Federal Spending to Address Homelessness

Summary

Over the term of Canada’s National Housing Strategy, 2018-19 to 2027-28, actual and planned spending on homelessness programs at Infrastructure Canada averages $561 million per year. This is an increase in nominal spending of $443 million per year (374%) over the prior 10-years.

This funding is almost entirely allocated to “Reaching Home”, which funds communities to reduce and prevent homelessness. This funding helps those communities to provide housing supports and associated services to tens of thousands of people annually who are either homeless or at risk of imminent homelessness. From 2019-20 to 2022-23, this funding has supported placements in more stable housing for 17,849 people annually, emergency housing funding for 5,399 people annually, and core prevention services for 31,164 people annually.

The best available evidence suggests that homelessness has increased in spite of Reaching Home. In the latest point in time count published by Infrastructure Canada, the number of homeless people had increased by 20% relative to 2018 reaching 34,270, and we estimate that the number of chronically homeless people had increased by 38% relative to 2018. The number of individuals living in unsheltered locations also increased 88%.

We estimate that interventions funded by Reaching Home are reducing the point-in time count of homeless persons by about 6,000 individuals (15%), relative to what the count would have been without those interventions. We estimate that achieving a 50% reduction in chronic homelessness would require an additional $3.5 billion per year, approximately a 7-fold increase in funding over the National Housing Strategy average.

Introduction

Within Canada’s overall National Housing Strategy, programs specifically intended to address homelessness are administered by Infrastructure Canada, with almost all spending flowing through Reaching Home.[^1] Reaching Home provides funding to communities to reduce and prevent homelessness. This program is Canada’s strategy to address homelessness.

Over the term of Canada’s National Housing Strategy from 2018-19 to 2027-28, actual and planned spending on these homelessness programs at Infrastructure Canada is $561 million per year. This is an increase of $443 million per year (374%) in nominal spending over the prior 10 years. This includes an additional $1,287 million allocated in the 2024 Budget.

Office of the Parliamentary Budget Officer, based on data provided by Infrastructure Canada and Budget 2024.

Office of the Parliamentary Budget Officer, based on data provided by Infrastructure Canada and Budget 2024.

Prior to Budget 2024, Canada had not committed funding for 2026-27 onwards comparable to current spending levels. With the additional funding announced in Budget 2024, nominal planned spending is above 2023-24 levels across the remainder of the National Housing Strategy, with an average increase of $81 million (13%) relative to 2023-24 spending. While all additional funding is allocated to Reaching Home, $50 million is earmarked for sharing lessons learned and best practices across communities, and $250 million is allocated to address encampments and unsheltered homelessness.[^2]

Homelessness Reduction Target and Plan

This section was written with regard to Recommendations 11-12 of HUMA’s Report on the National Housing Strategy.[^3]

Canada’s National Housing Strategy initially set a target of reducing chronic homelessness by 50% by 2027-28. In more recent announcements, the government has committed to ending or eliminating chronic homelessness by 2030.[^4]

Reaching Home is the central program intended to achieve this target.[^5] Infrastructure Canada is responsible for Reaching Home under its Core Responsibility for “Public Infrastructure, Communities, and Homelessness Investments” but it has not adopted reductions in chronic homelessness as a performance indicator for that program.[^6]

Progress on Contributory Initiatives

This section was written with regard to Recommendation 6 of HUMA’s Report on the National Housing Strategy.[^7]

“Reaching Home” funding supports a variety of activities to address homelessness, including housing; support services; prevention and shelter diversion; and capital investments.[^8]

Reaching Home allocates funding across all regions of Canada. From 2019-20 to 2022-23, Reaching Home provided $1.6 billion in funding to 6,855 projects. Of that funding, the majority ($921 million) went to large urban centres under the designated communities fund, but significant funding was also allocated for indigenous homelessness ($249 million), rural and remote homelessness ($68 million), and territorial homelessness ($24 million).

These activities have provided housing supports and associated services to tens of thousands of people who were either homeless or at risk of imminent homelessness. From 2019-20 to 2022-23, this funding has supported placements in more stable housing for 17,849 people annually (71,395 total over 4 years), emergency housing funding for 5,399 people annually (21,595 total over 4 years), and core prevention services for 31,164 people annually (124,655 total over 4 years). Progress has fallen somewhat behind the program’s initial target to place 71,500 individuals in more stable housing by the end of the 2021-22 fiscal year, but this may reflect in part challenges and shifts in priorities due to the COVID-19 pandemic.[^10] The program exceeded other targets, such as its target for core prevention services delivered.

Progress towards Outcomes

The best available evidence suggests that homelessness has increased in spite of Reaching Home and, as a result, the program is not on track to meet its targets with respect to reducing homelessness.

In the latest point-in-time count published by Infrastructure Canada reflecting counts between March 2020 and December 2022, the number of homeless people had increased by 20% relative to 2018. In total, the latest point-in-time count identified 34,270 people experiencing homelessness in shelters or unsheltered locations.[^11] The share of homeless survey respondents who reported being chronically homeless also increased by 15% relative to 2018.[^12] Compounding these changes, we estimate that the number of chronically homeless people has increased by 38% relative to 2018. The number of individuals living in unsheltered locations also increased by 88%.[^13]

As an interim objective, the program established a results indicator targeting a 31% reduction in the estimated number of shelter users who are chronically homeless by March 2024.[^14] In 2022, 31,476 shelter users experienced chronic homelessness, an increase of 17% relative to the baseline for this indicator.[^15]

A comparison of these two measurements of chronic homelessness and their limitations is outlined in Appendix A.

Factors Impacting Budget Sufficiency

A key reason why increased federal spending has not resulted in a proportionate reduction in homelessness is that federal spending represents a relatively small share of total spending to address homelessness. As a result, a given increase in federal spending does not result in a proportionately large increase in total spending. An evaluation for 2015-16 found that provinces and municipalities spent $13.02 for every dollar contributed by the federal government, meaning that federal funding covered 7.1% of spending.[^16] Likewise, when Reaching Home was first announced federal funding covered 14% of planned spending to address homelessness under municipalities’ 2019 to 2024 community plans.[^17]

A second key challenge is that housing placements do not reduce future homelessness on a one-for-one basis because some of the homeless people placed in stable housing would have found housing anyways and some people placed in stable housing return to homelessness.[^18] Even without any intervention, less than half of periods of homelessness exceed three months, and less than ten percent exceed one year.[^19] However, placing a homeless person in stable housing increases the probability they will be stably housed, months and years later.[^20] Over a time horizon of six to fifteen years, the reduction in point-in-time counts is about 10% to 15% of the increase in supportive housing capacity, both based on the results in jurisdictions which have significantly expanded capacity and aggregate implications of randomized control trials of Housing First in Canada.[^21]

Homelessness programs have reported results under several program evaluations, with the latest evaluation indicating that 58% of individuals placed in more stable housing could be reached a year later, and 70% of those clients placed in more stable housing either remained housed or had successfully exited the program.[^22] Depending on whether the uncontactable clients are stably housed or not, this could mean that the share of Housing First clients stably housed or successfully exited at 12 months could be as low as 40% or a high as 83%.

An alternative data source is based on recorded exits from the program. Under the Housing Partnership Strategy, 30,070 clients were placed between 2014-15 and 2018-19 through Housing First Interventions targeted to chronically homeless persons. By the end of the program, 37% of those clients had successfully exited the program, 52% were continuing to receive support, and 11% had returned to homelessness.

A third challenge is that homelessness interventions are not exclusively targeted to chronically homeless people, so they reduce homelessness generally rather than chronic homelessness specifically. This is a change from the prior Homelessness Partnership Strategy, which required Housing First interventions to be targeted to the episodically and chronically homeless population.[^23] This change was made to give more flexibility to offer Housing First interventions to groups who are not necessarily episodically or chronically homeless, like women who are victims of violence.[^24] In addition, individuals in chronic homelessness are not a fixed group, with new individuals meeting the threshold for chronic homelessness over time.

Budget Sufficiency

The best available evidence suggests that Reaching Home has not implemented sufficient programming to achieve its target of reducing chronic homelessness by 50%.

To quantify the impact of current spending, we examined the placement of individuals in more stable housing. Based on the At Home/Chez Soi pilot project and academic estimates, placing individuals in more stable housing with support reduces the number of days a homeless person spends in shelters/on the street over a two-year intervention by an average of 3.6 months or 15%.[^25]

Reaching Home has delivered 71,395 housing placements over 4 years, or 17,849 housing placements per year. Assuming each housing placement includes supports and reduces months spent homelessness by 3.6 months, we estimate that housing placements funded by Reaching Home are reducing the point-in time count of homeless persons by 5,355 persons.[^26] Reaching Home includes other activities like prevention services and emergency housing funding. We estimate that prevention services and emergency housing funding reduce the point-in time count of homeless persons by an additional 751 persons.[^27] In total, we estimate the existing programs are reducing the point-in-time count of homeless persons by about 6,000 persons. This estimate does not account for the impact of more qualitative changes, such as the implementation of coordinated access and information systems.

In the baseline point-in-time count for 2018, there were 25,216 homeless persons enumerated with an estimated 15,130 being chronically homeless. The targeted 50% reduction in chronic homelessness relative to this 2018 baseline implies a targeted chronically homeless population of 7,565 persons. In the latest point-in-time count for 2020-22, there are 34,270 homeless persons enumerated with an estimated 24,301 being chronically homeless. Because interventions are not targeted exclusively to a static population of chronically homeless persons, we assume that this reduction in chronically homeless persons is achieved by reducing overall homelessness to 50% of the 2018 baseline, i.e. to 12,608 homeless persons, which is a reduction of 21,662 homeless persons relative to current levels.

Office of the Parliamentary Budget Officer, based on data provided by Infrastructure Canada.

Office of the Parliamentary Budget Officer, based on data provided by Infrastructure Canada.

To achieve a 21,662 persons reduction in the point-in-time count with interventions that reduce homelessness by 3.6 months over two years, Reaching Home would need to deliver 72,000 interventions per year, necessitating 144,413 units of supportive housing.

We assume interventions are targeted to individuals with higher support needs, like those with serious mental illness, irrespective of the duration for which individuals have been homeless. If interventions were effectively targeted to the 71% of homeless individuals who are chronically homeless, this would proportionately reduce the number of interventions needed, and consequent number of units and cost.

Recently, the City of Toronto estimated the cost of operating supportive housing to be around $48 million for 2,000 supportive housing units including wraparound support services, or about $24,000 per year per unit.[^28] The costs for At-Home/Chez Soi were similar.[^29] Costs are mitigated by requiring clients to contribute towards rent.[^30] Costs vary substantially based on the degree of support provided, with Supportive Housing and At-Home/Chez Soi providing relatively intensive supports.[^31] At this annual cost per unit, permanently sustaining 144,000 additional units of transitional housing would require an additional $3.5 billion per year in operating funding, approximately a 7-fold increase in funding. This funding would have to be sustained on an ongoing basis, growing with inflation.

The At-Home/ Chez Soi pilot project suggests that a significant reduction in homelessness would reduce demand for other services, including shelters, hospitals, and jails. However, because funding for such services is discretionary and a provincial/territorial responsibility, actual cost savings would be highly uncertain and accrue to the provinces/territories. Conversely, the measure would increase provincial spending on social assistance where residents are not paid shelter allowances unless they have shelter costs.

Federal spending could displace existing provincial/territorial spending. It could displace provincial/territorial spending directly on homelessness programs and other programs that address homelessness like social assistance and supportive housing for individuals with disabilities. This could occur directly, in the case of fixed spending plans where provinces/territories cover the balance of costs not covered by federal contributions, or indirectly in cases where spending is set to certain levels in light of available financial resources.

Appendix A: Measurements of Chronic Homelessness