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Time to Scrap the Home Owner Grant?

Economist argues huge cost for program would be better spent on efforts targeting housing affordability.

By Andrew MacLeod 5 Jan 2018 | TheTyee.ca

Andrew MacLeod is The Tyee’s Legislative Bureau Chief in Victoria. Find him on Twitter or reach him here.

The British Columbia government would do a better job of providing affordable housing if it eliminated grants to home owners and cancelled a promise to provide rebates to all renters.

That’s the assessment of Marvin Shaffer, a Simon Fraser University economist who previously worked in senior positions for the provincial government.

The government spends $825 million a year on the home owner grants, a practice it indicated this week will continue. The NDP also promised in last year’s election another $265 million in rebates to the province’s renters.

That adds up to more than $1 billion for programs that are not well targeted to reach people in the greatest need, Shaffer said, adding that amount of money is a major commitment for a government that needs cash to make housing more affordable and to fight poverty. “It seems to me people concerned about the issue could find a lot better ways to invest that money.”

On Tuesday the provincial government announced that with property values rising across B.C., homes worth up to $1.65 million are eligible this year for the full regular homeowner’s grant, up from last year’s threshold of $1.6 million.

The regular grants provide $570 each year in Greater Vancouver, the Victoria region and the Fraser Valley. Outside of those areas, owners receive $770. There are additional amounts for seniors, veterans and people with disabilities.

“This to me is a step in the wrong direction,” Shaffer said. “I’m not surprised in the sense it’s always difficult to make a change where you’re taking something away from somebody.”

Finance Minister Carole James was unavailable for an interview.

A spokesperson for the ministry said in an emailed statement that the grant threshold is reviewed each year. “The 2018 threshold keeps pace with assessment values and ensures that 91 per cent of homes across B.C. are below the threshold — the same percentage as in 2017,” the statement said.

During last year’s provincial election campaign, the NDP promised to provide similar help to renters, a pledge Premier John Horgan said in December he still intends to fulfill.

“I’m working on that,” he said. “Home owners get a home owners’ grant, why can’t renters get a bit of a break as well?... We’re going to do our level best to have a plan that makes life better for people.”

The Green Party, whose three votes in the legislature the NDP relies on to stay in government, has criticized the plan as an election gimmick. “Put that money into the existing [rental supplement] programs,” Green leader Andrew Weaver said in December. “We’d be supportive of that... We want to see a needs-based approach and use existing programs so we’re not creating more administration.”

According to the B.C. Non-Profit Housing Association, 117,000 of the 500,000 renting households in the province are in homes that are more expensive than they can afford but are otherwise suitable for them. Those families would benefit from a grant or other income support, the association said.

Shaffer said there’s a need for a mix of programs to increase supply and target income supports, such as the plan put forward ahead of the election by Canadian Centre for Policy Alternatives senior economist Marc Lee.

Neither the home owners grant nor the proposed renters rebate ensures financial help goes to people who need it, Shaffer said. “Why collect taxes and give them back, and then throw in bureaucracy in the process?”  [Tyee]

Read more: BC Politics, Housing

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