Over the past two centuries, the world has become more urban, as people have moved to the cities to better their lives. Cities exist because, as large labour markets, they facilitate a higher standard of living for residents and reduce poverty. Governments place a high priority on these social goods. Achieving them requires that governments pursue policies that lead to higher household discretionary income. Governments must also proactively avoid policies that reduce discretionary income.
Regrettably, urban containment policy, the subject of this report, increases house prices relative to income, thereby reducing discretionary income and the standard of
living while increasing poverty.
Alain Bertaud, former principal urban planner at the World Bank, expressed the important role played by urban planning as follows:
“Increasing mobility and affordability are the two main objectives of urban planning. These two objectives are directly related to the overall goal of maximizing the size of a city’s labor market, and therefore, its economic prosperity.”
Yet, the dominant strain of urban planning, urban containment policy, leads to a lower standard of living and greater poverty by increasing housing costs relative to income. This occurs because urban containment policy places artificial limits on the supply of land and housing, which drive up prices because of an excess of demand over supply. The cost of housing is the largest element of household budgets and is thus a major determinant of the standard of living and the extent of poverty. There is a need to focus on the fundamental priority of improving the standard of living and reducing poverty (Section 1).
This report examines urban planning policy and its impact on housing affordability in the Calgary area.