How Canada’s 3 Levels Of Government Shape Housing Policy & Programs

Housing & Politics, News, Real Estate

I’m Steve Fudge, and I’ve been selling real estate in Toronto, Ontario, Canada for over 30 years.

Welcome to my blog on housing, culture and design, where I explore all the facets of real estate, shelter and home. Today I’m breaking down how Canada’s three levels of government – the federal, provincial, and municipal bodies – collectively shape housing policy and programs.

Now that the Ontario provincial election is done – which resulted in a second-term majority Conservative government on June 2nd, 2022  – it’s time to shift from campaign promises to acting on shaping policy.  Affordable housing – which can mean many things to different people – was a priority issue for voters in advance of the election – just like it was during the federal election in the Fall of 2021 – and continues to be an important topic that affects many people in the province.

All of the provincial parties campaigned heavily on affordable housing (I outlined their campaign platforms in The Housing Crisis In Ontario & The Upcoming Provincial Election) by promising solutions and aid to this ever-growing albatross of a problem. But housing policy and programs are not limited to just the provincial government. It is the shared responsibility of all three levels of government, meaning the municipal and federal jurisdictions are actively engaged in our housing policy and programs as well.



As the cost of living continues to go up, the Bank of Canada has responded with some pretty aggressive interest rate increases in an effort to control inflation. In fact, the most recent data from Stats Can shows inflation at a shocking 7.7 percent – levels not seen since 1983. The global pandemic and geopolitical events have created supply chain issues as well as affected the gas supply, which has increased consumer prices for everyday goods across the board. And, let’s acknowledge this, the swift rise in the price of real estate across Canada contributed heavily to rising inflation – and when the Bank of Canada stopped with the quantitative easing and started with aggressive interest rate hikes – in the course of a month it sent first-time buyers scurrying to the sidelines in what I consider an Exhaustion Movement – prompting prices to plummet and making all consumers feel the pinch.

It’s not good news, all around, albeit especially for those who are marginalized and living in poverty. As someone who believes housing is a right and not a privilege (and yes, I do believe in a universal basic income), affordable housing for those in need should be a priority and mandate in Canada. Even in the best of times (literally as recently as 4 months ago), this is easier said than done. And it’s because different levels of government play different roles in housing policy, and they’re not consistently coordinated. There needs to be a directed, synergistic effort to really effect impactful change.

Not many Josephine and Joe Blows fully understand what roles each level of government plays in shaping and executing housing policy and its related tasks, as well as what the various responsibilities of government are at each level. And I suspect there is a pretty small pool of objective experts who understand the implicit interwoven natures of these roles, including how best to create better collaborative frameworks that can expedite processes more effectively – and have policy affect change more efficiently. The truth for me is that the magnitude of the housing crisis is multi-dimensional and complex, and the more I explore it the more complicated it becomes.

Here is a breakdown of who does what in the municipal, provincial, and federal governments as they relate to housing.



The Role Of Municipal Government

The municipal government is very much ‘boots-on-the-ground’ when it comes to executing housing policy. Municipal powers and responsibilities are set by the provincial government, with some variation in that framework as you move across the country. In Ontario, the provincially-developed Ontario Planning Act sets out zoning, land use, as well as rules surrounding density & building type for municipalities.

Within this legal framework, municipalities are encouraged to exercise innovative approaches to accelerate the supply and creation of affordable housing. Particular latitude is given when it comes to day-to-day functionality, including needs assessment, zoning approvals, and land acquisition and assembly.

The municipal government is considered the ‘front line’ when it comes to zoning and making the best (and most appropriate) use of land for development, which is a key component of creating any, but especially affordable, housing supply. They dictate the zoning for various neighbourhoods. They can create a regulatory framework that makes use of available land to maximize the creation of housing units (i.e. permitting secondary suites, laneway homes, garden suites, and mandating certain housing types in certain areas, etc.).

Most recently for example, as of September 2022, the City of Toronto will require private developers constructing new residential highrises near transit lines to allocate 5 to 10 percent of new units for low-income households as outlined in this CBC article: “Toronto Council Votes To Require Developers To Build Affordable Units In Some New Condo Towers“.

One of the significant challenges for municipalities is funding their policy endeavors, as their coffers are significantly smaller than the budgets for the province and federal governments. Municipalities rely heavily on property taxes to support initiatives, plus additional funding from provincial and federal bodies. (See how this house of cards begins to form?) In fact, the municipal government is a large stakeholder in local affordable housing initiatives – both financially and socially. Did you know that in Ontario, municipalities foot the bill for 77 percent of the costs of community housing, with 14 and 9 percent being shouldered by the provincial and federal governments respectively?

Another challenge facing municipal-level governments is the practical side of implementing policy. Most initiatives require amendments to be made to provincial planning legislation – underscoring the need for collaboration between levels of government. Basically, municipalities need the province to be on board in order to implement change, but the province doesn’t need any municipality to agree with their top-down directed mandates. There’s definitely a power imbalance that can be highly problematic when you’re a municipality.

The other challenge? Ratepayers are typically highly resistant to the fabric of their neighbourhoods changing, particularly in areas that are predominantly single-family homes (which comprise about 70 percent of the urban landscape in Toronto). They exert enormous pressure on their local political representatives to prohibit multi-unit dwellings that would create more housing, which is exacerbating the housing crisis as I wrote in my post –>Toronto Real Estate, Yellowbelt Zoning & The Missing Middle: Part One – and – Part Two.



*Image courtesy of The Conversation. All rights belong to THE CANADIAN PRESS/Cole Burston, with thanks.


The Role Of The Provincial Government

The provincial governments of Canada basically dictate how everything housing is developed and managed. In Ontario, this includes the Planning Act, the Provincial Policy Statement on land use planning, the Greenbelt Plan, and other regional growth plans. They also are responsible for policies that direct timelines in the municipal development approval process, including the Ontario Land Tribunal (OLT) (formerly called the Ontario Municipal Board in 2018 and prior), provincial environmental assessments, Ontario’s land registry, etc. and, for renters, the province plays a pivotal role in the Residential Tenancies Act, as well as establishing metrics for rent control and rent increases.

Perhaps one of the most important functions that provincial governments can serve is to fast-track the development process. Red tape and bureaucracy have long been attributed as a barrier to supply.  And while you may nod your head in agreement that this is exactly what’s needed, are you ok if some really important long-term objectives to protect the environment and mitigate climate change became jeopardized because the province made housing a priority, as outlined in Canada’s National Observer “Critics Slam Ontario’s New Greenbelt Plan“?

The province supplies a great deal of funding to housing initiatives, including affordable housing development and incentify sustainable and accessible building practices. They help to fund transit and infrastructure, which is a key component of the creation of communities and housing. Lately, the province has been tossing transit, infrastructure, and housing together in a blender. Imagine if you lived a low-density life in York Region to discover two new communities nearby will have almost four times the jobs and people per hectare than Toronto’s Yonge and Eglinton area, as reported in this CBC article “They’re Called ‘Transit-Oriented Communities.’ But To Some GTA Residents, They’re A ‘Condo Wasteland‘? It would be a shock to one’s psyche, right? Or how about discovering that the suburban community you grew up in is slated to have “Seventy-five towers? In Pickering?” as published in The Globe and Mail earlier this month.

There are many things within the power of the provincial government that could aid with the supply of new housing, including helping with supply chain issues and assisting with labour shortages by funding training for skilled trade workers. Most of the current government’s housing plans are based on recommendations from the Housing Affordability Task Force Report published in February 2022. The report recommends the development of 1.5 million homes over the next decade which means doubling the rate of housing construction. Assuming funding is available, identifying and approving the locations will be a monumental task, and resolving supply chain issues will be no easy feat, but the biggest obstacle is Ontario lacks sufficient qualified trades to build all of this housing within the span of a decade. Can it logistically be achieved? And will the province step on toes and override municipalities by dictating zoning changes? The truth of the matter is that Ontario needs to build a lot of shelter and in order to meet this objective much of it will have to be high-density towers. It will have to be the 2020’s version of all the towers constructed across the GTA from the 1950s thru 1970s that are now aging and in dire need of upgrading per this post called “The Tower Renewal Project In Toronto Led By ERA Architects“. For more insights, check out “Steve Lafleur: Ontario Needs More Housing—But Where?


* Courtesy of the CBC, and all rights belong to Nathan Denette/Canadian Press, with thanks.


The Role Of The Federal Government

The federal government is key in providing support both to renters and to homeowners, and has a long history of supporting affordable housing across the country, as I covered in a recent post: Dear Urbaneer: Does Canada Have A History Of Building Affordable Economical Housing?

The federal body offers tax incentives to make housing more affordable (i.e., Principal Residence Tax Exemption, First Time Homebuyer Tax Credit, Home Buyers Plan, and shared equity through the First Time Home Buyer Incentive) and provides mortgage loan insurance for first-time homebuyers through CMHC (Canada Mortgage and Housing Corporation). I have offered some critique of this in the past, as I shared in my post Why Does Homeownership Remain A Priority For Canadians, Despite The High Costs?

Other policy measures meant to cool demand include monetary policy, which is set by the Bank of Canada (a body independent from the government, but still a crown corporation). In particular, they supply critical financial support to municipal and provincial government housing initiatives.

In 2017, the Federal Government launched the first-ever National Housing Strategy (NHS). This was significant, not just because it was the first time a comprehensive report like this on affordable housing was released, but because the federal government had largely been on the sidelines for decades. Prior to the 1960s, the federal/provincial cost split for housing initiatives was 25/75 respectively. After 1964, that split shifted – significantly – to 50/50.



The National Housing Strategy came with a hefty price tag, with an initial budget of $4b, with support in subsequent budgets, which would raise it to around $75b over the next ten years. That figure captured headlines. However, a review by the Parliamentary Budget Officer of the NHS in 2021 showed that the budget was closer to $37b over 10 years in planned and actual spending, in contrast to the $75b that had grabbed headlines (and voter attention in the last Federal Election). This post from PolicyNote – “What Happened To The National Housing Strategy?” – goes into greater detail on this.

In the NHS, there is an acknowledgement of support to municipalities to help drive the creation of supply, with a $4 billion Housing Accelerator Fund to help municipalities specifically grow housing supply more quickly that their typical development averages. They would support municipalities so that they could drive initiatives like increasing densification and speeding up approvals to build.

There are those who are critical of NHS, namely that it has not done enough to address the creation of affordable housing – and it goes as far as to suggest that the strategy has actually played a role in the financialization of housing – by offering incentives to developers through low-interest loans to build at-market housing.

The financialization of housing is becoming a more significant problem as dwell hunters find themselves competing with institutional and commercial investors who have much deeper pockets. I wrote about this in my post The Growing Trend Of Financial Landlords In Toronto Real Estate.


*Image courtesy of, with thanks.


Collaborative Solutions?

There are certainly challenges – logistically – and because each level of government has their own objectives and agendas, including favouring voters for their own parties.

Case in point, as I wrote about in The Housing Crisis In Ontario & The Upcoming Provincial Election. Just prior to the election, Ford’s government had aggressive legislation on the table to change development policy so as to fast-track development and speed up supply. This legislation faced significant backlash from the municipalities, and given that, Ford scaled back.

This illustrates a good point. Although it is clear on paper what each level must do within the framework of their own responsibilities to move us forward – collaborating to get the job done more quickly – it’s not often easy to reach consensus – or to move swiftly! They have an overlap of interests, requiring that they resolve issues around funding and priority while also pleasing various stakeholders in voter-rich areas. There are certainly a lot of moving parts!

As a baseline, a likely solution to support synergies would start with both the federal and provincial levels of government providing municipal governments with the financial and other support that they need to be flexible in planning and in making the best use of available land – in context of geography and topography – but also being mindful of the need of the local populations. Given that municipalities are more front-line with local populations, it makes sense to give them support to shape the cities in which we live.

It’s not enough to have housing starts or development plans if they don’t serve the needs of those sidelined by affordability. In fact, it can create a bigger gap between the haves-and-have-nots.

This CP24 article, “Report On Housing Costs Examines Role For Municipalities In Easing Affordability“, suggests that one possible solution is to have municipalities approve more multi-use homes, and have the provinces and federal government free up more land to use for this purpose.

Similarly, the various levels of government need to not only work together to solve affordability challenges in the current market but need to work together to plan for the future in all types of communities – with an eye to affordability and sustainability.

As a Realtor, Torontonian, Ontarian, and Canadian, I’m watching this issue closely, and, at this critical juncture in Canada’s housing history, am hoping for some healthy evolution and positive change, resulting from all three levels of government working together.



If you enjoyed this post, you may like these recent blogs as well!

When Dreams Of Domesticity Became Nightmares: A Recollection Of The 1989 Toronto Housing Market Crash

The Housing Crisis In Ontario & The Upcoming Provincial Election

Dear Urbaneer: Does Canada Have A History Of Building Affordable Economical Housing?

Climate Risk Assessment And Real Estate Values

Turning A Blind Eye To The Real Costs Of Toronto Real Estate Investment Properties



The Toronto real estate market faces unique dynamics at the moment, with pandemic-driven buying booms, cooling markets thanks to rising interest rates, and ongoing challenges with affordability. It takes patience, foresight and wisdom from experience to see the big picture.

May my team and I be of help? We’d be delighted to make an introduction.



Thanks for reading!


-The Urbaneer Team

Steven Fudge, Sales Representative
& The Innovative Urbaneer Team
Bosley Real Estate Ltd., Brokerage – (416) 322-800

– we’re here to earn your trust, then your business –

Celebrating Thirty Years As A Top-Producing Toronto Realtor


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