipalities to build more homes. Instead of positioning Ottawa as the primary driver of new builds, the platform sought solutions such as bringing incentives for municipal governments to build more homes and a focus on removing regulations for the private market.

“We have real solutions. Let’s take the GST off all homebuyers up to $1.3 million. Let’s get rid of the capital gains tax whenever anyone invests their proceeds in building new homes. Let’s incentivize the municipalities to speed up permits, free up land, and cut development charges,” Poilievre said Sept. 14. “And let’s cap immigration so that we can add homes faster than people and put roofs over the heads of real Canadians.”

Conservative MP Andrew Scheer told CTV on Sept. 15 said that his party will support any Liberal policies that “lift” from the Conservative platform but will oppose any that “graft their own tired policies that have been proven not to work” onto any legislation or policy programs.

“When it comes to building bureaucracies, which is what the Liberal plan is morphing into when they announced $13 billion to build a bureaucratic structure rather than getting out of the way of new home construction, well those are things that we can’t support,” Scheer said.

New Democratic Party housing critic Jenny Kwan has also criticized the Liberal approach to housing, saying Aug. 19 that Canada’s housing market has too much speculation occurring and is locking people out of the rental and homebuying network. She added that the Liberals’ policies are driving up the cost of housing and rental units.

“We cannot allow large financial firms, similar to the ones that Prime Minister Carney used to work for, to continue treating people’s homes as commodities to be bought and sold for maximum profit. The alarming rise in evictions is a direct consequence of the financialization of our housing market — and it’s time for that to end,” she said.

Parliamentary Budget Officer’s View

Interim Parliamentary Budget Officer (PBO) Jason Jacques recently weighed in on BCH during a House of Commons committee session on Sept. 16, saying that his office is unsure about whether the plan will be able to build the projected homes.

“We don’t know,” Jacques said. “As soon as the announcement was made ... on Sunday, yesterday morning when the office opened at 7:45, we drafted an information request to the government to ask them for details exactly how they’re planning on spending that $13 billion to transform the housing market.”

Jacques added that housing units built through federal initiatives aren’t always classified as affordable by Canada Mortgage and Housing Corporation (CMHC) standards. He said that official statements can be misleading and that his focus is on the actual data rather than promotional messaging.

Yves Giroux, who previously served as the PBO prior to Jacques taking the position on Sept. 3, projected that Canada needs 1.3 million new homes by 2030 to get rid of the country’s housing gap and restore its long-term vacancy rate. Combined with baseline housing completions, hitting this goal would mean building 3.1 million new units by 2030, which represents an 80 percent jump over 2023 levels of completion.

Remaining Unknowns

BCH has considerable funding behind it and ambitious goals. Significant risks are also present, however, including the fact that municipalities may not be agreeable to speeding up permitting and making rezoning easier. Putting the government as a major force behind the housing market also won’t erase market realities of the current high cost of labour and materials, especially in large metro areas like Toronto, where housing starts are down 69 percent since last year.

Analysis from Royal Bank of Canada said the ability of BCH to make a difference is far from certain as it contends with a difficult economic situation and many layers of bureaucracy.

“The extent to which quick progress can be made by BCH will depend on two critical ingredients: agreement on the problem and precision on what ‘affordability’ means,” RBC’s Director of Housing Policy Stephanie Shewchuk wrote in a Sept. 3 analysis. “All levels of government—federal, provincial and municipal—must row together to ensure funding and regulatory levers align.”

Canada’s housing system requires numerous layers of organizations to work together or risk duplicating efforts and wasting time. This includes federal departments such as Housing, Infrastructure and Communities Canada, Crown corporations (CMHC, Canada Lands Company), provincial and territorial governments, municipalities, indigenous governments, non-profits, and private developers. Coordination among these various layers of bureaucracy will be essential to the workability of the program.

Prefabricated and modular construction methods can accelerate housing delivery and reduce costs, but scaling up these innovations nationwide is harder than expanding traditional construction methods, which already have existing supply chains, and regulatory frameworks, whereas newer techniques may face bottlenecks in permitting, logistics, or finding enough regional expertise and labour.

It still remains unclear how this new initiative will work with municipalities, what the details of partnerships with developers are, and how it will deal with large-scale immigration that’s put pressure on the housing market, nor is it clear how 4,000 new homes per year would make a sizable dent in providing more affordable housing, particularly in areas like Metro Vancouver and the Greater Toronto Area, as well as how the new construction technologies and supply chains can be scaled up at a fast rate across the country.