Building more Toronto-area social housing could give the economy a $50-billion boost, report says

The GDP impact is nearly double that of leaving investment at current levels, according to the “Public Housing Dividend” report, published Monday.

The report was commissioned by the six biggest social housing providers in the Greater Toronto and Hamilton Area with support from Scotiabank. It was prepared by the Canadian Centre for Economic Analysis (CANCEA).

It found investing in high-quality, stable homes for the people who need them most would improve residents’ health and well-being, ease the burden on public systems and benefit the economy.

According to the report, creating those 22,000 homes would require an additional $19.3 billion in funding, but, along with the nearly $50-billion boost to GDP, would create $12.7 billion in tax revenue over the next quarter century.

Sean Baird, CEO of Toronto Community Housing Corp. (TCHC), said the report proves there is “tremendous payback” in social housing investments. 

”(The report shows) we need to think about housing the same way we think about other positive, public infrastructure,” Baird said, such as hospitals, schools and bridges. 

“They make our economy work better, they make people more well, they support labour mobility. Those things are all true. What’s less understood is that those things are true for public housing as well,” he said.

The report simulated and analyzed five different scenarios regarding investment for social housing from 2026 to 2050: leaving investment the same; reducing investment; increasing investment for renewing existing homes; increasing investment for constructing new homes; and increasing investment for both renewing homes and construction of new ones.

It found renewing and building more social housing together would generate the best returns, while reducing investment would create the worst outcomes.

According to the report, the combined renewal and new-construction path would cost $36.4 billion, up from the existing funding of $17.1 billion, and would preserve social housing in the GTHA while expanding the stock from about 80,000 homes to more than 102,500 homes.

This method would increase GDP to $49.6 billion and tax revenue to $12.7 billion by 2050 (while current funding would be projected to create $25.6 billion in GDP and $6.7 billion in tax revenue over the same period).

David Stiff, chief computation scientists with CANCEA, explained that some of that would be the result of construction activity itself, affected supply chains, and workers spending money; but it would also result from new developments inviting more business and private investment activity to the communities.

The investment would also create $48.3 billion in “social value,” including $4.2 billion for surrounding communities, which Stiff said is the monetary calculation for the change in well-being among residents and neighbours over 25 years.

“If you look at well-being and someone’s income, there is a relationship,” he explained. “If you increase someone’s income by $1,000, they tend to have an increase in well-being.

“What we’re able to do is also sort of reverse that relationship, so that if there is someone earning $20,000 a year and their well-being increases by say 2 per cent or 5 per cent, whatever it might be, we can use that same relation to say, well, what is the equivalent income that that would amount to?”

This path could also lead to 4,700 fewer people experiencing homelessness by 2050, saving the government $2.4 billion in related expenses, the report said.

Additionally, it would alleviate public systems, preventing 520,000 hospitalization days and reducing health care costs by $1.5 billion, while avoiding 44,000 criminal-justice incidents and saving the justice system $227 million.

The “reduced funding” pathway, which decreases investment to just $6.5 billion, however, would reduce social housing stock to about 66,000 homes, reduce cumulative GDP to about $12 billion, and increase the burden on public systems, the report found. The cost-to-benefit ratio would be -0.08.

The combined renewal and construction pathway, meanwhile, would generate 2.8 times the benefits of the capital cost, “a very high benefit-to-cost ratio,” according to Stiff.

Researchers also calculated the benefit-to-cost ratio of spreading the same amount of money across the economy so individuals could spend it themselves, and found a benefit-to-cost ratio of 1.6. 

“It’s a lot less than what you actually see from the public housing,” Stiff said. “And that really is because the public housing provides that social infrastructure for people to actually improve their quality of life, improve their employment.”

Andrew Boozary, a primary care doctor and the head of the University Health Network’s Gattuso Centre for Social Medicine, said the findings support the idea that housing is “one of the most cost-effective health interventions we have.”

He said he sees “the same story that the data tells,” where patients who live in deteriorating homes cycle through the hospital for issues that could have been prevented by stable housing.

“We sort of function as the last thread of the social safety net, and this (report) shows a much more humane and cost-effective way of delivering opportunities for people to attain health and longevity,” he said. 

Baird pointed out Canada still lags behind most countries in the Organisation for Economic Co-operation and Development (OECD) on social housing.

And with public housing “underfunded for a long time in this country,” the system can’t maintain the housing it already has or keep up with population growth. (TCHC warned earlier this year that more than half its rental homes could be in critical condition within 10 years.)

“We do a good job with what we have, but there’s so many more people living in need, right? Our homeless numbers keep going up,” he said. “More than 10,000 people are experiencing homelessness every night in the City of Toronto. Our wait-list is 100,000 people strong in the city of Toronto alone.”