Poilievre now owns the housing issue — the most important issue to most voters — and the Liberals are seen as culpable for presiding over a hot mess
Pierre Poilievre’s 15-minute “housing hell” video is a bit like Queen’s Bohemian Rhapsody, which the record company said was too long for radio and would never be a hit.
The exploration of how we got to a place where housing costs consume two thirds of average income has already been viewed four million times on X (formerly Twitter) and another three-quarter of a million times on YouTube.
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And the numbers are still rising.
To be fair to the Conservative leader, he was ahead of the game when it came to predicting that inflation was not as transitory as many central bankers would have had us believe — and that rising interest rates would prompt an affordability crisis such as we have rarely seen.
Much of the public anger that has turbo-charged the Conservative party’s performance in opinion polls is around housing — and we may have not have seen anything yet. The Canada Mortgage and Housing Corporation says that an estimated 2.2-million mortgages will be renewed at higher rates over the next two years (on top of the 877,000 that renewed this year). A study by real estate broker Zoocasa revealed that mortgage payments in 17 large markets across Canada increased by 100 per cent over the past 10 years, while income rose by just 16 per cent, according to Statistics Canada data.
Much of the Poilievre video is taken up with similarly incriminating data and anecdotes (most taken from the very media sources he likes to rubbish): tales of students crammed into homeless shelters, middle-class people living in their vehicles and tent cities popping up across the country.
“Paycheques have not caught up with the cost of housing,” he says, pointing out that Vancouver is now the third and Toronto the 10th most unaffordable city for housing on the planet — even more so than New York, London or Singapore.
He dates the reversal of fortune to 2015 when Justin Trudeau became prime minister. While it is true that housing costs have almost doubled in that time, correlation is not causation.
It’s true the Liberals have done little to address the problem until very recently — ironically, by purloining a number of solutions Poilievre has suggested — but it is one of the Conservative leader’s besetting sins that he dumbs down the problem and then offers simplistic solutions. Such is the performative art of politics.
The bigger picture post-pandemic was too much demand compounded by a shortage of supply related to COVID and the war in Ukraine.
There were local factors at play.
Poilievre makes a fair point when he blames the contribution to soaring costs made by the government’s deficit spending, which “poured fuel on the inflationary fire” even before the pandemic and which has led to a doubling of the national debt.
But he is rather unfair on the Bank of Canada for printing money to fund government largesse. That created inflation that required the bank to raise interest rates to push inflation down, he said.
The whole business is presented as a giant Ponzi scheme, where the Liberals got their friends at the central bank to increase the money supply so that the financial system was overflowing with cash, allowing wealthy investors to secure loans at ultra-low rates.
More discerning viewers will recall that the bank engaged in hyper-stimulative policies during the pandemic to avoid the whole system seizing up due to lack of credit. It may have “overcooked” things a bit, according to some economists, but the absence of quantitative easing could well have proven disastrous.
It is concerning because his constant criticism of the central bank suggests a Poilievre government will take action that goes beyond firing the current governor, or tweaking the mandate to maintain price stability. Central-bank independence took hold in the 1970s to foil politicians who manipulated interest rates to boost their own popularity. It is a large part of the reason why inflation has averaged four per cent over the past two decades. Is Poilievre preparing the ground for a time when politicians will once more set interest rates, in the same way he attacks the media to undermine any criticism of him? Let’s hope not.
He is on firmer ground when he calls for a return to balanced budgets and for a focused effort to increase the number of homes built. Despite huge surges in population, Poilievre points out that we are building fewer homes than we were 50 years ago and, almost unbelievably, the number is set to drop this year from last.
He returns to a familiar theme when he talks about the “gatekeeper gap,” where bureaucratic delays, consultants’ fees, lawyers’ fees, and taxes are the largest contributor to runaway house prices. The Conservative leader points out that it takes longer to get a building permit in Canada than in almost any OECD country.
He says that Trudeau has “encouraged” gatekeepers by sending $4.5 billion in municipal infrastructure transfers, without penalties for those that block housing development.
Poilievre’s “common sense plan” would require big cities to complete 15-per-cent more homebuilding per year as a condition of receiving infrastructure money and he would offer bonuses to cities that exceeded the 15-per-cent target. Money would be paid out on completion. “Instead of funding promises, we should fund results,” he said.
Other conditions would require federally funded transit stations to include adjoining high-density apartments and for federal buildings and surplus land to be sold for housing.
As usual, the Liberals have been shameless about pilfering some of Poilievre’s ideas and presenting them as their own: the GST relief on building rental units, the Housing Accelerator Fund to transfer money to cities that reduce red tape and so on.
Some of Poilievre’s solutions on the supply side are overdone. Many of the costs are unavoidable and related to the provision of infrastructure like water and wastewater to homes. The costs of development charges to homebuyers could be reduced by introducing a user-pay system but someone has to pay them eventually. The same is true of land transfer tax, which could be shifted to property-tax payers instead of homebuyers. The bottom line is the piper must be paid.
Still, Poilievre now owns the housing issue — the most important issue in the eyes of most voters — and the Liberals are viewed as being culpable for presiding over a hot mess.
Poilievre’s video concludes: “If the government is standing in the way of you getting a home, it stands in the way of your entire life going forward. The good news is that housing costs were not like this before Justin Trudeau and they won’t be like this after he’s gone.”
This may well prove to be true, without Poilievre lifting a finger. Bond yields have been falling dramatically in the past month, which means lower borrowing costs. Voters all over the world — in the U.K., U.S., Germany and Japan — are blaming their incumbent governments for high interest rates.
But the markets see cuts coming in 2024.
It seems likely that they will come too late for Trudeau and Poilievre might inherit a more benign economy.
Quite how his strategy of getting gatekeepers out of the way might be responsible for that happy circumstance was not clear to me, even after 15 minutes.
National Post
jivison@criffel.ca
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