THOUGH it was news to no one, the cries of outrage still erupted at the announcement that Ontario's new Conservative government would cancel construction of 385 social-housing projects approved by its predecessors.
It was "bad news for Ontario," said a spokesman for the Co-operative Housing Association of Ontario. "The very weak people in this society are being attacked by this government," declared a representative of the Supportive Housing Coalition of Metropolitan Toronto. An official with the Non-Profit Housing Association of Ontario threatened to sue.
But perhaps the most plaintive lament for the cancelled projects came from the developers who had hoped to build them. "To cancel it holus-bolus like this is just a disaster," a vice-president at one company was quoted as saying. "Whether you philosophically believe in it or not, it's something that was really helping the industry."
No kidding. Some 8 per cent of the province's 3.6-million households now live in one of three forms of social housing: 84,000 units of public housing, owned by the province through the Ontario Housing Corporation; 140,000 units of non- profit housing, owned by the municipal governments or community-based corporations; and 45,000 units of co-operative housing, owned by the tenants themselves. While the Tories' decision killed construction of about 17,000 new units of non-profit and co-op housing, more than 86,000 units had been built in the last ten years, at a cost of almost $9-billion - that is, more than $100,000 per unit.
When the new government declares it wants to "get out of the housing business," such costs are one of the factors. The up-front construction outlays are heavy enough but there's also the annual cost of subsidizing the mortgages and maintenance costs of the buildings - now in excess of $850-million a year. The provincial auditor in 1992 calculated the annual subsidy to each new unit of non- profit housing at more than $12,500 - greater than $1,000 a month.
Yet the average household described as being in "core need" by the Canada Mortgage and Housing Corporation - that is, paying more than 30 per cent of its income in rent - would need a supplement of only $150 a month to make ends meet, barely a seventh of what now goes to subsidize each new unit of non-profit housing. The rest goes to the developers and the construction unions and the social-housing bureaucracy. True, the cost of a non-profit housing unit drops sharply in 35 years, after the mortgage is paid off. But in the meantime, the difference is made up in borrowed money, on which interest must be paid.
The costs mount when it is reckoned that not everyone housed in social housing is actually in need. To avoid the public-housing fiascos of earlier decades, where the poor were shepherded into vast concrete ghettoes cut off from ordinary neighbourhoods and street life, the more recent trend has been to smaller-scale, "mixed-income" housing. While wealthier tenants are supposedly charged "market" rents, the rents they actually pay do not typically cover such particulars as the mortgage. Only about 70 per cent of the residents of non-profit and co-op housing pay a rent that is geared to their income. So the cost of new social housing for those in need could be said to be closer to $18,000 (the auditor's $12,500 estimate divided by 0.7), or $1,500 a month.
If not everyone in social housing is in need, it is equally true that not everyone in need is in social housing. Although the cost of non-profit housing subsidies has increased from $33-million to $853-million since 1988, waiting lists have grown to 64,000. This is one of the most intractable problems with a housing policy based on subsidizing bricks and mortar: Only those actually housed in these buildings get any benefit, and only so long as they remain there. Not only must they uproot themselves from the dwellings and neighbourhoods they had lived in before, but the housing they get is often not what they need, but what is available.
"It is clear," lawyer Stuart Thom concluded in the 1987 report of his provincial Commission of Inquiry into Residential Tenancies, "that assisting low-income households primarily through publicly financed housing would be a massive undertaking." The alternative the commission preferred, the alternative recommended by most economists, and the alternative that clearly appeals to the new government: direct income assistance to needy tenants, sometimes called shelter allowances, which they may put toward renting the apartment of their choice. The $853- million now spent subsidizing social housing could help many more families if instead it were distributed in this way.
As the Thom commission put it, "all households requiring assistance would be given immediate help to pay the rent. There is no need to wait for one of a limited number of subsidized units to come available or for new units to be built. . . . Nor is there a need to move in order to receive assistance." With the mobility a shelter allowance affords, the working poor could be integrated into existing middle- income neighbourhoods, one family at a time, without need of inducing the better off to live in social-housing projects and without fear of NIMBY-style protests. Combined with rent decontrol - another Thom Commission recommendation - we might even see some new private rental construction, which rent controls have all but killed and social housing all but replaced.
To ensure that the poor get enough to eat, we don't force them to shop in state- run grocery stores. We give them money, and let them buy food where they like. The same solution recommends itself in housing.