Canada Launches $6 Billion Housing and Infrastructure Fund

The Canadian government announced a new $6 billion Canada Housing Infrastructure Fund, an initiative to bolster residential property construction and upgrade vital components necessary to build new homes.

According to the Prime Minister’s Office (PMO), the fund will dedicate $1 billion for so-called urgent infrastructure needs, such as upgrading solid waste, stormwater, and wastewater infrastructure. The $5 billion leftover will be allocated to provinces and territories as part of agreements that have yet to be negotiated.

For now, the proposal for the Housing and Infrastructure Fund would see Ottawa mandate provincial and territorial jurisdictions to agree to various provisions before they can touch the public money. Provinces will have until January 1, 2025, to reach an arrangement with the federal government, and territories will have until April 1, 2025.

One component of the Housing and Infrastructure Fund is to encourage provinces to install a three-year freeze on boosting development fees for cities with populations greater than 300,000. The announcement also pushes municipalities to permit more “missing middle” home construction, such as duplexes, triplexes and townhomes. Additionally, the multi-billion-dollar program tells provinces and territories to permit pre-qualified construction so developments can emulate current building and zoning approvals.

This comes as Ottawa has already signed nearly 200 agreements to speed up the construction of a quarter-million new homes. The PMO estimates that the extra funding will ensure approximately 12,000 new homes are built over the next three years.

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

Fraser highlighted in a press briefing that $1 billion will be transferred to “shovel-ready projects that are ready to go and that money will flow immediately. “When it comes to the additional $5 billion, that is going to be spread out over a longer period of time, and the exact flow of money will be subject to negotiations with our provincial and territorial partners.”

According to Fraser, the federal government also intends to release a three-pillar plan to address the country’s affordability crisis. The plan will include building more homes, supporting the most vulnerable members of society, and ensuring it is easier to purchase or rent a home, he noted.

The Canada Mortgage and Housing Corporation (CMHC) projected last fall that about 3.5 million new housing units will need to be built nationwide by 2030 to restore housing affordability.

As for how this will be funded, the prime minister confirmed that the total cost will be outlined in the federal budget, scheduled to be released on April 16.

Provincial Pushback

Several provinces have already pushed back against the housing plan.

According to The Globe and Mail, New Brunswick Premier Blaine Higgs told reporters that he was unsurprised that the federal government inserted a series of provisions and “all kinds of conditions” on the Housing and Infrastructure Fund.

“It’s unfortunate for them right out front to put a condition where if you don’t agree, we will go directly to the municipalities,” he said. “I think that’s kind of unfair statement.”

The Quebec government dismissed the proposal, arguing that Prime Minister Trudeau and his cabinet should tackle issues that affect the Canadian real estate market within the federal government’s purview.

“We could never accept that the federal government interfere in our areas of jurisdiction while urgent issues under its responsibility are not taken care of,” said the statement issued by ministers Jean François Roberge and France-Élaine Duranceau.

A spokesperson for the Saskatchewan government explained that multiplexes work in major urban centres, such as Toronto and Vancouver, but they would not be a priority in the provincial prairie.

However, British Columbia Premier David Eby thinks the federal housing announcement aligns with the province’s plan. “We think it’s critically important to tie infrastructure funding to a clear commitment to build housing, to respond to the needs of the people of British Columbia,” he told a news conference.

State of Canada’s Housing Market

Over the last four years, housing affordability has become a national issue rather than a regional one. According to the Canadian Real Estate Association (CREA), the average price of a home sold in February was about $686,000, up roughly 37 per cent from before the pandemic. A blend of a lack of inventory, sky-high mortgage interest rates, and ballooning construction costs have impacted the country’s housing industry. This has resulted in more people being unable to access the housing market.