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The Federal Scene

Special Bulletin

Alfonso Gagliano, new Minister Responsible for Canada Mortgage and Housing Corporation

Federal Liberals betray promises to support co-op housing
Provinces get "freedom" to close down much-needed housing
Federal Liberal caucus growing uneasy as government moves ahead with social housing transfer to provinces
Liberal cabinet ministers, MPs and senators urge their own minister to slow down housing transfer
Marleau says, don’t worry about social housing transfer
Questions & Answers on the new Federal/Provincial Social Housing Agreement

Federal Liberals betray promises to support co-op housing

(April 4, 1997)

In 1992, federal Liberals condemned the Conservative government for cancelling the federal co-operative housing program:

  • "The Mulroney government has also cut co-op housing and this cut will greatly affect single parents, the handicapped and some of the less affluent Canadians who are able to live in these co-op housing units with some degree of comfort."
  • Diane Marleau, Sudbury MP, March 31, 1992

  • "Canada’s first co-operative housing program was introduced in 1973 under a Liberal government - and our party has remained committed ever since. Like you, we were dismayed by its elimination. . . Liberals have called for the restoration of this important federal program."

    Hon. Jean Chrétien, April 24, 1992

  •  In 1993, in the lead up to the last federal election, the Liberals promised:

  • "We intend to build new partnerships with your groups to achieve our goal of providing shelter for all Canadians."
  • Paul Martin, Sept. 22, 1993

  • "A Liberal government will remain a partner of the co-op sector and non-profit orgnaizations in subsidized housing by providing the means required to allow them to play their role fully."

  • Creating Opportunities for the Montreal Region, Liberal Action Plan, 1993

  •  In a major pre-election policy in 1993, "A Liberal approach to federal housing issues," the then Liberal Housing Critic Joe Fontana (now the Chair of the national Liberal Caucus) promised on behalf of the Liberal Party:

  • "One of the key elements to a Liberal housing policy is the re-institution of the federal co-operative housing program."
  • By 1996, Finance Minister Paul Martin stated in the federal budget that "the issue of the role for third parties in the administration of the social housing stock will be discussed with the provinces and territories". Contrary to that commitment the federal government has told the provinces that they must take over all federal housing programs or none - a position that effectively precludes any consideration of the co-op sector’s alternative.

    Provinces get "freedom" to close down much-needed housing

    (April 4, 1997)

    "These new arrangements will allow provinces and territories the flexibility to meet the needs of their residents and generate savings to reinvest in social housing while adhering to national principles and an accountability framework," said Diane Marleau, federal minister responsible for Canada Mortgage and Housing Corporation, April 1st as she signed an agreement to hand over federal co-op and social housing to New Brunswick. But the Minister’s "flexibility" will have serious consequences for the long-term legal contracts under which co-ops operate. In a legal opinion for CHF Canada based on a federal-provincial agreement signed in early March with Saskatchewan, noted constitutional scholar Patrick Monahan warned that nothing in the agreement prevents the province from changing the terms of the existing contracts.

    "The provinces have a new freedom to remodel co-op housing programs, " says Barbara Millsap, CHF Canada President. "The new federal-provincial agreement allows the provincial government to continue to receive federal housing dollars for a social housing project even if that project fails, or is closed down by the province. The province will continue to receive federal rent supplement dollars, even if the rent supplement program is ended. The province will continue to receive federal public housing dollars, even if those units are sold. The province has no obligation at all under the new agreement to put in any provincial money on housing. The province can substitute the federal funds ‘saved’ for its own housing funds." Under the agreement, the federal government isn’t covering all the costs of running the new provincial bureaucracies. "The Saskatchewan deal, far from meeting the housing needs of lower-income people, gives an incentive to the province to shut down existing social housing programs. The so-called national principles and accountability framework in the agreement won’t stop this."

    The federal-provincial housing transfer follows a pattern set by Ottawa in other areas of social spending, including health care, education and welfare. Ottawa is moving out of shared-cost programs, which provide some long-term certainty by locking in federal and provincial dollars and program commitments. It is downloading financial responsibility to the provinces and in return giving them more ‘flexibility’ to make spending cuts. "This change in financing arrangements for social programs has led to hospital closings, welfare cuts and a squeeze on school. Co-op housing is next," says Millsap. "The federal government is ducking its responsibilities. The provinces will be forced to preside over the inevitable erosion of a successful national program that has delivered good quality, affordable housing for three decades."

     Federal Liberal caucus growing uneasy as government moves ahead with social housing transfer to provinces

    (April 4, 1997)

    A growing number of Liberal politicians across the country are speaking out on their own government’s plan to hand over federal co-op housing programs to provincial and territorial governments. For months, Diane Marleau, federal minister responsible for housing, has promised that existing long-term legal agreements between co-ops and the federal government will be protected in any housing transfer deal. Liberal MPs have been repeating that promise in meeting after meeting with concerned co-op members across the country.

    Noted constitutional scholar Patrick Monahan has just reviewed the agreement signed between the federal government and Saskatchewan on March 4th and warns that co-ops’ legal agreements are not protected under the transfer scheme. Marleau has said that the agreement with Saskatchewan will serve as the model for deals with the other provinces and territories. An agreement with New Brunswick was signed on April 2nd and others may follow soon.

    "Co-op housing members are deeply worried," said Barbara Millsap, President of the Co-operative Housing Federation of Canada, at a press conference in Ottawa today. "This is not just an administrative move," added Millsap. "Moving from one federal agency to twelve provincial and territorial agencies won’t lead to streamlined administration of co-op housing and is already leading to the demise of individual co-op developments in some provinces. Federal officials risk destroying a successful program that has created good quality, affordable housing and knitted together communities across Canada. This is an example of the government’s hamfisted approach to tackle the national unity problem."

    "Jean Chrétien, Diane Marleau and other Liberals condemned Brian Mulroney in 1992 when he killed the development of new co-ops," noted Millsap. "Co-op housing members from coast-to-coast feel betrayed and are angry that their concerns are ignored." In the lead-up to the last election, Paul Martin and the Liberals pledged to work in partnership with co-ops to develop affordable housing. When he announced in the 1996 federal budget that CMHC would phase out its role in social housing, Martin pledged that a possible role for third parties in the administration of the existing stock would be discussed with the provinces. In response, the co-op housing sector tabled a detailed plan to create a non-governmental facility to take on the administration of the co-op portfolio. Co-ops across the country have endorsed the co-op plan - along with a large number of Liberal MPs. But Ottawa has told the provinces that they must take over all federal housing programs or none - a position that precludes consideration of the co-op alternative.

    For more information: Alexandra Wilson - (613) 230-2201, ext. 236

     Liberal cabinet ministers, MPs and senators urge their own minister to slow down housing transfer

    (April 4, 1997)

    Dozens of Liberal MPs and senators across Canada, including cabinet ministers, are distancing themselves from their own government’s plan to hand over the federal co-op housing program to the provinces and territories. Members of the government are also pledging their support for the co-op housing sector’s plan to take on administration of the co-op programs. 

    • "I will tell you that come hell or high water, I’m not about to transfer one darn co-op housing unit. . . to Mikey [Ontario Premier Mike Harris] so he can turn around and give it to the municipal taxpayer or anyone else. It just ain’t gonna happen."
  • Joe Fontana, MP for London Centre, London Free Press, Feb. 1, 1997

  •  "CHF’s experience, knowledge, and resources in the field of co-ops would make them effective in administering the social housing stock."

  • George Proud, MP for Hillsborough (P.E.I.), letter, May 16, 1996

  • "I urge you to revisit [the CHF Canada] proposal and to seriously consider this as an alternative to the transfer of co-operative housing to the provinces. Co-operatives have been very effectively administered in the past and I see this proposal as the best alternative."

  • Mac Harb, MP for Ottawa Centre, letter to Diane Marleau, Feb. 6, 1997

  •  ". . . how will the interests of the CHF and co-operatives in general be protected after the transfer of administration of social housing to the provinces. . . when will the individual housing co-operatives be consulted in a meaningful way. . ."

  • Anna Terrana, MP for Vancouver East, letter to Diane Marleau, Jan. 30, 1997

  •  In an unprecedented action, the Greater Toronto Area Federal Liberal Caucus, which includes 33 MPs and seven senators (including cabinet ministers such as Art Eggleton, Doug Peters and Allan Rock) issued a press release on Feb. 21st, 1997, urging their own minister to "move cautiously" on the plan to transfer federal co-ops to the provincial government in Ontario.

     Still plenty to be concerned about . . .

     Marleau says, don’t worry about social housing transfer

    (CHF Ontario Region Action Bulletin: May 8, 1997)


    On April 25, Diane Marleau, the federal housing minister, wrote to co-ops. Her letter attempts to address some of the concerns co-op members have raised about the federal plan to transfer administration of co-op and social housing programs to the Ontario government. Her letter raises a number of issues. 

    • The Minister says "the federal government has no intention of putting social housing at risk." She says that after the transfer, provinces will have to honour co-op contracts. She says that the federal accountability framework and principles set out in the transfer deal will protect co-ops in Ontario.

    The problem is that the federal accountability framework and principles in the transfer deals signed with other provinces are too weak. They simply do not provide real protection for co-ops or their members.

    Professor Patrick Monahan, one of Canada’s leading constitutional lawyers, reviewed the transfer agreement and concluded that provinces are not required to respect existing co-op contracts and can, without the consent of co-ops, amend or replace co-op contracts. 

    • The Minister also claims that the federal government doesn’t know enough about the Ontario government’s plans to download social housing, so she can’t decide whether the Harris scheme is acceptable to Ottawa. She says this is because Ontario has not responded to her February 11 letter.

    What more information does the federal government need? Ontario has made no secret about its plans. It wants "to get out of the housing business" and plans to do so by downloading housing onto municipalities. Co-ops, municipalities and the rest of the non-profit housing community are all clearly against downloading.

    The federal government and CMHC knew about Ontario’s downloading plan well before the January 14 announcement from Queen’s Park. According to Ontario officials, the federal government expressed no concern with the plan even though Ontario’s downloading announcement openly mentions the possibility of selling off social housing units.

    In her February 11 letter to Ontario Housing Minister Al Leach, Marleau says she is "pleased that you wish to continue our bilateral negotiations." Ontario has prepared its formal response to Marleau’s letter, but provincial officials say that the federal government has said that it prefers not to hear from Ontario until after the federal election. 

    • Minister Marleau closes her letter by again claiming the transfer deals signed so far oblige provinces and territories to respect the rights of co-ops, and that CMHC’s new role somehow safeguards co-ops.

    The Harris government has proven that it cannot be trusted to respect co-op contracts or the rights of co-op members. The Harris government has already broken contracts with co-ops, not once, but twice. Co-ops have twice taken the Harris government to court. The CMHC has stood by and done nothing to help when the province violated the contracts of co-ops built under the federal/provincial program.

    The federal government badly wants the provinces to take over housing. As part of selling the transfer deal to provinces, they have shown provinces where the weaknesses are in existing co-op contracts, and pointed out areas where provinces will have "flexibility" to make changes after the transfer.

    Questions & Answers on the new Federal/Provincial Social Housing Agreement

    The federal government has offered to transfer the management of federal social housing resources to provincial and territorial housing authorities. Canada Mortgage and Housing Corporation (CMHC) has now signed agreements with Saskatchewan and New Brunswick and these are expected to serve as templates for agreements with the other provinces and territories. The new social housing agreement addresses the management of all federally-funded social housing, except some native housing.


    Q. In good faith, federal MPs assured co-op members that co-ops' existing contracts with CMHC would be protected under the new Social Housing Agreement. Are they?

    A. No. While the Agreement addresses the issues and concerns of the two levels of government who sat down at the table, it fails to offer legally-binding protection for the other parties to these contracts, i.e. the co-ops that own and manage the actual housing. That's the opinion of noted constitutional expert Patrick J. Monahan, Professor of Law at Osgoode Hall Law School in Ontario. Prof. Monahan examined the Saskatchewan Agreement recently and said that, in his considered opinion:

      •  ".....nothing in the Agreement requires [Saskatchewan Housing Corporation] to 'respect' existing agreements or to obtain the consent of parties to operating agreements before amending or replacing those agreements."

     and that:

      • "....[Saskatchewan Housing Corporation] is not required by the Agreement to manage and administer federal co-operative housing programs in Saskatchewan in accordance with existing project operating agreements."

    The deal effectively gives the provinces complete control over the programs.


    Q. Does that mean that, despite what CMHC is telling MPs and the public, the provinces can unilaterally alter the operating agreements between co-operatives and the government?

     A. Yes. Prof. Monahan found that:

      • "....in the event that the Saskatchewan legislature were to enact legislation overriding or amending the terms of such project operating agreements, neither [Saskatchewan Housing Corporation] nor the government of Saskatchewan would be in breach of their obligations under the [Social Housing] Agreement."


    Q. Were all parties to co-op operating agreements permitted to sit at the negotiating table as these deals were made, or were they at least consulted in sidebar discussions?

     A. No. The negotiating took place -and continues to take place- behind closed doors, excluding a significant group of stakeholders: the women and men who live in, own, and manage this housing. These groups are the primary partners in the successful delivery of these federal programs, but they have not been consulted.


    Q. CMHC says it is guaranteeing stable funding for social housing at current levels. Doesn't that mean security for existing projects?

    A. No. The security is illusory. The $1.9 billion the federal government currently spends on social housing programs is "guaranteed", but the dollars are not tied to existing programs and projects. And the agreements with the provinces promise a steadily shrinking federal contribution. As existing programs and projects reach the end of their funding cycle, federal funding will cease and there are no assurances that anyone else will step in. The agreements reveal a slow but definitive withdrawal of federal financial support for Canadians with housing needs.


    Q. If the new Social Housing Agreement sets the stage for the steady withdrawal of federal financial support for affordable housing, does it require the provinces to do anything to meet the housing needs of low and moderate income Canadians?

    A. No. There is nothing in the Agreement that directs the provinces to assume that responsibility or, for that matter, that obliges them to continue spending the money they contribute now under shared-cost housing programs. In fact, the Agreement gives the provinces and territories an incentive to reduce the number of social housing units in their jurisdiction. Clause 7(e) of the Agreement says, "....for greater certainty the removal of Housing from the Portfolio [of programs covered by the Agreement] (whether by disposition, destruction, no longer being within a program in the Portfolio or otherwise) will not entail any reduction of the total amounts of CMHC Funding...."

    The Agreement only requires that CMHC funding be spent on programs that meet the broad principle of funding housing for low-income people. So a province is free to take the federal money that is no longer needed to support a discontinued project or program and substitute it for provincial money on other social housing projects.


    Q. Will the Agreement affect the character and quality of federally-funded co-ops?

    A. Yes. There are concerns among co-operatives that the Agreement will lead to the erosion of their autonomy as property owners, especially when it comes to day-to-day management decisions. The failure to protect the existing contractual rights of co-operatives makes these concerns very real; what the provinces view as "flexibility" in the Agreement, co-operative members see as an invitation to intrude. Any careful reading of the history of co-operative housing will show that the greater the degree of government intrusion, the less efficiently co-ops operate.


    Q. Minister Marleau has vowed not to enter into the new Social Housing Agreement with any province that is unable to convince her that it will respect the national principles the Agreement sets out. Doesn't this ensure protection for co-ops?

    A. No. The Agreement requires provinces to respect only two broad principles: CMHC funds must be spent on housing; and that housing must be for low-income people. The federal government appears to be turning its back on principles carefully developed and enunciated throughout nearly three decades of building social housing. Two proven principles that account for the success of co-operative housing in Canada appear nowhere in the agreement: that it be community-led, not government-run, and that it house a mix of low and moderate income families and individuals.

    And the Agreement will not stop a province that wants to from altering co-op programs. Indeed, the Agreement explicitly permits this.


    Q. But won't downloading social housing to the provinces reduce overlap and duplication of government services?

    A. Yes and no. Consolidating the control of shared-cost programs, such as public housing, with one level of government will reduce program administration costs. But very few co-op-erative housing units receiving federal support were initiated under these shared-cost programs. The remainder are unilaterally federally-funded and the transfer of management of these programs to twelve provinces and territories will increase wasteful duplication and government involvement, not lessen it. Provinces taking over these co-operative programs will have to add to their bureaucracies and invest time in learning to administer programs that CMHC will continue to oversee. In Ontario, the province intends to download those programs to yet a third level of government ůmunicipalities. So in that province three levels of government would be involved.


    Q. Will turning over social housing programs to all the provinces and territories contribute to national unity?

    A. No, it will not. At the community level the effect on national unity will be imperceptible to the majority of Canadians. And the transfer threatens to fragment the co-operative housing system, a Canada-wide system that features local delivery of an essential service-decent, affordable housing in resident-controlled communities. You don't shore up unity efforts by tearing down national programs that work and work well.

    Q. Are there alternatives that would meet the federal government's stated goals of efficient restructuring and the establishment of a strong accountability framework?

    A. Yes, there are. Few Canadians believe that moving services from one level of government to another is the way to achieve efficiencies. Governments worldwide are moving, not towards more government involvement, but less. Many are turning to accountable industry self-management models -and that is just what the co-operative housing sector has proposed to the Hon. Diane Marleau. The Co-op-erative Housing Federation of Canada (CHF Canada) has proposed setting up a non-profit, non-governmental facility to administer the federal co-operative housing programs.

    The proposed facility will reduce program administration costs and lead to more efficient use of federal subsidies, while adhering to the goals and principles of current programs and operating within a strict accountability framework. As important, the CHF Canada proposal will ensure the continuing success of a housing system that many thousands of people in this country have worked very hard to build-an effective, unifying system, working in every province and territory.


    Q. Has there been any evaluation of the CHF Canada proposal to administer the federal programs through an independent, non-governmental facility?

    A. Yes, there has. In January-February 1996, an independent study commissioned and jointly funded by CMHC and CHF Canada examined the co-op-erative sector's proposal and compared it to CMHC's current operation with improvements suggested by CMHC. The consultant found that, compared to CMHC's approach, the CHF Canada proposal would generate savings for government in program administration costs and assist co-operatives in increasing the effectiveness of their operations. When a co-op saves money in its operations, that means more money to house people in need, either in that co-op or through other housing programs.


    Q. Isn't the CHF Canada proposal all about empire building and saving jobs at the federation?

    A. No. Just the opposite, in fact. The CHF Canada proposal for a national non-governmental agency to administer the programs is a more efficient approach. If program management is transferred to twelve different provincial and territorial governments, CHF Canada will have to expand and set up a larger bureaucracy to deal with those twelve different governments. CHF Canada is a co-operative of co-operatives and will restructure itself as required to meet the needs of its members, not its employees.


    Q. But won't the non-governmental agency CHF Canada is proposing be in a conflict of interest?

    A. No. The proposal calls for an arms-length organization with an entirely separate structure and a separate board of directors. The agency will be accountable not only to its independent board but to the federal government through the contract it enters into to administer the program. The co-operative sector has at least as strong an interest in ensuring the proper administration of co-op housing programs and the continuing success of every co-op-erative community as does government.


    Q. Why doesn't CHF Canada negotiate with the individual provinces, as CMHC officials have suggested?

    It's important to note that the CHF Canada proposal is a national response to a national need for the business-like management of social programs. The federal government's current "all or nothing" negotiating stance means that provinces and territories interested in taking on any part of the federal social housing portfolio must take it all; they are not free to decline the co-op programs. The co-op housing sector is caught in a true Catch 22 situation: the provinces say the federal government won't exclude co-ops from the deal; and the federal government says go talk to the provinces. Several provinces have told CHF Canada that taking over responsibility for the co-op programs is not necessary for the achievement of provincial objectives. They await some indication directly from the federal government that it would prefer to keep co-ops out of the deal.


    Q. Aren't the federally-proposed Social Housing Agreements fixable?

    A. Not as they currently stand. But reaching an agreement with the provinces to take the co-operative housing units off the table and entering into serious discussions with CHF Canada on its proposal would be an excellent start.

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