WP

By Lori Turnbull

April 18, 2024

At a press conference in Hamilton in August of 2023, Prime Minister Justin Trudeau said that “housing isn’t a primary federal responsibility.” He went on to concede that the issue is something that the federal government “can and must help with” but resisted embracing a leadership role.

Clearly, his thinking on this has evolved. The 2024 budget proposes $52.9 billion in new spending over the next five years on a range of measures including rental construction and housing infrastructure like sewer and water systems. However, there is only so much the federal government can do alone. They need cooperation from the sub-national governments and intend to use their federal spending power as a consensus-building mechanism.

A substantial chunk of the money is up for grabs only if provinces and municipalities meet certain conditions on how to spend it. For example, of the $6 billion that is reserved for provinces under the new Canada Housing Infrastructure Fund, $5 billion will flow only if provinces and territories agree to build more multiplexes and multi-unit dwellings and suspend development charges for cities with more than 300,000 people.

For the federal government to put conditions on transfers to provinces is nothing new but, as strings attached go, these are pretty granular. For some time now, relations between the Liberal government and the premiers have been strained and, in some cases, are highly combative. Given that the current intergovernmental climate is all about conflict rather than cooperation, it could be that many of the key promises in this budget go largely unfulfilled.

The Liberals are aware of the precarity of the situation. They also know they must fix the housing crisis, or at least put a massive dent in it, before the next election, to avoid electoral catastrophe. They have hit the ground running with their intergovernmental negotiation strategy, which is shaping up as follows: they are playing hardball with the premiers, using bold rhetoric (i.e., Prime Minister Trudeau said that provinces who wanted the federal government to fix the housing crisis should “be careful what they wish for”), and, in the event that a province won’t play ball, they are threatening to go around them to do deals directly with the municipalities.

On the public relations front, the Liberals are aiming to convince the public to buy into the proposed housing plan so that provinces and territories feel obligated to do the same. Or, conversely, if the premiers still don’t get with the program even if Canadians support it, the subsequent negotiations with the municipal governments will have legitimacy with the public.

The rollout strategy for this year’s budget took the form of a two-week, pre-budget, cross-country tour, with the prime minister and others in his cabinet making a new funding announcement at each stop, most of them having to do with housing. This made for an anticlimactic budget day, given that there were few surprises left to disclose, but the purpose of this mini-campaign was for the federal government to boost public awareness of and support for its housing plan. There is no doubt that the housing announcements made headlines, but polls suggest that the public is concerned about overspending.

The 2024 budget will not assuage those worries and might even make them worse, to the extent that voters are listening to Liberal messaging at all.  Among those who have been tuned in, critics of the budget have been highly vocal about the risk that big spending could make the inflation crisis and, therefore, the affordability crisis, worse rather than better. So, public buy-in is not off to a smooth start.

There is reason to believe that the proposed federal housing strategy is a comprehensive one that could make a big difference.

As far as the provinces are concerned, the best that the federal government can hope for is a patchwork situation where some provinces put up roadblocks but others get on board. This will be a difficult, bump-filled journey with unpredictable events along the way. British Columbia, Saskatchewan, and New Brunswick are all headed to elections this year, which provides an incentive for incumbent governments to stand up to Ottawa and take a tough stance in intergovernmental talks.  Changes in government in those provinces would have the effect of starting the process all over again.

Ontario and Alberta have already indicated their opposition to the federal conditions on Infrastructure Fund money, with Premier Doug Ford saying that he won’t force cities to build multiplexes and Premier Danielle Smith threatening to take Ottawa to court over what she describes as the asymmetrical use of the federal spending power. To boot, she has introduced a “stay of out my backyard” bill that would require provincial oversight over future housing deals between the federal government and the municipalities.

Premier Smith’s zero-sum thinking with respect to federalism, and specifically the claim that Albertans’ per capita contribution to Canada outweighs the benefits coming back to them, speaks to the culture of toxicity that grips intergovernmental politics today. Winning is everything. To be fair, not all premiers use this kind of language and surely some of them will be willing to work with the federal government on fixing the housing crisis.

Perhaps once everyone makes their headlines and scores their points, temperatures will come down and negotiations can begin in earnest. But even if this happens, it will take a lot of time. Provinces will use one another’s deals, if they happen, as leverage for themselves, as we can see Premier Smith attempting to do whenever she says she just wants the same deal that Quebec has. Failure to reach agreement at the provincial level will necessitate a highly complex and time-consuming process of negotiating with the thousands of municipalities across the country, as the countdown to the next election clips along.

There is reason to believe that the proposed federal housing strategy is a comprehensive one that could make a big difference. The range of instruments that the Liberals are putting forward addresses various aspects of the housing crisis, including the labour shortage in trade professions. There is help for renters, owners, and those who want to transition from the former to the latter. The federal government is giving its own underused property to turn it into housing. But none of it matters if they can’t get it done.

The Liberals have taken a divisive approach to intergovernmental relations since they formed government and now this is coming back to bite them. They’ve always insisted on dealing with each province individually rather than meeting premiers as a group. This has contributed to a decline both in civility and in a sense of common purpose. To top it off, the carbon tax debate has been a disaster for federal-provincial collegiality.

Premiers have begged the federal government to at least take a pause from it, but the Liberals are not hearing it. There is only one Liberal provincial premier– Andrew Furey in Newfoundland and Labrador – and even he has lost patience with the Prime Minister. With the federal-provincial relationship in the shape that it is in, no wonder the federal Liberals are threatening to bypass the provinces and go straight to the municipalities. They might have no other choice.

The Liberals remind us regularly that voters don’t care about jurisdictional authority: they just want the housing crisis fixed. That’s true. But the Liberals have to care about jurisdictional responsibility because they can’t do this alone. Time will tell whether intergovernmental collaboration is still possible – but, as the next federal election looms within the next year and a half, there is not much time left.

Contributing Writer Lori Turnbull, co-winner of the Donner Prize for Political Writing, is a Professor in the Faculty of Management at Dalhousie University.