By Nojoud Al Mallees in Ottawa
Buying a home has become more unaffordable for Canadians even as housing prices fall, according to new reports from the parliamentary budget officer and RBC.
The PBO’s house price assessment, published on Thursday, says the cost of the average house is 67 per cent higher than what the average household can afford — and RBC’s own report says the median household would need to spend 60 per cent of its income on ownership costs.
That’s despite a seven per cent decline in housing prices from February to August this year.
According to the budget officer, the average national home price in February was more than 50 per cent higher than it was two years before.
The national average price of a home reached a peak of $839,600 in February 2022, up 52 per cent from $551,100 in February 2020.
Since then, prices have declined by seven per cent, down to $777,200 in August.
But with interest rates on the rise, buying a home remains highly unaffordable for the average household, the assessment says.
Using a methodology developed by the International Monetary Fund that examines household borrowing capacity and the ability to purchase a home in select Canadian cities, the PBO says a house considered affordable for an average household in August would cost $464,952.
The national average home price was 67 per cent higher.
The gap has gotten larger since December 2021, when the national average house price was about 45 per cent more expensive than what an average household could afford, according to the budget officer.
The RBC report, also published Thursday, says buying a home has never been this unaffordable, per its own affordability measures.
RBC says the median Canadian household would need to spend 60 per cent of its income to cover ownership costs. For those who live in Toronto and Vancouver, the figure balloons to 83 per cent and 90 per cent, respectively.
Both RBC and budget officer Yves Giroux attribute the worsening of the situation to higher mortgage costs, as the Bank of Canada aggressively raises interest rates to cool high inflation.
Since March, the central bank has hiked its key interest rate by three percentage points. Its key rate currently sits at 3.25 per cent and another interest rate hike is expected in October.
The rate hikes are feeding into higher borrowing costs for those seeking a mortgage and, in turn, a slowdown in the housing market.
“The Bank of Canada’s rate hiking campaign since March has added hundreds of dollars to mortgage payments that come with a home purchase,” the RBC report says.
RBC expects affordability issues to peak by the end of the year. As house prices continue to fall and interest rates eventually stabilize, the bank expects affordability to improve.
“The good news is the widespread market downturn is setting the stage for some affordability improvement down the road,” the report says.
Based on scenarios the PBO constructed to gauge where housing prices are headed, prices could decline by 12 to 23 per cent by the end of the year from the peak reached in the winter.
This report by The Canadian Press was first published Sept. 29, 2022.
Canada’s top five federal contaminated sites to cost taxpayers billions to clean up
By Emily Blake in Yellowknife
With a cost estimate of $4.38 billion, remediation of the Giant Mine, one of the most contaminated sites in Canada, is also expected to be the most expensive federal environmental cleanup in the country’s history.
The figure, recently approved by the Treasury Board of Canada, spans costs from 2005 until 2038, when active remediation at the former Yellowknife gold mine is anticipated to end. That includes $710 million the federal government said has already been spent, but does not include costs for long-term care and maintenance.
“It doesn’t bother me so much that it’s going to cost $4 billion to clean up Giant Mine. What really bothers me is that the taxpayer is covering that cost,” said David Livingstone, chair of the Giant Mine Oversight Board.
It indicates the federal government failed to ensure private developers provided financial security to remediate sites. He said while that has improved over time, there will likely be more issues in the future.
“We as a society need to get a better handle on what it costs us to support mining industry and oil and gas industry,” he said. “If the numbers suggest that it’s going to cost more to clean up a site than that site generated in revenue to the Crown, we’ve got a problem.”
There are more than 20,000 locations listed in the federal contaminated sites inventory, from dumps and abandoned mines to military operations on federal land.
Environment and Climate Change Canada says that after Giant Mine, the four most expensive cleanups are the Faro Mine in Yukon, the Port Hope Area Initiative in Ontario, Esquimalt Harbour in British Columbia and Yukon’s United Keno Hill Mine.
More than $2 billion has been spent on the five sites so far, and it’s anticipated they will cost taxpayers billions more in the coming years. Their final price tags are not yet known.
The most recent numbers from the Treasury Board of Canada indicate more than $707 million has been spent on remediation, care and maintenance at Faro Mine, a former open pit lead-zinc mine. Its remediation project is expected to take 15 years to complete and is currently estimated to cost $1 billion, plus $166 million for the first 10 years of long-term operation and maintenance.
Parsons Inc. was awarded a $108-million contract in February for construction, care and maintenance at Faro Mine until March 2026, with the option to extend the contract for the duration of active remediation. The company said the contract could ultimately span 20 years and exceed $2 billion.
In 2012, Ottawa committed $1.28 billion in funding over 10 years for the cleanup of historical low-level radioactive waste in the municipalities of Port Hope and Port Grandby, Ont. To date more than $722 million has been spent on assessment and remediation.
The Port Grandby Project was completed earlier this year and has moved into long-term monitoring for hundreds of years. The Port Hope cleanup, which started in 2018, will continue into 2030.
The cleanup in the Esquimalt Harbour seabed in Victoria currently has a budget of $162.5 million. Roughly $214 million has already been spent on remediation and assessment. The Department of National Defence said that may include costs before 2015, when the remediation project began.
Cleanup of United Keno Hill Mine, a historical silver, lead and zinc mining property near Yukon’s Keno City, is estimated to cost $125 million, including $79 million during its active reclamation phase. That is expected to begin in 2023 and take five years, followed by a two-year transition phase then long-term monitoring and maintenance. More than $67 million has been spent on remediation, care and maintenance at the site so far.
Other costly federal sites that have been cleaned up include the Cape Dyer Dew-Line, 21 former radar stations across the Arctic, for $575 million, the Sydney tar ponds and coke ovens on Cape Breton Island, N.S., for nearly $398 million, and the 5 Wing Goose Bay air force base in Labrador, for $142.9 million.
The 2022 public accounts state the gross liability for the 2,524 federal contaminated sites where action is required is nearly $10 billion based on site assessments. Of the 3,079 unassessed sites, 1,330 are projected to proceed to remediation with an estimated liability of $256 million.
The federal contaminated sites action plan was established in 2005 with $4.54 billion in funding over 15 years. That was renewed for an additional 15 years, from 2020 to 2034, with a commitment of $1.16 billion for the first five years.
Jamie Kneen with MiningWatch Canada said the contamination from Giant Mine highlights the importance of the planning and assessment process for development projects.
“If you don’t actually do any planning around something, you can end up with a pretty horrible mess,” he said. “In this case, it killed people before they started even capturing the arsenic. We don’t want that to happen anymore.”
This report by The Canadian Press was first published Nov. 27, 2022.
This story was produced with the financial assistance of the Meta and Canadian Press News Fellowship.
Saskatchewan government deciding what to do with new revenue from carbon pricing
By Mickey Djuric in Regina
Saskatchewan is to soon gain control of the carbon pricing charge that shows up on residents’ power bills.
However, Premier Scott Moe and his Saskatchewan Party government are still mulling over how that new revenue should be spent.
Since 2019, a carbon backstop has been placed on Saskatchewan Power Corporation bills to account for its greenhouse gas emissions.
The money has been going to the federal government, but starting in January the money will be staying in the province.
This comes after Saskatchewan successfully applied to have natural gas pipelines and power plants regulated through its own carbon-pricing system, and will take full regulatory control over all large greenhouse gas emitters in the province.
Under the program, Saskatchewan will still have to comply with the federal carbon pricing schedule.
Moe has said his government hasn’t made a decision whether it will return some of that money collected through power bills back to residents.
“It’s fair to say we haven’t made that decision yet,” Moe said Wednesday.
He said a priority for the government is to invest in Saskatchewan’s transition to cleaner power generation.
Moe said he’d like to see some money go toward producing nuclear energy.
Federal government policy aims to reach a net-zero grid by 2035. This is putting pressure on Saskatchewan to transition away from coal and natural gas — power generation it mainly relies on to keep the lights on in the province.
To support a transition to cleaner energy, the modernization of Saskatchewan’s electrical grid will be essential, SaskPower, the province’s Crown electrical utility, said in its 2021-22 report.
“We need to make responsible decisions of how we are making those investments, but we also want to do everything we can to keep power affordable for Saskatchewan residents,” Moe said.
The Opposition New Democrats have taken a similar viewpoint.
NDP Leader Carla Beck said Thursday that she wants to see a plan for the money that involves reliable energy that reduces emissions and doesn’t stick Saskatchewan people with power sources they can’t afford.
“These are huge investments, huge considerations for the future of this province,” she said.
This report by The Canadian Press was first published Nov. 24, 2022.
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