Human Resources Committee on Feb. 9th, 2017

[The chair]

I was told that I would be tarred and feathered if I did.

I believe Saint John is in good hands with the likes of you on the ground. It's up to us to make sure that you have the resources to do the jobs that you do, and I thank you sincerely.

We are going to suspend shortly. If you would indulge, we don't get to travel very often, so I would love to get a photo with everybody. Don't leave, but I will have to suspend in order to be able to take a photograph.

We will be suspending for about 15 minutes, and then we'll come back with our next panel.

Thank you very much.

[The Chair, Liberal, Bryan May]

Welcome, everybody.

It's an absolute pleasure to be here. This is our second panel today. For those of you who weren't here at the very beginning, I'll just let you know that we got in at about 1:30 last night and were up early this morning. If we start to nod off, please forgive us, but you will have our undivided attention for the next hour and a half.

I'm very happy to welcome, from Housing Alternatives Inc., Kit Hickey, executive director. We also have Jody Kliffer, appearing as an individual. From The ONE Change Inc., we have Anthony Dickinson, president. From Economic and Social Inclusion Corporation, we have Althea Arsenault, replacing Stéphane Leclair, manager, resource development. Also appearing as an individual, we have Daniel Shoag—Karen's new best friend—assistant professor at the Harvard Kennedy School.

Welcome, everybody. It's a pleasure to be here. We are moving forward on our poverty reduction strategy study. We are focused in this cross-country trip on the quadrants of housing and neighbourhoods. I'm very pleased to see everybody here.

We'll get started. Each speaker will have approximately seven minutes. If we get close to the seven-minute mark, I'll just raise my hand. I'm not telling you to stop, just to start to wrap things up.

From Housing Alternatives Inc., we'll have Kit Hickey, please.

The next seven minutes are yours.

[Kit Hickey, Executive Director, Housing Alternatives Inc.]

Thank you very much for the opportunity to be here this morning.

I would like to say—because my cheque did arrive—a special thank you to MP Long for all of the work that he and his staff do here in Saint John. We do appreciate it.

I'm Kit Hickey, the executive director of Housing Alternatives. Housing Alternatives is a nationally accredited non-profit resource group providing development and management services to non-profit and co-operative housing projects here in Saint John and the surrounding area. Additionally, we also offer housing and other related services to our homeless population through a provincially funded organized departure project, as well as the federally funded housing first project.

We were becoming increasingly concerned with the long-term viability of the co-operative housing sector in Saint John. A major preoccupation was the expiry of operating agreements and how we could ensure the long-term affordability of housing for low- to moderate-income families and single adults.

In October 2012, the Co-operative Housing Federation of Canada and Housing Alternatives organized a meeting and invited members of the nine Saint John housing co-operatives to attend. Members found that each co-op was facing similar issues, such as financial difficulties, lack of funds for major repairs, ensuring security of tenure for low- and modest-income members, and low member involvement.

It was decided that working together would be essential for our co-operatives to remain strong and healthy. Our group embraced the international co-operative principle of “Co-operation among co-operatives”, and began our journey. A steering committee was formed, with representatives from each of the nine housing co-ops. Each steering committee member was tasked with getting approval from their own co-operative to participate on the committee, and agreed to regularly report back to their co-operatives.

At a goal-setting meeting in April 2014, the group agreed that the purpose of the committee would be to explore opportunities for housing co-ops in Saint John to work together by considering the impact of consolidation. The goals of the committee included a financial analysis of all participating co-ops, developing and maintaining a communication plan, discussing the advantages and disadvantages of a possible merger, reviewing and discussing other best practices and other successful mergers, and meeting with stakeholders to develop a merger process.

Once the analysis was complete, it became clear that by merging, the co-operatives would see the following benefits. First would be financial savings, including decreased audit fees; decreased insurance premiums; bulk purchasing options; group tendering of contracts for snow removal and lawn care; and decreased risk in the cost of vacancies and arrears. There would also be increased interest in leadership roles; prevention of board member burnout; increased involvement; more access to time and/or funding for education; and an increase in new ideas and direction for the co-operative. Other benefits include a larger and stronger voice to government, the ability to refinance for capital repairs, a larger pool of units, and the ability to explore new possibilities.

Co-op failures are more likely where size threatens the ability to have good governance and management. By merging and creating a strong and viable co-op, the Unified Saint John Housing Co-operative is decreasing the threat of lost units to the Canadian housing co-operative sector. We are also protecting affordable housing in Saint John and providing a positive model for other co-operatives across the country, to ensure that affordable homes are not lost.

On January 1, 2016, eight of our co-operatives merged into one new 252-unit co-operative, now called the Unified Saint John Housing Co-operative Ltd. Each of the neighbourhoods of the previous housing co-ops is represented on the board of directors. The housing co-op received the Co-operative Housing Federation of Canada's award for co-operative achievement at the annual meeting in Hamilton, Ontario, in May 2016.

In conclusion, the members of the newly formed housing co-op report a high level of satisfaction. We feel confident that with this pre-emptive action taken by the sector, the long-term viability and sustainability of these affordable housing units is secure. We proudly see this as an example of how our community takes a leadership role to be innovative to solve issues.

Thank you very much.

[The Chair, Liberal, Bryan May]

Thank you.

Now we'll go over to Jody Kliffer.

You have seven minutes, sir.

[Jody Kliffer, As an Individual]

Thank you.

Thank you to the committee for hearing what I have to say today about land banking.

By way of background, this is a piece of research I did at graduate school, at UBC, back in 2007. That's why I'm reporting to you as an individual today. It's just something that came out from my past and has followed me like a wounded dog for seven years. So here I am before you to talk about some of the highlights of land banking as a tool that's been used throughout North America.

Basically when you think about poverty, it tends to manifest itself in many different ways. When we think about the solutions to it we have to have a holistic approach that involves both the health and education employment components of poverty, but also the built environment and how poverty has struck down a lot of our communities and neighbourhoods.

Poverty in Saint John, like many communities, is concentrated in pockets, which you've probably heard a lot about today. Especially in eastern Canada, these neighbourhoods have a lot of older building stock. CMHC tells us that anything built before 1930 has a very high occurrence of needing repairs, which is basically the entire building stock of the urban core of Saint John. It's not that it all needs repairs, but it certainly falls in the category of being built before 1930.

As some of these communities have experienced decline over the past 50 years, for various reasons, what tends to go down is community pride, tax revenue for cities and provinces, the safety of these communities, and reinvestment in lateral adjacent properties or properties in a similar area because there's no confidence among the private sector. What goes up at the same time is a cost to city resources to send emergency response vehicles to police these neighbourhoods—fire trucks, ambulances, and so on. Future blight also goes on the rise in these communities, as do crime rates. That cycle of decline enters into a very aggressive pattern, and it's hard to turn away from that without strategic thinking.

How does decline typically happen? As we know, for different reasons an owner of a property is not able to pay their mortgage, whether it's an absentee landowner who no longer sees value in the return on investment on their property or it's a landowner who, for whatever personal reasons, is unable to make mortgage payments. Tax accumulates on that property. Eventually it becomes abandoned and begins that cycle of deterioration, if it hasn't already entered that state, and the property is foreclosed. Then it goes to tax sale. This process takes about seven years or longer, and meanwhile there's been no reinvestment in the property. As time goes by, the return on investment on those properties becomes even more bleak.

So what is a land bank and how does it interface with these problems? The mission of a land bank is to restore integrity and community pride to these neighbourhoods and stabilize that process of decline. We'll talk in a bit about how it does that. It is a strategy that deals with the poverty of our built environments that form the physical conditions of poverty around us. It started in Michigan back in 2001, I believe, in a town called Flint, but later was adopted by Detroit, and now has spread across America, from San Francisco to St. Louis to Cincinnati to almost every major urban centre that has some form of abandonment. It's been a very useful and strategic method to return properties and buildings to new uses in the communities and stabilize that process of decline. Although it has not yet been adopted in Canada, I think it looms as a potential new strategy for us to consider.

The structure of a land bank is that typically it is a quasi-governmental organization comprised of about nine or so members; a couple typically are politicians, to build in the transparency of a land bank. It's a not-for-profit body. It looks at real estate properties in the city where it's working and tries to assign value where the regular real estate market has failed to assign value to these properties anymore. Basically it looks at properties that nobody else is looking at.

How does it work? It has three areas of interest. It acquires land sometimes through purchase, sometimes through donation. A lot of times you'd find somebody who doesn't want to actually own a property because they just inherited it, or there's no value to them. Land banks have the unique ability to expropriate land if the right circumstances are present for them to activate that power, which in the States is given to them by the state.

The second area of work it does is it maintains land. It creates green lots. The property building is way beyond feasible repair. It knocks the building down and creates a green lot instead of having blight. It can put community gardens into these spaces to offer food to the community, and it can restore buildings if they've not deteriorated enough to require being knocked down.

The third area of activity of a land bank is to divest itself of land. It's not there to hold land forever; it is there, rather, to repurpose it and reposition it. A land bank could go to affordable housing outfits to offer side lots to adjacent neighbours once the building has been removed and it has become a green lot, or it could go to new development if it's been able to acquire several adjacent properties. You could reposition that for sale.

One of the powers that is needed, typically, by a land bank in the States is the power to clear property taxes. A lot of times, a barrier to reinvestment in property is that the taxes have accumulated for so many years. A land bank has the power to eliminate those taxes. Another power needed is the power to clear the title on land. A lot of times, especially in older cities where there have been estates and inherited lands, the title can get very confusing over time, and that's a barrier to reinvestment. A land bank has the power, as I mentioned, to expropriate land, a power given to them by the state. Decisions are made by the committee when that is an appropriate power to exercise. A land bank can expedite the foreclosure process, so instead of taking seven to eight years, the process goes to about two years. The building in question doesn't reach that critical state of decline. A land bank can also make quick decisions. It doesn't have to vet its decisions through any government body, such as a city council. It's empowered to make decisions on its own by its own governance structure.

The benefits that fall out of a land bank have been robust in a lot of the communities that have them in the States. There's neighbourhood beautification, to start with. Land banks have stabilized the decline of the communities they operate in. There's new tax revenue in a lot of cases for the buildings that have been repurposed. They result in safer streets. They have more affordable housing that has been turned over to outfits that are active in that portfolio. They've retained a lot of old building stock because, instead of buildings going too far down the path of decline, land banks are able to stabilize that process more quickly and return these assets to the community. In some cases, they improve the food supply to the community, as more community gardens tend to operate.

The financing of a land bank has typically come through seed funding that comes from the government or from not-for-profits. They're able to operate because they don't pay taxes on the properties that they own. One revenue stream beneficial to land banks is the increased taxes to any properties repurposed for use in the private sector. For five years after a property is repurposed, the land bank retains the increased taxes. So it goes to the land bank for five years before it's returned entirely to regular format. Land banks are also able to generate revenue from any sales of properties.

Why Saint John? The evidence is clear. I think we have a lot of properties where poverty is concentrated—especially in some neighbourhoods where Kit's group and other groups in our community work in the north end. The real estate market has not been successfully assigning value to a lot of the properties and buildings. If we don't do something soon and the status quo remains our strategy, then demolition and further decline is probably everything but certain.

Thank you.

[The Chair, Liberal, Bryan May]

Thank you very much, sir.

Now we have the president of The ONE Change Inc., Anthony Dickinson.

Welcome. You have seven minutes.

[Anthony Dickinson, President, The ONE Change Inc.]

Good morning.

Thank you to the chair and to the rest of the committee for the invitation to speak today, and to the rest of the presenters this morning.

I want to focus my remarks on the need for safe and affordable housing, particularly how it relates to neighbourhood-based poverty reduction, which I would look at as an essential piece to any poverty reduction strategy. I am going to be speaking to you from my perspective as board president for The ONE Change Inc., which is a grassroots community development organization. However, my remarks will certainly be flavoured by my day job as a men's homeless shelter director for Outflow Ministry; my long-time advocacy for the homeless community in Saint John; and also my time living in the old north end, which is one of the priority neighbourhoods in Saint John.

Time is short, so I'll limit my remarks to two key areas. First, I'll discuss what type of housing, in my view, is needed; and second, I will discuss the importance of community, both its physical layout and its residents. I'll conclude my remarks by suggesting a way to crystalize our thinking.

What type of housing do I believe is necessary? The terms of reference given to us to prepare for this morning touches on my answer. One of the main areas raised for the study is on affordable housing. May I respectfully contend that this term of reference is incomplete? Saint John is in need of housing that is not only affordable but also safe. Today Saint John has housing that is affordable. We also have housing that is safe. The trick, in my mind, is to have housing that is both.

Let me provide you with two examples. ONE Change operates the Nick Nicolle Community Centre. We recently commissioned a study about the use of that centre and how to use an adjoining building that was vacated when the neighbourhood school closed, how we could use that building to benefit the community. One of the comments made by a community member is that they use our community centre as a place to get warm in the winter because their apartment is too cold. Clearly this apartment is affordable, but it is not safe.

The second example comes from a man who used the Outflow men's shelter. He excitedly left the shelter one day to move into his own place. It was a time of handshakes and celebration for everyone. He came back to the shelter two days later in need of a bed for the night, covered in scars from bedbugs. The building he moved into was infested. Again, the apartment was clearly affordable, but it was not safe.

Neighbourhood layout is also important when we consider safe and affordable housing. Housing is not only safe and affordable based on the unit or building itself, but also based on the physical place the building is. ONE Change is proud to be part of what we would call the corridor of services, which includes the NEW-C or the North End Wellness Centre, RiverCross mission, St. Luke's church, the Harbour church, the North End Food Bank, and our own Nick Nicolle Community Centre, which are all within a few blocks of each other.

Each of those services contributes to safe and affordable housing by providing residents with some of the services, meals, and community that they need in order to live flourishing and dignified lives. Such pieces of a community are crucial. At ONE Change, we are proud to offer all of our programming for free. No one is quizzed about how worthy she or he is to receive programming or about whether their household income is low enough to warrant a program subsidy. Instead, everyone is treated equally.

A family locked into a third generation of poverty will receive the same high level of service when they walk through the door at the Nick Nicolle Community Centre as a member of Parliament does. In my view, this is essential to providing a dignified service to our residents, because it means that everyone who walks through the door is an equal. Maintaining safe and affordable housing on a limited income is difficult. There are unavoidable expenses. Accessing the programming, whether educational, recreational, or athletic, that helps people break the poverty cycle should not add to these expenses.

I want to mention one more thing about ONE Change. I said earlier that we are a grassroots organization, and I mean that. Resident input is welcomed and it is encouraged with everything ONE Change does.

We have doors open to the community, and we are also eager to solicit its advice. With whatever ideas this committee has, please, please make sure you take your lead from the citizens that these ideas will most directly impact. Their voice matters every bit as much as mine does, and you have as much of an obligation to listen to them as you have to listen to me.

I would like to close my time by suggesting a framework for our thinking. At first blush, you may think this is a little bit pie in the sky or perhaps even silly, but please hear me out. My suggestion for you is to think big every single time. Poverty reduction is not good enough. Poverty reduction makes statistics shrink and people feel good, but it leaves other people behind. Our goal should be the end of poverty. That is a big dream.

Homelessness and a lack of safe and affordable housing is a big problem in Saint John. Generational poverty is a big problem in Saint John. Further than that, poverty in general is a big problem in Saint John. I am encouraged by this committee's desire to try innovative solutions and to give Saint John an opportunity to try out these new ideas. We are not going to solve poverty with the status quo. We've tried that, and it did not work. With every single idea you have, please ask, “Is this big enough to end poverty?” If the answer is no, then please scrap it and dream bigger.

It has been a privilege to present to you this morning and to share the floor with my colleagues. I appreciate your time.

Thank you. Merci.

[The Chair, Liberal, Bryan May]

Thank you very much, sir.

We have now, from the Economic and Social Inclusion Corporation, Althea Arsenault.

The next seven minutes are yours.

[Althea Arsenault, Manager of Resources Development, Economic and Social Inclusion Corporation]

Thank you very much.

Thank you for inviting us, and I send regrets on Stéphane Leclair's behalf. He had to attend a meeting this morning.

The Economic and Social Inclusion Corporation, or ESIC as we call ourselves, is a crown corporation of the provincial government. Our program is to oversee the implementation of “Overcoming Poverty Together: the New Brunswick Economic and Social Inclusion Plan”.

We have a role; we don't do a lot of the groundwork stuff, but it's partnerships, and we're here to support and foster and bring partners together to move projects toward poverty reduction. You can almost consider ESIC the backbone of poverty reduction for the province of New Brunswick.

We are governed by an act. We are in legislation. We are not a secretariat. And the one thing I would recommend to this committee is that if you're going to do a poverty reduction strategy, ground it in an act in legislation so it does not change.

Our mandate is to develop, oversee, and coordinate the implementation of the strategic initiatives and plans to reduce poverty and to assist thousands of New Brunswickers to become more self-sufficient. We have our vision. We also have a goal. It's very lofty. It was decided that by 2015 we were going to reduce poverty by 25% and deep income poverty by 50%. Is that obtainable? Probably not, not right now. We didn't get here in five years. We're not going to solve it in five years, 10 years, or 15 years. But working together in partnerships to make us stronger, we will make those numbers go down. And more importantly, we're going to make an impact on people's lives.

The board of directors has a unique structure. I think we're the only structure like this in Canada when you're looking at a provincial poverty reduction plan. We are comprised of four sectors. No one is greater or has more power than the others. We are representatives of government, business, non-profit, and citizens. Right now we sit as a board of 17. We have three government ministers on our board—the ministers of social development, education, and Service New Brunswick. We have three representatives from non-profits across the province. We have three representatives from business. But there are six members on our board of directors who are citizens. They are citizens who are or were living in poverty. Their voice is the most important, and we show we believe in that because we have six representatives of citizens in poverty but only three ministries, three non-profits, and three government reps. And that is the most important to us. These people will tell us when we have a plan that just won't work, because they've lived it and they'll tell us the reason why we're building a roadblock, or why there is a roadblock.

That structure is the same that goes down to our 12 community inclusion networks, and any of their boards of directors as well. It also is the same structure that goes to any of our working committees or our advisory committees. There are always representatives from those four sectors on our boards and our committees.

We are in what we call OPT2. It's the second phase of Overcoming Poverty Together. We have finished OPT1 from 2009 to 2014. We are in the 2014 to 2019 plan. In our second plan, we have four pillars—community empowerment, learning, social inclusion, and economic inclusion. The strength is that it's not our plan, not a government plan; it is a plan of the people of the province of New Brunswick. We went through consultations, we asked everyone, we invited everyone to come, and we made certain that citizens had funding for availability and transportation to come and have a voice. These are their ideas; it is their plan. It is what we use as our guiding principles. Do we take action and lead in all 28 action items for OPT2? We do not. We cannot. And our strength is the fact that we go out and seek partners—partners within different government departments, partners within the non-profit sector, partners within the business sector—so that together we will be able to make an impact and move these items that we have for poverty reduction.

Here are some things we've done in Overcoming Poverty Together. One that we developed in partnership with everyone else is a New Brunswick drug plan, and that drug plan is available for people who do not have insurance coverage. We developed Healthy Smiles, Clear Vision, which is a vision and dental program for low-income children. We have a community economic and development investment fund under social enterprise.

What we're working on in OPT2, as was mentioned by the previous group, is transportation. We're about to release a report in the spring of this year on urban and rural transportation, because if you have a job but you can't get there, you don't have a job. If you don't have transportation, you can't get to your medical appointment. You can't go get your chemotherapy because you can't afford a car. It's very important.

We're also looking at developing a one-stop shop. In communication we have found that individuals, when we talk to them, don't know about our programs; they say they know they're out there, but they have to ask us how to find out about them.

With the Human Development Council and the Government of New Brunswick, we're actually going to be developing research to look at a merged system between the Government of New Brunswick and the non-profit sector. It would be one place to call to get all the information. As a government employee, even I have trouble trying to navigate the provincial or the federal system. We're also going to be setting up an advisory committee for pay equity and living wage in the upcoming months.

Our biggest strength is our community inclusion networks. We developed them. There are 12 of them in the province of New Brunswick and they are based on the communities and the communities' needs. As a province, we have an Overcoming Poverty Together plan, but parallel to this, each CIN, community inclusion network, has their own poverty reduction plan that also reflects the needs and necessary areas of focus in these communities.

We have funded over 392 initiatives since November 2011, and we've participated with over 45,000 people who have actually benefited from these programs. The most important thing we have found is that ESIC has invested over $5 million. The community has invested over $16 million, in cash or in kind, for a total project value of $21 million. Our return on investment ratio is that for every one dollar ESIC puts in, the community puts in $3.80.

Was it that way at the start? No. We were looked at as the bank and everyone was coming in asking for grants, but we went back and talked about how you're only going to be strong if your communities are strong, and if your partners are there with you. That is one of the strengths that has been able to grow the community inclusion networks across the province of New Brunswick in the last five years.

Eighty per cent of our funding actually goes back into the communities, and that's how we support it. All of our project funding goes through the 12 community inclusion networks.

We have statistics like everyone else—LICO, LIM, and the market basket measure—about how we're trying to reduce poverty in different areas. We have the struggles of all the other non-profit organizations about measurement. We have the struggles of all the other provinces when we're talking about FPT and PAC organizations. The measurements are weak. We've had those discussions because ESIC is a part of PAC. Please talk to Statistics Canada and get a measurement that can be used across the country for poverty reduction.

Our biggest thing is our partnerships. As I said, we partner with local groups on the community level, but we also do partnerships at the federal level. In front of you are two little flyers about what we're doing. One is a major project with the Canada Revenue Agency, a community volunteer income tax program for low-income individuals. We do that in partnership with the CRA, and we've been doing it for six years.

When we started, there were about 13,000 people registering to get their taxes done through the CVITP. Now, through our provincial involvement and by bringing in the public libraries, Service Canada, first nations, the Department of Health, and the Department of Employment and Social Development, we've raised that amount by over 7,000 people. Now we have about 22,000 people in the province filing their taxes through CVITP. We also have the Canada learning bond that we are doing with ESDC, and we're promoting that as well.

The strength of what we do is in our partnerships.

Thank you.

[The Chair, Liberal, Bryan May]

You're very welcome. Thank you.

Our last presenter today is appearing as an individual. He is Daniel Shoag, assistant professor of the Harvard Kennedy School.

Welcome, sir.

[Daniel Shoag, Assistant Professor, Harvard Kennedy School, As an Individual]

Hi. Thanks so much.

My name is Dan Shoag. I'm an economics professor at Harvard—recently promoted to Karen's friend—and I teach urban economics and econometrics.

This is my first time in Saint John. I'm honoured to be here today to talk to you about my research on the housing market, migration, and inequality. What I am going to have to say is a much more macro picture than some of the talks, so I hope it's useful. My research focus is on the U.S., so I'll begin by speaking about the American experience, but I think there are important lessons for Canada. I'll conclude by discussing some of my initial investigation of the Canadian data for this purpose.

This research project actually began as a failed attempt to create a homework assignment for my students. There's a famous relationship in urban economics called “income convergence”, which is a fancy way of saying that poor places tend to catch up to rich ones in terms of income per capita, and they do this by experiencing faster income growth.

I know it's weird today to think about poor places like Alabama and Mississippi having the fastest income growth, but that was true. It was actually true for over a century, starting when we first had data after the Civil War.

The assignment was going to be to ask my students to demonstrate this catch-up, the fact that poor places are catching up to rich ones, in the last 20 to 30 years of data. Thankfully, I tried my own homework first, which doesn't always happen. It's good that I did in this case, because that relationship has gone away. In the last couple of decades, poor places are no longer catching up to rich ones. Regional inequality, which had been falling for over a century, has basically been frozen in the last two decades.

The second question on the homework was to ask some students to demonstrate another one of these canonical relationships, which is just showing that people move from lower-wage places to higher-wage places. That seems intuitive. People should move towards higher wages. Again, that's something that had been true for as long as we had data. However, again, like income convergence or catch-up, this directed migration towards higher wages has pretty much stopped in the last few decades. Instead of people moving towards richer places like Connecticut or New York, Americans are now moving to mid-wage places like Florida, Texas, or Utah. That's a big change in the way migration had worked in the U.S.

These two canonical relationships that had existed for a century, this catch-up in regional income and people moving towards higher-wage places, have both fallen apart in the last 20 to 30 years. The timing is not a coincidence. Migration has a big impact on income growth and inequality. It allows people to move to opportunities, people who have poor local opportunities to find jobs in higher-wage places. It reduces labour market slack in labour markets where there are few jobs. Therefore, it makes sense that a decline in migration could have effects on catch-up.

Having failed to generate a productive homework, though, I now had to figure out why migration patterns have changed so much. The answer that jumps out at you is the data, and I think the reason that I am here is that it's housing. There's been a dramatic change in housing markets in America's richest cities in the last few decades at the same time that these patterns have reversed.

It's always been the case that rich places are more expensive than poor ones. That's not surprising. I once gave a disastrous interview with a journalist who summarized my work as Harvard professor finds that New York is more expensive than Alabama.

[Voices]

Oh, oh!

[Daniel Shoag]

I took a lot of guff for that.

Bad interviews aside, the point is that places like New York have always been more expensive than Alabama; that's true. However, they are much more expensive relative to the poor places than they used to be. They used to be a place with 1% higher wages and 1% higher housing prices. That is now double in the last few years.

The consequence of this is that it has very different effects on high-education and high-income workers and low-education and low-income workers. That's because housing takes up a much larger share within a city of low-income budgets. You can take two occupations, let's say janitors and lawyers. Fifty years ago both occupations paid 50% more in New York than they did in the south, and that was true before and after adjusting for housing prices. Today, both occupations pay 40% more in New York than in the south. When you take out housing prices, for the lawyer it goes down to about 35% more in New York than in the south. For janitors it goes the other way. They actually have more income net of housing costs in the south than in New York. That's because housing just takes up a huge chunk of lower education wages in New York.

As you would expect, this jump in housing prices in the places that offer the highest wage really changed migration patterns. College-educated workers are still moving to San Francisco and New York, but less-educated workers are moving out. It's not that they don't want the higher wages. It's just that with that net of housing costs, these places offer them a bad job. This sorting of skills leads to segregation. It keeps less-educated workers from their best opportunities and the places that would offer them the highest-paid jobs. It increases income inequality and stops that regional income catch-up or convergence that I began by discussing.

To recap, I argue that there is a change in housing markets in America's richest cities that changed regional migration patterns and income catch-up. Why did housing markets change? I think the answer is pretty clear here too. When prices are rising and the quantity is static or falling, it's a supply issue, and when you look at the data, it's pretty clear that there are restrictions in place. Construction costs actually don't differ that much. Brick prices don't differ that much city to city. Cities like Boston, where I live, are not actually that much more densely populated than the cheaper places like Houston, or in fact not at all. Therefore, it's not the physical space that limits. The culprit is really regulations and restrictions that prevent development.

I feel this personally. Until two years ago, my wife and I lived with our kids in an apartment in Brookline, which is a nicer neighbourhood in Boston. You might know a famous resident, Tom Brady, who doesn't live in a small apartment like we do.

[The Chair, Liberal, Bryan May]

Who?

[Voices]

Oh, oh!

[Daniel Shoag]

The building was five storeys, but each apartment would have cost more than half a million dollars—we were renting—if it was on the market, and with dozens of units on the floor, it would have been very profitable to build a sixth storey. They couldn't because of height restrictions in the city. Therefore, they were unable to add units, which raised prices, and eventually it crowded out lower-skilled workers like me, who had to move out.

In my research, I created a measure of land use restrictions and regulations over time and by place, so you can see that it's only when one of these rich regions really starts putting in significant restrictions on development that prices rise and migration stops as less-educated people are pushed out and income catch-up ended. Places that don't put in these restrictions or regulate less have much less of this problem.

I know it's weird to think that local development policies—or at least what's very local in the U.S.—and land use restrictions have big national consequences or that these policies, which are set at very local levels, will affect things like national income catch-up or convergence, or national migration patterns, but that's what the research shows. When the legal environment changed 30 years ago and made these policies much more common, these local policies became a national issue. I think there is, or was, increasing recognition in U.S. policy circles of the national importance of this issue. I know that President Obama's Council of Economic Advisers had written a report specifically about this topic on their way out, and on the research that I'm discussing here today.

I want to end by talking about what things look like in Canada. I don't claim to be an expert on the Canadian data. It is more complicated because the regional dynamics are complicated by fluctuating national resource prices to a much greater extent than in the U.S. Still, if you look at the data, you can see that, while income convergence, catch-up, and migration towards richer places is still occurring, there does seem to have been a slowing in recent years. Recent housing price trends in some particularly higher-wage or productive cities do raise concerns about the continuation of those trends. For a body that's interested in a national perspective on poverty, opportunity, and inequality, I think that development policies that might seem like local matters are actually important when you're thinking about these macro-level issues. The possibility of pricing people out and creating this segregation based on education or income levels is an issue that should be on your radar.

[The Chair, Liberal, Bryan May]

Thank you, sir.

Yes, I think we all know who Tom Brady is. If you don't, well, that's okay too.

We'll start off with Bob Zimmer for six minutes, please.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Thanks again for coming to committee.

I want to talk specifically to Anthony....

Is it Anthony or Tony? Which do you prefer?

[Anthony Dickinson]

Tony.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Okay. You were asked to give your full name, so you gave it.

Tony, going back to my previous questions about getting to this as a poverty reduction strategy, I've just read your organization's bio. It says that the organization believes that crime should be addressed by dealing with the underlying issues of poverty, health, employment, and education. I think that's getting to the bottom line of poverty and what's causing it. Again, that's not letting the fire start. That's what we're getting back to.

You talked about health, you talked about a safe and affordable place to live, but you also have two other sections here called employment and education. Can you expand on how we can reduce poverty by changes to employment and education?

I know there are probably only five minutes left now, but do your best.

[Anthony Dickinson]

One of the things that recently happened, I guess, in the old north end in the last two years or so is that we lost our middle school through the school closure process. The numbers weren't high enough. It's been ONE Change's position that a neighbourhood needs a school. We're working at how to address educational issues and how that gap is there, but our programming isn't focused exclusively on youth. We have educational programming for adults, for example.

I can't remember if this is anecdotal or a stat that I read somewhere, but one of the folks I was talking to mentioned how few people in the neighbourhood know about UNBSJ being just over the hill. So one of the things in my mind is to let people know, or teach people, that education is valuable, whether through NBCC or UNBSJ or whatever.

It's also, in my mind, important to figure out what is the specific issue causing their poverty. Is lack of education what is making them unable to get employment, or is it something as simple as the fact that the employment available is for overnight jobs but our buses don't run overnight? We always have a lot of ideas about how to fix things years from now. It would be great if we could come up with ideas for people now, today, who are living in poverty.

I used to work at a call centre, like a lot of folks my age, and that call centre closed. A lot of my colleagues went to a new call centre that was opening, but one of them took a lower-wage job at a different call centre because he could walk to it. When he did the math, with the cab rate from that call centre to his home, he would actually have been losing. His net income would have officially been higher, but the cost of getting there would have been worse because the buses just didn't work.

With access to transit, I think the way the federal dollars worked was per rider, so then more could go on, but that doesn't address the need that a lot of.... When I lived in Vancouver, I would take public transit. It didn't even cross my mind to own a car, but that's not feasible for my line of work now.

One of the employees at the shelter, when his overnight shift would end, had to walk home or take a cab because the first bus wasn't going to come on a Sunday morning until 10 a.m. These types of things are putting up barriers that don't need to be there, I guess, is what I'm saying.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

We're getting dug in here, and I think you're onto it: that it's the little details that prevent the bigger things from happening. If you have a bigger structured plan, I would ask that you submit it to the committee because the testimony doesn't end here when your mike shuts off and we go home. We ask you to present the committee with further documents, if you can, of a grander plan for Canada to actually reduce poverty.

For me there are two kinds of poverty. I usually ask witnesses, too, about their definition of poverty. There's a poverty of spirit and there's a poverty of sustenance. I think if we can deal with the first one, the poverty of spirit—if we can get the person out of the darkness of poverty mentally—then we can deal with the other aspects a lot more easily. I think that's what you're onto.

Do I have more time, Mr. Chair?

[The Chair, Liberal, Bryan May]

Be very brief, please.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Sorry, I want to get to Daniel before I run out of time.

You had talked about housing generally in your comments, but what would some comments be on co-operative housing in Canada, or affordable housing involving the government? We have sponsored housing in some cases. What would that program look like if you were to create the program for Canada?

You have about 30 seconds. If you can't give us the full answer, you can submit it to us later.

[Daniel Shoag]

I will definitely submit more later.

I think construction is the way to go. The bigger picture I was talking about is that there are also market forces in places with a lot of economic opportunity, and it's actually regulations and restrictions getting in the way as opposed to a need for public construction, at least in the macro sense. I think in a local sense what you're talking about with co-operative housing can be really useful.

But I'm not sure I can answer. I need a....