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Urban rental housing in Canada, 1900-1985 : a critical review of problems and the response of government Selby, Joan Louise 1985

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URBAN RENTAL HOUSING IN CANADA, 1900-1985: A CRITICAL REVIEW OF PROBLEMS AND THE RESPONSE OF GOVERNMENT By JOAN LOUISE SELBY .S.W., The University of B r i t i s h Columbia, 1983 B.A., The University of Saskatchewan, 1972 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF ^ MASTER OF ARTS in THE FACULTY OF GRADUATE STUDIES The School of Community and Regional Planning * We accept th i s thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA October 1985 (g) Joan Louise Selby, 1985 \ In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make i t freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. It i s understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. Department O f SCHOOL OF COI'MJNITY AND REGIONAL PLANNING The University of British Columbia 1956 Main Mall Vancouver, Canada V6T 1Y3 Date D r r h n h e r 1 3 , 1QS5 D E-6 f V f m ABSTRACT There i s widespread agreement among housing p o l i c y a n a l y s t s that there are s e r i o u s problems with Canada's urban r e n t a l housing s e c t o r . The s p e c i f i c problems i n c l u d e d e c l i n i n g and p e r s i s t e n t l y low vacancy r a t e s , d e c l i n i n g p r i v a t e s e c t o r s t a r t s , and the u n a f f o r d a b i 1 i t y of p r i v a t e stock f o r a c o n s i d e r a b l e p o r t i o n of low- and moderate-income r e n t e r s . Given the importance of r e n t a l accommodation, p a r t i c u l a r l y f o r those lower-income households unable to enter or remain i n the ownership s e c t o r , t h i s s i t u a t i o n has prompted a d i s c u s s i o n as to whether the past and c u r r e n t approach t o r e n t a l housing p o l i c y i s a p p r o p r i a t e to the s o l u t i o n of r e n t a l housing problems, or whether new or d i f f e r e n t s t r a t e g i e s f o r a d d r e s s i n g r e n t a l problems are warranted. Within the context of both t h i s d i s c u s s i o n and of an ongoing debate as to the a p p r o p r i a t e r o l e of the s t a t e i n housing markets, t h i s t h e s i s i n v e s t i g a t e s what measures the Canadian government has taken over the past e i g h t y - f i v e years to address r e n t a l housing problems. D i v i d i n g t h i s p e r i o d i n t o four eras - 1900-1940, 1940-1949, 1949-1964, and 1964-1985 - the t h e s i s examines the e x i s t e n c e and e x t e n t of r e n t a l housing problems; documents how r e n t a l problems have been d e f i n e d and analyzed by housing experts and what t h e i r p o l i c y recommendations have been; and reviews the response of the federal government to rental problems. The primary assumption underlying the research i s that government intervention in the rental market has been minimal, ad hoc, and largely market-supportive, and that t h i s approach to rental problems has had an enormous impact on problem resolution. Government response to rental problems i s reviewed and the research assumption i s tested by examining major government and private housing studies, contemporary academic a r t i c l e s and media reports, s t a t i s t i c a l analyses, the debates in the House of Commons, and housing-related l e g i s l a t i o n in i t s o r i g i n a l and amended forms. The evidence suggests that government intervention in the rental sector has indeed been minimal, piecemeal and reactive, largely market-supportive, and c a r r i e d out within the framework of housing as a market commodity. It suggests further that intervention in the rental sector has been shaped largely by two interr e l a t e d factors: the federal government's terms of reference for intervention in the housing market, and i t s f a i l u r e to adequately define the rental housing problem. The federal government's terms of reference for intervention in the housing market define housing provision as a private sector r e s p o n s i b i l i t y , home ownership as the desirable tenure option, housing problems as temporary conditions, and housing policy as a pro v i n c i a l r e s p o n s i b i l i t y . These terms of reference have severely constrained rental policy and program options and have prevented the implementation of po t e n t i a l l y more e f f e c t i v e rental programs. Moreover, they have resulted in i v either the neglect of Canada's rental problems or the adoption of a variety of short-term, ad hoc programs in response to c r i s i s s i t u a t i o n s . The federal government's f a i l u r e to see the relationship between the quality, supply and a f f o r d a b i l i t y elements of the rental problem and thus to adequately define the problem i s the second factor which has shaped intervention in the rental sector. Intervention has tended to focus on the three problem elements separately and in a c l e a r l y sequential manner, with the result that opportunities for developing a long-term, comprehensive rental housing policy aimed at simultaneous treatment, of a l l three aspects of the problem have been missed. The thesis concludes that only by questioning the conventional assumptions underlying Canadian rental policy and by acknowledging the interrelatedness of the three problem areas w i l l we make progress on resolving rental housing problems. V TABLE OF CONTENTS ABSTRACT i i LIST OF TABLES v i i LIST OF FIGURES ix ACKNOWLEDGEMENTS x 1 . Introduction 1 2. Urban Rental Problems and P o l i c i e s , 1900-1940 21 2.1 The Housing Problem, 1900-1930 22 2.2 Recommendations for Action and Government Response to the Housing Problem, 1900-1930 35 2.3 Recognition of the Rental Problem - The 1930's....46 2.4 Recommendations for Government Action on the Rental Problem 60 2.5 Government Response to the Rental Problem 63 3. Urban Rental Problems and P o l i c i e s , 1940-1949 71 3.1 The Rental Problem During the War 72 3.2 Recommendations for Action and Government Response to the Rental Problem During in the War..77 3.3 The Rental Problem in the; Post-War Years. 88 3.4 Recommendations for Action and Government Response to the Rental Problem in the Post War Years 93 4. Urban Rental Problems and P o l i c i e s , 1949-1964 100 4.1 The Rental Problem 102 4.2 Recommendations for Government Action on the Rental Problem 131 4.3 Government Response to the Rental Problem 135 v i 5. Urban Rental Problems and P o l i c i e s , 1964-1985 141 5.1 The Rental Problem 145 5.2 Recommendations for Government Action on the Rental Problem 153 5.3 The Private Rental Sector and Government Response to the Rental Problem 156 5.4 The Public Rental Sector and Government Response to the Rental Problem 184 5.5 The Non-Prof i t Rental Sector and Government Response to the Rental Problem 194 6. The Limits of Government Rental Policy, 1 900-1985... . 207 6.1 Terms of Reference for Government Intervention... 212 6.2 Inadequate D e f i n i t i o n of the Rental Problem 220 6.3 Summary and Conclusion 226 BIBLIOGRAPHY 232 APPENDIX 241 v i i LIST OF TABLES Table 1 Renter Households by Income Q u i n t i l e , Canada, 1967,1973,1977,1981 13 Table 2 Home Ownership Rates By Income Qui n t i l e , Canada, 1967,1973,1977,1981 14 Table 3 Urban Residential Completions, By Type, Canada, 1921-1939 26 Table 4 Households and Dwelling Stock, Canada , 1 901 ,1911,1921-1939 31 Table 5 Wages and Shelter Costs, Canada, 1900-1931 34 Table 6 Incomes and House Prices, Canada, 1929-1939 49 Table 7 Incomes and Rent Levels, Canada, 1929-1939 55 Table 8 Households and Dwelling Stock, Canada, 1939-1949 73 Table 9 Urban Residential Starts and Completions, Canada, 1921-1949 83 Table 10 Rental Starts, By I n i t i a t i n g Sector, Canada, 1949-1964 106 Table 11 Residential Completions, By Type, Canada, 1949-1964 108 Table 12 A f f o r d a b i l i t y of Home Ownership, Canada, 1951-1961 109 Table 13 Private Sector Rental Starts, Canada, 1949-1964 118 Table 14 National Average Apartment Vacancy Rates, Canadian Census Metropolitan Areas, 1964-1983..148 Table 15 Private Sector Rental Starts, Canada, 1964-1983 158 Table 16 Urban Residential Starts, By Type, Canada, 1964-1982 159 Table 17 The Gap Between Financial Recovery and Market Rents, Canada, 1964-1983 172 v i i i Table 18 Government Assistance to Rental Construction, By Sector, Canada, 1964-1983 181 Table 19 Public Sector Starts, By Program, Canada, 1964-1983 185 i x LIST OF FIGURES Figure 1 Apartment Starts, Canada, 1920-1983 113 Figure 2 Total Apartment Starts, Canada, 1971-1983 167 Figure 3 Housing Starts, Canada, 1900-1983 209 X ACKNOWLEDGEMENTS A great debt i s owed Dr. David Hulchanski whose c r i t i c a l i n s i g h t and a d v i c e , and u n f a i l i n g support and encouragement have guided.me throughout t h i s r e s e a r c h . My thanks i s a l s o owed to Dr. Glenn Drover f o r h i s i n s i g h t f u l comments on e a r l y d r a f t s of the t h e s i s . As w e l l , Dr. Peter Oberlander made v a l u a b l e comments on the f i n a l d r a f t . F i n a l l y , I am extremely g r a t e f u l to the Canada Mortgage and Housing C o r p o r a t i o n and the Un i t e d Church of Canada f o r the f i n a n c i a l a s s i s t a n c e which made p o s s i b l e both my. graduate s t u d i e s program and t h i s t h e s i s . 1 CHAPTER 1 INTRODUCTION There i s widespread agreement among housing policy analysts that there are serious problems with Canada's urban rental housing sector. The sp e c i f i c problems which have become most evident over the past ten to f i f t e e n years include: declining and per s i s t e n t l y low rental vacancy rate s ; 1 declining private sector rental s t a r t s , despite the low vacancy r a t e s ; 2 and the unaff o r d a b i l i t y of both new and exis t i n g private rental stock •"The average rental vacancy rate in Canada was 4% in the 1963 to 1970 period, 2.5% in the 1971 to 1978 period, and 2.2% in the 1979 to 1983 period. In most urban areas, the rate i s much lower than the national average. Canada' Mortgage and Housing-Corporation, "An Analysis of the Rental Market" (Ottawa: CMHC, Planning D i v i s i o n , 1984), p. 9. 2Between 1968 and 1973, apartment s t a r t s , which are used as a proxy for rental starts, averaged 104,000 per year. By the 1980 to 1983 period, average annual apartment starts had dropped to 52,000. In both periods, private sector a c t i v i t y accounted for at least 75% of the st a r t s . Canada Mortgage and Housing Corporation, "Analysis of the Rental Market," p. 3. 2 for a considerable portion of low- and moderate-income renters. 3 This situation has prompted a debate as to whether the past and current approach to rental housing p o l i c y i s appropriate to the solution of rental housing problems, or whether new or d i f f e r e n t strategies for addressing rental problems are warranted. Given the important role the Canadian government has played in the housing sector, a number of analyses of Canadian housing policy have been undertaken in the past ten to f i f t e e n years. The major studies include the 1969 report of the Task Force on Housing and Urban Development, known as the Hellyer Report; L.B. Smith's housing research monograph prepared for N.H. Lithwick's 1970 report on the problems of urban Canada; the 1972 report of the Task Force on Low-Income Housing, known as the Dennis and Fish Report; Smith's 1977 Anatomy of a C r i s i s ; Albert Rose's Canadian Housing P o l i c i e s , published in 1980; Michael Goldberg's 1983 primer on housing markets, p o l i c i e s and problems; and George F a l l i s ' s 1985 book, Housing Economics. 3In 1971, an estimated 769,000 renter households with incomes below the o f f i c i a l government poverty l i n e or approximately 33% of a l l renter households were paying in excess of 25% of income for rent. In 1981, an estimated 500,000 renter households or 18.3% of a l l renters could not afford adequate, uncrowded housing without paying more- than 30% of gross income for rent. While the two sets of figures are not perfectly comparable, they do indicate that unaffordability among low-income renters remains a serious problem. Canadian Council on S o c i a l Development, A Review of Canadian Social Housing P o l i c y (Ottawa: CCSD, 1977), pp. 23, 31; Canada Mortgage and Housing Corporation, Section 56.1 Non-Prof i t and Co-operative Housing  Program Evaluation (Ottawa: CMHC, Program Evaluation D i v i s i o n , 1983), p. 41. 3 As well, numerous reports prepared by private housing consultants and organizations, such as the Social Planning Council of Metropolitan Toronto, the Canadian Home Builders Association, the Urban Development Ins t i t u t e , and the Canadian Council on Social Development, have also examined Canadian housing p o l i c y . Most of these studies share a common analytic perspective. They tend to view the provision of housing as a r e s p o n s i b i l i t y of the private market and the role of government as a passive intermediary between market conditions and housing needs. Some analysts, such as economists Smith, F a l l i s , Goldberg, and Clayton have rooted their analysis of housing in a conventional neo-classical model of commodity markets. They apply r e l a t i v e l y pure neo-classical supply and demand economics to housing analysis in an attempt to demonstrate that the housing market can and does work. The problems which are i d e n t i f i e d are merely "imperfections." While F a l l i s does acknowledge that housing markets are an unusual type of market, his analysis seeks to incorporate t h e i r special c h a r a c t e r i s t i c s while retaining a workable conventional market model. The detailed examinations of forces operating in the market and of economic relationships, such as supply and demand models and price and supply e l a s t i c i t i e s , undertaken by these economists are simply r e f l e c t i o n s of their b e l i e f that housing policy must be based on a sound understanding of market dynamics as defined by the analytic tools of neo-classical economics. 4 From the viewpoint of neo-classical economists, housing is a market commodity, not unlike others and the housing market plays an important role in the national economy. Accordingly, government intervention in the market i s considered appropriate only i f i t supports the market and seeks to render i t more e f f i c i e n t and competitive and, when necessary, i t serves to s t a b i l i z e fluctuations in the economy. According to most neo-c l a s s i c a l housing policy analysts, recent Canadian housing policy has served to destroy private housing sector incentive by disrupting the free operation of the market." Indeed, one of the purposes of Goldberg's monograph is to "explore a range of p o l i c i e s designed to improve the responsiveness and e f f i c i e n c y of housing markets and to identi f y classes of p o l i c i e s that are l i k e l y to be counterproductive and thus should be avoided in future." 5 Even the Hellyer Task Force and Albert Rose base their analysis of Canadian housing problems and p o l i c i e s on the t r a d i t i o n a l housing-as-a-market-commodity model, and defend the use of housing as an economic stimulant. While they note that imperfections in the market mechanism exist and they adhere to the p r i n c i p a l of adequate housing as a s o c i a l right, their prescriptions focus on steps government can take to reduce land, "See L.B. Smith, Anatomy of a C r i s i s : Canadian Housing Policy in  the Seventies (Vancouver: Fraser I n s t i t u t e , 1977), p. v i i ; Michael Goldberg, The Housing Problem: A Real C r i s i s ? A Primer  on Housing Markets, P o l i c i e s and Programs (Vancouver: University of B r i t i s h Columbia Press, 1983), p. 2. 5Goldberg, The Housing Problem, p. 2. 5 c o n s t r u c t i o n , and f i n a n c i n g c o s t s , and to ensure more e q u i t a b l e d i s t r i b u t i o n of the housing stock - measures designed to render market o p e r a t i o n more e f f i c i e n t . The assumption i s that the market can and w i l l respond to housing needs. Indeed, i n i t s D e c l a r a t i o n of P r i n c i p l e s , the H e l l y e r Task Force notes: "The housing needs of most Canadians can and should be met through the p r i v a t e market. Governments, in p r o v i d i n g the necessary r e g u l a t o r y framework, should seek to encourage, not i n h i b i t , the c o n s t r u c t i o n i n d u s t r y . " 6 Of the major p o l i c y s t u d i e s undertaken i n the past f i f t e e n y e ars, only the Dennis and F i s h Report i s c r i t i c a l of the Canadian government's almost e x c l u s i v e r e l i a n c e on the p r i v a t e s e c t o r . 7 In proposing the establishment of a s u b s t a n t i a l non-p r o f i t s e c t o r and of a l a r g e - s c a l e p u b l i c land-banking system, Dennis and F i s h a t t r i b u t e c o n t i n u i n g low-income housing problems to both the use of housing as an economic s t a b i l i z e r and to attempts to g r a f t s o c i a l housing programs onto "a p r o f i t - m a k i n g p r o d u c t i o n - o r i e n t e d market mechanism i n which the producers conceive of housing as an a r t i f a c t to be produced r a t h e r than a s e r v i c e to be rendered." 8 A c c o r d i n g to Dennis and F i s h , without the necessary changes in mechanisms f o r producing, m a i n t a i n i n g 6Canada, F e d e r a l Task Force on Housing and Urban Development, Report of the Task Force on Housing and Urban Development (Ottawa: Queen's P r i n t e r , 1969), p. 23. 7The report was so s c a t h i n g i n i t s c r i t i c i s m that i t s c o n t e n t s were never made p u b l i c by CMHC and the authors r e s o r t e d , i n 1972, to p r i v a t e p u b l i c a t i o n under the t i t l e Programs i n Search  of a P o l i c y : Low-Income Housing i n Canada. 8 M i c h a e l Dennis and Susan F i s h , Programs in Search of a P o l i c y :  Low-Income Housing i n Canada (Toronto: Hakkert, 1972) , p^ 347. 6 and d i s t r i b u t i n g housing, the goal of housing as a s o c i a l right w i l l remain ephemeral. In the l a s t few years, a body of c r i t i c a l housing l i t e r a t u r e which challenges the t r a d i t i o n a l conceptions of housing as a market commodity and of the market as the sole basis for housing provision has emerged. The l i t e r a t u r e , authored largely by B r i t i s h and American p o l i t i c a l economists, questions the sanc t i t y accorded the market and market theory, noting that theoretically-based neo-classical economic analyses of the housing market and housing problems are neither empirically nor h i s t o r i c a l l y - r o o t e d . According to p o l i t i c a l economists, the formal and s t y l i z e d textbook housing market never did exist because of a number of c h a r a c t e r i s t i c s of housing which d i f f e r e n t i a t e i t from t y p i c a l market commodities and which adversely a f f e c t the operation of the housing market. The c h a r a c t e r i s t i c s include both factors internal to the dynamics of the housing market such as the heterogeneity, d u r a b i l i t y and fi x e d location of the housing stock, and macro-economic and s o c i o - p o l i t i c a l conditions such as i n f l a t i o n and the a v a i l a b i l i t y and cost of land, which determine the broader context in which the housing market must operate. Together, these internal and external factors ensure that the housing market does not perform in a way that produces, for the majority of people, s a t i s f a c t i o n of their economic, s o c i a l and personal needs for a decent place to l i v e , in a decent and suitable 7 environment, at an affordable c o s t . 9 P o l i t i c a l economists assert that the treatment of housing as a commodity rather than as a s o c i a l good, and the housing industry's drive to maximize p r o f i t s from every aspect of housing ownership, operation, financing and production l i e at the root of housing problems in western c a p i t a l i s t n a t i o n s . 1 0 Canadian p o l i t i c a l economist Alan Moscovitch explains the reasoning as follows: "...the drive for p r o f i t s is in direct c o n f l i c t with the needs of ordinary people for housing...The drive for p r o f i t s makes the construction of new housing at prices which can be afforded by individuals and families with low incomes an unlikely p o s s i b i l i t y . The drive for p r o f i t s has continuously made impossible the private construction of housing at r e l a t i v e l y low prices. P r i o r i t y i s determined by the demands of finance corporations for p r o f i t s at low r i s k . . . P r i o r i t y , as a consequence, can only be given to housing which is l i k e l y to return a higher p r o f i t . " 1 1 Proposals for the resolution of housing problems must, therefore, move beyond simply stimulating growth in the economy or tinkering with an unworkable system through the use of government subsidies. The prescription offered by p o l i t i c a l 3Chester Hartman, "Introduction: A Radical Perspective on Housing Reform," in America's Housing C r i s i s : What i s to Be  Done? ed. C. Hartman (Boston: Routledge and Kegan Paul, f 9 8 3 ) , p. 5 . 1 0See Hartman and Michael Stone, "A S o c i a l i s t Housing.Program for the United States," in Urban and Regional Planning in an Age  of Austerity, eds. P. Clavel, J. Forester, and W.W. Goldsmith (New York: Pergamon Press, 1 9 8 0 ) , p. 2 3 8 ; Hartman, "A Radical Perspective on Housing Reform," p. 8 ; Emily Achtenberg and Peter Marcuse, "Towards the Decommodification of Housing: A P o l i t i c a l Analysis and a Progressive Program," in Hartman, America's  Housing C r i s i s , p. 2 0 7 . 1 ^ l a n Moscovitch, "Housing: Who Pays? Who P r o f i t s ? " In Inequality: Essays on the P o l i t i c a l Economy of Social Welfare, eds. A. Moscovitch and G. Drover (Toronto: University of Toronto Press, 1 9 8 1 ) , pp. 3 2 5 - 3 2 6 . 8 economists i s to decommodify or remove as much of the housing system as possible from the profit-maximization d r i v e . 1 2 Suggested vehicles for f a c i l i t a t i n g decommodification include s o c i a l production and ownership of housing, public financing of housing, s o c i a l control of land, and tax system reform. Within the context of this ongoing debate as to the most desirable means of producing and managing housing, and the appropriate role of the state in the housing market, this thesis investigates what measures the Canadian government has taken over the past eighty-five years to address one aspect of housing problems: rental problems. The primary assumption underlying the research is that government intervention in the rental market has been minimal and ad hoc and has not challenged either the p r i n c i p l e of housing as a commodity or that of the market as the best a l l o c a t i v e mechanism. This pattern of intervention has evolved out of a set of four fundamental and rarely-questioned assumptions about the appropriate role of government in housing, about the capacity of the private rental sector to meet Canada's rental housing needs, and about the role of rental tenure in Canadian society. These assumptions have severely constrained rental policy and program options and have prevented the implementation of p o t e n t i a l l y more e f f e c t i v e rental programs. These constraints on government rental policy have resulted in either the neglect of Canada's rental problems or the adoption 1 2See Hartman, "A Radical Perspective on Housing Reform," p. 9 ; Achtenberg and Marcuse, "Towards the Decommodification of Housing," p. 2 2 0 . 9 of a variety of short-term, ad hoc programs in response to c r i s i s s i tuations. The most s i g n i f i c a n t underlying assumption influencing government intervention in the rental sector i s the adherence to the b e l i e f that housing i s a market commodity whose provision is a private sector r e s p o n s i b i l i t y , and i t s corollary that the market is the best a l l o c a t i v e mechanism. Accordingly, government has involved i t s e l f in housing provision only in extraordinary or emergency circumstances, and only in order to aid the market rather than circumventing or competing with i t . From t h i s , i t has followed that when government has had to intervene, actors in the market place have been used for program implementation. This sanctity accorded the private housing market appears to be based on a strong value accorded to individualism, a notion which implies that the a c q u i s i t i o n of housing is a personal r e s p o n s i b i l i t y . Thus, except in the case of a narrowly-defined group of "truly needy" (the e l d e r l y , mentally or physically disabled, and single parents on welfare), who are incapable of assuming such r e s p o n s i b i l i t y , an attempt i s made to minimize the nature and extent of the government's role in the housing market. The second assumption defining government intervention in the rental sector, i s the focus on home ownership as- the-desirable tenure option given i t s allegedly s t a b i l i z i n g e f f e c t on family l i f e and society. Indeed, references to the 10 s t a b i l i z i n g influence of home ownership pervade both early and recent Canadian housing l i t e r a t u r e . As a result of thi s attitude, rental tenure has, r e l a t i v e to home ownership, enjoyed "second c l a s s " status in Canada. 1 3 The t h i r d assumption influencing the nature of government intervention in the rental sector i s the contention that not only rental sector but housing problems in general are temporary aberrations rather than manifestations of fundamental, long-term problems. This view that short-term market imperfections or ephemeral macro-economic conditions are responsible for rental problems follows from the be l i e f in the e f f i c i e n c y of the market mechanism, and has meant that government has consistently either neglected rental problems or responded with ad hoc, short-term interventions. The f i n a l assumption influencing government intervention in rental problems i s the view that housing is largely a l o c a l matter, with problems best l e f t to the municipalities and 1 3See Albert Rose, Regent Park: A Study in Slum Clearance (Toronto: University of Toronto Press, 1958), p. 18; Nicholas Steed, "The Lingering Death of the Family House: A Report on the Shelter Squeeze," Macleans, May 1967, p. 15; Roy LaBerge, "A New Concept," Canadian Labour 13 (February 1968):25; Canadian Real Estate Association, Housing in Canada: A Continuing Challenge, A l l Sector National Housing Conference Report (Don Mi l i s , Ont.: CREA, 1982), p. 52; Harry Flemming, "Tenants Outnumber Landlords: Shouldn't They Have More Rights?" A t l a n t i c Insight 4 (February 1982):61; A.G. D a l z e l l , Housing in Canada, Vol. 2: The' Housing of the Working Classes (Toronto: Social Service Council of Toronto, 1928), p. 19; Canada, House of Commons, Special Committee on Housing, Minutes of Proceedings and Evidence, Nos. 1-11 (Ottawa: King's Printer, 1935), p. 1711 . 11 prov i n c e s to s o r t out. S e c t i o n 92 of the B r i t i s h North America (BNA) Act d e l e g a t e s r e s p o n s i b i l i t y f o r housing to the p r o v i n c e s . The Act a l s o , however, accords the f e d e r a l government j u r i s d i c t i o n over a much l a r g e r and more l u c r a t i v e tax base. The constant v o l l e y i n g of the r e s p o n s i b i l i t y f o r r e n t a l housing problems back and f o r t h between the l e v e l of government mandated the r e s p o n s i b i l i t y and the l e v e l r e a l i s t i c a l l y a b l e to assume that r e s p o n s i b i l i t y has meant r e n t a l i n t e r v e n t i o n has been minimal and i n c o n s i s t e n t . T h i s t h e s i s i n v e s t i g a t e s government a c t i o n on r e n t a l problems and t e s t s the assumptions o u t l i n e d above by t r a c i n g the e v o l u t i o n of Canadian r e n t a l housing problems and p o l i c y from 1900 to the p r e s e n t . While an examination of r e n t a l housing problems i s not the primary purpose of the r e s e a r c h , some d i s c u s s i o n of the e x t e n t , nature and source of such problems over the course of the century i s c l e a r l y e s s e n t i a l to an examination of the response of government. S p e c i f i c a l l y , the t h e s i s examines the e x i s t e n c e and extent of r e n t a l housing problems d u r i n g the t w e n t i e t h century; documents how r e n t a l housing problems have been d e f i n e d and analyzed by housing experts and what t h e i r p r e s c r i p t i o n s have been; and reviews the response of the f e d e r a l government to r e n t a l problems. The r a t i o n a l e f o r undertaking t h i s study i s t h r e e - f o l d . The f i r s t r a t i o n a l e i s the s e r i o u s n e s s of the r e n t a l problem given the importance of r e n t a l tenure in Canada, both today and in the f u t u r e . In 1981, f o r example, 36.7% of a l l Canadian households 1 2 and 45.4% of urban households were r e n t e r s . 1 " The ab s o l u t e number of renter households i s expected to i n c r e a s e given p r o j e c t e d household formation r a t e s and well-documented trends towards non-family one and two person h o u s e h o l d s . 1 5 Moreover, the r e n t a l sector has become i n c r e a s i n g l y r e s i d u a l , a c t i n g as the l a s t r e s o r t f o r those unable to enter or remain i n the ownership s e c t o r . As Table 1 i n d i c a t e s , as r e c e n t l y as 1967, the tenant p o p u l a t i o n was d i v i d e d almost e q u a l l y between the income q u i n t i l e s , with the exception of the highest q u i n t i l e which comprised only 14.3% of the renter p o p u l a t i o n . By 1981, almost 80% of tenants were drawn from the lowest three income q u i n t i l e s , with the hig h e s t q u i n t i l e accounting f o r only 9% of the r e n t e r p o p u l a t i o n . These f i g u r e s i n d i c a t e that the higher income households able to take advantage of the home ownership option have done so, l e a v i n g those with no c h o i c e i n the r e n t a l s e c t o r . Indeed, as Table 2 i l l u s t r a t e s , the home ownership r a t e for the lowest two income q u i n t i l e s d e c l i n e d by 19% and 3%, r e s p e c t i v e l y , between 1967 and 1981. 1"See J.D. Hulchanski, "Tax Costs of Housing," P o l i c y Options, June 1985, p. 3; Canada Mortgage and Housing C o r p o r a t i o n , Canadian Housing S t a t i s t i c s . 1982 (Ottawa: CMHC, Economic Research Department, 1955- ), Table 101. Urban i s d e f i n e d as Census M e t r o p o l i t a n Areas. 1 5 W h i l e some of these households may d e s i r e owner-occupied d w e l l i n g s , i n t e r e s t r a t e v o l a t i l i t y , r i s i n g energy c o s t s and house p r i c e s , and the s t a b l e , i f not d e c l i n i n g , wealth of the lower two income q u i n t i l e s w i l l l i k e l y render home ownership i n c r e a s i n g l y i n a c c e s s i b l e to many households. 13 Tahlft 1 Renter Households. By Income OutntIIe. Canada. 1967. 1973. 1977. 1981 Change O u l n t l l e 1967 1973 1977 1981 1967 - 1981 1 2 3 4 5 Lowes t 2 0 . 4 $ 2 6 . 6 ? 2 9 . 1 ? 3 1 . 1 ? +10 .7? Second 2 3 . 9 ? 2 4 . 7 ? 2 5 . 9 ? 2 6 . 0 ? + 2 . 1 ? T h i r d 2 2 . 2 ? 2 2 . 6 ? 2 0 . 4 ? 2 0 . 3 ? - 1 .9? F o u r t h 1 9 . 2 ? 1 6 . 1 ? 14 .8? 1 3 . 6 ? - 5 . 6 ? F i f t h 1 4 . 3 ? 1 0 . 0 ? 9 . 8 ? 9 . 0 ? - 5 . 3 ? T o t a l 1 0 0 . 0 ? 1 0 0 . 0 ? 1 0 0 . 0 ? 1 0 0 . 0 ? S t a t i s t i c s C a n a d a , 1983 14 Tah|R 7 Home O w n e r s h i p R a t e s . B y Income O u t n t M e . C a n a d a . 1 9 6 7 , 1 9 7 ? . 1 9 7 7 . 1 9 9 1 Ouin+ l l e 1967 1973 1977 1981 Change 1967 - 1981 1 2 3 4 5 Lowes t 6 2 . 0 ? 5 0 . 0 ? 4 7 . 4 ? 4 3 . 0 ? - 1 9 . 0 ? Second 5 5 . 5 ? 5 3 . 6 ? 5 3 . 3 ? 5 2 . 4 ? - 3 . 0 ? T h i r d 5 8 . 6 ? 5 7 . 5 ? 6 3 . 2 ? 6 2 . 7 ? + 4 . 0 ? F o u r t h 6 4 . 2 ? 6 9 . 8 ? 7 3 . 2 ? 7 5 . 0 ? +11 .0? H i g h e s t A v e r a g e 7 3 . 4 ? 8 1 . 2 ? 8 2 . 3 ? 8 3 . 5 ? +10 .0? 6 2 . 7 ? 6 2 . 4 ? 6 3 . 9 ? 6 3 . 3 ? S t a t i s t i c s C a n a d a , 1983 15 As f o r f u t u r e t r e n d s , s t a t i s t i c s i n d i c a t e that the percentage of Canadians with incomes below the poverty l i n e i s on the r i s e , 1 6 and p r o j e c t i o n s suggest that an i n c r e a s i n g p r o p o r t i o n of f u t u r e r e n t e r households w i l l be comprised of young, e l d e r l y and female-headed s i n g l e - p a r e n t f a m i l y households who tend to l i v e on f i x e d incomes or who experience low earning power. 1 7 These trends have major i m p l i c a t i o n s f o r housing the Canadian populat i o n . The second r a t i o n a l e f o r t h i s study i s the p a u c i t y of Canadian housing l i t e r a t u r e which reviews r e n t a l housing problems and p o l i c i e s over the long-term. Indeed, most Canadian housing l i t e r a t u r e focusses e i t h e r on housing i n g e n e r a l , with only p a s s i n g r e f e r e n c e to the r e n t a l s e c t o r , or focusses p r i m a r i l y on the ownership s e c t o r . The 1971 Smith monograph, the H e l l y e r Report, and Rose's and F a l l i s ' s s t u d i e s , f o r i n s t a n c e , a l l examine Canadian housing p o l i c y i n a very g e n e r a l way. In none of the s t u d i e s are r e n t a l problems and p o l i c i e s accorded s p e c i a l or even separate treatment. Moreover, where r e n t a l s e c t o r problems have been examined, the a n a l y s i s has u s u a l l y focussed on the immediate s i t u a t i o n or on a long-term d e f i n e d as f i v e to ten years r a t h e r than on a broader h i s t o r i c a l c o ntext. As w e l l , most o f t e n only one aspect of the r e n t a l s i t u a t i o n has 1 6 T h e percentage i n c r e a s e d from 15.1% i n 1980 to 15.4% i n 1981. Leonard S h i f r i n , "Poverty L i n e i s Not H o l d i n g , " Toronto S t a r , 2 October 1982. 1 7Canada Mortgage and Housing C o r p o r a t i o n , " A n a l y s i s of the Rental Market," p. 5. 16 been examined. Smith's 1977 monograph on housing p o l i c y , f o r i n s t a n c e , which does t r e a t the home ownership and r e n t a l s e c t o r s independently, covers only the 1970's. A 1985 paper by J e f f r e y P a t t e r s o n , which does cover the e n t i r e p e r i o d s i n c e World War I I , focusses only on the O n t a r i o r e n t a l market and on one aspect of the r e n t a l i s s u e - rent c o n t r o l s . The t h i r d r a t i o n a l e u n d e r l y i n g t h i s r e s e a r c h i s i t s value as a foundation f o r f u r t h e r research i n t o r e n t a l problem r e s o l u t i o n and f o r r e n t a l p o l i c y d i r e c t i o n . As suggested above, the lack of a body of l i t e r a t u r e which p r o v i d e s an h i s t o r i c a l overview and a broader context for the a n a l y s i s of r e n t a l problems and programs i s e v i d e n t . Rental problems over the course of the century have been documented, but never brought together in one source. T h i s broad overview enables the i d e n t i f i c a t i o n of long-term trends, both i n r e n t a l problems and p o l i c y i n i t i a t i v e s , and i n f a c t o r s shaping the r e n t a l housing policy-making environment i n Canada. As such, i t h e l p s to i l l u s t r a t e the relevance of past problems, a n a l y s e s and government a c t i o n to c u r r e n t r e n t a l problems, and thus p r o v i d e s a broader context w i t h i n which to assess c u r r e n t problems and to formulate f u t u r e r e n t a l housing p o l i c y . At t h i s p o i n t i t may be u s e f u l to c l a r i f y what i s meant by " p o l i c y " , a task which has a t t r a c t e d much i n t e r e s t but l i t t l e agreement. I t can be argued that a c a r e f u l use of the term p o l i c y i s l i m i t e d to d e s c r i b i n g the product of a r a t i o n a l , systematic and long-term process of decision-making. As such, 17 p o l i c y would very d e l i b e r a t e l y d e f i n e a context w i t h i n which f u t u r e d e c i s i o n s w i l l be made. 1 8 P o l i c y can a l s o be d e f i n e d more bro a d l y , however, in acknowledgement of the a c t u a l environment in which government measures are o f t e n implemented. In t h e i r 1984 book t i t l e d The P o l i c y Process i n the Modern C a p i t a l i s t  S t a t e , C h r i s t o p h e r Ham and Michael H i l l note that i t i s hard to i d e n t i f y p a r t i c u l a r o c c a s i o n s when p o l i c y i s made because p o l i c y i s r a r e l y expressed i n a s i n g l e d e c i s i o n . Rather i t tends to be d e f i n e d i n a s e r i e s of d e c i s i o n s which, taken t o g e t h e r , comprise a common understanding of what p o l i c y i s . Ham and H i l l observe as w e l l that a study of p o l i c y must examine n o n - d e c i s i o n s i n a d d i t i o n to d e c i s i o n s because much p o l i t i c a l a c t i v i t y i s concerned with m a i n t a i n i n g the status quo and r e s i s t i n g c h a l l e n g e s t o the e x i s t i n g a l l o c a t i o n of v a l u e s . To decide to do nothing i s i n f a c t a p o l i c y d e c i s i o n . Ham and H i l l a l s o r a i s e the q u e s t i o n of whether a s e r i e s of a c t i o n s which have not been f o r m a l l y s a n c t i o n e d by d e c i s i o n s can c o n s t i t u t e a p o l i c y . 1 9 A 1972 a r t i c l e on p o l i c y a n a l y s i s by H. Heclo r a i s e s s i m i l a r q u e s t i o n s about what c o n s t i t u t e s p o l i c y . Heclo concludes t h a t p o l i c y i s not a s e l f - e v i d e n t term and may be " u s e f u l l y c o n s i d e r e d as a course of a c t i o n or i n a c t i o n r a t h e r than 1 8 S e e W.I. J e n k i n s , P o l i c y A n a l y s i s (London: M a r t i n Robertson, 1978), p. 15; J.K. F r i e n d , J.M. Power, and C.J.L. Yewlett, P u b l i c P l a n n i n g : The Int e r - C o r p o r a t e Dimension (London: T a v i s t o c k , 1974), p. 40. 1 9 C h r i s t o p h e r Ham and Michael H i l l , The P o l i c y Process i n the Modern C a p i t a l i s t State (Brighton: Wheatsheaf Books, 1984), pp. 11-12. 18 s p e c i f i c d e c i s i o n s or a c t i o n s . " 2 0 In t h a t t h i s r e s e a r c h i s c oncerned more w i t h the a c t u a l response of government t o r e n t a l problems than w i t h the announced i n t e n t i o n s of government r e g a r d i n g the r e n t a l s i t u a t i o n , the broader d e f i n i t i o n of " p o l i c y " a r t i c u l a t e d by Ham and H i l l and H e c l o i s used i n t h i s t h e s i s. The t h e s i s i s composed of s i x c h a p t e r s . Because so l i t t l e i n f o r m a t i o n on the r e n t a l s e c t o r i s a v a i l a b l e , the f o u r c h a p t e r s i m m e d i a t e l y f o l l o w i n g the i n t r o d u c t i o n p r o v i d e a c h r o n o l o g i c a l account of the e v o l u t i o n of r e n t a l problems and government i n t e r v e n t i o n i n the r e n t a l s e c t o r s i n c e the t u r n of the c e n t u r y . G i v e n the dominant f e d e r a l r o l e i n h o u s i n g i n Canada, the f o c u s of the d i s c u s s i o n r e g a r d i n g programs and p o l i c y i s on the f e d e r a l l e v e l , though the r o l e p l a y e d by the p r o v i n c e s , p a r t i c u l a r l y i n the e a r l y y e a r s , i s b r i e f l y d i s c u s s e d . Each of the f o u r c h a p t e r s d e a l s w i t h a p a r t i c u l a r h i s t o r i c a l p e r i o d . R e l y i n g on e m p i r i c a l d a t a g a r n e r e d from major government and p r i v a t e h o u s i n g s t u d i e s , contemporary academic a r t i c l e s and media r e p o r t s , s t a t i s t i c a l a n a l y s e s , the r e c o r d of the House of Commons d e b a t e s , and h o u s i n g - r e l a t e d l e g i s l a t i o n i n i t s o r i g i n a l and amended forms, each c h a p t e r o u t l i n e s the e x t e n t and s e v e r i t y of r e n t a l h o u s i n g problems, advocacy f o r a c t i o n on r e n t a l p roblems, and the response of government. C h a p t e r 2 c o v e r s th e y e a r s from 1900 t o 1940, a p e r i o d i n which t h e p r o v i n c e s and m u n i c i p a l i t i e s took c o n s i d e r a b l e a c t i o n on r e n t a l problems but i n which f e d e r a l i n t e r v e n t i o n was n e g l i g i b l e . C h a p t e r 3, which 2 0 H . H e c l o , "Review A r t i c l e : P o l i c y A n a l y s i s , " B r i t i s h J o u r n a l of P o l i t i c a l S c i e n c e 2:84-85. 19 d e a l s with the 1940 to 1949 p e r i o d , reviews the e x t e n s i v e and experimental f e d e r a l r o l e in the r e n t a l s e c t o r d u r i n g the war and immediate post-war years. Focussing on the p e r i o d from 1949 to 1964, Chapter 4 examines the permanent though minimal f e d e r a l presence i n the r e n t a l s e c t o r which r e s u l t e d from the wartime experience. F i n a l l y , Chapter 5 t r a c e s the emergence of a major permanent r o l e f o r the f e d e r a l government in the r e n t a l s e c t o r from 1964 to the p r e s e n t . U n l i k e these four chapters which cover s p e c i f i c p e r i o d s , Chapter 6 p r o v i d e s a thematic a n a l y s i s of the e n t i r e 1900 to 1985 p e r i o d . In i d e n t i f y i n g key themes in the e v o l u t i o n of r e n t a l housing p o l i c y , the a n a l y s i s i n Chapter 6 suggests that the r e s e a r c h assumption hypothesized above i s borne out -government i n t e r v e n t i o n i n the r e n t a l sector has indeed been c o n s i s t e n t l y minimal, ad hoc, l a r g e l y market-supportive, and c a r r i e d out w i t h i n the framework of housing as a market commodity. I t suggests f u r t h e r that two i n t e r r e l a t e d f a c t o r s have been i n s t r u m e n t a l i n shaping i n t e r v e n t i o n i n the r e n t a l s e c t o r and r e n t a l housing p o l i c y i n Canada over the course of t h i s c entury. The f i r s t f a c t o r i s the set of assumptions o u t l i n e d above which have c o n s t i t u t e d the terms of r e f e r e n c e from which the r a t i o n a l e f o r and nature of r e n t a l s e c t o r i n t e r v e n t i o n have been determined. The second i s the i n a b i l i t y on the p a r t of the f e d e r a l government to adequately d e f i n e the r e n t a l housing problem given that i t d i d not draw the connection between the three key elements of the r e n t a l problem. 2 0 Chapter 6 concludes by s p e c u l a t i n g b r i e f l y on the p o s s i b l e impact of government r e n t a l p o l i c y on r e n t a l problem r e s o l u t i o n and on the s i g n i f i c a n c e of both past government a c t i o n s and missed o p p o r t u n i t i e s f o r a c t i o n for c u r r e n t r e n t a l problems and fu t u r e r e n t a l p o l i c y development. 21 CHAPTER 2 URBAN RENTAL PROBLEMS AND POLICIES, 1900-1940 Canada entered the t w e n t i e t h century with housing c o n d i t i o n s in her l a r g e r c e n t e r s a l r e a d y a s e r i o u s problem and a focus of concern among p u b l i c h e a l t h o f f i c i a l s and e a r l y reformers. According to urban h i s t o r i a n John Weaver, crowded s t r e e t s with i r r e g u l a r alignments, frame d w e l l i n g s packed around f i r e hazards, and epidemics c h a r a c t e r i z e d the r e s i d e n t i a l areas of H a l i f a x , St. John, Quebec, Montreal, Toronto, and Hamilton as e a r l y as the mid-nineteenth c e n t u r y . 2 1 Moreover, a s e r i o u s s h o r t f a l l of adequate and a f f o r d a b l e w o r k i n g - c l a s s housing had r e s u l t e d i n the c o n c e n t r a t i o n of working-class households i n c e n t r a l slums or p e r i p h e r a l shanty towns. The f i r s t f o r t y years of the t w e n t i e t h century witnessed l i t t l e improvement i n Canada's "housing problem". Any advances occasioned by c o n s t r u c t i o n booms immediately p r e c e d i n g and f o l l o w i n g World War I and by the i m p o s i t i o n and enforcement of housing standards were more than o f f s e t by the unprecedented 2 1 John C. Weaver, "An I n t r o d u c t i o n to the H i s t o r y of S h e l t e r Costs i n Canada," Urban Focus 5 (May-June 1977) :7. 22 r a t e s of u r b a n i z a t i o n and immigration and the d e t e r i o r a t i n g economic circumstances of the working- and even m i d d l e - c l a s s e s throughout the p e r i o d . The c o n s t r u c t i o n slumps of World War I and the 1930's merely served to exaccerbate an a l r e a d y s e r i o u s s i t u a t i o n . Even government i n t e r v e n t i o n i n the 1930's i n t o a market h e r e t o f o r e completely dominated by p r i v a t e s e c t o r a c t i v i t y was l a r g e l y i n e f f e c t u a l and great numbers of Canadians, and p a r t i c u l a r l y low-income Canadians, remained very p o o r l y housed at the outbreak of World War I I . 2.1 The Housing Problem, 1900-1930 Only l i m i t e d r e f e r e n c e to r e n t a l housing i s found i n the housing l i t e r a t u r e of the pre-1930 p e r i o d . T h i s l a c k of a t t e n t i o n was l a r g e l y a r e f l e c t i o n of the r e l a t i v e unimportance of r e n t i n g i n a s o c i e t y i n which suburban lan d was cheap and i n which the i d e a l s of home ownership and p r i v a t e p r o p e r t y were widely accepted and promoted. 2 2 Indeed, the v i r t u e s of home ownership and i t s s t a b i l i z i n g e f f e c t on s o c i e t y and f a m i l y l i f e were e x t o l l e d i n a number of a r t i c l e s by Thomas Adams, the prominent p l a n n i n g a d v i s o r to the Commission of C o n s e r v a t i o n , 2 2 A l t h o u g h most urban Canadians, and p a r t i c u l a r l y those of the wor k i n g - c l a s s , were tenants i n the n i n e t e e n t h century, most households a s p i r e d to home-ownership. Indeed, home-ownership r a t e s rose by almost 20% between 1900 and 1910, and con t i n u e d to r i s e t h e r e a f t e r such that by 1921, 61.9% of Canadian households were owner-occupiers. See R i c h a r d H a r r i s , "Homeownership and C l a s s i n Modern Canada," I n t e r n a t i o n a l J o u r n a l of Urban and  Regional Research, forthcoming; J.T. Saywel l , Housing Canadians;  Essays on the H i s t o r y of R e s i d e n t i a l C o n s t r u c t i o n i n Canada (Ottawa: Economic C o u n c i l of Canada, 1975), p. 33; D a l z e l l , Housing i n Canada, p. 23. 23 between 1914 and 1923, and by numerous f e d e r a l and p r o v i n c i a l e l e c t e d r e p r e s e n t a t i v e s . Even as l a t e as 1928, noted Canadian planner and m u n i c i p a l engineer, A.G. D a l z e l l , i n a study of the housing c o n d i t i o n s of Canada's working c l a s s , concluded that d e s p i t e the growth i n numbers and the obvious u t i l i t y of r e n t a l b u i l d i n g s i n f a c i l i t a t i n g labour m o b i l i t y i t was " e s s e n t i a l t h a t the l o c a t i o n and the c o n s t r u c t i o n of such b u i l d i n g s be r e g u l a t e d so that they do not e n t i r e l y d i s p l a c e the s i n g l e detached d w e l l i n g . . . " 2 3 A L i b e r a l - U n i o n i s t Member of Parliament a p t l y summarized the popular sentiment regarding home ownership d u r i n g the Parliamentary debate over the 1919 f e d e r a l housing b i l l when he d e c l a r e d : " . . . i t i s i n the n a t i o n a l i n t e r e s t that a man may have the o p p o r t u n i t y to rear h i s family i n a comfortable house of h i s own equipped with modern s a n i t a r y c o n v e n i e n c e s . . . [ i t 3 induces him to take more p r a c t i c a l i n t e r e s t i n the a f f a i r s of the country and thus tends to the s t r e n g t h and s t a b i l i t y of our n a t i o n a l l i f e . " 2 " As h i n t e d i n D a l z e l l ' s statement, the reverence f o r home ownership i m p l i e d some ant i p a t h y towards m u l t i - f a m i l y r e n t a l d w e l l i n g s , l i k e l y as a r e s u l t of the poor l i v i n g c o n d i t i o n s and overcrowding e v i d e n t i n such d w e l l i n g s . The testimony of A. O f f i c e r , P u b l i c H e a l t h o f f i c i a l of the C i t y of Winnipeg, before the 1935 S p e c i a l Parliamentary Committee on Housing, a c c u r a t e l y r e f l e c t s the p r e v a i l i n g a t t i t u d e regarding r e n t a l tenure throughout the e a r l y part of t h i s c e n t u r y . Speaking of r e n t a l 2 3 D a l z e l l , Housing i n Canada, p. 39. 2"Canada, Parliament, House of Commons, Debates (1919), pp. 2532-2533. 24 dwellings, he said: "This class of building only affords the means of placing so many more people to the acre with no proper allowance for adequate sunshine and fresh a i r . When we come to consider the basement suites of our apartment blocks, we are forced to admit that after a l l , very few are r e a l l y suitable for occupation. They are frequently dark and damp, and when windows are opened they serve the purpose of permitting dust and d i r t to enter the rooms." 2 5 I r o n i c a l l y , poor rental conditions resulted l a r g e l y from an accepted t r a d i t i o n of providing housing for renters through the conversion of single-family dwellings for multi-family occupancy 2 6 and through the " f i l t e r i n g down" of older dwellings from the wealthier classes. A large portion of the units which f i l t e r e d down to lower-income households, however, were seriously deteriorated or even obsolete. As one witness before the 1935 Parliamentary Committee on Housing suggested, such second hand housing was generally so delapidated when passed on to the low-income renter that he started with p r a c t i c a l l y a slum. 2 7 Given the reliance on conversion and f i l t e r i n g to house renter households, the construction and design of dwellings 2 5House of Commons Special Committee on Housing, Minutes, p. 171. 2 6Many of the substandard dwellings recorded in the 1951 Census were i n i t i a l l y single-family units which had been converted to multi-family use. Central Mortgage and Housing Corporation, Housing and Urban Growth in Canada: A Brief from Central  Mortgage and Housing Corporation to the Royal Commission on  Canada s Economic Prospects (Ottawa: CMHC, 1956), p~. 30~. 2 7House of Commons Special Committee on Housing, Minutes, p. 48. 25 intended s p e c i f i c a l l y f o r m u l t i - f a m i l y occupancy remained at very low l e v e l s i n the e a r l y years of t h i s c e n t u r y . As the data i n Table 3 i n d i c a t e , i n f a c t , widespread apartment c o n s t r u c t i o n was a phenomenon of the mid- to late-1920's. Between 1921 and 1931, the percentage of the Canadian housing stock accounted f o r by apartments and f l a t s rose from 2% to 15%, 2 8 although even at 15% of the stock, apartment u n i t s c o u l d h a r d l y be c o n s i d e r e d a s i g n i f i c a n t housing form i n the pre-World War II y e a r s . Given the r e l a t i v e l y low s t a t u s of r e n t a l tenure i n the e a r l y pre-World War II p e r i o d , the p a u c i t y of i n f o r m a t i o n on r e n t a l housing and r e n t a l problems in the l i t e r a t u r e of the p e r i o d i s not s u r p r i s i n g . Consequently, however, the student of r e n t a l housing must make a number of assumptions r e g a r d i n g the a p p l i c a b i l i t y of a v a i l a b l e i n f o r m a t i o n on housing c o n d i t i o n s i n those e a r l y years to the r e n t a l s e c t o r . For the purposes of t h i s a n a l y s i s , i t i s assumed that the g e n e r a l concerns a r t i c u l a t e d about housing c o n d i t i o n s , p a r t i c u l a r l y i n the l i t e r a t u r e of the 1900-1930 p e r i o d , apply to r e n t a l as w e l l as owner-occupied accommodation. Saywell, Housing Canadians, p. 165. 26 Tflhla 3 Urban 1 Residential Completions. B y T y p e . C a n a d a , 1 9 2 1 - 1 9 3 9 Y e a r iJrhan C o m p l e t i o n s S i n a l e - F a m i 1 v M u l t i - F a m M v 2 0 0 0 ' s 1 o f T o t a l 0 0 0 ' s 1 o f T o t a l 1 2 3 4 1921 20 .1 6 7 . 4 9 . 7 3 2 . 6 1922 2 3 . 9 6 4 . 4 1 3 . 2 3 5 . 6 1923 2 3 . 6 6 1 . 8 14 .6 3 8 . 2 1924 1 9 . 2 56 .1 1 5 . 0 4 3 . 9 1925 2 1 . 5 5 4 . 2 1 8 . 2 4 5 . 8 1926 2 5 . 3 5 1 . 3 2 4 . 0 4 8 . 7 1927 2 3 . 8 4 6 . 8 27 .1 5 3 . 2 1928 2 4 . 7 4 3 . 6 3 1 . 9 5 6 . 4 1929 2 3 . 8 4 0 . 7 3 4 . 7 5 9 . 3 1930 1 9 . 5 4 0 . 9 2 8 . 2 5 9 . 1 1931 1 8 . 8 44 .1 2 3 . 8 5 5 . 9 1932 1 1 . 2 4 5 . 2 1 3 . 6 5 4 . 8 1933 9 .1 4 7 . 4 10.1 5 2 . 6 1934 1 1 . 5 4 7 . 7 1 2 . 6 5 2 . 3 1935 13 .3 4 6 . 5 15 .3 5 3 . 5 1936 1 5 . 6 4 5 . 6 1 8 . 6 5 4 . 4 1937 18 .7 4 4 . 2 2 3 . 6 5 5 . 8 1938 16.1 4 2 . 0 2 2 . 2 5 8 . 0 1939 , 20.$ 4 5 . 2 25,0 54.8 1 . Urban = non-farm 2 . Mul t i -Fami ly used as proxy for apartments Soyxca: F i res tone , O . J . ( 1951 ) R e s i d e n t l a I Real E s t a t e in Canada, Toronto: Un ivers i ty of Toronto P r e s s , p. 2 6 8 . 27 According to contemporary accounts, the housing problem of the 1900-1930 p e r i o d c o n s i s t e d of three i n t e r r e l a t e d elements: the p h y s i c a l inadequacy of e x i s t i n g u n i t s ( q u a l i t y ) , the lack of s u f f i c i e n t numbers of u n i t s ( s u p p l y ) , and the high c o s t of owning and r e n t i n g ( a f f o r d a b i l i t y ) . 2 9 Because systematic data c o l l e c t i o n and a n a l y s i s was not yet common p r a c t i c e , however, few f i g u r e s are a v a i l a b l e which q u a n t i t a t i v e l y d e s c r i b e the extent and s e v e r i t y of such problems. One must, t h e r e f o r e , r e l y on d e s c r i p t i v e accounts p u b l i s h e d i n contemporary r e p o r t s and on the few i s o l a t e d and incomplete s t a t i s t i c s which are a v a i l a b l e in order to gain an understanding of the nature and extent of the urban housing problem of the e a r l y pre-World War II ye a r s . Although d i s c u s s i o n of each of the problem elements i n i s o l a t i o n of the others i s somewhat a r t i f i c i a l given the i n t r i c a t e connections between them, they are c o n s i d e r e d s e p a r a t e l y here for the sake of o r g a n i z a t i o n a l c l a r i t y . 2 9 S e e Canada, N a t i o n a l I n d u s t r i a l Conference, Report of the Royal Commission on I n d u s t r i a l R e l a t i o n s (Ottawa: King's P r i n t e r , 1919) , p~. YTj Canada, N a t i o n a l I n d u s t r i a l Conference, O f f i c i a l Report of Proceedings and D i s c u s s i o n s (Ottawa: King's P r i n t e r , 1919), p. 187; D a l z e l l , Housing i n Canada, p. 36; Onta r i o , Report of the Lieutenant-Governor's Committee on  Housing C o n d i t i o n s i n Toronto (Toronto: Hunter-Rose Co., 1934), pp. 1, 32, 56; League f o r S o c i a l R e c o n s t r u c t i o n , S o c i a l Planning  f o r Canada, 2d ed. (Toronto: U n i v e r s i t y of Toronto Press, 1975), pp. 9, 457; House of Commons S p e c i a l Committee on Housing, Minutes, pp. 7, 13, 98; Thomas Adams, " P r a c t i c a l Housing," Canadian M u n i c i p a l J o u r n a l 15 (November 1919):359; A.E. Grauer, Housing: A Study Prepared f o r the Royal Commission on Dominion- P r o v i n c i a l R e l a t i o n s (Ottawa: King's P r i n t e r , 1939), pp. 49^ 56; Saywell, Housing Canadians, pp. 114, 155. 28 The Q u a l i t y Problem. Concern regarding housing q u a l i t y i n the 1900-1930 p e r i o d focussed p r i m a r i l y on the growth of urban slum c o n d i t i o n s . 3 0 The e x i s t e n c e of a s e r i o u s , though l i m i t e d , slum problem i n the working-class d i s t r i c t s of l a r g e r Canadian c e n t e r s was f i r s t widely p u b l i c i z e d by the p u b l i c h e a l t h movement, 3 1 a reform movement composed l a r g e l y of m i d d l e - c l a s s j o u r n a l i s t s , clergymen, women's o r g a n i z a t i o n s , h e a l t h p r o f e s s i o n a l s and a c a d e m i c s . 3 2 F u e l l e d by the i n d u s t r i a l i z a t i o n and r a p i d u r b a n i z a t i o n of the l a t e n i n e t e e n t h and e a r l y twentieth c e n t u r i e s , and in the absence of c o n t r o l s on c o n s t r u c t i o n and development, Canadian urban c e n t e r s had developed in a s p e c u l a t i v e , piecemeal and unco-ordinated f a s h i o n , with l i t t l e a t t e n t i o n given to s t r e e t l a y o u t , s e r v i c i n g and c o n s t r u c t i o n standards, or the s e p a r a t i o n of o f t e n incompatible land uses. As a r e s u l t , poor s a n i t a r y c o n d i t i o n s , a 3 0 A slum, a c c o r d i n g to a 1930's Washington, D.C. G l o s s a r y of Housing Terms, i s an area i n which d w e l l i n g s predominate that because of e i t h e r d e l a p i d a t i o n , obsolescence, overcrowding, arrangement or d e s i g n , lack of v e n t i l a t i o n , l i g h t or s a n i t a r y f a c i l i t i e s , or a combination of these f a c t o r s , are d e t r i m e n t a l to the s a f e t y , h e a l t h , morals, comfort and welfare of the i n h a b i t a n t s . See House of Commons, Debates (1938), p. 327. 3 1 E a r l y s t u d i e s of urban working-class l i v i n g c o n d i t i o n s were conducted by Montreal businessman Herbert Ames, c h i l d w e l f a r e advocate, J . J . Kelso, Winnipeg clergyman and s o c i a l reformer, J.S. Woodsworth, Toronto reformer, Bryce Stewart, and the Labour Gazette in 1904. See Paul Rutherford, "Tomorrow's M e t r o p o l i s : The Urban Reform Movement in Canada, 1880-1920," i n The Canadian  C i t y : Essays i n Urban H i s t o r y , eds. G.A. S t e l t e r and A.F.J. A r t i b i s e (Toronto: M c C l e l l a n d and Stewart and I n s t i t u t e of Canadian S t u d i e s , C a r l e t o n U n i v e r s i t y , 1977), p. 375; Weaver, ed., Shaping the Canadian C i t y : Essays on Urban P o l i t i c s and  PolicyT"1890-1920 (Toronto: The I n s t i t u t e of P u b l i c A d m i n i s t r a t i o n of Canada, 1977), p. 26. 3 2 R u t h e r f o r d , "Tomorrow's M e t r o p o l i s , " pp. 369, 382. 29 lack of basic water and sewer services, crowded frame dwellings packed around f i r e hazards, periodic outbreaks of contagious diseases, and high mortality rates characterized the working-class areas of larger Canadian c i t i e s . Indeed, v i s i t i n g B r i t i s h M.P. and prominent housing reformer, Henry Vivian, noted in a B r i t i s h magazine in 1910 that he had witnessed slums in Montreal worse than in East London 3 3 and a 1911 Health Department survey in Toronto revealed: "homes in c e l l a r s , lanes, stables and shacks, where adults and children mingled with chickens and cows; where the number of lodgers or family (sic) outnumbered the beds; where thousands of families l i v e d without drains or drainage, and people outnumbered baths f i v e to one; and where high rents seemed matched only by high disease r a t e s . " 3 " Si m i l a r l y , Dr. Charles Hodgetts, Medical Advisor to the Public Health Committee of the Commission of Conservation wrote of Canadian slums in the Commission's second annual report in 1911: "Indeed, a l l i s di l a p i d a t i o n , decay and desolation. The environment reeks with the odours of successive strata of d i r t , household refuse, and domestic slops, while the walls are cracked, and stairways rickety and unsafe, narrow and dark. The houses are often without c e l l a r s , are low and damp, being sometimes b u i l t f l a t upon the ground; while darkened rooms, inaccessible to sunlight, add a sombre hue to a condition which can only be summed up as 'damnable'," 3 5 The wretched l i v i n g conditions of the working-class were 3 3 D a l z e l l , Housing in Canada, p. 30. 3*See Saywell, Housing Canadians, p. 117. 3 5Canada, Commission of Conservation, Second Annual Report (Montreal: John Lo v e l l & Son, 1911), p. 53. 3 0 a l s o documented by a 1919 f e d e r a l Royal Commission on I n d u s t r i a l R e l a t i o n s , which c i t e d poor housing c o n d i t i o n s as a major f a c t o r u n d e r l y i n g i n d u s t r i a l unrest across Canada, by two Nova S c o t i a Royal Commissions on Mining in 1920 and 1926, and i n D a l z e l l ' s 1928 study on the housing c o n d i t i o n s of the w o r k i n g - c l a s s . The Supply Problem. The p u b l i c h e a l t h s t u d i e s of the turn of the century suggested that the c o n c e n t r a t i o n of working-class households in c e n t r a l slums or p e r i p h e r a l shanty towns was the r e s u l t of a shortage of adequate housing a f f o r d a b l e to average wage-earners. The a l r e a d y s e r i o u s pre-war s h o r t f a l l was exaccerbated by the v i r t u a l c e s s a t i o n of r e s i d e n t i a l c o n s t r u c t i o n i n the war years of 1914 to 1918. As Table 4 i n d i c a t e s , the s h o r t f a l l of d w e l l i n g u n i t s i n c r e a s e d d r a m a t i c a l l y from 84,000 in 1901 to 145,000 i n 1921. The s h o r t f a l l was somewhat r e l i e v e d d u r i n g the prosperous boom years of the mid-1920's, and vacancy r a t e s rose w e l l above the l e v e l s of the e a r l y 1920's. However, other f a c t o r s l i k e c ost and q u a l i t y combined to g i v e a new t w i s t to the supply i s s u e , such that the a v a i l a b i l i t y of decent d w e l l i n g s a f f o r d a b l e to lower-income groups became the main focus of concern r a t h e r than the a v a i l a b i l i t y of d w e l l i n g s i n g e n e r a l . 3 6 3 6 D a l z e l l noted, f o r example, that poor Vancouver f a m i l i e s were occupying converted horse s t a b l e s , barns, and sheds i n 1928 because of the inadequate supply of d w e l l i n g s a f f o r d a b l e to them. D a l z e l l , Housing i n Canada, p. 8. 31 T a n l f i 4 H o u s e h o l d s a n d D w e l I i n g Stock C a n a d a . 1 9 0 1 . 1 9 1 1 . 1 9 2 1 - 1 9 3 9 Y e a r T o t a l S t o c k 0 0 0 ' s O c c u p i e d S t o c k 0 0 0 ' s T o t a l H o u s e h o l d s 0 0 0 ' s H o u s e h o l d s L e s s S t o c k ( S h o r t f a l 1 ) 0 0 0 ' s H o u s e h o l d s L e s s O c c u -p i e d S t o c k 1 0 0 0 ' s 1 2 3 4 5 1901 1 , 0 3 8 . 0 1 , 0 2 6 . 0 1 ,122 84 96 1911 1 . 4 7 5 . 0 1 . 4 4 8 . 0 1.475 — 27 1921 1 ,908 .0 1 ,856 .7 2 , 0 5 4 145 197 1922 1 ,945 .9 1 ,891 .8 2 , 0 8 2 136 190 1923 1 ,984 .0 1 ,889 .7 2 ,113 129 223 1924 2 , 0 1 7 . 8 1 ,909 .8 2 , 1 4 9 131 239 1925 2 . 0 5 6 . 9 1 . 9 5 3 . 2 2 .187 130 234 1926 2 , 1 0 6 . 1 2 , 0 0 8 . 1 2 , 2 3 2 126 224 1927 2 , 1 5 6 . 7 2 , 0 5 8 . 7 2 , 2 8 3 126 224 1928 2 , 2 1 3 . 5 2 , 1 2 0 . 0 2 ,337 123 217 1929 2 , 2 7 1 . 2 2 , 1 7 9 . 6 2 , 3 9 2 121 212 1930 2 . 3 1 7 . 6 2 . 2 2 7 . 0 2 . 4 3 8 120 211 1931 2 , 3 5 7 . 5 2 , 2 5 2 . 2 2 ,474 116 222 1932 2 , 3 7 9 . 0 2 , 2 3 8 . 4 2 , 4 9 9 120 261 1933 2 , 3 9 5 . 4 2 , 2 5 1 . 5 2 ,525 130 274 1934 2 , 4 1 7 . 2 2 , 2 9 9 . 2 2 , 5 5 9 142 260 1935 2 . 4 4 3 . 8 2 . 3 4 2 . 5 2 .595 151 253 1936 2 , 4 7 6 . 1 2 , 3 7 8 . 4 2 , 6 3 4 158 256 1937 2 , 5 1 6 . 6 2 , 4 3 1 . 6 2 ,680 163 248 1938 2 , 5 5 3 . 6 2 , 4 7 1 . 7 2 ,725 171 253 1939 2 .597 .9 2 . 5 1 7 . 0 2 .7§6 198 2§9 1. H o u s e h o l d s w i t h o u t s e p a r a t e u n i t s o f t h e i r own. Sojjncfl: F i r e s t o n e , O . J . (1951) Residential Real Estate in Canada, T o r o n t o : U n i v e r s i t y o f T o r o n t o P r e s s , p p . 4 5 , 2 0 5 , 2 8 9 , 4 7 8 . F i r e s t o n e , O . J . (1958) Canada's Economic Development 1 9 6 7 - 1 9 5 3 , L o n d o n : Bowes and Bowes , p p . 2 4 0 - 2 4 1 . P i c k e t t , J . (1963) " R e s i d e n t i a l C a p i t a l F o r m a t i o n in C a n a d a , 1 8 7 1 - 1 9 2 1 . " C a n a d i a n J o u r n a l o f Economics and P o l i t i c a l S c i e n c e . 2 9 , p. 4 3 . 32 The f a c t that the number of households without u n i t s of t h e i r own was almost double the a c t u a l s h o r t f a l l of u n i t s d u r i n g the 1920's i s probably an i n d i c a t i o n of such an a f f o r d a b i 1 i t y p r o b l e m . 3 7 (See Table 4) Michael P i v a emphasizes the importance of t h i s r e l a t i o n s h i p between a v a i l a b i l i t y and a f f o r d a b i 1 i t y i n h i s monograph The C o n d i t i o n of the Working C l a s s i n Toronto -1900-1921 in n o t i n g that although vacant houses were in p l a i n evidence, p a r t i c u l a r l y i n boom years, they were most o f t e n u n a f f o r d a b l e to the working c l a s s . Piva observes: "High p r i c e s , not s c a r c i t y , caused the housing problem. B u i l d i n g went on but not of the kind that p r o v i d e d houses workers c o u l d a f f o r d . . . i n 1914...2,000 houses had been b u i l t , only about 3% of which rented at a p r i c e s u f f i c i e n t l y low f o r w o r k e r s . " 3 8 The A f f o r d a b i l i t y Problem. Documentation of s e r i o u s housing a f f o r d a b i l i t y problems among working-class households was f i r s t made in the 1886 r e p o r t of a f e d e r a l Royal Commission i n v e s t i g a t i n g the c o n f l i c t between labour and c a p i t a l , and i n the r e p o r t s prepared by the p u b l i c h e a l t h reformers at the turn of the c e n t u r y . Concern i n the 1900-1930 p e r i o d c e n t e r e d p r i m a r i l y on the i n c r e a s i n g i n a b i l i t y of the w o r k i n g - c l a s s to a c q u i r e and maintain homes of t h e i r own, and to a l e s s e r extent 3 7 A 1965 housing study by Wolfgang I l l i n g noted t h a t overcrowding i s h e a v i l y c oncentrated among the lowest-income households and that the c o n s t r a i n t s imposing t h i s form of housekeeping are u s u a l l y f i n a n c i a l . Wolfgang I l l i n g , Housing  Demand to 1970 (Ottawa: Economic C o u n c i l of Canada and Queen's P r i n t e r , 1965), p. 110. 3 8 M i c h a e l P i v a , The C o n d i t i o n of the Working C l a s s i n Toronto - 1900-1921 (Ottawa: U n i v e r s i t y of Ottawa Press, 1979), pp. 129-130. 33 on t h e i r i n a b i l i t y to a v a i l themselves of even r e n t a l housing of adequate q u a l i t y at a reasonable c o s t . As Table 5 suggests, high p r i c e s f o r land, c o n s t r u c t i o n and m a t e r i a l s had combined with unsteady employment to make the procurement of a downpayment impossible f o r many working-class f a m i l i e s and r e g u l a r mortgage payments d i f f i c u l t . Indeed, Piva r e l a t e s that many workin g - c l a s s owners i n Toronto were f o r c e d to board other workers and even e n t i r e f a m i l i e s i n order to meet mortgage payments, 3 9 a s i t u a t i o n r e s u l t i n g i n s e r i o u s overcrowding and u n s u i t a b l e l i v i n g circumstances f o r a l l concerned. As f o r r e n t a l accommodation, Weaver r e p o r t s and the data i n Table 5 c o n f i r m that i n terms of r e a l wages, r e n t s e s c a l a t e d by 60-70% between 1S00 and 1913. f l 0 As a r e s u l t , r e n t e r s were paying, on average, 25% of gross f a m i l y income to secure adequate housing i n 1913." 1 3 9 I b i d . , p. 125. tt0Weaver, "The Modern C i t y R e a l i z e d : Toronto C i v i c A f f a i r s , 1880-1915," i n The Usable Urban Past: Planning and P o l i t i c s i n  the Modern Canadian C i t y , eds. A.F.J. A r t i b i s e and G. S t e l t e r (Toronto: MacMillan of Canada and I n s t i t u t e of Canadian S t u d i e s , C a r l e t o n U n i v e r s i t y , 1979), p. 63. " ' S h i r l e y Spragge, "A Confluence of I n t e r e s t s : Housing Reform i n Toronto, 1900-1920," i n A r t i b i s e and S t e l t e r , Usable Urban Past, p. 249. 34 T a n l n *> Wages a n d S h e l t e r C o s t s -C a n a d a , 1 9 Q Q - 1 9 ? 1 ( C u r r e n t %) Year A v g . Annua l Wage f o r M a n u f a c t u r e W a g e - E a r n e r A f f o r d a b l e Month Iy Ren t a t 1/8 M o n t h l y 1ncome A f f o r d a b l e Month Iy Ren t a t 20? Mon th l y Income A v e r a g e Month 1y M a r k e t Ren t A f f o r d a b l e House P r . a t 2 . 2 5 X Annua l Wage A v e r a g e Va1ue o f New House A v e r a g e Va Iue o f E x i s t i n g House 1 2 3 4 5 6 7 1900 421 4 . 3 9 7 . 0 2 9 . 4 8 947 1,570 — 1905 375 3 .91 6 .25 11 .56 844 1,810 — 1910 417 4 . 3 4 6 .95 16 .20 938 2 , 0 9 0 — 1915 570 5 . 9 4 9 . 5 0 16 .48 1,283 2 , 1 6 0 — 1917 760 7 . 9 2 12.67 17 .28 1,710 2 , 8 4 0 — 1921 999 10.41 16 .65 2 7 . 0 8 2 , 2 4 8 4 , 1 0 0 2 ,776 1926 999 10.41 16 .65 2 7 . 4 3 2 , 2 4 8 4 , 2 0 5 2 , 4 3 0 1951 950 9 , 9 0 1?.8? 27.90 , 2 , 1 5 8 5 . 9 9 4 2 .343 Soyrxa: Canada , The Canada Y e a r Book . O t t a w a : K i n g ' s P r i n t e r , V a r i o u s Y e a r s . F i r e s t o n e , O . J . (1951) R e s i d e n t i a l Rea l E s t a t e In C a n a d a . T o r o n t o : U n i v e r s i t y o f T o r o n t o P r e s s , p . 9 9 . F i r e s t o n e , O . J . (1958) C a n a d a ' s Economic Deve lopment 1 8 6 7 - 1 9 5 5 . L o n d o n : Bowes and Bowes , p . 2 0 7 . L e a l y , F . H . (1983) H i s t o r i c a l S t a t i s t i c s o f C a n a d a . 2nd E d i t i o n , O t t a w a : S t a t i s t i c s Canada and S o c i a l S c i e n c e F e d e r a t i o n o f C a n a d a , S e r i e s S 3 2 3 - 3 2 5 , E 4 1 - 4 8 . P i c k e t t , J . (1963) " R e s i d e n t i a l C a p i t a l F o r m a t i o n In C a n a d a , 1 8 7 1 - 1 9 2 1 " , Canadian J o u r n a l of Economics and Pol i t i c a I S c i e n c e , 2 9 , p . 5 1 . 35 Yet the accepted rent-to-income r a t i o at that time was between one-tenth and one-eighth of gross f a m i l y income given the higher p r o p o r t i o n of the household budget consumed by other n e c e s s i t i e s , such as food, c l o t h i n g and t r a n s p o r t a t i o n . " 2 2.2 Recommendations f o r A c t i o n and Government Response to the  Housing Problem, 1900-1930 P u b l i c h e a l t h reformers were the i n i t i a l advocates of government measures aimed at easing w o r k i n g - c l a s s housing problems. Having observed a s t r i k i n g c o r r e l a t i o n between poor housing c o n d i t i o n s and h i g h m o r t a l i t y r a t e s and backed by a st r o n g b e l i e f i n environmental determinism, the reformers sought means of combatting e x i s t i n g urban h e a l t h problems and of e l i m i n a t i n g the causes of bad urban c o n d i t i o n s . Recognizing that the success of reform e f f o r t s was h e a v i l y dependent on the a c t i v e support of government - only the s t a t e had s u f f i c i e n t a u t h o r i t y to impose order on the urban chaos - they a g i t a t e d f o r m u n i c i p a l a c t i o n i n e s t a b l i s h i n g minimum standards of h e a l t h and hygiene with respect to water and food supply, d i s e a s e c o n t r o l , and housing c o n d i t i o n s . The motives of the reformers were "2R.M. F r i p p , " S p e c u l a t i o n s on the Problem of Housing the Working C l a s s e s i n Vancouver," Contract Record 28 (1914)s1277. Rent-to-income r a t i o s are a r b i t r a r y measures used to d e f i n e a f f o r d a b i l i t y . They are based on what i s c o n s i d e r e d a reasonable p r o p o r t i o n of income to expend on s h e l t e r while r e t a i n i n g adequate income to a c q u i r e other b a s i c n e c e s s i t i e s such as food and c l o t h i n g . However, the concept of the rent-to-income r a t i o i g n o r e s that there i s a c r i t i c a l income l e v e l below which even the accepted r a t i o becomes too high without causing d e p r i v a t i o n of other b a s i c n e c e s s i t i e s of l i f e . 36 v a r i e d , ranging from genuine concern f o r the w e l l - b e i n g of slum d w e l l e r s to s e l f - i n t e r e s t given the r e c e n t l y a r t i c u l a t e d "germ theory" of d i s e a s e t r a n s m i s s i o n . The reformers were i n i t i a l l y impeded in t h e i r attempts to secure government a c t i o n by a number of circumstances, i n c l u d i n g e n g i n e e r i n g and t e c h n i c a l d i f f i c u l t i e s and the r e l a t i v e l y small tax base of the m u n i c i p a l i t i e s . Even more important was the l a c k of precedent i n Canada for government i n t e r v e n t i o n i n t o matters i n v o l v i n g i n d i v i d u a l r e s p o n s i b i l i t y or i n d i v i d u a l and property r i g h t s . 4 3 I t took over f i f t y years i n O n t a r i o f o r the reformers to e s t a b l i s h t h a t the s t a t e not only had a r i g h t but a duty to i n t e r v e n e to e l i m i n a t e c o n d i t i o n s d e t r i m e n t a l to p u b l i c h e a l t h . " * Given p r o v i n c i a l j u r i s d i c t i o n over h e a l t h and housing, i t was the p r o v i n c e s who e v e n t u a l l y i n v o l v e d themselves in r e g u l a t i n g urban h e a l t h c o n d i t i o n s . The O n t a r i o government l e d the way with i t s 1884 P u b l i c H e a l t h A c t . ' T h i s Act o b l i g e d O n t a r i o m u n i c i p a l i t i e s to e s t a b l i s h h e a l t h agencies. E v e n t u a l l y O n t a r i o m u n i c i p a l i t i e s began to adopt nuisance laws, r e g u l a t e tt3Reformers o f t e n had to r a t i o n a l i z e i n t e r v e n t i o n i n h e a l t h and l i v i n g c o n d i t i o n s i n terms of t h e i r impact on the e f f i c i e n c y and i n d u s t r i a l output of workers r a t h e r than i n terms of improving the q u a l i t y of l i f e of the working-class out of a sense of s o c i a l j u s t i c e . Thomas Gunton, "The Ideas and P o l i c i e s of the Canadian P l a n n i n g P r o f e s s i o n , 1909-1931," in A r t i b i s e and S t e l t e r , Usable Urban Past, p. 182. ""Hulchanski, "The O r i g i n s of Urban Land Use Planning i n O n t a r i o , 1900-1946" (PhD. D i s s e r t a t i o n , U n i v e r s i t y of Toronto, 1981), p. 13. 37 p r i v y p i t s , and monitor l o d g i n g houses f o r overcrowding." 5 Other p r o v i n c e s and m u n i c i p a l i t i e s followed s u i t . 4 6 A c t i o n to improve a c t u a l housing c o n d i t i o n s of the working-class or to augment the supply of adequate working-class housing, however, was not forthcoming, perhaps, as Weaver suggests, because the improvement of working-class housing c o n d i t i o n s i m p l i e d a great expense with f a r fewer r e t u r n s to the powerful m i d d l e - c l a s s than d i d p u b l i c h e a l t h measures." 7 Moreover, adherence to the notion of i n d i v i d u a l r e s p o n s i b i l i t y f o r poverty and misfortune l e d many to conclude the lower c l a s s e s d i d not merit p u b l i c a s s i s t a n c e . Advocates of p u b l i c h e a l t h and housing reforms e v e n t u a l l y began to press f o r a f e d e r a l r o l e i n addr e s s i n g bad urban c o n d i t i o n s . T h i s demand was, at l e a s t i n p a r t , s a t i s f i e d by the c r e a t i o n i n 1909 of the Commission of Conservation, a f e d e r a l a d v i s o r y body concerned with the p r e s e r v a t i o n of human and n a t u r a l r e s o u r c e s . Although the B r i t i s h North America (BNA) Act preclude d d i r e c t f e d e r a l a c t i v i t y on p u b l i c h e a l t h and urban matters, the Commission f u n c t i o n e d , i n p a r t , to promote p r o v i n c i a l a c t i o n on urban problems." 8 " 5See Spragge, "Confluence of I n t e r e s t s , " p. 249; Margaret Andrews, "The Best Advertisement a C i t y Can Have: P u b l i c Health S e r v i c e s i n Vancouver, 1886-1888," Urban H i s t o r y Review 12 (February 1984):19. " 6Manitoba i n 1909 and Saskatchewan i n 1910. " 7See Weaver, "Modern C i t y R e a l i z e d , " p. 67; Shaping the  Canadian C i t y , p. 29. 1 ""Hulchanski, "Urban Land Use Pl a n n i n g , " p. 31. 3 8 E f f o r t s to involve government in regulating housing quality were given a boost by the emergence, in the 1900's, of the Canadian town planning movement. Unlike i t s American counterpart which was dominated largely by City Beautiful advocates, the early Canadian town planning profession focussed almost exclusively on the p r a c t i c a l concerns of health, housing and t r a f f i c , with the amelioration of working-class housing problems as i t s f i r s t p r i o r i t y . " 9 Indeed, C l i f f o r d Sifton, director of the Commission of Conservation, defined town planning as a "ra t i o n a l scheme of supervising the conditions in which the people of our great c i t i e s l i v e " , 5 0 and Adams considered housing to be the key issue in planning. 5 1 To accomplish their goals, early Canadian planners advocated the use of zoning to regulate land use, the imposition of construction standards and height r e s t r i c t i o n s to control density and ensure the penetration of adequate sunlight and fresh a i r to dwelling units, and the development of- planned suburbs of single-family, detached owner-occupied housing to * 9See Walter Van Nus, "Towards the City E f f i c i e n t : The Theory and Practice of Zoning, 1919-1939," in A r t i b i s e and Stelter, Usable Urban Past, pp. 171-172. 5 0Rutherford, "Tomorrow's Metropolis," p. 374. 5 1See Gunton, "Canadian Planning Profession," p. 189. 39 e r a d i c a t e urban working-class s l u m s . 5 2 As a s o l u t i o n to the worki n g - c l a s s housing problem, s u b u r b a n i z a t i o n was c o n s i d e r e d more d e s i r a b l e and p r a c t i c a l than c o s t l y slum c l e a r a n c e and redevelopment, p u b l i c housing, or curbs 'on urban growth. As i s evident from t h e i r r e l a t e d f o c i , the p u b l i c h e a l t h , housing reform and town planning movements overlapped e x t e n s i v e l y i n the f i r s t two decades of the t w e n t i e t h c e n t u r y . Indeed, the support of the p u b l i c h e a l t h reformers, who were i n s p i r e d by town planning's p o t e n t i a l to mold the p h y s i c a l c h a r a c t e r of c i t i e s and who viewed i t as somewhat of a panacea f o r a l l of the h e a l t h , housing and p h y s i c a l development problems of the c i t y , 5 3 was c r u c i a l to the eventual adoption of p l a n n i n g l e g i s l a t i o n i n v a r i o u s p r o v i n c e s . 5 4 The implementation of p u b l i c h e a l t h r e g u l a t i o n s and town pl a n n i n g measures undoubtedly helped to a l l e v i a t e some of the worst urban l i v i n g c o n d i t i o n s and to f a c i l i t a t e h e a l t h i e r and more o r d e r l y urban development. N e v e r t h e l e s s , the r e g u l a t i o n s were not a panacea to urban l i v i n g c o n d i t i o n s and to working-c l a s s housing problems, e s p e c i a l l y i n the e a r l y y e a r s . One 5 2 T h e suburban s o l u t i o n to the slum problem was based on a b e l i e f t h a t more e f f i c i e n t land use c o u l d h e l p to reduce the c o s t of new housing and render i t a f f o r d a b l e to average wage-ear n e r s . As a r e s u l t , overcrowding i n high d e n s i t y i n n e r - c i t y tenements and apartments would be r e l i e v e d and slums rendered o b s o l e t e . See Weaver, "Tomorrow's M e t r o p o l i s R e v i s i t e d : A C r i t i c a l Assessment of Urban Reform i n Canada, 1890-1920," i n S t e l t e r and A r t i b i s e , Canadian C i t y , p. 405; "Modern C i t y R e a l i z e d , " p. 60. 5 3 H u l c h a n s k i , "Urban Land Use P l a n n i n g , " p. 41. 5 4Nova S c o t i a , New Brunswick, O n t a r i o , Saskatchewan, A l b e r t a , and Manitoba passed pla n n i n g l e g i s l a t i o n between 1910 and 1918. 40 reason, as suggested above, was that home ownership was not the s o l u t i o n to the housing problems of most lower-income wage-earn e r s . As a r e s u l t , the middle- and u p p e r - c l a s s e s proceeded to occupy the new suburban homes, 5 5 while the working-class remained i n overcrowded and o f t e n substandard i n n e r - c i t y tenements. In a d d i t i o n , enforcement of the r e g u l a t i o n s proved d i f f i c u l t because of the lack of a l t e r n a t i v e housing f o r low-income slum d w e l l e r s , because of the lack of c o - o p e r a t i o n between the d i v e r s e s u p e r v i s o r y a u t h o r i t i e s , and because the condemnation and c l o s u r e of u n f i t housing was b i t t e r l y and o f t e n s u c c e s s f u l l y r e s i s t e d by property owners and d e v e l o p e r s . Yet without enforcement, much new c o n s t r u c t i o n continued to be- of a shoddy nature. Overcrowding and poor maintenance ensured that i t r a p i d l y degenerated i n t o slums. F i n a l l y , s u c c e s s f u l enforcement of the r e g u l a t i o n s and standards, when i t was achieved, i n t e n s i f i e d supply and a f f o r d a b i l i t y problems. The standards r a i s e d c o n s t r u c t i o n c o s t s , which discouraged new p r i v a t e investment and the co n v e r s i o n of o l d e r s i n g l e - f a m i l y u n i t s f o r m u l t i - f a m i l y u s e . 5 6 I t a l s o rendered new housing u n a f f o r d a b l e to many working-class households. 5 5 R u t h e r f o r d , "Tomorrow's M e t r o p o l i s , " p. 375. 5 6Weaver, "Tomorrow's M e t r o p o l i s R e v i s i t e d , " p. 408. 41 While most municipalities and provinces in the early years of the century limited their response to the housing problem to the introduction of public health and town planning measures, one municipality engaged in a somewhat more daring experiment. In 1913, the municipality of Toronto co-operated with the Board of Trade, the Manufacturers' Association, and the Civic Guild in establishing the Toronto Housing Company to f a c i l i t a t e the construction of dwelling units for sale or rent to moderate-income working-class households. The Company constructed only 334 single and double cottage units, however, and the rents were generally above the f i n a n c i a l c a p a b i l i t y of lower-income wage-earne r s . 5 7 S i m i l a r l y , the units produced by the Toronto Housing Commission, a company established by p r o v i n c i a l l e g i s l a t i o n in 1920 to erect moderately-priced houses for sale, were accessible primarily to better-paid workers who were in a position to accumulate a downpayment and q u a l i f y for a mortgage. Though interesting and innovative for their time, these endeavours had v i r t u a l l y no impact on housing conditions. The persistence of the housing problem throughout the f i r s t three decades of the twentieth century, combined with continually escalating development costs, eventually led housing experts, professional bodies, and some p o l i t i c i a n s to question the a b i l i t y of unaided private enterprise to provide adequate housing for the lower-paid wage earner. As early as 1919, the 5 7See Ontario, Report on Housing Conditions, pp. 75-76. 42 Ontario Housing Committee ventured a c r i t i c i s m of the t o t a l reliance on private enterprise for housing supply, observing in a report that: "...private enterprise cannot be depended on to meet the existing demand as the returns on the present cost of building are not adequate to the o u t l a y . " 5 8 Two a r t i c l e s appearing in 1920 and 1921 issues of Town Planning and Conservation of L i f e were even more c r i t i c a l . The f i r s t asserted that "further reliance upon the supposed potency of the law of supply and demand was perilous and impossible." 5' 9 The other a r t i c l e reported: "The Philadelphia Chapter of the American I n s t i t u t e of Architects, a body to which not [a] taint of radicalism has ever attached, has l a t e l y declared that houses for those who earn low wages can no longer be b u i l t anywhere in the world at a cost which w i l l permit them to be either sold or rented without loss, and that i t i s unquestionably true that an i n d u s t r i a l system, or even any p a r t i c u l a r industry, which f a i l s to make possible adequate shelter, food, clothing, and recreation for a l l of i t s operatives i s unworthy to exist. The Chapter proposes that housing for those earning low wages or s a l a r i e s be l e g a l i z e d as a public u t i l i t y ; that the manufacture of t h i s class of homes as a p r o f i t a b l e industry s h a l l cease in theory as i t has already ceased in fact; and that the Government, national and l o c a l , should at once adopt measures making possible this prime necessity of l i f e . " 6 0 Given these growing doubts about t o t a l reliance on the 5 8See Andrew E. Jones, The Beginnings of Canadian Government  Housing Policy, 1918-1924 (Ottawa: Centre for S o c i a l Welfare Studies, Carleton University, 1978), p. 7. 5 9 See Town Planning and Conservation- of Life-, April-June 19-20, p. 51 . 6 0"Housing as a Public U t i l i t y , " Town Planning and Conservation  of L i f e , January-March 1921, p. 19. 43 private sector to supply housing, pressure for government to stimulate the supply of affordable working-class housing began to b u i l d . The focus of the agitation, however, shi f t e d increasingly to the federal l e v e l , given the obvious f i n a n c i a l impediments to more comprehensive and sustained p r o v i n c i a l and municipal action. A 1917 Federal-Provincial Conference produced a resolution by the premiers urging the federal government to a s s i s t the private sector in the construction of working-class housing. In 1918, Adams suggested that some type of public contribution appeared necessary to promote housing construction u n t i l c a p i t a l became more p l e n t i f u l and private investment in building more secure. 6 1 The mounting public pressure, the v i r t u a l collapse of private sector construction during World War I and s o c i a l unrest a r i s i n g from post-war unemployment and poor l i v i n g conditions f i n a l l y brought the housing question to the f u l l attention of federal authorities and prompted the r e a l i z a t i o n that the a c q u i s i t i o n of housing could no longer be regarded solely as a personal matter. 6 2 Faced with exaccerbation of the already serious housing shortage by the return of the war veterans, the Conservative government approved the Federal Housing Loan Program in 1919. The stated purposes of the program were to offe r to working men, and p a r t i c u l a r l y to returning s o l d i e r s , 6 1Adams, "Reconstruction Messages," Canadian Engineer 3 5 (December 1 9 1 8 ) s 5 0 1 . 6 2See D a l z e l l , Housing in Canada, p. 8. 44 the o p p o r t u n i t y to a c q u i r e t h e i r own homes, to encourage the e r e c t i o n of d w e l l i n g u n i t s i n congested areas, and to c o n t r i b u t e to p u b l i c h e a l t h and w e l l - b e i n g . 6 3 The program made a v a i l a b l e to the m u n i c i p a l i t i e s , through the p r o v i n c e s , a loan fund of $25 m i l l i o n at 5% i n t e r e s t to a s s i s t them i n c o n s t r u c t i n g suburban owner-occupied d w e l l i n g s . The d w e l l i n g s were to meet s p e c i f i e d standards and were not to exceed $4,500 i n value, i n c l u s i v e of land c o s t s . I t i s s i g n i f i c a n t that d e s p i t e pressure from both s i d e s of the House of Commons f o r slum c l e a r a n c e and redevelopment measures to b e n e f i t low-income households, and i n p a r t i c u l a r low-income r e n t e r s , the program focussed on home ownership. Given the lack of precedent f o r f e d e r a l i n t e r v e n t i o n i n the housing market, the government took a number of p r e c a u t i o n s i n i n t r o d u c i n g the program. In acknowledgement of p r o v i n c i a l j u r i s d i c t i o n over housing, f o r i n s t a n c e , a d m i n i s t r a t i o n and implementation of the program were l e f t to the p r o v i n c e s and m u n i c i p a l i t i e s . Moreover, the use of the War Measures Act to a u t h o r i z e the program was a c l e a r i n d i c a t i o n that i t was conc e i v e d more as an emergency measure to a i d post-war r e c o n s t r u c t i o n than as a housing measure. The program d i d very l i t t l e to r e l i e v e e i t h e r the housing problem or the ge n e r a l economic s i t u a t i o n . To begin with, the 6 3Adams, Housing i n Canada: General P r o j e c t of the F e d e r a l  Government (Ottawa: King's P r i n t e r , 1919), p. TW. 45 dimensions of the experiment were so small as to make i t of only s l i g h t significance for the purpose of economic s t a b i l i z a t i o n . 6 4 In addition, although the government limited loans to persons earning $3,000 or less per y e a r , 6 5 the requirement for a minimum ca p i t a l contribution of 10% on the part of the prospective home owner, and in some municipalities that the applicant already possess his l o t , 6 6 precluded any benefits to the lowest-income wage-earner. Thus while the program, to some extent, addressed the supply aspect of the housing problem, i t did l i t t l e to relieve either working-class housing problems or conditions in the rental sector. Indeed, noted Canadian housing analyst Leonard Marsh remarked of the 1919 program in a 1932 a r t i c l e : "While the precedent for state action has been s e t . . . i t i s generally admitted that in r e l a t i o n to i t s r e s u l t s , the costs .of t h i s housing e f f o r t were high; and also that the basic housing problem of the c i t y - the provision of dwellings at rents which the wage earner can afford - was only inadequately touched, and i t s t i l l remains." 6 7 Moreover, the program raised serious doubts regarding the administrative and managerial a b i l i t i e s of the municipalities-. In examining the program in 1941, a Dominion Bureau of S t a t i s t i c s (DBS) Census monograph reported that with one or two 6"In a l l , $23.5 m i l l i o n was spent on 6,244 houses before the program was phased out in 1921. See Conservation of L i f e 6 (1920):25-26, 39. 65Adams, General Project, p. 11. 6 6House of Commons Special Committee on Housing, Minutes, pp. 102, 333. 6 7See House of Commons Special Committee on Housing, Minutes, p. 73. 46 exceptions, the "records showed mismanagement of funds and i n e f f i c i e n t administration of the [1919] projects by the municipal housing a u t h o r i t i e s . " 6 8 As a major housing report of the 1940's l a t e r noted, th i s inauspicious f i r s t foray of government into the housing f i e l d resulted in an undue prejudice against public p a r t i c i p a t i o n in housing for many y e a r s . 6 9 2.3 Recognition of the Rental Problem - The 1930's With the stock market crash of 1929 and the onset of the Great Depression, the housing problem i n t e n s i f i e d . With investment and returns in a l l industries, but p a r t i c u l a r l y in construction, down, r e s i d e n t i a l construction again v i r t u a l l y ceased. Consequently, as Table 4 indicates, the t o t a l s h o r t f a l l of units rose from 120,000 to 188,000 between 1930 and 1939. As well, unemployment escalated to mass p r o p o r t i o n s , 7 0 and wages plummeted, in some cases to 50% of their former l e v e l s . 7 1 As a result-, in the ownership sector, many households lost their homes due to their i n a b i l i t y to meet mortgage payments or l o c a l 6 8Canada, Dominion Bureau of S t a t i s t i c s , Housing in Canada, Census Monograph No. 8, c i t e d by Canada, Advisory Committee on Reconstruction, Subcommittee on Housing and Community Planning, Fi n a l Report of the Subcommittee, March 24, 1944 (Ottawa: King's Printer, 1946), p. 25. 6 9Subcommittee on Housing and Community Planning, F i n a l Report, p. 26. 7 0L.C. Marsh, Report on Social Security for Canada (Ottawa: King's Printer for the Advisory Committee on Reconstruction, 1943), p. 38. 7 1See House of Commons Special Committee on Housing, Minutes, p. 120. 47 tax l e v i e s . 7 2 In the rental sector, vacancy rates escalated, despite the influx of former home owners into the market, as households doubled up to maintain housing expenditures at affordable l e v e l s . 7 3 With the r i s i n g vacancy rates, rent levels f e l l , p a r t i c u l a r l y on substandard dwellings, prompting landlords to allow rental properties to f a l l further into d i s r e p a i r . Given these conditions, the housing problem emerged as an increasingly important topic of public concern in the 1930's, and sparked, for the f i r s t time, a series of private and public housing studies. The best known reports of the period are the 1934 Report on Housing Conditions in Toronto, known as the Bruce Report aft e r the Lieutenant-Governor of Ontario, and the 1935 Report on Housing and Slum Clearance for Montreal, j o i n t l y sponsored by the Montreal Board of Trade and the City Improvement League. In addition, a number of other reports on l o c a l conditions were prepared by c i t i z e n groups, welfare organizations and municipal agencies across the country. Even more importantly, the federal government appointed the Special Parliamentary Committee on Housing in February 1935 to investigate housing conditions on a national scale. The b i -7 2See Rose, Canadian Housing P o l i c i e s , 1935-1980 (Toronto: Butterworths, 1980), p. 164. 7 3See Andrew Hazeland, "Housing Accomplishments in Canada 1945-47," Public A f f a i r s 10 (1947):221; Yves Dube, J.E. Howes, and D.L. McQueen, Housing and Social Capital (Hull: Queen's Printer for the Royal Commission on Canada's Economic Prospects, 1957), p. 48; Canadian Congress of Labour, "Housing Act Wholly Inadequate," Canadian Unionist 28 (March 1954):91. 48 p a r t i s a n committee 7" was given the mandate to "report upon the i n a u g u r a t i o n of a n a t i o n a l p o l i c y of h o u s e - b u i l d i n g to i n c l u d e the c o n s t r u c t i o n , r e c o n s t r u c t i o n , and r e p a i r of urban and r u r a l d w e l l i n g houses i n order to provide employment throughout Canada, and a l s o to provide such d w e l l i n g houses as may be n e c e s s a r y . . . " 7 5 As w e l l , i n the l a t e 1930's, in order to a i d r e s e a r c h i n t o housing c o n d i t i o n s , the f e d e r a l government a u t h o r i z e d the DBS to begin c o l l e c t i n g and p u b l i s h i n g n a t i o n a l data p e r t a i n i n g to housing q u a l i t y , supply and a f f o r d a b i l i t y . As suggested above, the u n a v a i l a b i l i t y of such data had p r e v i o u s l y hampered attempts to s y s t e m a t i c a l l y document the extent and s e r i o u s n e s s of housing problems. It was as a r e s u l t of the s t u d i e s and the a v a i l a b i l i t y of h o u s i n g - r e l a t e d data that widespread d i s c u s s i o n and concern reg a r d i n g problems in Canada's r e n t a l s e c t o r f i r s t o c c u r r e d . Although the main elements of the housing problem d i s c u s s e d i n the s t u d i e s d i f f e r e d l i t t l e from those i d e n t i f i e d i n the e a r l i e r p e r i o d , i t had become apparent that the problems were f a r more s e r i o u s among lower-income working-class households who were l e a s t able to a f f o r d adequate and modern accommodation. 7 6 7"The Committee was composed of nine members of the governing Con s e r v a t i v e Party, seven L i b e r a l M.P.'s, and one Labour M.P. 7 5 S e e House of Commons, Debates (1935), p. 898. 7 6 T h e 1934 Bruce Report noted, f o r i n s t a n c e , that "the poorest f a m i l i e s are...compelled to accept the meanest accommodation with l i t t l e chance of anything being done to improve- i t . " O n t a r i o , Report on Housing C o n d i t i o n s , p. 52. Incomes and House Prices. Canada. 1929-1959 (Current *) A v e r a g e A f f o r d a b l e A v g . C o n s t r . A v g . C o n s t r . A v e r a g e Annual House P r i c e C o s t o f New C o s t o f New P r i c e Wage f o r a t 2 . 2 5 De tached o r Row House o f M a n u f a c t u r i n g T imes S e m i - d e t a c h , o r A p a r t m e n t E x i s t i n g W a g e - E a r n e r Annual Wage House S u i t e House 1 2 3 4 5 1929 1,041 2 , 3 4 2 4 , 4 8 2 3 , 7 8 3 2 , 6 1 0 1930 995 2 , 2 3 9 4 , 0 7 4 3 ,101 2 , 5 2 9 1931 950 2 , 1 3 8 3 , 9 9 4 2 , 5 4 0 2 , 3 4 3 1932 844 1,899 3 ,281 2 , 1 1 2 2 ,124 1933 777 1,748 2 , 8 6 8 1,928 2 , 0 2 3 1934 830 1,868 3 ,051 1,841 2,081 1935 870 1,958 3 , 0 5 4 2 , 1 4 6 2 , 0 5 4 1936 896 2 , 0 1 6 3 , 0 4 6 2 , 0 9 3 2 , 1 0 3 1937 965 2,171 2 , 9 4 6 2 , 3 5 5 2 , 2 5 3 1938 956 2,151 2 , 7 0 5 2 , 2 9 0 2,191 1939 975 2 , 1 9 4 2 , 8 0 6 2,231 2 , 2 0 3 F i r e s t o n e , O . J . (1951) R e s i d e n t i a l Rea l E s t a t e in C a n a d a . T o r o n t o : U n i v e r s i t y o f T o r o n t o P r e s s , p . 9 9 . L e a l y , F . H . (1983) H i s t o r i c a l S t a t i s t i c s o f C a n a d a . 2nd E d i t i o n , O t t a w a : S t a t i s t i c s Canada and S o c i a l S c i e n c e F e d e r a t i o n o f C a n a d a , S e r i e s E 4 1 - 4 8 , S 3 2 3 - 3 2 5 . 50 What had a l s o become apparent was that lower-income households tended to be r e n t e r s - the data i n Table 6 i l l u s t r a t e the u n l i k l i h o o d of home ownership f o r even average wage-earners, l e t alone low wage-earners or those faced with temporary or c h r o n i c unemployment. The Bruce Committee acknowledged t h i s c o r r e l a t i o n between r e n t i n g and low incomes i n n o t i n g i n i t s r e p o r t : " I t i s even l e s s p o s s i b l e f o r the poorest group to buy than i t i s f o r them to rent adequate accommodation. Home-ownership i s i m p o s s i b l e . " 7 7 S i m i l a r l y , U n i v e r s i t y of Toronto p r o f e s s o r E . J . Urwick noted i n a 1937 a r t i c l e : "The low wage-earner i s n e i t h e r s t r o n g enough nor secure enough to saddle himsel f with an expensive f i x e d p roperty not e a s i l y t r a n s f e r a b l e , i n v o l v i n g p e r i o d i c a l outgoings, and s u b j e c t to grave f l u c t u a t i o n s i n val u e . Home-ownership, may be the i d e a l f o r h a l f the p o p u l a t i o n . I t i s a ra t h e r dangerous dream f o r most wage-earners i n a r a p i d l y changing economy t o d a y . " 7 8 The Rental Q u a l i t y Problem. The r e p o r t s of the 1930's documented the e x i s t e n c e of thousands of i n s a n i t a r y and overcrowded d w e l l i n g s crammed t i g h t l y together i n slum neighbourhoods. Most of the d w e l l i n g s f a i l e d to meet even minimum h e a l t h standards. C o n f i r m a t i o n that such c o n d i t i o n s were p a r t i c u l a r l y c r i t i c a l i n the r e n t a l s e c t o r i s pr o v i d e d by the. Bruce Committee's f i n d i n g s that 93% of the slum d w e l l i n g s 7 7 I b i d . , p. 116. 7 8 E . J . Urwick, "The Economics of the Housing Problem," S o c i a l  Welfare, June-September 1937, p. 38. 7 9 0 n t a r i o , Report on Housing C o n d i t i o n s , p. 18. 51 surveyed i n t h e i r study of Toronto were r e n t a l u n i t s . 7 9 Moreover, the very d e f i n i t i o n of "slum", as p r o v i d e d in the League for S o c i a l R e c o n s t r u c t i o n ' s (LSR) 1935 c l a s s i c S o c i a l P l a n n i n g f o r Canada, suggests a high c o r r e l a t i o n between slum c o n d i t i o n s and r e n t a l tenure. A c c o r d i n g to the LSR: "A slum i s r e a l l y a p r o p e r t y which the landlord...does not bother to keep in r e p a i r . . . [ a n d f o r which he] i s prepared to accept a low rent with few r e s p o n s i b i l i t i e s . . . " 8 0 Although n a t i o n a l f i g u r e s p e r t a i n i n g to r e n t a l q u a l i t y are not p l e n t i f u l , d e s c r i p t i v e accounts of l o c a l c o n d i t i o n s can be gleaned from the housing s t u d i e s and the evidence presented before the P a r l i a m e n t a r y Committee on Housing. According to the Bruce Report, f o r i n s t a n c e , more than 3,000 of Toronto's 132,296 occupied d w e l l i n g s f e l l short of minimum h e a l t h and decency standards, and 4,500 lac k e d the elementary amenities of l i f e . 8 1 Given the c o r r e l a t i o n between such c o n d i t i o n s and r e n t a l tenure, i t i s c l e a r t h a t many Toronto r e n t e r s s u f f e r e d from dampness, vermin, f i l t h , and from a l a c k of f r e s h a i r , s u n l i g h t , adequate water supply, food storage f a c i l i t i e s , and s a n i t a r y c o n v e n i e n c e s . 8 2 Evidence presented before the P a r l i a m e n t a r y Committee suggested that s i m i l a r c o n d i t i o n s were to be found i n other °League f o r S o c i a l R e c o n s t r u c t i o n , S o c i a l P l a n n i n g , p. 453. 1 O n t a r i o , Report on Housing C o n d i t i o n s , pp. 33, 115. 2 I b i d . , p. 35. 52 l a r g e urban c e n t e r s . 8 3 In Montreal, f o r example, 450 to 500 slum u n i t s were repo r t e d to be i n very poor s a n i t a r y c o n d i t i o n , while 1,100 to 1,200 u n i t s r e q u i r e d urgent r e p a i r s . 8 " F u l l y 25,000 Montreal d w e l l i n g s u n i t s had been c l a s s e d by the l o c a l Board of He a l t h as i n s a n i t a r y . 8 5 A Manitoba r e p o r t t a b l e d before the Parliamentary Committee d e s c r i b e d s e r i o u s c o n d i t i o n s of overcrowding i n basements and a t t i c s l a c k i n g s a n i t a r y conveniences, and a Saskatchewan r e p o r t c i t e d 2,000 substandard d w e l l i n g s in Regina a l o n e . 8 6 The number of o b s o l e t e d w e l l i n g s in urban slums a c r o s s Canada was estimated by the Parliamentary Committee at 40,000 u n i t s . 8 7 Moreover, using rooms per person as a measure of housing q u a l i t y , the DBS concluded i n a 1935 monograph that i n f i f t e e n of twenty Canadian c i t i e s , more than 25% of the p o p u l a t i o n was l i v i n g i n overcrowded c o n d i t i o n s . 8 8 The Rental Supply Problem. As i s evident from the d i s c u s s i o n i n S e c t i o n 2.1, there had been no s u r p l u s of r e n t a l 8 3House of Commons S p e c i a l Committee on Housing, Minutes, pp. 105, 138, 147. 8 " I b i d . , p. 103. 8 5 I b i d . , p. 208. 8 6 I b i d . , p. 104. 8 7 I b i d . , pp. 122, 305. 8 8 H o u s i n g accommodation which p r o v i d e s l e s s than one room per person i s g e n e r a l l y c o n s i d e r e d overcrowded, although the s i z e of the rooms and the age and sex c o n s t i t u t i o n of the f a m i l y render the measure somewhat a r b i t r a r y . Dominion Bureau of S t a t i s t i c s , Seventh Census of Canada, 1931, The Housing Accommodation of the  Canadian People (Ottawa: King's P r i n t e r , 1935), pp. 8-10. 8 9 0 n e estimate set the shortage at 250,000 u n i t s . Horace Seymour, "Canada's Housing S i t u a t i o n , " Canadian Engineer, J u l y 1939, p. 4. 53 housing in Canada before the onset of the D e p r e s s i o n . 8 9 Although f i g u r e s p e r t a i n i n g to the r e n t a l shortage on a n a t i o n a l scale, are not p l e n t i f u l , the reports, of the 1930's provide some evidence regarding the s e v e r i t y of l o c a l r e n t a l and e s p e c i a l l y l o w - r e n t a l shortages f o l l o w i n g the v i r t u a l c e s s a t i o n of r e n t a l c o n s t r u c t i o n d u r i n g the e a r l y 1930's. Acco r d i n g to evidence presented before the Parliamentary Committee, for i n s t a n c e , Montreal alone r e q u i r e d 25,000 to 35,000 f l a t s or apartments in 1935 j u s t to keep up with p o p u l a t i o n i n c r e a s e s , 9 0 with 4,000 of those r e q u i r e d f o r low-income r e n t e r s . 9 1 Winnipeg s u f f e r e d a 1,500 to 2,000 l o w - r e n t a l s h o r t f a l l i n 1935, 9 2 while Vancouver r e q u i r e d an a d d i t i o n a l 12,000 l o w - r e n t a l d w e l l i n g s . 9 3 Thus c o n s i d e r i n g only three of Canada's l a r g e r urban c e n t e r s , low-r e n t a l needs in 1935 stood as high as 18,000 u n i t s , and were undoubtedly much higher on a n a t i o n a l s c a l e . Evidence presented before the Parliamentary Committee suggested, i n f a c t , that many f a m i l i e s were l i v i n g i n sheds and garages f o r want of adequate lo w - r e n t a l h o u s i n g . 9 " Although high vacancy r a t e s i n some urban c e n t e r s were 9 0House of Commons S p e c i a l Committee on Housing, Minutes, p. 226. Montreal, however, i s somewhat a t y p i c a l of l a r g e Canadian ce n t e r s given the high r a t e s of tenancy i n the province as a whole. 9 ' I b i d p. 33. 9 2 I b i d . , P- 1 75. 9 3 House of Commons, Debates (1938), p. 325. 9"House of Commons S p e c i a l Committee on Housing, Minutes, p. 201 . 54 e v i d e n t , 9 5 i t was generally agreed that they were confined to high-priced dwelling units and apartments inaccessible to unemployed or low-paid workers. 9 6 Indeed, a 1934 a r t i c l e in an arc h i t e c t u r a l journal reported that in the midst of above average vacancy l e v e l s , more than 15,000 Toronto families were l i v i n g doubled-up. 9 7 The Rental Affordabi1ity Problem. The reports and s t a t i s t i c a l monographs of the 1930's are ri c h with documentation of the rental affordabi1ity problem. The data in Table 7' i l l u s t r a t e the d i f f i c u l t i e s encountered by average urban wage-earners in securing rental accommodation at both the newly-accepted 20% rent-to-income r a t i o , 9 8 and at 25% of gross household income. For those with less than average wages, the situation was even more serious. 9 5 I n Toronto in 1933, 16% of suites were vacant, and in 1934, 11%. In the same years, the vacancy rate for rental units in Calgary was 8-10%. House of Commons Special Committee on Housing, Minutes, pp. 154, 201. 9 6 I b i d . , pp. 98, 231. 9 7James H. Craig, "A Municipal Housing Project That W i l l Pay," Journal Royal Architectural I n s t i t u t e of Canada, January 1934, p. 6. 9 8House of Commons Special Committee on Housing, Minutes, pp. 33, 106. T a h l f l 7 Incomes and Rent Levais Canada. 1929-1939 (Current t) A v e r a g e A f f o r d a b l e Annual M o n t h l y Wage f o r Ren t M a n u f a c t u r i n g a t 20? o f W a g e - E a r n e r Income A f f o r d a b l e A v e r a g e Month Iy Month Iy Rent M a r k e t a t 25? o f Ren t Income 1 2 3 4 1929 1,041 17 22 28 1930 995 17 21 28 1931 950 16 20 28 1932 844 14 18 26 1933 777 13 16 23 1934 830 14 17 22 1935 870 15 18 23 1936 896 15 19 23 1937 965 16 20 23 1938 956 16 20 — 1939 975 16 20 — Sojicca: C a n a d a , The Canada Y e a r B o o k . O t t a w a : K i n g ' s P r i n t e r , V a r i o u s Y e a r s . L e a l y , F . H . (1983) H i s t o r i c a l S t a t i s t i c s o f C a n a d a . 2nd E d i t i o n , O t t a w a : S t a t i s t i c s Canada and S o c i a l S c i e n c e F e d e r a t i o n o f C a n a d a , S e r i e s E 4 1 - 4 8 . 56 Although figures vary with urban location and type of employment, the reports estimated that semi-skilled and unskilled urban wage-earners in the 1930's could afford rent levels of no more than $9 to $15 at 20% of income." Households on r e l i e f were allocated even smaller rental allowances - as low as $6 per month in Montreal. Yet, average rent levels in existing modern apartments ranged from $20 to $30 per month, with rents in the few new units being produced as high as $35 per month. 1 0 0 Even the rents in Toronto Housing Company units, which received some assistance from the municipality and other sponsor organizations, ranged from $23 to $40 per month, and units f a i l i n g to meet even minimum health standards and lacking minimal amenities were renting for up to $30 and $45 per month in some urban c e n t e r s . 1 0 1 Given these figures, households hoping to occupy even an average-priced existing rental unit required an annual income of $1,200 to $1,800 i f they were not to exceed the 20% rent-to-income r a t i o . Yet, 1931 Census figures indicate that 56.2% of Canadians at that time earned less than $1,000 per y e a r . 1 0 2 9 9These figures are based on average wage levels of $500 to $800 per year. See House of Commons Special Committee on Housing, Minutes, pp. 13, 33, 106, 236; League for Social Reconstruction, Social Planning, pp. 11, 22, 27; Grauer, Housing, p. 58; Ontario, Report on Housing Conditions, pp. 115-116. 1 0 0 S e e House of Commons Special Committee on Housing, Minutes, pp. 24, 34, 37; Ontario, Report on Housing Conditions, pp. 63-64. 1 0 1 O n t a r i o , Report on Housing Conditions, pp. 63, 75; House of Commons Special Committee on Housing, Minutes, pp. 36, 172, 185. 1 0 2 T h e 56.2% figure excludes farm labourers. See League for Social Reconstruction, Social Planning, p. 16. 57 Before proceeding, i t may be u s e f u l to c l a r i f y some terms r e l a t i n g to rent l e v e l s . The term market rent r e f e r s to the private-market-determined p r i c e of a r e n t a l u n i t i n the absence of rent r e g u l a t i o n s . The term f i n a n c i a l recovery rent r e f e r s to the rent l e v e l necessary to render new c o n s t r u c t i o n p r o f i t a b l e i n the absence of government supply s u b s i d i e s . Although there has always been a premium between the c o s t s of o p e r a t i n g e x i s t i n g r e n t a l housing and the c o s t s of producing new r e n t a l housing, the d i f f e r e n c e was almost n e g l i g i b l e u n t i l the e a r l y 1970's. The r e f o r e , except i n Chapter 5 of t h i s t h e s i s , market and f i n a n c i a l recovery r e n t s are c o n s i d e r e d one and the same. The term a f f o r d a b l e rent r e f e r s to the l a r g e l y s u b j e c t i v e d e t e r m i n a t i o n of some l e v e l at which households have a problem p a y i n g f o r t h e i r accommodation. A f f o r d a b i l i t y i s determined by comparing the r e l a t i o n s h i p between a household's housing c o s t s and i t s income with an assessment of what the r e l a t i o n s h i p ought to be. Rent-to-income r a t i o s are the measures most often' used to d e f i n e a f f o r d a b i l i t y . 1 0 3 Probably the major f a c t o r c o n t r i b u t i n g to the r e n t a l and p a r t i c u l a r l y l o w - r e n t a l problem was the unfavourable economics of r e n t a l housing development. Given the c o s t s of developing and m a i n t a i n i n g adequate r e n t a l d w e l l i n g s and spor a d i c employment 1 0 3 S e e Hulchanski, Market Imperfections and the Role of Rent  R e g u l a t i o n s i n the R e s i d e n t i a l Rental Market, Research Study No. 6 (Toronto: Commission of I n q u i r y i n t o R e s i d e n t i a l Tenancies, 1984), pp. 4-5. 5 8 and f a l l i n g wage l e v e l s , a gap e x i s t e d between market and f i n a n c i a l recovery rent l e v e l s and rent l e v e l s a f f o r d a b l e to w o r k i n g - c l a s s households. Consequently, l o w - r e n t a l investment was u n p r o f i t a b l e . 1 0 " Even the N a t i o n a l C o n s t r u c t i o n C o u n c i l , an o r g a n i z a t i o n composed of the Canadian Manufacturing A s s o c i a t i o n , b u i l d i n g trade unions, and a r c h i t e c t u r a l and e n g i n e e r i n g i n s t i t u t e s , admitted i n a submission to the P a r l i a m e n t a r y Committee: "Our i n v e s t i g a t i o n s of housing f o r low-income groups show that p r o v i s i o n of t h i s c l a s s of housing cannot u l t i m a t e l y be p r o f i t a b l e to p r i v a t e e n t e r p r i s e . " 1 0 ' 5 ' As a r e s u l t , the p r i v a t e s e c t o r tended to c o n c e n t r a t e on the p r o d u c t i o n of d w e l l i n g s f o r higher-income home o w n e r s . 1 0 6 Those r e n t a l u n i t s i t d i d .produce were, f o r the most p a r t , beyond the f i n a n c i a l c a p a c i t y of lower-income households. Given the n e g l i g i b l e l o w - r e n t a l investment, the shortage of l o w - r e n t a l d w e l l i n g s mounted. Moreover, when the p r i v a t e s e c t o r d i d undertake l o w - r e n t a l development, the u n i t s tended to be of very poor q u a l i l t y . The Bruce Committee noted, f o r example: "...the e f f o r t s of s p e c u l a t i v e b u i l d e r s to p r o v i d e low-cost 1 0 " l n d e e d , one witness before the S p e c i a l P a r l i a m e n t a r y Committee on Housing t e s t i f i e d that given the h i g h c o s t s of d e v e l o p i n g housing, i t was most p r o f i t a b l e to b u i l d f o r those e a r n i n g more than $1,000 per year, a f i g u r e w e l l above the average income l e v e l of the great m a j o r i t y of the w o r k i n g - c l a s s . House of Commons S p e c i a l Committee on Housing, Minutes, p. 194. 1 0 5 S e e R.E.G. Davis, "Housing L e g i s l a t i o n i n Canada," Canadian  Welfare 28 (1952):12. 1 0 6 D u r i n g the 1920's, f o r example, only 15-18% of r e s i d e n t i a l c o n s t r u c t i o n was apartments. House of Commons S p e c i a l Committee on Housing, Minutes, p. 99. 59 housing i n e v i t a b l y r e s u l t i n a lowering of b u i l d i n g s t a n d a r d s . " 1 0 7 S i m i l a r l y , i n h i s testimony before the Parliamentary Committee, Montreal a r c h i t e c t Percy Nobbs d e c l a r e d : " . . . p r i v a t e c a p i t a l ' s way of doing i t [ p r o v i d i n g l o w - r e n t a l accommodation] i s by p r o v i d i n g a c l a s s of accommodation which i s s e r i o u s l y d e t e r i o r a t e d in twenty years - the c r e a t i o n of the s l u m . " 1 0 8 Given the i n s u f f i c i e n t supply of adequate and a f f o r d a b l e working-class r e n t a l housing, lower-income r e n t e r s had few s h e l t e r o p t i o n s . Many of them r e t r e a t e d to the few a v a i l a b l e u n i t s which c o u l d be a c q u i r e d at the $9 to $15 per month rent l e v e l s a f f o r d a b l e to them. Such housing was most o f t e n , however, s e r i o u s l y s u b s t a n d a r d . 1 0 9 Given the strong c o r r e l a t i o n between slum housing and d i s e a s e , high i n f a n t m o r t a l i t y r a t e s , c h i l d n e g l e c t , f a m i l y breakdown, crime and j u v e n i l e d e l i n q u e n c y , 1 1 0 t h i s p r a c t i c e had enormous i m p l i c a t i o n s not only f o r the q u a l i t y of l i f e of low-income r e n t e r s but f o r the p u b l i c tax burden as w e l l . Many others doubled-up in otherwise u n a f f o r d a b l e u n i t s i n 1 0 7 0 n t a r i o , Report on Housing C o n d i t i o n s , p. 60. 1 0 8 H o u s e of Commons S p e c i a l Committee on Housing, Minutes, p. 42. 1 0 9 A major government report of the 1940's noted, f o r i n s t a n c e , that d u r i n g the 1930's, low r e n t s were being charged on many u n i t s s o l e l y f o r the purpose of s e c u r i n g tenants f o r substandard and slum d w e l l i n g s which otherwise would remain vacant. Subcommittee on Housing and Community Planning, F i n a l Report, p. 241 . 1 1 0 S e e House of Commons S p e c i a l Committee on Housing, Minutes, pp. 32, 43; O n t a r i o , Report on Housing C o n d i t i o n s , pp. 41, 43, 45, 48-50. 60 order to reduce housing expenses, 1 1 1 a recourse which, as noted above, simply served to lower the l i v i n g standard o.f. a l l concerned. F i n a l l y , others coped with the problem by spending a disproportionate percentage of income to secure adequate h o u s i n g . 1 1 2 Doing so, however, reduced the amount of income available to them to acquire other basic necessities such as food and clothing, and often led to poverty-related s o c i a l problems. 1 1 3 2.4 Recommendations for Government Action on the Rental Problem Advocacy for government intervention in the rental sector during the 1930's derived from a number of sources. One source was the national and pro v i n c i a l organizations representing the construction industry and the lending i n s t i t u t i o n s , who recognized that federal assistance was c r i t i c a l to the post-Depression recovery of the economy in general and of the 1 1 1 T h e Bruce Report estimated that as many as 17,698 or 12% of Toronto households were doubled up in 1933. Ontario, Report on  Housing Conditions, p. 33. 1 1 2 A s many as 80,000 households in Montreal alone were paying disproportionate rent levels in 1935. House of Commons Special Committee on Housing, Minutes, p. 33. Moreover,the average employed wage-earner in Canada in 1931 was spending 30% of income for rent although the accepted r a t i o was 20%. Calculated from average working-class wage and average monthly rent figures in F.H. Leacy, H i s t o r i c a l S t a t i s t i c s of Canada, 2d ed. (Ottawa: S t a t i s t i c s Canada and Social Science Federation of Canada, 1983), Series E41-48; Dominion Bureau of S t a t i s t i c s , The Canada  Year Book: The O f f i c i a l S t a t i s t i c a l Annual of the Resources,  History, I n s t i t u t i o n s and Social and Economic Conditions of  Canada (Ottawa: King's Printer, 1931). 1 1 3House of Commons Special Committee on Housing, Minutes, p. 19; League for Social Reconstruction, Social Planning, p. 457. 61 construction industry in p a r t i c u l a r . 1 1 4 Another source was community groups such as the National Housing and Planning Association (NHPA) and the Canadian Federation of Mayors and M u n i c i p a l i t i e s (CFMM). The NHPA, which was established in 1937 as a national slum clearance and low-rental lobby, petitioned the federal government in that same year to implement a low-rental scheme. 1 1 5 S i m i l a r l y , the CFMM recommended in t h e i r 1938 report to the federal Royal Commission on Dominion-Provincial Relations the enactment of a low-rental scheme. F i n a l l y , the reports of the 1930's were unanimous in their recommendation for government intervention in the rental sector. The report of the Parliamentary Committee summarized the common sentiment in noting: "...there w i l l always be a large number who cannot a f f o r d to purchase a home. There is a need for some body (municipal, p r o v i n c i a l or federal) to see to i t that a s u f f i c i e n t number of suitable and sanitary dwellings are available for The prescriptions as to what form an emerging government role in housing should take were also very consistent. The establishment of a federal housing authority with powers to impose q u a l i t y standards on public and private development, to 1 1 4 C . J . Wade, "Wartime Housing Limited, 1941-1947: Canadian Housing Policy at the Crossroads" (Masters Thesis, University of B r i t i s h Columbia, 1984), p. 41 . 1 1 5 I b i d . , p. 72. 1 1 6House of Commons Special Committee on Housing, F i n a l Report (Ottawa: King's Printer, 1935), p. 364. 62 n e g o t i a t e w i t h the f i n a n c i a l s e c t o r f o r l o n g e r - t e r m mortgages and l o w e r - i n t e r e s t r a t e s , and t o f a c i l i t a t e the i n t e g r a t i o n of town p l a n n i n g p r i n c i p l e s w i t h h o u s i n g development was a h i g h p r i o r i t y i n a l l the r e p o r t s . 1 1 7 So t o o was f e d e r a l c o - o p e r a t i o n w i t h o t h e r l e v e l s of government i n f o r m u l a t i n g a comprehensive n a t i o n a l h o u s i n g p o l i c y based on the p r o v i s i o n of adequate h o u s i n g as a ma t t e r of p u b l i c r e s p o n s i b i l i t y . Most i m p o r t a n t l y , the r e p o r t s f o c u s s e d on the severe problems of low-income households and recommended slum c l e a r a n c e measures and the c o n s t r u c t i o n of p u b l i c a l l y - a s s i s t e d l o w - r e n t a l h o u s i n g by e i t h e r l i m i t e d d i v i d e n d c o r p o r a t i o n s or p u b l i c u t i l i t y companies. The s o c i a l d e m o c r a t i c LSR and i t s p o l i t i c a l wing, the C o - o p e r a t i v e Commonwealth F e d e r a t i o n (CCF), went even f u r t h e r i n a d v o c a t i n g f e d e r a l c o n s t r u c t i o n , o wnership, and management of l o w - r e n t a l , n o n - p r o f i t h o u s i n g as a s o c i a l s e r v i c e based on need r a t h e r than on monetary p o l i c y or economic e f f i c i e n c y . 1 1 8 F i n a l l y , a l l the r e p o r t s a d v o c a t e d p u b l i c a s s i s t a n c e f o r the r e h a b i l i t a t i o n of r e n t a l u n i t s f a l l i n g below h e a l t h and amenity s t a n d a r d s . The P a r l i a m e n t a r y Committee, i n f a c t , nominated r e h a b i l i t a t i o n as i t s f i r s t p r i o r i t y , n o t i n g i n i t s f i n a l r e p o r t t h a t : "More l i v i n g u n i t s c o u l d be o b t a i n e d more r a p i d l y by r e p a i r i n g e x i s t i n g houses up t o r e a s o n a b l e s t a n d a r d s than by any o t h e r m e a n s . " 1 1 9 1 1 7 T h e s e g o a l s , i t was assumed, c o u l d be b e t t e r a c h i e v e d through c e n t r a l government c o - o r d i n a t i o n and a s s i s t a n c e than t h r o u g h p r i v a t e s e c t o r e f f o r t s . 1 1"House of Commons, Debates (1935), p. 3929. 1 1 9 H o u s e of Commons S p e c i a l Committee on Housing, F i n a l R e p o r t , p. 369. 63 In making t h e i r case f o r government i n t e r v e n t i o n , the r e p o r t s emphasized the almost u n i v e r s a l acceptance of government involvement i n low-income housing p r o v i s i o n i n other western i n d u s t r i a l , c a p i t a l i s t n a t i o n s , and the negligence of Canadian governments i n the f i e l d . In h i s 1938 study on housing f o r the Royal Commission on D o m i n i o n - P r o v i n c i a l R e l a t i o n s , A.E. Grauer noted, f o r example: "There i s no reason to b e l i e v e that Canadian governments can escape f o l l o w i n g other governments in t a k i n g permanent a c t i o n to provide low-cost housing and to plan the general development of housing. The only q u e s t i o n here i s , which government or combination of governments i s best equipped to undertake the r e s p o n s i b i l i t y . " 1 2 0 2.5 Government Response to the Rental Problem With the n a t i o n a l economy in d i s a r r a y and at l e a s t three major housing r e p o r t s , the c o n s t r u c t i o n i n d u s t r y lobby, community groups, and o p p o s i t i o n Members of Parliament recommending government a c t i o n to a l l e v i a t e problems i n the r e n t a l s e c t o r , the C o n s e r v a t i v e government of R.B. Bennett took a c t i o n . In 1935, i t i n t r o d u c e d the f i r s t n a t i o n a l l e g i s l a t i o n on housing, the Dominion Housing Act (DHA). The s t a t e d purpose of the Act was to a s s i s t the c o n s t r u c t i o n of houses so as to reduce the housing s h o r t a g e , 1 2 1 although i t s p o t e n t i a l to s t i m u l a t e the economy and thus employment was a l s o c i t e d by s e v e r a l government 1 2 0 G r a u e r , Housing, p. 61. 1 2 1 S t a t u t e s of Canada, The Dominion Housing Act, 1935, 25 & 26 George V, ch. 58. 64 members as an important f a c t o r u n d e r l y i n g i t s p r e p a r a t i o n . Indeed, i n a s s e s s i n g the DHA i n a 1959 a r t i c l e reviewing Canadian housing l e g i s l a t i o n , A.D. Wilson noted: "The o b j e c t i v e of the l e g i s l a t o r s of that day was p r i m a r i l y the r e l i e f of unemployment; one might say that the F e d e r a l Government f e l l i n t o the housing f i e l d a c c i d e n t a l l y i n an endeavour to a s s i s t the country out of some of the d i f f u c l t i e s of the hungry t h i r t i e s . " 1 2 2 The Act a u t h o r i z e d long-term, l o w - i n t e r e s t f e d e r a l loans of 20% f o r the c o n s t r u c t i o n of owner-occupied houses of $5,000 average v a l u e . 1 2 3 R e g u l a t i o n s r e q u i r e d the borrower to provide another 20% of the necessary c a p i t a l and be e l i g i b l e to borrow the other 60% from a l e n d i n g i n s t i t u t i o n . The t o t a l loan fund a l l o c a t e d f o r the program was set at $20 m i l l i o n . Given that the Act c o n t a i n e d no p r o v i s i o n s to s t i m u l a t e the p r o d u c t i o n of r e n t a l housing, i t i s an understatement to suggest that i t was a r a t h e r token g e s t u r e towards r e s o l u t i o n of the r e n t a l problem. C i t i n g p r o v i n c i a l j u r i s d i c t i o n over housing and the complexity of the l o w - r e n t a l i s s u e , however, the government claimed i t c o u l d take no more than t h i s l i m i t e d measure pending both examination of m u n i c i p a l and p r o v i n c i a l plans f o r low-r e n t a l housing and slum c l e a r a n c e , 1 2 " and f u r t h e r i n v e s t i g a t i o n by the Economic C o u n c i l of Canada (ECC) of housing c o n d i t i o n s , 1 2 2A.D. Wilson, "Canadian Housing L e g i s l a t i o n , " Canadian P u b l i c  A d m i n i s t r a t i o n 2 (December 1959):219. 1 2 3 G r a u e r , Housing, p. 40. 1 2 " S e e W.C. C l a r k , "The Housing Act and Low Cost Housing," S o c i a l Welfare, June-September 1937, p. 37. 65 f a c t o r s c o n t r i b u t i n g to the high c o s t s of housing, and the f e a s i b i l i t y of a slum c l e a r a n c e p r o g r a m . 1 2 5 N e v e r t h e l e s s , i t i s d i f f i c u l t not to conclude that the government's r e l u c t a n c e to act on the l o w - r e n t a l problem stemmed from other concerns. P r o v i n c i a l j u r i s d i c t i o n over housing, f o r example, d i d not appear to be an impediment to f e d e r a l implementation of home ownership p r o v i s i o n s . Moreover, p l e n t y of i n f o r m a t i o n r e g a r d i n g housing c o n d i t i o n s , the f e a s i b i l i t y of slum c l e a r a n c e and the need f o r government a s s i s t a n c e to the r e n t a l s e c t o r was al r e a d y a v a i l a b l e i n the housing r e p o r t s prepared over the pre v i o u s t h i r t y - f i v e y e a r s . A statement i n the House of Commons by one member of the P a r l i a m e n t a r y Committee suggests, r a t h e r , that the government's r e l u c t a n c e to act on l o w - r e n t a l problems stemmed more from a reverence of f r e e e n t e r p r i s e and home ownership, and from a b e l i e f the r e n t a l problem would d i s s i p a t e as the Depression receded. In su p p o r t i n g the government's d e c i s i o n not to embark on a p u b l i c a l l y - a s s i s t e d scheme of l o w - r e n t a l housing, the M.P. remarked: "I should be very s o r r y to see the government go i n t o a general p o l i c y of s o c i a l i s m based on the gen e r a l c o n d i t i o n s today. The f a c t there i s a l a r g e number of people i n Canada today who cannot p r o v i d e proper housing f o r themselves does not in my o p i n i o n j u s t i f y a p o l i c y f o r a l l time to meet these s p e c i a l c o n d i t i o n s of t o d a y . " 1 2 6 Yet, the t h e s i s of the 1935 Report on Housing and Slum Clearance  f o r Montreal had been that a government-aided program of r e n t a l 1 2 5 H o u s e of Commons, Debates (1935), p. 3909. 1 2 6 I b i d . , p. 3773. 66 housing was long overdue, and that the long-standing r e n t a l slum problem was fundamentally a matter independent of the Depression, although aggravated by i t . 1 . 2 7 Not s u r p r i s i n g l y , the DHA met with c o o l r e c e p t i o n from those advocating slum c l e a r a n c e and l o w - r e n t a l a s s i s t a n c e . Indeed, some members of the Parliamentary Committee on Housing were outraged to f i n d t h e i r recommendations had been d i s m i s s e d . 1 2 8 Even the Committee Chairman, a C o n s e r v a t i v e , was compelled to acknowledge that the Act would a s s i s t i n the c o n s t r u c t i o n of houses, but not i n the housing d i f f i c u l t i e s of low-paid w o r k e r s . 1 2 9 The LSR summarized the p o t e n t i a l impact of the Act on r e n t a l problems i n S o c i a l Planning f o r Canada as f o l l o w s : "The recent housing B i l l of the Conservative Government w i l l do nothing f o r the s l u m s . . . [ I t i s ] merely a loan fund, p r o v i d i n g o n e - f i f t h of the c a p i t a l to be used (whether by i n d i v i d u a l s or c o r p o r a t i o n s ) f o r b u i l d i n g schemes. These i n d i v i d u a l s or c o r p o r a t i o n s must themselves put up the remaining f o u r - f i f t h s of the c a p i t a l and pay the government 5% on t h e i r "subsidy". Obviously, none of the i n d i v i d u a l s w i l l be slum d w e l l e r s , and the C o r p o r a t i o n s - unless they are going to be benevolent i n s t i t u t i o n s o p e r a t i n g at a l o s s for the b e n e f i t of the p u b l i c - w i l l be hard put to i t on t h i s b a s i s to provide housing at even 'white c o l l a r ' r e n t a l s . " 1 3 0 1 2 7 G e o r g e S. Mooney, "Housing i n Montreal," S o c i a l Welfare, June-September 1937, p. 56. 1 2 8A.A. Heaps, the lone Labour r e p r e s e n t a t i v e on the Committee, fo r i n s t a n c e , remarked that the recommendations and the Act had as much in common as p i g and p i g i r o n . House of Commons, Debates (1935), p. 3920. 1 2 9 I b i d . , p. 3930 1 3 0 L e a g u e f o r S o c i a l R e c o n s t r u c t i o n , S o c i a l P lanning, p. 458. 67 In 1937, the Li b e r a l government of MacKenzie King introduced the Home Improvement Loans Act to "increase employment by encouraging the repair of rural and urban d w e l l i n g s . " 1 3 1 As loans were limited to credit-worthy home owners, i t too was ineffectual in addressing the rental problem. In response to continued pressure for slum clearance and low-rental provisions, and to a 1937 recommendation by the ECC for a low-rental scheme, the Li b e r a l government introduced the National Housing Act (NHA) in 1938. The Act, l i k e the DHA, was designed to as s i s t in the construction of houses and to increase employment, 1 3 2 but contained unique provisions with respect to low-rental houses. Part I of the 1938 NHA repealed the Dominion Housing Act and re-enacted parts of i t with changes to render home ownership more accessible to lower income households, and to those in small and remote communities. In r a t i o n a l i z i n g increased assistance to the ownership sector at a time when low-rental needs were extreme, Finance Minister Dunning noted in the House of Commons: "One of the great objectives [of t h i s Act] i s to co-operate [with] those who...desire to own a home of their own, which is one of the most healthy aspirations in the breast of any man. " 1 3 3 1 3 ' S t a t u t e s of Canada, The Home- Improvement Loans Guarantee Act, 1937, 1 George VI, ch. 11. 1 3 2 S e e A. Wilson, "Canadian Housing L e g i s l a t i o n , " p. 219. 1 3 3House of Commons, Debates (1938), June 8. 68 Part II of the 1938 NHA c o n t a i n e d the long-awaited r e n t a l p r o v i s i o n s . Under the Act, the f e d e r a l government o f f e r e d a t o t a l of $30 m i l l i o n i n loans to L i m i t e d D i v i d e n d Housing C o r p o r a t i o n s or m u n i c i p a l housing commissions to a s s i s t them in the c o n s t r u c t i o n of houses to be l e a s e d to f a m i l i e s of low incomes at no more than 20% of income. The L i m i t e d D i v i d e n d Companies were e l i g i b l e f o r loans c o v e r i n g 80% of the c o s t s of a $2400 to $2700 u n i t at 1 3/4% i n t e r e s t and were l i m i t e d to a 5% d i v i d e n d . M u n i c i p a l companies were e l i g i b l e f o r a 90% loan at 2 % . 1 3 4 The Act e s t a b l i s h e d the p r i n c i p l e of s e l e c t e d tenancy and provided f o r a rent r e d u c t i o n fund supported by v o l u n t a r y c o n t r i b u t i o n s from the p r o v i n c e s and m u n i c i p a l i t i e s to a i d those unable to pay even,the s u b s i d i z e d market r e n t s at 20% of income. It a l s o encouraged inter-governmental c o - o p e r a t i o n i n s e t t i n g requirements f o r both p r o v i n c i a l e n a b l i n g l e g i s l a t i o n and m u n i c i p a l land p r o v i s i o n . The l o w - r e n t a l scheme met with mixed response. Grauer applauded the government's new approach to the housing problem, n o t i n g : "In Canada, u n t i l the Dominion l e g i s l a t i o n of 1938, governments tended to approach the problem of housing as an adjunct to the problem of unemployment r a t h e r than on i t s own m e r i t s . Consequently, l e g i s l a t i o n overlooked those a s p e c t s of the s i t u a t i o n which from a housing p o i n t of view, most needed a t t e n t i o n , namely the p r o v i s i o n of low-r e n t a l accommodation and the e r a d i c a t i o n of slum 1 3 f t S e e House of Commons, Debates (1938), pp. 3655-3656, 4266; S t a t u t e s of Canada, The N a t i o n a l Housing Act, 1938, 2 George VI, ch. 49. 69 conditions." 1 3 5 He concluded that the provisions provided re a l hope for low-income groups and slum c l e a r a n c e . 1 3 6 The NHPA and other progressive groups, however, had a number of concerns regarding the scheme. One was that without c a p i t a l grants or mandatory government contributions to a rent reduction fund, the program would f a i l to benefit the low-income renters most in need. 1 3 7 A second concern was that the exemption of low-rental projects from l o c a l r e s i d e n t i a l taxation would discourage municipal i n i t i a t i o n or approval of low-rental development. 1 3 8 A f i n a l concern was the requirement for p r o v i n c i a l enabling l e g i s l a t i o n given an apparent lack of p r o v i n c i a l interest in the scheme. Indeed, in 1939, the- $30 m i l l i o n available under Part II of the 1938 NHA remained unappropriated and un s o l i c i t e d , and only one c i t y , Vancouver, had obtained from i t s p r o v i n c i a l l e g i s l a t u r e permission to engage in low-rental development. 1 3 9 With the low-rental provisions set to expire on March 31,1940, optimism regarding extensive use of the program was, at that time, hardly warranted. Indeed, Canada's entry into World War II in September 1939 e f f e c t i v e l y thwarted hopes for low-rental and slum 1 3 5Grauer, Housing, p. 60. 1 3 6 I b i d . , p. 60a. 1 3 7Two bedroom suites were expected to rent at $16 per month, a le v e l above the upper l i m i t of most lower-income renters. "Selections on the National Housing Conference, 1939," Journal  Royal Architectural Institute of Canada, A p r i l 1939, p. 71. 1 3 8 I b i d . , p. 74. 1 3 9Moreover, only f i v e of nine provinces ever did pass the required l e g i s l a t i o n . Ibid., p. 71. 70 c l e a r a n c e a c t i v i t y , and Part II of the 1938 NHA e x p i r e d i n 1940 without one l o w - r e n t a l u n i t having been c o n s t r u c t e d under i t s p r o v i s i o n s . 71 CHAPTER 3 URBAN RENTAL PROBLEMS AND POLICIES, 1940-1949 The transformation to a wartime economy upon Canada's entry into World War II provided r e l i e f for many of the economic and' s o c i a l problems which had plagued the 1930's. The burgeoning war economy e f f e c t i v e l y eliminated unemployment, and national per capita incomes began to ri s e as the economy gained momentum. Later, the successful t r a n s i t i o n from a war-based to peace-time economy ensured vigorous post-war growth, and ushered in two decades of prosperity and optimism about Canada's economic future. The 1940's did not, however, produce a solution to the urban rental housing problems i d e n t i f i e d in the 1930's. On the contrary, accelerated rates of population growth and urbanization combined with high construction costs and low rates of rental production for much of the 1940's severely exaccerbated the already c r i t i c a l shortage of adequate and affordable rental housing. 7 2 3,1 The Rental Problem During the War Housing problems are not s t a t i c . If they are not being addressed, the housing situation deteriorates i f for no reasons other than population growth and wear and tear on the housing stock. The urban rental situation deteriorated during the war years not only because no action was being taken to improve i t but because of a combination of circumstances which exaccerbated exis t i n g problems. Canada's entry into World War II spawned a new wave of urbanization as prospective war industry workers and the families of servicemen migrated to the larger c i t i e s . 1 4 0 Despite the increased demand for urban housing, however, r e s i d e n t i a l construct ion.lagged during the war years due to a diversion of material and manpower resources to the war e f f o r t . The rapid urbanization and the construction slump combined with the already serious residual - s h o r t f a l l to produce an acute shortage of urban dwellings of a l l types and of a l l price l e v e l s by 1941. 1 4 0 I t is estimated that 300,000 people migrated to major Canadian c i t i e s as a result of war-related a c t i v i t i e s . Subcommittee on Housing and Community Planning, F i n a l Report, p. 1 35. Households and Dwelling Stock Canada. 1939-1949 Y e a r T o t a l S t o c k 0 0 0 ' s Occup i e d S t o c k 0 0 0 ' s T o t a l H o u s e h o l d s 0 0 0 ' s H o u s e h o l d s L e s s S t o c k ( S h o r t f a l I ) 0 0 0 ' s H o u s e h o l d s L e s s O c c u -p i e d S t o c k 1 0 0 0 ' s 1 2 3 4 5 1939 2 , 5 9 7 . 8 2 , 5 1 7 . 0 2 , 7 8 6 188 269 1940 2 . 6 4 3 . 4 2 . 5 7 9 . 7 2 . 8 6 3 219 283 1941 2 , 6 9 2 . 9 2 , 6 2 9 . 9 2 , 9 4 0 247 310 1942 2 , 7 3 3 . 2 2 , 6 7 2 . 6 3 , 0 0 7 274 334 1943 2 , 7 6 3 . 2 2 , 7 0 3 . 4 3 ,057 294 354 1944 2 , 7 9 9 . 0 2 , 7 3 9 . 4 3 , 0 9 9 300 360 1945 2 . 8 4 0 . 2 2 . 7 8 0 . 4 3 .151 311 371 1946 2 , 8 9 9 . 2 2 , 8 3 9 . 1 3 , 2 5 0 351 411 1947 2 , 9 6 9 . 9 2 , 9 0 7 . 1 3,34'1 371 434 1948 3 , 0 4 2 . 4 2 , 9 7 8 . 4 3 , 4 4 0 398 462 1949 3 . 1 2 4 . 5 3 . 0 5 9 . 2 3 .532, 407 473 1. H o u s e h o l d s w i t h o u t s e p a r a t e u n i t s o f t h e i r own. Soucca: F i r e s t o n e , O . J . (1951) R e s i d e n t i a l Rea l E s t a t e In C a n a d a . T o r o n t o : U n i v e r s i t y o f T o r o n t o P r e s s , p p . 4 5 , 2 0 5 , 2 8 9 . 74 Table 8 indicates, for example, that the s h o r t f a l l of dwelling units in Canada increased from 188,000 to 311,000 units between 1939 and 1945, and one estimate suggested the urban vacancy rate in 1941 was as low as 1%. 1 4 1 Moreover, the intense demand on the limited supply of both building materials and housing units sparked price increases which rendered available units unaffordable to many households. Typical market rents in urban centers, for instance, ranged from $20 to $25 per month. 1 4 2 The lower one-third of urban tenants, however, could afford no more than $12 per month at 20% of income. 1 4 3 Many of them, therefore, had no alternative but to reside in seriously substandard units, of which there were estimated to be at least 125,000 in Canada's major c i t i e s , 1 4 4 or to double-up. Indeed, as Table 8 i l l u s t r a t e s , the number of households without dwellings of their own rose by over 100,000 between 1939 and 1945, and in 1941, 18.5% of the dwellings in major Canadian c i t i e s were estimated to be overcrowded. 1 4 5 Given the shortage of adequate and affordable dwellings, a number of municipal housing reports in the early 1940's described a nation-wide phenomenon of 1 4 1 T h e commonly regarded d e s i r a b l e r a t e was 2% for s i n g l e - f a m i l y d w e l l i n g s and 6% for apartments. See Subcommittee on Housing and Community Planning, F i n a l Report, p. 89; H.M.S. Carver, Houses  for Canadians: A Study of Housing Problems in the Toronto Area (Toronto: University of Toronto Press, 1948), p. 28~. 1 4 Subcommittee on Housing and Community Planning, F i n a l Report, pp. 14-15. 1 4 C a l c u l a t e d from average annual income l e v e l s of $700. Ibid., p. 110. 1 4 4 I b i d . , p. 105. 1 4 5 I b i d . , p. 93. 75 households inhabiting converted stores, garages, f a c t o r i e s , deserted o f f i c e buildings, and boats and boat houses lacking sewage f a c i l i t i e s and water supply. Though urban households of a l l income levels were affected by the wartime housing shortage, low-income renters, whose lack of f i n a n c i a l resources precluded many shelter options, f e l t i t most keenly. Home ownership, for example, continued to be a dream for many. 1 4 6 According to Dominion Bureau of S t a t i s t i c s (DBS) figures, 65.5% of a l l urban male heads of.households earned $1,500 per year or less in 1 94 1 . 1 4 7 In the same year, however, the average value of e x i s t i n g owner-occupied homes in Canada's twenty-seven major c i t i e s was $3,640, 1 4 8 a price which rendered them inaccessible to those earning less than $1,600 per y e a r . 1 4 9 Even the t y p i c a l house financed under Part I of the 1938 National Housing Act (NHA), the lowest economic l e v e l for new owner-occupied housing in Canada, was valued at $3,950, 1 5 0 1 4 6The in a c c e s s i b i I t y of home ownership for a large proportion of the urban population was l i k e l y a major factor in r i s i n g urban tenancy rates. In urban centers of over 30,000 population more than 81% of dwellings were renter-occupied in 1941. Ibid., pp. 124-125. 1 4 7 W h i l e these figures do not necessarily measure t o t a l household income, a 1937-38 DBS study indicated that earnings of male heads of households accounted for 92.4% of t o t a l household income across the whole income range. Marsh, Report on Social  Security, pp. 22-23. 1 4 8Subcommittee on Housing and Community Planning, F i n a l Report, p. 15. 1 4 C a l c u l a t e d using the 2.25 times annual income rule of thumb. 1 5°Subcommittee on Housing and Community Planning, F i n a l Report, p. 15. 76 rendering such houses inaccessible to wage-earners below the $1,750 annual income figure. In addition, new private sector rental housing continued to be too c o s t l y for lower- and increasingly even middle-income renters. As stated above, at 20% of income, the lower one-third of urban tenants could afford rent levels of no more than $12 per month in 1941, while the middle one-third was li m i t e d to $23 per month. 1 5 1 Yet, $25 was the minimum f i n a n c i a l recovery rent which could render new, good quality rental housing a reasonable commercial proposition for landlords and b u i l d e r s . 1 5 2 Moreover, low-income renters were the least able to afford the i n f l a t e d prices on e x i s t i n g rental housing. The options l e f t to lower-income renters faced with the shortage of adequate and affordable rental housing were those outlined in Chapter 2 - to overspend for housing or to overcrowd in obsolete housing which continued, due to demand, to command a rental value. Indeed, there i s plenty of evidence which suggests an unmistakable negative relationship between income and both proportion of income required for rent and poor qua l i t y h o u s i n g . 1 5 3 According to the 1944 report of the federal 1 5 1Based on average annual income levels of $700 and $1,389 respectively. Subcommittee on Housing and Community Planning, F i n a l Report, p. 110; Marsh, "Principles of Low-Rent Housing," Public A f f a i r s 10 (1947):235. 1 5 Subcommittee on Housing and Community Planning, F i n a l Report, p. 119. 1 5 3 I b i d . , p. 95; I l l i n g , Housing Demand, p. 110. 77 Subcommittee on Housing and Community Planning, f o r example, 89% of low-income urban tenants i n 1941 were paying i n excess of 20% of income f o r housing, compared to 50% of middle-income t e n a n t s . 1 5 ' As w e l l , the rate of overcrowding among households ea r n i n g l e s s than $500 per year i n 1941 was 40%, compared to 12% f o r those e a r n i n g more than $2,000 per y e a r . 1 5 5 CMHC's 1956 B r i e f to the f e d e r a l Royal Commission on Canada's Economic Prospects noted the r e l a t i o n s h i p between income and housing q u a l i t y as w e l l i n s t a t i n g : "...the lowest-income households occupy the most o b s o l e t e pa r t of the housing stock...Any absolute shortage of housing tends to bear p a r t i c u l a r l y h e a v i l y on low-income households... The gr e a t e r p a r t of the d o u b l i n g up occurs amongst low-income f a m i l i e s and most d w e l l i n g s in need of r e p a i r and l a c k i n g e s s e n t i a l s a n i t a r y f a c i l i t i e s are occupied by low-income f a m i l i e s . " 1 5 6 3.2 Recommendations f o r A c t i o n and Government Response to the  Rental Problem During the War Given the p o t e n t i a l negative impact of the urban housing shortage on Canada's a b i l i t y to produce war equipment and s u p p l i e s , and i n a dramatic departure from i t s pre-war p a t t e r n of h e s i t a n t and i n d i r e c t i n t e r v e n t i o n i n the housing market, the f e d e r a l government took d e c i s i v e a c t i o n on the wartime r e n t a l problem by implementing a number of unprecedented and d i r e c t l y 1 5"Subcommittee on Housing and Community Planning, F i n a l Report, p. 14. 1 5 5 I b i d . , p. 93. 1 5 6 C e n t r a l Mortgage and Housing C o r p o r a t i o n , B r i e f to Royal  Commission, p. 24. 78 interventionist measures. The most remarkable was the creation in February 1941 of a federal crown corporation, Wartime Housing Limited (WHL). The function of the corporation, which was created under the War Measures Act, was to engage in the direct construction or purchase, operation and management of temporary rental housing for urban war-related i n d u s t r i a l workers and their families. Accordingly, i t was given both powers to expropriate private land and purchase municipal land, and p r i o r i t y on scarce building materials. Between 1941 and 1944, WHL spent $50 M i l l i o n to construct 17,190 workers' dwellings and a number of support structures such as schools and community c e n t e r s . 1 5 7 Other elements of the government's d i r e c t l y interventionist wartime housing policy were designed to consolidate and cent r a l i z e control over the rental market, building supplies, and labour. Rent and eviction controls for example, were imposed in 1940 on both existing and new accommodation in a l l urban centers. Materials, labour and construction permits were also regulated. In 1942, housing r e g i s t r i e s were introduced to f a c i l i t a t e more ef f e c t i v e use of existing rental accommodation. As well, the Home Extension Plan, which guaranteed private loans to owners to convert single-family homes to multi-family use, was introduced in 1942. Because response to the plan was slow, the government i t s e l f intervened in conversion a c t i v i t i e s in 1943 with the Home Conversion Plan, which enabled i t to. lease, 1 5 7Wade, "Wartime Housing," pp. 43, 47. 79 convert, and sublet privately-owned buildings in urban centers. These direct measures were accompanied by a reduction in in d i r e c t federal p a r t i c i p a t i o n in the housing market. As a means of reserving f i n a n c i a l , material and manpower resources for the war e f f o r t , the federal government terminated the 1937 Home Improvement Plan and the unused rental provisions of Part II of the 1938 NHA in 1941. However, i t continued, at a much reduced l e v e l , i t s lending operations for owner-occupied housing under the same A c t . 1 5 8 The creation of WHL and the adoption of the other measures outlined above represented the f i r s t s i g n i f i c a n t direct federal foray into the housing f i e l d . 1 5 9 Whereas the housing acts of the 1930's had r e l i e d on the private sector for housing provision and had been designed to support the market, the measures of the early 1940's were designed either to circumvent the market or to regulate i t . Given the strength of the free enterprise philosophy and the view of housing provision as a private sector r e s p o n s i b i l i t y , there was bound to be opposition to the government's actions. Those who favoured a l a i s s e z - f a i r e approach towards the economy and who clung to their f a i t h in the a b i l i t y of the private sector to supply housing under normal 1 5 8 A s s i s t a n c e to owner-occupied housing f e l l from $51 m i l l i o n between 1935 and 1940 to $26 m i l l i o n between 1941 and 1944. Ibid., p. 43 1 5 9 T h e devastation of 325 acres of working-class housing in Halifax as the result of a 1917 explosion in the harbour did result in federal emergency provision of public housing units, but i t was a one-shot and isolated action. 80 circumstances were p a c i f i e d only by the e x p l i c i t l y temporary nature of both the intervention and of the WHL. units themselves,. The r e d e f i n i t i o n of the rental problem as a "war problem" and national emergency which could be best addressed through the use of wartime emergency powers also ensured that the provinces, who lacked the f i n a n c i a l resources to cope with the problem at any rate, not only acquiesced in but a c t i v e l y encouraged this federal incursion into a f i e l d which c l e a r l y lay within p r o v i n c i a l j u r i s d i c t i o n . The units constructed by WHL did l i t t l e to a l l e v i a t e the low-rental problem, whatever the corporation's successes in helping to reduce the absolute s h o r t f a l l of rental d w e l l i n g s . 1 6 0 Although the press and CD. Howe, the federal Minister responsible for WHL, referred to the units as low-rental, the fact that the corporation was required to recoup i t s costs meant rent levels in the units ranged from $27 to $37 per month. 1 6 1 These rent l e v e l s rendered the units inaccessible to low-income renters limited to $12 per month. The units were more suited to, and indeed did house, the moderate-income tenant enjoying stable employment in the war i n d u s t r i e s . 1 6 2 Nor was the number of units produced by WHL, even had they been low-rental, nearly enough to 1 6 0 T h e 17,190 units constructed by WHL between 1941 and 1944 represented 11% of r e s i d e n t i a l completions during the period. (See Table 9 below.) 1 6 1 C a r v e r , "Housing Needs and Community Planning," Canadian  Welfare 24 (January 1949):38. 1 6 2Marsh, " P r i n c i p l e s , " p. 235. 81 meet the need. F i n a l l y , no special provision was made in WHL units for large families who tend to suffer most from, overcrowding and a f f o r d a b i l i t y problems. 1 6 3 O p t i m i s t i c a l l y sensing prospects for peace, the federal government turned some of i t s attention in 1941 towards planning for the t r a n s i t i o n back to peace-time. An Advisory Committee on Reconstruction was appointed in that year to investigate means to counteract post-war economic i n s t a b i l i t y . In 1943, a Subcommittee on Housing and Community Planning, under the chairmanship of Professor C.A. Curtis, was established with the following terms of reference: "To review the exi s t i n g l e g i s l a t i o n and administrative organization r e l a t i n g to housing and community planning, both urban and r u r a l , throughout Canada, and to report regarding such changes in l e g i s l a t i o n or modification or organization and procedure as may be necessary to ensure the most effe c t i v e implementation of what the Subcommittee considers to be an adequate housing program for Canada during the years immediately following the war." 1 6" The Subcommittee submitted i t s f i n a l report, known as the Curtis Report, in March, 1944. In the report, the Subcommittee stressed the c r u c i a l role a comprehensive housing construction program could play in domestic post-war plans given i t s potential to s t a b i l i z e the economy and to provide employment. The report also reiterated concerns expressed in the housing reports of the 1930's regarding Canada's negligence in providing 1 6Subcommittee on Housing and Community Planning, F i n a l Report, p. 1 5. 1 6 " l b i d . , p. 4. 82 government a s s i s t a n c e f o r housing as a matter of welfare and p u b l i c concern. I t suggested that an e f f e c t i v e housing p o l i c y must be m u l t i - f a c e t e d , encompassing home ownership, r e h a b i l i t a t i o n , slum c l e a r a n c e and l o w - r e n t a l housing i n order to a s s i s t the p r i v a t e market to provide a f f o r d a b l e housing and to a s s i s t those unable to a f f o r d even s u b s i d i z e d p r i v a t e s e c t o r u n i t s . The C u r t i s Report recommended a minimum urban c o n s t r u c t i o n t a r g e t of 50,000 to 60,000 u n i t s per' year f o r the f i r s t post-war decade to s a t i s f y an estimated need f o r 535,000 to 606,000 new urban u n i t s . 1 6 5 The estimate was based on e l i m i n a t i o n of only one-half of the e x i s t i n g urban b a c k l o g , 1 6 6 on the replacement of s c a t t e r e d , o b s o l e t e houses apart from those i n b l i g h t e d and slum areas, and on meeting a d d i t i o n a l annual requirements d u r i n g the decade. A more extended a t t a c k on o b s o l e t e and overcrowded d w e l l i n g s and on the backlog, or a higher s t a n d a r d f o r new housing requirements would have r e q u i r e d a program of even l a r g e r dimensions. As Table 9 i n d i c a t e s , however, annual urban completions had exceeded 50,000 u n i t s o n l y twice i n the pr e v i o u s two decades, and had averaged only 37,000 u n i t s over the p e r i o d . A l a r g e r program, t h e r e f o r e , would have been c l e a r l y u n r e a l i s t i c . 1 6 5 I b i d . , pp. 13, 147, 152. 1 6 6 T h e t o t a l urban backlog i n c l u d e d the replacement of substandard u n i t s i n slum areas, and the e l i m i n a t i o n of overcrowding and the i n h e r i t e d c o n s t r u c t i o n d e f i c i t . I b i d . , p. 12. Urban' Residential Starts and Completions. Canada. 1921-1949 Y e a r S t a r t s 2 C o m p l e t i o n s 1 2 1921 3 5 . 0 2 8 . 0 1922 4 0 . 7 35 .1 1923 3 9 . 5 3 6 . 3 1924 3 7 . 6 3 0 . 9 1925 4 5 . 5 3 7 . 0 1926 5 2 . 4 4 6 . 5 1927 5 4 . 7 4 6 . 6 1928 6 0 . 4 5 2 . 7 1929 5 7 . 5 5 4 . 9 1930 4 8 . 7 4 4 . 9 1931 3 9 . 4 4 0 . 5 1932 2 4 . 9 2 3 . 6 1933 2 2 . 8 18 .3 1934 2 8 . 3 2 2 . 9 1935 3 3 . 9 2 7 . 5 1936 4 1 . 0 3 2 . 9 1937 45 .1 4 0 . 6 1938 4 3 . 9 3 5 . 7 1939 4 8 . 9 4 2 . 7 1940 5 2 . 6 4 3 . 4 1941 5 1 . 2 4 8 . 0 1942 4 0 . 0 3 8 . 5 1943 36 .1 3 3 . 4 1944 4 1 . 5 3 9 . 3 1945 5 5 . 2 4 4 . 9 1946 6 4 . 4 63 .1 1947 7 4 . 3 75 .1 1948 9 0 . 2 7 7 . 2 1949 9 0 . 5 9 ? .7 1. Urban - n o n - f a r m . 2 . S t a r t s a r e f o r Canada a s a w h o l e . CMHC, C a n a d i a n H o u s i n g S t a t i s t i c s . O t t a w a , V a r i o u s Y e a r s . F i r e s t o n e , O . J . (1951) R e s i d e n t i a l Rea l E s t a t e In C a n a d a . T o r o n t o : U n i v e r s i t y o f T o r o n t o P r e s s , p p . 2 6 8 , 3 9 4 . U r q u h a r t , M . C . & K . A . H . B u c k l e y , (1965) H i s t o r i c a l S t a t i s t i c s  o f C a n a d a . T o r o n t o : M a c M i l l a n , S e r i e s R 1 3 3 - 1 3 9 . 84 The C u r t i s Report p a r t i c u l a r l y emphasized the need f o r low-r e n t a l d w e l l i n g s , n o t i n g that as Part II of the 1938 NHA had never been used, "with very few e x c e p t i o n s . . . the c o n c l u s i o n s reached by the [1935] Parliamentary Committee are as v a l i d f o r r e n t a l housing i n 1943 as they were i n 1935, the s i t u a t i o n having become a c t u a l l y worse i n most c i t i e s than i t was ten years a g o . " 1 6 7 S t r e s s i n g that a l a r g e and long-range program of l o w - r e n t a l housing was an inescapable c o n c l u s i o n from the a v a i l a b l e f a c t s , 1 6 8 the r e p o r t recommended that at l e a s t 15,000 u n i t s of the 50,000 to 60,000 y e a r l y t a r g e t be l o w - r e n t a l . 1 6 9 I t a d v i s e d that the u n i t s be c o n s t r u c t e d , operated and managed by L o c a l Housing A u t h o r i t i e s , i n the form of m u n i c i p a l agents, p r i v a t e l i m i t e d d i v i d e n d c o r p o r a t i o n s , or c o - o p e r a t i v e a s s o c i a t i o n s . I t a l s o recommended that the L o c a l A u t h o r i t i e s be a s s i s t e d by low-i n t e r e s t f e d e r a l loans c o v e r i n g 90% of the c a p i t a l c o s t s of low-r e n t a l c o n s t r u c t i o n , and by m u n i c i p a l l y - s u p p l i e d l a n d . To encourage m u n i c i p a l c o - o p e r a t i o n and p a r t i c i p a t i o n i n the program, the r e p o r t advised f e d e r a l grants to a s s i s t i n the survey and design of c l e a r e d slum areas. I t a l s o recommended f e d e r a l c o n t r i b u t i o n s to a rent r e d u c t i o n fund to keep rent l e v e l s i n l o w - r e n t a l u n i t s below e x i s t i n g market and f i n a n c i a l recovery rent l e v e l s - a recommendation which c l e a r l y had a s o c i a l w e l f a r e purpose. F i n a l l y , i t advised the p r o j e c t s be 1 6 7 I b i d . , p. 35. 1 6 8 I b i d . , p. 193. 1 6 9 I b i d . , p. 152. 85 provided with s k i l l f u l on-site managers and community f a c i l i t i e s such as schools and playgrounds. In addition to i t s proposals for home ownership, home improvement, and slum clearance and low-rental housing, the Curtis Report also recommended the nationwide adoption of a standardized building code, measures to reduce housing costs, and town planning practices. It also recommended that a l l federal l e g i s l a t i o n pertaining to housing be amalgamated into one statute, and be administered by one central federal agency. The Curtis Subcommittee was not the sole advocate for government action on low-rental problems in the early 1940's. In fact, i t s concerns regarding the low-rental s i t u a t i o n p a r a l l e l e d concerns voiced by Leonard Marsh in his Report on Social  Security for Canada submitted to the same Advisory Committee one year e a r l i e r . In addition, a large low-rental and slum clearance lobby composed of community groups- such as the newly-established Ci t i z e n s ' Housing and Planning Association, women's organizations, professional associations, service clubs, Boards of Trade, s o c i a l welfare associations and churches had emerged. They were supported in their lobby at the p o l i t i c a l l e v e l by the Co-operative Commonwealth Federation and the Labour Progressive (formerly the Communist) Party. Several months after the submission of the Curtis Report, the federal government replaced the 1938 NHA with the 1944 NHA. The s u b t i t l e of the 1944 Act c l e a r l y indicated i t s intended role 86 i n smoothing the t r a n s i t i o n from a war-based economy to a peace-time economy, and i n a v e r t i n g a post-war d e p r e s s i o n such as had o c c u r r e d i n 1918. I t read: "An Act to Promote the C o n s t r u c t i o n of New Houses, the Repair and Modernization of E x i s t i n g Houses, the Improvement of Housing and L i v i n g C o n d i t i o n s , and the Expansion of Employment i n the Post-War P e r i o d " . 1 7 0 The 1944 Act was the most comprehensive to date, and c o n t a i n e d p r o v i s i o n s f o r home ownership, r e n t a l housing, r u r a l housing, home improvement and exte n s i o n , and housing r e s e a r c h and community p l a n n i n g . In Part I, the f e d e r a l p r o p o r t i o n of loans t o owner-occupied housing was in c r e a s e d from 20 to 25%, the i n t e r e s t r a t e was reduced, and longer a m o r t i z a t i o n p e r i o d s were p e r m i t t e d f o r houses s i t u a t e d i n areas p r o t e c t e d by community p l a n n i n g and zoning. In a d d i t i o n , the e n t i r e loan fund was i n c r e a s e d to $100 m i l l i o n , i n c l u s i v e of that p o r t i o n a l r e a d y expended on DHA and 1938 NHA u n i t s . P a r t II of the Act expanded the t o t a l r e n t a l loan fund e s t a b l i s h e d under the 1938 NHA from $30 m i l l i o n to $50 m i l l i o n . Under S e c t i o n 8 of the Act, i n d i v i d u a l r e n t a l developers were e l i g i b l e f o r twenty year loans c o v e r i n g 80% of the l e n d i n g value of p r o j e c t s u n l e s s the p r o j e c t was s i t u a t e d i n an area p r o t e c t e d by community plann i n g and zoning, i n which case the a m o r t i z a t i o n p e r i o d i n c r e a s e d to t w e n t y - f i v e years. More favo u r a b l e terms p r o v i d i n g f o r f i f t y year loans at 3% c o v e r i n g 90% of l e n d i n g 1 7 0 S t a t u t e s of Canada, The N a t i o n a l Housing Act, 1944, 8 & 9 George VI, ch. 46. 8 7 value were offered under Section 9 to limited dividend corporations constructing new or converting e x i s t i n g dwellings into low-rental units. The corporations were also e l i g i b l e to receive rent reduction contributions from p r o v i n c i a l , municipal and s o c i a l agencies, trusts and individuals. Provision was also made under Section 11 for l i f e insurance companies interested in investing in low- and moderate-rental housing with a guaranteed return of 2.5%. 1 7 1 Part IT of the 1944 NHA also provided a federal fund of $20 m i l l i o n to a s s i s t municipalities in clearing and replanning, or r e h a b i l i t a t i n g and modernizing slums and blighted areas. The grants were conditional upon the sale of the land to limited dividend corporations or l i f e insurance companies for low- and moderate-rental construction, and were to cover one-half of the amount by which the cost of acquiring and clearing the land exceeded the price obtained from the sale. They were also conditional upon pr o v i n c i a l enabling l e g i s l a t i o n . The 1944 NHA, which p a r a l l e l e d many of the Curtis Report recommendations, f e l l far short of the recommendations for a comprehensive low-rental program in several important areas. It did not define "low-income" or set requirements for monitoring rent and income l e v e l s . It did not make provision for a federally-financed rent reduction fund to bridge the gap between 1 7 1 S e e Statutes of Canada, National Housing Act, 1944; Wade, "Wartime Housing," p. 60. 88 market and f i n a n c i a l recovery rent levels and affordable rents. It did not provide for on-site management or community f a c i l i t i e s . Most importantly, i t placed reliance for low-rental housing solely on private limited dividend corporations and private insurance companies, excluding municipal a u t h o r i t i e s . In doing so, the 1944 NHA reasserted the federal government's in d i r e c t , market-oriented housing policy of the 1930's, and renewed the pre-war committment to supporting private enterprise. Howe defended th i s s h i f t in policy focus by explaining that in assuming an indirect role, the federal government could avoid the laborious process of working out the municipal-provincial-federal partnership which would otherwise be required in the implementation of a low-rental scheme, and could make an early start in tackling the housing problem. 1 7 2 3.3 The Rental Problem in the Post-War Years Despite Howe's optimism regarding the potential of the 1944 NHA to a l l e v i a t e rental problems, the rental situation deteriorated in the immediate post-war years. Demographic factors played a large role, in that demobilization and high post-war rates of immigration, family formation, and urbanization exaccerbated the urban rental shortage. As well, because of the shortage, the removal of scattered obsolete houses from c i r c u l a t i o n and large-scale slum clearance programs 1 7 2C.D. Howe, "Meeting Canada's Housing Needs," Public A f f a i r s 10 (1947):218. 89 were di s c o u r a g e d . Consequently, many rente r households continued to r e s i d e i n the poorest housing a v a i l a b l e . The most s i g n i f i c a n t f a c t o r i n the p e r s i s t e n c e of the r e n t a l problem, however, was the nature of p r i v a t e s e c t o r c o n s t r u c t i o n a c t i v i t y i n the post-war years. Post-war p r i v a t e r e s i d e n t i a l c o n s t r u c t i o n got o f f to a slow s t a r t , hampered by competition f o r scarce b u i l d i n g m a t e r i a l s and labour and by the o b s o l e t e b u i l d i n g p r a c t i c e s of an i n d u s t r y which had e s s e n t i a l l y l a i n dormant f o r a g e n e r a t i o n . Given the post-war surge i n the urban p o p u l a t i o n , the u n i t s c o n s t r u c t e d between 1945 and 1947 d i d l i t t l e more than keep pace with new demand. By 1947, however, many of the problems had been overcome and p r i v a t e r e s i d e n t i a l c o n s t r u c t i o n was proceeding at an almost unprecedented r a t e . As the data i n Table 9 i n d i c a t e , average annual s t a r t s jumped from 46,500 u n i t s during the war years to 79,850 in the post-war years. The high l e v e l s of c o n s t r u c t i o n d i d l i t t l e , however, to ease r e n t a l and e s p e c i a l l y l o w - r e n t a l problems f o r a number of reasons. F i r s t l y , although the 1944 NHA had been intended to encourage the p r o d u c t i o n of a l l types of housing,, r e n t a l housing represented only a small f r a c t i o n of post-war p r o d u c t i o n . Higher c o n s t r u c t i o n c o s t s 1 7 3 d i c t a t e d that i n v e s t o r s t a r g e t a higher 1 7 C o n s i d e r i n g the f a c t o r s of both labour and m a t e r i a l s , the c o s t of b u i l d i n g at the end of 1947 was about 80% higher than i t had been i n 1939, and the c o s t s of new houses t o t a l l y out of p r o p o r t i o n to general p r i c e and wage l e v e l s . Carver, Houses for  Canadians, p. 10. 90 income market in order to maintain their l e v e l of returns, and given the generally lower incomes of renter households and the constraints of rent controls, suburban single-family dwellings for owner-occupation flooded the housing market in the post-war p e r i o d . 1 7 " Indeed, at the end of 1947, detached single-family dwellings represented more than 80% of a l l units under c o n s t r u c t i o n . 1 7 5 The economics of rental investment were so poor that not even limited dividend corporations were attracted to rental development in the post-war period. Indeed, Housing Enterprises of Canada Limited, a li m i t e d dividend corporation formed in 1946 by a number of insurance companies, and which received the majority of the financing offered under Part II of the 1944 NHA, 1 7 6 constructed only 3,300 units across Canada in i t s limited l i f e t i m e . 1 7 7 Moreover, many existing rental units were sold off for owner-occupation. 1 7 8 Despite their price, the demand for owner-occupied units was high given the deprivation 17"Home ownership remained inaccessible to most low-income households. With only one-third of Canadians earning more than $2,500 per year, the average modest single-family home s e l l i n g for $5,000 was beyond the means of a great majority of Canadians, and c e r t a i n l y of low-income Canadians. Marsh, "P r i n c i p l e s , " pp. 234-235. 1 7 5 C e n t r a l Mortgage and Housing Corporation, Housing in Canada:  A Factual Summary, 9 vols. (Ottawa: CMHC, Economic Research Di v i s i o n , 1946-1954), 3 (January 1948):9. 1 7 6 C e n t r a l Mortgage and Housing Corporation, Housing in Canada 2 (January 1947):14. 1 7 7Marsh, "The Economics of Low-Rent Housing," Canadian Journal  of Economics and P o l i t i c a l Science 15 (1949):30. 1 7 8Toronto, for instance, had 10,000 fewer rental units in 1946 than at the beginning of the war as landlords took advantage of an unrestricted sales market. Rose, Regent Park, p. 46. 91 during the depression and war years and the r i s i n g expectations of the prosperous post-war period. Canadian housing policy analyst Albert Rose suggests, in fact, that aspirations to home ownership "assumed the proportions of a national f e t i s h " in the post-war period, and c a r r i e d with them the notion that tenants constituted somewhat i n f e r i o r c i t i z e n s . 1 7 9 The second reason the high l e v e l s of post-war r e s i d e n t i a l construction f a i l e d to a l l e v i a t e the low-rental problem was that the few new rental units produced were beyond the f i n a n c i a l capacity of low-income renters. Even Housing Enterprises of Canada Limited, which engaged in rental development through the low-rental provisions of the 1944 NHA, found i t necessary to rent i t s units for $47 to $60 per month, 1 8 0 - an indication that even assisted private sector developers could not bridge the gap between market and f i n a n c i a l recovery rent levels and rent lev e l s affordable to low- and even moderate-income renters. Indeed, Marsh noted in a 1950 a r t i c l e : "Experience has now shown that the limited-dividend corporation i s c e r t a i n l y not able to supply anything better than moderately high rental housing. Low-rental housing, which involves a subsidy and requires public management, c a l l s for the i n s t i t u t i o n of the Housing A u t h o r i t y . " 1 8 1 1 7 9 I b i d . , p. 18. 1 8 0Marsh, " P r i n c i p l e s , " p. 235. As noted above, low-income renters could afford levels of no more than $12 per month, and middle-income renters up to $23 per month. 1 8 1Marsh, Rebuilding a Neighbourhood: Report on a Demonstration  Slum Clearance and Urban Rehabilitation Project in a Key Central  Area in Vancouver (Vancouver: University of B r i t i s h Columbia, 1950), p. i v . 92 A 1948 a r t i c l e in Saturday Night was even more c r i t i c a l of the results of the Limited Dividend program, noting that Housing Enterprises Limited had been compelled to abandon i t s "low-rental" program in 1947 because of i t s i n a b i l i t y to provide for any but the top 5% of the income s c a l e . 1 8 2 Moreover, the " f i l t e r i n g " process did not a l l e v i a t e the low-rental problem. In the f i r s t place, the volume of dwellings which f i l t e r e d down was i n s u f f i c i e n t to make a great impact on the low-rental situation because new construction represented only 1% to 2% of t o t a l s t o c k , 1 8 3 because the construction boom served primarily to relieve overcrowding and doubling-up, and because the increased supply of middle- and upper-income units simply induced additional demand among those income groups for second homes. 1 8" Secondly, the rental value of those units which did f i l t e r down did not reduce s u f f i c i e n t l y to render them affordable to low-income households. 1 8 5 Thirdly, f i l t e r i n g was, at best, a slow and protracted process and could not meet 1 8 2Benjamin Higgins, "Better Strategy and Tactics to Win the Housing War," Saturday Night, 14 February 1948, p. 6. 1 8 3Hulchanski, Role of Rent Regulations, p. 41. 1 8 U S e e I.R. S i l v e r , Housing and the Poor, Working Paper A.71.2 (Ottawa: Ministry of State for Urban A f f a i r s , 1971), p. 192; D.V. Donnison, "Housing Problems and P o l i c i e s : An Introduction," in The Right to Housing, ed. Michael Wheeler (Montreal: Harvest House, 1969), p. 41. 1 8 5 S e e S i l v e r , Housing and the Poor, p. 192; Carver, Houses for  Canadians, pp. 94, 96, 98. 93 increased demand among low-income households very q u i c k l y . 1 8 6 F i n a l l y , as discussed in Chapter 2, the quality, of many of the units which did fi.l t e r down was seriously substandard. 3.4 Recommendations for Action and Government Response to the Rental Problem in the Post-War Years With the deterioration of the rental situation in the post-war years, the low-rental and slum clearance lobby i n t e n s i f i e d . A rash of reformist a r t i c l e s and studies in the late 194'0's stressed the costs of further inaction, in both s o c i a l and economic t e r m s . 1 8 7 Public investment in low-rental housing, they noted, was not money lost but an investment in morale, health, s o c i a l s t a b i l i t y , human productivity, and the l i v a b i l i t y of c i t i e s . 1 8 8 The studies also emphasized that housing deserved to be considered not simply as shelter, but as an element of s o c i a l p o l i c y . A d i s t i n c t i o n had to be made between the e f f e c t i v e demand for housing and the need for housing. Given the i n a b i l i t y of the private sector to supply low- and even moderate-rental units and thus to s a t i s f y housing need, the recourse to public housing and di r e c t rental subsidies was simply unavoidable. Given the r e l a t i v e l y weak tax base of the provinces and the proposed scale of the undertaking, the studies concluded that 1 8 6Hulchanski, Role of Rent Regulations, p. 41. 1 8 7The costs included the e f f e c t s of poor quality housing on slum dwellers themselves, public expenditures on health, welfare and protection services, d e c l i n i n g tax revenues in both* slum areas and contiguous properties, and the wasteful use of land and neglect and deterioration of inner-city areas as suburban sprawl leapfrogged. 1 8 8Marsh, Report on Social Security, p. 119. 94 the primary r e s p o n s i b i l i t y f o r f i n a n c i n g p u b l i c housing c l e a r l y l a y with the f e d e r a l g o vernment. 1 8 9 In response to the pr e s s u r e and to the d e t e r i o r a t i o n of the r e n t a l s i t u a t i o n , the f e d e r a l government stepped up i t s d i r e c t p a r t i c i p a t i o n i n the housing f i e l d . In 1945, i t e s t a b l i s h e d the Emergency S h e l t e r A d m i n i s t r a t i o n to c o n t r o l m i g r a t i o n i n t o c e r t a i n congested areas, and to survey, i n s p e c t , and convert vacant b u i l d i n g s i n t o temporary accommodation. In the same year, the o p e r a t i o n s of WHL were expanded, but with a new focus - more permanent, b e t t e r q u a l i t y r e n t a l u n i t s f o r demobilized servicemen and war v e t e r a n s . Between 1944 and 1947, WHL co n s t r u c t e d 14,323 u n i t s f o r e x - s e r v i c e m e n , 1 9 0 b r i n g i n g the c o r p o r a t i o n ' s t o t a l c o n t r i b u t i o n of r e n t a l u n i t s s i n c e 1941 to w e l l over 31,000. As the f o l l o w i n g statement by Howe i n a 1947 a r t i c l e i n d i c a t e s , the expansion of the f e d e r a l government's d i r e c t r o l e and p a r t i c u l a r l y of the a c t i v i t i e s of WHL was again r a t i o n a l i z e d as a response to e x t r a o r d i n a r y circumstances. Howe wrote: "The aspects of p o p u l a t i o n d i s l o c a t i o n and emergency that c h a r a c t e r i z e d the needs of many war workers and j u s t i f i e d the wartime housing program were a l s o apparent among war veterans as soon as l a r g e - s c a l e d e m o b i l i z a t i o n s t a r t e d . I t was decided, t h e r e f o r e , the Wartime Housing L i m i t e d should continue to b u i l d l o w - r e n t a l u n i t s , but now f o r veteran occupancy...From t h i s i t i s c l e a r that the extent of the Dominion's d i r e c t p a r t i c i p a t i o n i n p r o v i d i n g accommodation has been l i m i t e d i n scope and t r e a t e d as an e x t r a o r d i n a r y 1 8 9 S e e Marsh, " P r i n c i p l e s , " p. 237. 1 9 0Wade, "Wartime Housing," p. 6 1 . 1 9 1Howe, "Meeting Housing Needs," pp. 217-218. 95 provi sion . " 1 9 1 The expanded direct a c t i v i t y was only temporary, however. Within two years of the end of the war, the federal government began to revert to i t s former indir e c t and market-oriented role. It removed the last vestiges of i t s di r e c t role in 1948 with the dismantlement of WHL, v i r t u a l l y the only producer of rental h o u s i n g , 1 9 2 and the subsequent sale of WHL units to occupants. The resumption of i t s indirect role resulted in a number of measures designed to f a c i l i t a t e private sector housing provision. The government stimulated the production of building materials and channelled them to p r i o r i t y construction. It co-operated with the provinces in extending training in order to increase the supply of q u a l i f i e d building tradesmen. In 1945, i t created a federal crown corporation, Central Mortgage and Housing Corporation (CMHC) to provide mortgage discounting f a c i l i t i e s for loan and mortgage companies, 1 9 3 and "to stimulate the private sector to serve as large an area as possible of the housing f i e l d . " 1 9 4 The federal government's various housing programs were centralized under the Corporation, and the administration of the NHA transferred to i t from the National Housing Administration of the Department of Finance. In 1946, CMHC was authorized to make direct loans to primary industries to construct rental housing for their employees. In 1947, in 1 9 2 C a r v e r , Houses for Canadians, p. 8. 1 9 3 I b i d . , p. 5. 1 9"See Wade, "Wartime Housing," p. 150. 96 order to offset declining returns in the rental market, the federal government introduced a number of tax system subsidies for rental developers, including a double depreciation rate on rental units, subject to their rental at less than $70 per month. 1 9 5 In 1948, the diminishing balance method of depreciation was incorporated into a c a p i t a l cost allowance system. Also in 1948, the federal government p a r t i a l l y l i f t e d rent controls. In addition, a 1948 amendment to the 1944 NHA provided for rental insurance and empowered lenders to make larger loans to rental projects covered by insurance. A second 1948 amendment increased the maximum loan available for multi-family units. Given the federal decision to.continue to rely solely on the private sector for housing provision despite the sector's proven i n a b i l i t y to provide low-rental housing, one must question the government's commitment to resolving the low-rental problem. Federal o f f i c i a l s were not unaware of the serious situation in the rental sector - in 1946 Howe conceded in the House of Commons that the government must act to redress the d e f i c i e n c i e s of assisted private sector p r o d u c t i o n , 1 9 6 and in 1947 he acknowledged that the hard core of the housing problem, the low rental problem, had barely been touched. 1 9 7 Moreover, 1 9 5 C e n t r a l Mortgage and Housing Corporation, Housing in Canada 2 (April 1947):16. 1 9 6 S e e Carver, Houses for Canadians, p. 15. 1 9 7Howe, "Meeting Housing Needs," p. 221. 97 the federal government had c l e a r l y demonstrated i t s a b i l i t y to supply good qua l i t y rental housing economically and e f f i c i e n t l y through the operations of WHL, and in 1947 already had the intergovernmental machinery in place to undertake a permanent and comprehensive program of slum clearance and low-rental production. The problem was c l e a r l y one of p o l i t i c a l w i l l , although the federal government rat i o n a l i z e d i t s inaction by c i t i n g p r o v i n c i a l and municipal j u r i s d i c t i o n over housing. In his 1947 a r t i c l e , Howe maintained, for instance: "Since housing is a function of property and c i v i l r ights, a matter within the j u r i s d i c t i o n of p r o v i n c i a l and municipal governments, direct p a r t i c i p a t i o n by the Dominion in a housing program is circumscribed...Where the subsidization of low-rental housing i s necessary or desirable i t i s ri g h t l y a r e s p o n s i b i l i t y of municipal and pr o v i n c i a l a u t h o r i t i e s . " 1 9 8 Again, one is led to conclude that the real reasons behind federal inaction and the dismantlement of WHL and the sale of i t s units were the government's philosophy of non-competition with the private sector, i t s reverence of home ownership, and i t s b e l i e f the rental problem was temporary. Indeed, L.B. Smith, a noted housing analyst and neo-classical economist, acknowledges in his 1977 monograph on Canadian housing policy that the major theme of government policy between 1935 and 1954 was to encourage the private sector rather than to replace i t with dir e c t government involvement. 1 9 9 As well, Howe predicted in 1947 that the low-rental s i t u a t i o n would improve once 1 9 8 I b i d . , pp. 217, 220. 1 9 9 S m i t h , Anatomy of a C r i s i s , p. 152. 98 construction costs had s t a b i l i z e d at a l e v e l where developers could expect to recover their investment and a reasonable p r o f i t . 2 0 0 Given federal inaction on slum clearance and low-rental housing provision, one municipality assumed r e s p o n s i b i l i t y for public housing. In 1947, the Housing Authority of Toronto, a municipally-owned limited dividend company and the f i r s t l o c a l housing authority in Canada, was established to construct and operate the Regent Park Housing Project, Canada's f i r s t public housing project. The Authority u t i l i z e d the federal grant available through the 1944 NHA to clear and acquire the very slum s i t e which had been surveyed and publicized by the 1934 Bruce Committee, and also received a p r o v i n c i a l grant of $1000 per unit to a s s i s t in the construction of 1,056 u n i t s . 2 0 1 The f i r s t residents were admitted to Phase One of the project, Regent Park North, in early 1949. With the Toronto public housing experiment as a model, in late 1949 the federal government passed a s i g n i f i c a n t amendment to the 1944 NHA which expressly acknowledged the need for dir e c t government intervention to meet low-rental needs. The amendment, for the f i r s t time, acknowledged housing as a s o c i a l , as well as economic, good, and ensured that a f t e r more than twenty years in the forefront of public policy discussion, the low-rental 2 0 0Howe, "Meeting Housing Needs," p. 219.. 2 0 1Rose, Regent Park, p. 76. 99 problem f i n a l l y became the object of more than token attention. Under the new Section 35 of the NHA, a federal-provincial partnership, charged with acquiring and developing land for the construction of new low-income housing for sale or rent, was established. The c a p i t a l costs and the p r o f i t s or losses of the projects were to be shared on a 75-25% basis by the federal government and p r o v i n c i a l government or i t s agent. Ownership of the units was to be joint as well. Although the amendment eschewed the term "public housing", the federal contribution to the operating costs of such projects ensured their a b i l i t y to house low-income families who were unable to pay market and f i n a n c i a l recovery rent l e v e l s . Like the 1938 low-rental and the 1944 slum clearance schemes, federal financing was-dependent upon p r o v i n c i a l enabling l e g i s l a t i o n and l o c a l i n i t i a t i v e and management. The amendment was hailed as a milestone in Canadian housing policy and housing reformers looked to the 1950's with optimism that at l a s t the housing needs of low-income renters would be s a t i s f i e d . 100 CHAPTER 4 URBAN RENTAL PROBLEMS AND POLICIES, 1949-1964 The housing c o n s t r u c t i o n boom which began in the immediate post-war years continued, with minor f l u c t u a t i o n s , w e l l i n t o the 1960's. F u e l l e d by high employment and wage l e v e l s , f a v o u r a b l e d e m o g r a p h i c s , 2 0 2 r a p i d u r b a n i z a t i o n , 2 0 3 and the emergence of l a r g e s p e c i a l i z e d development companies to r e p l a c e the t r a d i t i o n a l small b u i l d e r - c a r p e n t e r , housing p r o d u c t i o n doubled in the f i r s t post-war d e c a d e . 2 0 " During the 1950's and 1960's, in f a c t , r e s i d e n t i a l c o n s t r u c t i o n represented a g r e a t e r p r o p o r t i o n of Gross N a t i o n a l Expenditure (GNE) than ever 2 0 2 T h e favourable demographics i n c l u d e d c o n t i n u i n g h i g h r a t e s of p o p u l a t i o n growth, immigration, and household formation. Though net f a m i l y formation slowed towards the l a t e 1950's, the i n c r e a s i n g growth rate of non-family households maintained a h i g h l e v e l of demand for new housing. 2 0 3 I n the l a t t e r h a l f of the 1950's, 73% of a l l p o p u l a t i o n growth g r a v i t a t e d to the m e t r o p o l i t a n and major urban a r e a s . By 1961, 45% of Canadians l i v e d i n the seventeen m e t r o p o l i t a n area s , and 33% l i v e d in the f i v e l a r g e s t c i t i e s . James A. Murray, "Search f o r S h e l t e r , " Canadian A r c h i t e c t 10 (1965):38. 2 0 " C e n t r a l Mortgage and Housing C o r p o r a t i o n , B r i e f to Royal:  Commission, p. 12. 2 0 5Whereas housing expenditure had never exceeded 4% of GNE between 1926 and 1948, i t had r i s e n to 5.6% of GNE by 1955. Dube, Howes, and McQueen, Housing and S o c i a l C a p i t a l , p. 44-55. 101 b e f o r e . 2 0 5 A c c o r d i n g to the 1956 b r i e f p r e s e n t e d by C e n t r a l Mortgage and Housing C o r p o r a t i o n (CMHC) t o the R o y a l Commission on Canada's Economic P r o s p e c t s , the n a t i o n a l economy and the b u i l d i n g i n d u s t r y d i s p l a y e d the p r o d u c t i v e c a p a c i t y t o meet Canada's h o u s i n g needs t o 1980. The b r i e f n oted: " P r o s p e c t s f o r new h o u s e b u i l d i n g over the next two decades and a h a l f a r e such as t o suggest t h a t the p r e s e n t i n d u s t r y , w i t h v i r t u a l l y no e x p a n s i o n , c o u l d meet the t a s k [of h o u s i n g C a n a d i a n s ] . " 2 0 6 Such o p t i m i s m was, u n f o r t u n a t e l y , not w a r r a n t e d . Even at r e c o r d l e v e l s , p r o d u c t i o n b a r e l y kept pace, f o r much of the p e r i o d , w i t h r i s i n g d e mand. 2 0 7 In f a c t , a 1957 s t u d y p r e p a r e d f o r the same R o y a l Commission e s t i m a t e d t h a t 3,700,000 new h o u s i n g u n i t s - or 154,000 per y e a r 2 0 8 - would be r e q u i r e d b e f o r e 1980 t o meet new needs, t o reduce o v e r c r o w d i n g , and t o p r o v i d e f o r a r e a s o n a b l e 3.3% vacancy r a t e . 2 0 9 The p h y s i c a l c a p a c i t y of t h e c o n s t r u c t i o n i n d u s t r y , however, was e s t i m a t e d a t 125,000 t o 135,000 u n i t s per y e a r . 2 1 0 Moreover, c h r o n i c s h o r t a g e s of mortgage inv e s t m e n t funds and s e r v i c e d l a n d t hroughout the 1950's t h w a r t e d a t t e m p t s by the b u i l d i n g i n d u s t r y 2 0 6 C e n t r a l Mortgage and Housing C o r p o r a t i o n , B r i e f t o R o y a l  Commission, p. 12. 2 0 7 C a r v e r , "Housing Needs," p. 35. 2 0 8 T h i s f i g u r e r e p r e s e n t s 3,700,000 d i v i d e d by 24 y e a r s . 2 0 9 D u b e , Howes, and McQueen, Housing and S o c i a l C a p i t a l , p. 53. 2 1 Canadian Congress of Labour, "Housing Act Inadequate," p. 93. 2 1 C e n t r a l Mortgage and Housing C o r p o r a t i o n , Annual R e p o r t , 1959 (Ottawa: CMHC, 1953- ), p. 8. 102 to f u r t h e r a c c e l e r a t e p r o d u c t i o n . 2 1 1 Thus l i t t l e progress was made i n e l i m i n a t i n g the severe post-war housing shortage, and the doubling-up and slum c o n d i t i o n s which accompanied i t . A 1963 a r t i c l e i n Canadian Welfare estimated, i n f a c t , t h at at l e a s t 25% of Canadian f a m i l i e s were p o o r l y housed and were paying d e a r l y f o r the housing they h a d . 2 1 2 Given the s e r i o u s n e s s of the s i t u a t i o n , a 1955 a r t i c l e i n Canadian Business warned: "The housing s i t u a t i o n i s becoming more acute i n s p i t e of the boom; and the job ahead of us i s f a r gr e a t e r than the one that l i e s b e h i n d . " 2 1 3 As evidence presented i n Chapter 3 i n d i c a t e s , severe housing shortages most s e r i o u s l y impact low- and moderate-income households - households who tend to be r e n t e r s . Consequently, housing q u a l i t y , supply and a f f o r d a b i l i t y problems p e r s i s t e d f o r many r e n t e r households throughout the 1950's and 1960's d e s p i t e the general p r o s p e r i t y of the times. 4.1 The Rental Problem The acute s h o r t f a l l of r e n t a l u n i t s of an accept a b l e minimum standard and approaching the f i n a n c i a l l i m i t s of low-and moderate-income households was c h r o n i c l e d i n the housing s t u d i e s and p e r i o d i c a l s , and at the h o u s i n g - r e l a t e d conferences 2 1 2 J o s e p h E. Laycock, "Your Stand on P u b l i c Housing," Canadian Welfare 39 (November-December 1963):252. 2 1 3 R . L . E d s a l l , "This Changing Canada: Back to C i t i e s and Apartments?" Canadian Business 28 (February 1955):65. 1 03 of the d a y . 2 1 4 A 1949 a r t i c l e in the Financial Post suggested that a shortage of rental housing, p a r t i c u l a r l y in the low to medium rent range, was a general condition in the larger Canadian c i t i e s , 2 1 5 while a 1955 a r t i c l e in the Monetary Times documented the impossibility of finding any type of rental unit in Winnipeg, Regina, Saskatoon, and Edmonton. 2 1 6 Moreover, average rentals for available units in the larger c i t i e s ranged from $75 to $155 per month in the early 1950's, 2 1 7 although 53% of urban household heads earned less than $2,500 per y e a r , 2 1 8 and were thus unable, according to the 20% of income "rule of thumb", to afford rent levels of more than $42 per month. Indeed, in 1951 and again in 1964, CMHC o f f i c i a l s estimated the 2 1"See Rose, Regent Park, pp. 13, 15; P.R.U. Stratton, "Why Subsidized Rental Housing?" Canadian Welfare 28 (December 1952):3; W.S. Goulding, "Housing for Older People," Canadian  Welfare 28 (December 1952):38; Marsh, "Economics," p. 17; O.J. Firestone, "How Housing Shortage Snowballing," Financial Post, 22 September 1945, p. 13; F. Marrocco, "The Housing Problem," Trades and Labour Congress Journal 32 (September 1953):33; Vancouver Housing Association, Houses for A l l : Proceedings of  the Housing Conference, Hotel Vancouver, January 19-20, 1954 (Vancouver: Vancouver Housing Association and B.C. Division of Community Planning Association of Canada, 1954), Foreward. 2 1 5 C l i v e Chattoe, "Rents to Rise Steeply, Many Face Evi c t i o n , " F i n a n c i a l Post, 30 A p r i l 1949, p. 1. 2 1 6"House and Apartment Construction Outbooms A l l Other Industries," Monetary Times 123 (January 1955):52. 2 1 7 S e e Hal Tracey, "Low-Rental Housing Can be P r a c t i c a l , " Saturday Night, 10 November 1951, p. 34; Chattoe, "Want to Rent Apartment? Here's Outlook," Financial Post, 29 A p r i l 1950, pp. 1,3. 2 1 C a n a d i a n Congress of Labour, "Housing Act Inadequate," p. 93. 2 1 9 S e e John R.Nicholson, "Our War on Poverty," Finaneial- Post, 13 June 1964, p. 6; "Across Canada: Amendments to the National Housing Act," Canadian Welfare 40 (September-October 1964): 229; Firestone, "Shortage Snowballing," p. 13; Stewart Bates, "Housing and the Government," Journal Royal Architectural  I n s t i t u t e of Canada 35 (July 1 9 5 8 ) : 2 6 1 . 104 number of households doubled-up to be 500,000 2 1 9 - most of them because of the shortage of affordable d w e l l i n g s . 2 2 0 As for rental q u a l i t y , housing standards for the majority of urban households undoubtedly improved between 1949 and 1964. 2 2 1 Nevertheless, severe problems remained in some geographic areas and for s p e c i f i c population g roups. 2 2 2 It was estimated in 1964, for instance, that i f provision were made for a reasonable vacancy rate, a t o t a l of 1,000,000 to 1,300,000 low-rental units were required for low-income and elde r l y households in need of more adequate and affordable h o u s i n g . 2 2 3 Since the 1,300,000 units were not forthcoming, low-income renters were forced to rely for accommodation on the converted single-family house, s t i l l , in the mid-1950's, the greatest source of low- and 2 2 0 S e e Dube, Howes, and McQueen, Housing and Social C a p i t a l , p. 48; Canadian Congress of Labour, "Housing Act Inadequate," p. 91 . 2 2 1 I n 1961, only 5.6% of a l l dwellings and 3.4% of urban dwellings were in need of major repair compared with 13.4% and 9.9%, respectively, in 1951. In addition, 90% of Canadian households were, according to the 1961 Census, enjoying exclusive use of a home. See S i l v e r , Housing and the Poor, p. 190; S.H. Pickett, "An Appraisal of the Urban Renewal Program in Canada," University of Toronto Law Journal 18 (1968):238; Central Mortgage and Housing Corporation, Annual Report, 1962, p. 6; Bates, "Housing and Government," p. 261; N.H. Lithwick, Urban Canada: Problems and Prospects (Ottawa: CMHC, 1970), p. 21? Smith, Housing in Canada: Market Structure and Policy  Performance, Research Monograph No. 2 of Urban Canada (Ottawa: CMHC, 1971), p. 10; Nicholson, "War on Poverty," p. 6. 2 2 2 I n 1961, 20% of the housing stock s t i l l lacked hot water and private bathing f a c i l i t i e s and 15% lacked modern t o i l e t s . See Nicholson, "War on Poverty," p. 6; "Across Canada: Amendments," p. 28. 2 2 3 J . Murray, "Search for Shelter," p. 43. Murray estimated that 35% to 40% of those units should be earmarked for the e l d e r l y . 105 moderate-rental housing. 2 2" Unfortunately, as suggested in Chapter 2, such accommodation was often of extremely low quality and ripe for clearance and redevelopment, lacking adequate plumbing, play areas, space, l i g h t and v e n t i l a t i o n . 2 2 5 Aside from the f a i l u r e of the 1950's building boom to rel i e v e the general housing shortage, there were two other major reasons why rental problems remained so serious in the 1950-64 period. F i r s t l y , r e l a t i v e l y l i t t l e rental housing was produced during the 1950's, by either the private sector or the public sector under the new Section 35 provisions of the National Housing Act (NHA). Secondly, the rental housing which was produced f a i l e d , for the most part, to s a t i s f y demand or the needs of lower-income households. A brief discussion of development a c t i v i t y in both the private and public sectors and the forces shaping i t may help to explain why t h i s was so. The Private Rental Sector. Although the 1949 Section 35 amendment to the NHA paved the way for the emergence of a public rental sector in Canada, the private sector continued, as Table 10 suggests, to dominate the rental housing market in the 1950's. Consequently, the limited production of rental housing between 1949 and 1964 stemmed primarily from that sector's continued concentration on the construction of single-family 2 2 1 tMarsh, "Economics," p. 26. 2 2 5 I n 1961, the lowest income one-third of tenants occupied 71% of a l l rental units needing major repairs. Dennis and Fish, Programs in Search of a Policy, p. 48. TanI ft 10 Rental Starts. By Initiating Sector Canada. 1949-1964 P r i v a t e P r i v a t e P u b l i c T o t a l S e c t o r S e c t o r R e n t a l S e c t o r Renta1 R e n t a l S t a r t s a s % R e n t a l Y e a r S t a r t s S t a r t s o f T o t a l S t a r t s 1 2 3 4 1949 3 2 , 8 6 8 2 4 , 8 7 5 7 5 . 7 7 , 9 9 3 1950 2 6 . 0 2 7 2 1 . 2 2 8 8 1 . 6 4 . 7 9 9 1951 18 ,565 16 ,346 8 8 . 0 2 , 2 1 9 1952 2 4 , 8 2 8 19 ,870 8 0 . 0 4 , 9 5 8 1953 29 ,881 2 8 , 0 2 6 9 3 . 8 1,855 1954 3 3 , 1 7 7 3 1 , 7 0 4 9 5 . 6 1,473 1955 3 5 . 1 2 3 3 3 . 8 4 8 9 4 . 5 1.975 1956 3 3 , 5 5 4 3 1 , 1 5 4 9 2 . 8 2 , 4 0 0 1957 36 ,251 3 3 , 5 4 8 9 2 . 5 2 , 7 0 3 1958 5 6 , 6 0 9 53 ,131 9 3 . 9 3 , 4 7 8 1959 4 4 , 3 4 0 4 2 , 8 6 5 9 6 . 7 1,475 1960 3 6 . 8 3 8 3 5 . 0 0 8 9 5 . 0 1.830 1961 4 6 , 1 0 0 4 3 , 3 2 2 9 4 . 0 2 , 778 1962 5 2 , 8 5 9 5 0 , 5 0 5 9 5 . 5 2 , 3 5 4 1963 6 9 , 5 8 7 67 ,521 9 7 . 0 2 , 0 6 6 1954 8 5 . 3 2 4 8 3 . 4 2 3 9 7 . 8 1.901 Soycca: CMHC, C a n a d i a n H o u s i n g S t a t i s t i c s . O t t a w a , V a r i o u s Y e a r s . 107 suburban u n i t s f o r owner-occupiers. As Table 11 i l l u s t r a t e s , f u l l y 70% of new housing p r o d u c t i o n i n the 1950's represented s i n g l e - f a m i l y d w e l l i n g s . 2 2 6 As i n the past, and as the data i n Table 12 i n d i c a t e , such d w e l l i n g s were beyond the f i n a n c i a l c a p a c i t y of a l a r g e p r o p o r t i o n of the p o p u l a t i o n . With the average new NHA-financed s i n g l e - f a m i l y house valued at $12,305 i n 1954, p o t e n t i a l buyers r e q u i r e d annual incomes of $4,900, a c c o r d i n g to the newly-accepted 2.5 times annual income " r u l e of thumb." 2 2 7 Yet 58%' of Canadian wage earners earned l e s s than $3,000 in 1 9 5 4 . 2 2 8 Even the l e a s t c o s t l y NHA u n i t i n 1954, a row house valued at $ 9,020, 2 2 9 was beyond the means of that s u b s t a n t i a l p o r t i o n of Canadian workers. Indeed, a 1954 estimate by the Canadian Congress of Labour (CCD suggested that o n e - t h i r d to one-half of a l l wage-earner f a m i l i e s c o u l d not a f f o r d the cheapest NHA house without denying other n e c e s s i t i e s of l i f e . 2 3 0 In 1957, i n f a c t , only 2% of NHA borrowers were from the lower o n e - t h i r d of the income s c a l e . 2 3 1 2 2 6 S e e a l s o C e n t r a l Mortgage and Housing C o r p o r a t i o n , Annual  Report, 1959, p. 7. 2 2 7 I n f l a t i o n a r y p ressures on r e a l e s t a t e were pushing the t r a d i t i o n a l 2 to 2.25 times annual income f i g u r e up to 2.5. Marrocco, "Housing Problem," p. 33. 2 2 8 C a n a d i a n Congress of Labour, "Housing Act Inadequate," p. 93. 2 2 9 I b i d . , p. 94. 2 3 0 I b i d . , p. 94. 2 3 1 W y l i e Freeman, "The Housing C r i s i s and Government Response," A r c h i t e c t u r e Canada 45 ( A p r i l 1968):69. T a h l o 11 Residential Completions by Type Canada. 1949-1964 S i ng Ie-Fam11 y M u l t i - -Fam i I y 1 T o t a l Comp e t i o n s Comp e t i o n s Y e a r C o m p l e t i o n s (un i t s ) * o f t o t a l (un i t s ) t o f t o t a l 1 2 3 4 5 1949 8 8 , 2 3 3 6 8 , 9 6 6 78 11 ,958 14 1950 8 9 . 0 1 5 6 8 . 6 8 5 77 12 .954 15 1951 8 1 , 3 1 0 6 0 , 3 6 6 74 13 ,376 17 1952 7 3 , 0 8 7 5 5 , 9 6 7 77 11 ,806 16 1953 9 6 , 8 3 9 6 8 , 9 1 6 71 2 0 , 2 0 9 21 1954 101,965 7 1 , 7 6 0 70 24 ,107 24 1955 127 .929 9 0 . 5 5 3 71 2 9 . 0 9 8 23 1956 135 ,700 9 5 , 6 5 6 71 2 8 , 1 7 2 21 1957 117,283 8 1 , 0 9 6 70 2 7 , 7 2 3 24 1958 146 ,686 9 6 , 8 3 0 66 3 9 , 8 5 2 27 1959 145,671 9 5 , 4 5 5 66 3 9 , 2 9 3 27 1960 123.757 7 8 . 1 1 3 63 3 5 . 7 3 3 29 1961 115 ,608 76 ,171 66 2 8 , 8 4 4 25 1962 126 ,682 7 5 , 5 9 3 60 3 9 , 1 6 7 31 1963 128,191 7 1 , 5 8 5 56 4 9 , 4 5 6 39 19v4 150 .963 7 6 . 2 2 5 51 66 .647 44 1. I n c l u d e s a p a r t m e n t s and row h o u s e s ; e x c l u d e s s e m i - d e t a c h e d and d u p l e x u n i t s . Sojicca: CMHC, C a n a d i a n H o u s i n g S t a t i s t i c s . O t t a w a , 1965 , T a b l e 6 . 109 Tahlfl 17 A f f o r d a b l l t t y of Home Ownership Canada. 1951-1961 (Current 1) Y e a r Lowes t Income T e r c 1 1 e M i d d l e Income T e r c 1 1 e A v e r a g e C o n s t r u c t Ion C o s t o f New De tached NHA House Annua 1 Upper Wage L i m i t A f f o r d a b l e House P r i c e @ 2 . 5 T imes Annua l Waoe Annua 1 Upper Wage L i m i t A f f o r d a b l e House P r i c e @ 2 . 5 T imes Annua l Wage 1 . 2 3 4 5 1951 2 , 4 5 9 6 , 1 4 8 3 , 8 2 0 9 , 5 5 0 10 ,762 1954 2 , 9 2 0 7 , 3 0 0 4 , 4 7 3 11 ,183 12 ,305 1955 3 , 1 0 0 7 , 7 5 0 4 , 8 1 4 12 ,035 12 ,597 1957 3 , 2 2 4 8 , 0 6 0 5 , 1 2 3 12 ,808 14 ,044 1958 3 , 4 3 7 8 , 5 9 3 5 , 3 0 4 13 ,260 14,267 1959 3 , 5 3 3 8 , 8 3 3 5 ,401 13 ,503 14 ,462 1961 3 . 9 4 2 9 . 8 5 5 5.961 14.903 14 .463 CMHC, C a n a d i a n H o u s i n g S t a t i s t i c s . O t t a w a , V a r i o u s Y e a r s . 1 10 Studies and a r t i c l e s in the late 1950's and early 1960's lamented the fact that even moderate-income families - those earning $4,000 to $5,000 per year - were being squeezed out of the NHA home ownership market. 2 3 2 (See Table 12) Indeed, in 1964, the Toronto Telegram quoted University of Toronto professor James A. Murray as saying: "The Canadian home construction industry i s catering almost exclusively to the upper cl a s s , while some 600,000 families l i v e in substandard conditions...Houses being b u i l t are quite out of the reach of more than half the p e o p l e . . . " 2 3 3 Moreover, evidence gathered by the 1965 Royal Commission on Banking and Finance suggested that many of those who did purchase homes in the 1957 to 1962 period could scarcely afford to, in that 9% would not have purchased had required downpayments been 10% higher, and 20-25% would not have purchased had monthly payments been 10% h i g h e r . 2 3 " The private sector's f i x a t i o n on single-family dwellings was a response, in part, to the e f f e c t i v e demand of. prosperous 2 3 2"Housing and Apartment Building Account for $512 M i l l i o n , " Monetary Times 124 (January 1956):52; C l i f f o r d Fowke, "What's Ahead for Housing?" Financial Post, 20 July 1957, p. 3; Wheeler, "Evaluating the Need for Low-Rental Housing: A Review of Conditions Among Family Applications for the L i t t l e Mountain Low-Rental Project, Vancouver, and Consideration of C r i t e r i a for Future Housing Projects" (Masters Thesis, University of B r i t i s h Columbia, 1955), p. 92. 2 3 3 S e e Morden Lazarus, "Social Justice and Housing," Canadian Labour 9 (June 1964):13. 2 3"See Smith, Housing in Canada, p. 34. 111 middle- and upper-income households. 2 3 5 It also r e f l e c t e d the greater a v a i l a b i l i t y of vacant suburban land given the limited use of the 1944 provisions for the clearance of blighted central land, and the r e l a t i v e l y l u c r a t i v e provisions for home ownership set out in successive amendments to the National Housing Act. With regards to government promotion of home ownership, for instance, amendments to the NHA in 1949, 1957, 1960 and 1963 increased the maximum available loan to developers of owner-occupied housing. The 1949 and 1960 amendments also lengthened the amortization period for home owner loans, while a 1951 amendment reduced downpayment requirements for prospective home buyers. A 1957 amendment authorized CMHC i t s e l f to make direc t loans to prospective home owners i f other sources of, mortgage funds were not available. The greatest boon to single-family dwelling production was provided, however, by the 1954 NHA. E n t i t l e d : "An Act to Promote the Construction of New Houses, the Repair and Modernization of Existi n g Houses, and the Improvement of Housing and Liv i n g C o n d i t i o n s " 2 3 6 the Act was designed primarily to increase the supply of mortgage funds available for new r e s i d e n t i a l construction in order to bring home ownership within the reach of more Canadians. Besides increasing the level s and lengthening the terms of loans for owner-occupied housing, and providing for 2 3 5 I n Canada in general, an increase of over 70% in real per capita income since 1939 had made i t easier for higher-income households to accumulate a downpayment and meet monthly payments. Central Mortgage and Housing Corporation, Brief to  Royal Commission, p. 21. 2 3 6 S t a t u t e s of Canada, The National Housing Act, 1954, 2 & 3 Elizabeth I I , ch. 23. 1 12 federal guarantees on home improvement loans made by lenders, the 1954 l e g i s l a t i o n replaced the joint loan system whereby the federal government had participated with private lenders in mortgage financing, by a mortgage insurance scheme whereby CMHC would underwrite lenders' loans against default. The lenders, in return, would provide larger loans for longer terms and at lower interest rates. The guarantees to the lenders were to be backed by the 2 to 2.5% insurance fees paid by borrowers. The 1954 NHA also expanded the f i e l d of mortgage lenders to include the chartered banks and Quebec savings banks, and' established the basis for the development of a secondary mortgage market. This l a t t e r action paved the way for the p a r t i c i p a t i o n of individuals, pension funds, and trusts in mortgage lending. The emphasis on single-family dwellings in the 1950's was not to the t o t a l exclusion of dwellings for rent. As Figure 1 depicts, an increasing number of apartment units was being constructed during the period, and a minor apartment boom took place in the late 1950's. In fact, multiple-family starts represented 50.4% of t o t a l urban starts in 1960, though the figures varied greatly between urban a r e a s . 2 3 7 The rental construction of the 1950's did l i t t l e to redress rent a l , and p a r t i c u l a r l y low-rental, problems, however, for a number of reasons. 2 3 7 C e n t r a l Mortgage and Housing Corporation, Annual Report,  1961, p. 6. 1 1 3 FIGURE 1 APARTMENT STARTS, CANADA, 1920-1983 120 1920 1930 1940 1950 1960 1970 1980 SOURCE; CMHC, Canadian Housing S t a t i s t i c s , Ottawa, Various Years. Leacy, F.H. ( 1983) H i s t o r i c a l S t a t i s t i c s of Canada, 2d ed. , Ottawa: S t a t i s t i c s Canada and S o c i a l Science F e d e r a t i o n of Canada, S e r i e s S201. 1 14 For one, the supply of new units was i n s u f f i c i e n t to meet the high and r i s i n g demand for rental housing. The number of households in search of rental accommodation at the end of 1949, for instance, was approximately 314,000. 2 3 8 Yet, as Table 11 indicates, i t took the construction industry twelve years to produce 300,000 multi-family units. In the meantime, several factors including the increasing number of elderly households vacating family homes in favour of smaller quarters with janitor service, continued rapid urbanization and immigration, 2 3 9 and a s t a r t l i n g r i s e in the number of non-family households for whom apartment l i v i n g seemed appropriate and convenient, 2" 0 had combined to s i g n i f i c a n t l y raise the demand for rental housing. Indeed, a 1961 headline in the Financial Post announced a major trend to apartment l i v i n g in Canada. 2" 1 2 3 8 J . A . Rhind, "Today's Housing Problem: Rent or Buy?" Saturday  Night, 8 December 1951, p. 51. 2 3 9Apartment dwelling was most c h a r a c t e r i s t i c of immigrants a r r i v i n g in Canada between 1956 and 1961. N.H. Lithwick, Urban  Canada, p. 90. 2"°The average annual increase in non-family households, which had t o t a l l e d 8,000 households between 1941 and 1951, reached 12,000 in the 1951 to 1956 period and 29,000 between 1956 and 1961. In metro areas, non-family households rose by 41% between 1946 and 1967, while the number of family households rose by only 13%. See I l l i n g , Housing Demand, p. 7; Smith, Housing in  Canada, p. 13. Of 444,449 non-family households in non-farm areas in 1961, 250,942 or 56.7% rented their accommodation, and 238,098 or 53.6% l i v e d in apartments. Dominion Bureau of S t a t i s t i c s , 1961 Census, Housing: Dwelling Characteristics By  Type of Household, 93-531 (Ottawa: Queen's Printer, 1961), Table 89. 2" 1"The Sh i f t to Apartments," Financial Post, 30 December 1961, p. 1 . 1 1 5 A second reason why the rental construction of the 1950's f a i l e d to r e l i e v e the rental problem was that most of the new units were too costly for lower-income households, whose in e f f e c t i v e demand for lower-priced accommodation went un s a t i s f i e d . With construction costs and interest rates r i s i n g more rapidly than wages or other CPI goods and s e r v i c e s , 2 4 2 private developers were simply unable to overcome their h i s t o r i c i n a b i l i t y to provide rental housing for lower-income households, even with i n f l a t i o n a r y pressures pushing the acceptable rent-to-income r a t i o towards 25%. 2 4 3 Indeed', Leonard Marsh's 1949 assessment of the rental a f f o r d a b i l i t y s ituation - that the provision of low- and even moderate-rental housing was not a commercial proposition, p a r t i c u l a r l y i f i t was to meet decent standards - was equally applicable in the mid-1950's. 2 4 4 In fact, the Vice-chairman of the Vancouver Housing Authority reiterated at a Vancouver housing conference in 1954 that building costs made i t impossible for private developers to erect rental housing at rental rates affordable to lower-income households and s t i l l break e v e n . 2 4 5 New apartments in the major c i t i e s , for example, were renting at levels of $100 to $150 per 2 4 2Wheeler, "Need for Low-Rental," p. 89. Between 1945 and 1953, average family income after taxes increased by 56% while building costs increased by 82%. "House and Apartment Construction Outbooms," p. 53. 2 4 3Wheeler, "Need for Low-Rental," p. 67. 2 4 4Marsh, "Economics," p. 31. 2 4 SVancouver Housing Association, Houses for A l l , p. 6. 116 month i n the mid-1950's, 2 * 6 while the great m a j o r i t y of urban households were unable to a f f o r d more than $50 to $112 per month at 25% of i n c o m e . 2 4 7 Moreover, a 1955 study by housing p o l i c y a n a l y s t M i c h ael Wheeler suggested that the gap between commercial f e a s i b i l i t y and income s t r u c t u r e was widening. Wheeler wrote: "While i t i s true that wage r a t e s have r i s e n s t e a d i l y i n the l a s t ten years, b u i l d i n g c o s t s have a l s o soared, with the r e s u l t that incomes which p r e v i o u s l y were a b l e to support an economic [ f i n a n c i a l recovery] rent are no longer s u f f i c i e n t to pay rents of an amount which makes housing a reasonable commercial p r o p o s i t i o n f o r l a n d l o r d s and b u i l d e r s . . . i t may be necessary f o r the purposes of d e f i n i n g l o w - r e n t a l housing to extend the upper income boundary of the lower-income group so as to i n c l u d e a p o r t i o n of the 'middle' g r o u p s . " 2 4 8 S i m i l a r l y , Murray concluded in a 1964 study f o r the O n t a r i o A s s o c i a t i o n of Housing A u t h o r i t i e s that the housing system was i n e f f e c t i v e i n p r o v i d i n g housing f o r the lowest o n e - t h i r d to one-half of the income range, which i n c l u d e d s i g n i f i c a n t p o r t i o n s of moderate-income- earners. 2 4 9' The gap; between market and f i n a n c i a l recovery rent l e v e l s and a f f o r d a b l e r e n t s was widening at such a pace, i n f a c t , that James C. Downs, Housing 2 4 6 S e e "House and Apartment C o n s t r u c t i o n Outbooms," p. 54; Wheeler, "Need f o r Low-Rental," p. 4; Chattoe, "Want to Rent?"-pp. 1, 3. 2 4 7 I n 1953, 75% of Canadian household heads earned l e s s than $3,000 per year, and i n 1958, 70% of urban households l i v e d on an average of $200 to $450 per month. See Rose, Regent Park, p. 206; Marrocco, "Housing Problem," p. 33. 2 4 8 W h e e l e r s "Need fo r Low-Rental," p. 80. 2 4 9 J . Murray, "Search f o r S h e l t e r , " p. 42. 1 1 7 and Redevelopment Co-ordinator for the City of Chicago, and President of the Real Estate Research Corporation, warned participants at a 1956 Ontario Conference of Real Estate Boards that: "...except for the higher income group, the apartment house is becoming o b s o l e t e . " 2 5 0 Interestingly, as Table 13 i l l u s t r a t e s , the rental provisions of Part II of the 1944 NHA which might have assisted the private sector to construct lower-priced housing by reducing development costs were sparingly used. In fact, 74% of rental units produced by the private sector between 1950 and 1963 were constructed without government aid. One can speculate that the Limited Dividend program, despite the increased loan levels -and reduced downpayment requirements offered at various times throughout the 1950's, simply was not profitable enough, given the returns to be reaped in the unrestricted upper-income rental market. Indeed, a 1957 a r t i c l e in the Financial Post asserted that commercial builders had l o s t interest in•and had abandoned the Limited Dividend program due to i n s u f f i c i e n t p r o f i t s . 2 5 1 Even when the program was used the results were often disappointing. 2 5 0 S e e "House and Apartment Construction Outbooms," p. 54. 251"New Homes for $45 a Month i s Aim in Welfare Splurge," Financial Post, 2 November 1957, p. 20. Private Sector Rental Starts Canada. 1949-1964 Y e a r T o t a l P r i v a t e S e c t o r R e n t a l S t a r t s Fede ra11y A s s i s t e d P r i v a t e S e c t o r R e n t a l S t a r t s A s s i s t e d P r i v a t e S e c t o r R e n t a l S t a r t s as % o f T o t a l P r i v a t e R e n t a l S t a r t s 1 2 3 1949 2 4 , 8 7 5 9 , 6 1 6 3 8 . 7 1950 2 1 . 2 2 8 9 . 1 8 8 4 3 . 3 1951 16 ,346 3 , 7 5 4 2 3 . 0 1952 19 ,870 7 ,835 3 9 . 4 1953 2 8 , 0 2 6 9 , 7 5 2 3 4 . 8 1954 3 1 , 7 0 4 7 , 8 6 6 2 4 . 8 1955 3 3 . 8 4 8 8 .571 2 5 . 3 1956 3 1 , 1 5 4 5 , 5 0 9 17 .7 1957 3 3 , 5 4 8 9 , 6 2 2 2 8 . 7 1958 53 ,131 15,411 2 9 . 0 1959 4 2 , 8 6 5 9 , 2 0 5 2 1 . 5 1960 3 5 . 0 0 8 6 . 3 0 2 18 .0 1961 4 3 , 3 2 2 14 ,554 3 3 . 6 1962 5 0 , 5 0 5 9 , 7 8 0 1 9 . 4 1963 67 ,521 10 ,158 15 .0 1964 8 3 . 4 2 3 15 .825 19 .0 Soucce: CMHC, C a n a d i a n H o u s i n g S t a t i s t i c s . O t t a w a , V a r i o u s Y e a r s . 1 19 A 1957 a r t i c l e in Canadian Welfare suggested, for instance, that i t was necessary for government to impose upper rent l i m i t s of $95 per month on apartments b u i l t under the rental provisions of the NHA to render them affordable to at least the moderate-income r e n t e r . 2 5 2 With new apartment construction out of the f i n a n c i a l reach of lower- and many moderate-income households, many in government and building industry c i r c l e s continued to believe the needs of those households could be met by " f i l t e r i n g " . As the discussion Chapter 3 suggests, however, f i l t e r i n g had not proven an e f f e c t i v e way of meeting low-income housing needs. Indeed, in a 1966 a r t i c l e , Toronto planner Murray Jones observed: "...the supply of new housing for those who can afford i t i s not s u f f i c i e n t to provide decent second-hand housing for a l l those who cannot; the so-called ' f i l t e r i n g down' process does not work..." 2 5 3 Besides the quantitative and f i n a n c i a l reasons why private sector apartment construction in the 1950's f a i l e d to relieve the worst problems in the rental sector, a t h i r d reason was that the majority of new units produced were unsuitable to those most in need of rental, and especially low-rental, accommodation. The studies and a r t i c l e s of the 1950's highlighted two pa r t i c u l a r 2 5 2 "Across Canada: Low-Cost Housing," Canadian We 1 fare 3-3 (November 1957):189. 2 5 3Murray V. Jones, The Role of Private Enterprise in Urban  Renewal (Toronto: Metropolitan Toronto Planning Board, 1966), p. 291 . 1 20 elements of the population whose housing requirements were not generally s a t i s f i e d through the normal operation of the housing market and on whom s c a r c i t i e s bore most heavily - the already-familiar low-income family with children and the newly-i d e n t i f i e d e l d e r l y household. The elderly segment of the population, as a proportion of the t o t a l population, had grown rapidly during the war and post-war decades. 2 5" With the trend away from extended-family l i v i n g situations and with new evidence suggesting age and non-labour force p a r t i c i p a t i o n as the most important c h a r a c t e r i s t i c s associated with low incomes, 2 5 5 the housing conditions of Canada's eld e r l y were at the forefront of public discussion in the 1950's. Unable or unwilling to maintain separate owner-occupied homes and l i v i n g on fixed incomes, in some cases as low as the $40 to $50 per month provided under the 1951 Old Age Security and Old Age Assistance A c t s , 2 5 6 as many as 25% of elderly couples and 40% of elde r l y singles were experiencing housing problems in 1964. 2 5 7 Most of them were expending enormous proportions of their income to secure comfortable housing, or l i v i n g in the meanest 2 5*The r a t i o of persons over 65 years of age had advanced from 1/18 in 1927 to 1/13 by 1952, and the number of persons over 65 years had increased by 42% between 1941 and 1952. Moreover, the trend appeared to be long-term. See Goulding, "Housing Older People," p. 38; Vancouver Housing Association, Houses for A l l , p. 25. 2 5 5 J e n n y R. Podoluk, Incomes of Canadians, 1961 Census Monograph (Ottawa: Dominion Bureau of S t a t i s t i c s , 1968), p. 14. 2 5 6Vancouver Housing Assocation, Houses for A l l , p. 33; Dennis Guest, The Emergence of Social Security in Canada (Vancouver: University of B r i t i s h Columbia Press, 1980), p. T45. 2 5 7 J . Murray, "Search for Shelter," p. 43. 121 accommodation available which, but for the acute housing shortage, would have been condemned. Both of these population groups - families with children and elderly households - require design features or special considerations not generally provided in private sector rental housing. Families with children, for example, are most s a t i s f a c t o r i l y housed in ground-oriented dwellings with outdoor play space and ample i n t e r i o r space. Senior c i t i z e n s , too, are best housed in ground-oriented dwellings with a minimum of s t a i r s . They also require other features such as non-slippery f l o o r s , hand-rails and hand-grips in bathrooms, medium-height shelves and equipment to minimize climbing and bending, s i l l -less doors to reduce the risk of tr i p p i n g , above average • illumination, and good insulation, given their s u s c e p t i b i l i t y to the cold. Special consideration must also be given to access to services and transportation l i n e s , privacy and quiet without i s o l a t i o n , garden space, security of tenure, and creation of a sense of community when housing the e l d e r l y . The product of the late 1950's apartment boom and of the lat e r 1960's boom - the high-rise block containing, for the most part, bachelor and one and two bedroom apartments - did not provide the features required by low-income families and elderly households. A r t i c l e s in the periodicals of the day were c r i t i c a l . A 1950 a r t i c l e in the Financial Post reported, for instance, that most families with children were forced to buy, regardless of whether they could r e a l l y afford i t , because of 122 the scarcity of large apartments. 2 5 8 In a 1964 a r t i c l e , Morden Lazarus of the Ontario Federation of Labour charged, that in the face of great need for low-rental housing for seniors and families, private developers had been given the 'green l i g h t ' from a l l levels of government to b u i l d housing p r o f i t a b l e to them but disastrous for those r e a l l y in n e e d . 2 5 9 Another 1964 a r t i c l e also charged that the e x i s t i n g trend towards high-rise apartments was ignoring the f i n a n c i a l and s u i t a b i l i t y needs of low- and moderate-income households. It noted: "The Limited Dividend provisions of CMHC have been exploited for high r i s e apartments, although demand for low-income family accommodation c a l l e d for other forms of multiple h ousing." 2 6 0 Conceding that high-rises were, perhaps, preferable to the disgraceful shared basements which had been the only low-rental alternative, the a r t i c l e warned that they could hardly be considered a permanent solution to the low- and moderate-rental problem. The Public Rental Sector. The public sector was only l i t t l e more successful than the private sector in meeting low- and moderate-rental needs for a number of reasons. The f i r s t was that the very poor - those on s o c i a l assistance - were excluded 2 5 8 C h a t t o e , "Want to Rent?", p. 3. 2 5 9 L a z a r u s , "Social J u s t i c e , " p. 13. 2 6 0Hans El t e , "Public Housing," Journal Royal Architectural  Institute of Canada 41 (August 1964), p. 34. 1 2 3 from p u b l i c h o u s i n g by r e s t r i c t i v e a d m i s s i o n p o l i c i e s . 2 6 1 The second was t h a t the i n c r e a s e d p e r s o n a l w e l l - b e i n g which r e s u l t e d from r e s i d i n g i n good q u a l i t y , modern h o u s i n g based on f a m i l y s i z e and a b i l i t y t o pay was, i n many c a s e s , more than o f f s e t by the s e r i o u s s o c i a l problems s p a r k e d and/or e x a c c e r b a t e d by slum c l e a r a n c e and p u b l i c h o u s i n g p r o j e c t s . Communities, f o r i n s t a n c e , were u p r o o t e d , and i n many c a s e s slum c l e a r a n c e took p l a c e b e f o r e a l t e r n a t i v e h o u s i n g arrangements f o r the d i s p l a c e d r e s i d e n t s had been c o m p l e t e d . 2 6 2 S i t e s f o r p u b l i c h o u s i n g p r o j e c t s tended t o be m a r g i n a l , l o c a t e d on the f r i n g e of metro a r e a s , d i s t a n t from commercial a r e a s , employment and r e c r e a t i o n a l o p p o r t u n i t i e s and p u b l i c t r a n s i t , and a d j a c e n t t o expressways, r a i l w a y s or i n d u s t r i a l a r e a s . 2 6 3 In a d d i t i o n , adequate c o n s i d e r a t i o n was not always g i v e n t o the needs of l a r g e f a m i l i e s i n d e s i g n i n g p u b l i c p r o j e c t s . F i n a l l y , many of the p r o j e c t s were l a r g e , d r a b , u n i n s p i r i n g , and i n s t i t u t i o n a l i z e d and tended t o spawn a sense of i s o l a t i o n from the l a r g e r community among r e s i d e n t s . Most i m p o r t a n t l y , however, the 1 9 4 4 slum c l e a r a n c e and the 1 9 4 9 S e c t i o n 3 5 p u b l i c h o u s i n g p r o v i s i o n s were g r o s s l y underused. As T a b l e 10 i n d i c a t e s , by 1 9 6 4 b a r e l y 1 2 , 0 0 0 p u b l i c 2 6 S e e Wheeler, "Need f o r L o w - R e n t a l , " p. 9 8 ; Wheeler, "Why Not a N a t i o n a l H o u s i n g A l l o w a n c e ? " Canadian W e l f a r e 4 4 ( 1 9 6 8 ) : 1 0 ; Donnison, "Housing Problems and P o l i c i e s , " p. 4 3 . 2 6 2 S e e Task F o r c e on Housing and Urban Development, R e p o r t , p. 6 5 ; N.H. L i t h w i c k , Urban Canada, p. 2 0 5 ; Wheeler, "Study and A c t i o n f o r B e t t e r Housing," Canadian W e l f a r e 4 3 ( J a n u a r y -F e b r u a r y 1967):5. 2 6 3 D e n n i s and F i s h , Programs i n S e a r c h of a P o l i c y , pp. 1 8 2 - 1 8 3 . 124 housing u n i t s had been c o n s t r u c t e d a c r o s s Canada, a mere 2% of t o t a l r e n t a l s t a r t s d u r i n g the 1950-64 period., and only 7% of f e d e r a l l y - a s s i s t e d r e n t a l s t a r t s . 2 6 " In the face of the estimated 870,000 low-income households l i v i n g i n substandard c o n d i t i o n s , doubled-up or paying e x c e s s i v e p o r t i o n s of income to a c q u i r e decent h o u s i n g , 2 6 5 the 12,000 u n i t s are almost i n c o n s e q u e n t i a l . Moreover, by 1964, the m u n i c i p a l i t i e s had made use of only $3.2 m i l l i o n of the $20 m i l l i o n fund e s t a b l i s h e d i n 1944 to a c q u i r e and c l e a r b l i g h t e d a r e a s . 2 6 6 In commenting i n h i s 1964 study on the performance of the p u b l i c s e c t o r between 1949 and 1964, Murray concluded: "On the evidence the study concludes that present and past a c t i v i t i e s i n low-income...housing bear a b s o l u t e l y no r e l a t i o n s h i p to any r e a l i s t i c a p p r a i s a l of the need i n Canada. Present procedures appear to be c h a r a c t e r i z e d by i l l - d e f i n e d and d i v i d e d r e s p o n s i b i l i t i e s and by cumbersome r e l a t i o n s h i p s between l e v e l s of government. The, system i s b a r e l y adequate f o r the e x i s t i n g i n t e r m i t t e n t minute p r o d u c t i o n and o f f e r s l i t t l e hope of a c h i e v i n g the necessary expansion to cope with the a c t u a l i t i e s of the problem. The r e a l l y d i s t r e s s e d housing circumstances of thousands of Canadian f a m i l i e s and i n d i v i d u a l s young and o l d and the need f o r s u b s i d i e s p e r s i s t and grow i n m a g n i t u d e . " 2 6 7 A number of reasons have been suggested f o r the l i m i t e d use of the p u b l i c housing and slum c l e a r a n c e p r o v i s i o n s . One that 2 6 " A s s i s t e d r e n t a l s t a r t s i n the 1950-1964 p e r i o d t o t a l l e d 181,596 u n i t s . C e n t r a l Mortgage and Housing C o r p o r a t i o n , Canadian Housing S t a t i s t i c s 1 (1956):Table 42, 1 d 9 5 7 ) : T a b l e 38, l961:Table 37, l964:Table 34. 2 6 5 J . Murray, "Search f o r S h e l t e r , " p. 42. 2 6 6 I l l i n g , Housing Demand, p. 30. 2 6 7 J . Murray, "Search f o r S h e l t e r , " p. 42. 1 25 was often c i t e d by federal o f f i c i a l s when questioned regarding the apparent f a i l u r e of the two programs was municipal reluctance to i n i t i a t e a c t i o n . 2 6 8 The municipal reluctance stemmed, in part, from a lack of expertise and experience in real estate development, an a c t i v i t y which had t r a d i t i o n a l l y been undertaken by private enterprise. It also derived from f i n a n c i a l considerations given the high costs of servicing land, the r e l a t i v e l y lower revenue-generating potential of p u b l i c a l l y -owned property, and the limited taxation powers of municipal governments. Although the Section 35 provisions created a federal-provincial partnership, the l e g i s l a t i o n authorized the provinces to pass on any proportion of their 25% share of the expenses to the muni c i p a l i t i e s . At least one-half of the provinces elected to do so, with most of those sharing the burden on a f i f t y - f i f t y b a s i s . 2 6 9 Even on a f i f t y - f i f t y basis, many municipalities could not conceive of taking action. Moreover, the narrow r e s t r i c t i o n s placed on the re-use of cleared land under the 1949 NHA prohibited municipalities from using valuable cleared central land for more luc r a t i v e purposes than low-rental housing, and so many slums were l e f t i n t a c t . A t h i r d important factor in municipal inaction was, as 2 6 8 T o i n i t i a t e public housing projects, municipalities were required to document the need for low-rental housing, to clear blighted land, and to provide the municipal services public housing projects would require. 2 6 9Quebec, however, required i t s municipalities to pay the f u l l 25% p r o v i n c i a l share of the program. L e s l i e Wilson, "Are We Really Trying to Get Rid of Slums?" Financial Post, 30 September 1961, p. 26. 1 26 Murray's conclusion hints, the length of time required to implement a scheme given the complexities of co-ordinating three l e v e l s of government. Albert Rose suggests that federal q u a l i t y c r i t e r i a were so stringent and administrative procedures so d e t a i l e d that municipal bodies simply bogged down. The number of steps the Toronto Housing Authority was required to go through, back and forth between the three lev e l s of government, for instance, exceeded f i f t y in 1961 -1 962. 2 7 0 At that rate, i t i s remarkable that any public housing was b u i l t at a l l ! A f i n a l factor in municipal inaction was that, aside from the campaigns launched by progressive groups such as the Community Planning Association of Canada (CPAC) and various welfare groups, there existed a great deal of public apathy and even opposition towards public housing. As David Mansur, President of CMHC, noted in a 1954 statement: " U n t i l the attitude of most Canadians changes, there w i l l be no appreciable growth of public housing in t h i s country...The Federal Government has yet to turn down a proposal for public housing-, and the- Provincial: Government of Ontario has t r i e d to convince municipalities of the need. Lack of enthusiasm on the part of c i t y councils i s a f a i r l y accurate r e f l e c t i o n of the electors' views." 2 7 1 The public opposition to public housing stemmed from a number of sources. Some simply opposed public housing because i t appeared to reward laziness, sloth, and immorality. Others opposed i t for reasons of s e l f - i n t e r e s t - slum dwellers objected 2 7 0 R o s e , Canadian Housing P o l i c i e s , p. 34. 2 7 1 S e e Rose, Regent Park, p. 215. 1 27 to the expropriation of their homes, property-owners feared lowered property values and increased taxes, and the real estate and building industries feared competition with the private sector. F i n a l l y , some people opposed public housing out of a lack of knowledge and understanding of the extent and severity of the low-rental problem, and of the intent of the public housing l e g i s l a t i o n . Indeed, Rose suggests that one of the greatest obstacles the public housing program had to overcome was public expectations that i t should be a major answer, i f not the answer, to many of the s o c i a l problems of low-income households. 2 7 2 If municipal inaction was a factor in the limited use of the Section 35 public housing provisions, so too was p r o v i n c i a l indifference. While some provinces, as discussed above, c u r t a i l e d a c t i v i t i e s under the program by passing the heavy f i n a n c i a l costs on to the municipalities, others simply refrained, for several years, from passing the enabling l e g i s l a t i o n required under the federal statute to activate the provisions. Whether due to lack of w i l l or the absence of appropriate i n s t i t u t i o n a l arrangements, by 1951 three provinces, Alberta, Nova Scotia and Prince Edward Island, had yet to pass complementary l e g i s l a t i o n . By 1959, PEI had s t i l l not done s o . 2 7 3 2 7 2 I b i d . , p. 212. 2 7 3 C e n t r a l Mortgage and Housing Corporation, Housing in Canada 7 (April 1952):14; A. Wilson, "Canadian Housing L e g i s l a t i o n , " p. 226. 1 28 The f i n a l f a c t o r in the s p a r i n g use of the 1949 p u b l i c housing program was the f e d e r a l government's management of the program. Although R.H. Winters, the M i n i s t e r r e s p o n s i b l e for CMHC, and Mansur toured the country, o s t e n s i b l y to encourage the pr o v i n c e s to introduce e n a b l i n g l e g i s l a t i o n , the f e d e r a l government d i s p l a y e d a s t a r t l i n g lack of i n t e r e s t i n program uptake. Indeed, Winters had c l e a r l y foreshadowed the f e d e r a l p o s i t i o n on p r o v i n c i a l c o - o p e r a t i o n in the House of Commons i n 1949. In i n t r o d u c i n g the program he had s t a t e d : "We have no knowledge of the extent to which p r o v i n c i a l governments w i l l p a r t i c i p a t e i n arrangements contemplated by the l e g i s l a t i o n , and i t may well be that c e r t a i n p r o v i n c e s w i l l f e e l that the type of- a s s i s t a n c e proposed i s n e i t h e r necessary nor d e s i r a b l e . . . T h e r e i s no room for the suggestion that the proposed en a b l i n g l e g i s l a t i o n i s bi n d i n g upon the p r o v i n c e s . . . I am hopeful that a l l the pr o v i n c e s who have a problem w i l l take advantage of t h i s l e g i s l a t i o n . . . A l l we can do at t h i s stage i s wait and see what happens." 2 7" Not s u r p r i s i n g l y , the f e d e r a l government was c r i t i c i z e d f o r f a i l i n g to adequately promote the f e d e r a l - p r o v i n c i a l p a r t n e r s h i p . R.E.G. Davis, E x e c u t i v e D i r e c t o r of the Canadian Welfare C o u n c i l , charged the f e d e r a l government with adopting "a p o l i c y of w a i t i n g p a s s i v e l y f o r such advances as might be made to i t [ S e c t i o n 3 5 ] . " 2 7 5 A CCL b r i e f to the House of Commons Standing Committee on Banking and Commerce r e i t e r e d the 2 7 4 H o u s e of Commons, Debates (1949), pp. 1295, 1315. 2 7 5 D a v i s , "Canada's D i s c o u r a g i n g Housing Programme," Canadian  U n i o n i s t 26 ( J u l y 1952):209. 1 2 9 c r i t i c i s m , but more c o l o r f u l l y , noting that the federal government had been content: "to hide t h i s particular l i g h t under a bushel, instead of setting i t on a national candlestick. The Government ought to have trumpeted i t s achievements in putting t h i s section on the statute book four years ago, and ought to have encouraged people a l l over the country to take advantage of i t . Instead i t has been strangely reticent about one of the things i t should have been proudest o f . " 2 7 6 Not only did the federal government f a i l to promote the program, i t showed l i t t l e interest in modifying i t to better meet the needs of low-income renters. Indeed, in response to CMHC requests in 1955 and 1957 to expand the program or to make changes to improve the quality of public housing units, a senior government o f f i c i a l and member of the Board of Directors of CMHC rep l i e d : "My main c r i t i c i s m of the statement [request] i s that i t seems to assume that public housing is primarily an instrument of soc i a l policy to remedy d i r e c t l y the conditions of the poor who are l i v i n g in bad housing...I f e e l that the construction of any part i c u l a r public housing project should be based on economic and urban development considerations primarily and that the needs of individual tenants should be secondary...public housing projects-should also be at a minimum standard...[to] provide a bare minimum of housing for the occupants... 11 seems to me that t h i s should be deliberately used...to make clear we are not competing with private enterprise who we assume w i l l be building a more attractive product intended for those who can afford i t . " 2 7 7 The inaction at the municipal l e v e l , the indifference of the provinces, and the disinterested way in which the federal 2 7 Canadian Congress of Labour, "Housing Act Inadequate," p. 99. 2 7 7From a l e t t e r to the CMHC President, February 12, 1957 c i t e d by Dennis and Fish, Programs in Search of a Policy, p. 174. 1 3 0 government managed the 1949 public housing program a l l point to a s t r i k i n g lack of commitment to public housing at a l l levels of government. Statements by federal o f f i c i a l s suggest that t h i s lack of commitment stemmed, at least at the federal l e v e l , from a philosophy of reliance on the private sector for housing provision and a view of housing as a p r o v i n c i a l and municipal r e s p o n s i b i l i t y . During the Parliamentary debate on the 1954 NHA, for example, Winters remarked: "The government...believes in making i t possible for private enterprise to do as much of the job as possible and then -and only then- for the state to p a r t i c i p a t e . " 2 7 8 ' S i m i l a r l y , CMHC's 1956 Brief to the Royal Commission on Canada's Economic Prospects noted: "It has been a guiding p r i n c i p l e of national p a r t i c i p a t i o n in housing that, while the government may.act to stimulate and supplement the housebuilding market, i t should not assume di r e c t r e s p o n s i b i l i t i e s which are c o n s t i t u t i o n a l l y allocated to other governments or which could e f f e c t i v e l y be borne by private e n t e r p r i s e . " 2 7 9 F i n a l l y , the 1979 report of the- Task Force on CMHC obse-rved' of the 1950's: "Even though there was l e g i s l a t i o n focussing on the objective of housing r e d i s t r i b u t i o n ( i e . limited dividend and public housing l e g i s l a t i o n ) , the emphasis was on increasing the production of housing...government c l e a r l y sought to increase the e f f i c i e n c y of the private sector and to work with i t to stimulate r e s i d e n t i a l 2 7 8House of Commons, Debates (1954), p. 1574. 2 7 9 C e n t r a l Mortgage and Housing Corporation, Brief to Royal  Commission, p. 7. 131 construction..." 2 The f a i l u r e of the Section 35 public housing program to substa n t i a l l y a l t e r the low-rental housing situation underlines the important role commitment and p o l i t i c a l w i l l must play in the resolution of s o c i a l problems. Indeed, in commenting on the disappointing results of the program in his 1955 study, Wheeler concluded: "Between the acknowledgement of a pr i n c i p l e in l e g i s l a t i o n and i t s p r a c t i c a l r e a l i z a t i o n there i s . . . a vast area of inaction, and no departure from t r a d i t i o n a l policy avails' anything i f i t i s not accompanied by a change of thinking among those people on whom the chief r e s p o n s i b i l i t y rests for applying the new p o l i c y . " 2 8 1 4.2 Recommendations for Government Action on the Rental Problem Given the continuing serious s i t u a t i o n in the rental sector, housing c r i t i c s and community groups continued to press 2 8 0Canada, Task Force on Canada Mortgage and Housing Corporation, Report on Canada Mortgage and Housing Corporation (Ottawa: CMHC, 1979), pp. 6-7. 2 8 1Wheeler, "Need for Low-Rental," p. 103. 1 32 for more concerted government a c t i o n . 2 8 2 They advocated the creation of a federal Department of Urban A f f a i r s and Housing. They advocated the adoption of a multi-faceted housing program designed to address the housing needs of various segments of the population including the upper-income cohort, who are able to acquire adequate and suitable housing on the private market through their own resources, the middle-income cohort who are able to secure adequate private sector housing i f granted favourable f i n a n c i a l terms or assisted in some other way, and the lower-income cohort who are unable to access private sector housing even when market and f i n a n c i a l recovery rent levels have been reduced by subsidy and who thus require public housing. Indeed, Murray noted in his 1964 study: "...housing policy is obliged not only to ensure a s u f f i c i e n t production of new and renewed dwellings, but to ensure d i s t r i b u t i o n in accordance with the t o t a l housing market's varying a b i l i t y to pay for s h e l t e r . " 2 8 3 In o u t l i n i n g the d i f f e r i n g levels of housing needs, the c r i t i c s stressed that one aspect of the program could not 2 8 2 S e e Rose, Regent Park, p. 15; Central Mortgage and Housing Corporation, Brief to Royal Commission, p. 35; Laycock, "Public Housing," pp. 253, 255-256; Rose, "Social Aspects of Public Housing," Ontario Housing, F a l l 1967, p. 20; J. Richard, "Co-operative Housing in Canada," Public A f f a i r s 10 (October 1947):239-242; Canadian Congress of Labour, "Housing Act Inadequate," p. 99; Davis, "Discouraging Programme," p. 210; Marrocco, "Housing Problem," p. 34; J. Murray, "Search for Shelter," p. 39; Carver, "The Social Aspects of Housing," Journal Royal Architectural Institute of Canada 27 (February 1950):75; S.H. Pickett, "Urban Renewal Program," p. 4; E l t e , "Public Housing," p. 34; F.H. Finnis, "Slums and Property Taxation," Canadian Tax Journal 16 (1968):158; Vancouver Housing Association, Houses for A l l , p. 22; "Slum Renewal?" Canadian  Architect 7 (June 1962):9; Lazarus, "Social J u s t i c e , " p. 13; Higgins, "A Total War on Bad Housing to Meet the Current C r i s i s , " Saturday Night, 28 February 1948, pp. 6-7. 3 J . Murray, "Search for Shelter," p. 40. 1 33 substitute for another. The program should provide assistance for home ownership, moderate-rental housing, building co-operatives, and slum clearance and redevelopment or r e h a b i l i t a t i o n . In addition, research was required into methods of reducing housing costs, and of improving inter-governmental co-operation on housing matters. Most importantly, however, i f the latent demand of those unable to meet market conditions was to be addressed, the Section 35 public housing provisions had to be more a c t i v e l y promoted or, i f necessary, modified to produce a more viable means of producing low-rental housing. The c r i t i c s stressed that low-rental housing had to be regarded as a normal part of community development and as a soc i a l u t i l i t y rather than as a welfare or charitable o p e r a t i o n . 2 8 " Even J.R. Nicholson, Minister responsible for CMHC and the National Housing Act, admitted in the House of Commons in 1964 that low-rental and public housing p o l i c y had been the federal government's greatest single area of f a i l u r e in housing, and that given that 90% of houses b u i l t under the NHA since 1954 had been for middle- and upper-income households, renewed emphasis ' must be placed on the needs of low-income households. 2 8 5 The housing c r i t i c s of the 1950's also pressed for changes to the public housing program in order to ameliorate problems which had been i d e n t i f i e d with i t . They recommended that land 2 8"Carver, "Social Aspects of Housing," p. 75; J . Murray, "Search for Shelter," p. 38. 2 8 5 S e e Nicholson, "War on Poverty," p. 6; "Across Canada: Amendments," p. 229. 1 34 uses and housing types in public housing projects be varied, and that means be found for integrating project residents more, f u l l y into the community-at-large. They also recommended s o c i a l mix in the projects for both economic and s o c i a l reasons. By expanding the income e l i g i b i l i t y requirements for public housing to include moderate-income households, for instance, the amount of subsidy required to b u i l d a given number of units could be reduced. Moreover, moderate-income households were increasingly in need of public a id i f they were to be adequately and affordably housed. Indeed, as early as 1949", Marsh had noted that housing costs had risen so much that public housing could safely house a mix of low- and moderate-income households without competing with the private s e c t o r . 2 8 6 S i m i l a r l y , Wheeler's 1955 study concluded: "Perhaps one of the most important points which emerges from the study i s that the need for an adequate supply of low-rent housing presents a problem that cannot be wholly solved by even the widest measure of slum clearance or by providing for the very poorest groups alone. There are, in addition, a large number of families with moderate incomes who require rental housing of an adequate standard at a price within t h e i r means, and so far these requirements have been only i n d i f f e r e n t l y met." 2 8 7 6Marsh, "Economics," pp. 32-33. 7Wheeler, "Need for Low-Rental," p. 102.. 135 4.3 Government Response to the Rental Problem Despite the p e r s i s t e n c e of r e n t a l problems and the recommendations f o r government a c t i o n o u t l i n e d above, f e d e r a l response to r e n t a l and l o w - r e n t a l problems d u r i n g the 1950's and e a r l y 1960's was minimal, and a i d l e v e l s r e l a t i v e l y l o w . 2 8 8 Given the l u c r a t i v e p r o v i s i o n s f o r home ownership in t r o d u c e d d u r i n g the 1950's and e a r l y 1960's, one can only conclude, as i n the past, that the minimal response of government to r e n t a l and lo w - r e n t a l problems d e r i v e d not only from the government's p o s i t i o n r e g a r d i n g the r o l e of both p r i v a t e e n t e r p r i s e and the pro v i n c e s i n housing p r o v i s i o n , but from i t s view of home ownership as the d e s i r a b l e tenure o p t i o n . Indeed, d u r i n g the Parliamentary debate over the 1954 NHA i n which o p p o s i t i o n c r i t i c s a t t a c k e d the government f o r i t s seeming gre a t e r concern fo r the s e c u r i t y of the l e n d i n g i n s t i t u t i o n s and b u i l d e r s than fo r the housing needs of low-income r e n t e r s , 2 8 9 L i b e r a l Members of Parliament defended t h e i r promotion of home ownership. One L i b e r a l M.P. a c c u r a t e l y r e f l e c t e d the view of many government members i n warning: " I f Canada i s going to be great and st r o n g . . . a t home and abroad; i f we are going to make a c o n t r i b u t i o n to the world 2 8 8 C l a y t o n Research A s s o c i a t e s , Rental Housing i n Canada Under  Rent C o n t r o l and De c o n t r o l Scenarios 1985-1991 (Toronto: Canadian Home B u i l d e r s ' A s s o c i a t i o n , 1984), Appendix B, p. B9. Thi s i s h a r d l y s u r p r i s i n g given that a 1958 Senate Report of the Standing Committee on Finance concluded that an extension of l o w - r e n t a l f a c i l i t i e s under the NHA was not warranted. "Senate Probe i n t o Housing S p o t l i g h t s Low-Cost Homes," F i n a n c i a l Post, 23 August 1958, p. 14. 2 8 9 H o u s e of Commons, Debates (1954), pp. 1002, 1008, 1358. 136 of today, then this nation of ours must be a nation of home-owners."2 9 0 With regards to s p e c i f i c measures pertaining to rental housing during the period, slum clearance grants and guarantees on rental revenues continued, but the major rental provisions -the moderate-rental Limited Dividend program and the Section 35 public housing program - remained e s s e n t i a l l y unchanged, despite their proven i n a b i l i t y to meet rental needs. 2 9 1 Moreover, the only rental clauses contained in the 1954 NHA were an authorization for CMHC to d i r e c t l y construct rental housing for personnel of the Canadian Armed Forces, and a provision for mortgage funds for the conversion of single-family dwellings to multi-family dwellings. Amendments in 1953 and 1956 removed the narrow re-use r e s t r i c t i o n s for cleared land which had discouraged some municipalities from engaging in slum clearance and public housing development, and introduced a s i g n i f i c a n t degree of f l e x i b i l i t y into urban redevelopment. Henceforth, valuable cleared inner-city land no longer needed to be used for low-rental housing but could be used for the most suitable purpose consistent with an o f f i c i a l community plan, provided arrangements had been made for the appropriate rehousing of 2 9 0 I b i d . , ' p . 1343. 2 9 1 A number of minor changes to the Limited Dividend program, such as increasing the size of loans available to and reducing the down-payment requirement for rental developers were made during the period. 1 37 displaced households. Obviously, however, the change did l i t t l e to promote the construction of rental housing. Another amendment in 1956 authorized 50% to 75% federal grants for urban renewal studies, in addition to the 50% grant for actual slum clearance already in e f f e c t . Amendments in 1960 provided for long-term, low-interest loans of up to 90% of lending value for rental accommodation for university s t u d e n t s , 2 9 2 and extended the Section 35 (renamed Section 36 in 1954) provisions to cover the a c q u i s i t i o n and/or r e h a b i l i t a t i o n of existing housing for rent in areas designated for urban renewal. Previously area-wide improvements had been d i f f i c u l t in that some dwellings were not deteriorated enough to warrant demolition. The 1960 amendments also extended home improvement loans to owners of rental property. In addition to these amendments, the Municipal Sewage Treatment Loan Program was introduced in 1960 in acknowledgement of both municipal d i f f i c u l t i e s in financing the servicing of r e s i d e n t i a l land, and the importance of the a v a i l a b i l i t y of serviced land to housing supply. As well, between 1957 and 1959 the federal government operated the Small Homes Loan Program to a s s i s t in the construction of small low- and moderate-rental houses. However, less than 6,000 units resulted from the program 2 9 3 which, according to Minister of Public Works, Howard Green, was 2 9 2 C e n t r a l Mortgage and Housing Corporation, Annual Report,  1960, p. 15. 2 9 3 C l a y t o n , Rental Housing Scenarios, Appendix B, Table B—11. 1 3 8 designed more to create employment than anything e l s e . 2 9 4 It was not u n t i l the 1964 amendments to the NHA that the federal government f i n a l l y took decided action on the slum and low-rental problems, and gave housing reformers some hope that the low-rental problem would f i n a l l y be addressed. The amendments resulted from a 1962 review by CMHC of i t s low-rental programs - a review stimulated by a CMHC Board of Directors suggestion to trim the public housing program. The 1964 l e g i s l a t i o n extended the limited dividend provisions" to non-profit organizations w i l l i n g to construct low-rental housing, p a r t i c u l a r l y for the e l d e r l y . 2 9 5 Under the terms of the Act, a non-profit corporation, defined as one wholly owned by a province, municipality, or agent thereof, or one constituted exclusively for charitable purposes, was e l i g i b l e for long-term, low-interest loans of 90% of lending value to construct new low-rental units, including hostel and dormitory rooms for single persons, or to purchase and convert e x i s t i n g buildings for low-rental use. The 1964 amendments also established a loan fund of $100 2 9 4 S e e H.H. Binhammer, "The F i s c a l Implications of a Housing Program," Canadian Journal of Economics and P o l i t i c a l Science 29 (August 1963):336. 2 9 5 S e v e r a l p r o v i n c i a l governments passed- concurrent legislation-to a s s i s t non-profit corporations to construct low-rental housing for the el d e r l y . A. Wilson, "Canadian Housing Le g i s l a t i o n , " p. 226. 139 m i l l i o n , 2 9 6 through Sec t i o n s 23A and 23B, for the p r e p a r a t i o n and implementation of urban renewal schemes. Henceforth, the c o s t s i n v o l v e d i n any economic, s o c i a l or e n g i n e e r i n g research, in p l a n n i n g the scheme, in the a c q u i s i t i o n and c l e a r i n g of land, and i n the i n s t a l l a t i o n of m u n i c i p a l s e r v i c e s were to be shared on an equal b a s i s by the f e d e r a l government. The amendment a l s o p r o v i d e d f o r f e d e r a l support i n employing persons to a s s i s t p r operty owners a f f e c t e d by the scheme i n a d j u s t i n g to i t , and to a s s i s t i n the r e l o c a t i o n of d i s p l a c e d households. F i n a l l y , under S e c t i o n 23C, the urban renewal amendment a u t h o r i z e d f i f t e e n year, l o w - i n t e r e s t f e d e r a l loans to the p r o v i n c e s or m u n i c i p a l i t i e s to cover two-thirds of t h e i r share of the c o s t s of p r e p a r i n g and implementing the s cheme. 2 9 7 Most imp o r t a n t l y , the 1964 amendments attempted to address the d e f i c i e n c i e s of the p u b l i c housing program. Although they maintained the f e d e r a l - p r o v i n c i a l p a r t n e r s h i p , renumbering i t S e c t i o n 35A, i n view of the apparent c o l l a p s e of that p a r t n e r s h i p , 2 9 8 the l e g i s l a t i o n p r o v i d e d an a l t e r n a t i v e formula f o r the p r o d u c t i o n of p u b l i c housing. Under S e c t i o n s 35B through 35E, the f e d e r a l government o f f e r e d short-term loans to the p r o v i n c e s , m u n i c i p a l i t i e s or t h e i r agents to cover 90% of the 2 9 6 R o s e , Prospects f o r R e h a b i l i t a t i o n of Housing i n C e n t r a l  Toronto (Toronto: C i t y of Toronto Planning Board and C e n t r a l Mortgage and Housing C o r p o r a t i o n , 1966), p. 14. 2 9 7 R . T . Adamson, "Housing P o l i c y and Urban Renewal," i n Urban  S t u d i e s : A Canadian P e r s p e c t i v e , eds. N.H. L i t h w i c k and G. Paquet (Toronto: Methuen, 1968), p. 236. 2 9 8 R o s e r e p o r t s that no approvals under S e c t i o n 35 were given a f t e r the economic downturn of 1957-58. Rose, Canadian Housing  P o l i c i e s , p. 37. 1 40 costs of acquiring and servicing land for public h o u s i n g , 2 9 9 a provision making i t possible for municipalities to e s t a b l i s h land banks for future low-rental needs. The same sections provided for long-term loans to cover 90% of the c a p i t a l costs of constructing or acquiring and r e h a b i l i t a t i n g low-rental dwellings, and to cover 50% of the operating losses which would be sustained by offering the units to low-income households at subsidized rent l e v e l s . 3 0 0 The 1964 amendments ushered in a new era in housing p o l i c y in Canada and foreshadowed a greater federal commitment to resolution of low-rental problems. Given considerable p r o v i n c i a l interest in the new public housing provisions and the general prosperity of the times, housing c r i t i c s looked to the mid-1960' s, as they had the 1950's, with optimism that the longstanding rental and low-rental problems would f i n a l l y be relieved. 2 9 9 F o r the f i r s t time the l e g i s l a t i o n referred to the units as "public housing". 3 0 0Rose, Canadian Housing P o l i c i e s , p. 40. 141 CHAPTER 5 URBAN RENTAL PROBLEMS AND POLICIES, 1964-1985 Stimulated by a tremendous backlog of u n s a t i s f i e d demand, continuing high rates of immigration and urbanization, sustained prosperity, and the coming of age of the post-war "baby boom" generation, the r e s i d e n t i a l construction boom which characterized the 1950's and early 1960's continued for most of the 1964-1985 period.•Indeed, r e s i d e n t i a l s t a r t s for the 1968-1979 period averaged 229,000 units per y e a r , 3 0 1 well above the estimated requirement of 200,000 units per year made by both the Economic Council of Canada (EEC) in 1967, and the federal Task Force on Housing and Urban Development in 1969. 3 0 2 The high leve l s of apartment construction which had commenced in the late 1950's and early 1960's also gained momentum throughout the 1960's and into the early 1970's. By 1969, urban apartment starts represented 62% of a l l urban r e s i d e n t i a l s t a r t s , 3 0 3 3 0 1Canada Mortgage and Housing Corporation, "Analysis of the Rental Market," p. 3. 3 0 2Task Force on Housing and Urban Development, Report, p*. 23; Economic Council of Canada, Fourth Annual Review; The Canadian  Economy from the 1960's to the 1970's (Ottawa; Queen's Printer, 1967), pp. 133-134. 3 0 3Urban refers to centers of 10,000 and over population. 142 though they f e l l off sharply shortly thereafter. Despite the impressive s t a t i s t i c s and a substantial improvement in the quality of the Canadian housing stock over the p e r i o d , 3 0 4 however, the urban housing problem emerged as an increasingly important topic of public concern throughout the 1960's, the 1970's, and into the 1980's. The concern stemmed from two sources. The f i r s t was the building industry's f a i l u r e , despite i t s generally excellent performance, to s a t i s f y the rampant demand for h o u s i n g , 3 0 5 such that a shortage of housing, and p a r t i c u l a r l y of rental h o u s i n g , 3 0 6 was evident throughout much of the p e r i o d . 3 0 7 By 1981, in fact, vacancy rates in many major urban centers were approaching z e r o . 3 0 8 Even more 3 0 4 I n 1976, only 2.1% of families remained doubled-up, compared to 9.4% in 1951; only 4.3% of households contained more than 1 person per room, compared to 18.8% in 1951; and only 3% of the housing stock lacked major physical attributes l i k e plumbing, heating and sanitary f a c i l i t i e s compared to 40% in 1951. Task Force on Canada Mortgage and Housing Corporation, Report, p. 30. 3 0 5 S e e Freeman, "The Housing C r i s i s , " p. 69; Economic Council, Fourth Review, p. 23. 3 0 6 T h e 1967 ECC Report estimated the minimum number of apartment starts per year which would be required by the end of the 1960's at 120,000. But starts a c t u a l l y averaged 96,000 per year. See Canada Mortgage and Housing Corporation, Canadian Housing  S t a t i s t i c s , l977:Table 9, l982:Table 9; Economic Council, Fourth  Review, p. 135; Beatrice R i d d e l l , "Ottawa's Push for New Homes Less E f f e c t i v e for Apartments?" Financial Post, 8 November 1975, p. 5; Wheeler, "National Housing Allowance," p. 9. 3 0 7 S e e Murray Webber, "Canada's Housing C r i s i s i s the Greatest Ever," Financial Post, 29 A p r i l 1967, p. 7; Doris Boyle, "Needed: 2.4 M i l l i o n New Housing Units in 1970's," Financial  Post, 4 October 1969, p. 10; Task Force on Housing and Urban Development, Report, p. 14. 3 0 8Canadian Real Estate Association, Housing in Canada, Foreward, p. 11. 1 43 important, however, was the increasing unaffordability of the housing being produced, for both lower- and middle-income households. 3 0 9 Periodic shortages of mortgage funds, r i s i n g land and construction costs, and soaring interest rates combined with the overall shortage to dramatically raise the price of both new and existing housing which despite r i s i n g incomes and increased labour force p a r t i c i p a t i o n rose faster than any other component of the Consumer Price Index (CPI) in the f i r s t half of the p e r i o d . 3 1 0 The price r i s e was so steep, in fact, that a 1967 a r t i c l e in Macleans warned: "Already buying a house i s beyond the reach of most Canadians. Soon i t w i l l be only for the very r i c h . " 3 1 1 The p o l i t i c a l potency of the middle-class ensured that the housing problem gained the public spotlight. Indeed, in his introduction to the proceedings of the 1968 Canadian Conference 3 0 9Housing a f f o r d a b i l i t y problems for middle-income households increased despite the propensity of such households^ to have- two wage-earners. See I l l i n g , "The Rising Cost of Housing and Problems of Financing," in Wheeler, Right to Housing, pp. 144, 161; Webber, "Canada's Housing C r i s i s , " p. 7; Wheeler, "Introduction," in Wheeler, Right to Housing, p. 13; Wheeler, Right to Housing, p. 298; Boyle, "Needed," p. 10; Henry F l i e s s , "Affordable Housing," Canadian Architect 22 (August 1967):19; A.E. Diamond, Housing in the 1970's (Toronto: Canadian Housing Design Council" 1970), pi 20; Task Force on Housing and Urban Development, Report, p. 14; Paul Hellyer, " C r i s i s Ahead?" Canadian Business 43 (1970):26; Canada Mortgage and Housing Corporation, Projecting Long-Term Housing Requirements and  Assessing Current Housing Needs: The Canadian Experience, a Monograph Prepared for the Seventh Session of the Working Party on Housing; Economic Commission for Europe, Committee on Housing, Building and Planning, Geneva, A p r i l 24-28, 1978. (Ottawa: CMHC, 1978), p. 2. 3 1 0 S m i t h , Housing in Canada, p. 12. 3 1 1 S t e e d , "The Lingering Death," p. 15. 1 44 on Housing, Michael Wheeler noted: "With the extension of the [housing] problem to the middle-income groups, housing became a p o l i t i c a l issue of national concern, in marked contrast with the public indifference of preceding y e a r s . " 3 1 2 The issue became so prominent, in fact, that i t prompted a ho'st of housing conferences and government-sponsored studies and task forces dedicated to examining and prescribing solutions to Canada's growing housing and urban development problems. The major conferences and studies included the 1967 Federal-Provincial Conference on Housing- and Urban Development, the 1968 Canadian Conference on Housing sponsored by the Canadian Welfare Council (CWC), the 1969 report of the Task Force on Housing and Urban Development, N.H. Lithwick's 1970 study on Canadian urban problems, and.the 1972 report of the federal Task Force on Low-Income Housing. In the late 1970's and early 1980's, major housing-related reports were also prepared by the Canadian Council on Social Development (formerly the CWC), by a federal-p r o v i n c i a l Task Force on the Supply and Price of Serviced Residential Land, by a federal Task Force on Canada Mortgage and Housing Corporation (CMHC), and by CMHC on the performance of i t s s o c i a l housing programs and of the rental market in general. In addition, an A l l Sector National Housing Conference was organized by the Canadian Real Estate Association in 1981, and a symposium on the rental housing market and housing allowances was sponsored by the Canadian Council on Social Development 3 1 2Wheeler, "Introduction," p. 13. 145 (CCSD) in 1982. Despite the attention focussed on the housing problem, the deteriorating economic conditions and r i s i n g unemployment of the 1970's exaccerbated the a f f o r d a b i l i t y problem and dampened production, p a r t i c u l a r l y in the rental sector. By the mid-1970' s, a housing shortage amidst a large inventory of new but unaffordable and thus unoccupied units was e v i d e n t , 3 1 3 and the 1980's began with the housing situation approaching what the Chairman of the 1981 A l l Sector Housing Conference, c a l l e d "a state of c r i s i s " . 3 1 4 5.1 The Rental Problem Most of the conferences and studies of the 1964-1985 period focussed on the housing problems of low-income households. 3 1 5 Given the generally lower incomes of tenants r e l a t i v e to home 3 1 3Mark Ricketts, "Hearth of the Matter i s : Most of Us Can't Afford One," Financial Post, 19 A p r i l 1975, p. 1. 3 1"Canadian Real Estate Association, Housing in Canada, Foreward, p. 11. 3 1 5 S e e Wheeler, "Introduction," p. 13; Wheeler, Right to  Housing, pp. 268, 298; H.N. Colburn, "Health and Housing," in Wheeler, Right to Housing, p. 227; Webber, "Canada's Housing C r i s i s , " p. 7; Wheeler, "Study and Action," p. 8; F l i e s s , "Affordable Housing," p. 19; Canadian Council on Social Development, A Review of Canadian Social Housing Policy (Ottawa: CCSD, 1977), p. 33. 1 4 6 owners, 3 1 6 and the large proportion of renters drawn- from the lowest two income q u i n t i l e s (as documented in Table 1 in Chapter 1 ) , i t is probably f a i r to say that much of the discussion at the conferences and in the reports centered on low-income rental problems. The concern over rental housing in the past twenty years has focussed on a l l three elements of the rental problem -quality, supply, and a f f o r d a b i l i t y . Despite the overall national improvement in housing quality, slum conditions and physically inadequate, over-crowded, and unsuitable housing has remained a problem for many renter households, p a r t i c u l a r l y large families and those on fixed incomes. 3 1 7 A 1 9 7 4 CMHC-Statistics Canada study found that nearly 12% of the rental stock was in poor external condition and that renters were more than twice as l i k e l y as owners to be l i v i n g in poor h o u s i n g . 3 1 8 Even in the 1 9 6 0's and 1 9 7 0 ' s , residual pockets of nineteenth and early twentieth century slum dwellings remained in evidence in large urban centers, while much rural and native housing, which i s not the focus of t h i s thesis, remains in extremely poor condition today. 3 1 6 I n 1 9 8 1 , renter incomes averaged 45% lower than home owner incomes and the incidence of a f f o r d a b i l i t y problems among renters was more than 2 / 3 that of owners. Canadian Real Estate Association, Housing in Canada, p. 1 5 1 ; Canada Mortgage and Housing Corporation, Section 5 6 . 1 Evaluation, p. 3 5 . 3 1 7 S e e Wheeler, Right to Housing, p. 2 6 8 ; Webber, "Canada's Housing C r i s i s , " p. 7 ; A. Onibokun, "Housing for Low-Income Groups," Community Planning Review 2 2 (Spring 1 9 7 2 ) : 2 3 . 3 1 8 S e e Rose, Canadian Housing P o l i c i e s , p. 1 6 9 . 147 In addition, as a result of declining apartment construction after 1973, shortages of rental housing were evident across Canada throughout the 1970's and early 1980's. Indeed, at the 1981 A l l Sector Housing Conference, the Director of the Alberta Rental Incentive Programme reported the rental housing shortage to be unparalleled in the history of the n a t i o n . 3 1 9 As a result of the shortage and as Table 14 indicates, rental vacancy rates plummeted. In the larger urban centers, rates of less than 1% were not uncommon by the early 1980's, 3 2 0 and low- and moderate-income renters were once again doubling-up and even residing in m o t e l s . 3 2 1 The situation deteriorated to such an extent that in some urban areas landlords and tenants were v i r t u a l l y at war. In Halifax, for instance, where the rental vacancy rate f e l l to .5% in 1 982 , 3 2 2 tenants formed the Metro Area Tenants Union to oppose the removal or weakening of rent controls, to uphold tenant rights and to ensure enforcement of f i r e , safety, health, and building codes. 3 1 9Canadian Real Estate Association, Housing in Canada, p. 155. 3 2 0 V i c t o r i a and Vancouver, which suffered the worst rental housing situation in North America in the early 1980's, had rental vacancy rates of .1% and .2% in 1980-81. Thomas Hopkins, "Hunger for Housing," Macleans, 30 March 1981, p. 36; "Sardines in the B.C. Can," Macleans, 7 A p r i l 1980, p. 24. 3 2 Hopkins, "Sardines," p. 24. 3 2 2 J o a n Weeks, "Tough Times for Tenants - and Landlords," A t l a n t i c Insight 4 (July 1982):9. Tahlfi 14 National Average Apartment Vacancy Rates.1 Canadian Census Metropolitan Areas. 1964-1985 Year Vacancy Rate (t) Year Vacancy Rate (?) Year Vacancy Rate («) Year Vacancy Rate (t) 1964 5.5 1970 3.6 1976 1.3 1982 1.9 1965 4.4 1971 3.7 1977 2.2 1983 2.5 1966 3.1 1972 2.7 1978 3.0 1967 1.3 1973 2.1 1979 2.8 1968 2.6 1974 1.2 1980 2.1 1969 3 .1 1975 1.2 1981 1.2 1. Vacancy rate In privately Initiated apartment structures of 6 units or more. Souccfi: CMHC, Apartment Vacancy Survey. Ottawa, Various Years. Stat is t ics Canada, Housing Stock in Canada. The Provinces and Terr i tor ies. Ottawa, Various Years. 1 49 In return, landlords, caught between rent controls and r i s i n g interest rates, established a computer checking network to provide them with information regarding the cred i t rating, personal habits and work record of current and prospective t e n a n t s . 3 2 3 It was, however, the severe shortage of affordable housing for lower-income renters which emerged as the major problem of the 1960's, 1970's, and early 1980's, 3 2" and i t was th i s element of the low-rental problem which received the bulk of the attention at the conferences and in the reports. CMHC figures on national shelter costs and family income suggest that rental housing for the average family became more affordable during the 1970's. 3 2 5 Average rent-to-income ratios for renter households dropped to 17.9% in 1972 from 18.3% in 1962, and declined even further to 16.3% in 1976. 3 2 6 The decline in rent-to-income ratios ended in the early 1980's, however, with the average 3 2 3Weeks, "Tough Times," p. 9; Jane Cainey, "Halifax: Renters' Rights Advocated," City Magazine 6 (Spring 1983):7. 3 2"See Council on Social Development, And Where Do We Go From  Here? Proceedings from a Symposium on the Rental Housing Market and Housing Allowances, Winnipeg, October 4-6, 1982 (Ottawa: CCSD, 1983), p. 70; Council on Social Development, Social  Housing Policy, p. x v i i ; Canada Mortgage and Housing Corporation, Section 56.1 Evaluation, Executive Summary, p. 2; Hulchanski and B. Grieve, Housing Issues and Canadian Federal  Budgets, UBC Planning Papers, Canadian Planning Issues, No. 12 (Vancouver: University of B r i t i s h Columbia, School of Community and Regional Planning, 1984), p. 13. 3 2 5 S e e Canada Mortgage and Housing Corporation, Projecting, p. 15; Smith, Housing in Canada, p. 12. 3 2 6 S m i t h , Anatomy of a C r i s i s , p. 13; Task Force on Canada Mortgage and Housing Corporation, Report, p. 33. 150 r a t i o r i s i n g to 18% in 1982 from 16% in 1978. 3 2 7 Moreover, average rent-to-income figures conceal the real a f f o r d a b i l i t y and thus a v a i l a b i l i t y problems faced in some geographic a r e a s 3 2 8 and by some groups, p a r t i c u l a r l y senior c i t i z e n s , large families, and other t r a d i t i o n a l l y lower-income renters. Aggregate s t a t i s t i c s , though not an e n t i r e l y r e l i a b l e measure of r e a l i t y , provide some indication of the extent of rental a f f o r d a b i l i t y problems for lower-income households throughout the period. In the early 1970's, the average rent l e v e l paid in u r b a n 3 2 9 Canada hovered around $120 per month, 3 3 0 though rents were s i g n i f i c a n t l y higher in the larger urban areas l i k e Toronto where older one bedroom units in the central c i t y commanded average rents of $185 per month. 3 3 1 However, the upper income l i m i t s of the lowest two q u i n t i l e s - $3,000 and $6,000 per year r e s p e c t i v e l y 3 3 2 - enabled them to pay rent le v e l s of no more than $62.50 and $125 per month at 25% of income. The 3 2 7 J e f f r e y Patterson, "Rent Review in Ontario and Factors Affecting the Supply of Rental Housing," Draft Discussion Papers in Social Policy, No. 1 (Toronto: Social Planning Council of Metropolitan Toronto, 1985), p. 14. 3 2 8 I n 1982, for instance, although rent levels were r i s i n g at a rate equal to other CPI components on a national l e v e l , in nine of f i f t e e n major urban centers they were outstripping the aggregate CPI. Ann S h o r t e l l , "Deeper into Rent Controls," Financial Post, 25 December 1982, p. 1. 3 2 9Urban is defined as non-farm. 3 3 0Canada Mortgage and Housing Corporation, Projecting, p. 15. 3 3 1 " F o o d and Housing: Rents and Homes May Outpace the Increase in Food Costs," Financial Post, 12 August 1972, p. 8. 3 3 2 D e n n i s and Fish, Programs in Search of a Policy, p. 68. 151 situation for the average low-income renter was much worse. With average annual incomes of $1,858 and $4,541, 3 3 3 t y p i c a l f i r s t and second q u i n t i l e renters, many of whom were old age pensioners, 3 3" could afford to pay no more than $38.70 and $94.60 per month for rent. By 1981, the average rent paid in Canada was $296 per month, 3 3 5 although average rents on new two bedroom units ranged from $500 to $666 per month, 3 3 6 with many in the larger urban centers in the $800 per month and above ra n g e . 3 3 7 Yet the annual income l i m i t s of f i r s t and second q u i n t i l e renters - $6,900 and $12,100, r e s p e c t i v e l y 3 3 8 -dictated that low-income renters could pay no more for rent than $174 and $305 per month at the newly accepted 30% of income rule of thumb. Though average income figures for f i r s t and second q u i n t i l e renters are not available, the s i t u a t i o n of the average low-income renter was undoubtedly worse. The housing studies of the 1970's and early 1980's 3 3 3 I b i d . , p. 60. 3 3"The average annual incomes of old age pensioners ranged from $1,858 to $1,920. Ibid., p. 184. 3 3 5Canada Mortgage and Housing Corporation, "Analysis of the Rental Market," p. 7. 3 3 6 S e e Carolyn Green, "Rent Controls Tighten Knot on Builders' Purse Strings," Financial Post, 20 March 1982, p. S17; Canadian Real Estate Association, Housing in Canada, p. 203. 3 3 7 S h o r t e l l , "Higher Rents Push Most Tenants Out of Market," Financial Post, 5 June 1982, p. C18. 3 3 8 C l a y t o n , A Longer Term Rental Housing Strategy for Canada (Toronto: Housing and Urban Development Association of Canada, 1984), p. 6. 1 52 documented the significance of such s t a t i s t i c s for low-income renters. The 1972 Report of the Task Force on Low-Income Housing, known as the Dennis and Fish Report after Task Force Chairman, Michael Dennis, and co-author, Susan Fish, noted that f i r s t q u i n t i l e renters experienced rent-to-income ratios three times greater than f i f t h q u i n t i l e r e n t e r s . 3 3 9 The CCSD's 1977 Review of Canadian Social Housing Policy estimated that one m i l l i o n private sector renter households, most of them l i v i n g below the o f f i c i a l government poverty l i n e , spent more than 25% of income on rent in 1971, with over 60% of those hdusehlds spending in excess of 35%. 3 4 0 S i m i l a r l y , the 1979 report of the Task Force on CMHC observed that 23% of renters o v e r a l l , and 57% and 36% of f i r s t and second q u i n t i l e renters, respectively, were spending more than 25% of income on rent in 1976, although the average rent-to-income r a t i o at the time was 16.3%. 3" 1 By 1981, the proportion of private sector renter households unable to obtain suitable and adequate shelter at an affordable rent-to-income r a t i o had f a l l e n to 18% or 521,600 households, 3 4 2 although the figures are not s t r i c t l y comparable with those of previous years given that the rent-to-income r a t i o had increased to 30%, and the formula for determining income had been 3 3 9 D e n n i s and Fish, Programs in Search of a Policy, p. 5. 3 4 0 C o u n c i l on Social Development, So c i a l Housing Policy, pp. 23, 25. 3 4 1 T a s k Force on Canada Mortgage and Housing Corporation, Report, pp. 32-35. 3 4 2 S e e Canada Mortgage and Housing Corporation, "Analysis of the Rental Market," p. 1; Canada Mortgage and Housing Corporation, Section 56.1 Evaluation, Executive Summary, p. 2. 153 modified. Considering a l l three elements of the rental problem, the CCSD noted in i t s 1977 report that 1.2 mi l l i o n or 40% of a l l renter households, two-thirds of whom l i v e d below the poverty l i n e , were experiencing a housing problem. 3" 3 The situation was so serious that B. Danson, federal Minister responsible for CMHC, described the rental situation in 1975 as the "closest thing approaching a c r i s i s which confronts us". 3"" In order to understand why rental and low-rental problems remain so serious today, f i f t y years after the Parliamentary Committee on Housing documented the plight of renter households, i t i s necessary to examine a c t i v i t y in and government policy towards a l l three rental sectors - private, public and non-p r o f i t - during the past two decades. Before doing that, however, a br i e f discussion of recommendations for government action on rental problems is appropriate. 5.2 Recommendations for Government Action on the Rental Problem Given the number of conferences, task forces and studies during the 1964-1985 period, prescriptions for resolving the ongoing rental problem were not in short supply. One theme 3 " 3 C o u n c i l on Social Development, Social Housing Policy, pp. 31, 33. 3""House of Commons, Debates (1975), p. 719. 1 54 apparent throughout the entire period was targetting the "t r u l y needy", although there appear to have been as many d e f i n i t i o n s of "needy" as there were interest groups. 3" 5 Proposals for meeting the housing needs of the i d e n t i f i e d needy groups have varied widely too, and quite diverse proposals have enjoyed popularity at d i f f e r e n t times. The especially popular proposals in the late 1960's and throughout most of the 1970's were increased aid to non-profit, co-operative and li m i t e d dividend developers, resident and public p a r t i c i p a t i o n in the planning and management of large rental developments, and' an increased emphasis on r e h a b i l i t a t i o n and conservation of older stock. Longstanding c a l l s for more intergovernmental co-operation and planning, for additional aid for housing research, and for the establishment of a federal ministry responsible for housing were also re i t e r a t e d . Other proposals which received some attention included public land assembly and a mixed supply-demand scheme whereby government would continue to fund non-profit, co-operative or public housing while supplementing the incomes of lower-income households to enable them to compete more e f f e c t i v e l y in the private rental market. F i n a l l y , a s i g n i f i c a n t number of housing analysts suggested that the mobility requirements of Canadian f a m i l i e s , 3 4 6 the costs of individual 3 4 5 T h e " t r u l y needy" have been successively i d e n t i f i e d as single low-income persons, senior c i t i z e n s , native Canadians and other minorities, single mothers, the working poor, low-income families with children, the disabled, the chronically i l l , and moderate-income households. 3 4 6 I n the 1968 period, one-quarter of Canadian families moved every year. LaBerge, "A New Concept," p. 25. 1 55 home ownership, and the land and transportation system requirements of single-family dwellings were rendering home ownership increasingly obsolete. At the 1968 Canadian Conference on Housing, for instance, Albert Rose remarked: "We can no longer expect to be known primarily as a nation of home-owners: the very pace of our urban economic development makes i t absurd to remain wedded to these assumptions of 1945 or 1955." 3 4 7 Given that an increasing proportion of Canadian households, including families with chidren, were destined to remain renters for most of their l i v e s , 3 4 8 society needed to raise rental tenure from i t s "second-class" status and direc t increased energy and resources into rendering i t a more a t t r a c t i v e , secure and suitable housing o p t i o n . 3 4 9 Towards the end of the 1970's, the focus of proposed solutions to Canada's rental problems s h i f t e d away from d i r e c t government involvement in housing provision and towards renewed reliance on a government-supported private sector. While some analysts have continued to c i t e the need for government-assisted non-profit and co-operative housing and even a revised public housing program, a powerful lobby group composed of the 3 4 7Rose, "Canadian Housing P o l i c i e s , " in Wheeler, Right to  Housing, p. 136. 3 4 8 S e e Flemming, "Tenants Outnumber Landlords," p. 61; Rose, " C i t i e s of C l i f f Dwellers," Canadian Welfare 44 (1968):235. 3 4 9 S e e Steed, "The Lingering Death," p. 15; LaBerge, "A New Concept," p. 25; Canadian Real Estate Association, Housing in  Canada, p. 52; Flemming, "Tenants Outnumber Landlords," p. 61. 1 56 development and r e a l e s t a t e i n d u s t r i e s has proposed phasing out rent c o n t r o l s and the s o c i a l housing p r o g r a m s , 3 5 0 except f o r " s p e c i a l needs" groups such as the e l d e r l y and the d i s a b l e d , and s e l l i n g o f f p u b l i c and s o c i a l housing u n i t s i n favour of an income-tested s h e l t e r allowance scheme. C e n t r a l to t h i s proposal i s the r e d e f i n i t i o n of the l o w - r e n t a l problem as an "incomes p r o b l e m " , 3 5 1 the a m e l i o r a t i o n of which w i l l enable the p r i v a t e r e n t a l s e c t o r to f u n c t i o n once ag a i n . Other c u r r e n t p r o p o s a l s i n c l u d e i n c r e a s e d p r i v a t e / p u b l i c s e c t o r c o - o p e r a t i o n , production i n c e n t i v e s f o r p r i v a t e r e n t a l developers, the c r e a t i o n of a separate r e s i d e n t i a l mortgage and c a p i t a l funds market with s t a b l e or lower r a t e s of i n t e r e s t than other f i n a n c i a l markets, and i n n o v a t i v e ideas such as adaptable h o u s i n g 3 5 2 which can be e a s i l y and i n e x p e n s i v e l y t a i l o r e d to the needs of a v a r i e t y of housing consumers over i t s l i f e t i m e . 5.3 The P r i v a t e Rental Sector and Government Response to the  R e n t a l Problem P r i v a t e r e n t a l p r oduction remained at high l e v e l s throughout the 1960's and e a r l y 1970's. Indeed, r e n t a l apartment u n i t s represented almost 45% of a l l r e s i d e n t i a l c o n s t r u c t i o n i n 3 5 0 I n t h i s t h e s i s , s o c i a l housing r e f e r s to n o n - p r o f i t and co-o p e r a t i v e housing. 3 5 1 S e e Rose, Canadian Housing- P o l i c i e s , p. 191; N-.H. L i t h w i c k , "Housing: In Search of a C r i s i s , " Canadian Forum 48 (1969):9; N.H. L i t h w i c k , Urban Canada, p. 27; Task Force on Canada Mortgage and Housing C o r p o r a t i o n , Report, p. 35. 3 5 2 C a n a d i a n Real E s t a t e A s s o c i a t i o n , Housing i n Canada, p. 115. 157 the 1960's. 3 5 3 As Table 15 indicates, apartment s t a r t s , most of which were a result of private sector i n i t i a t i v e , rose from an annual average of 12,400 per year in the late 1940's 3 5" to 83,600 in the late 1960's and 96,500 in the early 1970's. According to S t a t i s t i c s Canada, the rental stock t r i p l e d between 1946 and 1983, mostly due to construction a c t i v i t y during the 1960's. 3 5 5 By 1970, in fact, almost one-half of the two m i l l i o n rental units in Canada had been b u i l t since i 9 6 0 , 3 5 6 and apartments and f l a t s accounted for 28.2% of the t o t a l Canadian housing s t o c k . 3 5 7 The boom was especially prevalent in urban areas of 10,000 and over population. In those centers, as Table 16 i l l u s t r a t e s , apartment construction exceeded single-family dwelling construction every year between 1963 and 1974, sometimes by two or three times. The apartment boom of the 1960's was a response to a number of demographic and economic factors which spawned great demand for rental housing. 3 5 3 S e e Saywell, Housing Canadians, p. 191; Canada Mortgage and Housing Corporation, Projecting, p. 12. 3 5"Clayton, Rental Housing Scenarios, Executive Summary, p. 9. 3 5 5 I b i d . , p. 8. 3 5 6 D e n n i s and Fish, Programs in Search of a Policy, p. 353. 3 5 7Canada Mortgage and Housing Corporation, Projecting, p. 11. 158 Table 15 Private Sector Rental* Starts Canada. 1964-1983 T o t a l P r i v a t e S e c t o r R e n t a l S t a r t s Y e a r R e n t a l S t a r t s ( U n i t s ) As t o f T o t a l 1 2 3 1964 7 5 , 1 1 8 7 4 , 4 6 0 99 .1 1965 7 7 . 8 9 0 7 5 . 6 3 3 97 .1 1966 51 ,551 4 5 , 4 5 2 8 8 . 2 1967 7 4 , 2 5 8 6 3 , 0 6 6 8 4 . 9 1968 103,383 9 0 , 7 5 7 8 7 . 8 1969 110,917 9 0 , 7 9 2 8 1 . 9 1970 9 1 . 8 9 8 68 .211 7 4 . 2 1971 106,187 8 1 , 1 0 2 7 6 . 4 1972 103,715 8 5 , 0 7 4 8 2 . 0 1973 106,451 9 1 , 7 0 7 86 .1 1974 7 4 , 0 2 5 5 6 , 5 7 0 7 6 . 4 1975 70 .361 5 1 . 9 9 9 7 3 . 9 1976 8 9 , 3 2 4 67 ,251 7 5 . 3 1977 9 2 , 3 2 7 8 1 , 0 0 2 8 7 . 7 1978 77 ,327 6 6 , 3 4 6 8 5 . 8 1979 5 8 , 3 8 7 5 2 , 0 6 5 8 9 . 2 1980 4 8 . 3 2 9 3 8 . 8 2 7 8 0 . 3 1981 6 1 , 6 0 9 4 8 , 4 6 2 7 8 . 7 1982 5 3 , 1 6 2 3 8 , 7 0 9 7 2 . 8 1983 44.124 3 0 . 6 1 7 6 9 . 4 1. A p a r t m e n t s used a s p r o x y f o r r e n t a l . Sauces: CMHC, C a n a d i a n H o u s i n g S t a t i s t i c s . O t t a w a , V a r i o u s Y e a r s . C l a y t o n R e s e a r c h A s s o c i a t e s L i m i t e d (1984) R e n t a l H o u s i n g in Canada U n d e r R e n t C o n t r o l and D e c o n t r o l S c e n a r i o s . 1 9 9 5 - 1 9 9 1 , A p p e n d i x B , T a b l e B - 1 1 . Tahlfl Ifi Urban1 Residential S t a r t s . By Type Canada. 1964-1982 T o t a l S i n g l e F a m i l y S t a r t s Apar tmen- I- S t a r t s 2 Y e a r S t a r t s ( u n i t s ) As t o f T o t a l 1 2 3 4 1964 133 ,562 5 0 , 3 8 7 7 1 , 9 1 0 5 3 . 8 1965 135 .218 49 .061 7 4 . 6 7 9 5 5 . 2 1966 108 ,329 4 8 , 2 7 0 4 9 , 1 7 8 4 5 . 4 1967 131 ,858 4 6 , 1 2 9 7 0 , 5 8 7 5 3 . 5 1968 162 ,267 4 6 , 7 4 0 9 9 , 2 4 4 6 1 . 2 1969 169,739 4 6 , 7 8 7 104 ,622 6 1 . 6 1970 150 .999 4 0 . 8 5 9 8 5 . 7 8 8 5 6 . 8 1971 180 ,948 5 6 , 8 8 7 9 8 , 8 2 0 5 4 . 6 1972 2 0 6 , 9 5 4 8 0 , 5 5 5 9 8 , 3 0 0 4 7 . 5 1973 2 1 1 , 5 4 3 8 5 , 0 8 9 9 8 , 7 7 6 4 6 . 7 1974 169,437 7 8 , 1 5 9 6 7 , 5 9 9 3 9 . 9 1975 181 .846 8 3 . 8 2 7 6 3 . 6 4 2 3 5 . 0 1976 2 0 9 , 7 6 2 85 ,301 8 0 , 0 6 2 3 8 . 2 1977 200,201 7 4 , 6 0 0 8 4 , 4 7 0 4 2 . 2 1978 178 ,678 7 2 , 9 3 2 69 ,087 3 8 . 7 1979 151,717 7 2 , 8 8 5 5 1 , 6 3 5 3 4 . 0 1980 125 .013 6 0 . 6 8 8 4 3 . 2 1 5 3 4 . 6 1981 142,441 6 3 , 3 8 3 5 4 , 7 2 0 3 8 . 4 1982 104 .792 3 9 . 1 1 3 48.379 4 6 . 2 1. Urban = Census M e t r o p o l i t a n A r e a s . 2 . I n c l u d e s A p a r t m e n t s and Row H o u s e s . Source: CMHC, C a n a d i a n H o u s i n g S t a t i s t i c s . O t t a w a , V a r i o u s Y e a r s . 160 One demographic factor was a continuing trend to smaller, non-family households as a result of a declining birthrate, a r i s i n g divorce rate, and increased l o n g e v i t y . 3 5 8 A second was the continued high rate of household formation res u l t i n g from the aging of the post-war baby boom generation and r i s i n g income l e v e l s . In a l l , CMHC figures indicate that the rate of growth of renter households rose from 66,000 per year in the early 1960's to 107,000 per year in the early 1970's. 3 5 9 The f i r s t economic factor spurring apartment demand" was the need to increase densities and to exploit economies of scale in building given the sharply r i s i n g costs of land, construction and servicing. Another was the existence of rental tax preferences which rendered rental investment p a r t i c u l a r l y a t t r a c t i v e to the wealthy. A f i n a l economic factor was the u n a f f o r d a b i l i t y of home ownership for many households. 3 6 0 Though there is not unanimous agreement on the point, a general conclusion at the 1968 Canadian Conference on Housing and in many media reports was that the price of houses for purchase had 3 5 8 A n n u a l net non-family household formation increased by 84% between the 1961-1966 period and the 1966-1976 period. Smith, "The C r i s i s in Rental Housing: A Canadian Perspective," Annals  of the American Academy of P o l i t i c a l and Social Science 465 (January 1983):63. 3 5 9Canada Mortgage and Housing Corporation, "Analysis of the Rental Market," p. 3. 3 6 0 A 1969 report by Kellough and Beaton Land Economists observed that the t r a d i t i o n a l movement of families from rental accommodation to houses of their own had decreased by two-thirds due to escalating prices and financing problems. W.R. Kellough and W. Beaton, "Anatomy of the Housing Shortage," Community  Planning Review 19 (Spring 1969):18. 161 outstripped increases in wage rates, average individual incomes and average t o t a l incomes in the 1949-1967 period, p a r t i c u l a r l y for fixed-income households. 3 6 1 Whether they had or not, s t a t i s t i c s indicate that home ownership was beyond the reach of a substantial number of Canadians. In 1968, for instance, the t y p i c a l house financed under the National Housing Act (NHA) was valued at $20,270. 3 6 2 The average MLS l i s t i n g in the twenty-five major urban centers stood at $19,264, 3 6 3 r i s i n g as high as $27,637 in Toronto and $25,089 in Montreal. 3 6" Yet, given 1969 upper income l i m i t s of $3,000, $6,000, and $8,000 for the f i r s t three income q u i n t i l e s , 60% of the Canadian population could not afford to purchase a house exceeding $20,000 in v a l u e . 3 6 5 The situation was even grimmer i f average income leve l s are considered, with available homes s e l l i n g well beyond the 3 6 1 S e e Rose, "Canadian Housing P o l i c i e s , " p. 132; Wheeler, Right  to Housing, p. 271; A.L. Murray, "Alternatives to High-Rise Development," Canadian Forum 52 (May 1972) :40; Council on Social Development, Social Housing Policy, p. 39; riling;, "Rising Cost," p. 143; Smith, Housing in Canada, p. 12; Smith, "The Housing Task Force," Canadian Banker 76 (March-Apri1):43; Dennis and Fish, Programs in Search of a Policy, p. 6. 3 6 2 S m i t h , Housing in Canada, p. 35. 3 6 C a l c u l a t e d from figures in Federal/Provincial Task Force on the Supply and Price of Serviced Residential Land, Down to  Earth, Report of the Federal/Provincial Task Force on the Supply  and Price of Serviced Residential Land, Vol. I I ; Synthesis and  Summary of Technical Research (Ottawa: Queen's Printer, 1978), p. 193. 3 6 " l b i d . , p. 193. 3 6 5 T h i s i s according to the 2.5 times annual income rule of thumb for house purchase. Dennis and Fish, Programs in Search of  a Policy, p. 6. 1 62 capacity of the average t h i r d q u i n t i l e household. 3 6 6 Figures regarding the income levels of NHA house purchasers in the 1960's confirm the i n a c c e s s i b i l i t y of home ownership to large numbers of Canadians. In both 1961 and 1969, f i r s t q u i n t i l e households purchased 0% of new NHA houses in Canada, while the second q u i n t i l e ' s purchase rate of 1.5% in 1961 dropped to .7% in 1969. Even t h i r d q u i n t i l e households, who acquired only 21.2% of new NHA houses in 1961, lost ground by 1969, purchasing only 16.6%. 3 6 7 Despite the excellent performance of the private rental sector during the 1960's, rental problems persisted for two major reasons. F i r s t l y , as a 1967 Canadian Press Agency Survey reported, the rental market remained almost universally tight and expensive. 3 6 8 This situation resulted from both the high demand for rental housing, and the loss of a considerable number of affordable inner-city rental u n i t s , through conversion to condominiums 36 9 or luxury apartments, and through demolition to 3 6 6 T h e average annual income l e v e l of the third q u i n t i l e in 1969 was $6,974 rendering $17,435 the average upper l i m i t for house purchase. Ibid., p. 60. 3 6 7 Ibid., p. 121 . 3 6 8 S e e LaBerge, "Housing - 1968," Canadian Labour 13 (February 1968):24. 3 6 9Hulchanski reports that renovations often deconverted buildings of two or more units to single owner-occupied units. The units deconverted were l i k e l y to be among those with the lowest rents. Hulchanski, Role of Rent Regulations, p. 52. Simi l a r l y , Greenspan reports that condominiums generally serve higher-income tenants than do re n t a l units. Task Force on- the-Supply and Price of Serviced Residential Land, Down to Earth, p. 148. See also Smith, Housing in Canada, p. 15; Cainey, "Halifax," p. 7; Gary Weiss, "Rent Controls Spark Move to Condominiums," Financial Post, 20 July 1974, p. 10. 1 63 make way for high r i s e development. The s i t u a t i o n was further exaccerbated towards the end of the 1960's as "whitepainting" or g e n t r i f i c a t i o n 3 7 0 of older, somewhat deteriorated inner-city working-class neighbourhoods became widespread. Secondly, the rental units produced were, for the most part, unsuitable to the low-income renters and p a r t i c u l a r l y low-income families most in need. The private sector continued, for instance, to erect high-rises containing largely bachelor and one bedroom apartments unsuited to family l i v i n g . 3 ' 7 * 1 Consequently, even those renter families able to afford market rent levels experienced d i f f i c u l t y finding suitable rental h o u s i n g . 3 7 2 Even when they were w i l l i n g to s e t t l e for apartment l i v i n g , families encountered discrimination in that few apartment owners and landlords were w i l l i n g to accept c h i l d r e n . 3 7 3 Moreover, as 62% of a l l new housing constructed in the metropolitan areas between 1961 and 1971 was situated in the suburbs, 3 7" many of the rental units produced were physically inaccessible to low-income households lacking transportation. 3 7 0 G e n t r i f i c a t i o n involves the r e h a b i l i t a t i o n and upgrading of housing in older, affordable neighbourhoods to s a t i s f y increasing demand for "character" housing on the part of young, often c h i l d l e s s , professional, and r e l a t i v e l y more affluent couples desirous of l i v i n g in the inner-city. 3 7 1Rose, Canadian Housing P o l i c i e s , pp. 177, 187. Rose reports that a very small fraction of private rental development in the past twenty-five years has been two bedroom or larger units. 3 7 2 S m i t h , Housing in Canada, p. 16. 3 7 3 D e n n i s and Fish, Programs in Search of a Policy, p. 198. 3 7 " l b i d . , p. 34. 164 Given the health of the private rental sector and i t s key role in rental housing provision, federal rental assistance throughout the 1960's was limited, f a l l i n g to 5-10% of new rental housing units in the early 1960's from 15-25% in the 1950's. 3 7 5 Because these figures represent units constructed under dir e c t subsidy programs only and exclude units resulting from indirect tax incentives, actual percentages for government-assisted units were probably s l i g h t l y higher. This decline in federal assistance was largely a r e f l e c t i o n of the termination, in 1964, of the Limited Dividend program due to federal d i s s a t i s f a c t i o n with the quality , maintenance, location and u n s u i t a b i l i t y to family l i v i n g of many of the units produced. 3 7 6 Moreover, the program suffered a high l e v e l of defaults and imposed an excessive administrative burden. In addition, there was some doubt regarding the a b i l i t y of private landlords to manage low-income housing, and some evidence of high-grading in tenant selection-, such that a- gap had begun to develop between the income group served by limited dividend housing and that served by public h o u s i n g . 3 7 7 The program was, however, reinstated in 1968 in response to the tight rental situation and to growing concern regarding housing a f f o r d a b i l i t y for moderate-3 7 5 P a t t e r s o n , "Rent Review," p. 24; Clayton, Rental Housing  Scenarios, p. 13. 3 7 6 D e n n i s and Fish, Programs in Search of a Policy, pp. 227, 234. 3 7 7 I b i d . , pp. 10, 242. 1 65 and middle-income households. The loan value was increased and the l i m i t on investment return removed with the reinstatement of the program, although rent levels were s t i l l required to be maintained $20 to $25 below market levels for f i f t e e n y e a r s . 3 7 8 Limited Dividend program a c t i v i t y and thus government rental assistance rose sharply after reinstatement of the program, 3 7 9 with the l a t t e r reattaining levels of 20-25% in the late 1960's. 3 8 0 Most of the problems with the Limited Dividend program persisted, however. 3 8 1 Though limited throughout most of the 1960's, federal rental assistance v i r t u a l l y exploded in the 1970's, such that assisted rental starts rose to 35-50% of a l l rental starts in the late 1970's. 3 8 2 If tax system subsidies are considered as well as the subsidies offered under di r e c t programs, more than 90% of t o t a l rental starts between 1973 and 1983 were a s s i s t e d . 3 8 3 3 7 8 I b i d . , pp. 229, 233. 3 7 9 C l a y t o n , Rental Housing Scenarios, Appendix B, p. B2; Dennis and Fish, Programs in Search of a Policy, p. 230. 3 8 0 C l a y t o n , Rental Housing Scenarios, p. 13; Patterson, "Rent Review," p. 24. 3 8 1 D e n n i s and Fish reported that between 1968 and 1970, for instance, only 40% of LD units had three bedrooms or more, and 45% were in elevator buildings. Dennis and Fish, Programs in  Search of a Policy, p. 234. 3 8 2 P a t t e r s o n , "Rent Review," p. 24; Clayton, Rental Housing  Scenarios, p. 13. 3 8 3 P a t t e r s o n , "Rent Review," p. 27. 1 66 A major factor in the infusion of government funds into rental housing in the 1970's was the abrupt decline in apartment construction a f t e r 1973. As Figure 2 i l l u s t r a t e s , with the exception of a few peaks due to temporary government incentive programs, apartment construction declined steadily from 1973 onwards, and by the end of the 1970's had f a l l e n behind the rate of new renter household f o r m a t i o n . 3 8 4 Given the private sector's dominance in rental construction, the declining apartment construction was largely the result of a reduction in private sector multiple-unit s t a r t s . (See Table 15) From an average of 44% of a l l r e s i d e n t i a l starts in the 1965-1969 period, private sector multiple-unit construction declined to 22% in 1975. 3 8 5 The large increase in government assistance to rental construction was primarily a result of the introduction of a number of private sector incentive programs. Three major programs were adopted during the 1970's and early 1980's: the 1974 Multiple-Unit Residential Building Program (MURB), the 1975 Assisted Rental Program (ARP), and the 1981 Canada Rental Supply Program (CRSP). 3 8 4 I n the early 1970's, new apartment starts exceeded new renter household formation by more than 25%. By the late 1970's, new apartment s t a r t s t o t a l l e d more than 10% less than new renter household formation, and by the early 1980's, the gap had increased to 35%. Ibid., p. 5. 3 8 5 S m i t h , Anatomy of a C r i s i s , pp. 36-37. As many of those multiple units were condominiums, Smith estimates that only 30,000 units or 13% of a l l private r e s i d e n t i a l construction in 1975 was a c t u a l l y rental.. 167 FIGURE 2 TOTAL APARTMENT STARTS, CANADA, 1971-1983 7 S H " T 1 1 1 1 1 — i — i 1 1 — i — r 71 73 79 74 73 7t 77 7* 7« «0 t l ft* SOURCE; C l a y t o n Research A s s o c i a t e s L i m i t e d (1984) A Lonqer-Term R e n t a l  Housing S t r a t e g y f o r Canada, p. 10. 168 These programs are discussed in more d e t a i l l a t e r in thi s chapter. In addition, the federal government introduced a number of minor i n i t i a t i v e s designed to encourage private rental supply. The minor programs included a 1975 authorization for CMHC to d i r e c t l y finance private rental construction in low vacancy areas, the 1975 Municipal Incentive Grant Program, which offered $1,000 per unit grants to municipalities approving medium-density moderate-rental housing, and 1978 conversion loans to f a c i l i t a t e the conversion of non-residential buildings to rental units. As well, in 1978 the Municipal Infrastructure Program replaced the Municipal Sewage Treatment Program. As a result of these programs, by 1978 annual federal assistance to the private rental sector had reached $115.8 m i l l i o n . 3 8 6 The debate regarding the factors contributing to the sudden and rapid decline of the private rental sector i s complex 3 8 7 and by no means resolved. Most housing analysts agree, however, that two conditions l i k e l y precipitated the decline: f a l l i n g demand for rental housing and the deteriorating economics of rental investment. Both demographic and economic conditions played a role in reducing the demand for rental housing. The rate of new household formation slowed throughout the 1970's. As well, the 3 8 6 T h i s t o t a l excludes MURB s u b s i d i e s . Canada Mortgage and Housing C o r p o r a t i o n , Canadian Housing S t a t i s t i c s , l982:Table 27. 3 8 7 I t i s complex because the f a c t o r s are so i n t e r r e l a t e d . 169 incomes of tenants r e l a t i v e to the general population and to home owners d e c l i n e d , 3 8 8 resulting in reduced e f f e c t i v e demand among renter households. 3 8 9 Probably even more s i g n i f i c a n t , however, was a series of government actions between 1964 and 1984 to encourage home ownership among low- and moderate-income households who had previously r e l i e d on the private rental sector for accommodation. 3 9 0 Following minor measures between 1965 and 1969 designed to ease the financing for home ownership, the federal government announced, in 1970, the a l l o c a t i o n of a special $200 m i l l i o n fund to encourage special innovations in low-income housing production. The major program funded under the scheme was the Assisted Home-Ownership Program (AHOP). Implemented on an experimental basis in 1970-71, and o f f i c i a l l y sanctioned in the 1973 amendments to the NHA, AHOP offered geared-to-income loans at 2% to low- and moderate-income households who were otherwise unable to afford home ownership and whose incomes rendered them i n e l i g i b l e for public 3 8"Patterson, "Rent Review," p. 8. 3 8 9Would-be renters tended, as a re s u l t , to double-up or to continue residing with their families. 3 9 0 A c c o r d i n g to the Hellyer Task Force report, at least 80% of Canadians aspired to home ownership in 1969 due to i t s investment value and the absence of a suitable family housing a l t e r n a t i v e . Task Force on Housing and Urban Development, Report, p. 17. 3 9 1Under AHOP, loan conditions were such that mortgage and interest payments could consume no more than 25% of family income. Even so, a large number of the units produced under the program were foreclosed, because even at 25% of income the low-income owners could not afford to keep their payments up. See Dana Mallin, "To Rent... Or to Buy," Canadian Consumer, 7 February 1977, p. 5; Hopkins, "Hunger," p. 40. 1 70 housing. 3 9 1 Other federal measures which increased the demand for home-ownership r e l a t i v e to rental accommodation and which rendered otherwise latent demand for home ownership e f f e c t i v e included: the 1972 tax exemption of c a p i t a l gains on owner-occupied housing; the Registered Home-Ownership Savings Plan (RHOSP) introduced in 1974 and operational u n t i l 1985; 3 9 2 home improvement loans for owner-occupiers offered through the 1973 Residential Rehabilitation Assistance Program (RRAP); the 1982 Canada Home Renovation Plan (CHRP); the Section 58 d i r e c t lending provision; home-buyer grants ranging from $500 to $3,000; the 1982 Canada Home-Ownership Stimulation Plan (CHOSP); the 1982 Canada Mortgage Renewal Plan (CMRP); and i t s 1984 successor, Mortgage Rate Protection Plan (MRPP). As well, the provinces have offered a variety of home ownership incentives ranging from home-buyer grants to refundable property and mortgage interest tax c r e d i t s . As for the deteriorating economics of rental investment, the gap between the costs of operating existing rental housing and those of developing new rental housing widened considerably in the early 1970's given dramatically i n f l a t e d land, 3 9 2Under RHOSP, non-home-owning tax-payers* were allowed a- tax-free accumulation of up to $1,000 per year, to a t o t a l of $10,000, as a downpayment on a house. 171 construction and financing c o s t s . 3 9 3 In other words, the costs of producing new rental housing ( f i n a n c i a l recovery rents) escalated well beyond the rent l e v e l s the rental market could bear. Consequently, new rental production of almost any description became uneconomical. As Table 17 indicates, in 1974, average monthly rent levels exceeded monthly mortgage payments per unit of new rental housing by 10%. 3 9 4 By 1981, however, the costs had escalated so much that monthly mortgage payments exceeded average market rent l e v e l s by 94%. 3 9 5 Given the poor economics of rental investment, i t was evident by the early 1980's that l i t t l e private rental development would take place in the absence of s i g n i f i c a n t government i n c e n t i v e s , 3 9 6 and that that which did take place would be in the form of luxury units for those who could afford to pay near f i n a n c i a l recovery rent l e v e l s . 3 9 7 3 9 3 T h e cost to build a t y p i c a l two bedroom apartment increased by 150% to 200% between 1974 and 1982. Green, "Rent Controls Tighten", p-. S17. 3 9"The monthly figure does not include operating costs. 3 9 5 G i v e n the deteriorating economics of rental investment and the d i f f i c u l t y in renting new units at even break-even rents, i t was not uncommon in the early 1970's and again in the early 1980's to find rental investors o f f e r i n g lures to entice tenants to t h e i r dwellings. One month free lodging, dishwashers, racquetball courts and fireplaces are only some of the extras prospective renters of new rental housing have been offered. 3 9 6Green, "Vacancy Rate Squeeze i s Easing," Financial Post, 28 May 1983, p. 31. 3 9 7 R o b e r t Block, "Shelter for- the Poor," Macleans, 12 March 1984, p. 62. 172 Tan I ft 17 The Gap Between Financial Recovery and Market Rents. Canada. 1964-1983 Y e a r Month Iy Payment A v e r a g e P r i c e d NHA A p a r t m e n t 1 A v e r a g e Nominal M o n t h l y R e n t 2 S i z e o f Gap 1 2 3 1964 $ 6 4 . 2 0 $ 7 9 . 0 0 - 1 8 . 7 1965 6 7 . 0 0 8 0 . 2 0 - 1 6 . 5 1966 7 2 . 1 0 8 3 . 6 0 - 1 3 . 8 1967 7 7 . 5 0 9 0 . 4 0 - 1 4 . 3 1968 8 8 . 2 0 9 9 . 7 0 - 1 1 . 5 1969 9 4 . 2 0 108 .60 - 1 3 . 3 1970 9 6 . 2 0 116 .00 - 1 7 . 1 1971 9 2 . 0 0 120 .00 - 2 3 . 3 1972 9 7 . 7 0 122 .00 - 1 9 . 9 1973 110 .90 127 .20 - 1 2 . 8 1974 124 .30 138 .00 - 9 . 9 1975 174 .80 153 .70 13 .7 1976 198.80 175 .00 13 .7 1977 2 2 3 . 9 0 190 .40 17 .6 1978 2 3 5 . 8 0 2 0 4 . 0 0 15 .6 1979 2 6 8 . 4 0 2 2 4 . 8 0 19 .4 1980 3 5 8 . 5 0 2 4 8 . 0 0 4 4 . 6 1981 5 2 8 . 9 0 2 7 2 . 9 0 9 3 . 8 1982 5 0 6 . 7 0 3 1 0 . 0 0 6 3 . 5 1983 4 7 3 . 3 0 3 3 7 . 9 0 40 .1 1. I n c l u d e s c o n s t r u c t i o n , l and and s o f t c o s t s m inus 25% e q u i t y . 2 . I n c l u d e s u t i I I t i e s . C l a y t o n R e s e a r c h A s s o c i a t e s L i m i t e d (1984) R e n t a l H o u s i n g in Canada Under Ren t C o n t r o l and D e c o n t r o l S c e n a r i o s . 1 9 8 5 - 1 9 9 1 . A p p e n d i x A , T a b l e A - 2 6 . 1 73 Indeed, in a 1982 a r t i c l e in the Financial Post, Richard S h i f f , Chairman of Bramlea Limited, one of the largest rental developers in Toronto, i s quoted as saying: "'I f u l l y r e a l i z e that to proceed in the rental market today without some form of government assistance would be economic s u i c i d e . ' " 3 9 8 Yet government assistance to private rental development was being reduced in the late 1970's and early 1980's as both federal and p r o v i n c i a l governments sought to res t r a i n spending. Consequently, many private developers began to look for alternatives to rental investment. Some of the large development corporations l e f t the r e s i d e n t i a l construction business altogether in favour of more pro f i t a b l e commercial and i n d u s t r i a l development. Others reverted to single-family dwelling construction given the r i s i n g demand for such housing, and the larger p r o f i t s t h e r e . 3 9 9 S t i l l others remained in multiple-unit r e s i d e n t i a l development but concentrated on producing condominium units for sale to prospective home owners, given the higher return on such units and their exemption from rent controls. u o° 3 9 8 S e e "Market Has Potential Despite Roadblocks," Financial  Post, 20 March 1982, p. S16. 3 9 9 R i c k e t t s , "Apartments W i l l Go Up, Despite Controls," F i n a n c i a l Post, 22 May 1976, p. S5. « o o S e e W e i s s , "Rent Controls," p. 10; Janet McClain, "Is Rental Housing at a Dead-End?" Perception 7 (September-October 1983-): 13. Among NHA-Financed units, the percentage of new multiple-unit dwellings sold as condominiums increased steadily from 5.2% in 1972 to 20.2% in 1975, reaching over 50% in metropolitan Toronto in 1976. Council on Social Development, Social Housing  Policy, p. 15. 174 The rent-cost squeeze experienced by rental developers has been exaccerbated by both the decline in rental housing demand and in r e l a t i v e renter household incomes, which have precluded increases in market rent l e v e l s , " 0 1 and by high vacancy rates in new buildings which have often resulted in negative cash flow." 0 2 As well, the private rental incentive programs of the 1970's offset a great proportion of the increased costs of rental development, with the result that new projects became economically viable without as substantial an increase in rents as would normally be expected." 0 3 Indeed, the 1984 CMHC analysis of the rental market noted that not only was there no evidence that the programs had f a c i l i t a t e d adjustment of the market to changing conditions, but they had probably created disincentives to adjustment.* 0" F i n a l l y , government regulatory measures such as zoning and building codes, public land banking, land speculation and transfer taxes, landlord and tenant l e g i s l a t i o n " 0 1 R e a l gross rents decreased by 34% between 1971 and 1981. Smith, " C r i s i s in Rental Housing," p. 71. " 0 2 I n Montreal in 1979, vacancy rates in some recently completed apartment blocks were as high as 35%. See S.E. Gordon, "Healthy Mortgage Funds for 1979 But Apartment Prospects Dimmer," Financial Post, 13 January 1979, p. 13; Smith, Housing in  Canada, p. 17. " 0 3Clayton's 1984 study of the rental market concluded that the expensive incentive programs did l i t t l e to address the gap between market and f i n a n c i a l recovery rents. See Clayton, Rental  Strategy, pp. i i i , 12; Canadian Real Estate Association, Housing  in Canada, p. 152. "°"Canada Mortgage and Housing Corporation, "Analysis of the Rental Market," p. 24. 175 and rent controls have been c i t e d by investors as contributing to the rent-cost squeeze. Rent controls have received the greatest share of the c r i t i c i s m . Largely as a result of the federal A n t i - I n f l a t i o n Program which began in 1975, rent controls were operational in a l l provinces by early 1976. 4 0 5 Though the federal program ended in 1978, eight provinces s t i l l retain controls, though a number have experimented with decontrol. Though th i s paper does not propose to enter the inconclusive debate over the impact of rent controls on rental production, i t i s important to acknowledge that whether or not rent controls actually do impede an investor's a b i l i t y to turn a p r o f i t on rental property, the fact that potential investors believe they do is enough to spark declining investment. While f a l l i n g demand and deteriorating economics may have acted as the catalysts for declining rental production in the late 1960's and early 1970's, housing analysts have suggested a number of additional factors which in the ensuing years have contributed to the rental market's f a i l u r e to adjust to the changing demographic and economic conditions, and which have thus contributed to declining rental production. One factor is the tax system reform introduced by the federal government in 1972. Before 1972, rental housing investors benefitted substantially from a number of long-a 0 5 B . C . had already implemented controls in 1974, and Quebec and Newfoundland had never completely phased them out after World War I I . 1 76 standing tax provisions contained in the Income Tax Act. The allowable depreciation rate on.rental property, for example, was twice the actual rate. Rental investors also enjoyed the right to pool a l l rental buildings for tax purposes and thus defer the tax on recaptured depreciation upon sale of a building as long as rental properties with unallocated c a p i t a l cost allowances (CCA's) remained in the pool. In addition, individual and corporate investors could shelter income by claiming CCA's for buildings, exclusive of land, against income from any source. F i n a l l y , c a p i t a l gains on real estate were not taxed, and rental investors were accorded special tax treatment on death. The 1972 tax reform eliminated a l l but the f i r s t of these tax incentives. The tax d e f e r r a l was eliminated by revisions which created a separate appreciation class for each rental building worth $50,000 or more, such that accummulated depreciation was to be recaptured and treated as income in the event of sale. The revisions also abolished the tax shelter by preventing investors other than re a l estate corporations from claiming CCA's on rental property in excess of the income from the property. Henceforth, CCA's could only be used to create a loss against rental income. The tax reform also resulted in the introduction of a c a p i t a l gains tax except on the sale of p r i n c i p a l residences, a tax which required that 50% of the gain from rental investment be treated as income. It also resulted in the deemed r e a l i z a t i o n on death of one-half the gain on- real estate investment. F i n a l l y , the revisions required the c a p i t a l i z a t i o n of carrying costs (interest and property taxes) 177 on undeveloped land and prohibited the treatment of these costs as operating expenses. The effect of the revisions to the Income Tax Act was to s i g n i f i c a n t l y lower the after-tax y i e l d for investment in r e s i d e n t i a l properties, to reduce the l i q u i d i t y of real estate investment, and to decrease the d e s i r a b i l i t y of rental housing investment v iz a v i z commercial, i n d u s t r i a l and other types of r e s i d e n t i a l property investment." 0 6 Indeed, by 1974 private sector multiple starts had f a l l e n to 56% of the i r 1969 l e v e l while private sector single-family starts had risen by 45%.* 0 7 A second factor contributing to declining private rental production during the 1970's and 1980's i s the ephemeral nature of the federal rental incentive programs. The ad hoc introduction, modification and elimination of the programs and doubt as to their continued a v a i l a b i l i t y have generated considerable uncertainty among rental developers as to whether rental investment w i l l remain viable long enough to cover * 0 6 I n the House of Commons, B i l l Clarke reported, for instance, that in Vancouver in 1969-70, applications for multiple-unit housing averaged 8,000 per year with new rentals outnumbering condominiums by 7 to 1. By 1972-73, applications were down to 7,000 per year, with rentals outnumbering condominiums by only 3 to 2. By 1975, applications for multiple-unit housing t o t a l l e d only 6,200 with condominiums outnumbering rentals 6 to 1. (The rent controls introduced in 1974 may have had some impact on these l a t t e r figures.) House of Commons, Debates (1973), p. 9743. " 0 7Smith, Anatomy of a C r i s i s , p. 27. 178 i n i t i a l investment." 0 8 Two p a r t i c u l a r l y i l l u s t r a t i v e examples of ad hoc rental programs are MURB and ARP. The 1974 MURB provision permitted rental investors other than real estate corporations to once again shelter income by deducting losses due to CCA's and front end (soft) costs from income from any other source. The provision was enacted in response to the dramatic decline in rental housing production aft e r the elimination of the tax shelter in 1972, and in response to intense lobbying by the development industry. Developers claimed that the defunct tax shelter had been the only acceptable financing vehicle for rental construction, and that i t had been d i f f i c u l t even before the tax reform to attrac t investors to rental housing." 0 9 MURB was intended as a temporary stimulus and i n i t i a l l y applied only to new-multi-unit r e s i d e n t i a l construction commenced between November 1974 and January 1976. It was subsequently extended to the end of 1976, and then annually to the end of 1979. Following a dramatic decline in rental construction, the MURB was reinstated in October 1980 and f i n a l l y allowed to expire in December, 1981. ARP, a low- and moderate-rental program, replaced the Limited Dividend program. Introduced in 1975 as a $600 per unit " 0 8The on-again-off-again nature of the programs is a result of federal f i n a n c i a l concerns. Between 1976 and 1982, the federal government spent $3.3 b i l l i o n on rental housing alone. Canada Mortgage and Housing Corporation, "Analysis of the Rental Market," p. 16. * 0 9See Green, "Federal Budget S t i l l Causing Concern," Financial  Post, 20 March 1982, p. S16. 179 c a p i t a l g r a n t " 1 0 designed to decrease each year f o r the remainder of the agreement with the rental investor, i t was modified three times before being phased out in 1978. The f i r s t modification replaced the grant with an interest-free loan of $1,200 per year in the f i r s t year, decreasing annually over the term of the agreement, the second decreased the maximum loan le v e l to $900 per unit per year, and the third introduced a new delivery mechanism. MURB and ARP were not the only private rental sector programs which caused uncertainty among rental investors during the 1970's and early 1980's. Reference has already been made to the phasing in and out of the Limited Dividend program and various rent control schemes - actions which caused confusion regarding future p r o f i t a b i l i t y of rental investment. In addition, the CCA write-off provision underwent at least seven changes between 1972 and 1982 and the soft-cost allowance was modified a number of times as w e l l , " 1 1 making i t d i f f i c u l t , i f not impossible, to determine f a i r market values, market rents and rates of return. F i n a l l y , CRSP, which offered rental investors interest-free loans of $7,500 to $14,000 per u n i t * 1 2 to build moderate-rental housing in p a r t i c u l a r l y tight markets, * 1°Hulchanski, The Assisted Rental Program (ARP), 1975-1978: An  Evaluation, Research B u l l e t i n No. 3" (Ottawa: Co-operative Housing Foundation of Canada, 1982), p. 3. " 1 C o u n c i l on Social Development, Where Do We Go? p. 87. " 1 2See Canada Mortgage and Housing Corporation Canada Rental  Supply Plan, Public Relations B u l l e t i n No. 340 (Ottawa: CMHC, 1982), p~. 1; Economic Council, Lean Times- P o l i c i e s and  Constraints: Nineteenth Annual Review 1982 (Ottawa: ECC, 1982), p. 49. 180 was introduced in 1981 only to be terminated in 1984. F i n a l l y , a l l of the minor private sector programs had lapsed by the end of the 1970's. The f i n a l factor often c i t e d as contributing to declining private rental production i s the growth of a non-profit rental sector which targets low- and middle-income households. In his 1977 monograph on Canadian housing p o l i c y , L. B. Smith concluded that with the growth of the non-profit sector housing policy had come to be used more and more to r e d i s t r i b u t e income and that such p o l i c i e s were destroying the private sector's incentive and a b i l i t y to supply rental housing." 1 3 Despite the private sector's h i s t o r i c i n a b i l i t y to provide low- and moderate-rental housing and i t s clear i n a b i l i t y in the past ten years to provide almost any type of rental unit, government has continued to rely heavily on the private sector for rental supply. As Table 18 i l l u s t r a t e s , except for the late 1960's and early 1970's when government rental p o l i c y focussed on publically-developed low-rental housing, most of the rental units assisted in the past two decades have been produced by the private sector. Even from 1973 onwards, when the private sector was in decline, more than 70% of assisted rental units were pri v a t e l y developed. * 1 3Smith, Anatomy of a C r i s i s , p. v i i . The non-profit sector is discussed later in this chapter. Tahlft 18 Government Assistance To Rental Construction. By Sector. Canada. 1964-1983 Year Total . Rental S t a r t s A s s i s t e d P r i v a t e S e c t ? Rental S t a r t s Pub I ic Sector Rental S t a r t s Non-Prof i t Sect Rental S t a r t s 1 2 3 4 1964 75,118 1,717 514 144 1965 77.890 70 1.156 1.105 1966 51,551 — 4,387 1,612 1967 ' 74,258 — 10,088 1,104 1968 103,383 1,956 10,300 2,237 1969 110,917 7,364 17,207 2,918 1970 91.898 19.440 20.257 3.430 1971 106,187 11,059 21,976 3,109 1972 103,715 8,470 16,828 1,813 1973 106,451 4,311 13,537 1,207 1974 74,025 17,015 12,403 5,052 1975 70.361 51.942 13.354 5.008 1976 89,324 46,295 13,828 8,245 1977 92,327 77,044 6,763 4,562 1978 77,327 37,483 7,800 3,178 1979 58,387 20,000 1,601 4,721 1980 48.329 20.000 1.331 8.171 1981 61,609 20,000 1,367 11,780 1982 53,162 30,744 1,210 13,243 1983 44.124 25. 2 $ 5 1.299 12.208 1. Apartments Used as Proxy for Renta l . 2. Includes Est imate of MURB S t a r t s , 1975-1983. 3. Includes P u b l i c Housing and Student Housing. Sjouccfi.: CMHC, Canadian Housing S t a t i s t i c s . Ottawa, Var ious Years . Clayton Research Assoc ia tes L imi ted (1984) Rental Housing in Canada Under Rent Control and Decontrol Scenar ios . 1985-1991. Appendix B, Table B-11. 182 Even with the infusion of public funds into private rental development in the 1970's, however, rental problems have persisted. One reason is that the private sector incentive programs did not have a s i g n i f i c a n t impact on rental supply." 1" ARP produced 122,791 u n i t s * 1 5 and MURB 195,000,* 1 6 the l a t t e r representing 30% of a l l row and apartment starts between 1976 and 1981." 1 7 Notwithstanding such figures, a study by housing policy analyst, I. Lithwick, suggests that 40% of those units would l i k e l y have been constructed even in the absence of the i n c e n t i v e s . * 1 8 Moreover, many of the units produced through the programs were registered as condominiums which means they are not guaranteed to remain in the rental market. Many others show evidence of poor quality construction and poor maintenance, which both reduces their lifespan and contributes to rental quality problems." 1 9 The impact of the programs has been further " 1"Canadian Real Estate Association, Housing in Canada, p. 108. " 1 5Hulchanski, ARP, p. 17. " 1 6Robert Dowler, Housing-Related Tax Expenditures: An Overview  and Evaluation, Major Report No. 22 (Toronto: Centre for Urban and Community Studies, University of Toronto, 1983), p. 44. " 1 7 I b i d . , pp. 44. Because the provisions permitted stacking of ARP and MURB subsidies, however, i t i s d i f f i c u l t to assess accurately how many units were produced as a direc t result of either of the programs. As many as 70% of a l l ARP units may also have been MURB's. " 1 8See Dowler, Housing Tax Expenditures, pp. 44-45. " 1 9 I . Lithwick's study notes than many ARP units show evidence of poor qu a l i t y construction as a result of attempts to reduce-costs. As well, the MURB tax shelter was en t h u s i a s t i c a l l y u t i l i z e d by absentee landlords who have l i t t l e incentive to provide either good maintenance or management. See Hulchanski, ARP, p. 23; Canadian Real Estate Association, Housing in Canada, p. 63; Dowler, Housing Tax Expenditures, pp. 48-50. 183 eroded by the tendency of developers to demolish older CCA and MURB buildings in order to avoid payment of deferred taxes upon sale of the b u i l d i n g . " 2 0 CRSP, which produced 21,000 units, suffered similar weaknesses - a 1984 CMHC report charged, in fact, that i t had had no effect on the level of rental housing c o n s t r u c t i o n . " 2 1 A second reason why rental problems have persisted despite considerable government aid to the private rental sector i s that the units produced through the private incentive programs were not affordable to lower- and sometimes even moderate-income households." 2 2 The average income l e v e l in a sample of new limited dividend units in 1970, for example, was $6,551. 4 2 3 Yet, upper income l i m i t s for the f i r s t two q u i n t i l e s at that time were $3,000 and $6,000 per year. As for the later programs, despite an estimate by Clayton Research Associates that ARP/MURB subsidies slowed the rate of rent increases between 1976 and 1977, most studies suggest that the subsidies had l i t t l e " 2 0As a result of such practices, City of Vancouver Housing Planner, Ann McAfee, estimated that in Vancouver the construction of two ARP/MURB units resulted in the net addition of only one rental unit to the t o t a l stock. See Hulchanski, ARP, p. 18. " 2 1Canada Mortgage and Housing Corporation, "Analysis of the Rental Market," p. 24. " 2 2 C o u n c i l on Social Development, Where Do We Go? p. 96. 2 3Dennis and Fish, Programs in Search of a Policy, p. 238. 1 84 b e n e f i c i a l e f f e c t on rent l e v e l s . " 2 " A CMHC study, in fact, found that 1977 ARP/MURB rent l e v e l s were anywhere from 13% to 96% above market rent levels in selected m u n i c i p a l i t i e s . " 2 5 S i m i l a r l y , most CRSP units in the Vancouver area in 1984 were renting at at least market l e v e l s , 4 2 6 not too surprising a finding given that the program contained no mechanism to control rent l e v e l s or suite a l l o c a t i o n . The only way any of the ARP, MURB or CRSP units would benefit lower-income tenants is i f they " f i l t e r e d down" to them. However, as noted in Chapter 3, there are serious p r a c t i c a l problems with the t h e o r e t i c a l l y viable concept of f i l t e r i n g . 5.4 The Public Rental Sector and Government Response to the Rental Problem With private rental production booming in the 1960's, the majority of federal rental assistance was directed towards an expanding public rental sector. " 2"See Clayton, "The Growing Rental Housing Shortage in Canada: Causes and Solutions" (Toronto: Clayton Associates, 1980), p. 7. A 1982 study by Gau and Wicks suggests that program benefits were c a p i t a l i z e d in land prices in the tight Vancouver market. G.W. Gau and A. Wicks, "The Impact of ARP and MURB Programs on the Vancouver Housing Market" (Vancouver: University of B r i t i s h Columbia, Faculty of Commerce, 1982), p. 11. Also Goring and Norbrega found most ARP/MURB rent levels at the top end of or above market rents. See Dowler, Housing Tax Expenditures, p. 47. " 2 5See Hulchanski, ARP, p. 24. Government measures to render ARP units affordable by setting a maximum unit price, a maximum floor area, and by inversing the relationship between rent lev e l s and loans were largely offset by the fact that since the program was designed as a supply stimulator, rent levels were-l e f t free to adjust to market l e v e l s after the f i r s t year. " 2 6 " I n t e r e s t Free Mortgages Sparked Apartment Boom," Vancouver  Northshore Real Estate Weekly, 20 January 1984. 185 Tahia 19 P u b l I c S e c t o r S t a r t s . By P r o g r a m C a n a d a . 1 9 6 4 - 1 9 8 3 Pub l Fc Hous na S t a r t s T o t a l P u b l i c S e c t o r R e n t a l S t a r t s Y e a r S e c t i on 40 (35A) S e c t i o n 43 (35D) T o t a l As % o f T o t a l S t a r t s S t u d e n t H o u s i n g 1 2 3 4 5 6 1950-1963 11 ,624 — 11 ,624 11 ,624 1964 514 — 514 . 6 8 514 1965 - 1 9 0 1.318 1 .128 1.4 28 1.156 1966 596 3 , 2 8 3 3 , 8 7 9 7 . 5 508 4 , 3 8 7 1967 1,280 7 , 2 7 8 8 , 5 5 8 1 1 . 5 1,530 1 0 , 0 8 8 1968 1,493 7 , 7 8 5 9 , 2 7 8 9 . 0 1,115 10 ,393 1969 997 14 ,606 15 ,603 14.1 1,604 17 ,207 1970 2 . 1 4 4 17 .525 19 .669 2 1 . 4 588 2 0 . 2 5 7 1971 2 , 0 1 0 19 ,234 2 1 , 2 4 4 2 0 . 0 732 2 1 , 9 7 6 1972 1,786 14 ,297 16 ,083 1 5 . 5 745 16 ,828 1973 2 , 5 1 4 10 ,915 13 ,429 12 .6 108 13 ,537 1974 2 , 4 4 9 9 , 9 5 4 12 ,403 1 6 . 8 12 ,403 1975 809 12 .545 13 .354 19 .0 13 .354 1976 1,660 12 ,168 13 ,828 1 5 . 5 13 ,828 1977 1,517 5 , 2 4 6 6 , 7 6 3 7 . 3 6 , 7 6 3 1978 1,868 5 , 9 3 2 7 , 8 0 0 10.1 7 , 8 0 0 1979 1,525 76 1,601 2 . 7 1,601 1980 1.331 1.331 2 . 6 1.331 1981 1,367 — 1,367 2 . 2 1,367 1982 1,210 — 1,210 2 . 3 1,210 1983 1.299 — 1.299 2 . 9 1 .299 Snnrr-ft; CMHC, C a p a d i a n H o u s i n g S t a t i s t i c s . O t t a w a , V a r i o u s Y e a r s . C l a y t o n R e s e a r c h A s s o c i a t e s L i m i t e d (1984) R e n t a l H o u s i n g in Canada Under R e n t C o n t r o l and D e c o n t r o l S c e n a r i o s . 1 9 8 5 - 1 9 9 1 . A p p e n d i x B , T a b l e s B - 5 & B - 1 1 . 186 As Table 19 indicates, the production of public housing rose from 12,138 units in the f i f t e e n years between 1949 and. 1964 to 169,827 units in the eighteen years between 1965 and 1983, for a t o t a l of 181,965 units. This represented an increased commitment of funds for public housing from $172 m i l l i o n between 1949 and 1967 to $377 m i l l i o n in 1968 and 1969 a l o n e . 4 2 7 As for urban renewal, by 1969 federal funds had financed 198 urban renewal studies and 135 urban renewal schemes, and 48 urban renewal projects had been authorized, for a t o t a l investment of more than $131 m i l l i o n . 4 2 8 The increased federal assistance to the public housing and urban renewal programs was a result of two major factors. The f i r s t was a heightened interest among the general public in the plight of low-income households given the discovery, in the 1960's, of wide-spread poverty amidst the affluence enjoyed by the majority of North Americans. Consequently, the concept of adequate and affordable housing as a s o c i a l essential, public u t i l i t y and basic human right gained widespread acceptance, and was formulated as a major declaration at the 1968 Canadian Conference on Housing and in the 1969 report of the Task Force on Housing and Urban Development. 4 2 9 The concept implied that governments must cease to use housing as an economic regulator, 4 2 7 T a s k Force on Canada Mortgage and Housing Corporation, Report, p. 9. 4 2 8 T a s k Force on Housing and Urban Development, Report, p. 6. 4 2 9 S e e Task Force on Housing and Urban Development, Report, p. 22; Wheeler, "Introduction," p. 15. 187 cease to regard the market as the most e f f i c i e n t mechanism for a l l o c a t i o n , and remove housing from the commodity market. The Canadian government's reaction to the "housing as a s o c i a l right" campaign was to implement a major change in housing policy focus in the late 1960's. The main thrust of i t s policy was no longer to be the promotion of home ownership through private sector mortgage support and assistance. The government would, rather, endeavour to attract more private funds into the mortgage market in order to free public funds for public housing, urban renewal, and other programs aimed s p e c i f i c a l l y at low-income households." 3 0 This change in policy was c r i t i c i z e d by some as an abandonment of the long standing federal policy of support for rather than competition with the private s e c t o r . " 3 1 While the majority of federally-assisted rental units in the early 1970's were public sector units, the government was, by 1974, a s s i s t i n g more private sector units. (See Table 18) Moreover, given the private sector's h i s t o r i c i n a b i l i t y to provide housing for the lower-income households to whom the public units were targetted, competition was hardly an issue. * 3 0See Task Force on Canada Mortgage and Housing Corporation, Report, p. 55; Canadian Real Estate Association, Housing in  Canada, p. 34; Council on Social Development, Social Housing  Policy, p. 159; Saywell, Housing Canadians, pp. 207-208. Accordingly, the government appointed a Task Force on Low^ -Income< Housing. a 3 1 S e e Smith, "Housing Assistance: A Re-Evaluation," Canadian  Public Policy 7 (Summer 1981):459; Smith, Anatomy of a C r i s i s , p. 12. 188 The second factor underlying the expansion of the public housing and urban renewal programs in the 1960's was the success of the 1964 public housing amendments in stimulating interest in low-rental housing and urban renewal among the provinces. As suggested in Chapter 4, before 1964, the provinces had displayed l i t t l e interest in public housing or slum clearance, and such a c t i v i t y as had taken place had been the result of pressure from a few progressive municipalities and socially-minded c i t i z e n s ' groups. The public housing provisions introduced under Section 35D of the NHA in 1964, however, were considerably more at t r a c t i v e to the provinces than had been the Section 35A arrangements in effect since 1949. The 1964 program was designed to stimulate the provinces and municipalities to assume a larger role in public housing by affording a greater degree of autonomy to l o c a l public housing agencies to select the type of housing most suitable to l o c a l needs, 4 3 2 and by reducing the junior governments' share of the f i n a n c i a l burden. Moreover, i t provided for p r o v i n c i a l ownership of the public housing produced. By 1970, 51,795 units had been produced through the popular Section 35D program and a t o t a l of only 18,458 through the federal-provincial partnership. (See Table 19) Ontario again provided the model for public housing and urban renewal, creating the f i r s t p r o v i n c i a l housing agency, the " 3 2 C e n t r a l Mortgage and Housing Corporation, Annual Report,  1964, p. 13. f 189 Ontario Housing Corporation (OHC) in 1964. f l 3 3 The other provinces, however, continued to u t i l i z e the 1949 federal-p r o v i n c i a l agreement for public housing or ignored the provisions altogether u n t i l the late 1960's when they too began to e s t a b l i s h p r o v i n c i a l housing agencies. By 1967, eight provinces had created p r o v i n c i a l housing corporations or commissions' 1 3 * although, as with the 1949 public housing program, most of the units under the new program continued to be produced in O n t a r i o . " 3 5 During the rapid expansion of the public housing and urban renewal programs in the late 1960's, some e f f o r t was made, as a result of negative public reaction to large public housing projects, to down-scale the size of the projects and disperse them throughout the community. 4 3 6 As well, with the change in policy focus and the apparent commitment to low-income housing assistance, guidelines designed to improve the management and quality of l i f e in e x i s t i n g public housing projects were adopted in 1970. The guidelines offered tenants leases and management trai n i n g grants to f a c i l i t a t e their p a r t i c i p a t i o n in project management and operation. They also aimed for a greater s o c i a l a 3 3 T h e OHC dissolved the Metropolitan Toronto Housing Authority in 1964 and assumed the administration of i t s holdings. Rose, "Canadian Housing P o l i c i e s , " p. 97. " 3 "Saskatchewan and B r i t i s h Columbia were the exceptions. " 3 5To the end of 1970, 64% of a l l public housing units were located in Ontario. Dennis and Fish, Programs in Search of a  Policy, p. 181. " 3 6Canadian Real Estate Association, Housing in Canada, p. 13. 190 mix in projects by r a i s i n g maximum income l e v e l s . As well, the federal government offered contributions for the development of so c i a l and recreational f a c i l i t i e s within large p r o j e c t s . " 3 7 At the same time as measures were being taken to improve the q u a l i l t y of existing public housing projects, a number of other important changes were taking place. In 1969, the urban renewal program was suspended.* 3 8 More s i g n i f i c a n t l y , after 1971 the government began to scale down the public housing programs in favour of c a p i t a l assistance to non-profit, co-operative and private developers. (See Table 18) By 1980, federal c a p i t a l commitments to public housing had been e n t i r e l y phased o u t . * 3 9 As well,, in 1973 the Section 44(1)(a) Rent Supplement program was enacted as an alternative to the public housing program. Under the Rent Supplement program, which the federal and pr o v i n c i a l governments cost-shared, p r o v i n c i a l agencies were encouraged to enter into agreements with private landlords to lease rental units at prevailing market rents, and to then rent those units, at 25% of household income, to households from the public housing waiting l i s t . The rent supplement grant was intended to cover the difference between the rent l e v e l * 3 7Dennis and Fish, Programs in Search of a Policy, p. 180. fl38The program was o f f i c i a l l y terminated with the 1973 amendments to the NHA when two programs designed to f a c i l i t a t e more selective redevelopment and more extensive use of r e h a b i l i t a t i o n and conservation measures - the Neighbourhood Improvement Program (NIP) and RRAP - were introduced. * 3 9 C . J . Whitton, "Eye on Ottawa," City Magazine 4 (January 1979):32. 191 affordable to the household and the market rent requested by the landlord. The v i r t u a l elimination of the public housing programs was a response, in part, to recommendations made by the Task Force on Housing and Urban Development. The Task Force, which had been appointed to examine housing and urban development in Canada and to report on ways in which a l l lev e l s of government, in concert with the private sector, could help to meet the housing needs of Canadians and contribute to the development of modern, v i t a l c i t i e s , submitted i t s report in 1969. 4 4 0 The s h i f t in focus away from the public sector was also a response to increasing federal and provincial concerns over the costs of the rent-geared-to-income subsidies required for public housing. Estimated at $1,000 per unit in 1970, 4 4 1 the costs began to escalate at the alarming rate of 14% per year in the early 1970's, 4 4 2 and were thus expected to double between 1972 and 1980. 4 4 3 By 1979, annual federal expenditure on public housing had reached $393.3 m i l l i o n . 4 4 4 Because of the high costs of the subsidies, only 61% of allocated public housing units were taken up by the provinces 4 4 0 T a s k Force on Housing and Urban Development, Report, p. 1. ""Subsidies could reach $1,500 to $1,700 in new units. See Council on Social Development, Social Housing Policy, p. 74; Dennis and Fish, Programs in Search of a Policy, p. 9. 4 4 2Dennis and Fish, Programs in Search of a Policy, p. 215. 4 4 3 C o u n c i l on Social Development, So c i a l Housing Policy, p. 84. 4 4"Canada Mortgage and Housing Corporation, Canadian Housing  S t a t i s t i c s , !982:Table 27. 1 92 in 1977. 4 4 5 Moreover, some provinces had even begun to s e l l off their public housing stock to project r e s i d e n t s . 4 " 6 While the rapid growth of the public housing stock during the late 1960's undoubtedly had a p o s i t i v e impact on many low-income households who would otherwise have remained inadequately housed, i t did not solve the r e n t a l , and in particular low-re n t a l , problems outlined at the beginning of t h i s chapter. One reason is that due to underfunding, the size of the public sector was simply not adequate to need. Dennis and Fish estimated in 1972, when public housing production was at i t s zenith, that even i f production increased by 250% public housing stock would only meet one-quarter of the need for low-rental h o u s i n g . 4 4 7 Even by 1981, the e x i s t i n g 179,456 public housing units constituted only 2% of t o t a l Canadian housing s t o c k . 4 4 8 Yet, according to a 1980 CMHC study, 500,000 renter households not l i v i n g in subsidized housing could not f i n d adequate private sector rental housing without exceeding 30% of income, and another 40,000 to 50,000 not paying 30% of income were l i v i n g in substandard h o u s i n g . 4 4 9 4 4 5Canada Mortgage and Housing Corporation, Section 56.1  Evaluation, p. 27. 4 4 6 T h i s practice was begun in Quebec in 1977. Whitton, "Ottawa," p. 32. 4 4 7 D e n n i s and Fish, Programs in Search of a Policy, p. 9. 4 4 C a l c u l a t e d from figures in Table 18 and in Canada Mortgage and Housing Corporation, Canadian Housing S t a t i s t i c s , l982:Table 99. 4 4 C o u n c i l on Social Development, Where Do We Go? p. 21. 193 A second reason why p u b l i c housing d i d not r e s o l v e the low-r e n t a l problem was the lack of q u a l i t y c o n t r o l i n the program and the problems of s o c i a l i s o l a t i o n , stigma, and environmental impoverishment which were d i s c u s s e d i n Chapter 4. F i n a l l y , some of those households most in need were unable to b e n e f i t from the p u b l i c housing program due to a d m i n i s t r a t i v e r e g u l a t i o n s . As a r e s u l t of attempts to reduce subsidy c o s t s by r e l a x i n g maximum income l i m i t s , f o r i n s t a n c e , the very poor continued to experience r e s t r i c t e d a c c e s s . " 5 0 The Dennis and F i s h Report estimated i n 1972 that l e s s than one-half of the l i m i t e d number of p u b l i c housing u n i t s were occupied by f i r s t q u i n t i l e h o u s e h o l d s . " 5 1 As w e l l , d e s p i t e the f a c t t h at i n 1968 low-income f a m i l y households spent, on average, 46% of income fo r s h e l t e r , * 5 2 such f a m i l i e s f e l l i n c r e a s i n g l y out of favour with p u b l i c housing a d m i n i s t r a t o r s throughout the 1970's due to m u n i c i p a l r e l u c t a n c e to expend scarce funds on s c h o o l s , l i b r a r i e s , r e c r e a t i o n a l c e n t r e s , and other types of s e r v i c e s r e q u i r e d by f a m i l i e s . P u b l i c housing u n i t a l l o c a t i o n focussed, * 5 0 I n 1968, only 8,000 of 250,000 s o c i a l a s s i s t a n c e r e c i p i e n t f a m i l i e s l i v e d i n p u b l i c housing. " I l l - H o u s e d Canadians 'Dwell in a Shoddy World' - CWC," Canadian Labour 13 (November 1968):9. " 5 1 D e n n i s and F i s h , Programs i n Search of a P o l i c y , p. 184. " 5 2 W h e e l e r , Housing C o n d i t i o n s of S o c i a l A s s i s t a n c e R e c i p i e n t s (Ottawa:CCSD, 1976), p. v i i . 1 94 instead, increasingly on senior c i t i z e n s " 5 3 and smaller "special needs" households such as single mothers and the disabled, who were perceived as less troublesome." 5" By 1977, only one-third of new public housing construction was designed s p e c i f i c a l l y for family households," 5 5 and the provinces were indicating their p o l i c i e s would not permit construction of further public housing units for f a m i l i e s . " 5 6 5.5 The Non-Prof i t Rental Sector and Government Response to the Rental Problem Despite the introduction of the Section 16A non-profit provisions in 1964, the non-profit sector experienced slow growth between 1964 and 1973, largely as a result of underfunding of the seniors' non-profit program. A c t i v i t y under the program, for instance, dropped in the early 1970's because, with break-even rents too high for most low-income households, non-profit developers simply found the subsidies too great a f i n a n c i a l burden." 5 7 Many municipal non-profit corporations " 5 3Between 1971 and 1975, 67% of public housing units completed were for the e l d e r l y . Council on Social Development, Social  Housing Policy, p. 69. " 5"Housing for the disabled became a s i g n i f i c a n t p o l i t i c a l issue throughout the 1970's, in large part, due to the de-i n s t i t u t i o n a l i z a t i o n p o l i c i e s adopted by medical and mental health administrations in the early 1970's. The designation of 1981 by the United Nations as- the Year of the Disabled increased the v i s i b i l i t y and p o l i t i c a l weight of the group as well. " 5 5 C o u n c i l on Social Development, Social Housing Policy, p. 156. " 5 6 I b i d . , p. 69. * 5 7See Dennis and Fish, Programs in Search of a Policy, p. 243; Council on Social Development, Social Housing Policy, pp. 117, 129. 195 preferred, instead, to negotiate the construction of seniors' housing under the public housing program which, unlike the non-p r o f i t program, was not operated on a full-recovery basis and so received regular contributions from the federal and pr o v i n c i a l governments to cover operating l o s s e s . " 5 8 At the same time, the l e v e l of co-operative a c t i v i t y , p a r t i c u l a r l y in the rental housing sector, was i n s i g n i f i c a n t . " 5 9 Although building co-operatives for home owners had been established in Nova Scotia as early as 1938, and had been e l i g i b l e for loans and loan insurance under the NHA since 1954, there was, in the 1960's, l i t t l e government interest in and support for continuing co-operatives." 6 0 This was due largely to the strong Canadian t r a d i t i o n of home ownership, to d i f f i c u l t i e s in both land a c q u i s i t i o n and in obtaining interim financing for large "risky" projects, to suspicion on the part of some that co-operatives would undermine the market, and to a lack of e f f e c t i v e leadership in the as yet nascent co-operative " 5 BDennis and Fish, Programs in Search of a Policy, p. 161. " 5 9 I n 1966, less than 12,000 co-operative units existed in Canada, most of them for home owners. A.F. Laidlaw, "Co-operative Housing in Canada," Canadian Labour 11 (March 1966):5. " 6 0See Laidlaw, "Co-operative Housing," pp. 6-7; Dennis and Fi s h , Programs in Search of a Policy, pp. 11, 149. A continuing co-operative is one in which a l l members share in the equity of the project c o l l e c t i v e l y but rent, without any ownership claim, t h e i r dwelling units. Thus though residents are tenants-, they do possess proprietary r i g h t s . 196 movement.* 6 1 In 1969, however, r e p r e s e n t a t i v e s from labour unions, churches, c r e d i t unions, and consumer and tenant groups banded together to e s t a b l i s h the Co-operative Housing Foundation (CHF) as a lobby group f o r c o n t i n u i n g c o - o p e r a t i v e s and f o r the non-p r o f i t s e c t o r i n g e n e r a l . O f f e r i n g Winnipeg's Willow Park, the f i r s t , c o n t i n u i n g c o - o p e r a t i v e i n Canada, as a model, the CHF set out to educate both p o l i t i c i a n s and the p u b l i c as to the m e r i t s of c o - o p e r a t i v e l i v i n g . w 6 2 As w e l l , the CHF s t r e s s e d the p o s s i b i l i t i e s f o r housing low- and moderate-income households which c o - o p e r a t i v e l i v i n g presented given the n o n - p r o f i t nature of c o - o p e r a t i v e housing and i t s treatment of housing as a non-. commodity. The t u r n i n g p o i n t f o r the c o - o p e r a t i v e movement and f o r the n o n - p r o f i t s e c t o r as a whole came i n the e a r l y 1970's with the f e d e r a l d e c i s i o n to down-scale the p u b l i c housing program. The-1973 amendments to the NHA ushered i n a new approach to the p r o v i s i o n of low-income housing based on community d e v e l o p e r s . F o l l o w i n g i n the wake of the 1969 and 1972 Task Force r e p o r t s , both of which had recommended i n c r e a s e d a i d to n o n - p r o f i t and c o - o p e r a t i v e developers, the amendments extended the n o n - p r o f i t program and i n t r o d u c e d Canada's f i r s t c o n t i n u i n g c o - o p e r a t i v e 4 6 1 S u b s t a n t i a l t e c h n i c a l and o r g a n i z a t i o n a l a s s i s t a n c e i s r e q u i r e d at the l o c a l l e v e l i n the formation of c o n t i n u i n g co-o p e r a t i v e s , i n p l a n n i n g p r o j e c t s and programs, and i n developing r e s i d e n t i a l o r g a n i z a t i o n s with management s k i l l s . " 6 2 S e c u r i t y of tenure, r e s i d e n t r e s p o n s i b i l i t y f o r and p a r t i c i p a t i o n i n management, and the sense of community spawned by c o - o p e r a t i v e l i v i n g were emphasized. 1 97 program. Under Sections 15.1 and 34.18 of the NHA, non-profit and co-operative developers were offered direct CMHC loans at 8% for t h i r t y - f i v e years to cover 100% of the agreed-upon costs of non-p r o f i t p r o j e c t s . 4 6 3 The loans, intended for low-rental housing for seniors, families and other "special needs" groups, were accompanied by a 10% federal front-end c a p i t a l contribution i f matched by the provinces, and by $10,000 in start-up funds to ass i s t non-profit and co-operative developers with a r c h i t e c t u r a l , engineering and planning fees. Additional funds were available for the establishment of non-profit and co-operative resource groups. As well, both non-profit and co- v operative developers were e l i g i b l e for RRAP grants' to f a c i l i t a t e r e h a b i l i t a t i o n and conversion of existing housing for low- and moderate-rental units. The maximum available loan per unit was set at $10,000 of which $3,700 was forgiveable. As rents in both non-profit and co-operative developments were to be based on a break-even l e v e l , the programs were designed primarily to target those whose incomes rendered them i n e l i g i b l e for public housing but also denied them access to assisted home ownership. They were also designed to f a c i l i t a t e s o c i a l mix, with higher income households receiving shallow 4 6 S t a t u t e s of Canada, An Act to Amend the National Housing Act, 1973, 21 & 22 Elizabeth II, ch. 18. Given the quasi-homeowner status of co-operative residents, co-operative developers were also e l i g i b l e for a l l assisted home purchase grants and loans. 198 subsidies or paying the lower-end-of-market (LEM) rent, and lower-income households paying on a rent-geared-to-income basis. To help non-profit and co-operative developers cover the difference between the rent-geared-to-income rents and break-even rents, the 1964 rent supplement program, through which the federal and p r o v i n c i a l governments had contributed equally to cover operating losses in the Section 35D public housing program, was extended. Henceforth, under Section 44(1 M b ) , non-p r o f i t and co-operative developers would be e l i g i b l e for the federal-provincial rent supplements, providing no more than 25% of the units in non-profit and 15% in co-operative projects were supplemented. 4 6 4 The new provisions stimulated the creation of a number of municipal non-profit corporations, the f i r s t of which, City Home, was established in Toronto in 1973. As Table 18 indicates, they also successfully stimulated the production of non-profit and co-operative housing, the production of which t o t a l l e d 26,045 units between 1974 and 1978, as compared to 18,679 units between 1964 and 1973. Co-operative production alone rose from an annual average of 200 units per year before 1973 to 1,500 per year between 1973 and 1979, 4 6 5 and t o t a l co-operative stock stood at 12,000 in 1979. 4 6 6 Even then, however, non-profit and 4 6"Catherine A l l e n , "A Triumph for Third Sector Housing," Habitat 25 (1982):32. 4 6 5Canadian Real Estate Association, Housing in Canada, p. 121. 4 6 6 L a i d l a w , "Co-ops: A Housing Alternative for Canada," Perception 2 (July-August 1979):23. 199 co-operative stock remained a minute proportion of t o t a l housing stock due to program underfunding. In 1978, when the public housing programs had a l l but disappeared, the non-profit and co-operative programs were substantially modified. Due to a new federal policy of "disentanglement", the provinces were offered, in the place of the cost-shared programs, u n i l a t e r a l federal subsidies for any non-profit and co-operative housing undertaken and f u l l r e s p o n s i b i l i t y for program delivery. Moreover, henceforth, the non-profit and co-operative programs were to be the primary means of producing low-rental housing and the bulk of new federal commitments to low-rental housing would s h i f t to the non-profit from the public sector. Neither the 1973 non-profit provisions nor the public housing provisions were repealed, although the intention was c l e a r l y to minimize their use given inequitable p r o v i n c i a l p a r t i c i p a t i o n in both programs and the insu f f i c i e n c y of federal subsidies to meet the needs of the lowest-income households without p r o v i n c i a l aid. Under the new Section 56.1 non-profit provisions, co-operative and non-profit developers were offered t h i r t y - f i v e year loan insurance to cover 90% of agreed-to c a p i t a l costs for loans obtained from approved private lenders. In addition, CMHC would write the market interest rate down to 2% for three years, after which the rate would r i s e by 5% annually to eventually meet the market rent. The remaining 10% of the loan would be provided d i r e c t l y by CMHC at the pr e v a i l i n g market rate. The 200 subsidized interest rate on the private sector loan would e f f e c t i v e l y reduce rent levels for a l l Section 56.1 residents from economic to LEM l e v e l s , with enough subsidy remaini.ng to o f f e r rent-geared-to-income units to some residents. Projects were expected to be operated on a break-even basis, and although no r e s t r i c t i o n s were placed on the maximum number of subsidized units, a minimum of 15% rent-geared-to-income units was requi red. The Section 56.1 non-profit and co-operative programs were, l i k e the 1973 programs, accompanied by a number of support schemes designed to address some of the shortcomings observed in the e a r l i e r programs. The f i r s t , under Section 37.1, offered a maximum start-up advance of $75,000 (compared to the former $10,000) 4 6 7 to a s s i s t non-profit and co-operative groups to proceed from i n i t i a l incorporation to project development. u 6 8 A second support program, the Community Resource Organization Project, provided increased i n i t i a l f i n a n c i a l assistance to resource gropus o f f e r i n g technical and professional services to non-profit and co-operative groups. This assistance was intended to help resource groups att a i n s e l f - s u f f i c i e n c y within three to f i v e years. Other assistance available to Section 56.1 developers included the RRAP grant for r e h a b i l i t a t i o n and conversion of ex i s t i n g buildings, and a revised Section 44(1 Mb) 4 6 7Canada Mortgage and Housing Corporation, Section 56.1  Evaluation, pp. 22-23. 4 6 8 T h e start-up advance would later be incorporated into project c a p i t a l costs. 201 rent supplement program. Under the revised arrangements, the provinces became responsible for covering operating losses. Once pro v i n c i a l contributions had reached a le v e l equal to CMHC's assistance to projects, however, the federal government would share further losses equally with the provinces. As Table 18 indicates, the new non-profit and co-operative provisions were readily u t i l i z e d . Between 1979 and 1983, 50,123 Section 56.1 units were produced, of which approximately 50% were private non-profit, 28% public non-profit, and 20% co-operative u n i t s . " 6 9 A c t i v i t y under the Section 56.1 programs brought the t o t a l number of non-profit and co-operative units produced since the introduction of the expanded program in 1973 to 76,168 units, and the t o t a l number of non-profit sector units b u i l t since 1964 to 94,847. Even with t h i s growth in the non-p r o f i t sector, however, non-profit stock composed only .8% of t o t a l Canadian housing stock in 1981." 7 0 A 1983 CMHC evaluation of the Section 56.1 programs concluded they had been successful in overcoming many of the problems encountered with the public housing programs. The so c i a l housing programs were found to produce good qualit y , modest, appropriate and affordable housing to serve not only low- and moderate-income families and individuals but "special " 6 9Canada Mortgage and Housing Corporation, Sect ion 56.1  Evaluation, Executive Summary, p. 1. " 7 C a l c u l a t e d from figures in Table 18 and Canada Mortgage and Housing Corporation, Canadian Housing S t a t i s t i c s , l982:Table 99. 202 needs" groups such as the e l d e r l y and disabled as well. The goal of s o c i a l mix had been achieved, and the stock of available, affordable rental housing increased by almost 15% in recent years, and up to 50% in some metro areas as a result of the programs. 4 7 1 The non-profit and co-operative programs were c r i t i c i z e d , however, for a number of shortcomings, a l l of which derive either from program design, budget r e s t r i c t i o n s , or c o n f l i c t i n g goals such as attempting to house the most needy while f a c i l i t a t i n g s o c i a l mix, and attempting to reduce federal expenditures while maintaining rent levels at no more than 30% of income. The number of units allocated to families, for instance, was considered inadequate. As well, almost one-third of non-profit and co-operative residents were found to be paying more than 30% of income for rent in order to maintain the f i n a n c i a l v i a b i l i t y of non-profit p r o j e c t s . 4 7 2 Moreover, the programs were charged with being the most costly method of providing rent-geared-to-income units yet u t i l i z e d . 4 7 3 Most s i g n i f i c a n t l y , the programs were faulted for serving only 1% of 4 7 1Canada Mortgage and Housing Corporation, Sect ion 56.1  Evaluation, pp. Abstract, 5, 9. 4 7 2 I b i d . , p. 3. 4 7 3 I b i d . , p. 7. 203 Canadian households with "core need" 4 7" - a c r i t i c i s m which c l e a r l y suggests they have been underfunded in r e l a t i o n to need. At 1982-83 funding l e v e l s , in fact, i t was estimated that i t would take fifty-two years to house a l l those in n eed, 4 7 5 with no allowance for growing numbers of needy households as unemployment steadily climbed and s o c i a l assistance benefits either remained stable or f e l l . Even the 1982 CMHC Annual Report noted: "Demand for assistance under a l l [ s o c i a l housing] programs continued to exceed the number provided for in the annual budget." 4 7 6 Presently, even the small number of low-rental units produced through the Section 56.1 programs appears to be endangered. One threat i s a recent federal move to turn the administration of and r e s p o n s i b i l i t y for the programs over to the provinces. As most of the provinces have shown l i t t l e i nterest in s o c i a l housing programs in the p a s t , 4 7 7 these programs are l i k e l y to decline or be discontinued at a time when 4 7 4 I b i d . , pp. Abstract, 36, 41. "Core need" households are households unable to afford adequate, uncrowded housing without paying more than 30% of gross income. Crowding i s defined as dwellings with more than one person per room. Inadequacy is defined as dwellings lacking basic f a c i l i t i e s such as piped hot and cold water, flush t o i l e t , or exclusive use of a bathtub or shower. 4 7 5 C o u n c i l on Social Development, Where Do We Go? pp. 42-43. 4 7 6Canada Mortgage and Housing Corporation, Annual Report, 1982, p. 1 6. 4 7 7Between 1979 and 1981, for instance, only one quarter of committed Section 56.1 units received p r o v i n c i a l assistance as well as federal, with special care units receiving almost one-half of that assistance. The co-operative program, which targets moderate-income households most s p e c i f i c a l l y , received the least additional assistance. Canada Mortgage and Housing Corporation, Section 56.1 Evaluation, pp. 267, 269. 204 tremendous s o c i a l need for low- and moderate-rental housing e x i s t s . A second threat i s r e s t r a i n t . The co-operative program, for instance, which was singled out for most of the c r i t i c i s m in the Section 56.1 Evaluation, was cut back by 40% in 1984. 4 7 8 Although the non-profit program was not slashed, unit a l l o c a t i o n s remain low. Moreover, recent media reports suggest that i f the programs are not handed over to the provinces, they may be slated for termination anyway. Rather than continue to encourage low- and moderate-rental production through the non-profit programs, the federal government appears to have sh i f t e d i t s p o l i c y focus back to reliance on the private sector. The establishment of a federal Task Force in 1979 to examine CMHC programs and to study the potential for p r i v a t i z i n g or at least encouraging the private sector to take a larger role in some CMHC a c t i v i t i e s 4 7 9 i s but one example of the s h i f t . Indeed, the s h i f t in focus from the public and non-profit sectors to private sector supply was confirmed by Paul Cosgrove, federal Minister reponsible for CMHC, in his keynote address at the 1981 A l l Sector Housing Conference. Cosgrove remarked: "The private market i s now the best tool for providing housing for most Canadians. The federal government i s 4 7 8Canada Mortgage and Housing Corporation, "Remarks by the Honourable B i l l McKnight, Minister of Labour and Responsible for Canada Mortgage and Housing Corporation, at the 80th Annual Conference of the Saskatchewan Urban M u n i c i p a l i t i e s Association," 28 January 1985, p. 6. 4 7 9 T a s k Force on Canada Mortgage and Housing Corporation, Report, p. 2. 205 determined to l e t market forces operate for the broad majority of households who can afford to choose what the market offers...the best long-term course for a l l concerned i s to l e t the market sort i t s e l f out."' 1 8 0 Unlike housing reformers at the end of World War II and in 1964, Canadians today cannot look forward with optimism that Canada's rental housing problems w i l l soon be solved. Home ownership remains inaccessible to most low- and moderate-income Canadians.' 1 8 1 Public housing construction has ceased. The non-p r o f i t sector i s cash-starved and private rental production remains low because average national market rents range from 25% to 40% below leve l s required to stimulate private sector interest in rental housing production." 8 2 Currently, dwellings l e f t vacant by upper-income renters purchasing homes are the single most important source of rental unit a v a i l a b i l i t y . " 8 3 Moreover, most of the current proposals for r e l i e v i n g Canada's rental problems - shelter allowances, assistance to the private sector, and the s t a b i l i z a t i o n of interest rates - are based on " 8 0Canadian Real Estate Association, Housing in Canada, pp. 13-14. 4 8 1 Even condominiums do not provide the home ownership answer for lower-income households. In 1981, a t y p i c a l two bedroom condominium in Canada cost $140,000 or $1,195 per month with carrying costs. Using 1981 income q u i n t i l e upper l i m i t s , even fourth q u i n t i l e households, with a l i m i t of $39,893, could a f f o r d only $1,007 per month at 30% of income or a dwelling worth $99,732 at 2.5 times annual income. See Weiss, "Hot Properties: Why Investors are Crazy for Condos," Canadian  Business 54 (January 1981):89; Hulchanski and Grieve, Federal  Budgets, p. 14. " 8 2 C l a y t o n , Rental Housing Scenarios, p. i i i . " 8 3Canada Mortgage and Housing Corporation, "Analysis of the Rental Market," p. 7. 206 the notion of housing as a market commodity to be bought and sold and not necessarily l i v e d i n . " 8 4 Those making such proposals display l i t t l e understanding that after eighty-five years of treating housing as a market commodity, Canada's rental problems p e r s i s t . 4 8 4 S e e Hopkins, "Hunger," pp. 37, 42; Canadian Real Estate Association, Housing in Canada, p. 20. 207 CHAPTER 6 THE LIMITS OF GOVERNMENT RENTAL POLICY, 1900-1985 From the detailed review of the rental housing problem which i s presented in Chapters 2 through 5, i t i s apparent that the rental housing sector has been plagued by serious problems throughout the entire twentieth century. These problems, which have been manifested in the poor qua l i t y of much of the rental stock, e s p e c i a l l y early in t h i s century, the i n s u f f i c i e n t supply of rental dwellings, and the high cost of rental housing, have been associated with the poor performance of the private rental market for much of the period. The appalling slum conditions of the l a t e nineteenth and early twentieth centuries, for example, resulted l a r g e l y from the unco-ordinated and speculative development pattern of Canadian c i t i e s . " 8 5 S i m i l a r l y , the chronic shortage of rental dwellings in Canada i s a result of v i r t u a l l y exclusive reliance on the private sector for rental supply. The private sector's capacity to supply not only a s u f f i c i e n t number of rental dwellings to meet demand but dwellings units of any description, for example, was c l e a r l y 4 8 5 I n the absence of regulations and minimum qu a l i t y standards to guide urban growth, central slums and/or peripheral shanty towns sprang up in a l l major Canadian urban centers. 2 0 8 inadequate u n t i l the 1960's." 8 6 Moreover, as Figure 3 i l l u s t r a t e s , the primary focus of private sector construction during the twentieth century has been on units for owner-oc c u p i e r s . " 8 7 In addition, private sector supply i s heavily dependent on macro-economic cycles and the profit-motive rather than on need and often even demand."88 F i n a l l y , the major factor underlying rental a f f o r d a b i l i t y problems throughout the twentieth century has been the private sector's i n a b i l i t y to construct housing for lower-income and, increasingly, even moderate-income renters while maintaining a * 8 6 C o n t i n u a l shortages of manpower, materials and mortgage funds, p a r t i c u l a r l y during and after the two world wars and during the Great Depression, and post-war shortages of serviced land maintained production at r e l a t i v e l y low l e v e l s . " 8 7 A s i d e from a r e l a t i v e l y minor apartment construction boom between 1923 and 1929, the construction and design of dwellings intended s p e c i f i c a l l y for multi-family rental occupancy remained at very low le v e l s for the f i r s t sixty years of t h i s century. " 8 8 F o l l o w i n g World War I, for example, when war veterans were returning home and seeking housing, and again during the Great Depression when rural people were migrating to larger centers in search of employment (and consequently housing), private sector r e s i d e n t i a l construction v i r t u a l l y ceased. S i m i l a r l y , from 1973 onwards, rental construction has declined consistently, except for a few spurts of a c t i v i t y resulting from government incentive programs, despite tremendous need for affordable rental housing. By the 1980's, in fact, when rental vacancy rates were at an a l l - t i m e low, many large private developers were leaving the rental construction business in favour of more p r o f i t a b l e single-family dwelling, condominium, commercial or i n d u s t r i a l development. 209 FIGURE 3 HOUSING STARTS, CANADA, 1900-1983 SOURCE: CMHC, Canadian Housing Statistics, Ottawa, Various Years. Leacy, F.H. (1983) Historical Statistics of Canada, 2d ed., Ottawa: Statistics Canada and Social Science Federation of Canada, Series S201-205. 210 r e a s o n a b l e p r o f i t l e v e l . 4 8 9 The poor performance of the p r i v a t e r e n t a l market and the s e v e r i t y and p e r s i s t e n c e of r e n t a l h o u s i n g problems over the pas t e i g h t y - f i v e y e a r s has r e q u i r e d t h a t government i n t e r v e n e i n the r e n t a l s e c t o r . The review of r e n t a l h o u s i n g p o l i c y p r e s e n t e d i n C h a p t e r s 2 t h r o u g h 5 s u g g e s t s , however, t h a t the f e d e r a l government d i d not t a k e up o p p o r t u n i t i e s t o d e v e l o p a comprehensive r e n t a l p o l i c y which would s t i m u l a t e a s u p p l y of r e n t a l h o u s i n g which was both of good q u a l i t y and a f f o r d a b l e t o w o r k i n g - c l a s s and lower-income h o u s e h o l d s . The re v i e w i n d i c a t e s , i n f a c t , t h a t d e s p i t e the p o l i t i c a l and economic i m p e r a t i v e s f o r government a c t i o n which stemmed from e a r l y and c o n t i n u e d documentation of r e n t a l h o u s i n g problems and p r o l o n g e d advocacy f o r government i n t e r v e n t i o n , the p r i m a r y r e s e a r c h assumption h y p o t h e s i z e d i n Chapter 1 i s s u p p o r t e d . I n t e r v e n t i o n i n the r e n t a l s e c t o r has ind e e d been m i n i m a l , piecemeal and r e a c t i v e , l a r g e l y market s u p p o r t i v e , and d e s i g n e d t o c h a l l e n g e n e i t h e r the p r i n c i p l e of h o u s i n g as a commodity nor the myth of market e f f i c i e n c y . The m i n i m a l n a t u r e of the i n t e r v e n t i o n i s c o n f i r m e d by the p e r s i s t e n c e , and i n some cases i n t e n s i f i c a t i o n , of r e n t a l h o u s i n g problems over the p a s t e i g h t y - f i v e y e a r s d e s p i t e 4 8 9 A s e a r l y as 1919, an O n t a r i o Housing Committee Report noted the gap between.the c o s t s of c o n s t r u c t i n g and m a i n t a i n i n g s a t i s f a c t o r y d w e l l i n g s and r e n t l e v e l s a f f o r d a b l e t o w o r k i n g -c l a s s h o u s e h o l d s , and i n 1949, Leonard Marsh observed t h a t the p r o v i s i o n of low- and even m o d e r a t e - r e n t a l h o u s i n g was not a commercial p r o p o s i t i o n . By the l a t e 1950's and e a r l y 1960's, the p r i v a t e s e c t o r was deemed i n e f f e c t i v e i n h o u s i n g the l o w e s t one-h a l f of the income range, and thus a p o r t i o n of even m i d d l e -income h o u s e h o l d s . 21 1 occasional government action. The piecemeal and reactive nature of the intervention i s r e f l e c t e d in the government's propensity to adopt short-term programs in response to c r i s i s s ituations. F i n a l l y , government adherence to the p r i n c i p l e of housing as a market commodity and i t s f u l l support for the free market approach to housing is re f l e c t e d in the ne g l i g i b l e stock of non-p r o f i t and public housing in Canada today - in 1981, non-profit and public sector units represented only 2.8% of the t o t a l Canadian housing s t o c k . " 9 0 Two major factors appear to have been instrumental in determining the nature of government intervention in the rental sector during the twentieth century. The factors, which are discussed in d e t a i l below, include: the set of constraining assumptions i d e n t i f i e d in Chapter 1 which have constituted the terms of reference for intervention, and the federal government's inadequate d e f i n i t i o n of the rental housing problem. A t h i r d factor, which i s not discussed but which must be recognized, i s the fact that the lower-income households for whom rental problems have been most pronounced are r e l a t i v e l y unorganized and p o l i t i c a l l y impotent. This factor has been recognized by a number of studies through the ye a r s . " 9 1 " 9°Calculated from figures in Clayton, Rental Housing Scenarios, Appendix B, Table B—11; Canada Mortgage and Housing Corporation, Canadian Housing S t a t i s t i c s , l982:Table 99. " 9 1See, for example: Carver, Houses for Canadians, pp. 121-122; Subcommittee on Housing and Community Planning, F i n a l Report, pp. 14, 110; Central Mortgage and Housing Corporation, Brief to  Royal Commission, p. 24. 212 6.1 Terms of Reference for Government Intervention The terms of reference which have constrained rental policy include: a) reliance on the private sector for housing supply and housing program delivery; b) the focus on home ownership as the desirable tenure opt ion; c) the b e l i e f that severe housing problems are temporary aberrations rather than manifestations of fundamental, long-term problems; and d) the view that housing i s largely a l o c a l matter, with problems best l e f t to the municipalities and provinces to sort out. The following sections i l l u s t r a t e how government intervention has been c a r r i e d out, whenever possible, with minimal v i o l a t i o n of these terms of reference. A. The Prominent Role of the Private Sector in Housing  Programs. For Canadian housing policy, the assumption that housing i s a market commodity whose provision i s a private sector r e s p o n s i b i l i t y has meant that government intervention in the housing market has generally been of an indi r e c t , market-oriented nature and, p a r t i c u l a r l y in the period before the 1960's, r a t i o n a l i z e d as a response to extraordinary circumstances. The 1919 Home Loans Program was a tool in post-war reconstruction, the 1935 Dominion ;Housing Act (DHA), the 1937 Home Improvement Loans Program, and the 1938 National Housing Act (NHA) were responses to the devastation of the Great Depression, and the 1944 NHA was aimed at post-war reconstruction. Moreover, the l a t t e r four interventions a l l 213 r e l i e d on the private sector, with the aid of government loans or grants, for housing provision, as did the loan insurance introduced in the 1954 NHA and the majority of the housing programs adopted in the 1970's." 9 2 The nature of these interventions i s indeed remarkable given widespread recognition among housing experts throughout the twentieth century of the need for major government intervention in the rental market, for the creation of a federal housing authority, and for public r e s p o n s i b i l i t y for low-rental housing provision. The federal government's direct intervention in the rental sector during World War II with the creation of Wartime Housing Limited (WHL) and the imposition of rent controls i s an- obvious exception to the pattern of indirect involvement, but the use of the War Measures Act to authorize WHL's a c t i v i t i e s had redefined the wartime housing shortage as a "war problem".* 9 3 As soon as the war ended, the government e s s e n t i a l l y reverted to i t s indirect p o s i t i o n . WHL was dismantled, the 31,000 housing units were sold o f f , and Central Mortgage and Housing Corporation (CMHC) was created "to stimulate the private sector to serve as large an area as possible of the housing f i e l d . " * 9 * * 9 2See Hulchanski and Grieve, Federal Budgets. * 9 3Indeed, one h i s t o r i a n has noted that the intervention was motivated more by economic and war-related concerns than s o c i a l concerns for the welfare of the population. See Wade, "Wartime Housing," p. 42. * 9"From a Memorandum to Cabinet, c i t e d by Wade, "Wartime Housing," p. 150. 214 The public housing programs introduced in 1949 and 1964 and the so c i a l housing programs of 1973 and 1978 are also exceptions. The government's lack of commitment to these programs and the direct role they imply i s manifest, however, in program underfunding. 4 9 5 Moreover, the programs have received only short-term, year-to-year funding commitments, 4 9 6 and have been designed to ensure the production of modest housing which poses no threat to private market s u p p l y . 4 9 7 The appointment in 1979 of a federal Task Force on CMHC to study the potential for p r i v a t i z i n g or at least encouraging the private sector to take a larger role in many CMHC a c t i v i t i e s , recent media reports that the s o c i a l housing programs may be slated for termination, and recent federal statements regarding private sector r e s p o n s i b i l i t y for housing provision suggest that the federal government remains committed to relying on the private market for v i r t u a l l y a l l Canada's housing needs. The federal government's January 1985 Consultation Paper on Housing, for example, noted that a l l l e v e l s of government must streamline the delivery of housing programs and suggest better ways to co-ordinate their actions as "an important f i r s t step...towards creating an environment in which the private sector can operate 4 9 5 A s stated above, in 1981, public and non-profit sector units represented only 2.8% of t o t a l Canadian housing stock. 4 9 6 D e n n i s and Fish, Programs in Search of a Policy, p. 14. 4 9 7From a February 12, 1957 l e t t e r to the President of CMHC from a senior government o f f i c i a l and Board Member of CMHC, c i t e d by Dennis and Fish, Programs in Search of a Policy, p. 174. 215 with greater c e r t a i n t y . . . " " 9 8 S i m i l a r l y , Housing Minister B i l l McKnight remarked at the annual meeting of the Co-operative Housing Foundation in May 1985: "Government actions, where they may be required, should be directed to f a c i l i t a t i n g the operation of a free and competitive market, not impeding i t . " " 9 9 Given t h i s attitude, and the assumption that i t is government programs which have impeded the e f f i c i e n t operation of housing markets, i t i s not surprising that the federal Consultation  Paper framed the government's options regarding intervention in rental production problems in terms of either removing impediments to private sector construction or offering assistance to private rental entrepreneurs. 5 0 0 B. Home Ownership as the Desirable Tenure Option. The reaction of the federal government to ongoing problems in the rental sector has refl e c t e d the "second cla s s " status to which rental housing has been relegated. The response to the working-class housing problem of the 1910's and 1920's, for instance, was to attempt to f a c i l i t a t e home ownership through the 1919 Home Loans Program. Even with the well-documented evidence of rental problems during the 1930's and clear indications that a " 9 8Canada, Consultation Paper on Housing (Ottawa: Supply and Services, 1985), p. 3. ""Canada Mortgage and Housing Corporation, "Remarks- by the Honourable B i l l McKnight to the Co-operative Housing Foundation Annual Meeting, Calgary," 23 May 1985, p. 4. 5 0 0Canada, Consultation Paper, p. 26. 216 large proportion of working-class households were incapable of financing even assisted home ownership, the 1935 and 1938 housing acts i n i t i a t e d only home ownership assistance programs. The very modest low-rental provisions included in the 1938 NHA were never implemented. The 1954 amendments to the NHA, which introduced mortgage insurance and permitted the chartered banks to lend on r e s i d e n t i a l property, were designed to augment the supply of mortgage c a p i t a l in order to render home ownership accessible to more Canadians. Only during the 1970's did the government i n i t i a t e several rental supply subsidy programs. These were outnumbered and outfunded, however, by a series of home ownership subsidy and tax incentive programs including the Assisted Home-Ownership Program, the Registered Home-Ownership Savings Plan, the Canada Home^Ownership Stimulation Plan, the Canada Mortgage Renewal Plan, the Mortgage Rate Protection Plan, and the tax exemption of c a p i t a l gains on p r i n c i p a l r e s i d e n c e s . 5 0 1 Moreover, the potential long-term benefits of the rental programs were reduced by the reg i s t r a t i o n of many subsidized private rental units as condominiums, which means they are not guaranteed to remain in the rental stock. A recent statement by Mr. McKnight before an annual conference of municipal o f f i c i a l s suggests home ownership w i l l continue as the preferred goal of Canadian housing pol i c y . In defending the existence of tax provisions which favour home-ownership over rental tenure, McKnight told the assembly that "as a society, we believe in and encourage home ownership" and that any changes in 5 0 1 S e e Hulchanski and Grieve, Federal Budgets. 217 the tax benefits to the ownership sector would be "unfair and counter to our strongly held b e l i e f in the value of home ownership." 5 0 2 C. The Housing Problem as a Temporary Aberration. Although there i s plenty of evidence suggesting that problems experienced by working-class and lower-income renters are chronic, the belie f that the problems are due to short-term and ephemeral market conditions has meant government has consistently either neglected rental problems or responded with piecemeal and short-term interventions. In 1918, for instance, Thomas Adams suggested public assistance to the private sector appeared necessary unti1 c a p i t a l became more p l e n t i f u l and private investment in building- more s e c u r e . 5 0 3 The rental problem of the 1930's was ra t i o n a l i z e d as a product of the Depression. S i m i l a r l y , the rental problem of the World War II years was dubbed a "war problem" and would, according to CD. Howe, ameliorate once the war ended and construction costs s t a b i l i z e d . 5 0 " Thus the rental dwellings constructed by WHL were constructed as temporary units. Yet, by the 1970's, proh i b i t i v e financing and construction costs continued to thwart private sector construction and the number of Canadians unable to afford adequate housing had reached unprecedented l e v e l s . The 5 0 2Canada Mortgage and Housing Corporation, "Remarks by B i l l McKnight at SUMA," pp. 9, 10. 5 0 3Adams, "Reconstruction Messages," p. 501. 50"Howe, "Meeting Housing Needs," p. 219. 218 government's response to this s i t u a t i o n was to implement temporary incentive programs such as the Multiple-Unit Residential Building (MURB) program, the Assisted Rental Program (ARP) and the Canada Rental Supply Plan (CRSP). Not only have these short-term programs f a i l e d to address what i s obviously a long-term problem, but they have tended to exaccerbate that problem by disrupting the market and creating further i n s t a b i l i t y . 5 0 5 A statement in the 1985 federal Consultation Paper on  Housing suggesting that limited access to home ownership and the poor economics of new rental construction are short-term problems 5 0 6 i l l u s t r a t e s the government's unwillingness to address the'long-term nature of such problems for low- and moderate-income households. Apparently, the housing problem, including the rental problem, continues to be viewed as temporary. D. Pro v i n c i a l J u r i s d i c t i o n Over Housing. Because Section 92 of the B r i t i s h North America (BNA) Act delegates r e s p o n s i b i l i t y for housing to the provinces, federal involvement in housing was slow to evolve. Only when i t became apparent the provinces were 5 0 5 S e e Canadian Real Estate Association, Housing in Canada, p. 152; Clayton, Rental Strategy, pp. i i i , 12; Canada Mortgage and Housing Corporation, "Remarks by B i l l McKnight to CHF," p. 4; Canada Mortgage and Housing Corporation, "Remarks by the-Honourable B i l l McKnight to Canadian Home Builders' Association National Conference, Ottawa," 11 February 1985, p. 9. 5 0 6Canada, Consultation Paper, p. 24 219 f i n a n c i a l l y incapable of coping with the ongoing housing problems did the federal government intervene. Even then, i t was careful to require either p r o v i n c i a l administration of housing programs, as with the 1919 Housing Loans Program, p r o v i n c i a l cost-sharing of the programs, as with the 1949 and 1964 public housing programs, prov i n c i a l enabling l e g i s l a t i o n , as with the 1938 and 1944 NHA's and the 1949 public housing provisions, or lo c a l i n i t i a t i v e for action as with the 1938 and 1949 rental programs. These requirements for b i - or t r i - l e v e l co-operation on policy and programming have presented a serious obstacle to action. Moreover, when the federal government has preferred not to act at a l l , the constitution has provided a convenient excuse. Numerous examples of federal "buck-passing" on the low-rental issue, beginning as early as 1935, are c i t e d in Chapters 2 through 5. The one time the federal government did take d i r e c t , u n i l a t e r a l action on rental problems - during and immediately following World War II - the provinces acquiesced given the "emergency" circumstances. In the past several years, the federal role in housing has increasingly devolved to the provinces. Currently, negotiations are under way to transfer administration of the la s t vestiges of federal rental policy - the s o c i a l housing programs - to the p r o v i n c e s 5 0 7 who have shown l i t t l e interest in s o c i a l housing 5 0 7Canada, "Communique on Housing," 4 July 1985. 220 programs in the past. 6.2 Inadequate D e f i n i t i o n of the Rental Problem Before d e c i d i n g what to do about a problem, i t i s necessary to d e f i n e what the problem i s . The way the Canadian government has d e f i n e d the r e n t a l problem has had major i m p l i c a t i o n s f o r the way in which r e n t a l problems have been approached. H i s t o r i c a l l y , the r e n t a l sector i n Canada has been plagued by an inadequate supply of good q u a l i t y , a f f o r d a b l e housing. From the r e p o r t s of the e a r l y p u b l i c h e a l t h reformers and the Royal Commissions of the l a t e 1910 1s and 1920's, through to the w r i t i n g s of housing reformers i n the 1960's, the c o - e x i s t e n c e of the three elements of the r e n t a l problem has been documented. However, because those r e s p o n s i b l e f o r d e v e l o p i n g r e n t a l p o l i c y f a i l e d to make the connection between the t h r e e key problem areas, government i n t e r v e n t i o n has tended to focus on them s e p a r a t e l y and i n a c l e a r l y s e q u e n t i a l manner. Consequently, the o p p o r t u n i t i e s presented f o r the development of a long-term, comprehensive r e n t a l p o l i c y aimed at simultaneous treatment of a l l three aspects of the problem were missed. These statements do not imply that any one of the three elements of the problem has been t r e a t e d at a p a r t i c u l a r time to the e x c l u s i o n of the other two. What they do imply i s that the government's primary focus on a p a r t i c u l a r element of the problem has- been s e q u e n t i a l , with poor housing c o n d i t i o n s l a r g e l y commanding a t t e n t i o n i n the e a r l y y ears, inadequate supply i n mid-century, 221 and the a f f o r d a b i l i t y issue most recently. The following sections b r i e f l y outline the sequential nature of government intervention on rental housing problems. A. Intervention in Rental Quality Problems. The f i r s t of the rental problem areas to be tackled by government was the poor quality of much of the rental stock. Given the confidence placed in the market's a l l o c a t i v e c a p a b i l i t y , government action was apparently based on the belief that with the improvement of housing conditions, the rental problem would be solved. The connection between poor quality construction and the private sector's a b i l i t y to supply housing, and between poor housing conditions and poverty was not, in those early years, made. 5 0 8 Intervention in issues relating to the quality of the housing stock originated largely as a municipal and p r o v i n c i a l a c t i v i t y , and was i n i t i a l l y f a c i l i t a t e d not through housing-s p e c i f i c programs, but through the public health reform of the early twentieth century and town planning. Early demands for federal action were, at least in part, s a t i s f i e d by the creation in 1909 of the Commission of Conservation, the federal advisory body concerned with the preservation of human and natural resources. Although the BNA Act precluded direct federal a c t i v i t y on public health and urban matters, the Commission functioned, in part, to promote pr o v i n c i a l action on urban Spragge, "Confluence of Interests," p. 251. 222 problems. 5 0 9 Otherwise, federal response to the problem of poor qual i t y rental housing has been minimal and r e l a t i v e l y recent. Aside from the introduction of a narrowly-conceived and thus scarcely-used $20 m i l l i o n slum clearance program in 1944, a concerted federal attack on the remaining scattered pockets of nineteenth and early twentieth century slum housing was not made u n t i l the introduction of the urban renewal program in 1964. Because the insensitive manner in which much of the clearance was carried out served to exaccerbate both the s o c i a l and housing problems of low-income households, however, the program was suspended in 1969. It was replaced in 1973 by the Neighbourhood Improvement Program (NIP) and the Residential Rehabilitation Assistance Program (RRAP) which were designed to f a c i l i t a t e more selec t i v e redevelopment and more extensive use of r e h a b i l i t a t i o n and conservation measures. Currently, RRAP i s the only federal program targetted to rental housing q u a l i t y . Given that i t s funding was reduced by 25% in November 1984, i t would seem that additional federal intervention to improve urban rental quality standards i s considered to be of low p r i o r i t y . B. Intervention in Rental Supply Problems. The second rental problem area which Canadian governments addressed i s the supply of units. Given the key role of housing in the national economy, i t is the federal government which has focussed on supply i n i t i a t i v e s . As with intervention on q u a l i t a t i v e problems, attempts to solve the rental problem by simply stimulating rental supply appear to have been based on 5 0 9 H u l c h a n s k i , "Urban Land Use Planning," p. 31. • 223 confidence in the market's a l l o c a t i v e c a p a b i l i t i e s . Again, the connection between housing q u a l i l t y and the market's a b i l i t y to supply housing, and income and a c c e s s i b i l i t y to housing was not made, and e f f e c t i v e demand was not d i f f e r e n t i a t e d from s o c i a l need. Despite early and continued documentation of a serious s h o r t f a l l of rental units, intervention in the supply problem was n e g l i g i b l e before World War II . With the outbreak of the war, however, the federal government became very involved in stimulating rental housing supply because the c r i t i c a l shortage of urban housing to accommodate war industry workers threatened the war e f f o r t . The government imposed eviction controls, engaged in conversion a c t i v i t i e s , and in 1944 reinstated the Limited Dividend rental provisions of the 1938 NHA which had expired in 1940. Most importantly, i t created Wartime Housing Limited to construct rental units for war workers and their families. The return of the war veterans, the post-war population boom, and concerns regarding the health of the post-war economy kept the federal government active in stimulating rental housing supply well into the 1950's. In 1945, the operations of WHL were expanded to include construction of rental units for returning veterans. Between 1946 and 1954, the federal government also made loans to primary industries to construct rental housing for their employees, introduced a number of tax system subsidies to rental developers, introduced rental investment insurance, 224 engaged in the construction of new rental housing for armed forces personnel, and sought to encourage the conversion of single-family dwellings to multi-family use. As well, in 1949 a modest public housing program was introduced to stimulate low-rental supply but given i t s focus on low-income households i t i s , for the purposes of this discussion, considered an intervention aimed at a f f o r d a b i l i t y . Federal action to stimulate rental housing supply f e l l off in the mid-1 950's when favourable demographics and economics triggered a major apartment construction boom which lasted into the early 1970's. The health and v i t a l i t y of the private rental sector during the 1960's lent credence to the long standing assumption that the market could produce the required numbers of rental units, maintaining federal intervention to stimulate supply at low levels for most of the period. Between 1954 and 1975, the Limited Dividend program was v i r t u a l l y the only private rental supply program in e f f e c t , and even i t was suspended for four years in 1960. A second and more substantial public housing program adopted in 1964 was aimed more at the a f f o r d a b i l i t y problem than at stimulating rental supply. In the early 1970's, a combination of factors precipitated the decline of the private rental sector, and rendered private sector rental development increasingly unprofitable. As a r e s u l t , the federal government again became- very involved in stimulating rental housing supply, launching three substantial private sector rental supply incentive programs - MURB, ARP, and 225 CRSP - and a number of minor supply schemes. As a l l of these programs had lapsed by the early 1980's, there are currently no private sector rental supply incentive programs in operation. Given the extension of the a f f o r d a b i l i t y problem to s i g n i f i c a n t portions of moderate- and middle-income households, two non-p r o f i t sector supply programs targetted at low- and moderate-income renters were also adopted during the 1970's. Like the public housing programs, however, they were aimed more at the a f f o r d a b i l i t y problem than the supply problem. C. Intervention in Rental A f f o r d a b i l i t y Problems. Arguing i t had adequately addressed the quality and supply problems through i t s r e l a t i v e l y i s o l a t e d q u a l i t y - and quantity-targetted i n i t i a t i v e s , the federal government f i n a l l y intervened in a serious way in rental a f f o r d a b i l i t y problems in the 1960's. 5 1 0 Its f i r s t response to rental a f f o r d a b i l i t y problems was the introduction of loans, in 1960, to stimulate the construction of rental housing for u n i v e r s i t y students. In 1964, i t extended the limited dividend provisions to non-profit organizations w i l l i n g to construct low-rental housing, p a r t i c u l a r l y for the e l d e r l y , and introduced an alternate formula for the financing of public housing. The improved funding of the public housing scheme succeeded in stimulating considerable interest in low-rental housing among the provinces, who began to establish p r o v i n c i a l 5 1 0 W h i l e the 1944 Limited Dividend program had been conceived as a low-rental supply program, i t was unable to produce low-rental units. In addition, the 1949 public housing.provisions were sparingly used. 226 housing corporations to administer their public housing programs. The poor design and minimal amenity standards of public housing projects, the low-income p r o f i l e of project residents, the insensi t i v e uprooting of established low-income communities for slum clearance and public housing development, and the s o c i a l stigma generally accorded project residents, however, spawned and/or exaccerbated serious s o c i a l problems. As a r e s u l t , following the recommendations of two major federal Task Force reports in 1969 and 1972, the federal government began to scale down the increasingly costly and problematic public housing programs in favour of smaller, scattered and socially-mixed low- to moderate-income projects. Accordingly, 1973 amendments to the NHA extended the•non-profit program and introduced a continuing co-operative program to f a c i l i t a t e the development of s o c i a l housing projects. In 1978, when the public housing programs had a l l but disappeared, the non-profit and co-operative programs were modified in order to reduce federal c a p i t a l expenditure. Currently, the non-profit and co-operative s o c i a l housing programs are the only federal rental schemes aimed at the a f f o r d a b i l i t y problem. 6.3 Summary and Conclusion In summary, the federal government's adherence to terms of reference which define housing provision as a r e s p o n s i b i l i t y of the private sector, home-ownership as the desirable tenure option, housing problems as temporary conditions, and housing 227 policy as a p r o v i n c i a l r e s p o n s i b i l i t y has resulted in a federal rental policy composed, for the most part, of minimal, ad hoc and short-term market-oriented programs. The fact that the government did not draw the connection between the three elements of the rental problem and the consequent isolated and sequential treatment of the three problem areas has also contributed greatly to the evolution of a narrowly-conceived, incremental, piecemeal and reactive rental p o l i c y . Though i t i s beyond the scope of th i s thesis, one can speculate as to the impact the Canadian approach to the rental housing problem has had on problem resolution. Currently, some bask in the i l l u s i o n that both the quality and supply elements of the problem have been resolved. Admittedly, except in rural areas and on reservations, Canada now has very few poor quality housing units. A recent CMHC estimate suggested, in fact, that less than 3% of rental dwellings are presently over-crowded or of poor q u a l i t y . 5 1 1 Moreover, our r e s i d e n t i a l construction industry i s now capable, at least in theory, of supplying the required number of units. As a re s u l t , there i s a tendency to define the rental problem today as an a f f o r d a b i l i t y problem. The review of rental problems presented in Chapters 2 through 5 suggests, however, that the advances in quality and supply may be more i l l u s o r y than r e a l , and that new versions of both elements of the problem, which are q u a l i t a t i v e l y d i f f e r e n t from 5 1 1Canada Mortgage and Housing Corporation, Sect ion 56.1  Evaluation, Table 3.1, p. 36. 2 2 8 the problems of the past, may have emerged. With regards the rental quality problem, before the introduction of by-laws and construction standards, the private sector could and did house the entire population, however inadequately for some. Eventually, the electorate demanded that minimum quality standards be adopted. Enforcement of such standards, however, precluded the low-income renter's option of l i v i n g in substandard housing when he could not find adequate housing he could afford. It also raised housing production costs and rendered new housing unaffordable to many low-income households. Today, new adequate quality rental housing remains unaffordable to not only most low-income renters, but to many moderate-income renters as well. Thus the improvement in housing qua l i t y has been made at the expense of affordable rental supply for low- and moderate-income households. As for the rental supply problem, once government had taken steps to address shortages of manpower, resources, serviced land and mortgage financing, housing supply problems ameliorated to some extent. The continually escalating costs of developing housing, however, eventually resulted in the emergence of a new gap between the cost of producing rental housing and market rents even moderate- and middle-income renters were w i l l i n g or able to pay. Consequently, production of a l l but very expensive rental units has v i r t u a l l y ceased because the market responds only to e f f e c t i v e demand and not s o c i a l need. Thus supplying affordable rental housing for low- and moderate-income 229 households i s an even greater problem than ever before. Only now, after a l l these years of ad hoc government a c t i v i t y in the rental sector, do we r e a l i z e we may s t i l l be in the same bind we were at the turn of the century in that a substantial percentage of the renter population i s unable to obtain good quality, affordable rental housing appropriate to the size of their household. In e f f e c t , then, the qu a l i t y and supply aspects of Canada's rental housing problem may not have been "solved" but simply repackaged, with even more households finding i t d i f f i c u l t to afford or even find good q u a l i t y rental housing appropriate to their needs. Moreover, the i n a b i l i t y of the private sector to supply reasonably priced rental housing may spark the onset of further rental q u a l i t y problems. At present, Canada's rental stock i s of good quality compared with other developed nations. The bulk of i t , however, is already twenty-five years of age, having been produced p r i o r to or during the 1960's apartment boom. Without additional supply, the rental stock w i l l deteriorate not only because of age but because of intensive use. With the increasing r e s i d u a l i t y of the rental s e c t o r 5 1 2 and the consequent rent^cost squeeze experienced by landlords, improvements to arrest the deterioration are less l i k e l y . 5 1 2 I n 1981, almost 60% of renters were drawn from the lowest two income q u i n t i l e s - the very groups the private rental sector has t r a d i t i o n a l l y been unable to provide for. This compares to 44% in 1967. Hulchanski, "Tax Costs," Table 3. 230 The rental programs of the past f i f t y years show a remarkable consistency in that they have, for the most part, been market-supportive, ad hoc, and minimal measures. Yet with the deteriorating economics of private rental investment, the increasing numbers of Canadians unable to afford home ownership, and the overwhelming evidence suggesting that rental problems are chronic, i t i s apparent that we cannot continue to rely on the same approach to rental policy as we have in the past. No private sector incentive program has yet been successful in producing adequate rental units affordable to low-income households. Moreover, i t i s obvious that one underfunded s o c i a l housing program cannot meet the tremendous s o c i a l need. Increasing the incomes of low and moderate-income renters could go a long way towards resolving the long standing a f f o r d a b i l i t y problem. Yet changing the income d i s t r i b u t i o n of Canadian society i s a monumental challenge. Even with the r e d i s t r i b u t i v e programs of the post-war Welfare State, the income d i s t r i b u t i o n of the early 1950's has remained e s s e n t i a l l y s t a t i c . 5 1 3 We must, therefore, concentrate on the possible. This thesis does not propose a solution. It can, however, be used as a policy t o o l . The main point of the thesis i s that in viewing rental problems and policy options we have been and continue to be constrained both by the terms of reference for 5 1 3 S e e D.P. Ross, The Canadian Fact Book on Income D i s t r i b u t i o n (Ottawa: CCSD, 1980), p. 12; Canada, S t a t i s t i c s Canada, Income"  Dis t r i b u t i o n by Size (Ottawa: S t a t i s t i c s Canada, 1979). 231 action we have imposed on our rental housing policy and by our f a i l u r e to c l e a r l y identify what the problem r e a l l y e n t a i l s . Removing the constraints can open up new options. If we are to make progress on resolving rental housing problems in the future, the f i r s t step must be to question the t r a d i t i o n a l terms of reference. We must rethink the conventional assumptions regarding the c a p a b i l i t i e s of the market and the role and status of rental and ownership housing in Canadian society which underly our rental housing p o l i c y . We must also acknowledge the interrelatedness df the three problem areas and design a comprehensive and long-term policy which treats a l l three aspects of the rental problem simultaneously. Had we done so in the 1930's, we would, perhaps, today have a substantial stock of adequate low- and moderate-rental housing and we would be concentrating on r e h a b i l i t a t i o n to keep that stock in good repair rather than on trying to find ways to house the more than one-half m i l l i o n Canadian renter households with housing problems. 232 BIBLIOGRAPHY Achtenberg, Emily P., and Marcuse, Peter. 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Public A f f a i r s 12 (1949):71-77. 241 APPENDIX FEDERAL PROGRAMS PERTAINING TO RENTAL HOUSING, 1938-1984  YEAR SECTION PROGRAM 1938 Limited Dividend Program (new low-rental) 1940 Rent and Eviction Controls (new/existing) 1941 Wartime Housing Limited (new) 1942 Home Extension Plan (conversions) 1943 Home Conversion Plan (conversions) 1944 9 Limited Dividend Program (new low-rental) 8 Loans to Rental Developers (moderate rental) 11 Guarantees to L i f e Insurance Companies (new) 12 Slum Clearance Grants (low-rental) 1946 9A Loans to Primary Industries (new) 1947 Double Depreciation Plan (new) 1948 8A Rental Insurance Plan (moderate rental) 1949 35 Public Housing (low-rental) 1954 7-13 Insured Mortgage Loans Conversion Loans (conversions) 1956 23 Grants for Urban Renewal Studies 1957 40 Direct CMHC Lending 1957-59 Small Homes Loan Program (low-moderate rental) Home Improvement Loans to Landlords 1964 16A Loans to Non-Prof i t Developers (new and existing low-moderate rental) 23 Grants/Loans to Implement Urban Renewal Schemes 35D Public Housing (new and existing low-rental) 242 35 Public Rent Supplements (low-rental) 1973 15.1 Non-Prof i t Program (new/existing low-moderate rental) 34.18 Co-operative Program (new/existing low-moderate rental) 34.1 RRAP Grants to Non-Profits and Co-operatives 44.1 Private Rent Supplements (low-rental) 44.1 Public Rent Supplements (extended to Non-Prof i t s ) 37.1 Non-Prof i t and Co-operative Support Programs 1974 MURB Program (moderate rental) 1975 14.1 ARP (moderate rental) 1979 56.1 Non-Profit/Co-op Programs (low-moderate rental) 37.1 Non-Prof it/Co-operative Support Programs 1981 Canada Rental Supply Plan (moderate-rental) 

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