Carney government’s housing plan poses major risks to taxpayers

A trade war, Trump’s threats to Canada’s sovereignty, and global economic volatility loomed large in the recent federal election. Yet many voters remained focused on an issue much closer to home: housing affordability.

In 2023, under Justin Trudeau, Canada added a record high 1.2 million new residents—more than double the previous record in 2019—and another 951,000 new residents last year. All told, Canada’s population has grown by about 3 million people since 2022—roughly matching the total population increase during the entire decade of the 1990s. Not surprisingly, homebuilding has failed to keep pace. In fact, housing construction rates have barely exceeded 1970s levels, even though the population has more than tripled since then. The result—a historic surge in housing costs.

On the campaign trail, the Liberals set an immigration target of about 400,000 per year, which is lower than the recent record highs but still high by historical standards, and tabled a plan they claim will double Canada’s residential construction rate to 500,000 new homes per year within a decade. But is it a good plan? And can the Liberals deliver it?

First, the good news. To help boost private homebuilding, the Carney government promised to introduce tax incentives including a rental building allowance, which would help reduce the tax bill on new multi-unit rental buildings, and a GST exemption for some first-time homebuyers, which may reduce the cost of newly-built homes and spur more homebuilding. The government also plans to expand the “Housing Accelerator Fund,” which offers federal dollars to municipalities in exchange for more flexible municipal building rules, and modernize the federal building code, which could shorten construction timelines. While much will depend on execution, these policies rightly aim to make it faster, cheaper and more attractive for the private sector to build homes.

Now, the bad news. The Carney government plans to create a new federal entity called Build Canada Homes (BCH) to “get the government back in the business of building.” According to Carney’s vision, the BCH will act “as a developer to build affordable housing” and provide more than “$25 billion in financing” to homebuilders and “$10 billion in low-cost financing and capital” for homebuilders to build “affordable” homes.

We’ve seen a similar movie before. In 2017, the Trudeau government created the Canada Infrastructure Bank (CIB) to invest in the “next generation of infrastructure Canadians need.” Since then, the CIB has approved approximately $13.2 billion in investments across 76 projects (as of July 2024), yet only two CIB-funded projects had been completed, prompting the authors of a multi-party House of Commons committee report to recommend abolishing the CIB.

The bureaucrats who will run the BCH won’t have the private sector’s expertise in housing development, nor the same incentives to keep costs down. BCH’s mandate is already muddled by competing goals—it must deliver “affordable” homes while simultaneously prioritizing certain building materials (e.g. Canadian softwood lumber), which could increase building costs.

The plan for BCH’s multi-billion-dollar loan portfolio includes significant “low cost” (that is, taxpayer subsidized) financing, a huge bet on prefabricated homebuilding, and no certainty about who will be on the hook for any failed projects—combined, this represents a major increase in costs and risks for taxpayers at a time when they already shoulder rising federal deficits and debt.

There’s also a real risk that BCH will simply divert limited investment dollars and construction resources away from private homebuilding—where projects respond to the needs of Canadian homebuyers and renters—and toward government-backed housing projects shaped by political goals. Instead of boosting overall homebuilding, BCH may simply reshuffle limited resources. And, as noted by the government, there’s a severe shortage of skilled construction labour in Canada.

It’s hard to see how Carney’s housing plan would double the pace of homebuilding in Canada—a very ambitious target that would require not only prudent housing policies but greater domestic savings, an implausibly large expansion in the construction workforce (which grew by only 18.4 per cent over the last decade), and the political fortitude to endure vocal opposition to housing development in certain neighbourhoods and on public lands.

Canada’s housing crisis will benefit from federal leadership—but not federal overreach. Rather than overpromising what it can’t deliver, the Carney government should refocus on what it’s best positioned to do: reform incentives, streamline regulations, and nudge municipalities and provinces to remove constraints on homebuilding. Trying to also act as a housing developer and lender is a far riskier approach.

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Austin Thompson

Senior Policy Analyst, Fraser Institute

Related Topics:#FraserInstitute #JakeFuss AustinThompson CanadaHousingSHortage CarneyHousingPlan feature

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Spending per K-12 student in Canada ranged from $13,494 in Alberta to $19,484 in Quebec in 2022/23

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Education

Spending per K-12 student in Canada ranged from $13,494 in Alberta to $19,484 in Quebec in 2022/23

Published on August 30, 2025

Todayville

From the Fraser Institute

By Michael Zwaagstra, Max Shang and Milagros Palacios

Spending per student (kindergarten to grade 12) in Canada ranged from a low of $13,494 in Alberta to a high of $19,484 in Quebec in 2022/23, finds a
new study published by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

Most people—parents included—don’t understand how much is being spent educating students in public schools across Canada, which is critical before parents begin to evaluate whether they’re getting good value for the money,” said Michael Zwaagstra, senior fellow with the Fraser Institute and co-author of Education Spending in Public Schools in Canada, 2025 Edition.

The study finds that inflation adjusted per student spending on public schools in Canada increased nationally by 5.9 per cent over between 2013/14 and 2022/23. A different way to think about this increase in spending is to analyze how much was required to offset changes in student enrolment and inflation. The analysis shows that over this time period (2013/14 to 2022/23) an additional $6.5 billion was spent over and above what was needed to compensate for more students and inflation.

The spending analysis also includes different categories such as compensation, capital and other spending as categorized by Statistics Canada. Compensation (salaries, wages, fringe benefits, and pensions) contributed the most to the total growth in spending on public schools from 2013/14 to 2022/23.

In total, Quebec experienced the largest increase at 40.6 per cent. Prince Edward Island (14.5 per cent) and Nova Scotia (10.8 per cent) experienced the next largest increases in spending per student, while Saskatchewan (-14.8 per cent), Alberta (-17.5 per cent), and Newfoundland & Labrador (-11.2 per cent) were the only provinces to experience meaningful declines during this same period.

“When it comes to our children’s education, it’s important to understand exactly what’s happening with spending in public schools, and, most importantly, to question how the money spent is being put to use,” said Zwaagstra.

Per student spending in public schools across the provinces 2022/23

Province Per-student dollars

Canada 16,579

Quebec 19,484
Prince Edward Island 17,475
New Brunswick 17,346
Manitoba 17,036
Nova Scotia 16,800
Ontario 16,164
Saskatchewan 15,774
British Columbia 15,116
Newfoundland &Labrador 14,190
Alberta 13,494

Education Spending in Public Schools in Canada, 2025 Edition

Total education spending in public schools over the last 10 years increased from $63.0 billion in 2013/14 to $88.4 billion in 2022/23, a nominal increase of 40.3%.
Per-student spending adjusted for inflation (price changes), increased by 5.9% nationally from 2013/14 to 2022/23.
The highest inflation-adjusted spending increases (per student) occurred in the provinces of Quebec (40.6%), Prince Edward Island (14.5%), Nova Scotia (10.8%), and British Columbia (9.3%).
Five provinces experienced decreases in inflation-adjusted per-student spending—Alberta (17.5%), Saskatchewan (14.8%), Newfoundland & Labrador (11.2%), Manitoba (3.0%), and Ontario (1.7%).
Quebec had the second lowest level of per-student spending in public schools in 2013/14 and now has the highest. Prince Edward Island went from seventh in per-student spending to second highest.
On the other hand, Saskatchewan went from the highest in per-student spending to seventh, and Alberta went from fifth highest to tenth, the lowest.
Even though British Columbia recorded the fourth-highest growth in adjusted per-student spending, it still ranks eighth in per-student spending in Canada.
Student enrolment across Canada increased by an average of 5.6% from 2013/14 to 2022/23. Only Newfoundland & Labrador saw a decrease in enrolment (4.9%).
Compensation remains the largest and costliest aspect of education spending and has contributed the largest portion to the growth of total education spending in Canada.

READ THE FULL STUDY

Michael Zwaagstra

Senior Fellow, Fraser Institute

Max Shang

Economist, Fraser Institute

Milagros Palacios

Director, Addington Centre for Measurement, Fraser Institute

Alberta

Alberta’s fiscal update—and $6.5 billion deficit—underscores need for spending reductions

Published on August 29, 2025

Todayville

From the Fraser Institute

By Tegan Hill

According to the Q1 fiscal update, the Alberta provincial government will run a $6.5 billion budget deficit this fiscal year—up from the $5.2 billion budget deficit projected in the February budget. This may come as a surprise to many on the heels of a $8.3 billion surplus in 2024/25, but it’s all part of Alberta’s ongoing resource revenue rollercoaster. And it’s time to get off the track.

Resource revenues, including oil and gas revenues, are inherently volatile. For perspective, over roughly the last decade, resource revenue has been as low as $2.8 billion in 2015/16, accounting for just 6.5 per cent of total revenue, and as high as $25.2 billion in 2022/23, accounting for 33.2 per cent of total revenue.

Alberta has a long history of enjoying budget surpluses when resource revenue is high, but inevitably falls back into deficits when resource revenue declines. And it’s no surprise we’re back here today.

According to the recent fiscal update, resource revenue will fall by $6.3 billion this year compared to last. That means that of the $14.8 billion swing in Alberta’s budget balance, nearly 43 per cent can be explained by a decline in resource revenue alone. And if resource revenue was the same level as last year, Alberta’s budget would nearly be balanced.

Deficits have real consequences. Consider Alberta’s last period of deficits, which went on nearly uninterrupted from 2008/09 to 2020/21. Alberta moved from a position of having more assets, such as the Heritage Fund, than it did debt, resulting in a net debt position of $59.5 billion in 2020/21. Overall, Alberta’s net financial position deteriorated by $94.6 billion over the period. Correspondingly, Albertans went from having interest payments on provincial debt of approximately $58 per person in 2008/09 to $564 in 2020/21 (that number is expected to surpass $705 per person by 2027/28).

Fortunately, Alberta isn’t doomed to the boom and bust cycle.

The key is understanding that Alberta’s fiscal challenges are not actually a revenue problem—they’re a spending problem. Indeed, the underlying issue is that governments typically increase spending during good times of relatively high resource revenue to levels that are unsustainable (without incurring deficits) when resource revenue inevitably declines. Put simply, ongoing spending levels significantly exceed stable ongoing revenue.

The provincial government has made important strides in recent years by limiting spending growth to inflation and population growth. Unfortunately, spending levels were already so misaligned with stable, predictable revenue, that it is simply not sufficient to avoid deficits. Alberta needs meaningful spending reductions.

Fortunately, there’s some low hanging fruit to help get the province on track. For instance, Alberta spends billion of dollars annually dolling out subsidies to select businesses and industries. For perspective, in 2024/25, grants were the largest expense for the ministry of environment and the second largest expense for the ministry of technology and innovation. The provincial government should require that each ministry closely examine their budgets and eliminate business subsidies to yield savings.

According to the recent fiscal update, Alberta will continue to ride the resource revenue rollercoaster in 2025/26. It’s time to finally change course. That means meaningful spending reductions—and eliminating business subsidies is a good place to start.