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Interview with Michael Shapcott: "Growing housing crisis" is a "perfect storm"

jesse mintz

Michael Shapcott

Michael Shapcott is the Director of Affordable Housing and Social Innovation for the Wellesley Institute, an independent research institute working to advance population health and equity through policy development. He is recognized as one of Canada’s leading housing policy experts and is a long-time housing and homelessness advocate.  He took some time to talk with us about the upcoming G20 Summit and what it means for low-income people in Canada and around the world.


Jesse Mintz: You are very involved in the housing and income equity struggle on a local and national level. Can you talk a little about some of the issues facing low-income Canadians?

Michael Shapcott: This country has undergone a shift in the last decade. We’ve had all the indicators point to not only a big growth in visible homelessness in Toronto and across the country—this includes people who are living in homeless shelters and on the street—but we’ve also seen a corresponding growth in housing insecurity, that is people who are a little less visible but may be in overcrowded housing, substandard housing or unaffordable housing. So while we’ve seen this huge increase in housing insecurity and homelessness in this country in the past decade, we’ve also seen the face of homelessness change as well. Whereas, say, 20 years ago, by far the vast majority of homeless people were single middle-aged people, most often male, we began to see in the 1990s the rise of family homelessness, youth homelessness, and seniors homelessness. The situation across the country is pretty grim, and it’s not just something that Canadians have noticed. In 2007 the United Nations Special Rapporteur on adequate housing visited Canada on a fact-finding mission and he confirmed how desperate the situation was in the country.

Overall what we have is a very grim and serious picture in terms of housing insecurity. That, of course, affects not only the individuals and their ability to find a good home but it also has a profound impact on personal health. The affordable housing crisis is triggering in turn a health crisis that is affecting individuals. It’s also disrupting communities. We’re seeing an increase in polarization in a number of urban areas across the country between rich neighborhoods and poorer ones. On top of the health and community aspect, the housing crisis is having an impact on the economy on a local and national level. We’re seeing more and more business, such as TD Economics on the national level and Toronto Board of Trade on a local level, come out and claim that attracting and retaining workers has become more difficult as a result of the lack of affordable housing. They recognize that the social dimensions of the affordable housing crisis affect businesses as well as individuals. The housing crisis is directly impacting a national health crisis, disruptions to our urban environments and the economy. So the overall picture of Canada’s housing market is of a steadily deteriorating situation and there are plenty of statistics and personal stories that illustrate what’s happening.

Jesse Mintz: It is obviously a very complex issue but, generally speaking, what factors can you point to as causes for the affordable housing crisis in Canada?

Michael Shapcott: There is no question that there are a number of mitigating factors at play. But the key factor that has been driving things has been the erosion of government support for affordable housing. The simple reality—and everybody in the country knows this—is that housing is very expensive and it’s always been that way. About two-thirds of Canadians have adequate incomes to afford housing and they are able to buy or rent a home and still have enough money left over for food and all the other necessities. The really enduring problem is what about the roughly one-third of Canadians who are low-, moderate-, and in some cases even middle-income who are finding it increasingly difficult to rent housing in this country.

So the number one driver in terms of the deteriorating housing situation has been the high cost of housing. What we’ve seen, though, right up until the start of the recession was that Canada was still producing near record amounts of new housing. So the problem obviously wasn’t that we weren’t building enough housing. The problem was that housing is too expensive for an increasing number of Canadians. Before the 1990s the issue was addressed by a national housing program. There were several versions of it but the most significant version, launched in 1973, created a plan to ensure that people who were excluded from the private housing market would have access to an affordable home. The federal government worked in conjunction with the provinces, municipalities, private sector and non-profits. So from 1973 to 1993 the government funded over 600,000 new affordable homes, mainly non-profit and co-op housing, across the country. While there certainly were housing problems for some Canadians in the ’70s and ’80s, we  didn’t see this sort of mass housing insecurity and homeless for that period because governments were paying attention to people who were excluded from the private housing markets. By 1993, though, the federal government stopped all funding for new affordable housing. In 1996 the federal government decided that it would transfer the administration of most federally funded housing projects to the provinces and territories, and in 1998 the federal government decided to partially commercialize Canada Mortgage and Housing Corporation, which is our national housing agency and the lead agency supporting affordable housing programs in the ’70s, ’80s and early ’90s. Virtually every Canadian province in one way or another mirrored the federal moves, downloading funding to municipalities, and the pattern was established of governments not only not creating any new affordable housing but also stopping subsidization of existing affordable housing projects from previous programs. This occurred simultaneously as populations were increasing and poverty and income inequality were growing exponentially in Canada. All these factors together led to the perfect storm of our current and growing housing crisis.

I also want to make clear that the governments in the 1990s didn’t just single out housing programs. Right across the spectrum there were cuts in a whole range of government social expenditures. Income transfer programs, everything from welfare to employment insurance, you name it—all the programs designed to put a little bit of money in the pockets of people who don’t have much money  were dramatically cut.

We see in the 1990s, at both the provincial and federal level, a real determination to cut social expenditures to the point where Canada, which used to be near the top in terms of percentage of GDP spent on public social expenditures  when compared with the other nations of the OECD (Organization for Economic Cooperation and Development), more recently we’ve slipped down close to the bottom of the list. In 2008, the OECD released a report called “Growing Unequal” which was focused on poverty and income inequality in the 31 countries that compose the main countries of the OECD, the richest and most developed countries in the world; one of the things that the OECD noted was that up until 1995, Canada was ahead of the rest of the OECD in terms of reducing poverty and reducing income inequality but after 1995 Canada fell behind the rest of the OECD and in some measures Canada is among the worst in the OECD in terms of poverty and income inequality. So what you have is a radical change in political direction in the 1990s which led to wholesale cuts in housing policies, in housing funding, plus a whole related series of government social expenditures and the net impact of all of that is the situation that were facing today.

Jesse Mintz: So if I’m understanding you correctly, directional changes in federal policy have led to a confluence of factors contributing to the housing crisis specifically and to a whole slew of social ills as a result. Is there a connection you can draw between Canada’s domestic policy and the issues facing low-income Canadians and international policies and the issues facing people of the global south?

Michael Shapcott: There’s no question. The politics that led to the massive erosion of housing and other social programs in Canada in the 1990s at the national level are often referred to on the international level as neoliberal policies. The neoliberal agenda is basically to shrink the role of government and enhance the role of the private market. It was explicitly adopted with the Mulroney government in 1984 and it was followed by the Chretien-Martin administration and of course the current Harper government. The neoliberal agenda stands very much in sharp contrast with the previous notion that there is an important and legitimate role for the government in terms of dealing with issues that markets couldn’t satisfy, issues such as equity and access to basic human needs. What has begun with the onset of the recession, which was triggered entirely by a failure of private markets, is that people have begun asking serious questions about the neoliberal agenda of unregulated private markets in terms of its failures to meet people’s needs. There is a talk of a new role for government, of government regulation of the private sector that seeks to ensure that everyone within the country has access to basic needs and basic rights.

One of the issues at the G20 summit, of course, is that you have a number of governments coming—the Canadian government and the coalitions of Germany and England, respectively—that are firmly committed to the neoliberal ideology of small governments and big markets. You have the U.S. government that, while under the Bush administration, was very committed to the neoliberal agenda but has since made overtures under Obama to more regulations in the aftermath of the recession. What we’ll see at the G20 meeting is a very enthusiastic group of cheerleaders for the neoliberal agenda on one side and on the other hand at least a few voices saying that the recession is a wakeup call and that governments have to figure out a new way of working.

Jesse Mintz: So you don’t think that the G20 is prepared or even interested in addressing the underlying issues of income equity on an international level?

Michael Shapcott: I think that it’s hard to say. It’s certainly on the domestic agenda in every G20 country, Canada included. And while the critical issues affecting people internationally are very much there, often times the leadership of a country doesn’t reflect the political will of the people in terms of direction of the G20. There are some interesting trends beginning to take shape in many parts of the world. One of the most important ones, I think, is emerging in Australia, the U.S., Britain and many other European nations, and it’s beginning slowly here in Canada as well. It is the idea of the social economy. The social economy is very complex but in its simplest form it exists between the private sector of business and the public sector of government and uses traditional economic tools geared towards meeting basic human needs as opposed to the private sector mentality of maximizing profit. The best example at the international level are micro credit organizations like the Grameen Bank that started in Bangladesh but has since gone global. It is not simply profit motivated but is organized very explicitly on a social economy basis.  Canada, with the exception of Quebec, lags behind the United States and most of Europe in terms of developing our social economy. Almost certainly the social economy will be nowhere near the radar screen at the G20 because, for some reason, the social sector gets very little attention from governments despite its often disproportionate contribution to the overall economy. In Canada, for instance, the non-profit sector contributes six times as much to the GDP as the auto manufacturing industry. There are literally hundreds of thousands of non-profit organizations providing a variety of services and employing a huge number of people generating economic activity. Yet they’re not on the radar screen.

We would love to see a real dialogue at this year’s G20. Instead of this polarized debate between people on the one side who think that the private sector needs free rein to maximize profits, and people on the other side who want to build big government to deal with the big social and environmental issues of the 21st century, we want to develop a third alternative. We think the most sensible way out of this mess is to address the social economy. It’s neither big governments nor big markets, but a whole range of social enterprises—some of which may look like traditional businesses from the outside but are in fact geared towards social objectives rather then profit. There are examples in Toronto of modest little social initiatives like an organization called Gateway Linens that is run by Gateway Homeless Shelter as an employment project for men who live in the shelter. There are more and more examples like this around the country everyday but, with the exception of Quebec, the social economy is not organized yet in Canada.

Jesse Mintz: Thanks for taking the time to talk with us today. What rallies can we expect to see you at this week?

Michael Shapcott: I’m going to be at the big one that the CLC is part of (the People First rally, on June 26). I’m also working behind the scenes. We know that at summits like this there is a lot of media attention either on the official meetings—which are pretty low key because we know by this point that most of the official communiqués have all been drafted and the meetings serve more as a photo opportunity then anything else—and there will be a lot of media attention aimed at the antics at street level. We think it would be great if there was some media attention both locally and internationally using the summit as a way of focusing on real solutions to move us forward. We’re going to do our best within the “Cone of Silence,” or the “security bubble” to connect with media and try and interest them to report on issues other then the action on the streets or the communiqués flowing out of the press offices of the leaders.

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