Current government responses, and their inadequacies

John Sewell Presentation
TDRC Reports
February 23/2002

I’ll talk on three issues: how the housing problem got here; government programs to serve the homeless; government programs to resolve the problems. Then will make a few concluding remarks.
1. Toronto and housing policies over the last twenty years
Housing costs have been on the rise for more than half a century. Until 1950, it was assumed a household should never pay more than 20 per cent of its incomes for housing. In the 1960s that rose to 25 per cent. In the late 1980s that rose to 30 per cent. There are lots of rumours it will go up to 35 per cent. In fact in Toronto, half the tenants pay more than 40 per cent of their income for housing, and a third pay more than 50 per cent.

Just by way of comparison. It’s generally said that in Italy a family pays 10 per cent of income on housing – which accounts for the fine way Italians dress, and the spectacular food they eat in restaurants. There are better ways of spending money than on the mortgage or the rent, but we are not a country which has yet learned that lesson.

As costs have risen, people in the middle have scrabbled to find places to live that they can afford. They ended up competing for the same houses that were priced at the low end of the market, driving up those prices considerably. Often these houses were occupied by those households with very little money – sometimes as rooming houses, or flats where bathrooms and kitchens were shared – and those people were evicted.

That’s one of the pressures that has created so much homelessness: the cheapest housing has been purchased by middle income families and taken off the market. The poor have no where to go.

The other pressure was the closing of the mental institutions in the early 1970s. This was done in the name of compassion, but the closure of the institutions was not accompanied by supportive places for the mentally ill to live. As we know, many of those in jails are mentally ill. One institution was replaced another, for some people.

These pressures were countered by a powerful affordable housing program starting in the early 1970s. The non-profit and non-profit co-op program built thousand of units in Toronto – probably close to 75,000 during the next 20 years. The program was large enough to provide housing for those feeling the pressures just noted.

But like all government programs which provide subsidies for social goods, this one grew stale after fifteen years. Some people found ways to take advantage of the program, and drove costs through the roof. Prime Minister Brian Mulroney cancelled the federal program in 1991, and Premier Mike Harris cancelled the provincial program in 1995. Instead of replacing the program that was worn out with one that was new and cost effective, they did nothing.

The result has been that those pressured out of the housing they were living in have no where to go. That’s why we have homelessness. It’s not complicated. If the inexpensive housing is disappearing (it disappears by becoming more expensive) there is bound to be a crisis for those who need it. And there is.

2. Serving the homeless.

a) Hostels currently house about 5000 a night. Tracked over a full year, there are 30,000 different individuals. Some use the hostel system every night, some use it only occasionally when they can’t make a n arrangement with friends or relatives to sleep on a couch. About 8000 of the homeless are children. Cost is about $50 per person per night – a total of $250,000 a night, or about $100 million a year. City pays almost one third of this, province pays about two thirds.
By the way, this is a system in growth. The formal hostel system has doubled in the last ten years.

Other homeless sleep on the street (maybe 1000 a night) and another 200 in Out of the Cold. They too use government services such as Street Patrols (supported by public subsidy), social agencies, police, public health officials, and hospital emergency rooms. The real cost here is hidden, but is probably $25 per person per night – a total of $60,000 a night, or about $20 million a year.
On any given night there are about 6200 homeless people in Toronto, and about $120 million is spent on them each year. Probably about half the 30,000 different individuals – about 15,000 – account for most of the hostel use and those sleeping rough. If they could be dealt with, then the hostel system could shrink very very considerably.

Suppose we said we wanted to help resolve the housing problems of these 15,000 individuals. Say we decided to help them with their rent by topping up the $325 shelter allowance from welfare a further $500 per month so they would have $825 to pay each month for rent. The cost of doing that would be $90 million a year. We could solve most of the problem of homelessness for $90 million and still have $30 million left over to deal with the part we hadn’t yet resolved.

But as a society we’ve set up an industry to serve the homeless rather than solve their problem, so we aren’t taking the easy or smart way out. In my opinion it’s only common sense to give them good housing and save money rather than spending all this money blaming them for being bad citizens.

b) Supportive Community Program Initiatives.
Introduced after Colleen Bradshaw, federal Minister of Labour, was appointed in early 1999 to respond to the Report on Homelessness led by Anne Golden. The SCPI program was introduced in December 1999, and its purpose was to develop a `seamless web of services and supports that people need to make a successful transition from street to a more stable and secure life. It will also help in the development of long term plans to address the underlying causes of homelessness and to develop a preventative agenda.’ The program had a total value of $305 million over three years, or about $100 million a year across the country.

Toronto looked at how the program might be implemented in this city. About $53 million would be available here, or about $17 million a year. Staff studied the matter and nine months later, in September 2000, announced its plan for spending this money. Of the total available under SCPI, staff proposed (and city council agreed) that $21 million, or about $7 million a year would be used on housing. The hang-up was that it could only be used for transitional housing, not for creating permanent new housing, and monies could only be spent on projects that were shown to be sustainable after SCPI was over. This $7 million is a tiny sum compared to Toronto’s annual expenditure, which exceeds $5 billion. It was one ten-thousandths of one per cent.

The city then issued a proposal call for ways to spend the money. In July 2001, projects totalling about $11 million for repair and new construction were approved. As of today, about $3 million of this amount has been dispersed. A number of projects simply haven’t got off the ground. Total number of new places to live built? Less than 100.

Of course, more are in the construction phase. Within a year, probably another 200 places to live will be available, of which perhaps half could be called permanent..

The point is, this is not a winning strategy. We are doing very little to make is easier for the homeless.

3. Solving the problem.

It sounds simplistic, but the problem here is there isn’t enough places for people with very little money to live and call home. To solve this problem, we must create housing that people can afford to live in on a permanent basis.

Here’s what’s happening on this front.

a) The city has a program encouraging rental housing on city land, writing down property taxes for a number of years and forgiving various building fees. Some units will be built under this program – probably 200 or more within the next two years, and it will sort of be affordable as the city tries to ensure that provincial rent supplements attach to these units. For the city, this is a significant achievement, given all its other financial problems.

b) The federal government announced a new housing program late last year, spending about $700 million over five years on new rental housing, with a maximum subsidy of $25,000 a unit. The program requires contributions by each province, so it can’t be implemented until an agreement is signed. Quebec has signed such an agreement, matching federal funds, and will built 6500 units over the next two years.

Ontario has yet to sign its agreement, so no funds are yet available. When it does sign, it is expected not to contribute any of its own fund , but require contributions by municipalities and charities. The chance of any of this housing becoming affordable to the homeless is very small. In any case, the total number of units that could be built in this province under this program will not exceed 3000 over 5 years (that’s 600 units a year) of which less than half would be in Toronto. At best, expect Toronto’s rental stock to increase by about 300 units a year. This will only happen if the provincial government signs the agreement.

4. That, in short, is why there’s a big problem.

5. In conclusion, a publicly funded housing program is needed. The amounts of money required are sizable, and no private company can come close to meeting them. Until we elect governments which see their job as helping give everyone a reasonable life, we’ll see this problem increasing.

In the meantime, individuals do what they can – Out of the Cold program, shanty towns and sheds, acts of individual charity and kindness.
What we can’t do is give up. If we keep pushing and working away, things are bound to get better.

Thank you.
John Sewell

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