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Alex MacDonald: What could (finally) solve Canada’s housing crisis

Commentary

Within the variety and volume of pieces The Hub has published on housing, the following theme has seemed to emerge: municipal governments are the most responsible for housing; while provincial governments have a political incentive to engage but little to offer, and; that the federal government also has a political incentive to engage, but even less to offer. 

The principle of subsidiarity—that when the government is needed, programs are best delivered by the lowest level of government that can meet that need—has been used to validate this theme and drive policy suggestions that concentrate both the problem and apparent solutions in the hands of municipalities. 

I too am a fan of the principle of subsidiarity. But in the context of housing policy, I think it has been applied in a rather one-dimensional fashion that has constrained the creativity of conservative-minded policy thinkers. This constraint has produced policy suggestions that municipalities have little to no incentive to enact, or suggested interventions by higher orders of government that could easily be contested or enrage intergovernmental relations. 

The principle of subsidiarity, however, can allow for multiple levels of government to be engaged in the same policy issue area while allowing each to bring an expertise, satisfy a particular responsibility, or offer a unique resource. In this way, subsidiarity can and often should be multi-dimensional. 

Subsidiarity, after all, should not be conflated with rightly ordered federalism. Subsidiarity is not ultimately a legal principle, but rather a moral-social principle in that its ultimate aim is the flourishing of the human person.

The Ford government’s most recent proposed legislation on housing demonstrates that multiple levels of government have particular responsibilities toward housing. The proposed legislation would, among other things, curtail the misuse or even abuse of housing regulations and planning authorities by municipalities, namely development charges, off-site levies, and parkland fees, all of which add hundreds of thousands of dollars onto the bottom line of new homes. 

This bold approach reminds us that provincial governments actually have a particular and unique responsibility in housing governance: to protect their constituents from short-sighted regulatory regimes that curtail economic prosperity and social advancement through thoughtful policy design and a fair regulatory environment. This is the second dimension of a multidimensional approach to subsidiarity. 

The third dimension of this multidimensional approach is the role of the federal government. This is perhaps where the mindset of one-dimensional subsidiarity has most constrained policy creativity and, in some cases, produced harmful federal policies on housing. In favour of localism, current federal policies have almost exclusively engaged the demand side (e.g. First Time Home Buyers Incentive or the new Tax-Free First Home Savings Account) or simply been performative (e.g. a ban on blind bidding, a house flipping tax, or a homeowners bill of rights).

One of the more popular policy ideas suggested by those of a conservative disposition has been the tying of federal infrastructure funding to housing densification. Sean Speer and Brian Lee Crowley suggested this back in 2016, it was in Erin O’Toole’s platform in 2021, and was more recently advocated for by both Pierre Poilievre and Scott Aitchison in their leadership bids. 

Realistically, this is the weaponization of the federal spending power, which although blunt in its character, has become more popular as a federal policy tool (but this doesn’t mean it’s a healthy form of federalism). Nonetheless, the prominence of this policy idea should remind us that a particular order of government may be most responsible for, or closest to, a policy issue that they are also sometimes the least likely to act on, or have the least incentive to do so. 

But let’s turn this idea on its head—what can the federal government do with its wealth of funding to incent homebuilding and densification? Rather than dictate, what could be done through partnership and the sharing of resources? 

The federal government could step in and help to reduce the bottom-line cost of homebuilding by establishing a grant program available to municipalities and designed to cover some of the most costly regulatory fees associated with homebuilding. For example, development charges and off-site levy fees are assessed by municipalities to maintain and build community infrastructure (e.g. sewers, wastewater treatment, sidewalks, highway on-ramps, local schools, libraries, and sports facilities) could be covered. While its common practice that developers pay to construct all the necessary infrastructure for a new development, like roads and sidewalks, they also are required to pay these fees to aid the municipality in managing and responding to the increased demand on and for community infrastructure. 

The federal government should recognize these aspects of homebuilding and community growth as traditional infrastructure—as it does highway overpasses, interchanges, or road widening—and fund it as they do other infrastructural projects. Namely, through cost sharing which is often done in partnership with the province. 

This could make a noticeable impact on the current cost of homes. According to a C.D. Howe Institute report, in 2020 it was estimated that municipal housing charges and taxes in Vancouver can result in an extra cost of up to $644,000 for the average new house. While in other major cities across the country home buyers paid an average of $230,000 extra. 

While the infrastructure associated with these charges is necessary for communities to comfortably grow and function, the question is who is best situated to fund their construction. Municipalities have long thrust this on to developers who have pushed the cost onto homebuyers, which has continually increased the cost of homeownership. 

With the help of the federal government, there is a better economy of scale to be had. While developers pass the cost on to a small segment of the economy, namely homebuyers, the federal government could distribute the cost across the entire tax base of the country, as it does with its usual infrastructure spending.

But should all taxpayers help to fund community infrastructure across the country? I say yes. These are public goods that are enjoyed indiscriminately by the local community at large, not just the new homeowners in the newly constructed subdivision or tri-plex. 

Rarely has it been controversial for the federal government to use tax dollars towards local community infrastructure projects (e.g. a hockey arena, overpass, wastewater treatment, etc.) in some town you will probably never visit in a province on the other side of the country from you. In our communities, we all have access to public goods that are funded by all Canadians. Housing infrastructure should be no different. 

This policy suggestion far surpasses those that call on municipalities to pause or waive their charges on new home construction at their own initiative (they have little to no incentive to do so, anyhow), or for provinces to mandate this via legislation. It’s necessary to go further because a pause or reduction will likely just delay the building of community infrastructure or make it prohibitively expensive to do so. Someone, at the end of the day, needs to pay for community infrastructure. The cost of affordable housing shouldn’t be a lack of community infrastructure. 

The federal government could support such a grant program without any net new spending by reallocating current infrastructure and housing spending. Specifically, federal funding allocated to the Canadian Infrastructure Bank and the National Housing Strategy could be utilized. While these two programs are exceptionally well funded they have woefully underperformed, as found by studies of the Parliamentary Budget Office, Office of the Auditor General, and the Standing Committee on Transport Infrastructure and Communities. It’s shameful to have a “housing strategy” with an annual budget of $3.7 billion that isn’t making any meaningful difference on the supply side.

The one-dimensional application of subsidiarity to housing has too often led to circular policy debates and buck-passing. Multidimensional subsidiarity where each level of government shoulders its particular responsibility, offers its expertise, and expends its unique resource may actually solve this crisis by getting more homes built at a more affordable price point for everyday Canadians. 

Taylor Owen: The Online News Act keeps journalism alive while it adapts to a new world

Commentary

Over the last decade, as the business of journalism has gone through substantial decline, governments around the world have struggled to develop policies to support them. The most polarizing idea to date has been the idea of forcing platforms and publishers into forced arbitration. 

First implemented as the Australian News Media Bargaining Code, the approach views the digital news market as a problem of market dominance. Publishers are simply not in a position to bargain fairly for the use of their content with the platforms that dominate the digital ad market. While platforms fought the resulting policy aggressively, the end result has been hundreds of millions of dollars of new money into the Australian journalism sector. This outcome has gotten the attention of other countries, including Canada. 

A lot has been said about Canada’s Online News Act (Bill C-18), including by me and Supriya Dwivedi for this Nieman Lab essay. But last week I had the chance to appear before the parliamentary committee reviewing the Online News Act, and the week before I co-hosted a workshop on journalism policy at Columbia University in which media bargaining codes were debated by policymakers, journalists, economists, and scholars from a number of countries considering the same model. This committee appearance (video of full session here) and workshop have given me a chance to reflect again on the debate to date.

In short, while I wish it wasn’t necessary and hope it won’t be permanent, when taken in combination with other government policies in place to support journalism C-18 will provide meaningful resources to the journalism sector and ensure that funding from platforms to publishers is equitably distributed and under terms that serve the public interest. Let me spell out my rationale.

First, it is important to acknowledge that for many individuals and corporations this debate is existential. Journalism is, for better or worse, a business. And a lot is at stake for those that run them. I am just an observer to this, but I value the views of all of those who are materially impacted by these potential changes. Some want no government intervention in the market of journalism, which is a view I respect, but don’t share. For me, journalism, and more broadly the access to reliable information, is a precondition for democratic society and in the face of market failures warrants careful public policy intervention. 

Second, any analysis of this bill needs to start with a recognition of the status quo in which platforms already have deals with publishers. These deals, with a small and select group of publishers chosen by the platforms themselves, are for undisclosed sums of money and the terms are hidden behind NDAs. We simply have no idea whether publishers have been pressured or incentivized in their reporting in any way. These existing deals also demonstrate that platforms are willing and able to place value on the journalism that is shared on their platforms in ways that do not simply monetize links, and in doing so have themselves proved that this will not “break the internet.” I understand why some publishers who already have deals would rather stick to the devil they know, but the interest of public policy should be to make these deals more equitably distributed and accountable to the Canadian public. This is in large part what this policy is designed to do.

Third, no one policy will “fix journalism,” and critiquing the bill on the grounds that it will not solve all of the challenges facing the industry is simply disingenuous. The effect that the internet has had on the business and practice of journalism, is wide-ranging and complex. This policy mechanism addresses one aspect of the challenge: the bargaining imbalance between publishers and platforms. A very asymmetry demonstrated by the inequity of current deals. However, analysis of its role and impact must be done alongside other policy support for Canadian journalism, including the Local Journalism Initiative, the Digital News Subscription Tax Credit, and, most importantly, the Journalism Labor Tax Credit. Which combined have had a meaningful impact on Canadian publishers of all types, ideological leanings, and sizes.

Fourth, while many, including myself in the past, have suggested an alternative centralized fund model, we need to acknowledge that it too has real challenges. It would require government to either create a dedicated tax on platforms (an actual link tax if you will), likely in breach of USMCA, or themselves put general revenue into a fund of their creation and design. The government is already providing 25 percent of newsroom labour cost via the subsidy. Do we want them providing still more through a fund? This would be a far more intrusive and complex policy than the bargaining code, and one which I suspect would garner even stronger objections from those rightly concerned about the government’s place in journalism, many of whom are suggesting this as an alternative to C-18.

Fifth, while many have suggested that this bill will differentially preference the large publishers, it is my belief that it will in fact do the opposite. Under the current status quo, most small independent publishers, including all of the ethnic media, have no deals. This is our starting point. Even if some did want a deal, they would have no idea under what terms others have made them, nor have the ability to band together to negotiate as a collective. This bill changes both of these dynamics. Independent publishers will have access to data on the deals of others, be able to band together to negotiate deals on their own terms using their own desired metrics of value (ie, not necessarily FTE or reach), and to present a best offer to an arbitrator if their negotiations with platforms are not successful. 

What’s more, any assessment of the implications for independent publishers must include the voices of those without deals who would substantively benefit from new revenue accounting for a substantial percentage of their labour costs. There are real ways in which this will enable small outlets to experiment, innovate and grow. 

It has been suggested that the PBO estimate shows that more money will go to large outlets. Leaving aside the questionable way they came to these figures, if the policy goal is to support those doing journalism, and large outlets can show that they do more journalism then they will receive a pro-rated higher proportion of money. This is exactly the same fairness principle of the fund model that many independent publishers have advocated for.

Sixth, while this bill has been widely characterized as the Australian model, it is in fact, to the credit of the civil servants who developed it, different in some important ways. The addition of specified exemption criteria are the central policy mechanism in this bill. This list of terms, how platforms demonstrate they have met them, and how they are evaluated and audited, are absolutely critical to this policy working in the public interest. In Australia, exemption from designation was a very broad and opaque process. In the Online News Act platforms will need to demonstrate that their deals meet a very specific list of criteria and this process can be re-evaluated in the future if terms are not being met. I am not suggesting that the list of criteria is perfect, but if you want to ensure that money goes to a wide range of organizations and towards journalists, this is the place to do it. The bill also adds meaningful public accountability and transparency tools that the Australian bill lacked.

Which brings me to my last point. The fact that this bill has improved materially on the Australian model has substantially increased the likelihood that other countries (such as the U.K., Germany, South Africa, and possibly even the U.S.) will very soon adopt a similar model. And it is this possibility, not of Canadian implementation, but of its global spread, that I think has shaped the character of the platforms’ response.

Google has sought to divide news organizations against each other and at every turn muddied the policy debate. They of course have every right to promote their own corporate interest, but the way they have chosen to do so on this bill has in my view made our public discourse on this important topic worse. I hate that journalist friends from small and large organizations alike are being pitted against each other.

And Facebook’s threat to turn off access to reliable information, as they did in Australia, is to me revealing about their place in our democratic society. We now know through internal leaked communication that their goal in Australia was to cause maximum confusion by not just turning off news, but also a host of government and public health websites in the middle of a pandemic. And in some respects, it worked. As Australian scholar Julia Powles has documented, this strategy of intimidation achieved meaningful last-minute concessions from the Australian government. Luckily, the design of the Canadian model, and in particular the specified exemption criteria, protect us somewhat from these types of blanket amendments.

All of this said, this bill is not perfect and involves difficult tradeoffs. If I were looking to make it better, I would be asking four questions:

How can this bill make the terms of deals as transparent as legally possible? Transparency is not a simple catch-all solution, as it is often portrayed. Instead, I think we need to start by identifying the objectives of transparency and then ask what should be made transparent and to whom to achieve them. To me, in this bill, there are three objectives of transparency. 

The first is to make these deals accountable to the public so that they can trust their news sources. While many have called for full transparency of the terms of deals, it’s pretty clear that the government cannot mandate this of private companies. However, we can demand that the aggregate reporting by the regulator be as detailed as legally possible.

Second, the arbitrator who will be evaluating the terms of the deals needs maximum visibility into them and clear metrics on which to evaluate whether platforms have met the exemption criteria. On this, the bill is strong, but to increase public security and confidence the exemption hearings should have a public element.

Finally, publishers, particularly smaller independent outlets, need timely knowledge of the deals already made by others so that they can enter into negotiation on an even foot. This will require more regular aggregate reporting from the regulator than the suggested annual release.

How can the bill be maximally inclusive while ensuring the journalistic integrity of recipients? Making the bill more restrictive, as Google has proposed, would exclude more small publishers. And adding overly specific journalistic assessment requirements would increase the role of government in journalism. On other hand, making the requirements too lenient could lead to the inclusion of non-journalistic sites. The bill in my view is close to the right balance, but should probably be amended to include proprietor-journalists or freelancers as qualifying FTEs, as well as a condition that non-QCJO organizations have a journalistic or editorial standards policy with a stated process on issuing corrections and clarifications.

Does the bill ensure that platforms are incentivized to distribute journalistic content and that they do not limit their ability to downrank false or misleading sources? The argument that the bill will incentivize Google to promote misinformation and disinformation in their search results has an easy fix. The legislation would benefit from clearer wording further specifying that the ranking or featuring of certain types of higher-quality content would not be considered unjust discrimination or an unreasonable disadvantage.

Finally, I think it is reasonable to ask whether the bill is suitably flexible to respond to future changes in the economics of platforms and news. Journalism and digital platforms are both in a state of rapid transformation. While this bill provides a valuable stopgap measure now and will certainly not “break the internet,” I think it needs to be implemented with maximum capacity to evolve over time. No journalism policy should be designed to be permanent, but should instead aspire to be no longer necessary.

I hope that in the future government support will not be needed to ensure that Canadians receive the journalism that their democracy demands. But I also believe that in this period of transition, it is critical that governments do what they can to support journalists. This bill, in my view, is on balance, one piece of this puzzle.