Two representatives of the BC Government Employees Union (BCGEU) recently made a presentation to the Labour Council about a project BCGEU has undertaken called “Building an Affordable B.C.” which examines causes of the housing crisis in BC and proposes some concrete ways that we can make housing affordable. It makes sense that a union would undertake a campaign such as this. Our members don’t become non-members once they leave the job site. The stresses and insecurities they face affect them as workers and as members. Those stresses have a chilling effect on their willingness to speak out or to take action if they are one payment away from losing their home or they can’t make next month’s rent. Also, the collective bargaining process can be distorted if wage increases become the end all and be all and other important issues are relegated to the back burner.
In a country as rich as Canada, everyone should have decent housing. As a signatory to the International Covenant on Economic, Social, and Cultural Rights, Canada has agreed that everyone should have ‘adequate housing’ and we should be continuing to strive to improve that housing, yet everywhere you look, even in our local paper, it is clear that a significant number of Canadians do not have adequate housing. In fact some don’t have a roof over their heads at all. An increasing number of working people are finding they cannot afford the housing they do have and are becoming homeless. So what is happening? We cannot all drive Mercedes or vacation in Tahiti but you would think a modest bungalow or a reasonably priced apartment would not be an extravagance.
Housing is not a simple issue, especially in a capitalist economy. Your house or your apartment used to be your home: a place where you lived, raised your family and often where you wanted to live out your last days. Now, more often than not, it is seen primarily as an investment. For many, that investment is seen as a retirement nest egg or as something to leave the kids on your death. For others it is seen as a speculation, sort of a futures market. There has always been land speculation but as the land becomes scarcer and the population grows, the consequences of that speculation is being felt more severely and by many more people.
The consequences include:
- Lack of both affordable housing and rental accommodation
- Threats to food security as farmland prices become prohibitively expensive
- Ripple effect on housing prices as homeowners cash in and move to smaller communities
- Potential corruption of local government officials beholden to real estate developers
- ‘Hollowing out’ of small desirable rural areas like Hornby Island
- Longer commutes as people move farther out of large urban areas
- Susceptibility to a major economic crash when the ‘bubble’ bursts
The BCGEU proposal to remedy this housing crisis can be found at www.affordablebc.ca. The solutions set forth are wide ranging from reframing property taxes to funding cooperative and supportive housing and, if implemented, would make housing more affordable and make rents more reasonable.
A major part of the proposal is to tax speculation on housing.
- Reform property taxes to target speculators and raise funds for affordable housing and infrastructure. This reform would require the following:
- Implementing a provincial land value capture tax to curb speculation and capture a portion of the value created in real estate by infrastructure projects paid for by the public
- Reforming the property transfer tax to target high-end investors, capture windfall gains on investment properties, and remove loopholes that allow landowners to transfer property without paying tax by transferring shares in a corporation
- Reform the Foreign Buyers Tax to add a surcharge on those owners who do not reside and earn income in B.C.
This solution is based on the difference between ‘productive value’ and the ‘speculative value’ of real estate. Productive value simply means the value in your home as a place to live. Speculative value is the value of it in the future when it is sold. Right now there is much more profit to be made on speculation, whether by real estate agents who make their earnings based on the frequency and price of their sales, or financial institutions that increase their profits with larger mortgage payments, or developers who make millions simply by buying the land then flipping it without adding any value to the property itself.
An example cited in the presentation is when a major publicly funded improvement like rapid transit line is constructed, speculators who own property along that line have immediately increased the value of their ‘investment’, often tenfold or more without lifting a finger. So this land value based tax would reduce their profit, and the money raised through the tax would go directly into building rental housing or some other local community amenity.
The inflated price of housing has a direct effect on rentals. Either because there is more money to be made in selling condominiums and houses or because municipal politicians do not defend the crucial role rentals play in our community, the number of rental accommodations has dried up. That situation will only get worse in some neighbourhoods as AirB&B’s become more prevalent.
There are solutions out there as demonstrated by these proposals. However, like many other complex problems we face, it will require a political will to do the right thing. Besides the powerful forces, whether banks or developers, that will fight any resolution that cuts into their profit, we must recognize that one of the consequences of hugely inflated housing prices is that some ordinary citizens think they are sitting on a gold mine. Like the aristocrats of the 19th century, they are ‘land rich and cash poor’ while complaining of the increased taxes that come with increased assessments. Will they see they have common cause with the renters, the first time buyers and the homeless? Will we shift what we value in our homes from that speculative value to the productive value? If other unions and social organizations get behind these proposals, we will have a fighting chance.