Federal government ponders creating new housing benefit for low-income renters

A 'sold over asking' sign is shown on a real estate sign in Oakville, Ont. on Thursday, Nov.17, 2016. (Richard Buchan / THE CANADIAN PRESS)

OTTAWA -- The federal government is looking at creating a new benefit to help low-income Canadians who struggle to pay the rent each month, but is being warned that the measure isn't a solution to the country's housing crunch.

Multiple sources with knowledge of talks say the government has quietly been exploring how to establish a new housing supplement program that would link benefits to individuals, rather than housing units -- a departure from how such supplements have typically worked.

Generally, housing benefits are provided to renters who need help paying the bills, but are usually tied to an apartment through rent-geared-to-income plans or rent supplements.

Should a renter move to a new unit, the benefit or supplement doesn't follow.

That creates problems -- for women and children fleeing domestic violence who need housing quickly, for instance, or homeless people on waiting lists who need help addressing issues like mental illness or addiction.

One federal source said discussions have revolved around how such a supplement could be delivered, be it through existing provincial or municipal programs, or through the tax system. The National Housing Collaborative, an umbrella group of housing and homelessness organizations, recommended the government use the tax system to remove the need for a lengthy application process.

Although the Liberals appear receptive to the idea, the sources -- speaking on condition of anonymity because they weren't authorized to disclose details -- say no decision has been made on whether to include the measure in the budget.

A spokeswoman for Finance Minister Bill Morneau said she wouldn't speculate on what will be in the budget this year.

The Liberals first budget set aside $2.3 billion over two years to build new affordable housing units, as well as refurbish existing ones.

Cities and advocates welcomed the spending, but said it would take time for the help to reach some 1.6 million households in "core housing need" -- those who spend more than one-third of their before-tax income on housing that may be substandard or doesn't meet their needs. Research from the University of Calgary has found that the country's lowest income earners can spend up to 80 per cent of their income on housing.

In its pre-budget submission this year, the Federation of Canadian Municipalities called for a "portable" rent supplement to help those households and serve as a bridge until new affordable housing units can come online.

The benefit, if adopted, could also help the approximately 300,000 households who are expected to lose federal housing subsidies as funding agreements with social housing providers expire over the next decade.

FCM president Clark Somerville said the supplement should be seen as one tool to combat homelessness. He said the Liberals still need to put money into building housing and protecting existing units to prevent rents from rising in response to a new federal benefit.

"It might seem tempting to offer rent supplements as an across-the-board solution, but in many areas that would just push rents up," he said. "There's no shortcut. We've got to fix the affordable housing supply shortage first."

If rents do rise -- and the research on the issue isn't clear if that would happen -- it would likely be in the short-term, but then be offset by expected increases in the supply of low-cost units, "which is really what we're after here," said Ron Kneebone, an economist from the University of Calgary who studies homelessness.

"The government realizes it's not a solution to simply build what generally end up turning into ghettos of huge numbers of government-provided housing," Kneebone said.

"What they're really recognizing here is that a better solution is to provide poor people with the housing benefit that allows them to go shopping for housing."

He said any new benefit tied to a person would also encourage a renter to avoid risky behaviour like drug use that could lead them to lose their housing and the benefit as well.

The federal government is in the midst of finalizing a national housing strategy and the minister responsible says he expects it to be completed by early 2017, although an exact timeline hasn't been set. A separate housing strategy for indigenous Canadians could take an additional year.

A key goal of the strategy is to provide every Canadian with affordable housing that meets their requirements.