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The Fiscal Implications of a Housing Program*
Published online by Cambridge University Press: 07 November 2014
Extract
In February, 1959, the Minister of Public Works, the Honourable Howard Green, said in the House of Commons that “the government went into the home financing field to such a large extent in the last two years for one reason, to provide employment.” He went on to say that “this was done deliberately as the best means of creating jobs.” The Honourable D. J. Walker, after he took over the Public Works portfolio later that year, presented estimates to the House of the actual labour content of residential construction. On November 22, 1960, he said that “at this time every house that is built gives six months' employment to two men on the job and two men off the job, and also another man who is employed getting the sewers, and so on ready.” A year later, when introducing yet another amendment to the National Housing Act, the Minister stated that “if each new dwelling unit financed under the National Housing Act involves 2½ man years of employment on and off site, the N.H.A. mortgage lending for eight months of this year has contributed to more than 112,000 man-years of employment and of these, direct federal lending has been responsible for 46,000 man-years.” In the light of the statements by two ministers of Public Works, this paper attempts to present more precise estimates of the labour income that is generated by an expenditure for residential construction.
- Type
- Articles
- Information
- Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique , Volume 29 , Issue 3 , August 1963 , pp. 336 - 347
- Copyright
- Copyright © Canadian Political Science Association 1963
Footnotes
*
This paper is based on a chapter in my “Study of the Residential Construction Sector in the Canadian Economy” (unpublished Ph.D. thesis, McGill University, 1961).
References
1 House of Commons Debates (hereafter cited as Debates), 02 20, 1959, p. 1243.Google Scholar
2 Ibid., Nov. 22, 1960, p. 96.
3 Ibid., Sept. 18, 1961, p. 8484.
4 Cf. Firestone, O. J., Manpower and Material Requirements for a Housing Program in Canada (Ottawa, 1946)Google Scholar and CMHC Manpower and Material Components of the Residential Building Program, Economic Research Bulletin no. 68, 01, 1957 (mimeo.).Google Scholar
5 Dominion Bureau of Statistics, Supplement to the Inter-Industry Flow of Goods and Services, Canada, 1949.
6 DBS, Standard Industrial Classification Manual, 1948.
7 Strictly speaking it is probably not correct to say that there is a residential construction industry per se. Rather than classifying it as an industry one might better call it “residential construction activity.”
8 DBS, Private and Public Investment in Canada, 1946–1957. The total figure includes expenditures for new buildings and for repair and renewals.
9 Supra., n. 5.
10 Ibid.
11 The data were supplied by the Dominion Bureau of Statistics.
12 Because of rounding, figures do not add up to total shown in Table III.
13 DBS, Supplement to the Inter-Industry Flow of Goods and Services, Canada, 1949, Table II. Since we initially derived the figures for the residential sector from the construction sector of the Bureau's Table I, the figures for this sector were revised accordingly in the Bureau's Table II.
14 The complete inverse table is not reproduced here but will be furnished by the author on request.
15 To derive these estimates the product of the annual average hourly earnings in each industry and the annual average of hours per week worked in the respective industry was multiplied by 52. Cf. DBS, Review of Man Hours and Hourly Earnings with Average Weekly Wages, 1943–1960. In the case of industries 2, 38, 39 and 40 where the above data was not available annual average weekly wages were used to derive the annual figure. Cf. Canada Year Book, 1961, 741. Since no data was available for industry group 3, the annual wage was estimated as an average of the rate received in related industries.
16 Firestone, O. J., Residential Real Estate in Canada (Toronto, 1951), 243 ff.Google Scholar
17 We have considered it beyond the scope of our study to provide a complete income-expenditure flow analysis. To do so, a Keynesian consumption function would have to be linked to the open Leontieff model or the model would have to be closed.
18 The income limits of applicants for loans were set at $5,000 per year for families of up to two children, with an increase of $200 in the limit for each additional child, up to a maximum of $5,600 per year. In July (effective in September), the income level was raised to between $7,000 and $7,600, and in October it was suspended.
19 House of Commons of Canada, Bill C-42, “An Act to Amend the National Housing Act, 1954.”
20 When he introduced the amendments to the National Housing Act, the Minister of Public Works (the Honourable D. J. Walker) said that: “these changes in the act and in the regulations are being put forward at this time to support demand along a broad front.” Debates, 11 22, 1960, 91.Google Scholar
21 Only two major cities, Edmonton and Calgary had not undertaken urban renewal studies. Since both are relatively new cities, such studies were not necessary.
22 See statement by the Minister, , Debates, 11 22, 1960, 92 ff.Google Scholar
23 In the words of the Minister of Public Works “… to inculcate in the municipalities the desire for immediate action and also as an encouragement to take up some of the unemployed and put them to work.” Ibid., 94.
24 The total amount of loans that may be made under this part of the Act was limited to $100 million.
25 When referring to this new provision, the Minister of Public Works said: “With 1,500,000 rental units and with the possibility now of obtaining loans for their improvement, think of the possibilities for employment that are provided all across the country.” Debates, 11 22, 1960, p. 93.Google Scholar To provide for the anticipated increase in home improvement loans the aggregate amount of loans that the government can guarantee under the Act was increased from $200 million to $500 million.
26 The loans could be made up to 90 per cent of the cost of a project and were to bear the same rate of interest as limited-dividend loans. They might be made for a period not exceeding the useful life of the project, but in no case for more than fifty years. The total amount of loans authorized for this purpose was $50 million.
27 Debates, 11 22, 1960, 91.Google Scholar
28 Ibid.
29 Cf. Binhammer, H. H. F., “Monetary Implications of the Operations of Central Mortgage and Housing Corporation with a proposal for the Establishment of a Central Mortgage Bank,” submission to the Royal Commission on Banking and Finance, 07, 1962.Google Scholar