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Report ripped; RIP

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Rob Shaw: Within minutes, Victoria and Ottawa’s finance ministers flatly rejected two key recommendations from an expert panel to address housing affordability.

It took three years for a panel of experts to research solutions to fix British Columbia’s worsening housing affordability crisis, but mere minutes for the province’s finance minister, and her federal counterpart, to kill the entire project dead this week.

Expectations have been high for the “Expert Panel on the Future of Housing Supply and Affordability,” since the BC and Canadian governments jointly launched the investigation in 2019, with a panel of “leaders and specialists in a range of fields with relevant expertise” and a mandate to begin “exploring options to allow British Columbians to have further access to the housing that they need and can afford.”

But when the six-person panel produced its final report Thursday, it was immediately clear neither the BC NDP government, nor the federal Liberal government, wanted anything to do with the final results.

Within hours of it being quietly posted on the BC government website, Finance Minister Selina Robinson rose in the house to denounce two of its key recommendations – that Ottawa explore a capital gains tax on principal residences, and that BC eliminate the annual home owners grant.

“We are not interested in making any changes to the homeowner grant,” said Robinson, quickly. ”I have said that before, and I am saying that again today.”

In Ottawa, Finance Minister Chrystia Freeland did the same.

“We will examine this report released today – though our government has been clear that we are not considering a capital gains tax on principal residences,” she said.

And with that, two recommendations that experts, housing advocates and even Canada’s largest banks have said could make a major and immediate difference in cooling the housing market were yanked off the table to score cheap political points in the two capitals.

Prime Minister Justin Trudeau is on the verge of a snap election call, and the idea of suggesting to voters that he might tax the profits on the sale of their homes by fiddling with the exemption on capital gains is a vote killer.

Never mind the fact the Bank of Montreal’s research division said in a March report that the proposal could be crafted in a fair way – say with a five-year time period that you are dinged on your profits for flipping a home, but no tax penalties after that.

“This could easily crowd out speculation, and alter market psychology,” the report said of the capital gains idea.

“A similar concept was used in Ontario in the 1970s, and it weakened the market overnight.”

But the Trudeau government is not known for doing what is hard, or necessary – only what is popular. And so the idea of getting its hands dirty with contentious solutions that might actually help fix the housing market doesn’t seem palatable.

Back in BC, no government has been willing to touch the homeowner grant since W.A.C. Bennett implemented the measure in 1957. He ingeniously crafted the tax exemption to have an annual application process, so that voters are reminded annually how generous and benevolent his government was to the “little people,” as he called them.

As property prices have skyrocketed, successive governments have been forced to raise the grant to preposterous levels.

A government-appointed tax panel headed by a former NDP finance minister in 2018 recommended the grant be scrapped because it was “inconsistent with principles of progressivity, administrative efficiency and fairness.”

It might be ancient, cumbersome, ineffective and do almost nothing to help actual housing affordability, but it remains as popular as in 1957, and no B.C. politician is willing to reach into the wallets of voters and take away grants that will increase their taxes.

Opposition BC Liberals tried to goad Robinson into veering even slightly off the course of total denunciations Thursday, arguing constituents would be outraged if she even thought about changes.

The BC Liberals seemed wholly unconcerned that their criticism showed their own unwillingness to make the hard decisions about housing affordability.

“People are already on edge about homeowners’ grants,” said MLA Peter Milobar. “I think the minister can appreciate that. The minister was a former housing minister as well. My inbox is flooded in Kamloops right now, especially by seniors.”

Robinson took the bait and brought the hammer down even more definitively on the report.

“What I can absolutely assure the member is that we are not interested in making any changes to the homeowner grant,” she said.

“I have said that before, and I am saying that again today.”

She then brought Ottawa in to execute a tag-team takedown.

“The federal Finance Minister and I said we’re not going to act on two of the recommendations,” she said.

“We have no appetite for either of those recommendations. I think it’s the right decision on the federal government’s part, and I know it’s the right decision on our part, in terms of what our responsibilities are. I think that’s good for homeowners, and I look forward to taking a look at the other recommendations.”

Robinson noted the two main ideas in the report are so dead upon arrival that she doesn’t even have to bring them up directly with Ottawa in any future conversations.

“While it is my responsibility to advocate and to lobby, there’s nothing to lobby about here,” she said.

“To spend time trying to get the federal government to do something when they’ve already stated their position is not a good use of my time. It’s not a good use of any relationship work that we continue to do, so it doesn’t make any sense, except, perhaps, a thank-you note: ‘It’s the right decision. Glad to see that you made that commitment.’ And I’ll be sure to do so when we get out of this chamber today.”

After tossing the expert report under the bus, and then backing the bus over it several times, Robinson returned to the familiar lament of the finance minister – the difficulty of finding solutions to the enormous and overwhelming problem of housing affordability. Never mind the ones staring her right in the face.

“It’s going to take a sustained level, frankly, of action to tackle the crisis,” she said.

“We know it won’t be solved overnight. Here’s one more piece for us to roll up our sleeves and dig in to, to see what more perhaps we need to be able to do.”

Far from digging into the report, the only thing the two finance ministers did was dig a grave in which to bury it. Then they returned to complaining about how hard the crisis is.

It’s hard to solve a problem when you aren’t willing to listen to potential solutions.

Rob Shaw has spent more than 13 years covering BC politics, now reporting for CHEK News and writing for The Orca. He is the co-author of the national best-selling book A Matter of Confidence, and a regular guest on CBC Radio.

rob@robshawnews.com
twitter.com/robshaw_bc

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