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The Progressive Economics Forum

Housing in the Northwest Territories

Last week, I was in Yellowknife, where I released results of new research on affordable housing in the Northwest Territories (NWT). The research project was sponsored by the Social Economy Research Network of Northern Canada, and was a collaboration with the Centre for Northern Families.

Research findings include the following:

-Housing indicators suggest that the state of housing in the NWT (especially in small communities) is much worse than in the rest of Canada. While 2% of Canadians report living in “crowded conditions,” that figure is 8% for rural NWT. And while 8% of Canadian households report living in housing that requires major repairs, the figure is 22% for rural NWT.

-Housing is more expensive to both build and maintain in the NWT than in the rest of Canada, and there are three main reasons for this.  First, building costs are higher in most parts of the North, especially areas that do not have road access; building costs on the Arctic Coast are roughly $300 per square foot, which is roughly double the cost in some other parts of the NWT.  Second, utility costs (i.e. electricity, fuel, water) in the NWT, for the average household, are more than double the Canadian average. Third, there is a considerable amount of poverty in the NWT, especially in small communities, meaning that a large proportion of households in the NWT require public housing, which is a relatively expensive form of government-assisted housing. (Public housing requires a very deep subsidy–i.e. as much as $20,000 per unit, per year, in the NWT–for the operation and maintenance of that unit. Among other things, this subsidy covers fuel, power and water.)

-Due to many of the above factors, the Government of the NWT pays considerably more on housing than a ‘typical Canadian province.’ While the average province pays $61 per capita on housing, the Government of the NWT pays $1,672. Ergo: the Government of the NWT pays more than 25 times per capita on housing than what is the norm for a Canadian province.

-In light of the above, the NWT is very reliant on federal funding for the building, operation and maintenance of housing. But across Canada, federal funding agreements for housing (most of which began in the 1960s, 1970s and 1980s, and which typically last between 35 and 50 years) are starting to expire.  In the NWT, all federal funding commitments of this nature will completely expire by 2038. In the NWT, in the absence of new agreements with the federal government, roughly half of all public housing units will disappear by 2038. Put differently, the issue of expiring operating agreements is very significant throughout Canada, including in Toronto, but even more pressing in the NWT.

-The research results, which appear as a chapter in the 2011-2012 edition of How Ottawa Spends, suggest that a long-term, permanent commitment is required by the federal government in order to sustain housing in the NWT.  The chapter argues that it’s more cost effective for the federal government to reinvest the savings it accrues (as current agreements run out) into fixing already-existing housing, than it would be to allow current units to disappear completely and to then rebuild from scratch. (This general argument has been made before by Steve Pomeroy in the following report, commissioned by the Canadian Housing and Renewal Association.)

All of the information relating to last week’s launch of the research can be found here, including a PowerPoint presentation I gave in Yellowknife on Thursday, and plain-language summaries of both my chapter and that of Dr. Frances Abele (who supervised this research and has a chapter of her own in the same publication on the federal government’s northern strategy).

UPDATE (10 Dec 2011): The full chapter is now available online.

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Comments

Comment from Purple Library Guy
Time: November 27, 2011, 1:23 am

Those are some hellacious costs. I wonder if there’s a case to be made for use of renewable, but more importantly decentralized, energy technologies, like micro-wind turbines and geothermal heat pumps. In most places those would be considered on the expensive side–but in the NWT and such places fuel is so expensive, presumably for the most part due to transportation costs, that anything which reduces the need to depend on transport from the outside is likely to be quite competitive in cost and desirable in other ways.

Comment from Bryan Sutherland
Time: November 29, 2011, 9:45 pm

What about the cost of real-estate, there is tones of land in every direction being used for nothing, the City of Yellowknife, (the NWT Capital) only has a population of under 20,000, far fewer then was projected and dropping; and the City pays zero to acquire the land, but it ends up costing buyers upwards of $120,000 for 5000 square feet, more if you buy a trailer sized half lot as most do!

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