The housing market suffers from an affordability crisis partly caused by a lack of supply. In response, the government has published its Canada Housing Plan, described as "a bold strategy to unlock 3.9 million new homes by 2031". However, the Fraser Institute report indicates this will require Canadians to save and invest much more than they presently do.
The report stated that to increase home building and restore business investment in key areas like technology to previous levels, Canada needs to become much more attractive to investors, both from within Canada and around the world.
In addition to the housing sector, the report noted that for business investment in industries such as communications and IT to return to previous levels, another US$9bn would be necessary.
The financing gap ranges from US$240bn to US$263bn a year. To meet that shortfall, Canadians would have to increase the amount they save by 50 per cent.
The report suggests that this would be unrealistic, meaning that the initiative's success would depend on the country's ability to attract foreign investment, which would require policy reforms to attract investors.
The report concludes with some suggestions, including increasing consumption taxes and reducing income and corporate rates to encourage saving. Another suggestion is to reduce public sector spending, thereby shrinking government borrowing since this reduces the funds available to private sector companies, who can borrow and invest more efficiently than the government.
A third suggestion is reducing the regulatory state since the regulatory burden can arguably be substantially reduced without compromising legitimate public policy objectives such as reducing harmful environmental externalities.
