Thank you very much, Mr. Chairman.
I'll say right away that CHF Canada is not a poverty specialist organization, although I think we can agree that there are multiple causes of poverty in Canada. We set some of those out in the brief we're presenting here today. I'm really here to talk about one thing, as you can imagine, and that's the link between poverty reduction and housing and the role that the federal government can play in it.
I think everybody would agree that housing, along with health and education, is a fundamental building block of civilized society in Canada and in all countries throughout the world. People who cannot afford the housing they need are obviously not going to escape the trap of poverty.
In Canada, the housing market, together with the existing affordable housing that we have, meets the housing needs of about 85% of the Canadian population. This is pretty good for them, but it means that about one in seven Canadians is left out. They cannot access housing at a price they can afford, and the market can't supply it at a price they can offer to pay for it. That's not a political opinion; it's just a question of economic fact.
It means that in Canada we see a disproportionate effect of housing costs on Canadian families. The average Canadian family spends 19% of gross income on housing, whereas the households in the lowest ten percentile of income groups in Canada pay fully 66%. You can well imagine that any household paying 66% to put a roof over their heads can barely afford the other necessities of life, let alone build a platform and a future they can rely on for self-determination in the future.
On top of that, the situation is not improving. Between the 2001 and 2006 censuses, the number of households in Canada in core housing need actually grew, from 1.485 million to 1.494 million. That's not exactly what you would call progress. There are disproportionate representations in those groups from seniors, the frail elderly, Canadians with disabilities, new Canadians, and single-parent families.
The percentage is down a little bit, from 13.7% in 1991 to 12.7% in 2006. But I think we can agree that this is painfully slow progress, especially as you consider that the intervening period of 15 years was one of the most affluent, if not the most affluent, in Canadian history. And yet there's a strong public interest in reducing housing need and helping to eliminate poverty. Quite aside from the compassionate ethical grounds, who would not want to see the human misery engendered by housing come to an end?
There is a very strong economic case to be made for ending poverty in Canada, because if you reduce poverty, you increase productivity and you grow Canada's GDP. It's quite simply because people live longer, healthier, and more productive lives. There are also, of course, reduced social costs if you eliminate poverty. Costs for policing, emergency services, and reactive health care all go down.
There's an interesting 2007 U.S. study that is cited in the document we're leaving behind. It's called the Holzer study. It cites some statistics around child poverty in the United States. It estimates the following. It's a longitudinal study that says that the future outcomes of child poverty are that productivity and economic output are reduced by 1.3% of GDP, health expenditures are increased by 1.2% of GDP, and costs of crime are increased by 1.3% of GDP.
The Canadian GDP for 2008 is estimated at $1.6 trillion. If we extrapolate those numbers for Canada and round those ratios to 1%, the cost to our economy of child poverty alone is some $60 billion a year. Even if half that number were true—even if it were $30 billion a year—there's a strong economic case to be made for poverty reduction strategies.
Let's get back to housing specifically and its link to poverty reduction. There's clearly a need for intervention at the public level when the market fails, especially in the current credit crisis. One of the lessons we've learned from the current credit crisis, especially in the United States, but here in Canada too, is that home ownership is not the 100% solution for housing needs in Canada. Meanwhile, housing need is growing as the recession deepens; more people are falling into housing need.
We need new affordable housing and we need a public intervention to see that getting it happens. That requires an integrated strategy involving the federal, provincial, and territorial governments working in cooperation with each other to reduce housing need.
Housing is a federal issue because it's a national problem, and that's why we believe the federal government needs to take the lead on it.
Right away I want to acknowledge that the present government, since 2006, has put more than $5 billion on the table for housing. The government is to be congratulated on that, but the government can do more, and it can do more, moreover, without increasing the current spending by adopting, in our view, two measures.
First, there needs to be an accountability framework for the money that is transferred to the provinces and territories. Right now you have the issue that I described, on one hand, which is core housing need, which doesn't seem to be going down. On the other hand, you have increasing federal spending that is going to the provinces and territories, but there is no link between the two at the moment. In my view, the federal government should be requiring an accountability framework that says that for our housing dollars spent we want to see a reduction in core housing need; we want to see targets set and targets met.
To me, the parallel with health is very simple here. In exchange for federal health transfers, the federal government has required reduction in wait list times. We want to see, in exchange for housing transfers, a reduction in housing wait list times. That is something the federal government has a right to insist on.
The second issue we want to raise here, the second piece of advice, if you like, is that the federal government should maintain what we call a legacy spend. There are some 650,000 units of affordable housing in this country that have been developed in the post-war period. Most of it has been developed under federal programs of one kind or another. That's an enormous asset legacy, and we think it should be preserved, and we think its affordability should be preserved. The funding agreements that provide affordability in those programs are starting to come to an end, and they're going to come to an end in very large numbers over the next 10 to 15 years. We think this is a tremendous opportunity for the government here to reinvest in that housing without increasing the amount it's already spending.
If the government maintains what we call the legacy spend, which is estimated to be about $1.7 billion a year through the minister's account to CMHC, we believe that as those agreements end, the existing affordable housing can maintain its affordability for Canadians with low incomes. If you're hearing the message from anyone, whether it's a crown corporation or anyone else, that these housing providers are going to be okay after these funding agreements end, then you're hearing about a very rose-coloured picture. Some might be; most won't be. Most providers will not be able to provide the level of affordability in their housing that they're offering now. We are talking significantly about co-ops, public housing, non-profit organizations, where the level of RGI, the rent-geared-to-income housing, is very high, and it cannot be sustained without continued government spending. Again, we're not saying more money needs to go on the table; we're saying maintain the existing parliamentary allocations at their present level.
I would be remiss, Mr. Chairman, if I didn't say something about cooperative housing, because that of course is my organization and my passion. Over the past 40 years, the federal government and the provinces delivered altogether some 90,000 units of affordable cooperative housing for Canadians of moderate and low incomes. It is tremendously good value, in our view. Successive evaluations have shown that housing coops offer the best value for public spending. That's because there is no intermediary bureaucracy. The money that the government puts on the table for co-ops goes directly to the provider. There's a strong business discipline model. They have to make ends meet. There is no automatic funding of deficits by the government. They are self-directed, and the involvement of the members in the operations of the co-ops means tremendous opportunities for personal development, and the result is, of course, that they build families.
In summary, Mr. Chairman, if I may, we are saying that housing has a very huge role to play in reducing housing need in Canada because of the clear, incontrovertible link between property and a shortage of affordable housing. Stable, affordable housing provides a platform that assists Canadians in poverty to invest in their futures and escape the poverty trap.
We're recommending two immediate strategies: an accountability framework for federal spending and the continuation of housing appropriations at present levels for existing housing assets--those several legacy assets. Canada's housing co-ops want to be part of that solution, and our sector wants to continue to build safe communities that help individuals and families break the cycle of poverty and inadequate shelter.
Thank you very much, Mr. Chairman.