Homelessness in Ontario:

The Case for a Needs-Based Shelter Supplement

When the media, politicians and housing advocates talk about homelessness in Ontario, they generally focus on a lack of affordable housing. Increasing the supply of rental housing is seen as the key to combating homelessness. Part of the reason for this supply-centered conception of homelessness is that the issue is being defined to a great extent by the specific housing situation in Toronto. Toronto has a very low vacancy rate (.9%) and, as a result, increasing the stock of rental housing is a high priority. Increasing housing supply alone, however, even in Toronto, will not solve the crisis of homelessness.

In the recently produced Where’s Home study (Dunphy et al 1999), 47% of the Ontario municipalities surveyed had vacancy rates greater than the commonly accepted minimum rate of 3%. In addition, as the study points out, there appears to be no correlation between vacancy rates and the extent of affordability problems in the different municipalities. In 1995, 24% of tenants in Sudbury were paying greater than 50% of their income on rent, even though, with a 6% vacancy rate, there was a plentiful supply of rental housing. In Toronto, 23% of tenants were in the same situation and the vacancy rate was less than 1%. The vast majority of municipalities where vacancy rates increased between 1994 and 1998 still showed rent increases over the same period. As the Where’s Home study illustrates, homelessness in Ontario is not simply a question of the demand for rental housing outweighing the supply. It is most importantly a problem of inadequate income to cover housing costs, especially for families with children.

Whether it is plentiful or not, thousands of Ontarians simply cannot afford shelter. Until we recognize the depth of poverty and its role in homelessness, we will never be able to adequately house our most vulnerable citizens.

The "Affordability Squeeze" for social assistance recipients:

In October 1995, social assistance benefits were cut by 21.6% across the province, causing immense hardship for families already struggling to make ends meet. Considering median gross rents in selected municipalities in May 1996, the cuts to benefits had an immediate, staggering effect on the ability of households receiving social assistance to pay for shelter. As can be seen in figure 1, a single parent with one child receiving social assistance would potentially have had to pay 73% of her income on rent in Toronto, 56% in Hamilton, 65% in Ottawa and 60% in Windsor. In all of the selected cities, the shelter allowance component of social assistance was well below median rents. Professor Michael Ornstein, Co-director of the Institute for Social Research at York University, calculated that the welfare cuts in 1995 forced at least 67,000 single parents from their existing housing. This was almost certainly the largest economic eviction of families with children in Ontario’s history.

figure 1. "Affordability Squeeze" for a single parent with one child receiving social assistance, May 1996

City

Max. shelter allowance

Max. total benefit

Max. benefit including tax credits

Median Rent (2 bedroom apt.)*

Amount left over

Percentage of income spent on shelter

Toronto

$511

$957

$1,095

$800

$295

73%

Hamilton

$511

$957

$1,095

$614

$481

56%

Ottawa

$511

$957

$1,095

$710

$385

65%

Windsor

$511

$957

$1,095

$656

$439

60%

Source: Statistics Canada

*for apartments which have turned over within one year using Statistics Canada median gross rents. Statistics Canada rent data are a better indication of what tenants will experience when searching for housing than CMHC average rents. CMHC average rents include all apartments whether they are available for rent or not and exclude apartments in buildings with fewer than three units. CMHC average rents also only include utilities if they are included in the actual rent and can therefore greatly underestimate actual housing costs in areas were utility costs are high and tend not to be included in rent, such as many rural communities. CMHC data does, however, provide a reasonable estimate of increases in rent since the last Census.

If we calculate a rough estimate of rent increases to October 1999, the situation for households receiving social assistance becomes dramatically worse. In Toronto in late 1999, a single parent would potentially have to pay 82% of her income on rent. In Hamilton she would potentially pay 62%, in Ottawa 68% and in Windsor 62% (figure 2). Between 1996 and 1999, the single parent’s income remained unchanged, but rents increased by as much as 12%.

figure 2. "Affordability Squeeze" for a single parent with one child receiving Ontario Works, October 1999

City

Max. shelter allowance

Max. total benefit

Max. benefit including tax credits

Median Rent (2 bedroom apt.)

Amount left over

Percentage of income spent on shelter

Toronto

$511

$957

$1,095

$896

$199

82%

Hamilton

$511

$957

$1,095

$682

$413

62%

Ottawa

$511

$957

$1,095

$746

$349

68%

Windsor

$511

$957

$1,095

$682

$413

62%

Source: Statistics Canada; CMHC

To get a truer sense of the hardship faced by people receiving social assistance it is important to isolate the impact of rent increases on the money which is left over for non-shelter items such as food, clothing and transportation. Using the example outlined above, a single parent with one child in Toronto was left with $295 to pay for non-shelter items in 1996 and $199 in 1999. Thus, a 12% increase in average rents over the three and a half year period corresponded with a 33% decrease in money left for other basic necessities. Rent increases have an exaggerated impact on non-shelter income. The loss of income for non-shelter items is particularly serious in communities outside of major city-centres where many non-shelter costs, such as transportation, are significantly higher.

To account for increases in rent, shelter allowance levels alone would have to increase by 20% in many circumstances to place Ontario Works recipients in the same desperate financial situation in which they found themselves in 1995, after the cuts!

The "Affordability Squeeze" for low income families relying on paid employment:

Those who are employed are also hard hit by housing costs in Ontario. This is especially true for families with children where one or two parents are employed in low-paying jobs. Minimum wage is the same whether you are single or have a family to support. Looking at median rents for 1996 in selected municipalities, we see that a single parent making minimum wage will have to devote an inordinate amount of her income to shelter (figure 3). She would be paying more than 50% of her income on rent in all but one of the municipalities selected.

figure 3. "Affordability Squeeze" for a single parent with one child earning minimum wage*, May 1996

City

Net Monthly Income with Tax Credits

Median rent (2 bedroom apt.)

Amount left over

Percentage of income spent on shelter

Toronto

$1,310

$800

$510

61%

Hamilton

$1,310

$614

$696

47%

Ottawa

$1,310

$710

$600

54%

Windsor

$1,310

$656

$654

50%

Source: Statistics Canada

* based on a 40 hour work week

In late 1999, a single parent working for minimum wage would likely be paying over 50% (and in some cases as high as 68%) of her income on rent in each of the municipalities selected (figure 4).

figure 4. "Affordability Squeeze" for a single parent with one child earning minimum wage, October 1999

City

Net Monthly Income with Tax Credits

Median rent (2 bedroom apt.)

Amount left over

Percentage of income spent on shelter

Toronto

$1,310

$896

$414

68%

Hamilton

$1,310

$682

$628

52%

Ottawa

$1,310

$746

$564

57%

Windsor

$1,310

$682

$628

52%

Source: Statistics Canada; CMHC

Discrimination and Systemic Barriers to Housing:

In all likelihood, the numbers described above actually under-estimate the severity of the affordability problems facing low income households, both employed and in receipt of public assistance, in Ontario. These households usually have to pay more than average or median rents. When searching for housing, low income families face a range of discriminatory and systemic barriers which keep them from renting the most affordable apartments they can find. They are refused by landlords because they are on welfare, because of their income level, because they have children, because they lack a credit history, because they cannot provide a last month’s rent deposit which is no longer provided through social assistance in most municipalities. As a result, low income households are pushed into undesirable and overpriced accommodation.

An analysis of census data by Professor Ornstein found that families with children living below the poverty line usually have to rent the most expensive apartments on the market. In 1990, 74% of single mothers with two children living below the Low Income Cut-Offs who rented an apartment during the one year period had to rent an apartment above the most affordable third of units on the market (by size). Over half had to rent apartments in the most expensive third of the market!

The housing affordability problems faced by low income households outlined above are simply impossible. Whatever way we decide to look at it, we cannot ignore this one fact: in Ontario, thousands of single parents, young families, people receiving social assistance, youth, people with disabilities, newcomers, and elderly people do not have adequate incomes to afford decent shelter, a basic necessity and a fundamental human right. Legislated homelessness in Ontario has been condemned by both the United Nations Committee on Social, Economic and Cultural Rights and the United Nations Human Rights Committee as a blatant violation of international human rights.

A Needs-Based Shelter Supplement:

Some people are of the view that the only solution to homelessness is to build more affordable housing. This should certainly be part of the solution and makes sense in cities, such as Toronto, that have very low vacancy rates. However, it can only be part of the solution. Indeed, in cities with higher vacancy rates, such as Thunder Bay with a vacancy rate of almost 8%, it would make little sense to focus on building new housing.

The majority of low income households in Ontario are housed in the private rental market and we have no reason to believe that this will cease to be the case in the future. According to data from the Ministry of Community and Social Services, 84% of households in receipt of public assistance live in market rent apartments. Given the reality of the rental housing market in Ontario, dealing with the income side of the equation is the most important component of any strategy to end homelessness. This government was elected on a promise to institute shelter allowances for households with affordability problems. It is an urgent necessity that it come through on this promise in the upcoming budget.

Some people believe that shelter allowances or income supplements to help families living in poverty pay for housing simply "line the pockets" of landlords. We believe this view is misguided and simply justifies complacency about the immoral and unacceptable levels of poverty in Ontario. There is absolutely no evidence that rents are adjusted to capture housing allowances, which would vary depending on income and would be confidential information which a landlord would not even have access to. A shelter allowance program is simply a means of adjusting the incomes of the most disadvantaged households in our society so that they can afford life’s necessities, such as shelter. We don’t criticize tax credits for poor families as a means of subsidizing landlords. Similarly, we shouldn’t criticize income supports which are a response to the realities of rental housing in Ontario.

The program would have to have two components, one for people on social assistance and one for low income households in paid employment who do not receive social assistance. For people on social assistance, shelter allowance levels must be raised to better reflect actual rents across the province. Shelter allowance levels could be calculated based on Statistics Canada’s median gross rent for each major city in Ontario, as recommended by Toronto’s Homelessness Action Task Force. We do not agree, however, with the Task Force’s suggestion that shelter allowance levels be set at 85% of median market rents. This is inadequate. As discussed earlier, because of the many barriers faced by low income households in their search for housing, it is impossible for most families to find accommodation under the median rent levels. Shelter allowance levels should be set at least at the level of median market rents.

Income supports for employed people would be equally essential. As discussed earlier, families with children who are dependent on low paying employment have always been particularly disadvantaged in our society. An income support program for housing would be a means of correcting the inequalities created by a wage payment system which ignores the financial realities of families.

 

The program must be available to all those who meet an income-based needs assessment. The recently announced rent supplement program is not the universal shelter allowance promised by this government and so desperately needed. It is limited to 5000 subsidies across the province. In addition, the program is administered through local housing authorities which in Ontario utilize chronologically-based rather than needs-based waiting lists. The result will be that disadvantaged households will be unable to access the rent supplements at their time of greatest need. Young families, newcomers, those most at risk of homelessness, will not benefit from this program.

The crisis of homelessness in Ontario is far more than what you see on the streets. Women and children are by far the largest groups effected by the cuts and by the erosion of income since this government took office. If we are to help low income people get housing, we have to give them what they need: an income which allows them to pay the rent, prompt access to last month’s rent deposit, far better protection from discrimination so that they can access the most affordable housing available, and, in areas with a supply problem, more affordable housing.