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We’re missing something from the policy debate on child care: the best interests of the child

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.

4:00 p.m. — We’re missing something from the policy debate on child care: the best interests of the child

By Howard Anglin, contributor at The Hub

Ken Boessenkool’s piece in the Hub earlier today posited that neither of the two main parties had found the sweet spot on childcare. The sweet spot or “middle ground” is evaluated as an electoral, economic, and constitutional matter. Curiously, the one measurement not discussed in his piece or his recent co-authored policy commentary for the CD Howe Institute is the most obvious measure of a childcare policy: the best interests of the child. 

The CD Howe piece does include one tangential link to a 2019 study of the Quebec program that analyzed outcomes for children and compared them to studies of similar programs elsewhere, like the Head Start program in the United States. It does not, however, note the study’s conclusion that the Quebec program has resulted in no measurable improvement to children’s cognitive skills. This outcome has been described (with reference to an earlier 2015) study thus: “there’s no distinguishing between a child whose performance was improved (or worsened) by daycare and one who did not go to daycare.” 

On the other hand, it seems worth noting that, overall, children in the program appear to have developed significantly worse noncognitive skills. Specifically: “At older ages, program exposure is associated with worsened health and life satisfaction, and increased rates of criminal activity.” This phenomenon has been written about extensively, including in progressive outlets.

Even the finding of no impact, positive or negative, on cognitive outcomes from Quebec’s program is challenged by studies of other childcare programs for very young children. One well-publicized study out of Italy showed that a single additional month of childcare between ages 0 and 2 “reduces IQ by 0.5 percent” by ages 8 to 14. Interestingly, this study concluded that the effect was strongest for children of more affluent families. As one social conservative website described the results: “the more money you make at work, the more likely it is that daycare will damage your children.” I would gently suggest it is more complicated than that, but it’s a study with all sorts of policy implications.

I know that raising these studies in a short “policy pulse” and just leaving it there is like pulling a grenade pin and walking away.

My point is that they (and any studies showing different results) should not just be part of the debate, but the heart of the debate. To look for the middle ground on childcare from the perspectives of parents, the economy, or even the voters and not consider the direct effects on children and the indirect and future effects on society is rather like studying the impact of athletes’ training on their coaches and on the fans, but not on the athletes’ performance itself: it rather misses the point.

3:00 p.m. — Price of everyday goods jumps considerably as inflation continues to rise

By L. Graeme Smith, The Hub’s content editor

Consumer prices are still rising. Statistics Canada’s latest report, released today, shows that Canada’s annual inflation rate reached 4.1 percent in August. This mark represents the highest inflation rate in 18 years, since March of 2003.

This is also the fifth consecutive month of rising Consumer Price Index rates, and follows a gain of 3.7 percent in July. 

Everyday goods have seen considerable jumps in cost. In tangible terms, this looks like: 

  • Gasoline prices up 32 percent.
  • Travel accommodation prices up 19.3 percent. 
  • Homeowners’ replacement costs up 14.3 percent.
  • Furniture prices up 8.7 percent. 
  • Passenger vehicle prices up 7.2 percent. 
  • Meat prices up 6.9 percent.
  • Video and audio subscription services prices up 5.8 percent.
  • Household appliance prices up 5.3 percent.

Excluding volatile commodities such as food and energy still results in a 3 percent increase, while excluding gasoline alone shows that the CPI rose 3.2 percent.

Earlier in March of this year economist Philip Cross warned of these increases in Macdonald-Laurier Institute’s quarterly economic report, Will Canada’s rapidly expanding money supply result in higher inflation?

“Rising commodity prices fuel speculation that inflationary pressures may surface faster than financial markets or central banks anticipate. This reflects ongoing concerns about extraordinary policies adopted by central banks spawning higher inflation dating back to the Great Financial Crisis of 2008,” he wrote.

Questioning the enthusiastic embrace of quantitative easing, he continued on to ask: “If the rapid increase in central bank assets had unforeseen impacts on the money supply and the economy, how can central banks be able to predict and manage their reversal?” 

Economist and Hub contributor Trevor Tombe is not ready to sound the alarm yet, though, commenting on Twitter that these numbers include weird COVID-19 base effects. Overall, he writes, these pressures are not expected to be sustainable. 

“What does the market currently expect inflation in Canada to be over the long-run? Comparing inflation protected government bonds to normal ones is a useful measure. Here’s the latest: expectations of ~1.7 percent. Markets (sensibly) don’t expect today’s elevated rates to persist.”

1:30 p.m. — One good thing and one bad thing from each party’s platform

By Sean Speer, The Hub’s editor-at-large

This election campaign has been marked by hundreds of pages of party platform text and dozens and dozens of policy commitments. As The Hub’s executive director Rudyard Griffiths observed at its halfway point, “[we have been] deluged by a daily stream of announcements covering every aspect of Canadian life from healthcare to the environment to housing to a deep dive by the Conservative Party into the policy minutia of puppy mills.”

Some of the ideas have been good. Others have been bad. The former have tended to address a specific problem within the federal government’s purview in a well-developed and cost-effective way. The latter are policy proposals disconnected from a clear problem or a federal role or any sense of costs, trade-offs, or secondary consequences.

No political party has a monopoly on either. Each platform reflects a combination of good and bad ideas.

Delineating between the good and bad ideas across the different party platforms may be highly relevant if, as polls seem to anticipate, we end up in another minority parliament in which the government must cooperate with other parties to pass legislation and advance its policy agenda. There may be a need in these circumstances to draw from the good ideas put forward in the various platforms.

Therefore here is an inexhaustive and singular perspective on some good and bad ideas from each of the party’s platforms. A key consideration (though not a definitive one) is whether there’s a reasonable probability that a policy idea could find support from the other parties. If so, the incoming government can practice the time-honoured tradition of stealing (or drawing upon) its opponents’ best ideas.

Conservative Party

Good: The Conservative Party’s promise to double the Canada Workers Benefit would increase incentives for low-income workers to find and obtain employment by boosting their take-home pay. It’s a good idea that (1) tilts the federal tax and transfer system more in the direction of supporting paid work and (2) could sustain support in a minority parliament.

Bad: Its promise to effectively bring digital streaming services into the Canadian content regulatory model represents one way – but ultimately a bad way – to solve for the asymmetrical treatment between traditional Canadian broadcasters and their online competitors. The better way would be to liberalize the regulatory model altogether and permit content production and dissemination in Canada to reflect consumer demands rather than bureaucratic diktats.

Green Party

Good: The Green Party’s proposal to use federal infrastructure dollars to build in a national energy grid that enables the transmission of low-cost, low-emitting energy sources from provinces like Quebec, Manitoba and British Columbia to provinces that rely on higher-cost, higher-emitting sources could boost Canadian competitiveness and help to achieve our climate goals. In a world in which the federal government is consistently failing to fully spend its infrastructure envelope, this is one area that ought to be prioritized.

Bad: The Green Party promise to cancel all new oil exploration projects presupposes that global oil demand is going to precipitously drop or that the domestic industry’s emission intensity is going to necessarily be higher than our global competitors. Both of these assumptions are incorrect. If the government incorporated these mistaken assumption into its policies, Canada’s economy and the global climate would suffer the consequences.

Liberal Party

Good: The Liberal Party’s proposal to establish a Canada Advanced Research Projects Agency based on the DARPA model in the United States could help to shake up Canada’s sclerotic innovation ecosystem and catalyse scientific and technological breakthroughs. Implementation will matter a great deal but in conceptual terms this is a good idea that was also supported by the Conservative Party.

Bad: The Liberal promise to establish a new minimum tax rate so as to prevent high-income earners from fully benefiting (or what the platform describes as “excessive use”) from various tax expenditures may reflect a legitimate concern about the overall progressivity of the federal tax system but fails to address the source of the problem which is the regressivity of different tax provisions. A more efficient and equitable option would be to directly address the source of the perceived problem by eliminating or reforming specific tax expenditures as opposed to layering another form of complexity on top of the system.

New Democratic Party

Good: The NDP proposal to establish an Employment Insurance pilot program to allow workers with episodic illnesses and disabilities to draw on EI Sickness Benefits is a crucial reform to the current system. The present model is too binary – one is either working or sick – and therefore makes it challenging for workers with episodic illnesses or disabilities to participate in the labour market. One option to implementing this idea may be to draw on the EI Work-Sharing model as a policy basis for providing partial benefits to workers whose employment fluctuates due to their health circumstances.

Bad: The NDP promise of a national pharmacare model fails to grapple with the consequences for the vast majority of Canadians who receive drug coverage through their employers and who are, according to various polls, satisfied with their drug access and affordability. There may indeed be a problem here for a small share of the population but disrupting the status quo for most Canadians seems like a costly and inefficient means of solving for a targeted cohort.

People’s Party

Good: The People’s Party proposal to review and reform the federal Equalization program so as to minimize the so-called “welfare trap” for provinces is a worthwhile exercise. Although the principle of equalization is constitutionally entrenched, there’s nothing requiring the federal government to maintain the equalization program in its current form. There’s a reasonable argument that the current model is too complicated and creates too much moral hazard for equalization-receiving provinces and we shouldn’t be afraid to consider how the program could be better.

Bad: The People’s Party promise to cut the number of refugees resettled in the country fails to reckon with the magnitude of ongoing refugee challenges globally, Canada’s humanitarian impulses and obligations, or the contribution that refugees can make it our society. This of course doesn’t mean that there are areas for reform (including the People Party’s proposal to prioritize private sponsorship) within Canada’s refugee system, but the idea of indiscriminately cutting refugee intake is a bad idea.

11:30 a.m. — Neither of the big two parties found the middle ground on child care

By Ken Boessenkool, contributor at The Hub

Child care has been among the highest profile policy offerings in this campaign. This is not a surprise as the Liberals made their child care plan the centrepiece of their April Election Platform… I mean the federal 2021 Budget. And then the Conservatives responded with their own, very different, plan during the campaign.

Mom’s face among the biggest challenges during what looks increasingly like a long extended COVID period. In addition to hoping dads learn to play a greater role in child care, it has created a large demand for new child care policies from political parties.

So how should those plans be evaluated?

Let’s start with a policy lens. Earlier this year, Dr. Jennifer Robson and I wrote a longish paper on child care for the CD Howe Institute. The authors’ note in that paper reads as follows:

The authors would also like to note that this paper is the result of a collaboration between the authors who bring distinct perspectives to the topic of early learning and care among other policy issues in Canada. The final paper reflects a negotiated area of common agreement and it is our hope that differences, partisan, regional and otherwise, can likewise be resolved between governments in Canada to rapidly advance the expansion of child care for families.

In short, Dr. Robson and I wrote that paper hoping to find middle ground. We laid out a set of proposals that would incrementally, albeit aggressively, build on the existing child care infrastructure in Canada. That infrastructure has roughly four pillars, as I we outlined in that paper and I summarized for The Hub soon after the federal budget.

First, kids are not boats. Only a couple decades ago, If you were a middle income family the Canadian tax and transfer system treated your purchase of a boat the same as having a child — you got no tax or transfer benefit for either. Since the early 2000s both Conservative and Liberal governments have created benefits for children. Throughout Stephen Harper’s ten years in office, tax and transfers to families with kids grew to $19 billion annually. Trudeau boosted that to just over $22 billion and refocused benefits toward lower income families.

Second, beyond the public interest in children qua children, public policy should recognize also the additional cost of working or going to school while having children. Put another way, if you work you should not be dis-incentivized to have children and if you have children, you should not be dis-incentivized to work. 

Child care policy should also correct for two market failures. One (third pillar) is a signalling failure regarding the quality of care. In a dynamic child care market, providers will always have more information than purchasers of care. For this reason, governments should play a role regulating the quality of care.  

The other (fourth pillar), is a deficiency of child care spaces to meet the demands of parents. Available spaces will be heavily influenced by the level of tax or cash support for child care because more generous support will make more money available to build spaces. It will also be influenced by the degree of regulation because a more stringent regulatory regime will increase the cost per space. Yet, even with very generous tax or cash support and modest regulation, the market may not produce adequate spaces. Filling this gap can be achieved by targeting public subsidy for spaces, whether operating or capital. 

In short, any reforms to child care should address both both the demand side (cash to parents) as well as the supply (regulation and provision of spaces) sides of the child care equation.

From this perspective both the Conservative and Liberal child care plans are a bust. Neither party found the middle ground.

The Conservatives are bringing a fix to the supply side of the equation. They want to convert the misogynist (based on the lower income spouse) and tilted to the rich Child Care Expense Deduction into a refundable credit based on family income. The CCED was designed in a day when lower income spouse’s (then, as now, predominately moms) income was largely considered discretionary. And because it is a deduction, its value rises as your tax rate rises. And Conservatives say their refundable credit will be paid monthly, not annually at tax time.

This will focus the benefit on lower and middle income Canadians, and because it is refundable, it will be available to families even if they pay no tax. And it will be available as needed — not just at tax time. Smart. Sensible. Contemporary.

But there is nothing in the Conservative plan to address supply side challenges. Bust.

Meanwhile, the Liberal plan is a large set of ambitious aspirations in the hopes that they will be able to leverage provincial governments into delivering something approaching $10 a day child care. They have, impressively, negotiated bilateral and asymmetric agreements with eight provinces. And while these agreements are more aspiration than perspiration, they deserve full marks for working with provinces to reach their goals. And their goals are largely on the supply side of the child care equation.

But there is nothing in the Liberal plan to fix the principle demand side policy tool, the Child Care Expense Deduction. Bust.

A quick aside on Quebec. Many child-care advocates spend a lot of time saying they want to replicate the Quebec model across Canada. But here’s the thing. Quebec has its fabled $7/day child care, but it is not universally available. That would cost far too much. So it also has a refundable credit that is the precursor to the refundable credit in the Conservative plan. So in a sense, both the Conservatives and the Liberals can claim Quebec as the forbearer of their plans. And they’d both be right, and wrong.

Now lets switch to a political lens.

Here, I think the Conservative Plan has the edge. And they have Justin Trudeau as well as Stephen Harper to thank for that. In every election since 2006 (and arguably one or two before that) the party who subsequently formed government had, as one the centrepieces of their campaign, a promise to increase cash payments to parents for children. Trudeau continues to tout his tinkering with Harper’s child benefits as one of his signature accomplishments.

In sum: Canadian parents are not only used to hearing about more cash in their pockets for kids, they are used to experiencing more cash in their pockets for kids.

Compare that to nearly 20 years of successive promises from the Liberals to bring in some version of “universalchild care.” And here they are again, having failed to do it for 20 years.

In sum: Canadians parents are used to hearing promises for universal child care for their kids, but have no experience of seeing universal child care for their kids.

The Liberal plan suffers from a political credibility gap — a gap the Liberals helped to open. The Conservative plan does not suffer from a political credibility gap — a gap the Liberals helped to close.

So when given a choice between the aspirational “$10/day universal child care” and “more cash in your pocket,” I think more Canadians will lean towards the latter, even if, in some perfect world, they might prefer the former.

As we head to what is almost certainly a minority, I hold out hope that a new government might look for common agreement that addresses both supply and demand side challenges in child care. That would be a big win for families.

10:30 a.m. — Canada must find its own way in a century that belongs to no one

In an increasingly uncertain geopolitical world, Canada is caught between the United States, the devil it knows, and China, the devil it is rapidly becoming better acquainted with. Read this piece by economist Livio Di Matteo on the implications for our country and its leaders:

With China’s increasing confidence, its cover as the shy duck that peddles furiously beneath the surface has been blown and the international pushback currently underway means that unlike the 19th or 20th centuries, the 21th century will belong to no one in particular.

It will be an oddly self-regulating disordered world with constantly shifting alliances and interests that afford opportunities and imperatives for trade and global cooperation given issues such as climate change. In some respects, for many countries — Canada included — it could well be a political metaphor for the perfectly competitive world of economic models where we must take the world as a given and adapt.

A more multi-layered competitive world with three or four superpowers and a half a dozen secondary powers and then everyone else falling in line could also be seen a sort of oligopoly type leadership model. Either way, we will be doing a lot of following.

Canada has yet to find its way in what has become a more multipolar world.

9:00 a.m. — The National Assembly is demanding an apology. What does it mean for the election campaign?

By Antonia Maioni, a political science professor at McGill University

Yesterday was an important day in Quebec politics, not because of visits from federal party leaders, but because the National Assembly reconvened for the fall session. And, as a first order of business, two motions were passed unanimously.

The first, brought by the Parti Québécois, asked for an apology from the Leaders’ Debates Commission for the question asked by moderator Shachi Kurl at the outset of last Thursday’s English-language debate, which was seen to characterise Quebec as a “racist and discriminatory society.”

That question has truly divided the country. A poll conducted by Leger and reported on this morning by Le Journal de Montréal shows that 65 percent of Quebecers thought the question was inappropriate. In the rest of Canada, 69 percent of respondents thought the question was acceptable.

The second motion was presented by the Liberal party of Quebec, which launched its own petition against “Quebec-bashing,” even though some of its own members have been vocal against Bill 21 (which limits religious symbols) and even Bill 96 (which extends the reach of French-language laws). 

Does this mean that all Quebecers and their political representatives think and vote alike? Obviously not, since there are four parties in the National Assembly and four more representing Quebec’s 78 seats in the House of Commons. But to understand the dynamics at play in the federal election campaign in Quebec, it would be wise to consider the central importance of provincial politics. Why? Because for most Quebecers, that is where the heart of the matter resides.

The Quebec government is, for all intents and purposes, the primary focus for citizen engagement with the state. The Quebec that emerged out of the Quiet Revolution had the state as its motor in many matters, most particularly the economy, social policy and, ever important, language and identity.

That’s why, in a federal election campaign, most Quebecers look to the ballot box as a choice of interlocutor with their provincial government.  And, conversely, Quebecers will look to their provincial premier as the spokesperson for Quebec in Canada, whether or not they are of the same political stripe.  

It is especially important to understand this dynamic with respect to francophone voters in Quebec, a key target of every federal party in this election campaign. For some, the Liberal party of Canada is compelling for historical reasons (complicated but enduring), for “favoured-son” reasons (having a francophone Quebecer like Justin Trudeau as prime minister in Ottawa), or as a credible progressive alternative. These can include nationalist voters, although they are less likely to be active supporters of sovereignty.

For others, especially some progressive nationalists for whom the federal Liberals are anathema (Trudeau père et fils doubly so) and federal elections an afterthought, the Bloc Québécois remains a safe haven. Although its strength can wax and wane, as we have seen, Yves-François Blanchet can rouse protest votes amongst both nationalist and sovereigntist francophones. 

As for the bleus, conservative Quebecers from time out of mind, the Conservative party may make sense if its leader can show a willingness to accept Quebec’s distinctive society and the Quebec government’s role in protecting their national interests, something Erin O’Toole has tried to do, but may be getting lost in translation. 

7:00 a.m. — Where the leaders are today

Stay tuned for details about Liberal leader Justin Trudeau’s schedule

Conservative leader Erin O’Toole will be in Jonquiere, Quebec at 10:30 a.m.

Stay tuned for details about NDP leader Jagmeet Singh’s schedule.

The election campaign may not be focused on China, but China is paying attention

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.

3:30 p.m. — The election campaign may not be focused on China, but China is paying attention

By L. Graeme Smith, The Hub’s content editor

The idea that foreign policy would be an absent issue this election was proven almost immediately wrong when the calamity of the Afghanistan withdrawal began to crest just as the snap election was called. 

The opening weeks of the campaign were thoroughly infiltrated by discussion, from an often personally invested press, around Afghanistan and Canada’s obvious fumblings there. 

With Afghanistan mostly occupying the limited foreign policy bandwidth of this campaign, there has been little big picture discussion on other pressing foreign policy problems, including Canada’s relationship with China (aside from occasional questions around the two Michaels who remain detained by the Communist regime). This is despite the importance of the issue to the Canadian public. 

The Hub’s exclusive polling, conducted by Public Square and Maru/Blue and released earlier in the year, showed that 75 percent of Canadians are uneasy with the prospect of China becoming the next global superpower. Of these uneasy respondents, 65 percent are worried about the Chinese government imposing its will on Canada.

But while the Canadian campaign has not been focusing much on China, China has been paying attention to the campaign. A recent article in the Global Times, a Chinese tabloid owned by the Chinese Communist Party, warned that if Canada implements the Conservative Party policies related to China, “it will invite counterstrikes from China, and Ottawa is the one to suffer.”

The article quotes Chinese commentators who describe the policies as “unusually hostile” and catering to the country’s “toxic anti-China atmosphere.”

The Conservative party platform references China 31 times, highlighting plans to rebalance Canada’s trade priorities and reduce reliance on Chinese supply chains, withdraw from the China-led Asian Infrastructure Investment Bank, and ban Huawei from Canada’s 5G infrastructure. 

The NDP platform includes four mentions of China, while the Liberal platform references China only once, promising to “respond to illegal and unacceptable behaviour by authoritarian states, including China, Russia, and Iran.”

Meanwhile, The Globe and Mail reports today that as the Chinese government was trying to deepen relations with Canada and further enmesh our economies with a free trade deal in 2016, a Chinese state publisher republished Prime Minister Justin Trudeau’s memoir, Common Ground, under the title The Legend Continues.

12:30 p.m. — Who has the best housing plan? A policy deep dive into the major platforms

By Chris Spoke, contributor at The Hub

There are three ways to make housing, or anything, more affordable. You can increase supply, reduce demand, or set price controls. This is an exhaustive list.

As we look at the policy proposals relating to housing affordability from the Liberal (LPC), Conservative (CPC), and New Democratic (NDP) parties, we can find some that fit into the first two of these buckets. Thankfully, none of the major parties have proposed anything like a federally mandated rent or vacancy control.

On the demand side however, we have seen a number of proposals from the LPC and NDP specifically that would also increase demand — a counterintuitive approach if affordability is the objective.

Let’s dive in.

On supply

Canada has the fewest homes per thousand people of any G7 country. This statistic, more than any other, highlights the cause of our housing affordability crisis. Housing in our major cities is expensive because there’s not enough of it.

If the federal government is going to make any improvements in this domain, it’s going to have to enact changes that lead to more housing supply.

The three party platforms all start with big overarching promises on supply and are then filled in with the policy proposals intended to substantiate those promises.

The LPC starts with a promise to “build, preserve, or repair 1.4 million homes in the next four years”, though it does not make clear how much of that would be new supply (the “build” share).

For context, over the past decade, Canada has averaged approximately 200,000 housing completions per year.

To make good on that promise, they’ve proposed a number of potential supply-boosters. The four most impactful are as follows.

  • A new rent-to-own program that would put renters, paying mandated below-market rates, on a five year path to ownership, paired with $1-billion in loans and grants to develop and scale up rent-to-own projects.

More money for more housing, though with a twist. There’s not much to say about this proposal other than to point out that 1) the development of new below-market rate rental housing is generally not economically feasible, 2) this is especially true given the record land and construction prices we’ve been experiencing lately, and 3) that $1-billion in loans and grants might not generate as many new units under this model as expected.

  • A new $4-billion Housing Accelerator Fund to support municipalities that “grow housing supply faster than their historical average; increase densification; speed-up approval times; tackle NIMBYism and establish inclusionary zoning bylaws; and encourage public transit-oriented development.”

This is the most meaningful LPC proposal as it acknowledges municipal regulatory supply constraints as key drivers of housing scarcity and unaffordability. It creates in effect a success fund, and leaves it up to municipalities to pare back those supply constraints in order to claim their share.

  • A major funding increase for the National Housing Co-Investment fund of $2.7 billion over 4 years to help affordable housing providers acquire land and buildings for development and pay for critical repairs on existing buildings.

More money for more housing. There’s not much to say about this one either.

  • A new Multigenerational Home Renovation tax credit that would help homeowners save up to $7,500 when adding a secondary unit to their homes for an immediate or extended family member.

This proposal should increase the number of secondary unit additions at the margin. More importantly, it should also increase political support for secondary units where they’re not currently permitted.

The CPC, for its part, promises to “implement a plan to build 1 million homes in the next three years.” If past housing completion data are to be extrapolated from and carried forward, this could mean 400,000 more homes over three years than we might otherwise have seen.

The three most impactful proposals that might help them fulfill that promise are as follows.

  • The construction of new transit infrastructure connecting employment centers to “where people are buying homes”.

As we’ve failed to build sufficient housing in our major cities, more people have had to “drive till they qualify” and live farther and farther from their workplaces. The CPC is proposing more transit connections from employment centres to these suburban and exurban neighbourhoods. More transit is good. More housing closer to employment centers is even better.

  • A new requirement that municipalities receiving federal funding for public transit increase permitted densities near that funded transit.

This is the most meaningful CPC proposal as it too acknowledges municipal regulatory supply constraints as key drivers of housing scarcity and unaffordability, and provides an elegant response. In Ontario, there already exists a provincial Major Transit Station Area framework that proposes the same thing. It’s not clear how this federal proposal would enhance that framework.

  • A new capital gains tax deferral when selling a rental property and reinvesting the proceeds in rental housing.

Many rental properties in Canada are owned by the children and grandchildren of the entrepreneurs who built them. They’ve appreciated substantially over those many years and would therefore be subject to a large capital gains tax if sold. For that reason, they’re not often sold. A tax deferral could lead to increased market liquidity and more returns being put to productive use in the development of new rental housing.

Finally, the NDP doesn’t have much to say about increasing the supply or market-rate housing but does promise to “create at least 500,000 units of quality affordable housing in the next ten years.” This promise is supported by two proposals.

  • A new “fast-start fund” to help streamline the entitlement process for co-ops, social, and non-profit housing providers.

The entitlements process that sees development projects through any required rezoning and site plan control is needlessly slow and complicated. Funding for measures that would streamline that process sounds like a good idea, though it’s not clear what those measures would include if they are to apply exclusively to non-market housing providers.

  • A new exemption on the federal portion of the GST/HST on the constriction of new affordable rental housing.

The federal portion of the GST/HST is a meaningful cost on any development pro forma. This exemption should, at the margin, improve the feasibility of new affordable rental housing.

On demand

Prices, as we know, are a function of supply and demand. Both increased supply and decreased demand place downward pressure on prices.

And yet we spend most of our time talking about supply, and not demand. Why?

In short, increased supply generally means more homes for more people, whereas decreased demand generally means fewer people, or at least fewer people who can afford housing. Most of us think that more people and more homes is preferable to fewer people and fewer homes.

The most impactful thing the federal government could do to reduce demand for housing is reduce immigration. Our three major political parties are generally very pro-immigraiton, however, so that’s off the table (good!).

Instead, they’ve focused on reducing foreign ownership of housing and money laundering — where money laundering mostly means money from China, as China enforces strict capital controls that force its citizens to launder any money they’d like to invest abroad.

On the former, both the LPC and CPC have proposed a two year ban on home purchases by foreign non-resident investors. The NDP has proposed a 20 percent foreign buyer’s tax on this same group.

On the latter, all three parties have committed to cracking down on money laundering and proposed the development of a beneficial ownership registry for residential properties in order to peer behind any corporate veil and identify the true owners of any given residential property.

As mentioned above, the LPC and NDP have also proposed policies that would lead to an increase in demand.

The LPC has proposed a First Home Savings Account, increased flexibility for the First Time Home Buyer Incentive, a doubling of the First Time Home Buyer Tax Credit, and a requirement that banks and lenders offer mortgage deferrals for up to 6 months in the event of job loss or other major life event.

The NDP has proposed the re-introduction of 30-year terms to CMHC insured mortgages, as well as to double the First Time Home Buyer Tax Credit.

On overall effectiveness

To restate a foundational premise, housing in our major cities is expensive because there’s not enough of it. There’s not enough of it because municipal land use rules render large parts of our cities as being effectively out of bounds for any meaningful intensification.

NIMBYs have captured our municipal councils and ensured that they prioritize neighbourhood stability and property value appreciation over housing abundance and affordability.

Both the LPC and CPC promise to address these land use rules with legislative sticks and carrots. (The NDP sidesteps the issue entirely.) More than anything else, any success in advancing housing affordability will rest in their ability to use them effectively.

10:30 a.m. — A grumpy political scientist explains the difference between a coalition government and a confidence agreement

By Antonia Maioni, a political science professor at McGill University

Memo to Canadian journalists from a grumpy political scientist: please, please refrain from using the term “coalition government” unless actually referring to a formal coalition which entails a shared policy platform and the presence of more than one party in the cabinet.  

The Canadian Parliament, based on the Westminister parliamentary tradition, has no example of this except that of the Union government during the First World War.

A coalition government is not the same thing as an “accord” (such as the one between the minority Liberal government and the NDP in Ontario in 1987) or a “pact” (such as the one between the minority Conservative government and the Bloc/NDP in 2004).

The latter are examples of confidence agreements, which can be formal or informal, in which opposition parties agree to support the minority government on key parliamentary votes of confidence. However, they are not coalitions because the minority government continues to govern alone, with ministers chosen from its ranks. 

9:00 a.m. — Canada’s infrastructure spending too often leads to ‘political explosions’

By Drew Fagan, a U of T professor and former Ontario deputy minister of infrastructure

Infrastructure is one of those $100 words that can mean almost anything. The legendary American journalist Theodore White wrote that the word was meant “to conceal political explosives.”

In fact, it should be something that the major Canadian parties can agree on. Ottawa has boosted capital spending after decades of underinvestment. The Harper-era Conservatives got things rolling, and the Trudeau-era Liberals have spent more still.

But the Liberal platform says little about broad-based infrastructure investment to support economic growth. As for the Conservative platform, it calls for faster growth and cites infrastructure as a key accelerant, but makes a proposal regarding the Canada Infrastructure Bank (CIB) that would do the opposite.

Canada’s infrastructure challenge isn’t low public spending, but that it isn’t always spent in the right ways. It leads too often to political explosions. Projects are dickered over. Ottawa has let provinces and municipalities spend federal funds on projects of their choosing, often with politics rather than results in mind.

Other countries do it better. Australia, New Zealand and Great Britain have strategies looking out decades and processes to plan and deliver the best projects with the best chances of success. Even the U.S. government sometimes brings more coherence, mitigating against the kind of institutional tangle that mars, say, transit in the Greater Toronto and Hamilton Area.

Earlier this year, the Liberal government took a big step, launching a National Infrastructure Assessment (NIA) to prioritize through 2050 economic, social and environmental infrastructure.

What made it into the Liberal platform is more specific but aligned. Liberals propose to invest more in municipal housing if cities do more to tackle NIMBYism and support inclusionary zoning and density, especially near transit lines.

The Conservatives agree: Their platform would require “municipalities receiving federal funding for public transit to increase density near the funded transit.”

This could be the beginnings of a federal urban agenda in which Ottawa flexes some muscles. Still, both parties know the risks — from the provinces, which have responsibility under the Constitution for municipalities, and from municipalities, which are used to a hands-off approach. That’s probably why the Liberals aren’t emphasizing their plank. Meanwhile, the Conservatives are hiding theirs. The party’s headline pledge is that a Conservative government would provide “more flexibility” to municipalities. Actually, the fine print says it’s less and that’s probably the better way.

The NDP platform, meanwhile, promises to double the Canada Community-Building Fund, the renamed federal Gas Tax Fund, which flows to municipalities largely without conditions.

The infrastructure issue that’s gained most campaign attention is the Conservatives’ commitment to “scrap the failed” Canada Infrastructure Bank (CIB). It’s a promise that they’ll regret, if elected. The CIB got off to a slow start but it’s been gaining traction rapidly.

Had the Liberals not invented the CIB, the Conservatives would have. In fact, the Harper-era Conservatives launched the CIB’s precursor, the P3 Canada Fund. Like the CIB, it was aimed at putting more policy and less politics into infrastructure through public-private partnerships. The CIB redoubles this approach, broadening the private sector’s role regarding revenue generation, like user fees, and innovation in design, construction and operations. (Given CIB financing methods, the Conservatives wouldn’t get as much money as they might think for traditional government infrastructure programs by reallocating what was on the CIB’s books.)

The CIB deserves a chance. Likewise, the NIA deserves to go forward, regardless of election outcome. So why not mix the two?

The CIB was established not just to finance some infrastructure, as it does now, but to bring a more independent, policy-focused approach to a broader range of infrastructure planning. This part never really got off the ground, such as a national centre of expertise and advice, including for better use of data in decision-making. The CIB could do this by being given a leadership role in the NIA and in the reforms that should flow from it, which would turn a bank into an agency.

A Conservative government could rename it the Canada Infrastructure Investment Agency. Campaign pledge fulfilled. It would be good policy too.

7:00 a.m. — Where the leaders are today

Liberal leader Justin Trudeau will be in Richmond, British Columbia to make an announcement at 11 a.m.

Conservative leader Erin O’Toole will be in Russell, Ontario to make an announcement at 11 a.m.

NDP leader Jagmeet Singh will be in Toronto to make an announcement at 8:30 a.m.