Editorial: Invisible hand not enough

By Katy Anderson

Alberta is experiencing a housing crisis as rent hikes force many out of their homes. The provincial government has the option of keeping Albertans in their homes, but they are refusing to take action based on ideological grounds.

Rent controls are thought to hurt the economy in the long run as it will take away the profit incentive for developers to build more rental properties, creating an even greater shortage of housing. The most cited example of rent controls impeding development is Ontario in the mid-1970s when controls were introduced and development slowed. However, a year before, the federal government made changes to tax programs for developers, essentially taking away rewards for rental property developers, and development across the country came to a halt.

Whether or not controls will impede long-term development is arguable. What is not arguable is our government’s social responsibility to ensure our basic needs are met. Shelter is one of those basic needs, and failing to secure this is a failure in governance.

In early May, Ipsos-Reid conducted a survey published in the Calgary Herald on Tue., May 15. The results-considered accurate to within 5.4 percentage points 19 times out of 20-showed 78 per cent of owners and 92 per cent of tenants support rent control. With a majority like that, it is unclear how the Stelmach government can comfortably deny the wishes of their voters.

To help combat the province’s shortage of workers, many companies have resorted to bringing foreign workers in while existing workers are chased out of the province. Disregarding the social implications of this, foreign workers cost the province language training, and worker camps are often needed. How is this efficient?

While it is true that the market also affects landlords, the profit margin for landlords is too high and the loss of a per cent of excess profit is not as big of a deal as a rent increase that renders a tenant helpless. Costs associated with running rental buildings are increasing, but a reasonable profit can still be maintained with controls. They do not mean that these buildings will not be profitable; they just mean tenants have some protection.

The government assigned a task force to evaluate affordable housing needs and solutions within the province. The task force came back with a bundle of recommendations to be applied, including rent controls. However, when the idea was brought to the legislature, it was not supported by most conservative MLAs despite almost unanimous support from their Liberal and NDP counterparts.

The Tories have pushed through legislation limiting the amount of times rent increases can occur within a year, moving the old limit of once every six months to once every year. This is a step in the right direction, but without a cap on how much rent can be raised, it means tenants are left vulnerable as increases are dictated by whatever the owner thinks he can get away with. In Calgary, vacancy rates are close to zero per cent, leaving renters with virtually no options. Landlords can take advantage of this, knowing the renters have few choices: homelessness, or leaving the province. Limiting increases to only once a year will ensure there will be an outcry from people in a year’s time.

The amount of homelessness, including the working homeless, are at record rates across the province, meaning that governments are facing pressures to create assistance for these people. It costs thousands of dollars in funding to house an individual in a shelter, whereas a subsidy for renters could be less than a thousand dollars a month.

Rent controls are not the ultimate answer, but they are an immediate and needed part of a solution. Municipal and provincial governments have many other options when trying to keep renters in their homes, including: building new affordable housing, purchasing existing apartments and converting them into affordable housing, incentives to encourage more development of secondary suites, and increasing rent supplement programs.

Resorting to an immovable ideological stance on controlling prices realistically means that more and more vulnerable Albertans-such as students, seniors and families-will be pushed out of their homes. Leaving the future of Albertan renters to the invisible hand of the market is not good enough.

Katy Anderson
News Editor

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