CMHC is unique among federal entities. As a Crown Corporation, it carries out securitization and insurance operations under a corporate mandate while also receiving public funding for federal policy initiatives. Once funding is allocated, CMHC reports to its board rather than the minister responsible on a day-to-day basis.
This differs from the typical departmental reporting model, which has created issues for the PMO, particularly as housing became such a hot-button political issue. Over time, the Department of Infrastructure and Communities evolved into Housing, Infrastructure and Communities, and CMHC’s reporting shifted to the department rather than directly to the minister.
As budgetary spending responsibilities have gradually been peeled away from CMHC, the structure has become more complex and confusing. Policy responsibilities now overlap between the department and CMHC, and some areas – such as addressing homelessness – are jointly managed.
A 2022 Auditor General of Canada report found federal efforts to reduce chronic homelessness have been ineffective because departments lack clear accountability for the National Housing Strategy’s target of reducing chronic homelessness by 50 per cent. The report also found that federal departments and CMHC did not know whether their initiatives were effectively improving housing outcomes. In addition, it highlighted a lack of coordination among various federal housing and homelessness programs.
The fragmentation of roles has worsened with the creation of Build Canada Homes, a $13 billion plan to build social housing, starting with development on public land. The initiative is designed to speed up delivery, strengthen Canadian supply chains, and ensure homes are affordable and sustainable over the long term. It focuses on a Canadian, factory-built, net-zero housing platform capable of delivering quickly in major cities, rural communities, and the North.
In the past, CMHC was responsible for social housing programs, typically under Section 95 of the National Housing Act, providing funding for non-profit and co-operative housing. More recently, new initiatives have included the Federal Community Housing Initiative, the Co-operative Housing Development Program, and preservation funding to support asset management planning.
Does it make sense to have three agencies responsible for social housing? These agencies have demonstrated poor accountability when responsibilities overlap. Consolidating CMHC’s social housing activity under Housing, Infrastructure and Communities or under Build Canada Homes could create a more streamlined and cost-effective framework for delivering on policy.
This would allow CMHC to focus on its two commercial mandates – securitization and insurance – while retaining some housing finance activities that require a commercial perspective for reviewing and underwriting loans.
One example is the Apartment Construction Loan Program, which is managed by CMHC but funded by the federal government. The program provides low-interest loans for qualifying projects that include below-market housing. Underwriting and loan servicing are handled by a commercial contractor, while CMHC conducts the final review and approval of each file. This approach uses minimal CMHC resources but relies on loan underwriting expertise that neither Housing, Infrastructure and Communities nor Build Canada possesses.
As recently noted by Tom Davidoff, director of the Centre for Urban Economics and Real Estate at UBC’s Sauder School of Business, the government could modify this program to “raise interest rates while eliminating affordability mandates.” By capturing the implicit subsidy for non-market housing, the government could use the revenue “to fund social needs more broadly and equitably, instead of the benefit being concentrated among a privileged few recipients selected by the developers.”
Imposing design and affordability requirements will reduce the number of homes built and create market distortions and inequalities. As part of its mandate to make housing more affordable and promote a stable and efficient housing finance market, CMHC should be exploring ways to improve this key program.
Part of the challenge is that CMHC has long had a mandate covering all things housing. This has stretched its focus across many areas. Narrowing its role to insurance, securitization and loan management could allow CMHC to concentrate on promoting a stable and efficient housing market.
I doubt that the government will undertake the restructuring needed to improve housing program delivery, but one can always hope they listen.
Independent Opinion
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