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Policy Pulse: Liberal long-term care funding promise is substantial, but many questions remain

News

Welcome to The Hub’s Federal Election 2021 Policy Pulse, where we’ll be tracking all the policy announcements from the major parties, with instant analysis from our crew of experts.

With the election scheduled for Sept. 20, we’ll be monitoring 36 days worth of policy ideas, so watch out each morning for the day’s live blog where we’ll be tracking every announcement as it happens.

5:00 p.m. — Daily Recap: Trudeau pledges big money to long-term care

The Liberals promised lots of cash for long-term care and the Conservatives tackled Canada’s housing shortage on Thursday. Here’s the rundown, with more news and analysis below.

  • Liberal leader Justin Trudeau promised $9 billion to address short-falls in long-term care, including pledges to train 50,000 long-term care workers and to raise the minimum wage for personal support workers to $25/hour.
  • Conservative leader Erin O’Toole promised to build one million homes over the next three years and promised to ban foreign buyers who are not living in or moving to Canada from buying homes.

4:30 p.m. — Liberal long-term care funding promise is substantial, but many questions remain

The Hub contributor Livio Di Matteo examines today’s Liberal long-term care announcement:

Canada had 81 percent of all COVID-19 deaths occur in long-term care homes — the highest proportion in the OECD.

Not surprisingly, Liberal leader Justin Trudeau announced a promise to provide $9 billion to address short falls in Canada’s long-term care sector. In addition, there was also a pledge to train 50,000 long-term care workers to address staffing shortfalls as well as raise the minimum wage for personal support workers to $25/hour. This is a well-intentioned investment given that Canada’s population is aging, there are long waiting lists for LTC and compared with the OECD average, Canada had fewer health-care workers (nurses and personal support workers) per 100 senior residents of LTC homes in 2018.

However, long-term care is under provincial jurisdiction rather than federal. According to the CIHI while no clear differences in pandemic outcomes were observed across funding models (public, private or mixed) across the OECD, countries with more centralized LTC provision (e.g., Australia, Austria, Hungary, Slovenia) generally had lower numbers of COVID-19 cases and deaths. Thus, additional funds alone may not be sufficient in addressing care and staffing, issues as well as the older vintage of many long-term care homes.

Needless to say, Ottawa will at minimum need to negotiate individual deals with provinces similar to what is underway in child care. While the plan is to also develop a Safe Long Term Care Act to ensure that seniors are guaranteed a higher standard of long-term care, this will more directly intrude on provincial jurisdiction and even if implemented there is the question of how and whether it would be enforced. The Canada Health Act for example tied federal funding to the provinces for health with compliance to its conditions but since 1981 there has been no major instance of any federal government ever withholding funds for non-compliance.

Along with being under provincial jurisdiction, LTC is a diverse sector in terms of operation. Currently Canada’s long-term care sector has over 2,000 homes of which 46 percent are publicly owned and 54 percent privately owned but with the ownership varying widely across provinces. For example, Newfoundland and Labrador have 2 percent privately owned (for profit or non-profit) whereas while Ontario has 16 percent publicly owned, 57 percent by private for profit corporations and the remainder by private not-for-profit. Both within and across provinces, there will be no one size fits all solutions to fixing the problems in home care.

Finally, given that the Canada Health Transfer for 2021-22 is estimated at $43 billion, $9 billion is a substantial increase in money going to health care and goes some distance in increasing the federal government’s share of provincial health spending which is at about 22 percent.

However, it falls short of the $28 billion dollar increase the provinces were asking for in Spring of 2021. Moreover, the question remains as to how quickly the funding will be rolled out and over how many years.

4:00 p.m. — Here’s how the Conservatives plan to expand Canada’s Magnitsky law

Marcus Kolga, a Canadian human rights activist and senior fellow at the Macdonald Laurier Institute, examines the Conservative platform:

The Conservative platform includes significant proposals to strengthen Canada’s existing Magnitsky human rights and anti-corruption legislation.

Canada’s Sergei Magnitsky law allows the government to target foreign officials and individuals involved in human rights abuse and corruption with asset freezes and visa bans. There is open source evidence that individuals and entities connected to regimes in Russia and China, that engage in political repression and human rights abuse, hold assets in Canada. The law was introduced by Conservative Senator Raynell Andreychuk and MP James Bezan and passed unanimously in 2017 with the active support of Foreign Affairs Minister Chrystia Freeland.

The Canadian government has been reluctant to use the Sergei Magnitsky Law and lags behind allies in designating new entities. In the United States, the State Department regularly engages with civil society groups about sanctions policy and encourages their involvement in nominating new designations.

The Conservative platform proposes a much welcomed update to Canada’s Magnitsky legislation by offering a formal role for civil society and Parliament in the sanctioning process and greater transparency in what is currently an opaque process with no accountability. Greater openness and engagement in Canada’s sanctions process will indeed enhance the overall effectiveness of it.

The Conservatives have also suggested the creation of an innovative, judicially monitored mechanism for transferring assets frozen under the Sergei Magnitsky Law to be transferred to the victims of human rights abuse — including refugees.

2:00 p.m. — How does the Conservative promise on housing compare to Canada’s recent performance?

The Hub’s content editor L. Graeme Smith and editor-at-large Sean Speer take a look at housing:

Today Conservative leader Erin O’Toole announced his plan to build one million new homes over the next three years in order to address the supply-side drivers behind Canada’s ongoing housing affordability challenges.

The question is: how does the Conservative Party’s target of one million new homes compare to Canada’s recent performance?

Historically speaking, it would represent a pretty significant increase. Total housing starts from 1972 to 2020 averaged fewer than 200,000 new housing units per year.

In 2021, though, we’ve seen a notable increase in new housing starts. Over the year’s first seven months, the annualized rate of housing starts per month has averaged 290,098 (see graph below).

Dwelling starts in urban centres in Canada, seasonally adjusted at annual rates, 2021.

This means that the Conservative target would represent a 14-percent increase over the country’s performance thus far in 2021. It’s a stretch goal for sure as The Hub contributor Chris Spoke rightly points out, but it would be building on growing awareness of the supply-side factors behind Canada’s housing affordability challenges.

The biggest challenge to achieving the target is that the federal government’s policy levers influencing housing construction are somewhat limited. Land-use and zoning regulations as well as development charges reside primarily at the provincial and local levels.

Research shows that these restrictive regulations and high building fees are major contributors to Canada’s poor performance on housing supply. A Scotiabank report from earlier this year showed, for instance, that Canada has the lowest number of housing units per 1,000 residents of any G-7 country.

Reaching the Conservative goal will therefore depend on policy reforms to liberalize land-use policies at the provincial and local level. In order to catalyse such policy changes, the Conservatives would place new conditions on federal transit funding that require greater housing density along transit lines.

It’s difficult to know at this stage if that will be enough to boost new housing builds at the rate envisioned by the Conservative government. But even if the three-year target ultimately proves too ambitious, it’s a good sign that the policy debate on housing affordability is shifting from demand-side to the supply-side of the housing market.

1:30 p.m. — Trudeau pledges $9 billion to address long-term care issues

Liberal leader Justin Trudeau was in Victoria today promise $9 billion to address short-falls in Canada’s long-term care sector.

Trudeau also pledged to train 50,000 long-term care workers to address staffing shortfalls and raise the minimum wage for personal support workers to $25/hour. He also promised to double the home accessibility tax credit to $20,000.

Although long-term care falls under provincial jurisdiction, Trudeau compared it to childcare, where he said it’s important for the federal government to step up and offer funding.

12:00 p.m. — Erin O’Toole’s promise to build a million new homes in the next three years could get tricky

The Hub contributor Chris Spoke examines the Conservative housing proposal:

Conservative Party leader Erin O’Toole has promised that, if elected, he will implement policy changes that will lead to one million new homes over the next three years. Foremost among these is a requirement that municipalities that receive federal funding for public transit allow increased housing density near the funded transit.

It’s unclear whether this requirement would only apply to new transit or existing transit as well, or whether it would apply to the areas surrounding transit stations or along transit routes.

Either way, it’s a great proposal that acknowledges that 1) housing in our big cities is expensive because there’s not enough of it, and 2) there’s not enough of it because restrictive municipal land-use rules constrain new supply.

That said, we should ask ourselves whether it will be enough, paired with the rest of the CPC platform, to deliver on the promise of one million new homes.

For context, we saw 586,200 housing completions over the last three years, so we’re talking about an additional ~400,000 homes, or a 70 percent increase, over the next three years.

And here’s where it gets tricky. Real estate development projects in our big cities can take five to eight years to complete, from land acquisition to entitlements and approvals and construction. At a minimum, our next two years of completions are already mostly baked in.

Those ~400,000 additional homes will mostly have to be completed in the third year of the promise, if they’re to be completed at all, which is closer to a 200 percent increase from the best of our last three years (200,262 completions in 2018).

Can that be done? It’s possible, but it would require aggressive negotiations with provinces and municipalities to fast track the required upzoning around transit stations or routes as well as expedited project approvals.

10:30 a.m. — Did we really experience a ‘she-cession?’ The answer is complicated

The Hub’s editor-at-large Sean Speer crunches the numbers behind the pandemic-induced recession:

Yesterday on the campaign trail, Prime Minister Justin Trudeau generated a bit of a buzz by describing the pandemic-induced recession as a “she-cession” and arguing for policies that prioritize a “she-covery.”

It’s actually not the first time that the prime minister and other Liberal Party spokespeople have used this language to characterize the gender-based effects of the recession. The government’s April budget, for instance, referred to a “she-cession” a handful of times.

Although it has enthusiastically adopted its use, the government itself didn’t coin the phrase. It originated with progressive economist Armine Yalnizyan who first used “she-cession” in March 2020 to describe the pandemic’s early employment effects on women.

The question, of course, is: have we experienced a “she-cession” in which women have been disproportionately affected by the pandemic-induced recession?

The answer is somewhat complicated. If the point is that the recession has affected female employment in relative terms more than previous ones, then there is indeed evidence to support this view.

Because public health restrictions generally targeted face-to-face transactions, the recession battered service-based industries — such as restaurants, retail, hospitality, and health care — in which female workers are disproportionately represented. This stands in contrast with past recessions which have tended to hurt male-dominated industries like manufacturing and construction more than other sectors.

Similarly if it refers to the effects that school and daycare closures have had on working mothers, there’s also evidence that they’ve imposed a disproportionate burden on women.

Data from Statistics Canada, for instance, shows that the majority of women (64 percent) reported that they mostly performed homeschooling or helping children with homework during the pandemic, while only 19% of men reported being mostly responsible for this task.

But if the idea of a “she-cession” is that women have experienced disproportionate employment effects, the evidence is weaker. While the female unemployment rate peaked higher (13.9 percent) than men’s (13.5 percent) in May 2020, the rates have since fallen to 7.8 percent for men and 7.0% for women in July 2021 (see graph below).

Male and female unemployment rate (ages 15 and older), seasonally adjusted, February 2020 to July 2021.

The same goes for participation rates: at its pandemic-induced trough, women’s labour participation fell by 5.5 percentage points in April 2020, compared to 5.7 percentage points for men. Both have since nearly fully returned to pre-pandemic levels (see graph below).

Male and female participation rate (ages 15 and older), seasonally adjusted, February 2020 to July 2021.

As mentioned above, the point here isn’t that the pandemic hasn’t imposed real burdens on women but rather that the employment effects haven’t necessarily been disproportionately felt by female workers.

To the extent that “she-cession” is therefore narrowly referring to these employment effects, the best that can be said is it may have described labour market outcomes in the early days of the pandemic.

9:00 a.m. — O’Toole touts plan to build a million new homes over three years

Conservative leader Erin O’Toole was in an Ottawa suburb today highlighting his party’s plan for housing.

The Conservative platform touts a promise to build one million homes over the next three years and a pledge to ban foreign buyers who are not living in or moving to Canada from buying homes.

O’Toole also promised to create a new market for mortgages that would have seven- or 10-year terms which he said would increase stability and reduce the need for mortgage stress tests.

The Conservatives have also promised to tweak the mortgage stress test, to avoid “discriminating against small business owners, contractors and other non-permanent employees including casual workers.”

7:00 a.m. — Where the leaders will be on Day 5

Liberal leader Justin Trudeau will in Victoria to make an announcement at 10 a.m. local time (1 p.m. ET).

Conservative leader Erin O’Toole will make an announcement at 9 a.m. in Ottawa.

NDP leader Jagmeet Singh will be in Edmonton to make an announcement about health care at 9:30 a.m. local time (11:30 a.m. ET).

Policy Pulse: The most interesting part of the Conservative housing plan is buried deep in the platform

News

Welcome to The Hub’s Federal Election 2021 Policy Pulse, where we’ll be tracking all the policy announcements from the major parties, with instant analysis from our crew of experts.

With the election scheduled for Sept. 20, we’ll be monitoring 36 days worth of policy ideas, so watch out each morning for the day’s live blog where we’ll be tracking every announcement as it happens.

5:00 p.m. — Daily recap: Campaigns focus on housing and corruption on Day 4

Conservative leader Erin O’Toole promoted his plan to tighten lobbying, ethics and conflict of interest rules and NDP leader Jagmeet Singh turned the focus onto housing in Day 4 of the campaign. Here’s the rundown, with more news and analysis below.

  • Speaking in Quebec City, O’Toole said he would raise the maximum fine for ethics violations from $500 to $50,000 and close loopholes in the lobbying process.
  • In Burnaby this morning, Singh promised to implement a 20 percent foreign buyers tax on the sale home to people who are not Canadian citizens and also pledged to build half a million affordable housing units over the next 10 years.
  • Inflation numbers came in higher than expected Wednesday morning, allowing the opposition leaders to tee off on the cost of living.

4:00 p.m. — The most interesting part of the Conservative housing plan is buried deep in the platform

The Hub contributor Ben Woodfinden takes a look at the Conservative housing plan:

There’s a lot to digest in the Conservative platform, but one standout item is the party’s housing promises. It presents a direct contrast to the NDP housing promises announced today and examined below on this live blog.

Pro-housing advocates have been screaming for years that the best way to solve this crisis is with a supply side solution. We simply need to build more housing.

Politicians have preferred to focus on the demand side of the equation, but pumping more capital into an already over-juiced market, with things like the first time homebuyers credit, just further increases prices.

To their credit, the Conservatives haven’t done that and have a lot to say about supply side solutions.

They’ve promised a plan that will build one million homes in the next three years. They bury the most significant way the federal government can help do that in a subpoint, but its still significant.

They say that they will “require municipalities receiving federal funding for public transit to increase density near the funded transit.” This, more than anything else, can help move the needle on housing supply.

3:00 p.m. — Parliament’s dissolution ends the AG’s lawsuit against the Speaker

The Hub contributor Gerard Kennedy reminds us about an important lawsuit against the Speaker of the House of Commons:

Last month, I explained the implications of the Attorney General of Canada’s lawsuit against the Speaker of the House of Commons. I argued that the lawsuit was inappropriate and the Federal Court should promptly dismiss it, though Parliament ignoring a court decision would nonetheless be deeply problematic.

Yesterday, the legal saga came to an end as the Attorney General discontinued his case. Parliament’s dissolution rendered it moot.

This is entirely appropriate. The Speaker’s order that the Attorney General challenged has no effect now given Parliament’s dissolution. Moreover, courts should not be using their scarce resources to decide moot matters, save in exceptional circumstances.

Having said that, one might perceive that the proceeding was brought to avoid compliance with the Speaker’s order pending Parliament’s dissolution. Hopefully, this is not the case. Attorney General David Lametti has asserted that he played no part in the decision to bring the lawsuit. The Attorney General personally is rarely involved in making litigation decisions undertaken by his office.

But the perception that inappropriate litigation has been brought for strategic purposes can be as great a problem as the reality.

Even though the case was proceeding promptly, the short delay in resolving it was consequential — there will now never be compliance with a ruling of the Speaker of the House of Commons.

2:30 p.m. — Do real estate taxes on foreign buyers actually work?

The Hub’s content editor L. Graeme Smith looks at the research on foreign buyers taxes in real estate:

In a report for the University of Toronto, Josh Gordon concludes that foreign ownership is indeed exacerbating the problem of surging prices in two of the most expensive real estate markets in the country, Vancouver and Toronto.

Foreign ownership is decoupling the housing market from the labour market and elevating costs beyond what local incomes can afford, he writes. 

In response, both markets introduced new real estate transfer taxes that targeted foreign buyers. Vancouver implemented its Foreign Buyers Tax in 2016 at a rate of 15 percent, and later increased it to 20 percent in 2018. 

Toronto followed suit with a similar measure, the Non-Resident Speculation Tax, at 15 percent in 2017.

The taxes affected housing prices and the number of transactions.

In research for the University of Ottawa, Zachary Thurston found Vancouver’s tax initially decreased the monthly percentage change in housing prices by 1.73 percentage points, and, then later by 1.43 percentage points. 

It also decreased monthly transactions by 24 percent, and later by 30 percent.

He found an equivalent effect in Toronto, with decreased monthly transactions estimated at 38 percent. 

In terms of prices, he found that the Foreign Buyers Tax and the Non-Resident Speculation Tax reduced the monthly percentage change in prices of single-family homes by 2.40 and 4.21 percentage points respectively.

It remains to be seen if similar policies on a national scale would have the same effect, but these local effects are evident in two of Canada’s largest cities.

2:00 p.m. — The difference between ‘housing affordability’ and ‘affordable housing,’ and why it matters

The Hub contributor Chris Spoke untangles some key housing market terms:

We’re starting to hear more about housing and housing policy from all federal parties in the election campaign.

To make sense of their talking points and proposals, it’s important that we distinguish between “affordable housing” and “housing affordability.” These terms might sound like they refer to the same thing, but they don’t.

“Affordable housing” generally refers to housing that is priced below the market rate, whether for sale or for rent. This can be housing that is supplied by the private sector and subsidized by the government, or housing that is supplied directly by the government (for example, social housing).

“Affordable housing” is generally made available only to lower income households that qualify through an application process, a lottery, or some combination of the two.

“Housing affordability” generally refers to people’s ability to afford housing. The larger the group of people that can afford housing, the more affordable it is.

For example, more households can afford to pay $2,000 than $3,000 per month to rent a 2-bedroom apartment. When it comes to “housing affordability,” the less expensive, the better. That’s something Canada has been struggling with recently.

1:30 p.m. — NDP housing plan is very ambitious and the price tag could be high

The Hub’s editor-at-large Sean Speer examines today’s NDP housing announcement:

The NDP’s housing policy announcement comes the same day that Statistics Canada reports that its homeowners’ replacement cost index (which aims to measure the cost of new homes) increased by 13.8 percent year-over-year in July, which is the largest annual increase since 1987.

The question, of course, is: will the NDP’s proposals help to address rising unaffordability challenges in many Canadian cities?

The first proposal, a 20-percent tax on the sale of homes to people who are not Canadian citizens or permanent residents, aims to address perceived concerns about demand-driven increases to housing costs. This policy would essentially nationalize similar policies in place in parts of British Columbia and Ontario. It’s difficult to judge the efficacy of these provincial policies at this stage or to assess what the effects may be when implemented nationally.

Although most policy observers believe that a lack of housing supply is the main driver of our housing unaffordability challenges, there may indeed be a case that a combination of the high concentration of immigration in small number of major cities and even foreign speculation is contributing to the problem.

A national foreign buyers tax may help on the margins with the second issue. But addressing the first one would require new and different thinking about Canadian immigration policy which is not part of the NDP’s proposal.

Its second proposal to “create at least 500,000 units of quality, affordable housing” targets the supply-side of the housing market — though it prioritizes social housing part units rather than the market-based housing units.

A commitment to build half a million homes (including 250,000 in the next five years alone) is highly ambitious relative to the current National Housing Strategy which only aims for “up to 100,000 new housing units and 300,000 repaired or renewed housing units” over a ten-year period.

The NDP proposal is presently un-costed — its individual and overall platform costs are to follow — but if the National Housing Strategy’s 100,000 new homes will cost as much as $40 billion, then one can assume that five times the number of new homes will presumably cost a great deal more.

1:00 p.m. — Where the parties stand on foreign buyers in real estate

With NDP leader Jagmeet Singh pledging to implement a 20 percent foreign buyer’s tax, it’s worth looking at where the other two major parties stand on the issue.

In the platform released on Monday, Erin O’Toole’s Conservatives promised to ban foreign investors who do not live in Canada from buying homes for a two-year period. After two years, the potential buyer’s status will be reviewed.

The Conservatives say they will encourage foreign investment in affordable “purpose-built rental housing.”

In the spring budget, the Liberals brought in a one percent national tax on vacant homes owned by non-Canadians who do not live in Canada, which will come into effect on Jan 1, 2022.

12:00 p.m. — NDP promises 20 percent foreign buyers tax on home sales

NDP leader Jagmeet Singh was in Burnaby today promising to levy a 20 percent foreign buyers tax on the sale of homes to people who are not Canadian citizens or permanent residents.

Singh also said an NDP government would build half a million affordable housing units over the next 10 years.

11:25 a.m. — Inflation numbers are being driven by shelter, transportation and food prices

11:00 a.m. — Based on their promises, the parties are effectively ignoring the inflation bogeyman

The Hub contributor Rob Leone examines how today’s inflation numbers will play out on the campaign trail:

Statistics Canada released its monthly Consumer Price Index this morning. The CPI measures the average change in prices over time that consumers pay for certain goods. It is the measure that is mostly widely used to measure inflation.

The July 2021 figure is 3.7 percent over the July 2020 figure. Given that the Bank of Canada has an inflation target of two percent with a target range of one to three percent, the July figure is considered high and outside the target range, which is a concern.

How the inflation data plays out on the campaign trail remains to be seen. All the parties are proposing policies that will further put pressure on consumer demand for goods. The expected tax credits that are being sold to make life more affordable for things like energy, homes, and mobile phone plans, as well as massive spending on things like infrastructure that will only fuel a red-hot construction sector, suggests that parties are effectively ignoring the inflation bogeyman.

Complicating the inflation question is how a fourth wave of the COVID-19 pandemic will affect economic output and consumer spending. If the Bank of Canada needs to raise interest rates to control consumer demand, any expected personal benefits to announced tax credits over the next 30 days could be erased by increased borrowing costs.

9:00 a.m. — O’Toole promises new anti-corruption law

Conservative leader Erin O’Toole was in Quebec City this morning to propose an anti-corruption act that would “close loopholes in lobbying,” increase transparency and significantly hike the penalties for ethical violations.

O’Toole said the new rules were necessary in the wake of the three ethics investigations conducted during Liberal leader Justin Trudeau’s tenure. O’Toole argued that the current penalties were far too low to deter ethical behaviour and proposed a maximum fine of $50,000 dollars that would apply to all ethical violations.

The new law would also ensure cabinet confidence won’t be used to protect “the high-placed friends” of elected officials, said O’Toole.

O’Toole said his plan was reminiscent of the Accountability Act, which was enacted by Stephen Harper’s Conservative government after beating a Liberal Party that was reeling from the sponsorship scandal.

7:00 a.m. — Today’s events for the party leaders

Conservative leader Erin O’Toole will be in Quebec City to make an announcement at 9 a.m. ET.

NDP leader Jagmeet Singh will make a housing announcement in Coquitlam, British Columbia at 9 a.m. local time (noon ET).

Liberal leader Justin Trudeau will make an announcement in Vancouver at 9 a.m. local time (noon ET).