A Real Platform Should Compensate Millennials and Gen Z

Young people are picking up the slack for decades of poor preparation by governments for the cost of population aging.

We knew years ago that retiree benefits and medical costs would grow rapidly when the large baby boom generation retired. We also knew that no government was asking boomers for enough tax dollars to fully cover the cost of the services they’d use in retirement. Now, young people are stepping up to cover the predictable financial shortfall by paying more taxes, enduring high housing costs, and inheriting large deficits. They deserve compensation.

This election, political leaders should stop taking for granted the protection provided by Millennials and Gen Z, and instead recognize it for what it is – a heartfelt show of intergenerational solidarity offered at their own expense.

What You Need to Know to Avoid Being Duped

As federal leaders jockey to show who can best stand up to Trump, domestic issues that topped the national agenda months ago aren’t getting the depth of attention they deserve. Among these is housing unaffordability for younger Canadians.

Conservative Leader Pierre Poilievre captured the stakes well last summer when he said: “We had a deal in this country… You get a job. You get a house by your 20s. That deal is broken.”

He’s right. This deal has been broken since the outset of the new millennium, when home prices began rising rapidly. They have since become so disconnected from earnings that many young people are locked out of the market altogether. Their consolation prize is high rents that erode financial security.

While Mr. Poilievre correctly identified the problem, no political leader is being honest with voters about the political bargain at the root cause of our housing crisis. Across multiple levels of government, and over time, Canada has chosen to protect housing equity for existing homeowners – even when that protection meant higher costs for renters and aspiring owners.

This bargain is political, because affording a home isn’t just about personal financial decisions. It’s a structural problem, shaped by decades of policy decisions. Our policy decisions oblige younger people to compromise their own standard of living to protect the ‘retirement nest eggs’ that rising home prices have generated for homeowners who have come before them.

Consider this. The net value of principal residences has grown by $5 trillion since 1977 (adjusting for inflation). While 70% of this increase can be explained by population growth, the remaining $1.5 trillion flows from rising prices. Canadians over age 55 reaped 60% of this $1.5 trillion windfall.

Political leaders could choose to make housing more affordable by organizing policies around the goal of having home prices fall. Lower prices would give young people a better shot at entering the market. They would help those enduring high rents see payments more in line with their earnings. So why aren’t candidates in this election even considering a policy option that would benefit so many?

Here’s the dupe-free answer you’re unlikely to get from ANY party on the campaign trail.

Most political leaders judge that their electoral success depends on protecting the wealth many older homeowners have gained from rising prices – wealth they’re now expecting to use in retirement. There’s little appetite to disturb the ‘nest eggs’ of this strong voting demographic, even though older Canadians have the lowest poverty and highest wealth of all age groups.

Conversely, politicians shy away from restoring what younger people have lost – the dream that good homes should be in reach of what hard work can earn. And since younger people tend to vote at lower rates, they rarely have to pay a political price for this decision.

Such political judgments compel younger Canadians to absorb higher costs to uphold a housing system that disproportionately rewards older homeowners. Quietly and without fanfare, Millennials and Gen Z offer a profound expression of intergenerational solidarity. They pay higher rents, take on larger mortgages, delay or abandon homeownership, and start families later – not because they want to, but because our political choices leave them no alternative.

Since younger Canadians are already doing their part, the question now is whether political leaders are ready to do theirs by making compensation part of the election conversation.

Compensation needn’t mean taxing the housing wealth owners have gained, although adding progressivity to property taxation merits consideration. What compensation should absolutely include is revisiting government spending priorities and tax expenditures.

Programs like Old Age Security, the Age Credit, the Pension Income Credit, and retirement income splitting provide billions annually to retirees – many of whom also benefit from large housing-wealth gains. Rather than asking younger generations to keep funding these benefits through deficits and a growing share of their taxes, Ottawa should shift eligibility for higher-income retirees who don’t need government subsidies, and use the savings to reduce costs for Millennials and Gen Z.

Sadly, that’s not what we’re hearing this election. Conservative and Liberal leaders are instead promising billions in income tax cuts for everyone, whether or not they need it. Such cuts will make it harder still to balance a budget that has already slid into big deficits. They also ignore how many older homeowners have gained housing wealth that is already tax-sheltered.

Party leaders are also making the usual promises to “build more homes.” This is part of the solution, but we already know that more supply alone won’t fix the generational imbalance. Years ago, CMHC estimated that Canada needed 3.5 million additional homes by 2030 to restore affordability to early-2000s levels. That would have required construction of 437,000 homes per year. Actual construction only increased to around 250,000.

When leaders imply that new GST rebates alone will jump start enough new affordable construction to close this gap, we’re being duped. Steve Pomeroy shows there are roughly 550,000 resales of existing homes each year, compared to 150,000 newly constructed homes. So most real estate transactions would not be impacted by proposed changes to GST.

What an honest platform would make clear is that there is no fixing Canada’s housing woes until parties acknowledge the harm many young Canadians endure to protect $1.5 trillion in housing wealth windfalls – and offer a plan to compensate them.

Let this be the election when political leaders stop taking for granted the protection provided by Millennials and Gen Z, and instead recognize it for what it is – a heartfelt show of intergenerational solidarity they offer at their own expense.

Dupe-O-Meter Party Assessments

Few voters likely will be surprised to learn that NO party is talking about compensating Millennials and Gen Z for the financial hits they are taking to prop up a housing system that has conferred enormous wealth on (primarily older) homeowners.

Party promises on housing, child care and postsecondary education will not grow investments in these priority areas at a scale necessary to compensate young people for enduring the high home prices from which many older homeowners have benefited. Instead, it's likely that Millennials and Gen Z will be expected to continue paying higher rents and larger mortgages to protect the housing wealth 'nest eggs' of homeowners who have come before them.

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Restoring housing affordability

We cannot fix our housing system without recognizing the generational dynamics as its core. These tensions are central to designing and implementing the full range of solutions needed to restore affordability forever. These solutions must stretch beyond the focus on expanding housing supply that is so far at the centre of party promises this election.

All three major parties are promising to help get more housing built. The Liberals and NDP commit to doubling housing starts from their current level of around 250,000 units per year to 500,000. The Conservatives haven’t set a target of which we are aware, but it’s likely their level of ambition is the same.

Doubling housing starts is a stretch goal. Federal and provincial governments have been talking about accelerating construction for years – and making important progress. From 2015 to 2020, Canada added about 200,000 units each year. From 2020 onwards, we’ve increased the pace of new supply impressively to around 250,000 annually. This 25% increase was no small feat. But there’s little sign we can ramp up the pace of expansion to consistently reach 300,000 units a year, let alone 400,000+.

To figure out which party might get us closest to achieving ambitious housing supply goals, we urge voters to look at who is promising to use the most tools in the housing policy toolbox – versus putting most of their eggs in one (policy) basket. To guide you in this task, we evaluate party promises in light of our comprehensive plan to restore housing affordability forever.

Before you launch into considering each party’s position, here are two other things to keep in mind.

First, setting a target for new home builds isn't obviously the right overarching goal to improve Canada's housing system. More units don’t necessarily mean more affordable units. If affordability is the goal, why don’t parties set a target for home values? Until parties are clear about whether home prices should rise, stall or fall, there is no north star towards which to steer all housing policy.

Second, let’s be honest that no party is on track to restore housing affordability for Millennials and Gen Z any time soon. Politicians will continue to rely on younger generations to prop up home values by paying higher rents and larger mortgages – thereby protecting the wealth older homeowners have gained from rising prices. This protection should be acknowledged. It’s time for parties to start talking about how best to compensate Millennials and Gen Z for the intergenerational solidarity they are offering, often at the expense of their own financial security.

Conservatives

*Fact-check: Before looking at the policy recommendations of the Conservative party, it is worth revisiting one of Mr. Poilievre's talking points about housing.  He regularly states that housing prices doubled under prime minister Trudeau.  Some rental stats may suggest this, but not the value of homes. According to the Canadian Real Estate Association, average home prices increased from $444,000 in 2015 to $690,000 in 2024 – a 55 per cent increase.  By contrast, prices increased 61 per cent under prime minister Harper.

In terms of policy promises, the Conservatives propose $14 billion more for housing through tax cuts, new spending and re-allocations between now and 2028. This compares to the Liberals who would add $24 billion, and the NDP $28 billion. To put this in context, Mr. Poilievre would inject about one-third more to existing annual federal expenditures on housing.  The other two parties would add about 50 per cent more.

Mr. Poilievre’s housing plan features the proposal to cut the GST from newly constructed homes priced below $1.3 million. The policy change would cost $2 billion a year. It would reduce the cost to the buyer by up to $65,000 – which sounds great.

And it will be – for the one in five housing transactions that involves a newly built home. But for the four in five people who purchase from the resale market, there is no direct benefit from a GST rebate.

This signals that Mr. Poilievre is primarily hoping his GST cut will help developers decide that building supply is profitable enough to accelerate their current plans. That’s a lot of pressure to put on one tax policy change.

The Conservative leader also responds to research from the Canadian Centre for Economic Analysis, which shows the charges and taxes levied on developers can add as much as 36% more to the cost of a new unit of housing. In response, Mr. Poilievre promises to reimburse municipalities for 50% of the cost of cutting those development charges -- at a cost of about $3 billion a year. 

Prior to the election, Mr. Poilievre often railed against municipal “gatekeepers” and red tape that slowed down local building. He has spoken in broad strokes about using federal infrastructure funding to incentivize cities to increase annual construction starts, and reducing funding for jurisdictions that fail to meet this goal. A  key challenge the Conservatives face in this election is that this policy idea doesn’t stand out from the Housing Accelerator fund that the Trudeau Liberals previously implemented, and which shows signs of success.

Mr. Poilievre does stand out in proposing sell off federal lands to the private sector to build housing. The Liberals and NDP would also partner with developers to use under-utilized federal land to build more housing – but retain public ownership and lease the land to developers. This is a really important distinction. We encourage you to favour the Liberals and NDP on this issue.  Here’s why.

A driving force behind higher rents and sales prices is the relentless increase in land values in many of our communities. Publicly owned land is a precious asset, because it can be shielded from these land lift pressures. Communities can choose to use the land to preserve permanently affordable housing, rather than selling it for short-term financial gain.

Simply put, the opportunity to preserve deeply affordable housing forever is priceless. It’s not worth giving this up by selling off federal lands for the sake of a short-term bump to Ottawa’s bottom line.

Finally, the Conservatives have promised the Canada First Reinvestment Tax Cut.  This would allow individuals and business to defer payment of capital gains taxes when they sell an asset, on the condition that they re-invest the proceeds in Canada.  We strongly encourage voters to think deeply about this policy as it relates to housing, and ask the party for more information. 

There is a risk that this measure could inadvertently accelerate unhelpful speculation in Canadian real estate, if the tax cut does not intentionally exclude investment in already-built Canadian homes. The last thing Canada needs is more investors – domestic or otherwise – bidding up the price of existing housing. By contrast, channeling investment to help finance the construction of new housing supply would make sense.

Liberals

Mr. Carney’s housing plan will add $24 billion in new spending and tax breaks between now and 2028.  This compares to $14 billion promised by the Conservatives and $28 billion by the NDP. 

The Liberal plan competes directly with Mr. Poilievre’s GST rebate, but with a tighter focus. His GST cut is limited to first-time buyers purchasing newly constructed homes priced under $1 million. It would only cost about $400 million per year.

That targeting makes sense to Gen Squeeze. Homeowners who’ve already gained tax-sheltered wealth from rising home values don’t need additional tax breaks. However, this narrower GST rebate won’t offer the same incentive for developers as does Mr. Poilievre’s version. 

To compensate, the Liberals draw on a broader toolbox. 

They plan build on the “Housing Accelerator Fund” launched in previous years to reward municipalities that change zoning to permit more density in land already prioritized for housing. This was the Liberal response to compelling critiques from Mr. Poilievre about municipal gatekeepers and red tape. Many cities have since signed up for the federal funds, agreeing to add more density. It’s a successful measure that’s worth protecting.

Mr. Carney also proposes to build a new federal unit to bring Ottawa back into the business building affordable homes at scale – something the federal government last did following the second world war.  He pledges $35 billion in government loans to jumpstart construction of new affordable housing, including on federally owned land:

  • $25 billion will target prefabricated homebuilders in Canada on the assumption that this will get more homes built faster.
  • $10 billion will offer low-cost financing and capital to homebuilders who deliver units below market prices.

We confess that’s it’s currently difficult to tell how this financing differs from announcements in previous versions of Canada’s National Housing Strategy. This is another area where voters should push the party for more information. We can report that the Liberal platform indicates this $35 billion in loans will work out to around $3 billion a year in new spending by the federal government over the next four years.

Mr. Carney frames these investments not just as housing policy, but as a counter to US economic threats – leveraging Canadian technologies, manufacturing and resources like softwood lumber to strengthen the home-building industry and buffer recessionary pressures resulting from Trump’s tariff war. 

The Liberals also respond to research from the Canadian Centre for Economic Analysis, which shows the charges and taxes levied on developers can add as much as 36% more to the cost of a new unit of housing. Mr. Carney promises $1.5 billion annually to work with municipalities to reduce their development cost charges by half. 

Finally, the Liberals promise to revive tax advantages used to accelerate the construction of rental housing back in the 1970s. Some housing commentators look back longingly to the Multiple Unit Residential Building (MURB) program, because it enabled investors in specific kinds of rental housing to accelerate the deduction of costs and losses from their taxable income.  Mr. Carney wants to bring back similar tax measures today. The platform suggests it will take a few years for rental developers to make use of the new tax measure; but by 2028, the Liberals think it will represent a nearly $2 billion annual investment into rental housing.

NDP

The NDP is struggling to be relevant in this election. Our pre-platform assessment suggested that NDP housing policy isn’t helping the party stand out. It reads a lot like the Liberal approach – though if the NDP had published its plan earlier, perhaps we’d say the reverse.

Following the release of party platforms, there's reason to take a closer look. The NDP proposes to add another $28 billion to housing between now and 2028.  That is higher than the Liberals ($24 billion) and the Conservatives ($14 billion).  The difference between the NDP and Liberals seems to revolve around larger NDP investments for Indigenous housing and infrastructure.

At the core of the NDP plan Mr. Singh promises two programs: the Canadian Homes Transfer and the Communities First fund. Together, they would function like an NDP-branded versions of the Accelerator Fund already launched by the Liberals. 

In the face of US tariffs and economic threats, the NDP also emphasizes using Canadian-made materials, building pre-fabricated homes to speed up new supply. They also want to cut municipal development cost charges.

The NDP ultimately wants cities to commit to 20 percent non-market housing in every neighbourhood to be eligible for its funding. That’s a big stretch goal that is worth considering over the longer-term. But it is not a short-term reality.

Where Mr. Singh does stand out is on advocating for renters. He emphasizes rent controls, and revives the idea of a Renters’ Bill of Rights, including protections against renovictions. That’s a valuable focus, especially given the housing insecurity many tenants face.

 

Protecting and expanding affordable child care

Child care has received little attention to date in this federal election. It’s yet another priority issue for Millennials, Gen Z and the kids they raise that is being swept off the table as Donald Trump’s attacks on Canada’s sovereignty and economy dominate discussion.

Following the release of the party platforms in the final week of the campaign, it is clear that neither the Liberals, Conservatives nor NDP propose significant increases for the $10 a day child care system.  According to the 2024 federal budget, annual child care spending will stall around $8 billion per year. This leaves funding gaps to recruit child care professionals, expand supply and reduce fees to $10.

Liberals

The Liberal government’s investment in $10/day child care has been incredibly important, and will be recorded in history books as the most significant new social program implemented in Canada in decades. But it is still in its infancy, and needs ongoing support from Ottawa - along with increased investment by provinces.

Just prior to the election, the Liberals worked out concrete deals with 11 provinces and territories to sustain and grow federal funding for the $10/day system. This is important. Funding is necessary to increase the number of spaces with subsidized parental fees, and to attract and train enough child care professionals to scale up the supply of these badly-needed services. More attention is necessary in this federal election, and by all provincial governments, to invest in wage grids that deliver pay-equity level salaries for the child care workers we need so that enough spaces can be made available to families across the country.

Conservatives

Mr. Poilievre and the Conservatives have pledged during the election campaign to maintain the $10/day child care program. Few other details have been shared.

NDP

The same goes for the NDP.  The party has traditionally advocated for affordable child care, but so far there are no specific promises from the leader, Mr. Singh. 

 

Postsecondary Education

None of the leading parties is focusing much attention on postsecondary education in this election, making it difficult to find specific commitments to cite. This inattention continues a trend across years of federal budgets, in which investments in postsecondary have been, at best, an afterthought. According to the 2024 federal budget, postsecondary spending will grow by $3.5 billion between now and 2028. That is very modest by comparison with Old Age Security, which is scheduled to receive another $28 billion over the same period.

From what we can tell to date, the party that would most disrupt this pattern is the Greens.

In the past, the Green Party has promised to add $10 billion more per year to cancel federal student loan debt and abolish tuition for postsecondary institutions. It would add another $10 billion per year to support postsecondary schools to hire more faculty, and facilitate more contact time between students and instructors. This $20 billion per year increase would be a big deal – one that no other party is contemplating. However, since the Green Party is so low in the polls, we have generally narrowed our own work at Gen Squeeze to focus on the three national parties polling above 5%.

For the Conservatives, Liberals and NDP, the (limited) focus on postsecondary can be summarized as follows.  Building on the funding already allocated by Ottawa between 2025 and 2028, the Liberals would add another $3 billion for training, the Conservatives $1.4 billion, and the NDP $0.3 billion. 

Building on these spending commitments, the postsecondary commentary offered by the parties focuses on the following three themes: 

1. Helping students with tuition and related costs

The Conservatives would allow students to deduct interest paid on lines of credit from their taxes. They would also change repayment requirements for federal student loans to provide greater relief to lower-income graduates.

Conservatives also promise an independent Canada Education Transfer targeted at postsecondary education. This is a good idea, and would make more transparent the level of funding Ottawa is contributing. Having a specific federal transfer for postsecondary also could help shine light on the fact that students, colleges and universities have rarely been a priority for federal funding in recent decades, by comparison with investing in healthy retirements for Canada's aging population. 

The Liberals haven’t said anything about helping students with costs, beyond what was announced in their 2024 budget. That budget included minor increases to the amount people can borrow under the Canada Student Loan program, along with a time-limited 40% boost to the Canada Student Grants program.

The NDP would forgive $20,000 in federal student debt, and grant graduates five years grace before requiring any initial payments on federal student loans. These represent incremental changes toward the NDP longer-term goal to abolish tuition for postsecondary education - which would be a game changer for young Canadians faced with rising levels of student debt.

2. Housing for students

The Conservatives haven’t made any specific campaign promises to invest in student housing. This is a weakness, because housing costs regularly create financial pressures on students that dwarf the already large pressure represented by tuition.

The Liberals regularly feature the Build Canada Homes initiative, which includes $10 billion in financing (a.k.a loans, not grants) to support developers who specialize in building affordable homes. Within this financing envelope, $2 billion has been earmarked for new student housing.

The NDP indicates it will deliver (some unspecified) amount of matching funding to provinces and postsecondary institutions to accelerate the construction of affordable student housing. The party also aims to incentivize partnerships between business, non-profits and postsecondary institutions to convert office space into co-living (think dormitory-style) student housing.

3. Immigration

Since funding for postsecondary hasn't gone up to at anywhere near the scale of investments in medical care and retirement income security, universities and colleges have turned to other sources of revenue. This has often included recruiting international students, who are charged much higher tuition than domestic students.

This funding strategy has received increased scrutiny lately because of the harm it causes international students, and because of the argument that a rising number of international students is helping to amplify demand-pressures on already expensive rental markets that surround postsecondary institutions. 

The Liberals responded by imposing new caps on the number of international students to be recruited to Canada’s postsecondary institutions. Mr. Carney indicates he will retain those visa caps for the foreseeable future. 

No party is speaking directly to the significant hole this leaves in the budgets of postsecondary institutions. Current and future students can anticipate disruption, and potentially a reduction in programs, until this hole is addressed more comprehensively by either the federal or provincial governments.

 

Bringing it all together

The sad conclusion from our assessment of party positions on housing, child care and postsecondary is that no party is doing anything significant to disrupt the ageism against Millennials, Gen Z and their children that is evident in current federal fiscal priorities. The following depicts how the 2024 budget plans to grow spending on different policy areas that matter to Millennials and Gen Z by comparison with Old Age Security, which is a priority for older generations. 

As such, we cannot judge that any major party is taking seriously the need to use investments in housing, child care and postsecondary education as vehicles by which to compensate younger Canadians for enduring higher rents and mortgage payments to protect the wealth windfalls enjoyed by older homeowners. Quite the opposite. The fiscal patterns that all three parties tolerate will continue to amplify discrimination against younger generations.