A sobering report from Canada's fiscal watchdog has cast doubt on the federal government's ability to rapidly solve the national housing crisis through major new spending programs.
Modest Impact of Major Investment
The Parliamentary Budget Officer (PBO), Jason Jacques, reported this week that the government's flagship $13-billion Build Canada Homes program is projected to result in the construction of just 26,000 new homes over the next five years. Of those, only about half are expected to be available to low-income households.
Prime Minister Mark Carney launched the new federal agency in September 2025, announcing its initial funding during a media event near his riding, backed by modular homes built by Caivan. The agency's mandate is to scale up affordable construction, preserve rental units, and tackle homelessness.
However, the PBO's analysis suggests its contribution will be limited. Jacques stated the program's output represents a mere 3.7% of the 690,000 additional housing units needed over the next decade to meet demand beyond "business as usual." The report concluded that "Build Canada Homes should be expected to make a modest contribution toward housing supply and affordability."
Broader Federal Spending Trends and Economic Concerns
The housing report arrived alongside other developments highlighting the limits of government subsidy. The PBO also noted that overall federal planned spending on housing programs is set to decline sharply, falling 56% from $9.8 billion in 2025-26 to $4.3 billion in 2028-29. This drop is attributed to the expiry of existing program funding and cuts outlined in Budget 2025.
Furthermore, the government has pledged to double the pace of residential construction to 500,000 homes per year over the next decade. Yet, the PBO pointed out that "the government has not yet laid out an overall plan to achieve this goal." Housing Minister Gregor Robertson responded that the government is in the early stages of programs designed to leverage private investment.
Separate news underscored the precarious nature of government support for industry. Despite $500 million in loan guarantees from the federal and Ontario governments, Algoma Steel announced it will lay off 1,000 workers from its Sault Ste. Marie plant in March 2026. The company stated both governments were aware the layoffs were part of a plan to convert to electric arc steelmaking, a process accelerated by U.S. President Donald Trump's 50% tariffs on Canadian steel.
In another instance, the CBC reported the federal government gave automaker Stellantis more than $220 million to upgrade its Ontario plants before the company revealed plans to move some production to the United States.
The Path Forward
These examples collectively illustrate a central challenge for policymakers. While targeted government investment can play a role, the reports suggest it cannot single-handedly drive housing construction or guarantee long-term industrial stability. The PBO's findings on Build Canada Homes indicate that meeting ambitious national housing targets will require significantly more than this one program.
The ultimate pace of homebuilding, analysts argue, rests largely with the private sector. The broader economic examples indicate that subsidies can be a temporary bridge but not a permanent solution for industrial competitiveness. The emerging consensus from these reports is that sustainable recovery depends on governments creating the right conditions for growth, rather than attempting to subsidize their way to prosperity.
