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Neoliberal Ideas and Social Housing Realities in Ontario

July 24, 2005 by Administrator in Summer 2005

By Jason Hackworth

A Return to the Halcyon Days or Just Another Empty Promise?

On April 29, 2005, officials from Ontario and the Canadian federal government announced what was deemed by one senior provincial official as “the largest affordable housing deal in Canadian history.” The roughly C$600 million partnership between the federal and provincial government will be directed toward the construction of 15,000 affordable housing units and rent supplements to 5,000 Ontario families. The announcement came only weeks after a (federal) government-saving compromise between the ruling Liberals and the leftish New Democrat Party to devote C$1.6 billion over the next two years for housing. To say that these announcements were welcome news to housing activists in Ontario would be the understatement of the decade. For the last twelve years, activists and affordable housing tenants have been forced to witness the ideologically-driven sacrifice of a once-impressive social housing sector in Canada. These announcements were met with enthusiasm by the affordable housing community, but also with a certain degree of caution that can be attributed to the community’s increasingly uneasy relationship with the provincial and federal governments during the past decade.

A (Very) Short History of Social Housing in Canada

The Canadian social, or government-subsidized, housing system functionally and symbolically sits between the welfare-friendly systems of Western Europe and the market-friendly system of the United States. The UK, France and the Netherlands, for example, all have (or recently had) rates of social housing over 20 percent and a fairly strong commitment to the sector, while antipathy toward the sector in the US has limited public housing to about two percent of the total stock (at the beginning of the 1990s). Somewhere in between (but obviously closer to the latter), Canada ‘s housing stock is about 6 percent social housing, or about 650,000 units nationwide. This stock consists of three large portfolios (and a number of smaller ones that will not be covered here). First, there is traditional public housing, which is about one-third of the social housing stock and consists of units built and, until recently, owned and managed by the federal government. Second, there is cooperative housing—arguably the most successful portfolio in the housing stock—that is derived from changes to housing laws in the 1970s that allow more residential autonomy in non-market housing. Finally, there are private and municipal non-profit housing stocks. These consist of units built with federal, provincial or municipal money but managed by either a community group or a special administrative wing of the city. Despite the variation in success, management style and cost of these portfolios, each has been attacked during the past decade for similar ideological reasons.

It is not too much of an exaggeration to say that for Canadian social housing, the early 1990s was akin to the early 1970s for US public housing. Not unlike Nixon’s famous 1973 declaration that the urban crisis was over and that the federal government was ending its commitment to future public housing, the early 1990s began with the newly-elected Liberal government declaring that housing for the poor was no longer the responsibility of the Canadian federal government. That announcement was made in 1993 by the deficit-obsessed finance minister Paul Martin—now the prime minister of the country—and applauded by the International Monetary Fund and Bay Street ( Canada ‘s equivalent to Wall Street).

Because the federal government was the largest source of funding for most affordable housing in the country, the announcement was devastating for both the provinces and individual providers. Some provinces resisted for awhile, trying to shoulder the commitment that had been downloaded to them by the feds, while other conservative-leaning governments saw it as an opportunity to remove government from housing altogether. Ontario became one of the latter when it elected a Conservative government led by Mike Harris—a longtime and prominent member of Canada ‘s leading neoliberal think tank, the Fraser Institute. Harris immediately compounded the crisis in affordable housing by removing provincial funds from the sector as well. To be sure, the Harris announcement was more mean-spirited and doctrinaire than the federal one. Not only did Ontario cancel all future commitments, it eliminated support for the roughly 17,000 units that were already in the pipeline, devolved responsibility to the municipalities (which, unlike their American counterparts, do not have enough taxing authority to generate adequate revenue for such expenditures) and eliminated major regulatory obstacles for unaffordable housing growth in the province.

The rationale for the decision read like something out of a Frederick Hayek book, part of a grand plan to devolve (to the municipalities) and privatize as much as possible. Faith in “individual choice” and the market and an obsession with competition drove the government’s decision. The government argued, above all, that the market would figure out how to address the growing affordable housing crisis, if only we gave it a chance. They deemed the movement “the common sense revolution,” and it was wildly successful at undoing welfare state gains made during the past several decades.

Discussions about how to administer the downloading of existing housing stocks—many of which were jointly owned by the province and federal government—marked the late 1990s, finally resulting in the 2000 Social Housing Reform Act for Ontario (and various similar agreements for other provinces). The act formalized the downloading of housing in Ontario to forty-seven local housing service managers, most affiliated with an existing municipal government.

What We Are Left with Today…

It is often the case that the ideological hyperbole of newly-elected governments amounts to very little material change once the actual administrative negotiations take place. The complexity of organizations, the costs of wholesale restructuring and parallel legal frameworks often make such material change difficult to achieve. The restructuring of social housing in Ontario is not one of these cases. The change since 1993 has been rapid and profound.

First, there has been an intensification of the affordable housing crisis. A 2000 study by Peressini and McDonald found that rates of homelessness in Canada now actually exceed those in the US on a per capita basis. These increases are even more intense in highly urbanized provinces like Ontario, home to roughly one-third of all Canadians. Social housing waiting lists now exceed 150,000 people (63,000 in Toronto alone), as rapid population growth has continued without any serious increase in the social housing stock during the past decade. The affordable housing crisis in Ontario—and all of Canada, for that matter—was sufficient enough for federal officials to commit C$300 million in 2001 to build new units, but the more ideologically-driven Conservative government in Ontario refused to match these funds (a prerequisite for receiving them). As a result, the federal housing money sat untouched for several years. In 2003, the provincial Liberals came to power in Ontario, in part on a promise to match the aforementioned funds, but it took several years for this promise to materialize because the Tories, upon exiting the government, left the current government with a C$6 billion deficit.

The second, perhaps unintended, consequence of social housing restructuring in Ontario has been the creation of an institutional kaleidoscope that is difficult to navigate for even the most seasoned housing provider. The downloading of responsibility for housing units, once held by the federal and provincial governments, has been an institutionally complex matter. The Social Housing Reform Act of 2000 attempted to add some clarity to the new system, but many private and municipal non-profit providers complain both that it is very confusing to work within the current system, and that the local service managers appointed by the province to manage existing portfolios are less knowledgeable than previous federal and provincial officials (under the previous system). The increase in complexity and the decrease in expertise is an ironic one since the original intent of downloading, and restructuring more generally, was the absolute reverse—to decrease complexity and increase expertise by localizing responsibility.

A third, largely unexplored, consequence of social housing restructuring has been the creation of a space for experimentation, primarily amongst non-profit housing providers and municipalities in the province. This “space” holds great promise for creating more affordable housing, but it also contains much danger; it is possible that further privatization of the stock will occur and that a highly uneven system like that in the US might result. Much remains to be seen about how non-profits are operating within this context, but several models have emerged already.

One model that has emerged has been the experimentation of cities with zoning and fiscal incentives granted to non-profit, and increasingly for-profit, developers who are willing to build affordable housing. In Toronto, for example, the Let’s Build program has been working with non-profits for five years to smooth out the development process. The program provides cash, land and, most importantly, zoning concessions to developers in exchange for legal obligations to retain affordable housing. The model is very new in Canada, primarily because cities have historically enjoyed less autonomy from the provinces than cities do from states in the US. Much of the effort to incentivize affordable housing construction is directed at the private non-profit housing sector. In Ontario, there are about 600 private non-profit housing agencies who manage over 83,000 affordable housing units. These agencies are similar in nature to American community development corporations, but have a much closer and sustained funding relationship with higher levels of government than their US counterparts. Private non-profits in Canada enter into long-term agreements (often thirty years or longer) to keep their housing affordable in exchange for a stream of government funding—not unlike project-based Section 8 developments in the US.

There has also been experimentation with existing housing stocks through the vehicle of municipal non-profit housing agencies. Municipal non-profits manage the majority of non-profit housing in Ontario (140,720 of the 223,885 non-profit housing units) and are amalgams of various housing portfolios inherited by higher levels of government combined with those built at the municipal level. There are over 100 municipal non-profit housing agencies in Ontario, but the vast majority of units are managed by a handful of large urban agencies. The Toronto Community Housing Corporation (TCHC), for example, manages a portfolio of over 58,000 units—nearly one-half of all municipal non-profit units in the province. In this case, TCHC, and most other municipal non-profits, and a politically-elected city council (and mayor) have tremendous influence (in cases, outright control) over how the housing stock is managed. In Toronto, several high profile projects, including the infamous downtown Regent Park development— Canada ‘s closest equivalent to Cabrini Green in the US —are being attempted at the prodding of city officials. TCHC is engaging in an entrepreneurial plan to create a mixed-income community where a highly segregated one currently exists by demolishing and rebuilding much of the complex. Sound familiar? It has publicly discussed ideas like selling units to higher-income tenants, selling on- and off-site land in its portfolio and leasing space to commercial tenants to finance this venture. TCHC has gathered copious amounts of press in Toronto, but it isn’t entirely clear whether this activity is anomalous or whether such forms of entrepreneurialism are taking place elsewhere in Ontario ‘s municipal non-profit housing system (as its architects envisioned, or at least hoped, it would).

I have begun a systematic study of all municipal non-profit housing providers in Ontario to determine the extent of entrepreneurialism within the system. Through interviews with general key informants (i.e., those knowledgeable about recent changes) and officials at each of the 106 municipal non-profits in Ontario, I am attempting to address the following questions. First, how much have municipal housing providers in Ontario been forced to turn to the market to raise revenues, and in exactly what ways? Second, where has the desire to turn to the market come from (above or within)? Third, are non-market units directly or indirectly being threatened by the turn toward a more private relationship with the real estate market? Finally, are there ways that municipal non-profits are able to collectivize resources or oversight in a way that might be counter to the architects of downloading but positive for affordable housing construction?

Actually-Existing Versus Ideal-Type Political Restructuring

Though the interviews have just begun, a number of preliminary findings are emerging. The least surprising of these is that the entrepreneurialism that does exist in the system is borne of a certain desperation for resources, not a long-suppressed desire by local authorities to become more market-oriented. There are discussions about selling property, renting commercial space and increasing market-rate housing and homeownership, but most of these are marginal to the mission of these institutions. Most see these as a matter of necessity rather than desire, even in conservative districts that one might expect to be sympathetic to the original architects of the currently devolved system.

More surprising has been the finding that many municipal non-profit officials remain more trusting of higher levels of government than their American counterparts. The Canadian non-profit sector has been and continues to be closer to the state, but most non-profits don’t consider recent discussions about privatization as a threat to the system, even though privatization was espoused originally by a politician with open contempt for welfare systems of almost all sorts.

Additionally, beneath the veneer of downloading and funding cuts at the federal level, there are a number of ways that non-profits and municipalities are actually able to centralize regulation and resources in a way that is not entirely different from the classic Keynesian model. Agencies like the Social Housing Services Corporation have been established to pool resources needed for financing the development of new affordable housing. Moreover, cities have utilized existing legal protections and autonomy afforded to private corporations to create institutions that have both market power and public control. TCHC, for example, is a single-shareholder corporation—the single shareholder being the City of Toronto—that is less vulnerable to direct provincial or federal government decisions but is publicly controlled by the city. Simply put, the institutional architecture that has resulted from social housing restructuring has not generally led to the highly diffuse, private system that its neoliberal architects envisioned. New forms of regulation are emerging that are often only different in label than previous public housing, and this holds great potential for the centralization of resources that might once again lead to the development of new affordable housing in the province in the coming years.

Jason Hackworth is assistant professor in the Department of Geography at the University of Toronto.

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