Sean Fraser not running again
Nate Erskine-Smith is the new federal housing minister
Last month, Sean Fraser announced that he’s not running in the next federal election - he represents a rural Nova Scotia riding, which means a lot of travel, and he has a young family. Normally this would have been big news, since Fraser is highly regarded. In this case, though, it was overshadowed by Chrystia Freeland’s resignation, which happened on the same day.
Mike Moffatt describes Fraser as “one of Justin Trudeau’s most vital ministers.” Unlike a lot of politicians, Fraser really understands the need for more housing, perhaps because he’s relatively young (he’s a Millennial). And he was willing to take concrete measures to make it easier to build housing, in particular waiving the GST on new purpose-built rental housing, and allowing accelerated depreciation (over 10 years instead of 25).
Fraser’s success stemmed from his willingness to take bold action, his acknowledgment that Canada has a housing shortage, and his acknowledgement that tax and regulatory systems that discourage new home construction are part of the problem. His greatest triumphs came when he focused on policies to drive down the cost of building new for-profit and not-for-profit homes.
It is undeniable that Fraser’s reforms have had a positive impact. Economic conditions, from a slowing economy to fluctuating interest rates, harm investment in housing, particularly in the condo market. However, despite these challenges, housing starts are up in 8 out of 10 provinces in 2024 relative to 2023, with Alberta and Quebec each experiencing a 30 per cent rise, and only British Columbia and Ontario seeing declines. Much of the growth has been in rental apartments, which have benefited from favourable tax treatment and access to capital that are a direct result of Fraser’s reforms.
Housing Accelerator Fund agreements
Fraser is perhaps best-known for the many Housing Accelerator agreements which he negotiated with municipalities across Canada. Deny Sullivan, writing in September 2023:
This is incredible. Housing minister Sean Fraser demanding Halifax allow 4-units, 4 storeys by right, more near the universities. That’s more housing supply across a lot of the city.
Deny also pointed out that municipalities turn out to be incredibly sensitive to property-tax increases, and thus are willing to loosen their rules in exchange for relatively small one-time payments. Halifax budges on housing:
I don’t think anyone who cares about more housing should tell councilors this, but they are revealing themselves to be incredibly cheap dates. The demands from minister Fraser are in exchange for a one-off, $73m in funding. Call it equivalent to $10 million per year over 10-years (accounting for interest).
Halifax has a billion dollar operating budget! They are willing to abandon their foundational urban planning policy in exchange for 1% of their own miniscule budget! Put differently, property taxes, the city’s main revenue tool, would only need to increase by 1.5% for Halifax to raise the annual equivalent revenue that Sean Fraser is offering.
Of course, the councilors would say they we’re headed down this path anyway with the regional plan review and so on, but it only happened when the feds dangled a toonie in front of them (the average single family tax bill is $2288 - so a 1.5% increase is about $3 a month).
I know I sound like a crank being the one guy jumping up and down and pointing, but last week was a game changer for housing policy.
Sean Fraser realized he could wield the Housing Accelerator Fund carrot like a stick. He's going around bashing munis and I am here for it!
Seriously. Explain to me how CPC's housing policy is better than the revamped LPC approach like I'm five years old. You can't, can you! Sean Fraser is eating their lunch on policy. Maybe it doesn't matter electorally. But if CPC wants to own the file, they need to go bigger.
Moffatt takes a more skeptical view, noting that more oversight is needed to make sure that municipalities fulfill their commitments.
Another limitation of the Housing Accelerator Fund is that although municipalities are willing to loosen their rules in exchange for a one-time payment, they’re not going to give up a stream of future revenue (development charges). Fraser did pressure the Metro Vancouver board to halt their planned increases in development charges, but in the end, they’ve gone ahead with the increased charges.
Nate Erskine-Smith: “A short runway”
After Freeland resigned, Trudeau appointed new cabinet ministers a few days later. The new housing minister is Nate Erskine-Smith. Erskine-Smith is known for being unusually candid; he’s sometimes defied party discipline and voted against the Liberals. He has a Substack, including a podcast with interviews across party lines (e.g. Erin O’Toole and Lisa Raitt). He ran for the leadership of the Ontario Liberals last year, coming in second to Bonnie Crombie. His YIMBY advocacy appears to have helped to push Crombie to support housing. Profile by Justin Ling.
I’m not sure how much time he’ll have before the government falls (as he puts it, he has a “short runway”).
If Nate Erskine-Smith does nothing but
1) update the National Building Code to reduce vertical circulation requirements (single egress, smaller elevators, etc.) in midrise buildings, and
2) renegotiate Toronto’s HAF Agreement for a quick update to the City’s multiplex, Major Streets, and Avenues permissions
his short tenure as Minister of Housing will be a success and he’ll be very well placed to replace Bonnie Crombie as the next OLP leader.
Metro Vancouver to get $250M from feds for Iona wastewater treatment plant. Will it freeze DCCs in return? Howard Chai, Storeys. A condition of funding from the Canada Infrastructure Fund is that municipalities are required to freeze development charges at April 2024 levels. But this will only happen if Erskine-Smith is willing to threaten to withhold funding.
Evan Scrimshaw has a number of suggestions.
More
The overall federal housing plan, April 2024. Reduce population growth, build more housing everywhere.