Cabinet shuffle in a troubled time

With new faces around the cabinet table, the federal government has an opportunity to press reset and deal with urgent problems.

An Abacus Data poll shows Canadians are worried about these top five issues, in this order: the rising cost of living, health care, housing affordability and accessibility, the economy and climate change.

On the cost of living, the federal government weighed in with what it’s calling a “grocery rebate” for people who are eligible for the GST/HST credit. Any income top-ups for low-income households are always welcome, but it would be nice if it was permanent instead of a one-off.

What’s driving inflation now that gas prices have stabilized is high food prices and, in particular, stubbornly high real estate prices that should have gone down as interest rates rose, but didn’t.

The Bank of Canada’s aggressive interest rate hikes are meant to drive inflation down in some areas, but they will drive up inflation in others. Things Canadians buy with debt, like houses and cars, should come down in price. Unfortunately, other items of the Consumer Price Index, like mortgage interest costs and rent, which are driven by landlord mortgage interest costs, go through the roof.

Of course, you don’t get an affordable housing crisis overnight; it’s been brewing for decades. At its core, Canada’s housing market is increasingly seen as something for private gain and not for the public good. Having modest, affordable places for Canadians to live is necessary for vibrant cities but won’t happen without government intervention.

After decades of failure from multiple governments to create affordable housing, the sitting federal government is taking the heat.

It doesn’t deserve all the blame — the previous Conservative federal government did absolutely nothing to stop this trend, and it’s provincial governments that are responsible for controlling rents. Everyone is kicking the can to the Bank of Canada, whose higher interest rates only put affordability more out of reach, even if house prices decline a small amount.

What can the federal government do?

It’s been focused on increasing the supply of housing. While supply is important, the type of supply is just as important. Paving farm fields for mansions — which is what the Ontario government is trying to do — increases supply but does nothing for rental affordability.

The federal government could do five things to impact the housing market.

1. For rental affordability, you need rent to cover costs and not be “whatever the market will bear.” Buildings need to be purpose-built to become rentals, and this should be financed by the Canada Mortgage and Housing Corporation, just like it did in the 1970s and 1980s.

2. The feds could renovate the National Housing Strategy to ensure that programs positively impact those that bear the brunt of Canada’s housing and homelessness crisis.

3. Ottawa could commit to building one million new non-market and co-op housing units over the next decade — that would create affordable units.

4. The federal government could accelerate the rollout of the Federal Lands Initiative — a government program that frees up surplus federal land for affordable housing — of the housing strategy, which, to date, has done little to put federal land into use for affordable housing.

5. And Trudeau Liberals could end various real estate tax incentives, which only serve to inflate the housing market.

As for Canadians’ No. 2 worry, health care, the federal government has actually done far more than the provincial governments to invest in better health care. The feds are providing an additional $46.2 billion to provinces and territories over the next 10 years.

The problem is that not all of that money will have conditions attached. The deal requires provinces to spend 58 cents out of every new dollar on actual new health-care programs while leaving the remaining without requirements.

The federal government could also provide targeted funding to shore up the retention of nurses, doctors and other health-care workers.

And Ottawa could do more to invest where health begins: the social determinants of health like poverty reduction, child care and affordable housing.

On the child-care front, the federal government is well on the way to a $10-a-day child-care program across Canada. The problem is that there aren’t enough existing child-care spaces for parents to take advantage of cheaper services.

My recent report, co-authored with Martha Friendly, examined the availability of child-care spaces by postal code across the country and found child-care deserts to be widespread: 48 per cent of children live in a child-care desert. Ottawa should be expanding the number of available spaces — especially in areas that have extensive areas with insufficient child-care spaces.

Last, but not least, is climate change. With wildfires burning across Canada and the Earth experiencing record heat temperatures this summer, the climate crisis is too hot to deny.

The feds need to place an immediate moratorium on new fossil fuel extraction and exploration projects and implement a regulatory phaseout of oil, natural gas and coal production for fuel by 2040.

Furthermore, they need to eliminate all federal subsidies and financial support to the fossil fuel industry by the end of 2024, and invest in a climate change adaptation plan, as more Canadians become climate refugees due to wildfires, floods, tornadoes and other extreme weather events.

This isn’t an easy road to travel, but it’s the path to future sustainability.

David Macdonald is a senior economist at the Canadian Centre for Policy Alternatives’ national office.