University of Toronto Press

Chapter Title: Social Housing in a Divided State

Chapter Author(s): KEITH G. BANTING
Book Title: Housing the Homeless and Poor
Book Subtitle: New Partnerships among the Private, Public, and Third Sectors
Book Editor(s): George Fallis, Alex Murray
Published by: University of Toronto Press . (1990)
Stable URL: http://www.jstor.org/stable/10.3138/9781442675889.8

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K E I T H G. B A N T I N G

5 Social Housing in a Divided State

Canada is governed in part through an endless succession of federal/

provincial meetings to which prime ministers, premiers, ministers, and
officials troop with clockwork regularity. These meetings usually take
place in tall, elegant buildings located in the heart of metropolitan
centres, often only blocks away from the rooming-houses, residential
hotels, hostels, and social housing projects that shelter many of
Canada's poor and homeless. Mere physical proximity, however,
cannot disguise the immense social distance between the world of
federal/provincial diplomacy and the world of the poor, and the secret
deliberations of federal and provincial governments must often seem
irrelevant to the lives of those on the margins of the housing market.
In reality, however, the federal structure of our political system and
the complex web of agreements between levels of government do have
important implications for social housing programs. Rose (1980:16) has
observed that 'the most important background fact in the Canadian
housing experience is that Canada is a federal state.' The size of the stock
of social housing, its internal configuration, its redistributive consequences, and its responsiveness to changing economic and political
circumstances are all influenced by the division of power between
federal and provincial authorities, and the annual ritual of secret
negotiations between them.
This chapter investigates the nexus between federalism and social
housing programs, and its consequences for the poor and homeless.
Analysis of these relationships is complicated by the fact that the
intergovernmental balance itself has changed repeatedly since the
Second World War, and a historical perspective is, therefore, important
to understanding the impact of different federal/provincial regimes on
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n6 Keith G. Banting
social housing. In examining the historical pattern, this chapter parallels
the approach of chapter 4, which sets social housing within the context
of the evolution of the welfare state as a whole. Federal/provincial
relations in the field of social housing have been shaped and reshaped
by the same linguistic, regional, and governmental conflicts that have
pervaded social policy generally, and this chapter therefore begins with
a discussion of the ways in which the federal/provincial balance has
evolved in social programs generally. The second section then examines
the specific case of social housing in greater detail, and the final sections
explore the consequences of different federal/provincial regimes for the
size, redistributive role, and responsiveness of social housing programs, as well as for the specific problems facing homeless Canadians.
SOCIAL POLICY A N D C A N A D I A N F E D E R A L I S M

As Alexis de Tocqueville observed about federations in general, it is 'as

impossible to determine beforehand, with any degree of accuracy, the
share of authority which each of two governments is to enjoy as to
foresee all the incidents in the existence of a nation' (quoted in Birch
1955: 3). Nowhere is this problem clearer than in the impact of the
emergence of the welfare state on the Canadian federation. The original
British North America (BNA) Act was a nineteenth-century document
reflecting the assumptions of the day about the appropriate role of the
state. Welfare in the Canada of 1867 was largely a private matter, with
the public sphere confined to rudimentary relief at the municipal level.
Such a minor function of government did not command much attention
in the BNA Act itself, and certainly such twentieth-century terms as
income security, social services, and social housing do not appear in the
list of jurisdictions parcelled out in sections 91 and 92. Hence the
constitutional dilemma that has plagued Canadian politics throughout
the last fifty years. Which level of government has the responsibility to
respond to the social needs of an industrial society?
Given the local, private, and municipal nature of welfare in the i86os,
provincial responsibility seemed established in the constitution, and
this assumption was seldom challenged until the inter-war years. As the
scope of social problems inherent in a modern society and the
constraints facing a purely local or provincial response to them became
more obvious, advocates of social reform, including many provincial
governments, focused their pressure on federal authorities. The federal
response in the 19203 and 19305 was limited and often grudging; but

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ii7 Social Housing in a Divided State

after the dramatic centralization of power and politics during the Second
World War, the federal government assumed the leadership in developing the Canadian version of the welfare state.
In part, federal leadership was grounded in formal constitutional
change. Three amendments to the constitution expanded federal
jurisdiction over unemployment insurance in 1941, pensions in 1951,
and survivor and disability benefits in 1964. Elsewhere, the federal/
provincial division in the social-policy sector was determined, not by
constitutional amendment, but by the distribution of political power
and financial resources between the two levels of government. In the
post-war decades, the federal government was politically and financially dominant; that dominance found a constitutional outlet in the
doctrine of the federal spending power.
The spending power lies at the heart of much of Canadian social
policy, including the field of social housing. According to the traditional
doctrine, the spending power allows the federal government to make
payments to individuals, institutions, and other levels of government
for purposes that Parliament does not necessarily have the power to
regulate. That is, the federal government claims the right to give money
away, and attach conditions if it wishes, even if the purposes fall entirely
within provincial jurisdiction. This constitutional claim has never been
settled authoritatively by the Supreme Court, and it was never fully
accepted by provincial authorities, especially in Quebec. Nevertheless,
the spending power proved to be a potent instrument, allowing the
federal government to set the social-policy agenda and to shape the
broad pattern of policy during the post-war decades in two ways. First,
the spending power served as the basis of payments to individuals and
private organizations, including direct assistance to non-profit groups
and co-operatives in the field of social housing.1 Second, it supported
payments to provinces, including conditional grants for health insurance, post-secondary education, social assistance, and, most important
for our purposes, social housing (Canada i969a).2
Beginning in the mid 19605, however, federal predominance was
challenged by provincial governments; slowly the constraints on
Ottawa's leadership grew. The dramatic resurgence of Quebec nationalism in the 19605 and 19705 generated strong opposition to federal
'intrusion' in provincial jurisdiction, and the province was soon leading
the assault on federal dominance. Inspired by the Boucher and
Castonguay-Nepveu reports (Quebec 1963, 1971), Quebec sought to
establish a comprehensive provincial welfare state that would be fully

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n8 Keith G. Banting
controlled and integrated at the regional level and would reflect what
nationalists saw as a distinctive cultural approach to the social needs of a
modern society. Such a project required the province to liberate itself
from the constraints inherent in federal conditional grants, to wrest
control of unilateral federal programs from Ottawa, and to capture a
larger share of public revenues.
Quebec's demands were increasingly echoed by other provinces.
During the 19505 and 19605, provincial governments had been growing
steadily in size, bureaucratic expertise, and political self-confidence. In
part, such expansion was the inevitable consequence of the fact that the
primary policy concerns of the post-war era fell largely in provincial
jurisdiction; but in part, it was also accelerated by the very conditionalgrant programs that provincial administrations came to resent. From the
late 19605 on, other provinces joined Quebec in complaining that federal
shared-cost initiatives distorted their own policy priorities, and the
conditions attached to the payments introduced distortions and inefficiencies in program design and delivery. Freedom from the constraints
inherent in the federal spending power became a widespread provincial
goal during the 19705.
Provincial frustrations were exacerbated by the intense regional
conflicts of the decade. Regionalism has been a constant feature of
Canadian history since well before Confederation, but the conflicts
engendered by the economic and energy issues of the 19705 were
particularly acute. Provincial governments emerged as forceful advocates of distinctive regional interests, prepared to do battle with one
another and the federal government in a wide range of policy fields.
These tensions also flowed into the debate over constitutional reform,
which had been stimulated originally by the possibility of Quebec's
separation. Provincial governments, especially in the west, brought to
the table their own list of constitutional demands, which were carefully
crafted to strengthen provincial influence over public policy and tame a
number of federal instruments, including the spending power. Social
housing came to play an important role in this battle.
The federal response to the politics of language and regionalism
oscillated between periods of grudging accommodation and periods
of determined resistance. The cumulative effect, however, has been
to constrain the role of the federal government in social policy generally, and to limit the flexibility inherent in the spending power in
particular. This pattern became evident in a series of decisions in the
mid 19605. The Liberal government of Lester Pearson accepted that

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ii9 Social Housing in a Divided State

it could not prevent Quebec from establishing its own Quebec Pension
Plan, and agreed that future amendments to the Canada Pension Plan
would require the consent of the provinces. In addition, the federal
government agreed that provinces could opt out of a number of
shared-cost programs and receive full fiscal compensation. Quebec
opted out immediately and, while the effect was largely symbolic
because the province agreed to meet existing program standards, its
action effectively served notice that the days of the traditional federal
spending power were numbered.
During the late 19605 and the 19705, federal authorities tacitly
accepted a more constrained view of the spending power. The Trudeau
government shied away from launching major new shared-cost programs, and in 1977 it accepted the decentralizing consequences of block
funding for health and post-secondary education under the Established
Programs Financing (EPF) Act. By abandoning the cost-sharing mechanism, the federal government hoped to gain more control over its own
expenditure levels; but the provinces became freer to design their own
programs and direct the resources as they saw fit. In addition, the
federal government pronounced itself open to a constitutional limit on
future uses of the spending power. During the first round of constitutional negotiations in 1969, Trudeau himself proposed a constitutional
amendment that would have required that any new shared-cost
programs be supported by a broad provincial consensus; and during
another round of negotiations in 1979, the government proposed a
variant on the same principle.
This pattern of incremental accommodation was temporarily reversed
after the 1980 election. Under the banner of 'the new federalism/ the
Liberals chose to challenge the twin forces of Quebec separatism and
regionalism frontally by adopting unilateral action on a wide variety of
fronts ranging from the National Energy Program to the threatened
unilateral patriation of the constitution (Milne 1986). Their aim was to
appeal over the heads of the premiers to the public and to sympathetic
interest groups, in order to build a stronger political constituency and
preserve as much room as possible for forceful federal action. In the
social-policy sector, the high-water mark of federal assertiveness was
the Canada Health Act, but the approach permeated other policies as
well. A new EPF formula was imposed over provincial objections in
1982; and the federal government placed greater emphasis on the
visibility of its role, stricter accountability to Parliament for the uses
made of federal transfer dollars, criticism of provincial underfunding,

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120 Keith G. Banting

TABLE 5.1
Centralization of income-security expenditure

1974

1976

1978

1980

1982

1984

1986

1 Income-security
expenditure
Federal
Provincial

79.2
20.7

77.4
22.5

77.6
22.4

73.8
26.2

75.9
24.1

73.5
26.5

72.9
27.1

2 Financing of income
security
Federal
Provincial

85.5
14.4

84.6
15.3

85.6
14.4

82.8
17.2

84.7
15.3

83.1
16.9

83.2
16.8

NOTE: Data on provincial expenditure includes municipal relief; federal and provincial tax
credits are not included.
SOURCE: Calculated from data in Statistics Canada 1988

and stronger monitoring of provincial compliance with program conditions (Parliamentary Task Force 1981).
Not surprisingly, this period of unilateralism was marked by bitter
conflict between the two levels of government. The 1984 election,
however, ended this combativeness. The new Progressive Conservative
government promised 'national reconciliation' and a return to a more
collaborative style of federalism, with renewed emphasis on consensus
and mutual accommodation. The most significant expression of the
approach is the proposed Meech Lake Accord, which would - if ratified
- establish new constitutional rules governing the exercise of the federal
spending power. The consequences of the proposal are discussed in
greater detail below.
The cumulative impact of twenty years of intergovernmental warfare
in the social-policy sector has been to constrain the federal role and
increase the responsibilities of provincial governments. The balance has
certainly not returned to the situation prevailing in the inter-war period,
because the federal government retains considerable weight in the
sector. Nor has the decentralizing trend been uniform across all
programs. Canada has increasingly edged towards a bifurcated welfare
state, in which the income-security system remains relatively centralized while social services have become more decentralized.
The centralization of the income-security system can be seen in table
5.1, which presents two different measures of the extent of centraliza-

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121 Social Housing in a Divided State

tion for the period 1974-86. The first panel measures centralization in
terms of which government actually pays the benefit directly to the
recipient and demonstrates the continuing predominance of the federal
government, which pays out approximately three-quarters of all incomesecurity dollars. The second panel reveals the roles of the two
jurisdictions in financing income security; in this case, intergovernmental transfers such as those through the Canada Assistance Plan are
credited to the donor government rather than the recipient government.
By this measure, income security is even more centralized, as over 80 per
cent of the dollars flowing through the system are federal dollars, and
this figure even ignores the portion of equalization grants that is
devoted to social-assistance benefits. The pattern is thus clear: the
income-security system remains highly centralized.
In contrast, social services such as health and post-secondary education have become more decentralized since the advent of block funding.
These transfers are still subject to conditions. Although provinces may
use the funds they receive for post-secondary education as they wish,
the resources devoted to health care are still subject to the conditions
laid down in the original legislation, which were specified in greater
detail in the 1984 Canada Health Act. Nevertheless, provinces have
gained greater flexibility under the EPF arrangements in two ways.
First, they are freer to redesign their program delivery, especially in
health care. Under the old approach, efforts to increase efficiency in
various ways, such as relying more on convalescent homes than on
hospitals, were undermined because the cost-sharing provisions did not
cover such services. Second, provinces are free to transfer resources
between health care and post-secondary education, or between the two
programs and other provincial spending priorities; and the evidence is
clear that they have done so in the case of post-secondary education
(Johnson 1985).
FEDERALISM AND SOCIAL HOUSING

The evolution of federal/provincial relations in social housing has

broadly paralleled that in the Canadian welfare state as a whole and
has been driven by the same underlying political forces. None the less,
social housing has also displayed distinctive features, and the record in
this sector deserves closer inspection.
Two major threads run through the history of federal/provincial
relations in social housing. The first is the classic tension between

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122 Keith G. Banting

centralization and decentralization in the division of power between the
two levels of government. It is here that the record most closely tracks
that of social programs generally, with early federal dominance increasingly challenged as the post-war decades wore on. A second thread is
also present, however. When two governments are active in the same
sector, the mode of interaction between them is also important. In the
case of social housing, there has been a continuing tension between
unilateral and joint action. In some periods, the balance has tilted
towards unilateral initiatives, with each government emphasizing its
own programs and establishing direct relations with groups and
individuals in the housing sector. In other periods, the balance has
shifted toward joint federal/provincial programs that are financed
through conditional grants and shaped by intergovernment bargaining.
These two threads are closely interwoven in the history of this sector,
and each has important consequences for the nature of the policymaking process and the shape of housing programs that emerge from it.
When peering back in time, it is useful to distinguish four broad
periods: the post-war era of federal dominance in the 19405 and 19505;
the growth of the provincial role after the mid 19605; the era of
competitive unilateralism of the 19705; and the era of accommodation
from 1978 to the present.
The Federal Era
As chapter 4 emphasized, the early post-war years were animated by a
tremendous faith in the capacity of the state to respond to the social
problems of modern society. This faith was reflected most explicitly in
the blueprints for post-war reconstruction, which envisaged the development of a comprehensive welfare state, providing a level of wellbeing and social protection previously unknown in Canadian life. Social
housing was to be part of this vision. Both the Curtis and Marsh reports
called for a major role for government in providing public housing for
low-income Canadians (Canada 1944; Marsh 1943).
These expectations fell largely on the federal government. During
the war, federal authorities had proved themselves effective in the
housing sector.3 A federal crown corporation, Wartime Housing Ltd,
had provided inexpensive housing for workers swept into the cities
by the demands of wartime production, and over 19,000 temporary
units were constructed between 1941 and 1945. This momentum carried
over into the post-war years, and by the end of the decade the newly
created Central Mortgage and Housing Corporation (CMHC), which

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123 Social Housing in a Divided State

inherited this housing from the wartime agency, was 'the landlord of
more than 40,000 families in 50 communities across Canada' (CMHC
1970:12).
These housing drives were unilateral federal initiatives and, in the
words of one internal CMHC memo, contributed to 'the belief in the
public mind that the Dominion is indeed the only authority who can
provide public housing' (Dennis and Fish 1972:132). Federal authorities
negotiated directly with municipalities, builders, and tenants, with little
or no apparent objection from provincial governments, which were
unprepared - politically, administratively, and financially - to assert
themselves in the housing field. As a result, CMHC officials in branch
offices across the country built up close relationships at the local level
that continued into the following years.
'This momentum did not survive the transition to peacetime, however. As the sense of crisis receded and returning veterans were
assimilated into the housing market, federal enthusiasm waned and the
government sought to limit its commitments. The pressure for partial
withdrawal came not from outraged provinces but from federal authorities themselves. The Liberal government of Louis St Laurent was loath
to launch a major public housing program, and expressed doubts about
the constitutionality of such a course.4 The government gradually sold
off its existing stock of housing, and switched to a conditional-grant
approach to social housing. Under the 1949 amendments to the National
Housing Act, public housing projects were to be initiated by the
provinces or by municipalities empowered to do so by the provinces.
The federal government would contribute 75 per cent of the capital and
operating subsidies, and provincial governments were free to pass on
some share of their costs to municipalities.
The era of joint programs had arrived. The new arrangements
transferred political responsibility for launching new public housing
projects to the provinces. This system had political advantages for a
federal government that remained lukewarm about public housing
throughout the 19505. The provinces were reluctant to become deeply
involved, and their inactivity protected federal authorities from substantial expenditures. Thus, the federal government could always
proclaim its willingness to fund any public housing projects with
relative financial impunity. The president of CMHC explained to his
minister in 1956 that 'this so-called "taps open" policy has the great
tactical advantage of transferring the entire public housing debate to the
provincial and municipal level. A restriction ... would "close the taps"

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124 Keith G. Banting

and transfer public pressures back to the senior government, as was the
case before 1949' (Dennis and Fish 1972: 176).
Within the rubric of conventional grants, however, the public housing
program was a centralized affair. The new legislation officially cut the
federal government off from direct negotiations with cities, but in
practice informal dealings between CMHC officials and municipalities
remained active; the provinces played a relatively passive role. As the
predominant financial partner in these joint ventures, CMHC insisted on
controlling each stage of a project, from the original request, through
design and construction, to the ultimate appointment of a local manager
of the completed dwellings. The process was often criticized as slow and
cumbersome, and it was remarkable that any public housing was built at
all. And, indeed, not much was. No matter how the count was made,
fewer than 15,000 units of public housing were completed by 1960 (Rose
1980: 37). Administrative complexity was hardly the major reason for
the scarcity of public housing projects, however. Slow progress was
fundamentally a reflection of the limited nature of political support for
such initiatives at all three levels of government.
The Provincial Challenge
The political landscape of housing policy was transformed in the 19605.
The decade witnessed the adoption of major components of the
Canadian welfare state, such as the Canada Pension Plan, the Canada
Assistance plan, and medicare, as well as a broad emphasis on
redistributive policies in many sectors, including housing. The growth
of interest in social housing reflected a belated response to fundamental
changes in society. The steady process of urbanization since the war had
created a decisively urban Canada and the needs of an urban society
increasingly penetrated political debate (Rose 1980; Lithwick 1970). The
re-emergence of poverty as a political issue in both the United States and
Canada reinforced this trend, focusing attention on the plight of the
inhabitants of inner-city areas. As a result, the social housing programs,
which had existed on paper for twenty years, finally received substantial
funding, and by the end of the decade federal and provincial leaders
were appealing to their electorates in part with housing promises.
'Housing policy had arrived as a political weapon in the hands of the two
senior levels of government' (Rose 1980: v).
Federal/provincial rivalry followed right behind. In 1964, the new
Liberal government sought to stimulate public housing by amending
the National Housing Act to provide a choice of methods for financing

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125 Social Housing in a Divided State

new projects. The prevailing assumption at the time was that strong
municipal housing agencies would develop and take the lead at the local
level.5 In a critical decision, however, the Ontario government upset
such calculations by announcing that Ontario municipalities would not
be permitted to take advantage of the new legislation, asserting that 'if
advantage is to be taken of the new provisions of the National Housing
Act, this will be on a direct federal-provincial basis' (Dennis and Fish
1972: 146). To give effect to this decision, Ontario created the Ontario
Housing Corporation, which rapidly expanded into a powerful agency
that competed on an equal basis with the expertise and administrative
capacity of CMHC. The Ontario corporation relied heavily on the new
provision for financing public housing that allowed it to operate
somewhat more independently of CMHC, and the province quickly
developed an ambitious housing program.
Quebec soon followed, creating its own Quebec Housing Corporation, a decision that reflected the province's broader goal of recapturing
jurisdiction over social affairs. When first introducing the proposal for a
provincial housing corporation in 1965, Liberal minister Pierre Laporte
lamented the negligence of earlier provincial leaders that had allowed
Ottawa to pre-empt such a major role and looked forward to the day
when the province would reclaim 'complete jurisdiction in the field of
housing' (Dennis and Fish 1972:153). The Quebec Housing Corporation
was actually established two years later by the Union nationale government. Although the new government was not as enthusiastic about a
large, dirigiste program of public housing as had been its Liberal
predecessor, it was happy to advance the autonomist goal of greater
independence from federal control.
Housing corporations or agencies quickly spread to other provinces.
In one year, 1967, provincial bodies emerged not only in Quebec but also
in British Columbia, Alberta, Manitoba, New Brunswick, and Newfoundland. Admittedly, there was considerable variation in the strength of these
provincial agencies. Some, such as the Alberta Housing Corporation,
moved towards the Ontario and Quebec model, building up considerable
expertise and delivery capacity, and establishing themselves firmly between CMHC and the municipal level. Others simply oversaw federal/
provincial exchanges, and continued to rely heavily on the administrative
and technical facilities of CMHC. Most provincial corporations moved
more slowly than Ontario in building a sizeable stock of public housing.
Nevertheless, by the end of the decade, the federal agency was faced by
a solid phalanx of provincial corporations with growing ambitions.

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126 Keith G. Banting

Intergovernmental frictions quickly emerged, and CMHC was forced
into a defensive posture, responding incrementally to the specific
pressures from individual provinces. The result was an increasingly
asymmetrical pattern of intergovernmental relations. Relations between
CMHC and the Quebec Housing Corporation, for example, were
sensitive to the highly charged relations between Ottawa and Quebec
City. Beginning in 1968, the province's insistence on greater autonomy
in the field of social housing was translated into a series of annual master
agreements, which reduced CMHC'S role in project approval, design,
construction, and management. When the first set of proposals from the
Quebec Housing Corporation were ready, CMHC announced that $150
million a year would be available to the corporation without the
necessity of formal approval of each specific project (Rose 1980).
This agreement upset relations between Ontario and the federal
government. Ontario had developed by far the largest program of public
housing of any province, and it had done so within the traditional
constraints of the CMHC approval process. Now Ontario wanted the
same treatment as Quebec, but the federal government responded only
partially to the pressure. The approval process for public housing
projects was streamlined, but the concession represented considerably
less than the broad delegation to Quebec under its master agreement and even this easing of the constraints was not offered to other
provinces (Dennis and Fish 1972: 152).
By the early 19705, the classic pattern of a provincial challenge to
federal controls was playing out in the social housing sector. Since 1949,
the federal government had repeatedly insisted that the primary
responsibility lay with the provinces and municipalities. The provinces
were now accepting that responsibility, in some cases aggressively, and
were pressing for liberation from the detailed federal regulations that
had built up over the years of provincial passivity. In effect, the policy of
1949 had succeeded far more than CMHC might have wished.
In all this, social housing was closely tracking experience in the
social-policy sector generally. During the 19705, however, housing
developments moved in a somewhat distinctive pattern.
Competitive Unilateralism
The 19705 witnessed a shift away from joint programs, which had
dominated social housing since 1949, towards unilateral action at both
the federal and provincial levels of government.6 This trend was
facilitated by a proliferation of housing programs, which in part

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127 Social Housing in a Divided State

reflected a broadening of the goals of housing policy. With the
inflationary pressures of the decade, the dream of home ownership was
receding beyond the reach of a widening band of moderate-income
families, and governments expanded their policy focus to incorporate
this large and vociferous constituency through initiatives such as the
Assisted Home Ownership Program and the Assisted Rental Program.
In addition, however, program innovation was a response to growing
resistance to conventional public housing, especially major projects that
concentrated large numbers of poor families in what became, in effect,
low-income ghettos.7 Governments developed a wider set of policy
mechanisms, ranging from support for non-profit and co-operative
housing to shelter allowances, in the hope of integrating the occupants
of low-income housing more fully into the wider community.
The proliferation of programs alone did not necessitate a shift to
unilateralism. After all, new programs could have been delivered
through federal/provincial agreements, as in the past. The primary
reason for the renewed emphasis on independent action was the
frustration generated by collaborative programs. From the federal point
of view, the shared-cost mechanism had important drawbacks. First,
not all provinces were equally capable of, or interested in, taking
advantage of shared-cost grants for social housing; disadvantaged
provinces had to make the greatest sacrifice to participate, and political
enthusiasm varied enormously from one province to another. The result
was a very uneven spread of federal social housing dollars, with a
disproportionate concentration in Ontario. Second, the conditionalgrant mechanism was obviously generating tensions with provincial
governments. While Ottawa continued to resist provincial demands for
block funding of existing programs, federal officials sought to avoid
the shared-cost mechanism when planning new initiatives in social
housing, a pattern consistent with the government's general approach
to federal/provincial relations over much of the decade.
This trend became clear in the 1973 amendments to the National
Housing Act. New initiatives, such as the Assisted Home Ownership
Program and the Assisted Rental Program, were for the most part to be
delivered directly by CMHC through its branch offices across the country.
More important for the future, however, was that much greater
stimulus was to be given to social housing delivered through non-profit
and co-operative groups, and this support was also to come directly
from CMHC.
Growing reliance on the third sector, which is discussed more fully in

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128 Keith G. Banting

chapter 7, reflected several forces. Mixed-income projects in the nonprofit sector were a means of avoiding the stigmatization associated
with large tracts of public housing; and they also reflected the broader
trend identified in chapter 4 toward a mixed economy of welfare, with
non-state instruments of delivery playing a prominent role. In addition,
the third sector offered rich opportunities to a federal government tired
of working through provincial agencies. Unilateral programs would
strengthen the federal government's links with non-profit and cooperative groups across the country, planting the government more
fairly in another dimension of Canadian society. The visibility and
public support generated by such programs were not lost on federal
government facing constitutional challengers in many provincial capitals.
Federal unilateralism in the third sector did not eliminate intergovernmental conflict, however. Municipal non-profit corporations were
eligible and soon emerged to take advantage of the legislation, operating
separately from municipal public housing offices and sometimes
maintaining separate waiting lists for accommodation, thus generating
controversy at the local level. (On the role of municipal agencies, see
chapter 8.) In addition, having received a promise of capital assistance
from CMHC, non-profit corporations would then press the provincial
government for rent subsidies for the units to be designated for
low-income occupants, a pressure not always welcome in provincial
offices. In the longer term, both the non-profit and co-operative housing
sectors were to emerge as independent, active participants in the politics
of housing policy, forming national organizations in part with direct
assistance from CMHC, and lobbying both federal and provincial officials
on policy directions.8 In these ways, federal unilateralism was a source
of friction within municipalities, between municipalities and provinces,
and between the provincial and federal governments.
Unilateralism emerged at the provincial level as well, reflecting the
growing self-confidence of provincial housing officials. A number of
provinces established departments of housing headed by a full cabinet
minister to provide a higher level of political direction to housing policy.
Once again Ontario took the lead. The Ministry of Housing was
established in 1973 to increase provincial policy co-ordination, to reduce
municipal discretion, and to increase the province's leverage vis-a-vis
Ottawa on funding issues (Rose 1980). British Columbia and Alberta
followed quickly, with the Alberta department becoming a leading
advocate of the transfer of housing responsibilities to the provinces. In
this, it was supported vigorously by Quebec, especially after the election

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129 Social Housing in a Divided State

of the Parti quebecois in 1976. Although the Levesque government
chose to expand the functions of the Quebec Housing Corporation
rather than to create a new ministry, it began to plan for an expanded
program of social housing and became a bitter critic of the federal role
(Streich 1985: 58-62).
Unilateral programs quickly followed. According to one count, 'by
1976, there were fifty-three housing programs administered by the
provinces independently of the National Housing Act, including direct
construction and rental subsidies, housing rehabilitation, capital financing and rentals controls' (CMHC 1983:49). As always in the housing field,
there was dramatic variation in provincial activity during the 19705, both
as to the level of activity and the extent of unilateralism. As table 5.2
demonstrates, provincial spending did not reflect the severity of
housirig need; poor provinces, with the worst conditions, spent least. In
addition, poor provinces emphasized shared-cost programs. Richer
provinces, such as Ontario, Alberta, and British Columbia, in contrast,
could afford the luxury of independence.
The 19705 thus produced a more complex social housing system: 'In
the immediate postwar period and through much of the sixties,
Canadian housing policy was largely defined and directed by the federal
governments ... By the early 19805, housing policy had come to be
produced by eleven governments acting in varying degrees of unilateralism and collaboration'(Streich 1985:31-2). Not surprisingly, the result
was greater intergovernmental conflict. Led by Quebec, Alberta, British
Columbia, and Ontario, the provinces pressed for a reduction in the
federal role, making their case in federal/provincial negotiations in both
the housing field and the wider struggle over the constitution. At the
1973 conference of ministers of housing, for example, Ontario and
Alberta pressed the case for block funding of social housing. At that
point, not all provinces were equally enthusiastic, and the minister from
New Brunswick reminded the conference that his province was not
'jealous of its authority in the field of housing' (ibid.: 85). After the
acceptance of the principle of block funding in the Established Programs
Financing Act in 1977, however, the provinces developed a written
consensus on such financing for social housing as well (ibid.: 86). By
1980, an interprovincial task force reported that three provinces had
raised their jurisdictional sights even further: British Columbia, Alberta,
and Quebec demanded a transfer of tax points along with a complete
transfer of responsibility for housing to them.9 Although other provinces
still preferred block funding, they all agreed that provincial govern-

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TABLE 5.2
Unilateral provincial expenditures and federal/provincial expenditures on housing, 1974-6
Nfld

PEI

NS

NB

Que.

Ont.

Man.

Sask.

Alta

BC

Total

Expenditures
($ per capita)
Unilateral provincial
Federal/provincial

1
21

5
19

n/a
11

4
13

n/a
13

*21
14

5
35

10
10

107
16

31
10

21
14

Total

22

24

11

17

13

36

40

20

123

41

35

Housing need
(% of households)
Crowded conditions
No running water
No flush toilet

23.6
16.3
26.4

12.8
13.9
22.0

12.4
7.8
15.3

15.2
7.8
13.8

12.4
1.1
2.6

9.2
9.8
14.9

9.8
16.2
22.5

6.8
2.0
4.3

*Minus Ontario Purchase Grant Program

SOURCE: Canada 1979

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8.3
7.4
11.1

6.8
2.0
4.4

9.4
3.9
6.9

131 Social Housing in a Divided State

ments should be 'totally responsible for the majority of policy, program
development, program delivery and program administration' (Interprovincial Task Force 1980).
These tensions inevitably spilled over into the intense battle over the
constitution in the late 19703. Throughout the constitutional process,
the federal government sought to focus attention on its own priorities the patriation of the constitution, a charter of rights, and the amending
formula - and to defer questions about the division of powers to a
second round of negotiations. Provinces insisted that the first round
must also respond to their concerns over the division of powers and
financial resources, and repeatedly pointed to specific areas of tension
and duplication of effort. Housing was a recurring example in this
battle, especially for the premiers of the western provinces and Quebec.
The 1977 report of the Western Premiers' Task Force on Constitutional
Trends, known as the 'Intrusions Report,' emphasized the areas of
housing, urban development, and land use. 'In recent years, federal
intervention has become more systematic and aggressive, and has
begun to challenge provincial jurisdiction in a more direct way,' the
report insisted; the result was to 'restrict provincial and municipal
initiatives, distort provincial and municipal priorities, and strain both
federal-provincial and provincial-municipal relations' (Western Premiers' Task Force 1977: 29, 3). A year later, Quebec published its own
dossier noir, which criticized federal treatment of the Quebec Housing
Corporation and attacked the federal role in housing and urban affairs as
a contravention of the constitution. At the First Ministers' Conference
on the Economy in 1978, a bitter confrontation broke out between Rene
Levesque and the federal housing minister, Andre Ouellet, and the
battle became part of the Parti quebecois campaign leading up to the
referendum on sovereignty association.10 Social housing had become a
weapon in the struggle for hegemony among the governments of
Canada.
Federal Accommodation
Over the next few years, the federal government slowly accommodated
itself to these pressures in a series of steps that decentralized program
delivery, tamed federal unilateralism, and launched the elaborate
system of joint planning that exists today. The first stage came in the
1978 amendments to the National Housing Act. The changes reflected
both the erosion of the federal government's fiscal position and its desire
to keep the housing sector from adding more fuel to the constitutional

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132 Keith G. Banting

Figure 5.1
Public housing and non-profit/co-operative housing, annual unit commitments, 1971-82. SOURCE: after Streich 1985

fires. In order to reduce its annual cash requirements, the government

shifted from a system based on the direct provision of capital to one
based on the subsidization of the interest charges on private financing
(Teron 1981). Under the new arrangements, known as the 56. i program,
public or private non-profit sponsors of social housing were expected to
arrange a private mortgage. The federal government would then insure
the mortgage and provide a subsidy to reduce the effective rate of
interest to 2 per cent. As figure 5.1 indicates, this change radically
reduced the construction of traditional public housing for which
government provided the capital, and most new projects were soon
proceeding under the new program.
In addition, the federal government moved to ease federal/provincial
tensions. The Ministry of State for Urban Affairs was abolished, and a
program of 'disentanglement' was announced to the 1978 conference of
ministers of housing. The aim, the federal minister declared, was 'to
extricate ourselves from the tangle of NHA programs and the duplication
and overlapping of responsibilities' (Streich 1985: 198). Disentanglement took two forms. First, the new subsidy for social housing was not a

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133 Social Housing in a Divided State

shared-cost grant. In place of the mandatory sharing of subsidies for
traditional public housing, the new subsidy was unilateral, and did not
depend on financial participation by the provinces. The federal government hoped that the provinces would 'stack' additional subsidies on the
federal base; in fact, the original Cabinet document on the scheme
conceded that 'provincial subsidies will continue to be required if the
program is to penetrate deeply enough to reach large numbers of those
with very low income' (CMHC 1983: 48). None the less, federal support
was not actually conditional on such stacking, and the federal government was soon to be disappointed by the provincial response. Second,
the federal government agreed to withdraw from detailed project
approval and inspection in the case of municipal and provincial projects.
This decentralization would proceed within the framework of a global
agreement negotiated with each province, but CMHC'S role within the
agreement was limited to budget allocations. All other aspects of project
development became the responsibility of the province, which could
target its allocations according to its own housing priorities.
These changes represented only partial decentralization, however.
The federal government continued to deliver the private non-profit
program that, as it turned out, provided two-thirds of new social
housing in subsequent years. The federal government had offered to
allow provinces to take over the private side as well, but only where they
agreed to provide 25 per cent of the capital for the project; only two
provinces were to make use of this provision.
The fate of the private non-profit sector revealed the growing
polarization between the Liberal and Progressive Conservative parties
towards federal/provincial relations in general and social housing in
particular. The short-lived Clark government offered to withdraw the
requirement of a 25 per cent contribution, and entered into negotiations
with Ontario concerning provincial delivery of the private component,
on the assumption that agreement would serve as a model for other
provinces as well. Such negotiations might well have succeeded,
because provinces regarded disentanglement as a success that should be
extended (Interprovincial Task Force 1980). The negotiations were not
complete, however, before the fall of the Conservative government. The
re-elected Liberals, in the full flush of their 'new federalism' and
resistance to provincial pressures, halted the negotiations. Because the
projects were largely federally funded, provincial delivery would hardly
appeal to a government intent on strengthening direct links between the
federal government and individual Canadians. In the words of a CMHC

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TABLE 5.3
Provincial variations in global agreement on social housing, 1983
Nfld
Provincial delivery
CMHC delivery
Provincial contributions

2, 3, 4

PEI

NS

1,2

3,4

3,4,5

NB

Que.

Ont.

1,2

3, 4

3, 4, 5

3, 4, 5, 6

1,2

Man.

Sask.

Alta

BC

1, 2, 3

2, 3, 4, 5, 6

3, 4, 5, 6

3,4,5

2, 3, 4, 5,6

3,6

a
Manitoba had a small allocation of 56.1 private non-profit global units for its use. However, these units were approved as if they were
CMHC-led projects.
b
Ontario Community Housing Assistance Program
CODE: 1, provincial non-profit; 2, municipal non-profit; 3, private non-profit; 4, co-operative; 5, DIAND non-profit; 6, urban native
SOURCE: CMHC 1983

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135 Social Housing in a Divided State

(1983:50) report, 'the principal rationale was the lack of federal visibility
in projects that are provincially-led/
As a result, decentralization remained stalled for the life of the Liberal
government. CMHC retained direct delivery of the private non-profit
program, and the federal government influenced the upper limit on the
public side through its annual budget allocations. Some provinces
preferred to continue to rely on CMHC delivery for large portions of the
public non-profit program as well; table 5.3 illustrates these provincial
variations. All in all, the 1978-9 adjustments had made only a modest
dent in the federal role. They had, however, created the precedent for
the future.
The second'phase of federal/provincial accommodation began with
the election of the Progressive Conservative government at the federal
level in 1984. Provinces continued to press for the extension of the
disentanglement provisions to all social housing, but this pressure ran
into resistance at the bureaucratic level in Ottawa. This opposition,
which was reflected in a major CMHC evaluation of the 56.1 program
(CMHC 1983) and later the study team report on housing for the Nielsen
Task Force (Study Team Report 1986), focused on both substantive and
intergovernmental issues. Substantively, both reports insisted that
resources were not being targeted on those most in need, and the
program was having minimal impact on the housing problems of the
poor.11 The studies also attacked the growing imbalance between the
two levels of government. The federal hope that provincial governments would stack their subsidies on top of the unilateral federal
payment was disappointed. The CMHC evaluation of the 1978-81
experience concluded that provincial assistance had dropped to only 9.0
per cent of federal subsidies (CMHC 1983: 274); and three years later, the
Nielsen study group concluded that provinces had reduced their
spending on housing in general (Study Team Report 1986: 27-8, 46).
The Nielsen group's analysis sounded hauntingly like many earlier
Liberal speeches: 'Unless provinces significantly increase their financial
contributions to social housing, there is a significant danger of the
federal government paying the bills with the provinces having control
over expenditures. Such a situation threatens federal accountability,
visibility and control over program cost and effectiveness' (ibid.: 30).
The proposals advanced by the Nielsen group represented a reversal
from previous Liberal inclinations, however. They advocated a major
return to cost-sharing: provinces would be asked to share the costs of
each program on a 50:50 basis. Failure to do so would jeopardize

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136 Keith G. Banting

hard-won provincial delivery. Any province sharing costs equally
would deliver the program; otherwise the government with the higher
contribution would normally deliver the program; and 'under no
circumstances should provinces not making financial contributions
assume the delivery and administration functions' (Study Team Report
1986: 32). While the proposal held open the possibility of provincial
control of both the public and the private non-profit sectors, it did so on
much steeper terms. Not surprisingly, its authors anticipated 'some
resistance to the proposed strategy' from the provinces (ibid.: 40).
This broad critique was accepted by the Progressive Conservatives,
but its sharper edges were smoothed by the government's 'national
reconciliation' and emphasis on federal/provincial consensus. An elaborate consultative process was launched, in 1985, with the issuance of the
Consultation Paper on Housing (Canada 19853); the minister travelled
across the country for meetings with each province; and negotiations
continued at a conference of ministers of housing in Calgary. The new
policy, which was announced in December 1985, contained two broad
thrusts.12 First, federal social housing dollars would be much more
tightly targeted on low-income households. Second, the federal government would accept the principle of provincial delivery of all social
housing (except the co-operative program). Ottawa wished to retain a
role in broad policy, however, and decentralization would therefore be
subject to conditions set out in a global agreement between the two
levels of government and in subsidiary operating agreements that
would be renegotiated annually between Ottawa and each province.
The primary conditions, which are incorporated in the current
agreements, fall into five categories:
1. Distribution of federal resources: Each province must agree to an
allocation of federal resources among provinces based predominantly
on housing needs. Federal expenditures do not depend, therefore, on
the level of provincial activity as they did under traditional shared-cost
programs.
2. Cost sharing: Given the consensual mode of the negotiations over
the new system, the terms were predictably less stringent than those of
the Nielsen group. Provinces must contribute 25 per cent of the costs to
gain control over the delivery of a program, in effect, reverting to the
traditional 75:25 formula established in 1949. Any province wishing to
expand its housing effort further may inject additional money into the
program; federal expenditures do not increase in this situation, however, and the effect is to shift the federal/provincial split closer to 50:50

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137 Social Housing in a Divided State

for the enlarged program. Alternatively, provinces are free to mount
independent housing programs.
3. Allocational rules: The agreements are much more detailed than the
ones that established provincial delivery of the public non-profit
program in 1977-8. The new system requires joint federal/provincial
planning on all major allocational issues. First, the division of housing
projects between public bodies on the one hand and the private
non-profit sector on the other must be specified in the annual operating
agreement, as are the basic principles governing the process by which
individual groups are selected to deliver specific projects. Second, the
allocation of assistance to different clientele groups is similarly identified. The federal rules require targeting on the poor for all new
cost-shared units; and the balance between units constructed for senior
citizens, families, and those with special needs is also subject to
agreement. Third, the geographical distribution of new housing commitments within the province must also be set out in the annual
operating agreement.
4. Planning process: To give effect to this allocational system, the
agreements establish a joint planning and monitoring committee,
.known as the PMC, in each province that chooses to deliver social
housing programs. This committee, which is chaired jointly, negotiates
the annual operating agreements. The PMC is required to meet at least
four times a year, establish a rolling three-year plan, evaluate existing
programs, and recommend annual program levels for each region of the
province to both levels of governments. If a province chooses to deliver
native housing programs, a tripartite committee must be established,
with representatives of the CMHC, the province, and native groups.
5. Publicity: The agreements call for joint publicity in the form of signs,
plaques, ceremonies, and announcements. They call also for all publicity in both official languages, a matter of sensitivity in some western
provinces.
The basic trade-off in the 1985 negotiations is clear. The federal
government was prepared to surrender its unilateral role in social
housing and to decentralize program delivery. In return, it wanted to
retain considerable control over the basic parameters of housing policy.
Indeed, in the case of the public non-profit program, which had been
decentralized in the late 19705, the new agreements represented a
reassertion of federal influence. In effect, the new global agreements
sought to control the distributional politics inherent in social housing.
The federal bureaucracy was convinced that provincial and municipal

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TABLE 5.4
Federal/provincial agreements on cost sharing and delivery of social housing, 1987
Residential Rehabilitation Assistance Program (RRAP)
Emergency Repairs
Program (ERP)

Urban
native

Rural native
housing (RNH)

Home owner

Rental

Disabled

Prov.
75:25

CMHC + Prov.
75:25

CMHC

CMHC + Prov.
75:25
Urban Rural

Province

Non-profit

Rent
supplement

Newfoundland

Prov.
75:25

Prov.
75:25

Prov.
75:25

Prince Edward Island

CMHC

CMHC

CMHC

CMHC

CMHC

CMHC

CMHC

CMHC

Nova Scotia

Prov.
75:25

CMHC

CMHC

CMHC

CMHC

CMHC

CMHC

New Brunswick

Prov.
75:25

Prov.
45:55
Prov.
75:25

CMHC

Prov.
75:25

Prov.
75:25

CMHC

Prov.
75:25

CMHC

Quebec

Prov.
62:38
Public

Prov.
62:38
75:25
Regular Co-op

Prov.
75:25

Prov.
62:38
Non-Nat.

Prov.
60:40

Prov.
60:40

CMHC

CMHC

Manitoba

Prov.
75:25

Prov.
75:25

Prov.
75:25

CMHC
75:25
North

Saskatchewan

Prov.
75:25

CMHC

Alberta

Prov.
70:30

Prov.
75:25
Prov.
70:30
Terr.
75:25

CMHC

Ontario

Northwest Territories

75:25
Priv.

CMHC

75:25
Native

Prov.
50:50

75:25

Prov.
50:50
Non-Nat.

75:25
Native

Prov.
50:50

75:25

Prov.
75:25

Prov.
50:50
Non-Nat.

CMHC

CMHC

CMHC

CMHC

CMHC + Prov.
75:25
Urban Rural

CMHC

CMHC

CMHC

CMHC

CMHC

CMHC

CMHC

CMHC

Prov.

CMHC

CMHC

CMHC

CMHC

CMHC

CMHC

CMHC

Terr.
75:25

75:25
+ Prov.
75:25
South

75:25
CMHC

Terr.
50:50

75:25

HAP

RNH

British Columbia

Prov.
67:33

Prov.
67:33

CMHC

CMHC

CMHC

CMHC

CMHC

CMHC

Yukon

Terr.
75:25

Terr.
75:25

CMHC

CMHC

CMHC

CMHC

CMHC

CMHC

SOURCE: Data provided to author by CMHC.

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75:25
Native

139 Social Housing in a Divided State

decision-makers are more susceptible to local political pressures. In
CMHC'S view, the federal government must be involved to protect
non-profit groups from losing out to provincial housing corporations in
the competition for new units, to prevent disproportionate attention to
senior citizens at the expense of families, to target assistance on the
poor, and to forestall the possibility of new housing commitments all
appearing in the constituency of the provincial minister of housing. Not
surprisingly, provincial officials reject this view as federal paternalism,
and insist on their commitment to responsible delivery of social
housing.
None the less, provincial governments proved willing to accept this
broad approach at least in part. In the first round of agreements under
the new system, all but one province chose to deliver the basic housing
and rent-supplement programs. Admittedly, provinces proved less
anxious to take over other programs. Only four provinces chose to
deliver the rehabilitation and native housing programs, with Quebec
alone assuming responsibility for the entire package (see table 5.4 for
details). This response reflected in part the wider decline of interest in
social policy identified in chapter 4, and in part an easing of provincial
expansionism, especially in the western provinces, which became less
interested in major new responsibilities than they had been in the
affluent climate of the 19705. Financial commitments by the provinces
also differed. Most chose the basic formula of 75:25, but Ontario,
Quebec, and Alberta initially opted for larger programs with larger
provincial commitments, resulting in financial splits ranging from 60:40
to 70:30. When the dust had settled, however, the provincial role in the
delivery of social housing had expanded considerably.
Provincial governments can also expand their role further by launching unilateral initiatives outside the framework of the global agreements. Such independent programs are free of federal conditions and
can be used to dilute federal priorities. For example, in the face of intense
housing pressures in Ontario and especially Toronto, the province
announced a succession of unilateral commitments. In 1986, Project
3000' was mounted to provide 3000 non-profit units for hard-to-house
groups such as low-income singles, ex-psychiatric patients, and elderly
or battered women; in 1987, 'Project 3600' promised another 3600 units
over two to four years; and the 1988 budget added another 30,000 units
over three to five years (Ontario 1988). Because Ontario rejects Ottawa's
insistence that social housing be targeted exclusively on low-income
people, it simply adds unilateral provincial units to each new project to

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140 Keith G. Banting

ensure a more socially integrated approach to social housing in the
province.13 Federal officials claim that the overall balance within new
projects even in Ontario is still more targeted, but the federal impact is
clearly less than in provinces without such room for independent action.
The Contemporary Pattern
The history of the federal/provincial balance in social housing parallels
the broader trends in the federation and has been shaped by the same
underlying political forces that shifted the equilibrium in social policy
more generally. As elsewhere, the broad pattern is one of decentralization, from the centralized activities of the 19405 to the global agreements
of today. The trend has not been as consistent; unilateralism in the 19705
represented the reassertion of an independent federal role in housing.
In principle, however, the new global agreements tame federal unilateralism and devolve the delivery of social housing to the provinces.
Comparison with the other major components of the social-policy
sector discussed earlier qualifies this picture somewhat. The social
housing system remains relatively centralized by the standards of health
and education. Despite all the talk of block funding in social housing,
the new global agreements do not introduce block funding on the model
of the Established Programs Financing (EPF) Act. Rather, they consolidate social housing in the traditional condition-grant mode, and they
therefore resemble the Canada Assistance Plan (CAP) more than EPF.
Even by the standards of CAP, social housing remains centralized in
several critical ways. First, CAP remains an open-ended program; the
CAP 'tap' is open for all eligible activity, and total federal expenditures
are still driven by provincial decisions. In contrast, the social housing
'tap' is under federal control, at least in terms of the level of new
spending. Second, social housing transfers are subject to much stricter
conditions. Federal housing dollars are now subject to specific rules
concerning the incomes of those housed, for example; in comparison,
CAP is silent on provincial welfare rates; and the income limits set for
recipients of other services funded under CAP are now so high as to
exercise little constraint on provincial programs (Health and Welfare
Canada 1985). Third, planning and monitoring of social housing
through joint committees is much more formal and stringent. During
the drafting of CAP, officials in Health and Welfare Canada pressed hard
for an annual review of the administration of the program, province by
province; but this suggestion was eliminated from the draft legislation at
the last moment in response to pressure from provinces and senior

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141 Social Housing in a Divided State

officials in the central agencies of the federal government (Splane 1985).
As a result, federal officials have difficulty enforcing the few conditions
that do exist, especially in provinces that rely in part on municipal
delivery of benefits.
Thus, the brave new world in social housing has an old face. Indeed,
its reliance on the conditional-grant mechanism evokes a certain
nostalgia for the days before EPF. The reasons why the pressures of the
last generation appear to have had less impact on social housing are
reasonably obvious. In practice, public housing began as a predominantly federal service, delivered by a federal agency with branch offices
across the country - and provinces have had to struggle to capture it.
Other social services began as provincial programs - and the federal
government has had to struggle to influence them. Different starting
points produced different end points. Several other factors also muted
decentralist impulses in housing. Historically, provincial administrative
capacities have varied more than in health or post-secondary education,
and therefore a provincial consensus on proposals for real block funding
or a transfer of tax points proved elusive. And important interest groups
in the third sector that grew up around the strong federal presence in
housing during earlier years, such as the non-profit and co-operative
movements and native organizations, have resisted unconditional
decentralization.
Do the new arrangements represent an end point, a stable equilibrium
in social housing? Such a prediction would defy the entire, restless
history of federal/provincial relations in Canada. Admittedly, a reassertion of federal unilateralism seems unlikely, even though the Liberal
opposition in the House of Commons attacked the agreements as the
abandonment of a national housing policy.14 Revoking the principle of
provincial delivery would undoubtedly provoke serious conflict with
some provinces and would require an act of considerable political will by
a new government. In the current political climate, the conditional-grant
mechanism seems safe from federal hawks.
Canadian history confirms, however, that conditional grants are not
necessarily immune from provincial hawks. Close collaboration and
co-operation can easily turn to mutual frustration and recrimination,
and battles over federal conditions are inevitable. This dynamic emerged
almost before the ink was dry on the new agreements, as provincial and
municipal officials protested the stringent income limits for households
in new social housing.15 These early complaints have been echoed by
senior officials, especially in those provinces that have maintained large,

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142 Keith G. Banting

active housing corporations. In early 1988, for example, a senior Ontario
official strongly criticized CMHC'S 'incredibly detailed guidelines [that
are] intended to ensure rigid conformity across the country' (Wilson
1988). The competitive process required for the selection of delivery
groups, federal controls over the transfer of allocations among projects,
and the rigid caps on project costs all frustrated provincial officials. This
absolute lack of flexibility stifles ... the ability to make decisions based
on a clear understanding of the local provincial housing environment'
(ibid.). Not all provinces are equally assertive about expanding their
jurisdiction, and it is possible, in the current financial climate, that
poorer provinces might simply walk away from the process, forcing
CMHC to resume direct delivery of some programs.l6 Nevertheless, if the
past is any guide to the future, strong provinces will press against the
outer limits of conditional-grant programs, and over time they may wear
down federal resolve.
The more that social housing becomes defined as a provincial
program that the federal government is simply cost-sharing, as opposed
to a federal program that the provinces are simply administering, the
more the basic political legitimacy of federal conditions will erode. The
federal conditions are not entrenched in legislation, as in the case of the
Canada Health Act. They must be sustained politically in the annual
ritual of intergovernmental negotiation over the operating agreements.
As one federal official admitted privately: 'Our ability to enforce these
conditions does not depend fundamentally on all those bits of paper. It
depends on the political will of the day. If the minister decides to go easy
on the provinces, there are few real sanctions that the bureaucracy can
bring to bear/ In the first rounds of bargaining, the federal government
prevailed, with only minor concessions, on its controversial objective
of targeting new social housing commitments exclusively on the poor.
The impact of joint planning on other issues on which federal government was less committed is not clear, however. Non-profit groups,
for example, have complained that they have been shut out in some
provinces.17
Constitutional changes, such as those proposed in the Meech Lake
Accord or perhaps some successor agreement, might accentuate this
trend. At the present time, the prospects of the accord's ratification are
highly uncertain. If the agreement were to be ratified, it would establish
a firm constitutional foundation for the federal spending power, but
would also subject its exercise to limitations. The accord proposes to add
the following section to the Constitution Act:

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143 Social Housing in a Divided State

io6a. (i) The Government of Canada shall provide reasonable compensation to
the government of a province that chooses not to participate in a national
shared-cost program that is established by the Government of Canada after the
coming into force of this section in an area of exclusive provincial jurisdiction, if
the province carries on a program or initiative that is compatible with the
national objectives.
(2) Nothing in this section extends the legislative powers of the Parliament of
Canada or of the legislatures of the provinces.

Although there is considerable debate about the implications of

Section io6a, it would probably increase regional variation in future
social programs in two ways. First, federal authorities would most likely
build considerable flexibility into new shared-cost programs so as to
accommodate diverse provincial preferences from the outset and
thereby minimize the incentives for provinces to opt out. Second, some
provinces, especially Quebec, would probably opt out as a matter of
principle and be bound only by the 'national objectives' of the program
(Banting 1988).
The centralized nature of the current federal/provincial agreements in
social housing runs counter to the ethos animating the Meech Lake
Accord. Admittedly, social housing may not fall within the strict legal
reach of Section io6a because the federal government might contend that
social housing is not 'an area of exclusive provincial jurisdiction,' citing
both the recent history of direct federal delivery and existing case law,
especially CMHC v. Coop. College Residence Inc. Nevertheless, while social
housing might escape the legal claws of Meech Lake, it would be
unlikely to escape its political claws completely. The accord is premised
on an accommodative approach to federal/provincial relations and an
acceptance by the federal government that it should not dictate the
specifics of social programs to provinces. If the accord is ratified, its
ethos might well spill over into the housing sector and erode the
willingness of future federal ministers to insist on detailed controls over
provincially delivered social housing projects.
There are dangers in such a world, even for provincial ministries of
housing. If federal control over social housing is worn down, federal
commitment to the sector may also wither. Deprived of the political
benefits and visibility inherent in control, ambitious federal politicians
might naturally look to policy instruments in federal jurisdiction when
responding to the social concerns of their electorate. Certainly the

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144 Keith G. Banting

tax-transfer system, with its direct link between the federal government
and citizens in every region, would be an inviting alternative. It is
possible that such dynamics would make shelter allowances a more
active issue in federal policy debates. It is also possible, however, that
political excitement at the federal level would move beyond social
housing altogether.
FEDERAL MODELS AND SOCIAL

CONSEQUENCES

Social housing has witnessed a struggle for hegemony among governments that has been accompanied often by strong rhetoric and sharp
conflict. Underlying these battles, and contributing to their intensity,
have been competing visions or models of Canadian federation and its
future. Centralized and decentralized models of federalism have lain at
the heart of constitutional controversy in this country since its birth. The
centralized model is premised fundamentally on the primacy of a single
pan-Canadian political community, and insists on the need for a strong
central government that speaks for individual Canadians across the
country and nurtures a common political loyalty that transcends our
more local attachments. The decentralized model, by contrast, celebrates our regional and linguistic communities, and emphasizes the
importance of strong provincial governments that can respond effectively to regional diversities and speak forcefully for them on issues of
national debate.
In a less dramatic way, the tension between unilateral and joint
programs also captures the essence of different models of federalism.
Unilateralism reflects a classical conception of a federal state, in which
each level of government acts independently within its own jurisdiction
and is accountable directly to its own electorate, with few formal
mechanisms integrating the policies of the two in a comprehensive way.
Joint action, in contrast, reflects an alternative model, often called
collaborative or co-operative federalism, in which governments mount
common programs that are financed through conditional grants and
managed through continuous intergovernmental negotiation.
Individual Canadians, however, might wonder whether all this really
matters. Are federal/provincial battles simply a game beloved by
bureaucrats and politicians, driven by a territorial imperative, but
devoid of real consequences - 'full of sound and fury, signifying
nothing'? Or do subtle shifts in the models that structure the distribution of power have major impacts that are visible at the grass roots,

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145 Social Housing in a Divided State

where real people need better housing? The complexities of federal/
provincial relations do, in fact, have important implications for the
broad patterns of public policy. In exploring these social consequences
of federalism, it is useful to distinguish between the degree of
centralization on the one hand, and the extent to which governments
rely on unilateral as opposed to joint programs on the other. Although
these two threads are interwoven and confounded in day-to-day practice,
their implications are distinctive and warrant separate examination.
Centralization and Social Housing
The extent to which power over social policy is centralized in the hands
of the central government or decentralized to provincial governments
has important consequences for both the scope of social action and the
redistribution that flows from it.
The Scope of Social Action
Political theorists have long argued that decentralized government means
limited government.18 This view can be traced back to early American
theorists, for whom federalism was part of a larger system of divided
jurisdiction designed to restrain the powers and growth of the state.
Modern studies of the welfare state tend to confirm this view by demonstrating a dear relationship between levels of welfare spending and political centralization; other things being equal, countries with decentralized
governments devote a smaller proportion of their national resources to
social security than do those with more centralized governments (see
Cameron 1978; Wilensky 1975; Castles and McKinlay 1979).
In Canadian history, certainly the growing power of the federal
government and the expansion of welfare proceeded in tandem, and
most observers conclude that the two processes have been intimately
related. Indeed, the inadequacy of social policy during the 19303'
depression convinced an entire generation of constitutional scholars
and social reformers, in English Canada at least, that decentralized
authority was a formidable barrier to social progress. Provincial responsiveness during the inter-war period was undermined in part by the
problems of fiscal imbalance, with spending responsibility lodged
firmly at the local level but the broadest taxing powers reserved for
central government. In addition, provincial authorities were well aware
of the constraints inherent in the mobility of capital and labour in a
federation. The premier of Manitoba wrote to the prime minister in 1927
that If any City or Province singly adopted plans to solve unemployment, that City or Province would become the mecca to which the

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146 Keith G. Banting

unemployed in other cities or provinces would drift' (Schofield 1983:
92). The reports of a long stream of government commissions in the
1930s and early 1940s are replete with similar arguments.
Federalism was not the only - or even the most important - factor
limiting social policy in those decades. Canada was still undergoing the
transition from an agricultural to an industrial economy; the unionization of the urban work-force was only in its early stages; left-wing
protest was still consolidating itself in the form of the Co-operative
Commonwealth Federation; Keynesianism had yet to reshape the
orthodoxies of policy makers. As these forces came into play during and
after the Second World War, constitutional road blocks that had seemed
insurmountable in the 1930s proved much more manageable. As a
result, it is difficult to sort out the independent influence of the division
of powers.
Nevertheless, there can be little doubt that decentralization did
complicate inter-war efforts to respond to the social needs of the time.
The centralization in this sector after the Second World War circumvented barriers confronting provincial action, facilitating the development of a modern social-security system. Undoubtedly some expansion
would have come in the post-war era even without major changes in the
federal/provincial balance. But centralization aided a larger expansion
than Canadians could have legitimately expected from the institutional
framework of the inter-war years.
This dynamic was at work in the specific case of social housing as well,
although the impact was more modest, because federal enthusiasm for
public housing was restrained throughout the 1950s. Nevertheless,
CMHC kept public housing on the national agenda. As the government
most distant from local resistance to public housing projects, the federal
government could remain a somewhat detached supporter. Rose (1980:30)
describes the politics at work in the early years in the following terms:
The federal role was fostered by the outright and fairly strong hostility to public
housing programs, a hostility far more evident within the councils of local
government and the legislatures of provincial governments than elsewhere in
Canada. At the federal level, there was, by the late 1940s, at least a decade of
major housing [experience] ... The Marsh Report and the Curtis Report were
further influences at the federal level that helped to weaken whatever
antagonism existed... There was never in Ottawa the strong anti-public housing
lobbies which were evident in Washington from 1933 onwards.

As a result, according to Rose, federal policy was 'primarily an in-

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147 Social Housing in a Divided State

strumentality to encourage the assumption by the provinces of their
rightful constitutional responsibility.' (ibid.: 182) Without that pressure,
even fewer units would have been built, except perhaps in Ontario.
In more recent decades, when provinces developed greater interest in
social housing, the federal impact became more subtle. In effect, the
federal government became the guardian of a wider mix of policy instruments. This conclusion challenges the argument often advanced by
public-choice theorists that it is decentralization that encourages experimentation and diversity, as provincial governments develop their own
approaches to problems and then learn from each other's successes and
failures. Whatever the merits of this argument when viewed from a
nationwide perspective, it pales when attention shifts to the range of
policy options maintained in any single province. The national political
constituency is more complex than that of any province. The nature of
housing problems varies enormously across the country, as does the
relative political strength of builders, tenants, non-profit organizations,
the co-operative movement, and native groups. In responding to
regionally diverse constellations of needs and pressures, the federal
government developed a larger menu of nation-wide programs than
any single province would likely have chosen to support, and citizens
therefore enjoy a more diverse set of choices.
The federal government has tried to entrench this diversity through
the new global agreements. Fear that individual provinces might
sharply narrow the range of delivery groups or beneficiaries lay behind
the requirement for joint planning on major allocational decisions. Even
these provisions failed to reassure important interest groups, such as
the co-operative movement and native organizations. The co-operative
movement was convinced that at least half the provinces had no
commitment to co-operative housing, and that some provinces were
actively hostile.19 As a result, the movement mounted an intense lobby
of MPS and Cabinet ministers to ensure that support for co-operative
housing remained a unilateral federally delivered program; and in this,
it succeeded. In addition, the federal government responded to the
concerns of native organizations by insisting that any province assuming responsibility for native housing had to adopt the tripartite planning
committees mentioned earlier.
Redistribution
Historically, centralization also transformed the redistributive impact of
social-security programs. The expansion of the federal role did not

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148 Keith G. Banting

necessarily make social programs more redistributive between high- and
low-income classes, but it did transform social security into a powerful
instrument of redistribution among different regions of Canada (Banting
1987). As Gunnar Myrdal (1957: 46) argued almost thirty years ago, the
development of social security and greater progressivity in taxation
were 'two mighty policy trends which have forcefully contributed to
equalization between regions' in Western nations. Such policies have
little to do with regional policy per se; but, in Stuart Holland's words
(1976: 56), the welfare state 'is the submerged but massive part of the
iceberg of state interventions' that favour poorer regions.
In Canada, centralization was a prerequisite for this process of
nation-wide redistribution. As long as welfare was a municipal or
provincial responsibility, redistribution took place within the confines
of the local economy; the poorest regions always had the greatest needs
but the fewest resources with which to respond. The growth of federal
social programs, however, generated substantial interregional redistribution because the populations of poorer regions have larger proportions of elderly, unemployed, and needy people than do others, while
the revenues to finance federal programs that help these people are
raised in disproportionately greater amounts in more affluent regions.20
Defenders of a strong national role in social housing make the same
argument.21 Only the federal government has the capacity to equalize
access to housing because, in the words of the Matthews Report (CMHC
19793: 24), 'provinces which can least afford a redistributive housing
policy are the same provinces which have a disproportionate share of
households requiring assistance.' This pattern was highlighted most graphically by the experience of unilateral provincial programs during the
19705. As table 5.2 demonstrated earlier, purely provincial spending accentuated, rather than compensated for, regional inequalities in housing:
poor provinces with the poorest housing spent least, while rich provinces
pumped substantial resources into the sector. Traditional open-ended
shared-cost programs, in which the overall level of activity depends on
provincial decisions, do not escape this dynamic. During the 19505 and
19605, the federal government's reliance on the conditionalgrant mechanism meant that the regional distribution of federal housing dollars was
distorted by provincial fiscal capacity and interest in public housing. The
result was a very uneven distribution of federal assistance, with well over
half of all units being built in the richest province, Ontario, a considerable
embarrassment in a federation increasingly sensitive to such issues.

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149 Social Housing in a Divided State

TABLE 5.5
Allocation of federal social housing units by province, 1986

Province
Newfoundland
Prince Edward Island
Nova Scotia
New Brunswick
Quebec
Ontario
Manitoba
Saskatchewan
Alberta
British Columbia
Canada

Distribution of households
in core housing need
(per cent)
2.1
0.5
3.9
3.4
22.0
32.0
6.2
5.2
8.4
16.3

100.0

Allocation of federal
housing units
(per cent)
2.5
0.7
3.5
3.5
27.4
31.4
5.1
5.3
7.9
12.7

100.0

NOTE: Data on federal housing units represent 95 per cent of the units made available for
the Non-profit Housing Program, Rent Supplement, and Rural and Native Housing
Ownership and Rental Programs. The remaining 5 per cent of the units were to be allocated
through negotiation with the provinces. Data on housing need are for 1982.
SOURCE: Data on core housing need are from the Study Team Report 1982, table 2. Data on
the allocation of federal units are from the 1986 Global Agreement on Social Housing.

Direct federal delivery in the 19705, in contrast, facilitated a more

equitable regional distribution. CMHC devoted considerable effort to
measuring housing needs across the country and moved towards a
needs-based allocation of federal expenditures among the provinces.
The transition was not complete when the global arrangements were
renegotiated in 1986; but a provisional formula was adopted and the
governments committed themselves to develop a mutually agreed
needs-based model. This quest for an apolitical allocational system is
probably chimerical. Federal/provincial bargaining over the distribution
of federal resources is a quintessentially political process; and despite
improved data, consensus on a revision to the 1986 formula continued to
elude governments as the decade drew to a close. Nevertheless, as the
partial evidence in table 5.5 suggests, the distribution of federal social
housing expenditures among the regions of the country is more
equitable than in the 19605, and the remaining deficiencies appear to
favour poorer provinces, especially Quebec.

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150 Keith G. Banting

Modes of Interaction
With two governments active in the same sector, the relations between
them shape the policy-making process and the nature of the programs
that are developed within it. The tension between unilateral and joint
action in social housing has important implications for the responsiveness of the system to new problems, the level of co-ordination among
programs, and the openness of the process to groups and the public.
The Responsiveness of Policy
The extent of centralization is not the only dimension of a federal state
that conditions its responsiveness to new social problems. The nature of
relations between levels of government is at least as important in
facilitating or inhibiting change.
Unilateralism enhances the flexibility enjoyed by governments to
respond to their own political constituencies and facilitates experimentation in policies and delivery mechanisms. In so doing, it opens up
more avenues for new concerns to enter the system, establish a toe-hold
in public policy, and then spread from one jurisdiction to another. It was
not an accident that the period of greatest unilateralism in social housing
- the 19703 - also saw a proliferation of new approaches to meeting
housing needs. Joint programs, in contrast, set alternative dynamics in
motion. New initiatives require the agreement of governments espousing different political ideologies, pursuing different policy agendas, and answering to different constituencies. At the extreme, programs controlled by various governments are subject to multiple veto
points that slow the process of innovation.22 At minimum, collaborative
action produces a more tortuous policy process and raises the level of
consensus required for new initiatives. As we shall see more fully
below, provinces wishing to respond to homelessness have sometimes
found it faster to act unilaterally, outside the framework of global
agreements.
Federalism and Co-ordination
The modern state is a sprawling apparatus that delivers thousands of
programs through hundreds of departments, commissions, and agencies. Policy makers face a constant struggle to co-ordinate increasingly
complex policy systems, and success in this effort is never more than
partial. In such circumstances a citizen faces a bewildering organizational maze when seeking help from government; and citizens with

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151 Social Housing in a Divided State

especially complex or multi-faceted problems, such as the poor and the
homeless, must co-ordinate their relationships with a diverse set of
bureaucracies - a degree of co-ordination that governments themselves
are unable to achieve.
Co-ordination problems are inevitably accentuated in a federal
system, especially when both orders of government occupy common
policy sectors and relation between the two levels are conflictual, as has
often been the case in Canada. Much depends, however, on the nature
of program links. The unilateral approach of the 19705 preserved
flexibility but at the cost of a lack of integration in social housing as a
whole. Streich observed (1985: 108) that 'housing became a field of
policy duality or interpenetration to an increasing extent; federal and
provincial policies operated within the same housing markets often in
pursuit of different objectives without any coherent policy framework.
Under these conditions, the potential for complementarity was not
great.' In contrast, the onset of joint planning and the consolidation of
the delivery of major programs in provincial hands in the 19805 hold out
the possibility of higher levels of integration. The conflicting objectives
of governments should increasingly be resolved in federal/provincial
meetings rather than be played out as independent initiatives in the
housing market; and the commitment of the federal government in the
1986 agreements to consult with the provinces before introducing any
new programs extends such joint planning into the future.
Provincial delivery also increases the scope for co-ordination between
social housing and other programs relevant to the needs of the poor. As
noted earlier, the Canadian welfare state has increasingly settled into a
bifurcated pattern, with the federal government being the predominant
force in income security and provincial governments predominant in
social services. Given this broader context, centralized control over
social housing was always somewhat anomalous, and the decentralist
impulses of the last generation have increased the possibility of linkage
between social housing and related social programs. While income
security as a whole is primarily federal, social assistance itself is firmly
under provincial, and in some cases, municipal direction. The wider
range of personal and family services, health care, and employment
programs for those on social assistance is also largely in provincial
hands. Because the problems faced by the poor are seldom restricted to
the housing market, decentralization of social housing creates opportunities for more integrated responses to their needs.

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152 Keith G. Banting

Federalism, Groups, and the Public
In a democratic system of government, the openness of the policy
process to the public and groups in the community is an important test
of the health of the political order. Given the contemporary context of
the social housing debate, the openness of the process is especially
relevant. In an era of protracted fiscal restraint in government, innovative proposals increasingly depend on new forms of collaboration
among government, the private sector, and the non-profit sector. It is
important, therefore, to ask whether the evolving system of federal/
provincial relations has implications here as well.
According to defenders of the classical model of federalism, unilateral
action prevents the lines of political accountability between governments and their electorates becoming obscured or attenuated by
multiple layers of responsibility and control. In the political vernacular
of the 19705, governments have Visibility/ Political debate, as a result,
focuses on substantive issues rather than intergovernmental complications, and there is less danger that concerns of interest groups will be
shut out by an overriding imperative to reach a federal/provincial
compromise.
The collaborative model, in contrast, is often criticized for accentuating the closed and secretive nature of policy making in Canada. Decision
making retreats into closed federal/provincial meetings that issue bland
communiques which are indecipherable to all but the cognoscenti; public
debate is muffled, as governments avoid comments that might jeopardize negotiations; interest groups have difficulty in getting their
concerns onto the negotiation table; and voters are uncertain about
which set of politicians to hold responsible for policy failures. This
critique of federal/provincial negotiations as a mode of government was
given fresh currency by the controversy over the Meech Lake Accord,
but it is a long-standing complaint about Canadian federalism.
The new world of federal/provincial collaboration in social housing
betrays many of these attributes. Policy is increasingly hammered
out in annual negotiations between Ottawa and each province in the
Policy and Monitoring Committee (PMC). Debates within this committee are closed to the public and to other participants in social housing
such as municipalities, the private sector, non-profit groups, and the
beneficiaries themselves. Only in the case of provincial delivery of
native housing programs is the clientele represented directly on the
PMC. Indeed, it may even be difficult for other interested groups to

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153 Social Housing in a Divided State

determine which level of government has ultimate responsibility for
particular housing problems.
This new federal/provincial order has mixed implications for collaborative projects involving government, non-profit groups, and the
private sector. In one sense, decentralization should help. A defining
characteristic of such partnerships, especially in a regional country like
Canada, is their local nature, and provincial delivery of a wider range of
housing programs should increase the scope for innovation. In some
regions there does seem to be active consultation with the third sector
and municipalities in the development of new provincial initiatives.
Nevertheless, the emphasis on federal/provincial planning constrains
the opportunities here. For example, chapter 6 describes the initiative of
Governor Dukakis of Massachusetts in creating a tripartite advisory
body called the Massachusetts Housing Partnership, representing the
three sectors: public, private, and non-profit. The board meets on a
quarterly basis to review housing problems in the state, advise on policy
issues, and nurture collaborative projects developed at the local level.
Although such a model is available to any provincial premier in Canada,
it would inevitably operate in tension with the realities of federalism,
especially in provinces that do not have large unilateral programs.
Important parameters of social housing in the province would continue
to be determined in federal/provincial meetings, which would be closed
to the other participants in social housing. Provincial officials might
carry the message forward from a tripartite advisory forum, but they
would sit across the table from federal officials constrained by the
objectives of their own political masters who must respond to nationwide concerns. Whether the credibility of a partnership forum would
survive the marginalization inherent in divided jurisdiction is doubtful.
THE H O M E L E S S IN A W O R L D OF G L O B A L A G R E E M E N T S

The social housing agreements examined in this chapter deal with the
full range of housing needs and are not focused particularly on those at
the very margins of the housing market - the homeless and those at risk
of becoming homeless. Indeed, the word 'homelessness' does not even
appear in the global agreements between the two levels of governments.
Nevertheless, the evolving federal/provincial balance in social housing
is relevant to the needs of people with no fixed address.
The global agreements structure general social housing programs,

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TABLE 5.6
Special-purpose housing under the non-profit housing program, 1984-5
Special-purpose type
Children's Aid Society
Ex-prisoners
Transients
Unwed mothers
Victims of family violence
Alcohol and drug abusers
Physically disabled adults
Physically disabled children
Disturbed children
Mentally disabled adults
Mentally disabled children
Nursing homes
Total

Nfld

NB

PEI

NS

5
16
5
87

45

124

45

Ont.

1
32
15
8
8

35
15
151

53
56
10
149
39
79

36

15
78
8

7
91
9

5
6

Que.

67

335

493

Man.

Sask.

19

Alta

BC

50

28
63
188
10
256
206
390
16
32
743
42
665

579

2639

9
87

8
70

11
30
100
2
44

14
8
82

446

191

652

21
24
10
16
61
12
153

SOURCE: Data supplied by CHMC

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Canada

19
20
37
8
358

%
1.1
2.4
7.1
0.4
9.7
7.8
14.8
0.6
1.2
28.2
1.6
25.1
100

155 Social Housing in a Divided State

which do assist many who might otherwise be homeless. Moreover,
with the return to a strong emphasis on targeting federal assistance,
future social housing commitments should produce more units for the
poor. The size, distribution, and diversity of the social housing program
are therefore important to the homeless in Canada. This point, although
undoubtedly true, should not be overstated. The social housing sector
remains small, and the great majority of those on the margins of the
housing market are unlikely to gain access to it. In addition, regular
social housing projects have traditionally been less responsive to certain
categories of the homeless; single persons often receive a lower priority
than the elderly and families with children, and many people in need of
special support services cannot be accommodated in regular projects.
The interests of the homeless have been more directly addressed by
the separate provision in the global agreements for 'special-purpose'
housing. Until now, the special-needs program has provided a variety
of types of accommodation, ranging from emergency shelters and
transition homes to permanent housing that incorporates special
support services. As table 5.6 indicates, the beneficiaries have been
diverse: the elderly in nursing homes, battered women and their
children in transition houses, the mentally and physically handicapped
in community-based housing, substance abusers in special centres,
parolees in half-way houses, and the transient in emergency shelters.
Between 1979 and 1984, approximately 15,000 units of special-purpose
housing were built, although, as table 5.7 reveals, there was considerable provincial variation in the commitment to such accommodation.
Under the global agreements established in 1986, up to 10 per cent of
new commitments could be allocated to special-needs housing, and this
program has been used to tackle the problems of the truly homeless.
During the International Year of Shelter for the Homeless, for example,
the province of Quebec mounted a special program 'aimed specifically at
the homeless clientele' under the umbrella of the Canada-Quebec global
agreement (Societe d'habitation du Quebec 1987). There have been
important limits to this vehicle, however. Given the 10 per cent cap, a
major response to the particular needs of the homeless has had to come
from the allocation to other groups with special needs, including
nursing homes for the elderly and transition houses for victims of family
violence, both of which are supported by powerful political constituencies. A radical shift in the allocation towards shelter for those actually on
the street has not been easy.
Provinces seeking prompt action have found the complexities of

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156 Keith G. Banting

TABLE 5.7
Special-purpose housing by province, 1979-84

Province
Newfoundland
Prince Edward Island
Nova Scotia
New Brunswick
Quebec
Ontario
Manitoba
Saskatchewan
Alberta
British Columbia
Canada

Number of units

Percentage of all
social housing

562
283
696
1,091
2,239
2,079
764
833
760
5,161

19
38
16
40
6
6
19
11
7
29

14,468

12

SOURCE: Study Team Report 1986: 65

federal/provincial diplomacy a significant constraint. The response of

the Ontario government to homelessness during the winter of 1987 is a
case in point. Rapid economic growth and the inflow of people from
other provinces had generated acute pressure on the housing market,
especially in Toronto and Ottawa. The number of homeless people was
rising dramatically and beginning to exceed the capacity of existing
emergency hostels. Not surprisingly, the plight of the homeless in a
wealthy province during the International Year for Shelter of the
Homeless became a major issue in the media and political debate, and
the government knew that the pressure would intensify with the onset
of winter. The provincial government decided to develop a major
initiative on homelessness as quickly as possible. The package that was
unveiled in mid December was a purely provincial initiative, however,
with no federal funding under the global agreement (Ontario, Ministry
of Housing 1987). Working through the federal/provincial mechanism
would have been much slower and would have involved a painful
reallocation within an already stretched program. Also, a unilateral
provincial initiative escaped federal conditions that focus effort on new
housing stock, allowing Ontario's crash program to concentrate on the
rapid acquisition and repair of existing buildings.
Provincial responsibility for the homeless is now being further
entrenched by refinements in the global agreements. As the Nielsen

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157 Social Housing in a Divided State

Task Force pointed out, special-purpose housing often involves a
transfer from health and social-service budgets to the housing budget.
For example, the move to community-based facilities rather than
institutional care for the physically and mentally handicapped eased
health and welfare costs but increased the demand for social housing.
The federal government was not slow to point out that social-service
budgets are cost-shared under the Canada Assistance Plan on a 50:50
basis, while housing budgets are most often shared on a 75:25 basis.
Moreover, the federal contribution to heath care is locked in under the
EPF formula and does not decline if health costs shift to the housing
budget. Not surprisingly, the Nielsen Task Force recommended federal/
provincial negotiations 'to shift responsibility for subsidising special
purpose housing to health and social service budgets' (Study Team
Report 1986: 67).23
Such negotiations are now under way, and the federal government
is in the process of phasing out elements of the special-needs program. Emergency and transitional housing, including shelters for the
homeless, are to be transferred to the Canada Assistance Plan over
a five-year period. The consequences of this shift are more than financial. It also represents a decentralization in policy control since, as
discussed earlier, the Canada Assistance Plan is a more flexible instrument than the global agreements, placing far fewer conditions on the
exercise of provincial discretion. Current changes are firmly consolidating provincial and municipal responsibility for policies relating to
homelessness, bringing with them all of the strengths and weaknesses
of decentralization.
The framework of political institutions constitutes a hidden influence on
the policies of contemporary government. The imprint of a particular set
of institutions is seldom sufficiently visible to generate intense public
interest, and constitutional patterns can be as important as many of the
more dramatic clashes of personalities, ideologies, and interests that
dominate the public stage. Institutions do not by themselves determine
policy outcomes but they do constitute a filter that shapes the play of
contending economic and political forces.
Throughout the post-war era, the social housing sector has been
shaped and reshaped by repeated shifts in federal/provincial relations.
The post-war dominance of the federal level was challenged by increasingly active provincial governments, and two decades of occasionally intense conflict produced an accommodation in the form of the

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158 Keith G. Banting

new global agreements, which retain a federal role in policy but
decentralize the delivery of major social housing programs. Intergovernmental relations have also alternated between unilateral and joint
programming. Unilateral federal action in the 19405 gave way to joint
action through conditional grants in the 19505 and 19605, which was
supplemented by competitive unilateralism in the 19705, which in turn
gave way to joint planning in the 19805.
This evolving regime of federal/provincial relations has been important to social housing. The historically strong role of the federal
government has shaped the amount of social housing; the diversity of
programs, delivery mechanisms, and beneficiary groups; and the
distribution of social housing subsidies across the regions. At the same
time, however, centralization of social housing undoubtedly made
co-ordination with other relevant social service programs, which were
under provincial control, more difficult.
Changes between unilateral and joint programs, in contrast, have
important implications for flexibility, co-ordination, and openness. On
the one hand, unilateralism preserves maximum flexibility for experimentation and greater openness to outside groups, but cannot ensure
the integration of social housing programs operated at two levels. On
the other hand, the consequences of joint action represent the obverse of
unilateralism. Conflicting objectives are co-ordinated in meetings rather
than played out in independent policies, but the policy process is
inevitably slower and more cumbersome.
The new global agreements establish a new blend among these
enduring cost and benefits. Whether co-ordinated policy and decentralized delivery is a stable combination remains to be seen. The history of
Canadian federalism suggests that stability is an illusive goal, and that
the balance between governments will continue to evolve. It is certain,
however, that social housing policy will be hammered out in federal/
provincial meetings held behind closed doors in elegant buildings
located only blocks away from the tenements, hostels, and projects
sheltering Canada's poor and homeless.
NOTES
1 See CMHC v. Coop. College Residence Inc. (1975) 13 ER (ad) 394 (Ont. CA);
also Scott and Lederman (1972).
2 Until the constitutional reforms of 1982, the spending power also provided

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159 Social Housing in a Divided State

6
7

9
10

11

12

the basis for the unconditional equalization payments to provincial

governments.
Many of the early activities of the federal government as a mortgage lender
of last resort and provider of mortgage insurance arose out of the federal
responsibility for banking.
The dual nature of St Laurent's opposition to public housing is reflected in
the observation attributed to him that subsidized housing was 'unconstitutional and a threat to democracy' (House of Commons, Debates, 1948, vol.
ii [15 March 1949], 1492).
The expectation that the amendments would stimulate municipal activity is
clear in the speech of the minister responsible for housing during second
reading of the bill in Parliament (House of Commons, Debates, 1964, vol. iv
[28 May 1964], 3717; see also Dennis and Fish 1972: 14; CMHC 1970: 22, 26;
and Feldman 1963).
By far the best source on this period is Streich 1985.
The first major expression of this growing opposition to large-scale public
housing projects came in the report of the Hellyer Task Force (Task Force
on Housing and Urban Development 1969). The critique was to be reinforced a few years later by the Dennis Report (Dennis and Fish 1972).
The key organizations are the Cooperative Housing Foundation of Canada
and the Canadian Association of Housing and Renewal Officials (CAHRO),
which publishes the magazine Canadian Housing and incorporates many
officials in the non-profit sector, especially public non-profit corporations.
Such a transfer of tax points involves the federal government lowering its
tax rates and the provinces raising their tax rates by the same amount at
the same time, thereby diverting revenue from federal to provincial coffers.
See Streich 1985. Ouellet replied vigorously that the Quebec Housing Corporation was responsible for the slow progress on social housing, pointing to its long-standing failure to complete all of the housing authorized by
CMHC. The Quebec Housing Corporation, he insisted, was 'an elephant
that moves at a turtle's pace' (ibid.: 121).
The 1983 CMHC evaluation, which calculated that only 21 per cent of the occupants of non-profit housing were poor, sparked widespread media coverage
and contributed to a growing polarization of debate over the appropriate
role of social housing. (For a critique, see Manchee 1984.) The Nielsen study
was even more critical, concluding that 'the record of current programs in
meeting social housing needs is dismal' (Study Team Report 1986: 39).
See the statement by the federal minister, Bill McKnight, and the responses
of opposition critics in House of Commons, Debates, first session, vol. vi (12
December 1985), 9432-8; see also Canada 1985^

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160 Keith G. Banting

13 Ontario's preference for socially integrated projects is deeply rooted in the
local political objections to large public housing projects established in
the province during the early post-war era. The federal decision in 1985 to
target federal social housing dollars exclusively on core housing needs
therefore posed a bigger problem for Ontario than for other provinces.
14 After the announcement of the new approach in the House of Commons,
the Liberal housing critic Sheila Copps observed that 'we have just found
out today that a minister is quite prepared, like Pontius Pilate, to wash his
hands of the issue of social housing for Canadians' (House of Commons,
Debates, vol. vi [12 December 1985], 9434; see also her comments in Canadian Housing 3, no. 5 [1986-7]: 18).
15 See, for example, the comments sprinkled through the proceedings of the
symposium on the new programs held by the Canadian Association of
Housing and Renewal Officials (as reprinted in Canadian Housing 3, no. 5
[1986-7]).
16 Shortly after signing the global agreements, Saskatchewan decided to reduce its housing commitments as part of an austerity drive. As a result,
it withdrew from the delivery of several smaller programs, retaining only
the basic housing and rent-supplement programs.
17 See, for example, 'Social Housing 1987' in Canadian Association of Housing
and Renewal Officials (1987).
18 The next few paragraphs are drawn from Banting 19853.
19 Goldblatt 1987. The fears of the co-operative movement were exacerbated in
the midst of negotiations over the new global agreements by the leak of a
BC cabinet document that suggested that the province would channel all the
federal dollars into shelter allowances. The active BC co-operative movement was particularly distressed (Globe and Mail 15 July 1988).
20 For estimates of the size of the interregional redistribution that results, see
Banting 1987, ch. 6.
21 It is possible to argue that the federal government is likely to develop social
housing programs that are more vertically redistributive as well. As the
government most distant from local resistance to traditional public housing,
Ottawa may be politically freer to insist on targeting social housing expenditures on low-income individuals. The historical record is mixed, however. Public housing in the early period of federal dominance was certainly a low-income program; and in recent years federal authorities have
been leading the drive for targeting on 'core housing need.' In other
periods, however, the federal government has shared - and in some cases
led - the reaction against this approach. In 1969, for example, the Hellyer task force vigorously articulated the objections to the traditional concept of public housing (CMHC 1969).
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161 Social Housing in a Divided State

22 The classic instance of this pattern is pensions policy. See Banting 198513.
23 A similar issue concerns housing subsidies to social assistance recipients in
social housing. If the cost was borne through CAP rather than through
the social housing legislation, the cost to the federal government would be
reduced (Study Team Report 1986: 60).

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