Thank you for the opportunity to make this presentation today on such a pressing matter for workers in Canada.
The Canadian Union of Public Employees is Canada's largest union, with 740,000 members, including workers at publicly owned housing corporations, homeless shelters, long-term care homes, and other social and health care services at the front line of the housing affordability crisis. Many CUPE members are also suffering under the same crisis as wages fail to keep up with rising costs.
One reason the cost of buying or renting a home in Canada has increased so dramatically is that people and institutional investors have treated housing like an investment, specifically as a means to fund retirement. Our research has found that Canada's inadequate public pension system has been a factor behind the current housing affordability crisis. To put it simply, too many people must rely on the value of their homes going up, which worsens affordability for future generations, in order to have dignified retirement.
Retirement security in Canada was supposed to be a three-legged stool: the Canada pension plan, old age security and a workplace pension plan, but more than 60% of Canadians don't have a workplace pension plan, which leaves the majority of workers with a very wobbly stool.
One way people have been making up for this gap is by treating housing like an investment rather than a basic right. Recent surveys indicate that around 40% of Canadian homeowners rely on the appreciation of their homes to fund their retirement, and the federal government has actually promoted this view of housing. Up until a few weeks ago, the Government of Canada website dedicated to retirement planning proposed selling your current home and buying a less expensive home or getting a reverse mortgage as retirement income options.
Federal tax policy has also fed into this phenomenon because equity gains in primary residences are not considered taxable income. There is also the homebuyers' plan, which allows people to withdraw from their RRSPs to build or to buy homes.
Encouraging Canadians to count on their homes as investment vehicles for retirement income is very risky. It leaves people at the mercy of the boom-and-bust cycle of the housing market. It also means that homeowners can see efforts to bring down house prices as a direct threat to their retirement. This misplaced fear of falling house prices can lead homeowners to fight against more affordable housing in their neighbourhoods.
There's a second piece to this, and that's how workplace pension plans have fed into the financialization of rental housing as they search for the high returns for their members. More and more, pension funds are investing in purpose-built rental housing in Canada, and unfortunately, the way those pension funds view housing is no different from REITs or other asset managers who seek to maximize profit.
Investors profit from both value appreciation and a stable form of income in the form of tenants' rent. Investors often reposition their real estate holdings to make even more money: They buy existing affordable housing, evict tenants, and then replace them with more expensive units. Our union wants our members' pension funds to achieve decent investment returns, but not at the expense of workers and the Canadian public.
We implore this committee to focus on the more than 1.4 million people in core housing need, nearly one million of whom cannot afford monthly housing costs of more than $1,050 a month. It is those people for whom the consequences of inaction are the most dire.
This committee heard it from a representative from Skyline earlier in the study. The private market, by definition, will not deliver below-market affordable housing; it's against its interests to do so. The current path is not working. Government should stop using public subsidies, financing and forgone revenue to support for-profit investors as they build unaffordable housing. Instead, for those who are in the most need, we need direct public investment in affordable housing, which Governor Macklem has confirmed would not be inflationary spending.
The committee can use today's study to refocus the national housing strategy towards social, non-profit and co-operative housing, investments that would actually advance the right to housing.
The federal government can also use its spending power to require greater protections for tenants from the profit-seeking imperative of their financialized landlords. For all Canadians, government should guarantee a good pension for all through old age security and the Canada pension plan, and stop encouraging Canadians to count on their home sales to pay for retirement.
My colleague, Aditya, will now add some brief additional remarks.