But the data tells a more complicated story.

In this episode, Cara Stern and Mike Moffatt dig into new polling from Abacus and Ipsos that shows concern about climate change hasn’t disappeared — it’s just evolving. Canadians still feel a moral obligation to act, many are choosing more sustainable products, and a majority believe the country should be doing more. At the same time, optimism is slipping, and more people are questioning whether individual actions actually make a difference.

If you enjoy the show and would like to support our work, please consider subscribing to our YouTube channel. The pod is also available on various audio-only platforms, including:

Apple Podcasts

Spotify

Podbean

Below is an AI-generated transcript of the Missing Middle podcast, lightly edited.

Cara Stern: We just celebrated Earth Day and maybe you took part in a city cleanup or took a nature walk, but we celebrated it here at the Missing Middle by looking at some new data on Canadians’ priorities on climate change. What we read is actually pretty worrying.

Only 13% of Canadians now say climate change is a top personal priority. In 2019—so that was just seven years ago—it was 1 in 3. It topped the issues agenda heading into that election. Now, according to a new Abacus Data poll, it ranks eighth behind cost of living, the economy, health care, Trump, housing, immigration, and crime. That’s a huge drop in just seven years.

Mike Moffatt: Yeah, I often hear that people don’t care about climate change anymore, that other issues, from affordability to geopolitics, have caused us to forget about the issue, or even worse, consider the idea of fighting climate change a so-called “luxury belief” that we simply can’t afford. But you’ve been looking at some numbers that tell a bit of a different story.

Ipsos just released its annual 32-country survey on climate opinions, and despite inflation, the engagement is still there.

Mike Moffatt: So what are the numbers saying about what Canadians actually believe?

Cara Stern: Just under half of Canadians think our country should be doing more, and 55% agree that if individuals like them don’t act, we’re failing future generations. Clearly, Canadians still care and haven’t given up yet.

Mike Moffatt: Now, this may just be the Gen Xer in me, but it’s one thing to care in the abstract and another thing to actually do something about it. Are we seeing any changes in how people live or what they buy?

Cara Stern: Surprisingly, yes we still are. Ipsos also did a study for a company called Public, Inc. looking at consumer actions.

What they found was that people chose products based on environmental factors more last year than the year before, both in Canada and America.

Mike Moffatt: I find that really surprising given how many Canadians are just trying to get by.

Cara Stern: What really surprised me the most was that income doesn’t predict how sustainably you shop anymore. The most committed, conscious consumers are actually more price-sensitive than the least committed ones. The core group is aged 35 to 54; they have kids, they are university-educated.

Mike Moffatt: That’s not exactly the group I would have guessed before I saw this data. Though, at some level it makes sense—being a parent, particularly of a younger child, it does make someone think about the future of the planet more. You mentioned that more than half of people feel a moral obligation to act.

Cara Stern: Also when you are a parent, I can’t overstate how many plastic things you get in your household. Just so many things coming in all the time that it makes me feel like I need something more sustainable. How much plastic do my kids need to use for two years before they grow out of it and it ends up in a landfill.

Mike Moffatt: So much plastic. So very, very much plastic. You mentioned that more than half of people feel a moral obligation to act, but how does that compare to other years?

Cara Stern: It’s going down. It was about two-thirds in 2021 and it’s been trending down since. It is nice comparing the data over the last two years because I did start this by looking back at the 2024 report, which highlighted how different demographics feel about climate change and how hopeful or hopeless they feel about it all. At the time, the younger you were, the more hopeless you felt about climate change, which I feel reflects our dynamic here.

Mike Moffatt: I think it does. So how does that compare to this year’s report?

Cara Stern: There’s much more consistency across generations now, so fewer people feel like it’s too late to do anything. From most hopeful to least, it goes: Boomers, Millennials, Gen X, and then Gen Z.

Mike Moffatt: Once again, Gen X is lost here in the middle. But it’s not surprising to see Gen Z and Boomers have the biggest spread given how different their worlds have been.

Cara Stern: There’s still a big gender gap where women feel much more optimistic than men do about climate change, and that’s consistent across generations. On average, 21% of people agree there’s no point in changing their behavior anymore because it won’t make a difference, whereas half of Canadians still disagree with that.

Mike Moffatt: This is something I’ve felt a lot about in my career—that there’s always been this downside to climate messaging.

Cara Stern: I can see where that 21% is coming from. I recycle, I bike instead of drive when it makes sense, I chose to live somewhere where I don’t need to drive everywhere, and I try to avoid limited-use plastic despite all the ones that my kids keep bringing in. But then you see the industrial emissions from billionaires and private jets and you feel like you’re so tiny. Individual efforts can feel like they matter so little.

Mike Moffatt: And I’d add that there’s this talking point that Canada is less than 2% of global emissions, so it doesn’t matter what any Canadian does. That’s always bothered me. For example, by any metric, Canada accounted for less than 2% of the activity in World War II, but our contributions in that war are something we’re all proud of, and rightfully so. That’s another kind of messaging I’ve always found problematic.

Cara Stern: That’s interesting. Although, at least Canadians are more optimistic than the rest of the world; only 17% of Canadians think climate change is totally beyond our control, compared to a global average of 25%.

I couldn’t get over how different India was compared to most other countries they surveyed. In India, that number is almost two-thirds of people who think it’s beyond our control, and they’re almost twice as pessimistic as the next most pessimistic country, which was Thailand.

Mike Moffatt: If I’m going to summarize what’s going on in Canada: we have a public that feels fairly hopeful and they’re still shopping their values despite affordability issues, but they’re starting to feel like their individual efforts are too small to matter. So who do we blame for this?

Cara Stern: If you ask many Canadians, there’s a problem at the top. Less than a third of Canadians think our country is a world leader in this fight. That’s not surprising given we just had an election where both major parties promised to cut carbon taxes and where we’re seeing targets on things like EVs degraded. Although I don’t know whether it was ever realistic to have no more gas cars sold by 2035. But half of Canadians want the government to do more, and less than a quarter don’t.

Mike Moffatt: Though, the Gen Xer in me is still somewhat skeptical. Often when I hear people say “governments should do something,” I think what’s typically being said is “government should do something as long as the costs are borne by other people and not by me and my family.”

That said, you pointed out that many Canadians are paying more for sustainable products. There’s at least a cohort of folks who are okay taking a financial hit if it means doing the right thing. But they need to trust that their actions are making a difference. They want detailed data reporting and independent journalism; they want the receipts, and I don’t think they’re seeing it.

Cara Stern: There’s one more survey I wanted to bring up that I found a little more optimistic and this is from Abacus Data. It talked about how nature and the economy can work together.

It found massive support for the government, encouraging businesses to encourage “nature-based practices to improve resilience and stability,” such as reforestation, wetland restoration, and sustainable farming.

Maybe people don’t see that having a direct effect on them, so maybe that’s why they’re okay with it. But at least most Canadians don’t seem to see the economy and the environment as being opposites all the time, which is great, because climate change is not the top issue anymore sadly.

Mike Moffatt: It’s great that so many Canadians don’t see a trade-off between the economy and the environment, because if push comes to shove and the majority feel they have to choose between affordability and climate action, they’re going to choose affordability. In my view, that’s what killed the consumer carbon tax.

Supporters of carbon pricing will point to misinformation, but I think people understood the whole point of the carbon pricing exercise was to make emissions-causing activities more expensive.

Cara Stern: It’s true, although the Ipsos data found that people do still make climate-friendly choices even if they cost more. Although I thought it was interesting that they had some information that they prefer products that emphasize immediate benefits rather than ones far in the future. I definitely think that sacrificing now for longer-term gain was a core part it.

Mike Moffatt: That’s why I think it’s so harmful when we get narratives that the choice has to be between affordability and climate action. Governments should be focusing on policies that simultaneously address both. For example, a couple of years ago, we wrote a report for More and Better Housing Canada on how smart housing policies can simultaneously lower monthly bills and address climate change, so we don’t have to choose between the two.

Cara Stern: How does that work?

Mike Moffatt: There are four big ways. First, we can make homeownership and rent more affordable by cutting building costs and allowing for modern, low-carbon construction methods. Often times we can’t use those in the building codes, so we have to change that.

Second, we can keep property taxes and transportation costs in check by allowing more homes to be built closer to jobs and amenities. We have to build less infrastructure that way, so you don’t have to drive as much if you live closer to where you work and shop.

Third, we can lower insurance and maintenance costs by building sturdier homes in safer areas and avoid building on floodplains. The most expensive home is the one you have to build twice, so let’s not do that.

Finally, we can reduce utility bills with energy-efficient homes and retrofits.

Cara Stern: I love when you can blend what’s good for the environment and what’s good financially. It’s pretty nice when that happens. It means people might actually get on board.

Mike Moffatt: Absolutely.

Cara Stern: Thanks so much for watching and listening. Our producer is Meredith Martin and our editor is Sean Foreman.

Mike Moffatt: If you have any thoughts or questions about building a home on a floodplain, please send us an email to missingmiddlepodcast@gmail.com.

Cara Stern: And we’ll see you next time.

Additional Reading/Listening that Helped Inform the Episode:

Low-carbon, Resilient Homes Improve Housing Affordability

Majorities Say Both Climate Action, Oil & Gas Growth Should Be Top Priorities

• Today, MMI, in conjunction with the Cornerstone Association of REALTORS, released the report, From Cornerstone to Capstone, which provides 15 practical recommendations on how governments can increase the supply of gentle-density housing. The report can be downloaded at the bottom of the page.

• The price of new homes, while down from pre-pandemic peaks, is still out of reach of many potential homebuyers.

• Communities are falling behind their housing supply targets and need a wide range of housing options to support a diversity of needs at an attainable price.

• Gentle density housing, including multiplexes, accessory dwellings, and laneway homes, can create housing options in both new and existing neighbourhoods while maintaining the neighbourhood’s look and feel, as buildings are limited to a maximum of 3-4 storeys and 600 m².

• There are five barriers, in particular, that limit the construction of gentle-density housing: Zoning and approval processes, a lack of regulatory harmonization between municipalities, high development charges, fees, and taxes, and barriers in obtaining construction financing and obtaining sufficient electricity amperage

• As well, current regulatory structures make it cost-prohibitive, and in some cases, outright impossible, to have families purchase the gentle-density home that they occupy, limiting the use of gentle-density to rental.

• Experiences in other jurisdictions, such as British Columbia and Oregon, show that these challenges can be overcome.

• There is a role for municipal governments, along with provincial and federal governments, in creating the conditions to enable attainable, gentle-density homes to be built in new and existing neighbourhoods.

Unlocking gentle-density

Ontario needs more homes to accommodate a variety of family types, and housing remains a top-of-mind concern for Ontarians. Although rents and home prices have eased in many markets in recent years, affordability remains a challenge. Young people, and couples, in particularly struggle to find an attainable home that suits their needs. Twenty years ago, a couple in their late-20s or early-30s could find a newly constructed family-sized starter home for four times their income. Today, it requires nearly twice that, making qualifying for a mortgage a near impossibility.

The lack of attainability has not reduced young people’s desire to own a home, as a recent OREA poll finds that 88% of non-homeowners under the age of 30 in Ontario desire to own a home one day. Unfortunately, there is a shortage of homes that suit their needs at a price they can afford. A lack of supply diversity not only affects the young; seniors currently lack downsizing options that meet their needs in the neighbourhoods they wish to live in.

High land prices, the need for municipalities to use infrastructure efficiently, and the need to create housing options in existing neighbourhoods have led to a demand for gentle-density housing. Gentle-density housing refers to housing options that blend into existing low-rise neighbourhoods while allowing higher unit density than traditional single-detached and multi-detached homes. These include, but are not limited to, stacked townhouses, multiplexes, and accessory dwelling units.

Gentle Density Housing Types

Chart Source: Gentle Density Toolbox

While there is a need for these types of homes, building them in a way that suits the needs of a diverse range of families at a price they can afford is a formidable task. While not an exhaustive list, MMI has identified five barriers as being particularly challenging:

1. Zoning and approvals processes that outright prohibit, or increase the risk and cost, of building gentle-density housing.

2. A lack of regulatory harmonization across municipalities, which limits economies of scale and the use of modern methods of construction.

3. Development charges, fees, and taxes, which make building new gentle-density housing cost-prohibitive.

4. Barriers to obtaining construction financing for gentle-density housing.

5. Utilities making it difficult, time-consuming or expensive to obtain sufficient electrical amperage, particularly for lots with EV charging or homes with electric heat pumps.

A final barrier is the lack of regulatory structures that allow individual units to be owned by their occupant. While this does not prevent homes from being built, it does limit housing options for those who wish to own their own homes.

These barriers can be overcome with smart public policy, but for existing neighbourhoods in particular, they must be implemented in ways that take into account the needs of existing residents, many of whom are concerned about the potential downsides of densification.

Recommendations

Increasing the availability of attainable gentle-density housing won’t just happen; it will require a series of policy reforms. It will require tackling the five largest bottlenecks to building gentle-density housing. Additionally, to ensure that gentle density works for all family types, reforms are needed to allow occupants to purchase gentle-density units rather than just rent them.

These challenges must be addressed in a way that is sensitive to local concerns, while also respecting Canada’s division of powers. The tools needed are split across multiple orders of government. To break down these barriers, we have provided a list of 15 recommendations, split evenly across three orders of government.

Municipal recommendations

Recommendation 1: Institute a series of zoning reforms to gradually transition to full form-based zoning for both existing and new low-rise neighbourhoods.

Recommendation 2: Reduce or eliminate minimum parking requirements to facilitate the creation of additional units on existing lots.

Recommendation 3: Create forgivable loan or grant programs for the construction of Accessory Dwelling Units (ADUs).

Recommendation 4: Reform development charges to facilitate the creation of gentle density.

Recommendation 5: Work with local utility providers and electricity distribution companies (LDCs) to ensure that gentle-density projects can easily and inexpensively access necessary infrastructure, including appropriate levels of electricity, water, and wastewater services, and to adopt measures similar to Toronto Hydro’s Multiplex PowerPlay pilot.

Provincial recommendations

Recommendation 6: Harmonize rules and remove barriers to gentle-density housing by instituting a series of zoning reforms to gradually transition to full form-based zoning for both existing and new low-rise neighbourhoods, and by amending the building code.

Recommendation 7: Follow the lead of jurisdictions such as British Columbia and Oregon to create simple pathways to allow individual, low-density housing units to be owned by their occupants.

Recommendation 8: Reform development charges to provide financial relief for new development, including exempting development charges from PST and land-transfer taxes.

Recommendation 9: Follow the lead of British Columbia and provide a full exemption on the land-transfer tax for newly constructed homes valued under $1.1 million.

Recommendation 10: Extend the enhanced HST rebate on new owner-occupied housing beyond one year.

Federal recommendations

Recommendation 11: Create construction financing vehicles for gentle-density housing.

Recommendation 12: Increase the number of gentle-density options in the CMHC Housing Design Catalogue.

Recommendation 13: Implement the 2025 campaign promise to reintroduce the MURB program and ensure it is designed in such a way that it can be used to create gentle-density housing.

Recommendation 14: Tie future federal housing and infrastructure funding to provinces and municipalities to the adoption of pro-gentle density housing reforms.

Recommendation 15: Reform the GST to lower the cost of housing construction, including exempting development charges from GST and extend the enhanced HST rebate on new owner-occupied housing beyond one year.

Download the full report below:

Cornerstone To Capstone Apr 23

2.66MB ∙ PDF file

Download

Download

But just as conditions improve, some governments are expanding rent control.

In this episode, Sabrina Maddeaux and Mike Moffatt unpack new CMHC data, why increased construction is putting downward pressure on rents, and whether those declines will continue. They also dive into Manitoba’s major rent control changes — and the debate over whether such policies protect renters or risk reducing future supply.

If you enjoy the show and would like to support our work, please consider subscribing to our YouTube channel. The pod is also available on various audio-only platforms, including:

Apple Podcasts

Spotify

Podbean

Below is an AI-generated transcript of the Missing Middle podcast, lightly edited.

Sabrina Maddeaux: Rents across Canada are at their lowest level in three years, and vacancy rates rose from 2% to 3% last year, according to the CMHC. These lower rents and increased vacancy rates are due to a combination of slower population growth and an influx of new supply into the market. While these reductions have brought relief, average rents in Canada are still over $2,000 a month, causing hardships for low and median-income Canadians.

Mike Moffatt: So, Sabrina, you mentioned this CMHC report. Can you give us a little bit more detail about what they found?

Sabrina Maddeaux: Of course. Back in December, they released their 2025 Rental Market report, which highlighted the increased options for renters. What it found was that cities saw more empty apartments because a record number of new buildings were finished, just as population and economic growth slowed down. Because there were fewer people looking for homes, landlords had to offer deals like free rent and signing bonuses to get tenants to move in.

Mike Moffatt: I find all of this really interesting for a few reasons. The biggest of which is, it doesn’t matter what policy ideas we talked about on this show, from HST rebates, new housing, or other programs to get more housing built, we’ll immediately get pushback that none of those benefits will flow back to buyers or renters, that developers or land owners, or what have you, will capture all of the benefits.

But here’s a clear case of where there were a number of policy changes, including ones like removing the HST from purpose-built rental construction that led to increased homebuilding, increased options for renters, and — surprise, surprise — decreased rents.

In other words, markets work. And it’s not just that they’re lowering rents, but they’re also offering other incentives to have to compete for renters. And that’s how it should be in a healthy competitive market. Sellers should have to find novel ways of attracting and retaining customers, and they are.

Sabrina Maddeaux: We also get a lot of comments stating that increasing immigration, whether it be permanent or temporary programs like temporary foreign workers and international students, has no impact on the housing market. That it’s all just “greed” or “financialization”. But here we have the CMHC clearly stating what should be obvious: When you increase the size of the population without increasing the infrastructure to support that growth, housing becomes scarce, and guess what? Prices go up.

Mike Moffatt: I know we’ll no doubt get emails on this, so I’d just like to point out that it is not the role of international students or temporary foreign workers to ensure that Canada has a functioning housing system. Rather, it’s the role of policymakers to ensure alignment between immigration policies and housing, infrastructure and health care policies, which clearly they did not do.

Sabrina Maddeaux: Do you expect these rent reductions to continue?

Mike Moffatt: Yeah, I do, though, like anything in real estate, the answer is always location, location, location. So how this is going to play out will differ across the country and across housing types. But we need to consider both demand and supply.

On the demand side, population growth is going to be flat until 2028. The economy is still rather weak, so that’s going to depress demand. On the supply side, there are currently around 200,000 rental units under construction in Canada, which will come online at some point. A decade ago, there were fewer than 50,000. So that supply-demand mismatch is going to put a lot of downward pressure on prices.

Sabrina Maddeaux: And the total number of non-permanent residents has been falling in Canada as part of the government’s plan to have this group represent less than 5% of Canada’s population by the end of 2027. But what I’m wondering is, what happens after that? Will those numbers start to climb back up, and will immigration targets start to rise again? And, what could that eventually mean for rents?

Mike Moffatt: Yeah, I wish I had a good answer to that because that’s honestly the biggest question right now in rental development. I’ve noticed that most of the developers who are bullish on rentals are still making purpose-built rental investments.

They’re the ones who are optimistic that the federal government will loosen up immigration restrictions. And on the other side, you’ve got developers who are pulling back. They’re saying, “We’re not going to build any purpose-built rental for a while.” Those are the folks who tend to believe that Canada’s days of a growing population are over. So that really determines the types of investments that companies are making. They’re really making a bet on the future of immigration policy.

Sabrina Maddeaux: Yes. Hard to see which way it will go, but I think it’s going to be very politically difficult for a government to open up the immigration floodgates again within the next 5 to 10 years. Long term, that might be different, but we have a lot to fix first.

Mike Moffatt: I would tend to agree with that as well. I just look at the polling from Ipsos or Abacus or others, and Canadians are still pro-immigration, but the proportion of people who are saying that the numbers are too high are still much larger than those who are saying it’s too low.

Now, there are other factors, of course, other than immigration that determine what’s happening on the rental housing market, and one is the future of other policies, such as rent control policies. Now, I know I’ve asked Cara this before on past episodes, but I don’t think you and I have ever discussed it.

So, as someone who has rented more recently than I have, what is your take on rent control?

Sabrina Maddeaux: We haven’t discussed it before, and I know the broader argument that Cara makes is that rent control contributes, obviously, to a free market, and I understand that in a broader sense.

Even for myself, rents are so high. Even when rents get raised every year for just the inflation amount, about 2%, that’s still a significant new total on your bill. And then I look at when homeowners see property tax increases that equal way less than the increase to my rent just based on inflation every year, and they freak out, it’s an interesting gap there.

Even when I’m looking for apartments - when I looked for my last apartment, and I’m in one now that I’ve been in since 2020 — I didn’t look at newer builds because in Ontario, rent control doesn’t apply if first occupancy happened after 2018. So there’s also this divergence in the market where rent control applies in some buildings but not others, and renters are very well aware of that.

If my rent went up 20% next year, I would not be able to afford to live in my place.

Mike Moffatt: Yeah, and I think all that’s really fair, and I think I tend to have a more nuanced opinion than most economists.

Most economists will look at the research and say rent control, on average, actually pushes up rents because it decreases the supply, and I think all of that’s true. On the other hand, you could say, “Look, a lot of things matter and yes, the overall level of rent matters, but so does volatility and so does certainty.” So I do think there is a role for government to regulate these things. I think the details of those regulations matter. I think we need to have balance.

So, I’m giving the economist a two-handed answer here, but I don’t think it’s all that black and white. And I definitely agree that renters can be in a more difficult situation, more ripe for exploitation, so having rules that protect their interests, I think, makes a great deal of sense.

Sabrina Maddeaux: We’re in a tricky spot because I think overall rent controls probably do prohibit new supply coming online. But when we have so little supply right now, it’s like the chicken before the egg situation in terms of kicking renters potentially out of their places effectively by raising rents.

But in our group chat, you had mentioned some recent changes to rent control that the province of Manitoba is about to implement. What’s going on there?

Mike Moffatt: So the changes are all part of the provincial government’s Bill 13, which they call the Residential Tenancies Amendment Act. Which the government itself calls it the largest expansion to rent controls in decades, and the scope of the changes are pretty wide, and many of them aren’t that controversial. But overall, I don’t think this is being hyperbolic. I think the government is right that this probably is the biggest change in Manitoba rent control rules in decades.

There are a couple of changes that are worth mentioning. So the first is, right now in Manitoba, units that are at least 20 years old and under $1,670 a month in rent can have their rent increases capped at the rate of inflation, unless a landlord can obtain what’s called an “above guideline increase” or an AGI approval. Now, what the government’s doing here is increasing that threshold from 1670 to 2000 a year. So, higher-end units are now going to fall under the rent control rules. And more controversially, however, the government is also just changing the AGI rules themselves.

Sabrina Maddeaux: What changes is the Kinew government making there?

Mike Moffatt: The most common reason for landlords to be given an AGI waiver is that they invested in upgrades, new windows, appliances, that kind of thing. The government is changing the eligibility criteria for these expenses and how they are treated in AGI calculations. What it essentially boils down to is that it roughly cuts in half the amount landlords can raise rents in response to these investments.

Now, supporters of the Kinew government’s changes claim that the old AGI rules were overly generous to landlords, and that they encouraged gentrification — that a landlord could make a bunch of expensive upgrades, jack up the rents and kick out lower-income tenants and get higher-income ones instead.

Sabrina Maddeaux: Yeah, it’ll be interesting to see how this plays out. I’m curious how many landlords actually invest in these types of upgrades to begin with, versus those that just use them to raise rent. I don’t know that in my experience, I’ve seen landlords necessarily invest in meaningful upgrades in places, so maybe this is a good policy for Manitoba, but we’ll have to see how it plays out.

I think the biggest thing, though, for renters, is it’s not only about pure price. It’s about stability, which you mentioned earlier, and when you don’t know what your rent could be the next year or even three years from now, you don’t know if you’re going to be able to live in the same place or even the same community. And that’s very difficult to address in policy. But one of the biggest reasons, I think, why young people want to own is not just financial reasons, but the ability to actually plan their life. Especially when you want to have kids, to be like, “Oh, I can live in this place longer term. I can live in this community, the school district.” And right now, renters don’t have any of that, so it’s very psychologically difficult.

Mike Moffatt: I would agree with all of that, but I would also suggest that a lot of times, all of the new sort of taxes and rules that we put on any kind of businesses increase their costs faster than inflation.

So, I worry about the sustainability of these things, where the costs that a property owner might have might be going up 3 or 4 or 5% a year, but we’re capping their rents at like 1.8%.

So I do understand that the Kinew government, like any government across Canada, is looking at the polling data, seeing how important affordability is to people and trying to do something about it. But I do also worry that it’s going to make it tough to operate these buildings and make those kinds of investments.

Governments across Canada talk about wanting to attract more investment, but at the same time, put in rules that discourage investment. So I worry that this may be one of those situations.

Sabrina Maddeaux: One aspect that’s interesting to me is that I think you have two buckets of landlords. You have developers who create purpose-built rentals, and they have to cover their costs month to month, year to year. And then you have your more individual investors who are in this for the long term. And in that case, I think there’s this misconception that the renters should be paying all their mortgage and all their costs, and the landlord should just have the benefit of eventually being able to cash out 30 years in the future and make a huge amount of money, while not putting any costs in from their side during that time period.

Obviously, a landlord needs to offset some of their costs, but I’m curious about your thoughts on this. Should it be the renter’s role to offset the mortgage, the upgrades, everything that a landlord spends over time?

Mike Moffatt: I feel like this is a wacky Wednesday episode where you’re being far more progressive than I am, and I’m taking more of a conservative position here, but I absolutely love that.

I tend not to think of it in terms of responsibility. I think in terms of market conditions and things like that.

I go back to the beginning of this discussion, and I think the role of government is to try to create the market conditions that create affordability, rather than saying there’s some kind of moral or legal responsibility for tenants to pay the landlord’s expenses.

As long as we have a well-functioning market that we have incentives to create new supply, then I think the system works here. So we’ll have to see how this goes.

I don’t love these new rules. I don’t mind the increasing of the cap from $1,670 to $2,000, but I do worry about these AGI changes. I do worry it’s going to make it harder to make those investments, particularly to make those climate investments.

I do take your skepticism around whether or not landlords or property owners are actually making those investments - totally fair point. But I do worry that this is going to restrict their ability to do so. And I do worry that it’s going to reduce investment in upgrading existing buildings.

Sabrina Maddeaux: Thank you, everyone, for watching and listening. And to our amazing producer, Meredith Martin, and editor, Sean Forman.

Mike Moffatt: And if you have any thoughts or questions about policies in Manitoba or Winnipeg, please send us an email to missingmiddlepodcast@gmail.com.

Sabrina Maddeaux: And we’ll see you next time.

Additional Reading/Listening that Helped Inform the Episode:

2025 Rental Market Report

NDP plan to expand Manitoba rent control protections

Big rent hikes — a made-in-Manitoba problem

Rent control killing jobs: landlords

Bill 13 - THE RESIDENTIAL TENANCIES AMENDMENT ACT

Funded by the Neptis Foundation

Brought to you by the Missing Middle Initiative

In this episode, we discuss what’s behind the drop. Is social media really to blame? Or is the bigger story about expectations, affordability, and what the report calls “option freedom”: the ability to make meaningful life choices. We dig into why the decline is concentrated in English-speaking countries, how the World Happiness Report actually measures well-being, and why housing, opportunity, and delayed milestones may be driving a generational sense that the promised path to the middle class no longer works.

If you enjoy the show and would like to support our work, please consider subscribing to our YouTube channel. The pod is also available on various audio-only platforms, including:

Apple Podcasts

Spotify

Podbean

Below is an AI-generated transcript of the Missing Middle podcast, lightly edited.

Cara Stern: Canadians are now experiencing their midlife crisis in their early 20s. Well, sort of.

Happiness typically follows a U-shape in your life. Young adults are quite happy, but get less content as they get older. Life satisfaction would bottom out when someone hit middle age, with 47 often seen as the unhappiest age, and when midlife crises were at their worst.

Mike Moffatt: As someone who just turned 49, I’m glad to hear it’s all uphill from here.

Cara Stern: Yeah, over time, happiness would increase as someone entered their golden years. But that’s not happening anymore in Canada.

This isn’t just happening to Canada, though. We’re seeing the same kinds of drops all over English-speaking countries like Australia and the United States, but we’re not seeing it in many other countries. Youth happiness is on the rise in Latin American countries such as Mexico and Costa Rica. Although the headlines about this report mostly focused on social media causing this drop, those countries also use social media a lot. So that can’t be the only reason.

Mike, I remember a couple of years ago, you had a post that went viral about the World Happiness Report. At that time, it showed young Canadians were particularly unhappy, and a lot of the pushback at the time said these results are just a blip. Young Canadians, they’re not really that unhappy. But the 2025 version of the report was released last month, and somehow, the youth happiness results are even worse than last time.

Mike Moffatt: Yeah. That’s right. Two years ago, when the report was released, young Canadian adults, those between the ages of 18 and 30, were found to be the 58th happiest in the world. Needless to say, this caused a great deal of controversy, and if someone like me stated this stat, it was taken as a sign that they either hate Canada or they hate the Trudeau government or both, and I exaggerate there, but not by much. There is a pretty tense online debate.

Cara Stern: Canada’s results are pretty depressing. Back in 2011, when the first World Happiness Report was published, Canada was ranked fifth in the world, behind only Denmark, Finland, Norway and the Netherlands, with an overall score of 7.5. Today, those four other countries are still in the top ten, but Canada has fallen all the way down to 25th overall, and our score has fallen by nearly a full point.

We should talk a little bit about this report and who put it together. How do they collect the data?

Mike Moffatt: Yeah. So this report was born out of a United Nations initiative to both measure and understand the factors that contribute to well-being. Now we have all kinds of indices of economic activity and human development, such as educational attainment, inequality, life expectancy, and so on, but all of those indirectly measure how satisfied people are with their lives. So the goal of this project is to directly measure how people feel about their lives, but also to understand why.

Every year, a report is released on March 20th, which is the United Nations International Day of Happiness. Now, the report relies heavily on an initiative called the World Gallup Poll that surveys adults from all over the world. The question for the poll that is relevant to the World Happiness Report rankings is as follows:

Cara Stern: So before, when Canadians were at 7.5, that meant they were on step seven and a half of the ladder, and now they’re on step six and a bit of a ladder, right?

Mike Moffatt: Exactly, yeah. We’ve gone from about 7.5 on the ladder down to about 6.7. And these results on this ladder are then compared to a number of other data sets and polling results. Things like GDP per capita to income inequality, to questions like, “Have you donated money in the last month,” to see which factors are correlated with happiness and which aren’t.

So I know many scoff at the idea of actually asking people how they’re doing rather than inferring it from economic data. I think there’s value to both approaches, and as it turns out, they lead to similar, though not identical, results.

Cara Stern: The youth happiness results are actually pretty depressing, with Canada falling all the way to 71st, which seems unlikely at first, but it makes more sense when you look at how the poll question is worded. The question asks whether you are currently living the best possible life for you, not the best possible life in the world, or how you’re doing compared to a billionaire financially.

You’re not being asked to compare your life to someone else’s, but rather how your life compares to how well you could be doing. And that explains a lot of this.

There’s a book called Engineering Happiness: A New Approach for Building a Joyful Life, and in it, the authors develop something they call the fundamental equation of happiness, which defines happiness as the difference between reality and expectations.

Mike Moffatt: Yeah, exactly right. And I think that’s what people don’t get about this report. They’ll look at it and see that young people in Costa Rica are much happier than those in Canada. Those folks will scoff at the idea, and they’ll dismiss this whole exercise.

Cara Stern: You mentioned earlier that the report examines a number of other factors and rates countries on those factors. Looking at Canada’s ratings, it looks like a bit of a mixed bag because we do well on some indicators — like we’re 18th for GDP per capita, 21st for healthy life expectancy — but then we’re at 42nd for inequality and somehow 48th overall for freedom.

That one confused me. How are we 48th for freedom?

Mike Moffatt: Well, the definition of freedom is really important here. It’s not freedom in the sense that the government is preventing you from doing something, but rather is based on the concept of option freedom. That is, do you have options? Do you have the resources to make decisions that are in your best interest, or is your life determined by factors outside of your control?

Cara Stern: Okay, so it’s less about civil liberties and more about options of whether you’re able to control your destiny in terms of being able to own a home or move to a more expensive city, maybe afford to have children before you’re 35, and so on.

Mike Moffatt: Yeah, I couldn’t have said it better myself. And in that sense, there is no question that young Canadians today have less freedom than my generation had 20 or 25 years ago.

Cara Stern: As I mentioned, the headlines on this report focused on the role of social media and how it’s making young people unhappy. And the report has a lot of evidence to back that up, but the relationship isn’t this straightforward relationship. Yes, heavy social media use, specifically more than 2.5 hours a day, is linked to lower life satisfaction and higher rates of depression and anxiety, particularly for young women.

But that doesn’t mean you should just quit social media. The people who reported the highest well-being were actually moderate users, around an hour a day on average.

Mike Moffatt: Yeah, and what I found particularly interesting is how much youth happiness has cratered across the Anglosphere. Like it’s not just a Canada problem. Australia, the United States and the U.K. are also experiencing large declines in youth happiness. However, we’re not seeing the same relationship between youth happiness and social media use in other countries, including countries where social media use is really quite heavy.

Cara Stern: The authors think part of it might explain the Anglosphere pattern, specifically, which platforms are dominant in those countries. So there are the passive algorithm-driven platforms like Instagram and Twitter, which seem to be the ones most strongly linked to worse mental health outcomes.

Mike Moffatt: And remember, if you like our TikTok videos, please like and subscribe. It would help us out a lot.

Cara Stern: Just don’t spend two hours a day watching our videos, and you’ll be fine.

Then there are social media platforms that are more communication platforms. Those are ones that are like WhatsApp, Facebook Messenger. Because those require more active engagement, they’re therefore a more curated experience, and they appear to have a neutral or maybe even a positive relationship with mental health.

There might be a way to regulate social media to try to help address Canada’s youth happiness decline. Australia is trying it now with a new social media ban that came into effect in December, focusing mostly on those passive social media platforms.

Mike Moffatt: There probably is a role for improved regulation of social media, though I worry we may end up doing more harm than good.

Cara Stern: Yeah, if we could fix it, that would go a long way. As we say all the time on this podcast. People entering adulthood today like they’re playing by totally different rules. So the game plan we’ve given them just doesn’t work, and that’s because of a series of policy choices, not because kids today are doing it wrong.

We just didn’t build enough homes, especially in areas where people want to live, especially where they can access jobs.

So we shouldn’t be surprised that people who were promised a certain kind of life and can access it are unhappy. The Gallup question asks if you’re living the best possible life for you.

Thank you so much for watching and listening. Our producer is Meredith Martin, and her editor is Sean Foreman.

Mike Moffatt: If you have any thoughts or questions about why it’s actually okay to spend three hours on our TikTok feed, please send us an email to missingmiddlepodcast@gmail.com.

Cara Stern: But only our TikTok feed! See you next time.

Additional Reading/Listening that Helped Inform the Episode:

World Happiness Report 2026

Canada ranks 25th out of 147 countries in the 2026 World Happiness Report - The Globe and Mail

First, I would like to congratulate the federal government on its recent agreements with the province of Ontario to provide a full HST rebate on homes under $1 million and to cut development charges by up to half. The combined impact of these moves will cut the cost of new homes by 15-20 percent, make new homes competitive with resale homes, increasing housing starts. Since these are temporary measures, the Missing Middle Initiative encourages all governments to use this time to extend them to other provinces and enact further reforms to drive down the cost of building new homes.

Earlier this year, the CMHC released projections showing that housing starts will fall in each of the next three years. The HST and DC reforms will help reverse that trend, but they are insufficient to reach the government’s 500,000 annual housing start target. We would encourage the federal government to take further action, such as implementing the MURB reforms promised during the 2025 election. We would also encourage the government to develop a goal, not just a target, to address the middle-class housing crisis.

I am here to discuss Bill C-20 and Build Canada Homes, which can be an important piece of achieving the government’s housing target. We believe there is merit to BCH’s approach of using federal land to build housing that the market would not, while simultaneously using government procurement as a tool to drive innovation.

The Missing Middle, however, has significant concerns around implementation and transparency. BCH lacks a clear goal, lacks targets, and lacks key performance indicators and accountability measures. The public has not been told how many homes the program will complete, what types of homes, what the rents and prices will be, or over what time frame. I can’t tell you five years from now whether BCH was working, as there is no benchmark for success. That is a problem.

Our team is also concerned about the lack of transparency regarding the unit mix to be created and that those homes will not meet the needs of larger families.

In 2021, there were roughly 300,000 households in Canada with five or more persons who rented their homes. Over half of this group lived in unsuitably small housing, according to the federal government’s National Occupancy Standard. And of those approximately 150,000 families living in unsuitable housing, 78% needed a home that has four or more bedrooms to meet the federal government’s own standard. Despite this, we do not know what proportion of homes built by BCH will be large enough to suit these families. But what we do know is concerning.

In BCH’s Investment Policy Framework, project proponents are encouraged to “leverage the [CMHC’s] Housing Design Catalogue” in their proposals. However, in that design catalogue for Ontario, only 1 of the 21 units has four bedrooms, with 16 having two bedrooms or fewer. This leaves us concerned that BCH will build few homes that are suitable for larger families, as BCH is encouraging the creation of smaller homes. We would encourage the government to provide greater transparency regarding the type and size of the units to be created, and to not forget that households come in all shapes and sizes, including multigenerational families.

Thank you for your time.

In this episode, Sabrina Maddeaux and Mike Moffatt break down what productivity actually means, why it matters for wages and living standards, and why the usual policy playbook has failed to deliver. They explore how red tape, risk aversion, and lack of competition are holding Canada back, and why constantly adding incentives may be part of the problem.

If we already know what drives productivity, the real question is not what more we can do. It is what we need to stop doing.

If you enjoy the show and would like to support our work, please consider subscribing to our YouTube channel. The pod is also available on various audio-only platforms, including:

Apple Podcasts

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Below is an AI-generated transcript of the Missing Middle podcast, lightly edited.

Sabrina Maddeaux: Canada has a productivity problem. The word productivity is thrown around a lot in economic circles, but to be clear, what it means is how much value each worker creates in a given period of time. So, if Mike and I work at a coffee shop and I serve 30 customers coffee in an hour and Mike only serves 10, I’m a lot more productive than him - 200% more productive.

Mike Moffatt: But the key idea here is that it’s the total value of outputs relative to inputs that matters. So you can increase value by increasing the number of coffees you produce in an hour. But you can also increase it by increasing the value of each coffee. So perhaps my coffees have fancy art that customers are willing to pay more for.

There are many different measures for how productive a country is, with the most basic being a simple measure of labour productivity, which takes the total annual value of everything a country produces, both goods and services, divided by the total number of hours worked across a country, and this measure is known as Real Gross Domestic Product or Real GDP per hour work.

This measure is vital because it describes the amount of wealth a country is generating each year, with that wealth then distributed to firms, workers and governments to pay for things like health care and education. So when productivity is increasing, companies are growing, new firms are created, which causes competition for workers, which drives up wages.

Overall productivity doesn’t measure how that income is distributed across society. Much of it could be going to the 1% or some other group. But generating that wealth is necessary to have high middle-class incomes and robust social programs. Even the most ardent Social Democrat realizes that a country can’t have wealth redistribution if it isn’t generating wealth.

Sabrina Maddeaux: Recently, there was a heated discussion on social media about why using GDP per capita to measure Canada’s labour productivity is an unfair metric because it doesn’t take into account things like the fact that we live longer than Americans and the United States has more inequality than Canada. We got into this debate on our recent episode on How Canada Fell behind Alabama, and we’ll link to that in the show notes.

Now, GDP per capita isn’t a perfect metric, but it’s the one everyone uses. And today I want to focus on why we have been falling so far behind for so very long. This line by Charles Lamman from a recent Globe and Mail column really struck me. He wrote, and this is a quote:

What’s your take on that?

Mike Moffatt: Yeah, I totally agree that Canadian productivity has been falling behind for years, and that’s just a fact. Now, there is a caveat here. There are many competing definitions and measures of productivity, i.e. GDP per capita, GDP per hour worked, and a whole host of others, but they all basically say the same thing.

We’ll include a graph for our YouTube audience, but for our listeners, it compares the labour productivity of all G7 countries, plus Australia, for the period covering 1995 to 2023, and Canada is at the bottom. We’re only ahead of Japan.

I find the media discourse on this topic incredibly frustrating, because every other day there’s some op-ed about how Canadian policymakers need to focus more on productivity without any kind of indication of what they should be doing. Like, there’s some magic productivity button in the Prime Minister’s office, and he just needs to push that button harder and bang, we’re all more productive.

Governments have been implementing pro-productivity policies for decades, so it’s not like they haven’t been trying, but rather that their efforts haven’t caused much of an improvement. And if anything, some of them may have even been counterproductive.

Sabrina Maddeaux: Like what?

Mike Moffatt: Well, back in 2011, Don Drummond wrote a well-known piece called Confessions of a Serial Productivity Researcher. We’ll link to that in the show notes. And in the piece Drummond writes:

The playbook of things that governments did included signing free trade deals like NAFTA, cutting corporate income tax rates, eliminating capital taxes, increasing depreciation rates, eliminating the deficit (at least temporarily), reducing government debt (at least temporarily), introducing inflation targeting, and so on. And while these policies impacted the Canadian economy and society, for both good and bad, our productivity performance actually got worse.

Sabrina Maddeaux: Now that’s a long list, but there is a notable omission from your list, and that’s cutting red tape. There’s too much of it. And as part of that, too much deference to special interest groups that often block development and projects going forward, which could increase our productivity.

And as we’ve mentioned many times on this podcast, Canada is an incredibly difficult place to get anything built, from housing to pipelines to high-speed rail, which ultimately harms our productivity. The ability of people to live close to where they work and travel efficiently within a country, or switch jobs, increases worker productivity. And although these things do get discussed in headlines and policy circles, nothing seems to change.

Mike Moffatt: Yeah, that’s exactly it. And I think Canadian governments have been asking the wrong questions entirely for the past 40 years. They always ask: What could we do to increase productivity? And they wind up with ideas like worker training initiatives or lending programs for small businesses, or shiny new tax provisions. And to be clear, some of those are actually really decent ideas. So we should consider them, but governments never seem to ask the question: What could we stop doing to increase productivity?

And I think that second question is more important because…

If you want to see a big jump in productivity and innovation, look to Ukraine. They have no choice but to become more productive, to find creative solutions to labour shortages, to find ways to integrate disabled workers and older workers into the labour force, as they’re facing an existential threat.

Now, to be clear, I’m not suggesting Canada start a war with a larger opponent, but I do think that there are lessons there. That instead of trying to incentivize companies to innovate, we should be opening them up to foreign competition. We should knock it off with all these temporary foreign worker schemes, and instead have governments focus on making a regulatory system that works better. Addressing the issues at the CRA, which you’ve written about a lot, so businesses can focus on their business rather than navigating semi-functional government programs and processes.

Sabrina Maddeaux: You’re so right. And you hear in a lot of conservative circles, especially in the States, that welfare for individual workers is bad for productivity. I’ll say corporate welfare is very bad for productivity because it says you’re too big to fail. There’s no actual risk. So why actually invest in innovation or your workers or make changes, be bold? Those sorts of things that actually lead to better productivity.

And this all gets to the idea that incentives can’t force companies to invest in increasing productivity; just lowering corporate taxes or depreciation rates can create the conditions for companies to reinvest, but they can also just increase after-tax profits, which they then distribute back to shareholders through increased dividends and share buybacks.

Governments keep saying that they want more productivity, but the second companies start to feel the pressure to make those investments, governments panic, step in and ensure they don’t have to.

How do we actually fix this?

Mike Moffatt: Well, as you say, it all comes down to competition and creating a regulatory environment that allows companies to build things and make investments. And then when it comes to investments in productivity, fear is a better motivator than greed. And I think that Canada’s business culture also needs to change, and increased competition can help with that.

For over a decade, I worked as a regulatory consultant in the chemical industry, mostly in consumer products. I spent a lot of time speaking at conferences, working with clients, and working with a lot of companies that produced aerosol products. So everything from brake cleaners, for a car, to hair spray. And anyone who’s ever worked in the consumer packaged goods industry knows that it is almost impossible for a small Canadian manufacturer to get their products on retail shelves in this country.

I used to advise my clients that the fastest way to sell 10,000 units to one of the big Canadian pharmacy chains - which I won’t mention by name because I like not being sued - is to sell 100,000 units to an American chain like Walgreens or CVS first. Because big Canadian retailers won’t buy from small Canadian companies until they’ve proven themselves in the U.S. first, because there’s a massive amount of risk aversion up here that you don’t see in the U.S.

One of the nicest compliments I ever received was in South Carolina. I was having dinner with a number of VP’s from a company headquartered in the South. We were discussing expanding a deal we had finalized a few months earlier, when that company had switched from one of our Canadian competitors to working with us. And the thing they told me, which really warmed my heart, was that ‘We like working with you, rather than them, because you think like a Texan.’ It was cliché, but I think he genuinely meant it.

There is a real aversion in Canada to trying new things, to taking risks and to thinking big.

That’s my take, I’d love to get yours.

Sabrina Maddeaux:

And we’re seeing that pattern repeated across many industries.

Certainly, fear needs to come back into the reality of doing business in Canada, not in a negative way, but in a way that inspires people to take risks that they otherwise feel very comfortable, too comfortable not taking.

Thank you so much, everyone, for watching and listening. And to our producer, Meredith Martin and our editor, Sean Foreman.

Mike Moffatt: If you have any thoughts or questions about how to get beauty products onto store shelves, please send us an email to the MissingMiddlePodcast@gmail.com.

Sabrina Maddeaux: And we’ll see you next time.

Additional Reading/Listening that Helped Inform the Episode:

StatCan: Labour Productivity and Related Measures

The Globe And Mail: Productivity is an urgent problem for Canada. The response? A 15-year study

Confessions of a Serial Productivity Researcher

Canada: Q4 Productivity Slips Under the Weight of Tariffs and Uncertainty

From Bad to Worse: Canada’s Productivity Slowdown is Everyone’s Problem

The Globe And Mail: Eighteen ideas on how to kickstart the Canadian economy

What Is Canada’s Productivity Performance and How Does It Compare to Other Countries?

Towards An Inclusive Innovative Canada

The Secret to Ukraine’s Remarkably Resilient Labour Market

Out of Nowhere: How Canada Fell Behind Alabama

Funded by the Neptis Foundation

Brought to you by the Missing Middle Initiative

• Despite recent declines in resale prices, home price-to-income ratios are double what they were in 2004, and in much of the country, incomes have not kept pace with rent growth over the past two decades.

• The middle-class housing crisis leads many to ask, “What is the #1 thing that governments are getting wrong on middle-class housing?”

• In MMI’s view, ineffective and often counterproductive housing policies stem from governments lacking a clear goal.

• Targets like reaching 500,000 housing starts per year aren’t goals. They are a means to an end, not an end in themselves. Young middle-class Canadians want a home they can afford, not for the country to hit an arbitrary start target.

• Governments need to define a clear, housing goal for young, middle-class Canadians, which they can use as the basis for policy.

• We would recommend the following housing goal for Canadian governments: A Canada where middle-class individuals in every city don’t have to choose between their career, their family, and their home. Young, middle-class families must have the financial capability to grow into a family of up to five members; be able to access affordable, sustainable, new, but basic, housing suitable for a household of that size, whether renting or owning; and maintain the financial security to have up to three children before age 40 in any community in the country. Governments must recognize this need and align economic, policy, and regulatory levers to achieve this goal.

You can’t fix a problem if you can’t define success

At MMI, we often get asked, “What is the #1 thing that governments are getting wrong on middle-class housing?” Our answer, somewhat surprisingly, isn’t directly about policy. Rather, we believe the #1 problem of middle-class policy is that governments have no idea what they’re trying to accomplish. They have not set a goal, and they don’t know what success looks like.

Governments set targets, but these targets are objectives, not goals. Increasing housing starts to 500,000 a year is a means to an end, not an end in and of itself. And even as an end, it is a pretty weak one. What type of homes? Where? At what price?

If I’m a young person, my concern is not how many housing starts Canada has in a year. It’s whether I’ll be able to afford one, in the community I wish to live in, and to start a family with children if I so choose.

What Canada needs is a middle-class housing goal, in the GOST Framework sense; a qualitative, long-term vision of success that guides decision-making. So let’s work on that.

Figure 1: GOST Framework

Source: Kent State University.

Creating a true middle-class housing goal for governments

We can start developing that goal by adapting the Missing Middle Initiative’s North Star:

Missing Middle Initiative’s North Star: A Canada where every middle-class individual or family, in every city, has a high-quality of life and access to both market-rate rental and market-rate ownership housing options that are affordable, adequate, suitable, resilient, and climate-friendly.

We define each of the terms in our North Star, such as “high-quality of life” and “middle-class,” here.

This North Star works for MMI’s purposes, but it would be a bit vague as a goal for Canadian governments to create housing affordability for young, middle-class Canadians. We can correct that with a few additions and some rewording, as shown below:

Young Middle-Class Housing Policy Goal: A Canada where middle-class individuals in every city don’t have to choose between their career, their family, and their home. Young, middle-class families must have the financial capability to grow into a family of up to five members; be able to access affordable, sustainable, new, but basic, housing suitable for a household of that size, whether renting or owning; and maintain the financial security to have up to three children before age 40 in any community in the country. Governments must recognize this need and align economic, policy, and regulatory levers to achieve this goal.

The ten principles behind a young, middle-class housing policy goal

We’re not convinced this is the best possible construction of the goal; there are undoubtedly tweaks that would improve it. However, each word was carefully chosen and is based on ten principles.

1. Middle-class housing policy should be centred around freedom of choice. It is not about telling middle-class people how to live or whether they should have (or not have) children, but rather about not being priced out of options that previous generations could take for granted. This includes:

   1. Young, middle-class people should be able to afford to live on their own and start a family if they wish.

   2. Young middle-class people, or couples, should not be priced out of their community, nor should they be blocked from moving to one because of housing costs.

   3. Young middle-class people should have a range of entry-level rental and ownership options, not be limited to either ownership housing or rental housing. Both play a vital role in our housing ecosystem.

   4. Young middle-class people should have the economic means to start a family and have children.

2. Time is of the essence. A target to solve the middle-class housing crisis 20 or 30 years from now does little for the 29-year-old who wants a home to raise children. Due to this, the North Star focuses on those under 40; we would advise governments to also have measurable objectives for those in their 20s and 30s.

3. Children are disproportionately impacted by the middle-class housing crisis and should be prioritized. The North Star also recognizes that children under the age of 6 and between the ages of 6 and 17 are more likely to live in unsuitably small housing (16.2% and 15.0% living in homes that are unsuitably small, respectively) than adults between the ages of 55 and 64 (4.7%) and those over 65 and older (2.8%).

4. The goal of middle-class housing policy should not be whether a middle-class person or couple can afford their current circumstances, but rather whether they can afford to move to a new city or have another child. This is a restatement of the first principle around choice, but it acknowledges that statistics such as core housing need estimate whether a family, as it exists today, can afford to have its housing needs met in the community where it currently lives. It says nothing about whether they can move, nor does it estimate whether they can afford another child. However, research shows that housing affordability constraints reduce family size, as many families sensibly opt not to have children they cannot afford. Our goals should not just ask whether a family can afford its current circumstances, but also whether it could move to another city or have another child.

5. Families come in all shapes and sizes, and the goal should reflect that, while also recognizing that benchmarks require bounds. Families come in all shapes and sizes, from nuclear families to multigenerational families to blended families to single-parent families and single individuals. Very few families are average; we have yet to meet a family with 1.5 children. Our policies must recognize this.

   However, we also must recognize that for a goal to have meaning, it must be bounded. It cannot cover every possible circumstance. Currently, 97% of all households have five or fewer members, though the proportion of households with six or more members has increased in recent years. Basing an affordability goal on a five-person household feels reasonable, and covers many multigenerational families, though a more ambitious government could set the benchmark at six.

   As of the 2021 Census, there were nearly one million families in Canada with three or more children. Three feels like a reasonable cut-off for our goal; unfortunately, no data is provided on how many families have four or more children.

   To be clear, none of this suggests that families cannot, or should not, have more than five members or more than three children, and policymakers and urban planners should consider these families in their work. Rather, it is a recognition that achieving affordability for this group, at middle-class incomes, would be exceedingly difficult.

6. The goal of middle-class housing policy should recognize that both higher incomes and lower home prices are both pathways to eliminating the affordability crisis. The middle-class affordability crisis is larger than home prices, and there are multiple pathways to align incomes with the cost of living. Both higher incomes and lower prices play a role, specifically:

   1. Raising after-transfer, after-tax incomes for young, middle-class Canadians, which can happen through some combination of higher pre-tax incomes, lower taxes, and increased transfers, such as increased Canada child benefit payments.

   2. Lowering monthly expenses for young, middle-class Canadians by either making goods and services, including housing, less expensive or by reducing the things families need to purchase. For example, making it easier to live in walkable neighbourhoods near transit can reduce monthly fuel expenditures.

7. The role of government is not to directly build middle-class homes, nor to set middle-class wages, but rather to set the underlying conditions for success while filling in the gaps. Social housing and deeply affordable housing have a vital role to play in our housing system, and those homes should go to those who need them most, who typically are not in the middle class. This principle recognizes that the role of government here is to set the policy conditions for success and let markets work, while filling in the gaps with programs, like the Canada Child Benefit.

8. The goal should focus on lowering the price of basic new housing, not resale. There is considerable resistance to the idea of governments enacting policies with a deliberate goal of lowering the price of existing homes, as it turns housing policy into a zero-sum game between existing homeowners and potential buyers. Instead, governments should focus on reducing the “cost of delivery” of new homes to create new housing options for everyone, from young persons to seniors, and let market conditions determine the price for resale homes. Of course, what happens in the new market will impact resale prices, but not in a straightforward way. For example, making it easier to build family-sized infill multiplexes in big cities would put downward pressure on home prices in smaller communities, as it would reduce “drive until you qualify” traffic, while at the same time raising land values in the neighbourhoods where those multiplexes would be built.

9. Success should be defined as a middle-class person being able to afford a basic new home that meets their current and potential future needs, not a luxury one. One criticism we often hear at MMI is that the core cause of the middle-class housing crisis is that young people’s expectations are too high. We vehemently disagree with this claim, but we do recognize that our affordability targets should not be based on average new home prices for a given type of home. Rather, they should be based on a basic, entry-level home. Of course, a family could spend more on a home if they have the means, but the goal should be that a middle-class family can purchase a new home that meets their needs, not any new home.

10. Circumstances can change unexpectedly, creating a need for financial security. Unexpected events happen, from a family expecting to add one child having twins, to needing to move to another city for work, to divorces, to disability, to having an older family member requiring care and moving in. All of these can add unexpected costs, so financial security is vital.

Turning a qualitative goal into policy and quantitative results

Goals, by their nature, are qualitative. They provide a vision of what an organization is trying to accomplish. If a government were to adopt the goal laid out in this piece, it would then have to work out the objectives, strategies, and tactics to make it happen, including setting quantitative measures for its performance.

Much of the work that we will be undertaking at MMI over the next year will be in developing those measures, objectives, strategies and tactics. But those will have to wait for another day!

When the “prerequisites” for parenthood become moving targets that shift further into our 30s, the decision to have fewer kids looks less like a lifestyle trend and more like an economic survival strategy.

From the “arms race” of Montessori-perfect Instagram nurseries to the surprising data behind Quebec’s subsidized childcare experiment, we ask: Is society actually giving the middle class a choice, or are we just pricing them out of the future they want?

If you enjoy the show and would like to support our work, please consider subscribing to our YouTube channel. The pod is also available on various audio-only platforms, including:

Apple Podcasts

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Below is an AI-generated transcript of the Missing Middle podcast, lightly edited.

Mike Moffatt: There’s this “zombie myth” that the fertility rate of a country, province, or city is simply a function of family planning and the changing preferences of society. That is, that once you account for those, nothing else matters, and no amount of public policy can change the trajectory of birth rates. And while it is true that fertility rates and birth rates are falling almost everywhere, they’re not falling at the same rate. It turns out there are other factors that matter, and those revolve around the rising costs, both economic and social, of having children.

Cara Stern: The “it’s just a preference” argument drives me a little crazy because it does sound reasonable, but then you start looking at the research. The picture is so much more complicated than just “people don’t want to have kids anymore.” Each of the areas we’re going to talk about is something we want to go deeper into, but I want to start with what I suspect will be a long series of episodes on our declining fertility rate. The big question is: are people just choosing to have fewer children, or are they responding to external factors?

Mike Moffatt: You used a word there that’s incredibly important: choice. I often hear the argument that couples are having fewer children because they’re choosing to do so. At one level, that’s absolutely true. But I’m always tempted to respond to that statement about choice, with a quote from one of the greatest Gen X movies ever, The Princess Bride: “You keep using that word. I do not think it means what you think it means.”

I’ll illustrate that with an example.

It’s a false dichotomy when people suggest that some factor doesn’t play a role in falling fertility rates because “couples are choosing to have fewer children.” That choice was influenced by a change in external factors, specifically a change in cost. In other words, people use “choice” and “preferences” interchangeably, but they’re actually two very different things. In my road trip example, my preference for road trips didn’t change, but my choice of how many to take did because the cost changed.

Cara Stern: Yeah, it’s a bit frustrating because there’s a substantial amount of research showing that birth rates are influenced by a number of factors. Let’s start with when parents feel ready to have their first child. Then there’s societal expectations, the cost of childcare, the role of social media, and of course, the cost of housing. I want to go through these one at a time.

Mike Moffatt: Yeah, sounds good.

Cara Stern: The first on my list is what researchers call the “rising prerequisites of parenthood,” which is just a fancy way to say whether someone feels ready to have kids. That has to do with income level, the stage of life they’re in, and all the things young adults feel they need to reach before they’re ready to have their first kid.

That bar has risen substantially over the last two decades. This isn’t just a housing affordability story; it shows up in places where housing hasn’t even gone completely off the rails like it has in Canada. It’s a cultural shift on what ready looks like. Before, people worried less about job security, whereas now that’s much more important.

Mike Moffatt: I have a bit of a different take. I think it’s not that people worried less about job security in the past, but rather that careers started much earlier. My mom, for example, started her career before she was 20. By the time she was in her mid-twenties, she was well-established in her profession. Back then, you were more secure in your career at 26 or 27 because you’d been in that profession for a few years.

Cara Stern: Interestingly, American surveys tended to cite economic concerns even when participants had decent jobs and a relatively stable income. Which makes it a really hard thing to change because it’s the feeling of economic readiness matters even more than the reality. You can’t just pull numbers and prove to people that they are ready. I don’t think you can legislate this problem away because it’s about how people feel.

Mike Moffatt: Well, I actually disagree that you can’t legislate it away. Public policy still matters. For instance, we should look at the length of undergraduate and graduate programs. Make them shorter, let people graduate earlier, and let them get on with their lives sooner. But you raise an important point: security is not the same as affordability. If you don’t feel secure in your job, you might forgo having kids, even if on paper you can afford them.

Cara Stern: We’ve also changed the timeline for when society thinks you’re ready. In the 70s, the average age of a mom giving birth was in her mid-20s; now it’s in the low 30s.

The research also flagged societal expectations of parents. That could partly be a social media thing or a cultural shift. I get targeted with Instagram “parenting influencer” accounts all the time showing beautifully crafted, Montessori-inspired nurseries. Whereas when I first got pregnant, I was in a one-bedroom apartment trying to figure out how to subdivide the living room or if I could put the crib in the closet!

Mike Moffatt: I believe it started even earlier than that. In the 1970s, you just needed less planning. Gen Xers like me were the “latchkey generation”. It was normal for an eight-year-old to walk to an empty house, unlock the door, and make a peanut butter sandwich while watching Scooby-Doo or Speed Racers. Maybe you get out the Atari 2600 and play some Space Invaders. If I did that to my kids today, I’d probably get arrested. The expectations have changed. This societal need and occasionally legal requirement—to have kids constantly monitored and to get them in expensive activities/sports has increased both the time and financial costs of raising them.

Cara Stern: It’s wild how scheduled some kids are. I know there are probably benefits to it but it’s so tough to keep such a busy schedule. I have my 4-year-old in one activity a week, and I feel like I’m holding her back compared to some of her peers because I don’t have the energy, especially with two kids, to have her in several programs a week like so many kids in her class.

There is a 2025 Brookings study that argued the cost per child has risen as parents compare their children’s success to others, creating an “arms race” of educational investment, both in the actual cost and how much of a time commitment kids can be.

Mike Moffatt: I can totally see that. This was less of an issue when I was growing up because there weren’t as many options to increase that “educational investment” in a young child.

Cara Stern: And social media has put this on steroids. You can see what your kids’ friends are doing.

Mike Moffatt: “Keeping up with the Joneses” as driven by social media can’t be great for mental health, which doesn’t increase our desire to have more kids. For example a recent World Happiness report blamed social media for a decline in happiness, and the more unhappy you are, the less likely you are to want kids.

Cara Stern: There’s growing evidence that social media is contributing to fertility decline by undermining connections, contributing to mental health challenges especially among young woman and shifting norms about what a “good life” looks like. And then, there’s the cost of childcare.

Mike Moffatt: Those childcare costs are absolute killer. They were less of an issue in previous decades in part because it wasn’t needed as much. Some of this was due to that “latchkey kid” phenomenon.

We’ve seen folks have to move out of the GTA to places like Woodstock and Peterborough. Far away from Grandma and Grandpa. So governments seemed to have recognized this problem and are working to reduce the cost of childcare. Do we know if that has had any impact on fertility rates?

Cara Stern: They are reducing costs, but the number of spots isn’t meeting demand. So the cost are still high if you can’t get a subsidized spot.

We have a good natural experiment from Quebec. In 1997, Quebec introduced $5-a-day childcare. A 2024 study looked at what happened to fertility across different cohorts of women afterwards. And for younger women (20-24), it actually worked, and the chances of having a first or second kid went up by seven percentage points.

Mike Moffatt: So for young women who hadn’t started their family yet, subsidized childcare made having kids feel manageable. And it sounds like they are responding by having more kids.

Cara Stern: True, but for women in their low 30s who already had kids, the reform actually decreased the probability of having more by 5 to 7 percentage points for second and third births.

The broader research backs this up. There is evidence that childcare expansions increase fertility rates overall. There are some studies on baby bonuses too, which some people advocate for, such as Trump, and those tend to affect when people have kids. They shift when people are having kids to a little bit earlier. But it’s not shifting the number of kids they’re having in total.

That helps. We know it’s much easier for a 20-something woman to get pregnant and have a healthy baby then a woman in her 30s or even early 40s, but it’s not increasing the number of children.

Mike Moffatt: That totally makes sense to me. All of this just shows the complexity of this issue. Different policies impact different groups differently. It’s not one-size-fits-all.

We see that a lot when it comes to the relationship between home prices and fertility rates: we saw high and rising prices cause fertility to fall for young people who get priced out of family sized homes, but it also can cause fertility to rise for the cohort who already owned a home and the value rose sharply after they purchased it.

Cara Stern: That seems like one of those very obvious findings. If you own a home and you’re gaining wealth, you probably feel more settled and are ready to take on additional expenses. But of course if you’re worried about housing security, you don’t want to bring children into the mix.

Mike Moffatt: And this whole fertility rate discussion feels like all of our housing affordability discussions. There is no one single cause and also no single policy that will fix any of this.

Cara Stern: Which doesn’t mean that policy doesn’t matter because the research is still pretty clear that countries with good comprehensive packages do better then countries without them.

Mike Moffatt: So where does all of this leave us? We’ve got a rising bar for what ready to have kids means, childcare policies that work better for some people then for others, and cultural forces that even the best welfare states can’t fully counteract. So where do we go from here?

Cara Stern: It means it’s really complicated and there is no single lever. You have to attack the problem from all angles. Subsidized childcare isn’t enough. Baby bonuses aren’t enough. Affordable housing isn’t enough. You need to address all of that as well as gender equality and culture. It’s everything all at once, which is hard and an expensive way to approach this.

Mike Moffatt: Success shouldn’t be defined by a birth rate number, just like a successful housing system isn’t just about ownership rates. It’s about creating choice.

Cara Stern: Yeah we see people choosing to have fewer kids even in countries where kids on paper are well supported by the government, which is why these conversations connect to so many of our other episodes. There is a constant underlying problem of a housing and policy environment that just makes family formation harder then it needs to be.

Mike Moffatt: Now, I also think we need to be clear as a society about what we are try to accomplish here. I’m not sure how you see it, but in my mind success in not defined by a higher fertility rate or birth rate in the same way I don’t see a successful housing system as necessarily be one with higher rate of ownership.

I see a successful society is one that creates choice for the middle class. That they can choose to own or rent. They can choose to have three kids or four kids or no kids. That the choices they make aren’t because they are priced out of some options but they have free choices on how they live their lives.

Now I suspect in such a society, people would have larger family then they are having now. I suspect they would have a child at a younger age. I also suspect that home ownership rates would go up. But those, in my view, are outcome of attaining the goal of increased choice, but not the goals themselves.

Cara Stern: For sure, it is all about choice, and we do know that people are having fewer kids than they otherwise would want to. That’s what the research shows that people are saying. They want to have this number of kids, but they don’t have that number of kids. And I think a society that supports people making the choice to have kids is a good one, because not only does our country’s economy depend on it — that isn’t the real reason — although I will say our producer, Meredith, did thank me for making another taxpayer.

And we need to make the path to having kids much easier than it is right now, because I think we’ll see those third-order effects of these changes, because places where fertility rates are higher also tend to have stronger communities, and they have lower isolation, more intergenerational connection. And if you fix the conditions to have kids, you’ll see some real benefits outside of this area too.

Thank you so much for watching and listening. Our producer is Meredith Martin and our editor is Sean Foreman.

Mike Moffatt: If you have any thoughts or questions about the best Atari 2600 games to play after school, please email us at missingmiddlepodcast@gmail.com.

Cara Stern: And we’ll see you next time.

In this episode, Sabrina Maddeaux and Mike Moffatt break down how this hidden tax works, who it hits hardest, and why it raises serious questions about fairness, accountability, and the future of Canada’s tax system. From surtaxes capturing middle-class renters to generational divides in who benefits from inflation, this conversation exposes a system that increasingly taxes effort while rewarding assets.

If you enjoy the show and would like to support our work, please consider subscribing to our YouTube channel. The pod is also available on various audio-only platforms, including:

Apple Podcasts

Spotify

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Below is an AI-generated transcript of the Missing Middle podcast, lightly edited.

Sabrina Maddeaux: Provincial governments are raising your taxes by stealth. These tax increases were never debated in legislatures and never voted on, but have a real impact on your bottom line. They do this through something called bracket creep. This happens when tax brackets don’t adjust over time with inflation and are fixed at set income thresholds. When inflation pushes wages up just to keep pace with the cost of living, more of that income tips into a higher tax tier automatically. We call that bracket creep. The result? Your purchasing power stays flat, but your tax bill goes up. You’re not actually any richer, but the government is collecting more from you as though you are.

Mike Moffatt: So, Sabrina, you had a fantastic piece of this over at the National Post. We’ll link to that in the show notes. How widespread is bracket creep?

Sabrina Maddeaux: Unfortunately, it’s becoming a lot more widespread. Bracket creep doesn’t happen by accident, as there’s a pretty simple fix. Index tax brackets to inflation every year. Several provinces in the federal government already do this, but now, B.C., Manitoba and Ontario have been freezing - or failing to adjust their brackets - turning inflation into a quiet revenue tool for politicians. The provinces moving in this direction include British Columbia, which announced plans to freeze brackets from 2027 to 2030 and hike the base tax rate for the first time in 25 years, which is a double hit for the middle class.

For the 2028-2029 fiscal year, the projection ballooned to around $590 million in extra taxes. So that’s huge. And they’re not the only ones who are doing this. Manitoba has now indefinitely frozen all brackets and their basic personal amount. The Canadian Taxpayers Federation estimates this extracted about $82 million in unvetted revenue in the last year alone.

And Ontario, on top of that, has its own version of this around surtax thresholds.

Mike Moffatt: And so when you add up all of these provinces, we’re in the billions. But I think the thing that really strikes me is that this isn’t just about the money; it’s the process. As you pointed out in the intro, these are tax increases by stealth. Normally, if a government wants to raise taxes, it needs to include it in a budget bill.

We’ve seen provinces introduce their budgets in recent weeks, and that would be a whole public thing - there’d be a whole debate around it. Governments would have to defend their choices. But here that’s not happening. So why does this matter so much?

Sabrina Maddeaux: That’s exactly right. A conventional tax increase means tabling a bill, standing in front of the legislature, defending it in front of the opposition, and ultimately getting it passed. It’s loud. It’s public and often uncomfortable. But that produces accountability. And that’s what our democracy is based on.

And now that phrase taxation without representation isn’t hyperbole here. It has deep roots in why democratic institutions exist in the first place. And so what makes this entire trend particularly sneaky is how easy it is to miss. Most people aren’t tracking their tax bracket thresholds year over year or paying attention to the minutia of tax policy when a bracket is frozen, unless there’s a headline big rate hike, it can go over their heads. So it just starts to look like your paycheck is a little bit lighter than expected. But it does add up over time.

And beyond that accountability piece, there’s a real economic question about who this actually lands on because bracket creep doesn’t hit everyone equally, does it?

Mike Moffatt: No, it doesn’t. But I am disappointed that not everybody has their marginal tax rate Excel sheet like me and my cohort do. It really depends on the province here and how those brackets are set. It tends to hit medium and mid-to-high-income earners the most. Those who earn their income through a paycheck rather than capital gains, because they’re generating wealth through assets, such as a home, investments, or a business. Inflation often works in your favour because the asset values climb, and in many cases, you’re not taxed on those gains, and you’re certainly not taxed on the unrealized gain.

And on the unrealized gains, if the asset is in a tax sheltered vehicle like a TFSA or your primary residence, or the shares of a qualified small business corporation, you’re not going to pay capital gains on that. So that inflation actually helps you rather than harms you, as we see in bracket creep.

So you end up with this dynamic where the people who are already most exposed to the cost of living crisis are the same ones who are most exposed to the stealth tax.

There’s no cushion, and there’s a clear generational divide, as younger Canadians, like you, are far more likely to be income-dependent and far less likely to hold significant assets, like me.

Sabrina Maddeaux: That is something I feel personally because I’m someone who’s still renting, still hasn’t been able to afford homeownership, and yet I’ve been paying Ontario surtax for years now. I know I’m far from alone in that situation. There’s this whole category of people earning decent salaries, living in expensive cities, who the tax code is treating as wealthy, but who are absolutely not.

Instead, the surtax is capturing the downwardly mobile middle class. Now, Mike, can you walk us through what’s actually going on with that surtax and how we got in this situation?

Mike Moffatt: Yeah. So in Ontario, you have your marginal tax rates, but once you hit a certain threshold, you have a surtax, which is literally a tax on top of the regular tax. These thresholds were set decades ago, and they’ve barely moved. So when the thresholds were initially written, they were designed to catch genuinely high-income earners. And the idea was that, if you’re making this much, you can afford a little extra. I think it was originally designed to put more money into the health care system. But today, an income of less than $110,000 triggers that surtax - or can trigger that surtax - a salary that in most of Ontario is not enough to qualify for a mortgage on the average home.

At some point, people are going, okay, why am I staying here, and why am I working harder if I’m losing $0.54 on the dollar? For every extra dollar I earn?

Sabrina Maddeaux: So, at what point does this actually start changing people’s behaviour? Is there evidence that bracket creep and high marginal rates actually make people think twice about working harder or taking on more?

Mike Moffatt: I think it absolutely can. And I think with that harder work, you’re going to do that in a way that doesn’t generate as many taxable gains. So maybe you’re going to spend more of your time on primary real estate rather than going to work or trying to land a new client or something like that.

But I think the biggest impact it has is that it causes people to move. Why stay in Ontario, where tax rates are high, when it’s nearly impossible to buy a home, when you can move to Alberta? Or as those ads on the TTC said, Alberta is calling. Both home prices and taxes have contributed to the record levels of outmigration that Ontario has experienced in recent years.

So, Sabrina, you write about politics and policy, and you’re also exactly in the income range and the age range that gets clobbered by this. So what do you think the political consequences are when governments normalize this kind of thing? And in particular, I don’t understand why we haven’t seen the Ford government address more of this, given their political leanings, it would seem to be right up their alley.

Sabrina Maddeaux: Yeah, it should be a common-sense conservative solution to address bracket creep and save taxpayers’ money in a way that will also enhance productivity.

The core bargain of democratic taxation is that people understand what they’re paying and why, and that they have a say in it when that breaks down, trust in institutions erodes. And it’s not just trust and tax policy specifically. For younger Canadians who already feel like the system wasn’t built for them and is actually working against them. This is just another entry in that long list of evidence or their views, that Canada is not working for them and doesn’t care about them, so it reinforces that cynicism and anger.

The federal government and many provinces already index brackets to inflation automatically. So fixing this isn’t some radical idea. And yet Ontario hasn’t updated its surtax thresholds in decades. And now B.C. and Manitoba are going even further by not just not updating them, but actively choosing to freeze the indexing that they previously had; they’re failing to fix the problem. But we’re seeing a scenario where provinces are making it worse.

So, the obvious fix: indexing brackets and base personnel amounts to inflation.

What does this say about the broader ways our taxation system is breaking? Is this a symptom of even bigger problems?

Mike Moffatt: Yeah, I think it is, because that political challenge is real. Governments have quietly depended on this revenue because the alternatives are either finding cuts elsewhere or making the honest case for tax increases. And neither of those things is easy. And this whole bracket creep issue reminds me a lot of shrinkflation, that once you become aware of this phenomenon, you see it everywhere. You can’t avoid it.

In a lot of provinces, this same version of bracket creep applies to things like the minimum wage or disability support payments - they don’t rise with inflation. So the value of these programs diminishes over time. And then it allows the Premier of that province to come in like Santa Claus, increase these amounts and get patted on the back for being so generous. But in reality, they’re not really increasing anything. They’re simply having these payments, or having the minimum wage keep up with inflation. So at the end of the day, recipients really aren’t receiving any more value in real terms.

So if we are serious about a tax system that treats people fairly, regardless of which generation they were born into, that’s a bigger conversation. We need to start having.

Sabrina Maddeaux: One hundred percent, bracket creep is just one element of this. Younger people are being unfairly burdened by the tax system that just doesn’t recognize their current economic circumstances, and how Canada has changed over the years. So this is something that I think will continue to bubble up. And, tax fairness will become a bigger issue over the next few years. I expect to see it in a lot of headlines.

Thank you, everyone, for watching and listening. And to our amazing producer, Meredith Martin and editor Sean Foreman.

Mike Moffatt: And if you have any thoughts or questions about how Gen X is winning, please send us an email to the Missing Middle podcast at gmail.com.

Sabrina Maddeaux: And we’ll see you next time.

Additional Reading/Listening that Helped Inform the Episode:

Sabrina Maddeaux: Provinces Are Profiting From Your Inflationary Pain

Canadian Taxpayers Federation Report On Manitoba Bracket Freeze

Kelowna Capital News On BC Bracket Freeze Revenue Projections

• After years of policy inertia, the federal government and the province of Ontario are finally moving in the right direction, albeit with temporary measures: an HST rebate on new homes and reductions in development charges could cut new-home prices in Ontario by 10–20%, aligning with long-standing MMI recommendations.

• These moves address the current climate, where resale prices have fallen while construction costs haven’t, leaving us in a perverse equilibrium where homes are still too expensive to buy but not profitable enough to build.

• In a real-world example, these reforms could lower the minimum viable price of an entry-level Oshawa townhome from about $730,000 to roughly $615,000, a meaningful 16% drop that could bring stalled projects back to life.

• This is a good first step, but not a solution. Even at $615,000, many middle-class families are still priced out, and without deeper structural reform to taxes like development charges, governments will continue to treat new homebuyers as a revenue source rather than a policy priority.

• And let’s be clear: this isn’t a “subsidy.” Even after these changes, buyers are still paying tens of thousands in taxes. The real issue is that housing taxes, particularly development charges and HST on new homes, have grown far beyond any reasonable connection to actual costs, and are now a primary driver of unaffordability.

• If housing is a human right, or at least a necessity, we need to ask ourselves why a young family buying an entry-level home is assessed HST, while caviar and foie gras are considered a “basic necessity” under tax law and are exempt from HST. If a simple home to raise a family isn’t a basic necessity, what is?

Finally, some housing relief… though some details TBD

In the past two weeks, the federal government and the province of Ontario have reached two agreements, both of which align with recommendations in several MMI reports, which combined will lower the price of a new home by as much as 20%. The first announcement is a one-year enhancement of the HST New Housing Rebate and New Residential Rental Property Rebate that will rebate all HST on homes priced under $1 million, with a partial rebate for homes priced under $1.5 million, which can remove more than $100,000 in HST from the cost of a new home. The second announcement is a three-year reduction in development charges of up to 50% for some homes in some Ontario municipalities. Details on this plan are still relatively sparse, including timing and size of the reduction for any particular home, but the federal government and the province have each allocated $4.4 billion to the fund.

Ontario finds itself in a strange equilibrium, where the price of resale homes has substantially fallen, creating affordability, while the costs of building new homes have not. Benjamin Tal of CIBC summarized it best when he said, “Home prices are still too high to buy and not high enough to build.” Lowering development charges and rebating HST, which applies only to new homes, will lower the cost of homebuilding, leading to both lower prices and increased construction activity.

While these moves will not end the housing crisis and are both temporary, they will help move the needle and make housing more attainable to young, middle-class families. While all the details have not been released, here is what an HST rebate and a 50% reduction in development charges would mean for the construction of an entry-level family-sized townhome in the City of Oshawa.

Before the reforms: A $730,000 townhome price floor

Let’s take a highly simplified example of a developer who wishes to build an entry-level townhome in Oshawa, and the potential purchaser is not a first-time homebuyer. The developer’s cost to build, including land, materials, labour, financing, permits, but excluding development charges, is $500,000 a unit. Currently, development charges for this type of unit, are just over $100,000, as shown in Figure 1, which increases the costs to $600,000.

Figure 1: Development charge schedule for Oshawa, ON, as of April 2, 2026

Chart Source: City of Oshawa.

The developer will need to obtain construction financing for the project, and no lender will finance it if it has an insufficient profit margin, given the risk of non-payment. We will assume for this developer that they need to show a minimum 10% profit margin. This bumps the price up to $660,000.

A 13% HST is applied to the $660,000 price, adding an additional $85,800 in taxes to the project. While (under the old system), this project would not qualify for a federal HST rebate as the home price is too high, it would qualify for a $24,000 provincial rebate. After rebates, our HST-inclusive price is $721,800.

Finally, the buyer would have to pay an additional $9,675 in land transfer taxes on the project, which brings the cost to just over $730,000, as shown in Figure 2.

Figure 2: Cost breakdown of a hypothetical Oshawa condo project

Chart Source: MMI.

This is a highly simplified example and excludes several closing costs, but it is a useful estimate. The $731,475 figure represents the lowest possible price the developer could sell the unit for. If there is no market for townhomes at this price because resale prices for equivalent units are lower, then this home simply will not be built. This helps explain why pre-construction home sales in Oshawa are down by more than 80%, as shown in Figure 3.

Figure 3: Pre-construction sales changes by municipality, Q3 2025

Chart Source: The Big Collapse: New Condo Sales Down 89%, Ground-Oriented Down 65%.

After the reforms: A $615,000 townhome is possible

But now let’s apply both a 50% reduction in development charges and a full 100% HST rebate to this project. This not only reduces DCs by $50,000 and eliminates HST payable, but it also reduces the amount of land-transfer tax payable and allows the developer to get construction financing at a lower profit margin (in dollar terms). It lowers the project’s minimum viable price to $613,575, a 16% reduction, as shown in Figure 4.

Figure 4: Cost breakdown of a hypothetical Oshawa condo project after a 50% DC reduction and full HST rebate

Chart Source: MMI.

This is a substantial reduction, and should allow more homes to be built, and sold to consumers at lower prices, as the market for new $614,000 townhomes is substantially higher than the market for $732,000 ones.

This is a fantastic joint initiative from the federal government and the province of Ontario, and I hope that it is replicated in other provinces with high development charges (looking in your direction, British Columbia). It is a sign that our governments are starting to take the home ownership crisis seriously.

This is the beginning of a process, not the end

There are, however, a number of factors and caveats we should keep in mind here:

1. We do not know for sure that the development charge reduction for this type of home will be 50%, we do not know when the reduction will take place, and we do not know if municipal governments will increase other fees by an offsetting amount, as has happened in the past (looking in your direction, Metro Vancouver). It is vital that governments move forward with implementation; we’ll be watching closely at MMI.

2. A price point of $613,500 remains out of reach for far too many middle-class families, so other reforms are needed to bring new home prices down to a level that young, middle-class families can afford. But we should not overlook the value of a 16% price reduction, which saves families $117,900.

3. It may be the case that this still isn’t a large enough reduction to get homes built, given current market conditions.

4. Alternatively, it is also possible (though given current market conditions we suspect unlikely) that this is a larger-than-needed reduction in costs, and some of these tax savings will not be passed along to consumers, but rather captured by some combination of developers through higher prices, landowners through higher land prices, labour through higher wages for the trades, sellers of construction materials through higher prices for drywall and toilets, and by lenders through higher construction loan interest rates. This is also something worth monitoring closely.

5. It is exceptionally difficult to estimate how many additional homes will be built due to these changes, as we discussed on last Friday’s episode. The most straightforward way to derive such an estimate (and to derive estimates for the previous point) is to apply elasticity parameters, which examine how quantity supplied and demanded change in response to a price change. However, those parameters would be generated from past market conditions, and our current market is unlike anything we have seen in decades. Elasticities are not constant and are certainly different today than they were 10 years ago.

6. While incredibly valuable, these are all temporary measures, and are not the kind of deep structural reforms Ontario needs to the development charge system, the kind we discuss in the report we co-authored with OREA, A Pathway to Development Charge Reform.

7. These deals only cover Ontario; other provinces with sky-high development cost charges and other taxes on housing construction still need to come to an agreement with the federal government (looking in your direction, British Columbia).

And there is one final elephant in the room that is worth mentioning.

These new rebates are not a subsidy; there are still nearly $60,000 in construction taxes on this home

There is a fair bit of chatter on social media, from Bluesky to Reddit, that these programs are a “subsidy” to homebuyers and developers. This is an understandable viewpoint, but it simply does not hold up to scrutiny. The homebuyer is still on the hook for nearly $60,000 in taxes ($50,000 in development charges and $8,575 in land transfer taxes). In contrast, the new home I bought in 2004 had only $17,000 in taxes (less than $5,000 in development charges, $7,500 in GST, $3,500 in PST, and $1,400 in land transfer taxes, which in my case were waived entirely because I was a first-time buyer). That is over a 250% increase in taxes in just over 20 years, and that’s after these so-called subsidies.

There is an assumption in this “subsidy” argument that the taxation levels on housing are just, normal, and necessary. But let’s first consider the HST. In Canada, basic necessities like basic groceries, prescription drugs, and medical devices are all exempt from the HST (or, more accurately, they are “zero-rated”). Which means when a 0.1% goes to buy caviar and foie gras, they are not charged HST on those purchases.

However, housing, which both international and national law consider a human right, is assessed for HST when an owner-occupant purchases a new home. So when our 0.1% buys caviar and foie gras, they’re fulfilling a basic necessity, but when a young couple buys a modest townhome to raise a couple of kids, that’s a luxury purchase and taxed as such?

Now you could respond with, “while housing is a human right, owning one isn’t… it’s a luxury when a family could always rent”. In that case, if ownership housing is a luxury, reserved only for the rich, we ought to ask why so many existing homeowners qualify for financial supports, such as Old Age Security, which is set to exceed $100 billion in annual expenditures by 2035.

We can certainly understand placing HST on “luxury homes”, but forcing a young couple buying a modest home to raise a couple of kids to pay HST on that purchase, while keeping caviar and foie gras tax exempt, is a choice.

Next, consider development charges. If development charges were simply defraying the direct cost of building a new home, they would not have risen by over 5000% in the City of Toronto over the past 25 years, as the cost of building infrastructure has not risen by that much.

The whole argument that development charges need to be this high because “growth should pay for growth” is based on a policy sleight-of-hand that confuses population growth with the growth of the housing stock. As I pointed out in a previous article, the building of the home I moved into in 2004, and my being able to move out of my parents’ home, did not give rise to additional expenses:

• Moving to this home did not increase my library usage.

• Moving to this home did not increase my use of local parks and facilities.

• Moving to this home did not increase my use of city roads. In fact, my driving was significantly reduced because I was able to purchase a home closer to where I worked. High road usage is typically a sign of a lack of development, forcing people into long commutes.

And the infrastructure associated with the house, such as subdivision roads, sidewalks, sewers, and lampposts, is not funded by development charges. The developer (not the city) pays for the construction of those outside of the development charge system, and passes those costs along (with a markup) to the homebuyer. Annual property tax payments pay for their upkeep.

In short, the fact that a new home was built did not entail a significant increase in infrastructure costs for the municipality. People use libraries and roads, not homes, and making young people live with their parents well into their 30s, or in overcrowded, overpriced housing, does not reduce infrastructure use. Population growth creates the need for infrastructure, not housing growth.

We need to see development charges for what they are: a tax on new homebuyers, which pushes up the price of existing homes, used to support the costs of population growth, replace aging infrastructure, and buy nice things that existing homeowners would not pay for if they had to foot the bill themselves. Lowering these taxes is not a subsidy, as their rates do not reflect the costs of new housing development.

In this week’s episode, we answer some of the questions and misconceptions we’ve read online about the new HST rebate on new homes.

Beyond the rebate, they explore bigger structural challenges like land costs, zoning, and competition in development. The key question remains whether this policy can meaningfully increase supply in a market that is still not functioning normally.

If the goal is to improve affordability, the HST rebate may help, but it is only one part of a much larger housing problem.

If you enjoy the show and would like to support our work, please consider subscribing to our YouTube channel. The pod is also available on various audio-only platforms, including:

Apple Podcasts

Spotify

Podbean

Below is an AI-generated transcript of the Missing Middle podcast, lightly edited.

Mike Moffatt: Housing starts have been in freefall in Ontario, and pre-construction home sales are down as much as 95% in some GTA markets. Home prices have fallen in recent years, which is great news for affordability. But the cost of building homes hasn’t dropped.

This has created the awkward condition where homes are still too expensive to buy, but not expensive enough to build.

Cara Stern: The federal and Ontario governments are trying to address that, and they’ve made two big housing announcements in the last ten days, one on HST and one on development charges. And those can actually get more homes built soon. And both of them are areas that Mike and the Missing Middle team have been advocating for since day one.

They’re big moves that are meant to move the dial on supply, especially in the kind of market we’re seeing right now, where it makes no financial sense to build homes. Today, we’re addressing the most common questions and misconceptions we’ve seen online about the new HST rebate. So first of all, how does this new HST rebate even work?

Mike Moffatt: Well, the important thing to recognize about the HST is that it only applies to new homes, not to resale homes. So, because of that, it acts as a tax on housing construction. And in Ontario, it’s a tax that is paid to both the federal and provincial governments. Hence the “H” for harmonized in HST. These rebates aren’t a new idea. They’ve existed in one form or another since the GST went into effect in 1991. What changed last week were some of the details, and it’s not the first time that things have changed. For example, the Trudeau government recognized that the HST was a barrier to building rental apartments. So back in 2023, they instituted a 100% HST rebate to builders of purpose-built rentals, with Ontario following suit. And these were moves that contributed to Canada’s rental apartment boom.

Cara Stern: But that was just for rental housing, not ownership, right?

Mike Moffatt: Correct. Yeah, and there have been ownership rebates for decades as well. The province of Ontario, for example, has a couple—the HST new housing rebate, which is for people purchasing new homes that they will live in as their primary residence. And the new residential rental property rebate, which is for landlords who purchase new homes and rent them out, so long as they meet qualifying criteria around, like not flipping the home, not putting it on the short-term rental market and so on.

Now, the problem with these rebates is that they only cover a small portion of the HST paid on the home. And for the federal versions of these rebates, they only cover homes priced under $450,000, which means that in most of Ontario, nobody ever qualifies for that federal rebate.

Cara Stern: Why is that cutoff so low?

Mike Moffatt: Well, the federal government has never indexed it for inflation, so it’s stayed at the same level since 1991, which would be fine if home prices were at 1991 levels.

Cara Stern: If only! We first saw this change last year with the introduction of the first-time homebuyers rebate.

Mike Moffatt: Exactly. So the Carney government introduced a 100% HST rebate for homes priced under $1 million and a partial rebate for homes priced between $1 million and 1.5 million. And the province of Ontario matched these changes, which reduced the price of new homes, in some cases by over $100,000.

Cara Stern: That was only for first-time homebuyers, not for everyone. And then I hear the criticism that first-time homebuyers often can’t afford new builds.

Mike Moffatt: And that’s a really valid complaint. It missed some very important groups, including seniors who want to downsize their homes and what I call second-time homebuyers, which are typically couples in their 30s who bought a small condo a few years ago. They want to upgrade into something larger, so they want to upsize, but they can’t qualify for a mortgage because prices are too high. Now, some of them will be able to own a new home, which will help them move into something larger while also getting more homes built.

What the federal government in Ontario have done here is update those HST new housing rebates and the new residential rental property rebates I mentioned earlier, and given them the same 100% rebate as the first-time buyers.

Cara Stern: As you know, I am annoyingly addicted to Reddit, and I’ve seen a lot of chatter online, and there are quite a few people who think this is either just not going to work for them, or really that it’s just meant to line developers’ pockets. So I’ve read a lot of comments there, and I thought maybe we can use some of that to unpack it together. So here we go. Here’s one from Redditor /u/thefringthing. Maybe a Breaking Bad reference there.

“Oh, good. Another demand subsidy. Nothing brings prices down like making it easier for buyers to pay more.”

Mike Moffatt: Now this is something I hear all the time and not just on Reddit. Even governments more often than not, in my view, get this wrong. There’s a fundamental difference between measures that increase the demand for pre-existing assets, like resale homes, and measures that lower the cost of building new assets. Because the HST only applies to new homes, it acts like a tax on construction. It is ultimately a supply-side tax. Reducing the HST on housing construction is a supply-side measure, so it shouldn’t be compared to something like changing mortgage amortization, which increases the demand for new homes and resale homes alike. So this is fundamentally different.

And this is not about increasing the demand for resale homes. HST rebates on housing actually reduce the demand for resale homes because it creates new supply, which competes with resale homes. So it has the exact opposite effect of what this Redditor and, frankly, a lot of politicians suggest.

Cara Stern: So what you’re saying is it increases supply. So it is increasing demand for new supply. But hopefully, by adding new supply, it will reduce the demand across the board, lowering prices across the board. Is that about right?

Mike Moffatt: So new homes compete with resale homes, right? So if the government put in some measure to build more Fords, that’s not going to help General Motors. In the same way, if you create more new homes, it’s not going to help the demand for resale homes.

And this downward pressure on resale happens because demand is shifted away from resale to new. But it also increases the supply of resale, as some of those new home buyers will be putting their existing homes on the market.

Now, there can be complex second-order effects here. So, for example, it can spur infill construction. And that infill construction can increase the cost of land in specific neighbourhoods, and the price of certain homes in certain neighbourhoods can rise. But on average, this puts quite a bit of downward pressure on the resale market.

Cara Stern: So, a follow-up to that is: Some people worry that prices will just go up exactly the rebate price. Like developers, they could theoretically raise prices 13%, and they can give that money back. In the end, they’re making the same amount of money. Or they could be more sneaky. They could raise prices 5%, and then they’re like, you’re getting a discount, and you’re getting 8% off the original price, but it’s still not the full 13%. How do we know they’ll actually pass along all 13% and not just bake it into a price increase?

Mike Moffatt: Yeah, this is a good question and a legitimate concern. I would say that, right now, if developers had that kind of pricing power, pre-construction and condo sales wouldn’t be down like 97% in Toronto. But legally speaking, the rebate goes to the buyer.

There’s a concept in economics known as economic tax incidence, which recognizes that the benefit of any change is split among a variety of factors. And it’s not just home buyers versus developers. Trades workers can reap some of the benefits here through higher wages. Drywall manufacturers can benefit from extra demand for drywall and so on. So there are a lot of different actors in the system, all of which can benefit to a certain degree.

But the benefits tend to flow disproportionately to the group with the most negotiating power and that holds the most scarce asset. Right now, home buyers are the scarce asset. They’re what’s in short supply, so they should reap the largest share of the benefits.

Cara Stern: Right now, home buyers are in short supply, but that hasn’t been the case for most of my adult life. And I wonder what happens when we’re not in such a terrible market for sellers and builders.

Mike Moffatt: Yeah. So we’re not in such an ice-cold market. Often, the scarce asset isn’t builders and developers because there’s a lot of competition there. It’s actually in development land. So, who benefits from reducing construction taxes can sometimes be the owners of that development land. So changes in tax policy can end up boosting development land prices. So that’s why land reform is so important to make sure that those groups aren’t capturing the benefits here.

Cara Stern: What kind of land reform?

Mike Moffatt: Well, really anything that creates competition in land markets, and that includes, but is not limited to, things like zoning and approvals reform. So really, anything that creates competition in land markets, including but not limited to zoning and approvals reforms to allow for the ease of building a variety of different housing types, both on greenfield and infill sites. We need to make sure that developers have access to sufficient utilities, from water to electricity. Nobody’s going to buy a home if they can’t turn on the lights or flush the toilet. We also need to make sure that urban growth boundaries are adjusted to keep up with population growth and changes to our immigration systems.

Cara Stern: So, should this rebate — and frankly, the development charges reduction that was announced for only three years — should they only exist when it’s a buyer’s market?

Mike Moffatt: I understand the logic of the question, but the short answer is no. Unless you like really expensive homes, because there’s no world in which governments could charge $300,000 or $400,000 in taxes and development charges for a home, and have those homes be affordable to the middle class.

If you go on Twitter, you’ll find some Boomer who paid like $0.38 in taxes on the home they built in 1986, and they’re now complaining that young people’s new home taxes are being lowered to only $200,000. And they’re crying that young people are getting subsidized. It’s a bit much.

Now, that said, yeah, we have to worry that reducing taxes on housing construction will simply cause land values to go up. But the solution to that is through land competition, rather than taxing young people out of home ownership.

Cara Stern: The provincial press release said the expanded 13% HST rebate could stimulate an additional 8000 housing starts in Ontario next year, supporting up to 21,000 jobs and boosting Ontario’s GDP growth by $2.7 billion.

Mike Moffatt: Yeah, it’s really hard to know how many homes will get built due to this HST rebate. To get that kind of estimate, you need to be able to estimate what economists call price elasticity. That is, how much do sales change in response to a price reduction? Now economists estimate price elasticity based on historical data. But the historical data doesn’t tell us much here because we’re operating in a market unlike anything we’ve seen in decades. So I don’t find any of these estimates particularly instructive. I know why governments do it, but it’s like trying to calculate how long it would take a monkey with a wooden leg to kick the seeds out of a dill pickle. Like, it’s just a hypothetical question. And there’s no data to be able to to get that kind of answer.

Cara Stern: Are there from other countries?

Mike Moffatt: You run into the same problem that the conditions in other countries are so unlike what we have here. We really do lack a map to all of this, because we really haven’t seen a market like this arguably since the early 1990s. And that was a much different world and a much different housing system back then.

Cara Stern: So why did they go with a one-year time limit on the HST rebate?

Mike Moffatt: I expect it will get extended, but there are two benefits to it being such a short period of time. First, we could treat it as a pilot. As I mentioned, we don’t know how well this is going to work, so why not test it out? And secondly, the time limitation creates a sense of urgency. So you’ll get new buyers coming into the market due to a fear of missing out.

Though I will say this undermines the effectiveness of this as a pilot, because if we have a bunch of sales that happen, we won’t really know if that continues if we extend the program or if people were just acting out of a sense of FOMO.

Cara Stern: That makes sense. If you know you can get a big rebate, then it makes sense to act quickly. But at the same time, how can we know whether, if it were going to be indefinite, we would always see that increase?

Here’s another question from a Redditor. This one is /u/petpet0_0.

“I don’t get it. Most first-time buyers aren’t buying new homes, so this helps mostly nobody or mostly rich people. I guess if rich people are incentivized to buy new, it leaves more older shit for us poors.”

Mike Moffatt: Now, the way that Redditor phrased it is funny, but they’re not actually wrong. This policy benefits new home buyers naturally, but it also benefits people who are buying resale homes because it opens up those existing homes that are sold by seniors downsizing and by second-time home buyers.

Now, I’ll leave it to those home buyers to determine whether or not these new homes are — I won’t use a term that they used. I’ll just say, poopy.

Cara Stern: Should it apply to people who bought last year but haven’t closed? Because I’ve seen some people online who are upset. They may have heard rumours this was coming, or they just decided, “I should take the plunge now and buy a place.” And I understand the argument that they didn’t need the help to spur construction. They were able to afford it before this came in. But, it does kind of suck if you bought and then your next-door neighbour gets 13% off the same unit.

Mike Moffatt: Yeah, I’d be annoyed too. But the point of this is to create new supply. So if you’ve already bought the unit, you’re not really creating new supply. And frankly, how far back do we want to go? Can I get some of the $16,000 I paid in 2004 back?

Cara Stern: Thanks so much for watching and listening. Our producer is Meredith Martin, and our editor is Sean Foreman.

Mike Moffatt: If you have any thoughts or questions about monkeys and dill pickles, please send us an email to the missingmiddlepodcast@gmail.com.

Cara Stern: And we’ll see you next time.

Additional Reading/Listening that Helped Inform the Episode:

Doug Ford And Mark Carney To Expand HST Rebate To All New Home Buyers

Doug Ford And Mark Carney To Expand HST Rebate To All New Home Buyers: r/canadahousing

They explore how the Consumer Price Index works, why different households experience inflation differently, and how factors like shrinkflation, quality changes, and spending habits can distort the real picture. They unpack why lower-income Canadians and renters are often hit hardest, while others may feel inflation very differently depending on where they are in the housing market.

If you enjoy the show and would like to support our work, please consider subscribing to our YouTube channel. The pod is also available on various audio-only platforms, including:

Apple Podcasts

Spotify

Podbean

Below is an AI-generated transcript of the Missing Middle podcast, lightly edited.

Sabrina Maddeaux: The Bank of Canada regularly asks Canadians how high they think inflation is, and not surprisingly, on average, they give higher answers than the official inflation rate. Some of this is simply a distrust in government, and that we have a stronger emotional reaction when the price of something goes up than when the price of something goes down. We’re seeing that play out right now with the recent spike in gas prices, but there is more to it than that.

The general public isn’t entirely wrong. Part of it has to do with how we measure inflation. The improvement in the quality of a good is treated the same as a price reduction, when they are two very different things. But it also has to do with how some prices rise faster than others. So the inflation that you experience may differ from my experience.

And that’s not just a housing phenomenon. When the Bank of Canada measures inflation and announces that prices rose 2.5% over the last year, how do they actually come up with that number, Mike?

Mike Moffatt: Well, the short version of it is that they break down household spending, including both goods and services, into hundreds of different categories to create a representative consumer spending basket. They then track the price of each of those individual goods and services, and how those change over time. And that basket is weighted by the average total spending of that good. So cars are given a higher weighting than golf balls.

Now the items and relative weightings are updated from time to time as new products and services are introduced and old ones go extinct. And the prices of the goods and services are adjusted, or at least they try to adjust to take into account both changes in product size and product quality. And all gets thrown into a blender, and we see how those prices change over time. And that gets us the inflation rate.

Sabrina Maddeaux: So two different families are going to have radically different spending habits. Obviously, some may have children who need daycare, others may spend a lot of money traveling or going to restaurants, while others may see most of their paycheck go to the high cost of housing. So, because everyone’s basket of goods and services differs, families will experience inflation very differently.

Do we know which groups are experiencing higher rates of inflation than others?

Mike Moffatt: Well, it really does come down to those spending patterns, as you mentioned. Statistics Canada tracks hundreds of different categories of spending, but they are divided into eight basic categories. Surprisingly, since 2002, housing or what the Consumer Price Index calls shelter. Has actually not experienced the biggest jump in prices. Though that’s partly a quirk of how stats can measure housing inflation. The biggest jumps have been in the alcohol, tobacco and cannabis category, along with the food category.

Sabrina Maddeaux: I actually didn’t know reading was a category. I’m just curious, were those books, newspapers and magazines? Because that’s so broad?

Mike Moffatt: Yeah, it is. So it’s books, newspapers, magazines and those prices haven’t gone up nearly as much as other categories. And a lot of that has to do with the fact that there’s a lot of competition. And when it comes to news media, newspapers have had to lower their prices. We’ve had online bookstores create a little bit of competition there. So it shows that market dynamics matter and they affect the rate of inflation that people experience.

Sabrina Maddeaux: Okay, thank you for satisfying the journalist nerd and me.

I would imagine there are large differences within categories. There have been all kinds of headlines lately about the skyrocketing price of beef, for example.

Mike Moffatt: Beef is a terrific example because. Those prices have more than doubled since 2002, while the price of potatoes is only up about 50%. And obviously, it depends on what time period you’re examining.

So, for the last couple of decades, coffee prices have increased at about the same rate as general food inflation. And actually, in many years, they’ve increased more slowly than the typical food category. But last year, in 2025, we saw consumer coffee prices jump by about 30%. And that’s the worst type of inflation of all. It’s the type that affects me!

Sabrina Maddeaux: Now consider someone like you who drinks a lot of coffee, but who isn’t an economist like you and doesn’t follow the data. You go to the supermarket or the local coffee shop, and you see prices are way up. You have to be thinking that inflation is absolutely out of control.

Mike Moffatt: Yeah, that plays a huge role in people’s inflation perceptions. When they see the price of something that they purchase frequently, and those prices have increased a lot. There’s a certain level of salience there.

So when it comes to inflation perceptions, some prices matter more than others. And when it’s good, you purchase a lot of it. Like if you’re somebody who drives a lot, it also means that your personal rate of inflation is probably higher than the rest of the economy.

Sabrina Maddeaux: I do know when my fiancé and I drive past gas stations, we always comment on the price of gas, so that’s very true.

Now, you mentioned earlier that Statistics Canada takes into account changes in package sizes. So, when we see shrinkflation at the grocery store, is that taken into account in the inflation data?

Mike Moffatt: Though it is possible that certain examples are missed, for the most part, I think Statistics Canada does a good job of this. They recently reported that from 2021 to 2023, 30% of the grocery items that they track experienced shrinkflation. So I think that says a couple of things. One, they’re aware of it. And two, that shrinkflation is really widespread when, just in a two-year period, 30% of those products or product categories are experiencing shrinkflation.

Sabrina Maddeaux: I’m a big Kraft Dinner fan, and one box used to feed four people when I was growing up. Now one box barely feeds me.

Mike Moffatt: I’m a dad of a growing 11-year-old boy, and sometimes you’re cracking open that second box. So absolutely, that’s a big, big issue, and I think a lot of people have noticed that. That is relatively straightforward for Statistics Canada to measure because on the Kraft dinner box or the coffee container, they have how many grams it is and so on. So they do catch a lot of that. But what’s harder to accurately measure is how the quality of goods changes for both better or worse. So when computers get faster, or smartphones get more features, statistical agencies like StatsCan try to account for that in the data. But where I’m a bit skeptical that StatsCan is accurately capturing changes in quality is when products make subtle changes to reduce quality. Like when food companies reduce the quality of their ingredients instead of raising prices.

Sabrina Maddeaux: Yeah, this is something that seems to happen a lot.

Mike Moffatt: Yeah, that’s right. And that’s something that really annoys me as someone who enjoys a good bowl of ice cream. And I’m skeptical of the ability of any statistical agency to properly account for that. Properly account for the fact that you’re no longer getting chocolate in your chocolate ice cream. And I don’t think it’s because statistical agencies are not trying. They do try to account for this, but it’s just really hard to track. And given how common these quality downgrades are, it makes me believe that we may be underestimating the rate of inflation because we’re not adequately capturing how consumers are paying more for products, but they’re actually getting less because these products are worse than they used to be.

Sabrina Maddeaux: I absolutely believe that.

I’m going to talk about cheese again for a second. Kraft Singles, big fan as well. There have been a lot of comments on Reddit about texture changes, how the cheese might melt differently, and differences in flavour, over the years. So it seems like something consumers are noticing, but it’s very hard to get any real transparency into that.

But because this is the Missing Middle, we can’t have an inflation discussion without talking about housing. You mentioned that there’s a shelter component in the CPI that covers housing, but the actual rate of inflation any family is experiencing must be different depending on where they live or whether they’re renters or homeowners. Is that the case?

Mike Moffatt: Yeah, absolutely. There are massive differences. And, the CPI is done at the national level, but it is also done at the provincial and geographic levels. So we do account for that. And it does mean that inflation can be higher in some provinces or some cities in others. But overall, the CPI measures the average family, so it finds that basically the average family owns 70% of a house and rents 30% of one. Which, of course, no actual family does in reality, the same way that nobody has two point three kids. But statistically speaking, that was the average in the 80s.

And as well, the shelter component considers things like water bills, property taxes and so on and not everyone directly pays those either. So there’s a lot of variability within that basket. And even without taking into account those geographic differences, we can split households into four types, and how they experience shelter inflation is vastly different.

The first group is renters, and they have no plan to buy a home soon or ever. So they’re not directly impacted by changes in home prices or mortgage rates. They could be indirectly impacted because it could affect rents, but ultimately, it is the changes in rents that they’re affected by. Not all of these other things.

And then you have folks like me, who own a home, but we haven’t fully paid off that mortgage. Unlike the second group, I actually benefit. At least in a financial sense, from home prices and inflation. We’ve already purchased a home. It’s ours now, so if home prices go up 10%, our potential purchasing power actually goes up, not down, because we could borrow against those, untaxed and unrealized capital gains and so on. So that type of price increase doesn’t really affect me in a way that other types of inflation would. It’s actually financially beneficial.

Sabrina Maddeaux: Shocker, Gen X Mike wins again.

Mike Moffatt: Gen X Mike wins again. Well, Gen X was due for a win.

But on the other hand, if mortgage rates go up, we are negatively impacted because you have folks who have variable-rate mortgages, so they get hit right away. Or fixed-rate mortgages, that will eventually renew, in my case, as of January 2027. So I’m okay for a while. But I’m really hoping those rates go down in the next six months or so.

And then finally, you have Boomers and Silent Generation folks like my parents. They own their home. They’ve paid off their mortgage. So rising mortgage rates don’t impact them at all. And it actually means that if other interest rates are going up the same way that mortgage rates are, like the interest paid on savings accounts, that’s a net positive for them.

In my case, interest rates up, that’s bad. For them, interest rates up, that’s good as far as their purchasing power goes.

Sabrina Maddeaux: Tracks to the theme that we don’t have one economy anymore, we have multiple, often based on when you were born, where people are experiencing it very differently. And the way our data is reported doesn’t always reflect that.

Thank you so much, everyone, for watching and listening. And thanks to our producer, Meredith Martin and our editor, Sean Foreman.

Mike Moffatt: And if you have any thoughts, questions or advice on somebody who has a mortgage to renew. Please send us an email to MissingMiddlePodcast@gmail.com

Sabrina Maddeaux: And we’ll see you next time.

Additional Reading/Listening that Helped Inform the Episode:

Consumer Price Index and Inflation Perceptions in Canada: Can measurement approaches or behavioural factors explain the gap?

Shrinking products, rising prices: Food-specific quantity adjustments in the Consumer Price Index

Reddit Post: Greedy Bastards. This just happened in the past few weeks.

Funded by the Neptis Foundation

Brought to you by the Missing Middle Initiative

In this week’s episode, we go deep into the engine room of Canadian democracy. Paige argues that our current electoral system acts like a monopoly, repressing political innovation and protecting the assets of a small sliver of the population at the expense of the middle class.

If you enjoy the show and would like to support our work, please consider subscribing to our YouTube channel. The pod is also available on various audio-only platforms, including:

Apple Podcasts

Spotify

Podbean

Below is an AI-generated transcript of the Missing Middle podcast, lightly edited.

Cara Stern: Here at The Missing Middle, we often talk about how the political and economic system is tilted towards the people who have. And getting reform means getting someone who’s doing really well, being willing to sacrifice for no gain.

Paige Saunders is one of my personal favourite YouTubers, and he has a theory that there’s one issue that lurks under the surface of many of our problems. And if we make this one big fix, many of our structural challenges will become easier to tackle. So first of all, welcome, Paige. I’m so happy to finally have you on the Missing Middle. So what is that big fix that we need to do? What is that issue?

Paige Saunders: Shocker: Not getting what you vote for when you go to the ballot box is a very large problem in a democracy, and has distorted Canada’s electoral outcomes and the policies that we get for decades. And it’s time to put a stop to it Cara. As a person who loves Canada, as a person who likes to see Canadians well housed, I think that the fact that we have an electoral system which prioritizes the preferences of suburban swing ridings and doesn’t give people who live downtown much of a say at all on the the electoral politics map, is a major problem.

So for me, proportional representation is a broad reform. It’s not necessarily the top of any particular list. If you want to fix housing, the top thing you can do is pass right-to-build legislation. But proportional representation sits down the list of the number of things: transportation and health care and the economy and housing. And makes it so that if you pass proportional representation, you get a much better outcome for your country.

Cara Stern: Much of our audience obviously cares about housing, and I know that we need, as you said, many more homes built so people can get back to living that middle-class dream of at least having the option to own a home, even if they don’t want one. So how could proportional representation help us solve the housing crisis?

Paige Saunders: Okay, I’ve got a little map. So what does this map look like? And for people watching can now turn to your YouTube channel, Missing Middle Podcast. Check it out on YouTube and tune in if you want to see the map on screen. What does this map look like to you?

Cara Stern: So it’s a map with some red on it. That’s where the yellow belt has been historically, where you see a lot of single detached housing, and basically it’s a map of the suburbs of the GTA and some of the inner suburbs.

Paige Saunders: Well, it’s not, Cara, I got you. It is a map of swing ridings. These are ridings where the vote was within 5000 votes away from switching between different political parties.

They’re pushed in this direction to be like, what will help us win? And for someone like Doug Ford, if they’re looking at downtown Toronto, they’re never going to flip that riding. It’s not up for play. It’s a stronghold riding for a different party.

Cara Stern: Even though a lot of the downtown ridings have a lot of Conservative votes. A lot of them have 20% to 30% Conservative votes or more.

Paige Saunders: And it’s a big thing that they’re missing out on — having choices on the conservative side of the political spectrum. If you are a conservative, there are the social conservatives. There’s the populist wing, and then there’s the fiscal conservatives, and all of them are in an unhappy marriage in one Progressive Conservative party in Ontario.

It would be really nice if conservatives can be like, I’m not so much into the social conservative side of things, but I am a fiscal conservative or a conservative living downtown who’s like, well, I do like taking transit and riding my bike, but I also want the government to be more responsible, and keep taxes low.

Those people should exist. They should be part of the calculus of a party deciding, “Oh, I’m going to run for office. What votes can I pick up? Oh, there’s a lot of conservatives who work in finance living in downtown Toronto, and they have this set of values. So let’s have on our policy platform not cancelling a bunch of bike lines.”

Whereas what you have right now with the conservatives in Ontario is, who cares about downtown? They’re not in play. They’re never gonna give us any votes. And so they’re effectively abandoning their own voters downtown in favour of scoring political points by doing things that appeal to suburban voters.

Cara Stern: It sounds a little bit, though, that what you’re suggesting is that most of the population lives in urban areas, and you’re just taking the power away from people in the suburbs and just going to make it so that people in urban areas hold all the power. Because if the majority of the population based on where they live, if they want something, if they’re under a proportional representation system, you think that it wouldn’t matter what the suburbs want. It wouldn’t matter if this hurts rural voters.

And that’s a problem too, no?

Paige Saunders: Not really, because I mean, this is just an equalization so that people are evenly seen by the political system, but it also works in favour of rural ridings because rural ridings are also safe seats, but in the other direction, and they’re basically taken for granted. A lot of rural Ontario is like how Alberta is for Conservatives. A hay bale painted blue would win in this riding. So it would be good. You might see a small rural interest party arise.

And so I’m sure there are many conservatives who are like, Doug Ford’s not exactly my cup of tea, but I really don’t like the NDP.

Cara Stern: A lot of them say Doug Ford’s a liberal. That’s the line I hear from conservatives these days is that he really is a liberal.

Paige Saunders: He’s a populist, which is this interesting new form of conservative. And I mean, populists are quite dangerous. They often do seem to erode things, like the scandal recently that was the freedom of information request.

Cara Stern: Yeah. Making it so you can’t get that information of what they’re talking about behind the scenes.

Paige Saunders: Now imagine that Doug Ford was in a coalition with another conservative party, as you would typically have if you were in power. You would be tarnishing your coalition partner with this brush of not wanting to be accountable. And to be honest, you’d probably get them breaking the line on that. I mean, you wouldn’t even try it, in that sort of situation, because people would be saying to the coalition partner, “What the hell? Why are you enabling this behavior? That’s clearly not what we’re looking for.”

I feel like in Canada we have this interesting cultural tendency towards monopolistic behaviour, right? We have a problem with it in commerce. Even in health care, we’re like, “No, you can only go to the government. There’s not going to be a private option.”

We just seem to really like a large incumbent thing. And I think that stems from our political culture, which is a reflection of this. We have created a system that represses innovation, third parties and different ideas and gives you the two options. You got the Bell and you got the Rogers, you’ve got the Liberals, you got the Conservatives.

And it’s really hard to go with the third or fourth option without effectively throwing away your vote. I think that if we passed proportional representation, you’d see this unlocking of the true desire that people have. What do people want to vote for if they’re not voting for the Liberal Party?

Cara Stern: Countries with proportional representation still have housing crises. They still have inequality, and many have the same problems that we have. So, for example, the Netherlands, it has proportional representation, but they also have a massive housing shortage. Why is our voting system the variable that matters here?

Paige Saunders: So a voting system or electoral system is not a panacea. it’s not like, “Oh, you get proportional representation. Your housing prices are now really cheap.” There’s other elements at play. So land constraints, for example, in the Netherlands, if you’re literally creating land out of the sea, you’re going to have more valuable land. You’re going to have higher housing prices. There is obviously the fundamental property rights of the country, which are also another element.

And so, if you’re broadly interested in reform, which I am, it is a no-brainer that it should be top of the list, because it amplifies the benefits of all the other things that you pass, and it makes those reforms much more likely.

Cara Stern: We’ve spent a lot of time talking about this, and I feel like there were some issues where I’d say to you, “Paige, I’m so frustrated with this, why is it like this?” And eventually it always finds its way back to electoral reform. However, I think there’s a lot of people who aren’t convinced yet.

So I’m going to channel that person and try to put some of the criticisms to you. Changing the system requires the support of governments who do really well under the current system. So you’re counting on a party that does really well under the first-past-the-post system to be like, “Let’s make it so it becomes much harder for us to get a majority government. We love being the King of Canada for a bit. And we would like to keep that going. Even if we’re out of power for ten years, we’ll get back in.”

Why would they change it?

Paige Saunders: This is part of a problem because we live inside this first-past-the-post majoritarian system. We’re used to a hyper political atmosphere where things are so gamed and it is all about the status quo and the way things are. So I guess it’s hard for Canadians to imagine what if Canada had a more reasonable and effective government that wasn’t so focused on, “What do I need to say to win power? How do I play this game so that I win these swing ridings so that I can form the government?”

So it has bred a certain level of cynicism in Canada about the possibility for this reform. The first issue you encounter is people just don’t even know, and this is a bit of an Anglosphere North America problem. We neighbour a country that has first-past-the-post, and we inherited a political system from England, which also has first-past-the-post.

This very strange system, which every other Western democracy has replaced with proportional representation. It has an outsized influence on what we think is normal. We’re just very ignorant of Spain and Germany and Sweden, New Zealand and these other countries. They’re just not on the radar as much. So your first issue is just that what you vote for isn’t what you get.

And then people are like, “Oh, what’s that? I don’t understand.” And then you walk them through it and explain it.

Cara Stern: I think there’s a lot of people who see that the U.K. has first-past-the-post, and they look back at our historical traditions and they think, we’ve created a pretty good Canada with the system. It’s working less now for a lot of people, but it’s worked for a lot of people, especially the ones who have political power.

So I don’t see why they would want to change it, because I think the political system has historically led to a pretty good country.

Paige Saunders: When you’re in a club with the U.S. and the U.K. and Canada — that’s it, that’s the three established Western democracies left with it — it’s just so hard not to notice that something is wrong. The U.K. has had a horrible 15 years, as has the U.S. And sure, all democracies have an issue like, Spain was hit quite hard by the financial crisis. Germany is having a hard time forming a government at the moment, but none of them are as bad as storming the Capitol and then voting for the guy we kicked out, and now he’s back in and forgave everyone who stormed the Capitol, or the self-sabotage of the U.K. over Brexit.

Like again, this happens quite frequently. Like in 2024, Mongolia switched from a majoritarian system to a proportional system. It was an act of parliament. It was done by the majority government who had won a massive majority in the first-past-the-post system. People were frustrated. There were protesting in the streets. They saw the way the wind was blowing.

They were going to get crushed in the next election and totally wiped out by the same electoral system. So they passed the reforms and weirdly enough, they actually managed to form a government again, even though they lost a lot of power — they didn’t have the absolute majority — they didn’t lose all of it. They were looking at being reduced to the single digits, similar to the CAQ, in Quebec.

This is a thing we’re headed towards. It’s an iceberg that we will hit with a system because distorting the will of the people frustrates people. So let’s just get it sorted out and let’s have a Canada that reaches its full potential. A Canada with that across the board, 20% performance increase in the economy and in health care and in housing.

Cara Stern: So we are going to see a couple of referendums about whether provinces should leave. But there’s also been some historically about whether provinces should have proportional representation. And it never passes. And so at some point, do you just have to accept that Canadians just don’t want it?

Paige Saunders: Cara! So cynical! The thing is, in Quebec, the majority of people want proportional representation and have for quite a long time, because of that they are heading to the “as bad as things can get” mark, at an earlier stage than other provinces. So Quebec was the earliest province in Canada to deal with a multi-party system on a regular basis.

So you had extremely disproportionate elections during the rise of the Party Québécois, where you had 90% of the seats going to a party with 50% of the vote. That was when they were up against the Liberals. So in Quebec, the populace has been aware for a long time about the issues of a fragmented vote.

And most people in Quebec — something like 60% — support a move to proportional representation.

Cara Stern: So why haven’t they moved?

Paige Saunders: Well, because politicians didn’t do what they said they’re going to do, which all the parties that were in opposition signed on to, to say that they would shift over to a proportional system. And so you saw this very familiar pattern. There’s the slow roll of: “We need to look into this. We need to do some consulting.”

Then, “I know we said that we would switch over to proportional representation, but actually we’re going to have a referendum on it instead, and we won’t have a referendum before the next election. We’ll have it during or after the next election.”

So you see these barriers put up by politicians. And I think that the solution is to get away from this like referendum solution and move towards a binding citizens’ assembly promise.

So that’s where you say, look, this is a constitutional decision. We need to get a large selection of citizens in here to choose an alternative solution or decide to stick with the same system. They will hear from experts, like a jury, and decide on a system to use. And then we will implement it, not have a referendum where you ask people, the entire population, do you want to move to this electoral system?

And so you do get this phenomenon where people will say no until everything’s terrible, which is what’s happened when you’ve had referendums that have succeeded in places like New Zealand. It took New Zealand having an absolutely catastrophic financial crisis and decades of false majority governments for New Zealand to vote yes on two referendums.

Cara Stern: And when you say two referendums, I guess what they do is the first one will say, do you want proportional representation or do you want to keep the current system? And then they voted yes. And then the next one would be like, which system do you want?

Paige Saunders: Exactly. So they had that. The party promised to implement electoral reform and was like, “Okay, here’s a referendum. Would you like to change?” People said, yes, and I think they had to choose which particular system they’d be interested in. And then the second referendum was simpler: change to the system that came out on top last time, or keep what we have. And it passed, but it’s a small miracle.

Most countries that have changed their electoral system, you just do it through the legislature. We’re really lucky. If America wanted to change its electoral system it would have issues. You’d need to change the Constitution. It’s got a limited range of systems that it can change to.

Cara Stern: I’m still stuck on the fact that we know that older voters turn out at higher rates. They live in the ridings that are more important electorally. They own the assets that it seems like governments keep trying to protect. Obviously, they’re resistant to change. And then we know politicians are resistant to change. That hurts this crowd of voters. So I just don’t understand how we would get them on board to the point where a government would feel comfortable making this change.

I know you said there are examples like in Mongolia, where they did have the party that had a majority and was losing and they decided, let’s do that. We didn’t see that happen federally when the Liberals looked like they were going to be crushed. I thought maybe then we would see something, because they could have been wiped out and they weren’t, and they were rewarded for it.

So then I just keep thinking, why would a government do it? Like is it just out of the goodness of their heart that they’re like, this would be fairer? “I know we do really well and we want to keep doing really well, but it’s just not fair. So we’re going to do it.” Because I just don’t think that people act that way.

Paige Saunders: The thing is, in aggregate they don’t. Most parties and most politicians will let you down on this issue. But some of them don’t, like to his credit, John Horgan in B.C., when they were running their third electoral reform referendum. The questions were about as good as a referendum can be. He said that he’d do it. He did it.

I think the lesson really, in looking at an example like B.C., is that you have to move off the referendum thing. It’s just too hard. In the end, politicians are people. Some politicians have more credibility or integrity.

Justin Trudeau didn’t have integrity. He lied about it. He deceived that he would pass electoral reform in 2015. Lots of people, including myself, were really excited to vote for that. Then it got slow rolled. He went through the typical process, but there are plenty of examples of politicians and parties like the Yukon who just had a referendum to decide if they wanted a ranked choice system. They followed through. They asked the public.

And if you look at all these referendums in aggregate, you can see trends. You want to make sure a referendum is binding. There’s a lot of referendums that are like a public information session. It’s just up to the government to decide whether to implement it. You want a binding referendum, as in, we’re going to do the results.

Ideally avoid the referendum and just have the citizens’ assembly and make sure it’s a binding citizens’ assembly, because that can happen too. The citizens’ assembly will most of the time say, oh my God. We spent two weeks in a room learning about electoral systems. We don’t want to have first-past-the-post. We should change the system and then the politicians will go, “Good suggestion! Anyway…”

Cara Stern: I think about Justin Trudeau’s public consultation that I still refer to, to this day all the time, where it was like, when you want to ask a question, but you don’t really want the answer. So you’re just being like, “Do you like governments that are effective, or do you want Nazis in your government?”

That was the survey they had for the public. It was so bad. And then on top of that, I remember when the citizens’ assembly that they put together suggested a proportional system.

I’m sure that was a decision like, “Let’s make sure this doesn’t happen.”

Paige Saunders: Yeah, there’s a bit of like, “Well played Mr. Trudeau” because you look at his promises, and he says it’ll be the last election run on the first-past-the-post, which doesn’t exclude ranked choice which is the preference of the Liberal Party. Ranked choice is not a proportional system. It’s a system that heavily favours a centrist party, and the Liberal Party models to do very well under a ranked choice system.

But for Canada, it’s not really a suitable solution because we are a multi-party state. And I think what benefits Canada are the fresh ideas that would come from coalitions being formed with minor parties that are coming in being like, a political startup, so to speak, rather than the incumbents that we have. Canada culturally has this centred, ballasted weighted system. And a lot of the problems in Canada are just related to not having more variety and more options and more choice. Obviously, we see that when it comes to supermarkets, but it also includes our politics.

Cara Stern: One of my favorite times talking to you about this is when you were sharing a conversation you had with ChatGPT, and I wanted to know if you could go over what you said to it, about asking what system would be the right system for you.

Paige Saunders: This is quite funny. Back in the day when I’d have to argue the case for proportional representation, I’d be debating with someone and I have to send them these links to these academic studies, of 50 proportional countries compared over a 50 year period for military expenditure or something like that. AI has made it really handy to make the case.

I can just ask the audience listening now: Go to AI and say which electoral system outperforms the other on whatever matters to you, and you’ll usually find that it says a result like, proportional system would have a stronger result.

And I think what you’re referring to is one night when I put into Gemini and I was like, “I’m a real son of a bitch, and I want my country to be unstable. And I don’t want women in Parliament, and I want the economy to have centralized monopolies etc. Which electoral system should I choose?” And it said, “Well, you want first-past-the-post.” Because it’s the opposite of all those pro-rep things. And it really is.

I want to try to get across to Canadians that I love Canada, I like Canadians and the reason for it is because Canada has great values. The citizens of Canada have great values.

So it is bananas that the electoral system we have, the way that we choose leaders, is the system that’s like, “We’re not interested. We want to shut out our political opposition, and we only want to hear from Canadians who live in a certain part of Toronto, who often happen to be a certain demographic.”

Cara Stern: Yeah, I recommend going into AI and doing that. Put in the things that you hate about Canada and say, which system should I have if I want these things? Because I was shocked. I was like, “Okay, well Paige probably did something here, I don’t know. I should trust you. But for some reason I was just like, I have to check this out for myself.” Does it really do that? Or does it just know from your history of conversations that’s what you’re looking for?

Paige Saunders: I like that the AI was also delighted to tell you that you’re in luck. You have a first-past-the-post system. It’s like, “Oh, wow, luckily you’re doing a great job of repressing women!”

I’ll give an example like the Mongolian one. I’ll keep using Mongolia and it’s a funny example, but I actually think it’s just the most recent country that’s done the change — one of dozens in the last couple of decades. When they implemented proportional representation, the share of women in the National Assembly went from like 11% to 20%.

Immediately you get the results when it comes to who’s representing you. And then within, over the course of a few decades, you’ll start to see the actual results. So you have things like mega-projects not getting cancelled because they go through a riding that irritates someone. All these chronic issues that have held back urbanism in Canada. “We have to bury it because it’s going through this neighbourhood, and that’s a riding that’s very important to the province.”

Why is it important to the province? Inevitably, when you look into it, it’ll be a swing riding that gives them the power that they have.

It’s funny when people say, we wouldn’t want a complex proportional system. Look at this math. It’s like people don’t realize the hot water that they are boiling in. In Canada, we have an immensely complicated gamified political system where 20% of the vote equals 30% of the seats. And you have to mathematically model.

We have a really hard time projecting seat counts, for example, because it’s so complex to figure out how to win the election and what will result in actual power and actual outcomes. We have an incredibly complicated electoral system. It’s just we’re used to it, so it’s easy.

We’re speaking English. Apparently it’s a complicated language, but it seems easy for us just because it’s always been this way, and it’s what we’re used to.

Cara Stern: Often when we talk about electoral reform, you bring up when you came to Canada and that you were shocked we still had this system. So I was hoping you can tell us a little bit more about that.

Paige Saunders: I was born a Canadian citizen, so I always knew that I was going to be here at some point. And it actually wasn’t until I went to vote for the first time that I realized it used first past the post.

Given a lot of stuff like all the achievements that are typically on the democracy spectrum, like giving non-landowning men the right to vote, giving women the right to vote, Indigenous people and immigrants the right to vote — all these things Canada has achieved.

So it was like coming to Canada and realizing that all high schools are private, that you have to pay for them. Just something that’s really out of line with the civilizational achievement that the country is on. And I think it’s important to see this as part of the democracy spectrum.

The story of democracy is a gradual inclusion of more people and gradually more equally representing the will of the people. So in the past, it was just a very small sliver of people who were able to vote. And then over time, we’ve allowed more people to vote, so that you now have the representation of women and their preferences.

And at each step of the way, the people in power, like dudes — guys gave women the right to vote. Women asked for it, fought for it, and convinced enough men to give it; to allow them to participate. Same thing for all the other achievements that we’ve had on this democracy spectrum.

Cara Stern: Yeah, but I don’t know that we see this fight the same way, as we did with women. You have this group of people that’s very invisible that you can say, “Oh, these people don’t have a right to vote, and that is unfair. Look at all the things that they are contributing to society.” And it was like 50% of the population that did not have the right to vote. That’s very easy to look at and say that’s a problem.

Doug Ford got about 40% of the vote and he has a majority. That is obviously more than half the population who didn’t vote for him, who then have a premier who isn’t necessarily representing them at all. If they’re lucky, they have an MPP who’s at Queen’s Park pushing back sometimes. But they don’t really have any power. So yes, it is a majority of people — I see that line there as I said — but at the same time it’s not the same sort of group. People don’t see themselves as part of the disenfranchised group in the same way that women would have seen it, right?

Paige Saunders: Well, you’re starting off with the worst offenders, right? The first political reforms in Canada were to enable non land-owning men to vote, then women, then minorities and then Aboriginal people. And honestly, all those delays are shameful. Canada was way too late. And to anyone who is pushing for proportional representation today, you hear people say, “Sure this system empowers wealthier people on average, and it’s not good for the representation of women.” And that’s why Canada and the U.S. and the U.K. have hardly any woman as the head of state, while New Zealand, half of my life, has been led by a female prime minister.

It’s tempting to say, “Well, why would they let it happen? Why would they change it?” But I would never want to say that to a person advocating for Aboriginal people to be given the vote.

Just because we have waited for too long doesn’t mean that the problem is that the reformers wanted reform. The problem is that the system hasn’t changed, and Canada is late on this one. We should have dealt with this decades ago. We haven’t, and we’re now in a really dangerous situation of having an electoral system that is harming our democracy, lowering our economic performance and increasing our housing prices, and just taking us into a really dark and dangerous place.

We should fix it. Now.

Cara Stern: As someone who’s covered a lot of elections, I see every time there’s an election year, electoral reform and proportional representation pops its head out a little bit and it’s like, “Remember this thing?” And every election you’ll see some media coverage afterwards being like, “This is what the vote was. This is what it would have been if we had a proportional system.”

And then they talk about it for a bit. And having worked in newsrooms, it seems like it’s a little bit like, “We always have to talk about that but obviously this is not a serious suggestion because it’s never going to happen. But at the same time, we have to give them the airtime now.” And then it disappears for a little bit.

And there are lots of examples in this country. I mean, if you look at, as I said, Doug Ford with a strong majority, with 41%. You have Olivia Chow who got her mandate with 37%, which I know it’s different in the mayoral elections, but still. Even Justin Trudeau, I don’t think people appreciate that he lost two elections in terms of the share of the vote and got minority governments out of them. The Liberals won way more seats than the Conservatives despite losing the popular vote.

And these conversations have never led to change. So what’s your answer to someone who says, “I’ve heard this argument over and over and over. The arguments are good. There are some valid points here, but like, you’ve got to accept that people don’t care. Maybe they don’t want it. And just at some point, just like move on to another topic because it’s just never going to happen.”

Paige Saunders: So I understand why it is hard for people to get their head around this one. Because when you have something like woman not having a vote, you can be like, look, this is obviously terrible for them. And that’s systematically terrible for women in a very overt way because it’s discriminating against them. The problem with electoral reform as an issue is it goes through this complicated process.

There’s no party list. So that’s where women came through in other systems. So you have this complex process producing an outcome. And that’s just less satisfying for individuals to get involved in. It takes years for people to get their head around it. However, people do get their head around it once you go on about it for long enough. People start to see the pattern and then they come on board. Like, at this point, I’m devoting my life to getting this thing across the line in Canada. And you just have to get more people who want to participate in that, which I think is possible.

I’ve seen a lot of my friends over time go from being like, “Whatever. What’s that about?” To being like, “This is a big issue.”

Cara Stern: Do you have to convince the so-called elite in order to make this change, or do you think convincing young people who are frustrated with housing prices, if you can convince the general population, do you think that that is good enough to get us change? Or do we need to convince the people who are part of the system?

Paige Saunders: I think you just have to constantly highlight that this is crazy. It’s crazy to live under this system. There is an elite problem in Canada. There is a bias towards the status quo. And when I have arguments with people, when it’s late at night, over a couple of drinks, and it’s someone who’s very much involved in policy and quite influential, in their own way. You’ll find the ugly truth a lot of the time is, “It’s working for me. I have the ear of the Liberal or Conservative Party over-represented.” So they quite enjoy it. And so it can be interesting.

You’ll be debating with them and they’ll be telling you these stories like, “Well, you see, for the reason we have first-past-the-post is it creates a strong and stable government.” And the data shows that it does not. These coalitions that form under a proportional system are difficult to assemble, but continuity of policy is better on a proportional system. Or often there will be stability, but in a form of repression, like notably one of the few countries in the last couple of decades that has gone back towards a majority system is Hungary.

Like the first thing that Viktor Orbán did when he got in Hungary was implement a majoritarian first-past-the-post dynamic into their electoral system. And it’s from that point on, he suppressed the opposition. So it’s telling. So I say, “You want to do what Viktor Orbán did? You want us to stick with the Viktor Orbán electoral system and not move on to the next thing?”

I think it really comes down to us as citizens elevating this issue and not letting people get away with it. We have multiple provinces that are poking away at this issue, I think what’s going to happen is Quebec or Ontario, because both of the last elections were incredibly disproportionate — one of them will implement proportional representation. I think, from that point on, it will spread across the country pretty quickly — if the Americans don’t do it first. I mean, they’re passing electoral reform in a number of states.

Cara Stern: If you’ve convinced some people watching that this is something that they should care about, but they’re new to talking about this, or maybe they just want to find out more, where do you recommend they go to get an understanding? Because it is a complicated issue and you start looking into it and you start seeing the different proportional representation systems, and there are so many of them out there.

Where do you recommend people start?

Paige Saunders: So people who are into electoral reform have preferred systems, and it can create this sense that there’s like a lack of consensus. That’s often what’s used by the politicians who are opposing it. It’s because people are going, “Oh, I think single transferable vote.” Or “Oh, I think in MMP, I think party list or whatever.”

I would tend to suggest avoiding that little debate when you are out in public, arguing about stuff. But if you are interested in this, it could be a good point of entry for technocratic people, the sort of people that listen to the Missing Middle, to have a look at how different countries choose their governments.

Like I find as a fan of civics, it is really fascinating to look at the constitution and the structure of Colombia, or France.

Cara Stern: Where would you recommend people look that’s the most similar to Canada that deals with some of the local representation that people really like from first-past-the-post? Which country should people look at as a starting point?

Paige Saunders: What’s a good example would be Australia’s upper house. So Australia has a pretty powerful senate relative to Canada. It’s not like a suggestion mechanism like ours. And it is elected using a proportional system called single transferable vote. So all of the senators in Australia are linked to a local geography. There’s no party lists.

Citizens choose that senator and that senator. But you have these larger multi-member constituencies where you might have two politicians or three politicians representing you in your area. And I really like STV. I think it’s a pretty good solution for Canada. Ireland has it for example, because it allows you to have someone to go to effectively. So if you are in a riding, you’ll have maybe an NDP, a Liberal and a Conservative MP representing you.

And so if you’re a conservative, you can go to your Conservative MP that’s representing you and talk to them, and then you can go to the Liberal and the NDP MP and try to convince them too.

But it gives you that local accountability with a completely proportional system. It’s also known as proportional ranked choice voting in the U.S. because it uses a ranking mechanism.

Anyway, that’s where I would suggest jumping on a YouTube video to learn about different electoral systems. Look at single transferable vote (STV), look at mix member proportional, look at party list, if you really want to be a dork about it and get your head around it, because it is fun to consider like what we could have.

And then from there, there’s groups like Fair Vote, which advocate for this stuff in Canada, and obviously Canadian Civil. It’s a big issue for me. It’s probably the top issue. And I feel like over the next few years, my whole job is just going to be drawing people’s attention to the fact that any one thing that I’m focused on, we’ll have underlying it that by the way, it is important how you choose your leadership. And if you choose your leadership using the system that we have, it’s not going to be as effective at getting this reform passed.

Cara Stern: Well I want to recommend one video. It’s an amazing YouTube video called “How the Two Parties Crushed Competition” on a great channel called “Paige Saunders”.

Honestly, I think you set the gold standard for explainer videos on YouTube. You have the humour, the intelligence, the production value. No one does it better.

So honestly, people, please. I know when he hates when I compliment him, but go and watch it. It really shows you how America became so dysfunctional in their political system, and how the Trump Party basically took over the Republican Party. And I think it’s really worth a watch.

And we’re so grateful for you to join us today, so thank you so much.

Paige Saunders: Thanks. And I hope that Canadians are proud of our multi-party democracy. And when you look at the US, I think it’s easy to see this is what happens when you only have two options, when when there’s just two political teams and you have to slot yourself into one often because you’re just like, “I hate this other party so much that I will reluctantly pinch my nose and vote for this one. At least not those guys.”

Cara Stern: And thanks, as always, to our producer, Meredith Martin, and our editor, Sean Foreman. If you have any questions about how to set up a survey like a proportional representation one, where you get the exact answer you were always looking for, you can send us an email to missingmiddlepodcast@gmail.com.

And we’ll see you next time.

Additional Reading/Listening that Helped Inform the Episode:

How The Two Parties Crushed Competition

Paige Saunders and Sean Speer: The contrarian case for why Conservatives should embrace electoral reform - The Hub

Fair Vote Canada

In this episode, Mike Moffatt and Sabrina Maddeaux unpack the rise of the “trapped” second-time homebuyer, households in their late 20s to early 40s who did everything right, built equity, and planned ahead, only to find that larger, family-sized homes are further out of reach than ever. With prices outpacing incomes, policy focused on first-time buyers, and a shortage of suitable homes, the traditional housing ladder no longer works.

What happens when an entire generation can’t move up, even after getting in? And what does it mean for family formation, economic mobility, and the future of Canada’s housing system?

If you enjoy the show and would like to support our work, please consider subscribing to our YouTube channel. The pod is also available on various audio-only platforms, including:

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Below is an AI-generated transcript of the Missing Middle podcast, lightly edited.

Mike Moffatt: I’m really concerned about those couples who bought a small condo a few years ago, which they’ve now outgrown, but can’t qualify to purchase a larger home and how it impacts everyone. We hear a lot about the challenges facing first-time homebuyers, but not so much about those who would like to be second-time homebuyers. Now, Sabrina, unlike me, you’re in the same age range as these folks.

Is this something that gets discussed among your circle of friends?

Sabrina Maddeaux: It absolutely does, especially among anyone lucky enough, somehow, to be able to get into a so-called starter home a few years ago during the peak, often a small condo.

I know people who are couples, who are like, We’ll get into the market, and we’ll get that one-bedroom condo right now, just to get in, and we’ll maybe even have a baby. But by the time that child is three or four, and ready for more space, we’ll have enough equity to move into that larger, second family home. But now they’re in a position where they feel they’re stuck, and who knows how long they might be in a small apartment that really isn’t suitable for the family or the life that they envisioned because of the way the market’s gone.

Mike Moffatt: That’s what I think, too. And I believe that governments are ignoring the families and voters facing the second-time homebuyer challenge, which is a critical part of Canada’s housing crisis.

Most of us, you and I and others, are familiar with the challenges faced by young people. They’re living with their roommates, or they’re living with their parents. They would like to purchase their first home, but simply can’t afford the down payment or qualify for a mortgage.

This is a very real, very massive problem, and governments across Canada have policies that attempt to address this. So it’s just the first time homebuyers get a GST rebate.

Now, however, those same governments are ignoring the second-time homebuyer problem. These are people in their late 20s all the way up to their early 40s -usually couples - either have young children, or they’d like to.

They bought that small condo a few years ago with the hope of eventually moving into something with three or even more bedrooms. But those homes remain out of reach, and whatever equity they’ve built up in their current home is not enough for a down payment or to qualify for a mortgage. And I cannot for the life of me figure out why governments are ignoring the families and voters facing that second-time homebuyer challenge.

You are a little bit more politically astute than I am. Do you have any ideas why that might be?

Sabrina Maddeaux: I think it took them so long to come around to the first-time homebuyer challenge that they’re going to need more years to catch up to the second-time challenge. In their minds, the housing crisis is still something that, when they do acknowledge it, affects people in their early 20s who are in more entry-level jobs, and who are really just trying to get into any type of housing, and that’s probably a small apartment or a condo.

And that’s something that they see as easier to fix in many ways, because we do have an oversupply of these shoebox condos and not enough people want them. And then they can say, Well, a unit is a unit is a unit. It’s a lot harder for them to figure out how we build enough family-sized homes for people and family-sized homes that people want, in areas that people need to be in in order to work and not have entirely unreasonable commutes.

That’s a much larger problem, and it’s one they’d rather avoid. On top of the fact that, just by nature of being out of touch with the crisis, not experiencing it themselves, they don’t see how it has now spread into other demographics. And it’s not just young people in their 20s and first-time homebuyers. It’s people all the way up into their mid-forties who can’t find a place to raise a family.

Mike Moffatt: Yeah, it really is surprising how much things have changed in the last 20 or 25 years or so. In the early 2000s, I was in my mid-20s. And for us, the common thinking was that you buy your first home, which may be too small to be your forever home, but you would own it for a few years.

You’d pay down the mortgage, have the price of that home go up a little bit, and then you could sell it. And the difference between the sales price and whatever was left on your mortgage would be more than enough for the down payment on your, quote unquote, forever home. Now, in London, Ontario, where I was living at the time, that starter home was more likely to be a small townhome than a condo unit.

And a high rise. And you and I discussed that in our starter home episode, and we’ll link to that in the show notes. Back then, my wife and I had a lot of friends in Toronto and Vancouver, and they had the same basic idea, except the first home that they purchased was a one-bedroom condo, but that goal was the same. The idea: you make your monthly payments, you have the price of that condo appreciate, then eventually sell it and use the proceeds on a family size home.

Now again, this was the early 2000s. So my experience is over 20 years old. Do you think that same mindset existed 5 or 10 years ago, and do you think it still exists today?

Sabrina Maddeaux: It still did five or 10 years ago. Housing was skyrocketing, and there was a sense of FOMO - fear of missing out. If you didn’t get in now, you never would. And it still seems like if you could somehow just get on the ladder, you were then on the ladder and you’d be able to move up eventually. Now, unfortunately, a lot of those people are stuck.

And quite frankly, when you go to do the math on potentially buying a starter home, and then you think about future planning, it’s very clear, the ladder is entirely broken. It doesn’t work, and there’s no way to even get on it. Or, if you are on it, on that first rung, to move up it. Especially when you’re talking about urban centers or suburbs. Those places where there should be economic mobility, class mobility, and growth doesn’t exist. That has a lot of repercussions.

This model that you describe of people buying condos, planning for them to shoot up in value and then selling them after a few years and then taking those profits and buying something larger, it almost sounds like a Ponzi scheme to me when you think about it.

Was it ever a sustainable model, and doesn’t it require condo prices to rise much quicker than incomes? While at the same time, those larger family-sized homes can’t go up in price too much, or they’d still be out of reach.

Mike Moffatt: I think that is a fair question and a fair concern. Now, I will say that there is a Goldilocks version of this that can work and is sustainable, but it involves condo and starter home prices rising at roughly the same rate as wage growth. So, around 3 to 4% a year. Under that scenario, you can still build equity on a condo or starter home, but a lot of the heavy lifting is done by your monthly payments. Paying down the mortgage, rather than home price appreciation. Now, there have been times where we’ve had this Goldilocks scenario. London, Ontario, from about 2004 to 2014 is one example. Home prices rose, but not too much faster than income. So, the home price to income ratio stayed at reasonable levels around that 3 to 1 range.

Now, of course, that was never the case for the GTA, where it wasn’t uncommon to have condo and family-size home prices have double-digit percentage gains in a single year, at a time when inflation was 2%, wage growth was 3 to 4%, causing home prices to become even further disconnected from incomes. That model was never sustainable. So it’s totally understandable why there was this 15-year period where it seemed that every week the media was predicting the mother of all home price crashes that never came. Because I think we often underestimate how long our economy and society can sustain unsustainable things. Eventually, those things are truly unsustainable.

So we now find ourselves in a situation where we have a lot of young individuals and couples who are trapped in place. They purchased a small condo in a high-rise a few years ago. They don’t qualify for any of the first-time homebuyer programs, but they really need more space, and they don’t have any realistic hope of getting in anytime soon.

So the first step to fixing a problem is admitting that you have it. The other day, you were showing me some new polling data on how Ontarians view housing affordability, and that left me with some optimism that the general public actually gets it.

So what did the data show?

Sabrina Maddeaux: Well, David Colletto and our friends over at Abacus conducted a poll of a couple thousand people on behalf of the Ontario Real Estate Association, and we’ll link to the results in the show notes. Overall, Ontarians ranked “improving housing affordability as one of their top three priorities for the provincial government,” just behind addressing the rising cost of living and improving access to health care.

Now, not surprisingly, the younger you are, the more likely you are to see housing as a top-three issue. But it was a high priority for all groups over the age of 60. Also in the poll, Abacus asked homeowners whether or not they plan to sell in the next five years and, if so, why? Less than a third of homeowners under the age of 45 who want to move in the next few years identified “upsizing” as a motivation.

Roughly a third of this group identified a desire to relocate, and a third identified high property taxes as their motivation. So it would seem that a lot of young people and couples don’t seem to be moving into a larger house in the future, suggesting that the second-time homebuyer barriers we’re talking about are very real.

Mike Moffatt: And I think they are very real.

Now, Abacus polled Ontarians on this idea of extending this rebate. What did it find?

Sabrina Maddeaux: They found that overall, 55% of respondents support the rebates, which were announced last year by both the federal and provincial governments, with only 10% opposing, with the remainder either unsure or indifferent. So they are broadly popular with the public, and despite this popularity, only 8% think it’s enough to solve the affordability crisis, and 80% believe it’s either too little or think it won’t accomplish anything at all.

Over two-thirds of respondents believe that the tax rebate should be extended passed first time homebuyers, with 44% wanting to extend it to everybody, and an additional 16% want it extended, but only to seniors who wish to downsize, and another 9% want it only extended to our second-time homebuyers who need to move into a larger home.

So it looks like the general public is largely on your side here, Mike.

Mike Moffatt: So I have that going for me, which is nice.

Now, in general, I always find it an interesting exercise to find out what policy solutions the general public is willing to entertain. And it’s not that I think that respondents to a poll are secretly policy experts or anything like that, or that they spend a lot of time thinking about this stuff. Far from it. But I think it’s useful to know where the public and policy experts like me diverge, and where there is a divergence, I don’t automatically jump to the idea that policy dorks like me need to do a better job of educating the public that we’re right and they’re wrong. I find that often the public has very real concerns that we’re not paying enough attention to when we’re designing policy ideas and policy proposals.

Now, the Abacus poll asked voters a couple of different policy ideas when it comes to housing. And generally speaking, the respondents pretty much like everything that was put in front of them. But they like some ideas better than others. So I would love to get your thoughts on a few that are particularly relevant to building homes.

That would be useful to second-time homebuyers. Now, two related ones received quite broad support. One was increasing provincial investment in infrastructure, and they listed transit, water, and sewers to support more housing supply. And the second one was increasing provincial funding to municipalities to reduce reliance on property taxes and development charges.

So let’s say I’m the pollster. I’m asking you about these ideas. Would love to get your take.

Sabrina Maddeaux: We do have an infrastructure issue, especially in Ontario, and we’ve seen some municipalities say, Oh, well, we can’t build more housing because of infrastructure barriers, whether that’s water or they’ll even say things like parking - I don’t necessarily buy that one. But there does need to be more investment in infrastructure, but my concern is that’s not a solution in and of itself. It’s an element. And we need other broader changes that target both supply and demand to get to affordability.

We also have a lot of municipalities that have been collecting development charges, which are supposed to support infrastructure, but have a lot of those fees now sitting in bank accounts. And where are those actually going, and what are they being used for? So I’d like more transparency there, too, before we just throw more public tax dollars at the issue.

In terms of increasing provincial funding to municipalities to reduce reliance on property taxes and development charges, I’m not a big fan of sending more provincial money to municipalities, especially if there aren’t strings and expectations attached that are actually enforceable, which we’ve seen, they tend not to be.

The property tax situation is interesting, though, because if you look at Toronto, for example, there’s a very strong argument to be made that properties are actually under-taxed and they haven’t reassessed homes in a long period of time. So, looking at the overall balance of who is paying for growth and how that benefits everyone is a broader conversation.

But I’d love to hear your take on these ideas.

Mike Moffatt: I imagine we’ll get some emails about property taxes needing to go up in the city of Toronto. So send those over to Sabrina. It’s a political third rail, but it doesn’t mean that Sabrina is wrong. People might be surprised to hear me say this based on my well-known dislike for development charges, but I don’t love these ideas of simply more provincial funding for the same reasons that Sabrina gives.

So I don’t hate these ideas, but I don’t love them either. I don’t think that just shifting money from one government to another solves a problem. I’d rather see much more structural reform on how we pay and fund the infrastructure, rather than simply shuffling money around from one government to another. I’d much rather see things like funding for roads through charges on cars and water treatment plants, or charges on water bills, rather than having a complex set of cross subsidies that nobody can really follow or understand.

That we should be tying infrastructure to its use. And doing so in a transparent way, because I completely agree, Sabrina, that lack of transparency is a real problem.

Sabrina Maddeaux: We see a lot of subsidies over the last few years that haven’t been working, so I don’t think that’s the solution. If we do have a situation where the province is going to come in and take on more financial responsibility for some of these elements, I think some of that decision-making around zoning and infrastructure also has to be elevated to the province.

When you do have a provincial or a Canada-wide crisis, dealing with this municipality by municipality, especially when local voters and councillors are heavily incentivized to not find a solution and to block further housing. [This system] isn’t working, and I don’t see a scenario where it does work if a lot of the decision-making power stays at that level of government.

Mike Moffatt: I couldn’t agree more.

It’s going to be hard to fight this in Ontario when Ontario has 444 different municipalities, right? So that’s a lot of change that needs to happen. So absolutely, I would love to see a lot of these responsibilities uploaded to the province. Who then could make those changes that could apply province-wide? And you’re having to change one set of rules rather than 444.

Now, interestingly, not the most popular idea in the poll was something you’ve already mentioned: having municipal governments provide more transparency on how they spend development charges and related money. So the public is absolutely with you on that one, because really, who could be opposed to more government transparency?

Now, interestingly, one policy solution that didn’t do as well as I would have guessed was providing down payment support or other assistance to first-time homebuyers. I thought that would be quite popular. And to be fair, it’s still got 55% support as opposed to only about 12% opposed. But as I mentioned, respondents like pretty much everything that was put in front of them. This was one of the lowest levels of support in the poll, and I can’t imagine it’s because of those responses think about the second-time homebuyer problem as much as I do. So, where are you when it comes to first-time homebuyers’ credits and grants, things like that? Are you for them or against them?

Sabrina Maddeaux: I don’t like them either. And I’m someone who would, in theory, as a renter and would-be first-time-home buyer, benefit from them. And I say in theory, because if we subsidize first-time homebuyers, or help them with down payment support, all you’re doing is buttressing demand or increasing demand. So the real solution here is that we do need to see home prices come down in a way that they align with wage growth.

Just throwing around more taxpayer dollars. And then how do those taxes get paid for doesn’t actually result in affordability or long-term sustainability in our housing system for anyone. And at the same time, young people don’t want government handouts. They want to have very good wages. Sometimes multiple jobs actually translate into opportunity, and being able to at least have a chance at the same quality of life as generations before them.

Sabrina Maddeaux: But what are your thoughts?

Mike Moffatt: I’m the same way.

There are a lot of people who ignore the second-time homebuyer problem. And I am totally on board with your criticism that it only bids up the price of existing homes. I do think that this can be addressed in the policy design by making it a requirement of these programs that they can only be used on new builds. That way, you have a supply-side element, but overall, I think the arguments around fueling demand are legitimate. I think that is a concern. And I think there probably are too many policies at both the federal and provincial levels that, either by design or inadvertently, goose demand for resale homes, rather than focusing on building new ones.

Sabrina Maddeaux: Right.

Where I’ve argued for changes in the past isn’t about giving extra credits for buying first-time homes or any homes. It’s more about adjusting the tax system so that people who are renting and don’t have equity and aren’t building equity and won’t have those large capital gains later in life, have similar tax advantages, or not have disadvantages, compared to homeowners. So I’d like to see more of that.

Mike Moffatt: Yeah, absolutely. And I think there is a large cohort of the population who believes that Canada should be going to a system where more of us are renters. If that’s the case, we don’t have the savings vehicles, we don’t have the insurance vehicles necessary to support a population that’s 70, 80, 90% renters. So I think we would have to figure all of that out. And I think that is a very legitimate concern.

I’m going to go back to the poll, because there are two ideas in the poll that received the lowest level of support. The first is allowing more gentle density, such as duplexes, triplexes and small apartment buildings in low-density neighbourhoods, which received only about 55% support and didn’t attract a massive amount of opposition.

And actually, coming in dead last was the suggestion of eliminating exclusionary zoning and encouraging gentle density. It only received 41%. Still, about 13% are opposed, with a lot of people on the fence.

So, Sabrina, does that result surprise you? That the least popular ideas were around up zoning? And how do you feel about creating gentle density in existing neighbourhoods?

Sabrina Maddeaux: I love the idea of gentle density.

They’re scared, and they don’t want to see this. So that’s part of the struggle, is having politicians be able to sell density to the public in an appealing way, and building that level of trust where density doesn’t mean more ugly buildings or strained resources or negative impacts on the community. There are a lot of benefits that come with more new neighbours, and that’s how it should be pitched.

Mike Moffatt: Yeah, I have to say that these types of missing middle proposals are the exact ideas that housing nerds like me and you love and are in the majority of the policy reports that we release here at MMI. So it does pain me a little bit to see them near or at the bottom of the list, but I get it for all the reasons that you describe. People love the neighbourhoods that they live in, and they don’t want them to change. And I think policy wonks like me need to be mindful of that and find ways to design policies that can benefit residents, such as ones to make it easier for seniors to downsize while remaining in the neighbourhoods they love. But I think it should be a cautionary note for all of us who are supportive of gentle density that we’ve really got to work with the existing residents. We have to hear their concerns and design policy in a way that they don’t necessarily love, but they can at least live with.

Sabrina Maddeaux: I think so much of the conversation around density has centred around younger Canadians, and the benefits for new generations, which would have immense benefits. But also, like you just said, for seniors downsizing, for having workforces within communities, there are tons of economic and social benefits here as well. And those conversations, I think, have been more limited and are just really starting to evolve.

So I’d like to see more of them.

Thank you so much for watching and listening, and to our producer, Meredith Martin, and our editor, Sean Foreman.

Mike Moffatt: If you have any thoughts or questions about how sometimes the general public is right and policy nerds are wrong, please send us an email to the MissingMiddlPodcast@gmail.com

Sabrina Maddeaux: And we’ll see you next time.

Additional Reading/Listening that Helped Inform the Episode:

OREA Housing Policy Survey

Housing in Ontario: Perceptions, Impacts, And Solutions

Unlocking Homeownership: What Canadians Want From Housing Policy

A Blueprint to Restore Homeownership for Young Canadians

Is Ontario Ready to Spend $895M to Jumpstart Homebuilding?

Funded by the Neptis Foundation

Brought to you by the Missing Middle Initiative

MMI is now accepting guest submissions of 700-1200 words on topics relating to young, middle-class Canadians. Submissions can be submitted via e-mail to missingmiddleinitiative@gmail.com.

In Canada today, the word “build” has shifted from being a simple verb to something approaching a national ideological posture.

The word is everywhere. It was a pillar in Mark Carney’s leadership campaign. The federal government’s infrastructure legislation was formally named the “Building Canada Act,” and its housing initiative is branded “Build Canada Homes.” We’ve seen an open letter from the country’s largest energy companies titled “Build Canada Now.” The Ontario government has a website and advertising campaign focused on building Ontario. There’s even a think tank called Build Canada, dedicated to, well, building a better Canada. There are many more examples of how the word’s been woven into a new Canadian agenda. While not a coordinated effort, this does seem to be a deliberate linguistic ecosystem.

“Build” works very well in today’s Canada.

It invokes Canada’s nation-building mythology: the St. Lawrence Seaway, the Canadian Pacific Railway, the Trans-Canada Highway. It reminds us of a time when governments made big, physical things happen and changed the nation’s course.

It responds to the perceived threat from the south. If Donald Trump wants to absorb Canada, then “building” becomes an act of defiance. It’s creating something tangible he can’t take away and gives Canada agency and a defence of our sovereignty.

It is cross-ideological. “Build” is used by the federal Liberal government and the provincial Conservative government in Ontario. It’s embraced by both energy companies and housing advocates.

And its resonance with Canadians is real. For a decade, many felt like nothing in the country could get finished. Pipelines were blocked; housing approvals dragged on. For a public exhausted by process and consultation, “build” is an emotional bullseye. It implies outcomes, not just intentions. It’s concrete.

“Build” may be the most politically successful single word in Canadian public life right now because it occupies the intersection of nostalgia, urgency, and cross-ideological appeal. But “build” may be becoming too successful. It’s now so saturated across government, industry, and civil society that it risks becoming a word that signals nothing because everyone says it, and it means everything.

It’s also a word on a clock. It’s so laden with expectations that it risks falling short no matter how much actually gets built.

The predecessors to “build” were words like “hope” for Barack Obama and “sunny ways” for Justin Trudeau. They were emotive words that didn’t describe a policy, but a feeling. The implicit contract was: “Trust me, and I will change how you feel about your country and your future.” That language worked when the public was open to it. In 2008, America and 2015, Canada, there was enough latent optimism for these words to rally citizens. Those words asked nothing of citizens except their sentiment.

“Build” asks for something different. It’s not an emotive word. It’s an operational one. It doesn’t say “feel something.” It says: “expect something.” The implicit contract is: “Hold me to account for physical outcomes and real change.” “Build” is the natural evolution from hope, moving from emotion to action at the exact moment the public has been burned by emotional promises.

But for all its practicality, “build” carries hope’s original vulnerability. Hope failed when the feeling wasn’t matched by facts. “Build” will fail if the rhetoric isn’t matched by cranes in the sky, keys in front doors, and a better life for Canadians. Some critics are already noting the gap between words and reality. While Canadians have so far bought into the concept, they have a well-developed antenna for promises that never turn into results.

“Build” is also being pressured by what Ipsos calls the “Endurance Economy”. This concept describes a period where households operate under sustained pressure from structural high costs and uncertainty. It reflects a fundamental mindset shift from optimism and expansion to one of coping, adaptation, and resilience. Affordability is no longer a temporary crisis but a chronic condition with no clear endpoint.

Canadians are exhausted, but exhaustion is not indifference. Many are enduring precisely because they believe something better should be possible. They’re carrying deferred hope, and “build” speaks directly to that deferral. For someone in financial or psychological survival mode, this promise carries a near-visceral appeal, not because they trust it automatically, but because they want a reason to.

There’s also alignment at the material level. Many pressures of the Endurance Economy like housing costs, infrastructure decay, and energy insecurity are problems of things not having been built. In this light, “build” names the cure for the chronic condition.

However, people have recalibrated their lives around managing reduced expectations in the Endurance Economy, in part because they stopped trusting big promises. They’re not so much cynics as they are adaptive realists. “Build” is a big, optimistic word, and for them, such words have a credibility problem.

The disconnect runs deeper. “Build” today is a word said by institutions; endurance is lived by individuals. The Endurance Economy is a ground-level experience that shows up in household budgets, in the decision to delay having a child, take on a second job, etc. “Build” is being proclaimed by governments, think tanks, and CEOs. The people doing the enduring are not the people doing the building, at least not yet.

Furthermore, endurance thinking is short term: “Get through this month.” “Build” implies a long-term payoff. Infrastructure takes decades. Housing takes years. For someone in survival mode, being told the future will be great may feel like being told to keep enduring.

Canada’s leaders likely can’t build fast enough to provide immediate relief to those enduring. To maintain support and momentum for a “building” agenda, they must bring Canadians into their narrative. The licence to “build” must be framed as emerging from the public’s own resilience. The “build” movement cannot be imposed on a weary public from above; it must be seen as growing from the strength they have shown.

The risk of not making that connection is that “build” remains elite vocabulary, while the Endurance Economy is an unacknowledged mass experience. If that happens, the clock on public support for “build” will strike midnight long before the cement sets.

Michael Colledge is Executive Insight Lead, Ipsos Canada.

The views expressed in this article are those of the author and do not necessarily reflect the views of the Missing Middle Initiative or its affiliates.

MMI accepts guest submissions between 700 and 1200 words; they can be submitted via e-mail to missingmiddleinitiative@gmail.com.

It’s a foundational promise of the Canadian identity. But as Cara Stern and Mike Moffatt discuss in today’s segment, that promise is starting to feel like a relic of the past.

Drawing on new data from Ipsos and Statistics Canada, this conversation tackles the growing “fairness gap” between generations. While over half of Boomers still view Canada as a pure meritocracy, only a third of Gen Z feels the same. The data backs up the cynicism: intergenerational social mobility is trending downward, and for the first time in decades, the “bottom 20%” is becoming a permanent trap.

So is Canada still a meritocracy? The answer may not be a simple yes or no. But it is clear that the country is moving in a direction that raises serious questions about fairness, opportunity, and what it really takes to get ahead.

If you enjoy the show and would like to support our work, please consider subscribing to our YouTube channel. The pod is also available on various audio-only platforms, including:

Apple Podcasts

Spotify

Podbean

Below is an AI-generated transcript of the Missing Middle podcast, lightly edited.

Cara Stern: People like to think if you work hard, you can get ahead. But we’ve all worked in offices and seen someone who maybe doesn’t deserve it get promoted. Maybe they’re close with the boss, or they’re good at schmoozing with the hiring managers, or they’re tall and funny, but they aren’t actually the most qualified. And it’s a reminder that success isn’t entirely based on how hard you work. Which leads me to today’s question: how would you define the word meritocracy?

Mike Moffatt: Well, first of all, I think being tall and funny is a qualification. But that aside, meritocracy is the idea that the rewards in society — money, power, status, vintage baseball cards — should go to the most talented and hardest working people. Not the ones born with the biggest trust funds or the best connections.

Cara Stern: Yep, that definition works for me. So the next question is a bit harder. Is Canada a meritocracy?

Mike Moffatt: Yeah, this question frustrates me a little because my response is like, compared to what? Compared to France? The NBA? A ham sandwich? It reminds me a little bit of the recent debate about whether or not Canada is broken. It just creates this false binary with an unclear dividing line between is and isn’t broken or is and isn’t a meritocracy. So I find that the answer to that question tends to say more about the person answering it than anything else. But this is where the relative part comes in.

I think Canada isn’t nearly as much of a meritocracy as it could or should be. I think it’s less of one than it was, say, 15 or 20 years ago.

So even though I dislike the question, it does seem fair if I ask you the same question, unedited. So, do you think Canada is a meritocracy?

Cara Stern: I think it sort of is. Canadians, broadly speaking, like the idea that you can be born here, that you can come here as a refugee. You can grow up with very little material wealth and then become rich or middle-class through hard work. But I’m actually a little bit skeptical if that’s true, and I think it may have been true in the past, but I’m just not sure if it’s true anymore.

And like I said earlier, we’ve all had experiences at work or in our professional lives where we try really hard, we do everything right, and we see other people who didn’t do everything right, didn’t try as hard, get farther ahead. And every time those experiences happen, they undermine in a real, tangible way that Canada is a meritocracy. But I think at a gut level, people understand that maybe it isn’t fully a meritocracy.

Mike Moffatt: Yeah, I think that’s an important distinction because there are different ways of measuring it. So one way is you could look at income data. You could look at how much someone’s income is correlated with that of their parents, or if there are differences between someone’s income based on where they grew up, like their postal code. Differences can’t be explained by other factors.

But qualitative research can also be quite helpful where the researcher focuses on understanding, interpreting, and analyzing personal experiences, feelings, beliefs, and perspectives of either individuals or groups of individuals. I also think polling data, which is both qualitative and quantitative, can be incredibly helpful for a subject like this to determine how the population feels as a whole. And as well are there any differences in averages and beliefs among groups on whether or not they believe Canada is more or less fair or meritocratic?

Cara Stern: So I’ve been thinking about this because I went to an Ipsos event recently and they presented some material, and what they suggested was that Canadians are actually quite divided when it comes to perceptions of fairness, success and hard work, and whether that pays off. The number one thing that impacts your perception of whether or not hard work equals success is the generation you were born into.

Ipsos surveyed over 20,000 people under 75 years old from 31 countries, and they asked:

In your country, what do people’s chances of success depend on?

They gave two options. A) People’s chances of success in their country depend mostly on their own merit and efforts.

Or B) people’s chances of success in your country depend mostly on factors beyond their control.

In Canada, more than half of boomers think that, yes, it is mostly about merit, while Millennials and Gen Z are both around a third.

Mike Moffatt: Okay, so I’m sitting here in my flannel and my Nirvana t-shirt, and I’ll note you still excluded Gen X from your analysis, but that’s fine. We’re used to it. We’re the forgotten generation. I’ll go drink water out of a garden hose, whatever, and just sit here being ignored.

But if we go back to your numbers, you said that there was about an 18-point difference, with boomers more likely to answer A, and that the results are mostly about merit and effort. So what about the responses to B?

Cara Stern: Well, only 19% of Boomers said that success depends mostly on factors beyond their control. And Millennials and Gen Z came in at 28 and 35%. And Gen X, fine, I will get some data for you guys. You guys are in the middle of Boomers and Millennials in age, but you’re also in the middle in sentiment, as usual.

Mike Moffatt: Well, we are the missing middle generation. But overall, I think it’s interesting that more people said results were primarily based on merit and effort rather than factors beyond their control. So that is a sign that overall Canadians lean towards thinking that we’re more of a meritocracy rather than one where your success depends on your circumstances of birth.

And for Boomers, it was interesting to note that it was heavily tilted towards meritocracy, with your category A merits getting chosen almost three times as much as category B, factors outside of your control. But for Gen Z, the results were split roughly equally between A, B, and not sure. So it’s a really interesting generational divide.

Cara Stern: The other place where there’s this clear generational divide is on the question of fairness. I found this really interesting. They asked whether equal outcomes or equal opportunities define a fair society. Boomers were more likely to say opportunity is more important, and Gen Z were much more likely to say equal outcomes are more important. I’ve always heard that defended as: if outcomes are unequal, that tells us that something’s not equal about the opportunities, even if they seem fair on the surface. And Gen X gets a mention here, too. You guys are more like Gen Z than Boomers in this regard.

Mike Moffatt: Well, that’s really nice to hear. I think these results make a lot of sense when you think about it.

Think about young people who were all told growing up: work hard in school, get a great education, and the world would be yours. They did all of that. They did everything right. Everything that they were told would lead to homeownership and a white picket fence and 2.3 children and all of that. Yet now they’re finding they’re struggling to find work. They’re struggling to pay the rent.

They’re thinking like, hey, this situation isn’t fair because we’re dictating or believing that fairness is defined by the same quality of life. And those people are having such a difficult time achieving those milestones that every other generation seems to acquire more easily.

Cara Stern: So I’ve given you lots of information from the pollsters. What do economists say about this?

Mike Moffatt: Well, economists have a lot of different ways of looking at this, but one of the best measures, or one of my favourite measures we have as a proxy for meritocracy, is a correlation between your income and that of your parents. And as I mentioned earlier, that is one of the best measures, because in no way can a society be considered meritocratic if your success in life is largely determined by who your parents are.

There’s a Statistics Canada research study — we’ll link to it in the show notes — that shows over time people’s incomes are becoming more correlated with that of their parents, which suggests Canada is becoming less meritocratic and more unequal over time, and that social mobility is eroding.

Cara Stern: So it’s getting harder and harder to move up the income ladder.

Mike Moffatt: Yeah, absolutely. At least in an intergenerational sense, that in Canada, kids who grow up in the bottom 20% of family incomes are now more likely to stay there as adults. It used to be that about a quarter of kids who grew up in the bottom 20% stayed there as adults. Now it’s closer to a third. So to be clear, a lot do move, but you’re getting more stuck in the bottom 20% than you used to get.

Cara Stern: A full third of kids can’t get out of the bottom 20%, and we know it’s trending in the direction of getting harder and harder still.

Mike Moffatt: Yeah, exactly. Yeah. And because of that, fewer of them end up in the middle class, which in their report is defined by being outside the top 20% in the bottom 20%. So overall, it’s gotten a bit harder for kids born in low-income families to move up and a bit more likely that they’ll stay where they started.

Cara Stern: So essentially, your ability to have a middle-class income is more of a function of who your parents are than it used to be.

Mike Moffatt: Yeah, absolutely. And what do we think is going to happen when an older cohort of people believes that they live in a meritocracy, but younger people listen to that, they hear their parents and their grandparents, and it really doesn’t match the lived experience of younger generations. How are they going to respond to that?

Cara Stern: Yeah, so much frustration and increasingly we see a lot more distrust in institutions and politicians. And just in the idea that if you play by the rules, you’re going to get somewhere.

So a lot of people just get to the point where they’re just like, why bother? And that’s a big problem for society. Imagine you’re doing everything right. You’re working super hard, you’re not getting ahead, and you’re being told it’s your own fault by people who play by totally different rules.

Mike, I’m sorry to say you’re much closer to the boomer age than I am, so I’m hoping you can channel their minds for a moment. Can you bring out your “Uncle Boomer Mike”? How do you actually change minds on this when people’s sense of whether Canada is fair is wrapped up in their own life story?

Mike Moffatt: Well, I think it’s really important to hear the stories of younger generations because absolutely, we tend to view the world through the lens of our own experiences, how we grew up. So in the mid-1990s, I’m going to go back to my childhood in London, Ontario. A lot of us at the time didn’t necessarily see the opportunities in London for us. So a lot of my graduating high school class and a lot of my university class ended up going to Toronto or Vancouver to get those jobs. There were sacrifices there. We had to leave our families to do that, and that was a challenge. And certainly, we don’t like to be told we had it easy or things were fair, but I think a lot of my generation and older don’t realize that that pathway has been closed for a lot of younger people.

If you are growing up in Whalen Corners, Ontario, you’re probably not going to be able to move and take that entry-level job in Toronto that doesn’t necessarily pay well, but can be the first step on climbing the corporate ladder. You just can’t do that because you can’t afford to live in the city. So I think it’s important that these stories get told.

And I think it’s important for older people like me to understand that the world has changed, the country has changed, and what worked for us 25 or 30 years ago doesn’t necessarily work today.

Cara Stern: What I hear you saying there is that housing is expensive in Toronto. It’s hard to be able to move to these places or wherever you can go to find jobs. So what I start thinking is, maybe if we just solve housing, that would go a long way to fix this, no?

Mike Moffatt: I’m absolutely a fan of the housing theory of everything, but I don’t want to suggest that that’s causing all of this. But it is causing a portion of it, and if we do solve the housing crisis, particularly in our cities, I think that would help with social mobility a lot.

And, we often hear from people my age and older who say, “Well, if you can’t afford to live in Toronto, there are lots of great places in Canada, just go move somewhere else.” I don’t think they realize what that does to social mobility. I don’t think they realize how that creates, again, a situation where your success in life is determined by who your parents are. And that’s not going to lead us to a great place where you’ve got all of these young kids who figure out, like, hey, they’re never going to be able to achieve certain levels of success simply because of the circumstances of their birth.

I’m not going to suggest that we’re going to French Revolution styles of disorder, but I can’t think of a society where that ended well for anyone. So, hopefully, we can fix the housing crisis. We can get people to acknowledge that it is important for young people to be able to move to the city or the neighbourhood of their choice.

Cara Stern: I feel like it’s hard for people to accept what you’re saying, because when you say it to them, especially if they worked hard and did very well, that part of it is that the rules are in your favour. That makes people feel a little bit like you’re taking something away from them. They worked hard and they want to know that that is something that they earned, and it is something they earned. But the rules have changed. How do you get people to listen to this and stop taking it as a personal attack on whether or not they worked hard enough?

Mike Moffatt: Well, I think we have to try and get people to understand that you have to have the preconditions of success.

So yes, you got to where you are because of your hard work and talent just the same way that Bill Gates and Steve Jobs and all of these folks absolutely built all these incredible companies and this great wealth, but they wouldn’t have been able to do it if they lived in 14th-century Scotland, right? You have to understand that it requires both effort and environment.

And, I think we also just have to realize that some people are just going to be selfish or not particularly concerned about the welfare of others. So I think we also have to recognize we’re not going to get through to everyone, but I think we can get through to enough people out there. I think there are enough reasonable people to say: we’re not denigrating your effort. We’re just recognizing that success is a function of both effort and environment, and you really can’t have success unless you have both.

Cara Stern: So, back to the original question. Is Canada a meritocracy? So I think the honest answer from this conversation is: it used to be. And whether or not it becomes one again depends entirely on the choices we’re making right now about housing, about opportunity, about what country we’re actually trying to build. Would you agree with that?

Mike Moffatt: Yeah, absolutely. So I think that’s where I end up landing here. Let’s not talk about this necessarily as being a false binary of whether or not we’re meritocratic or not meritocratic, but rather understand that we’re moving in the wrong direction. But this actually does have solutions. This is a fixable problem.

Cara Stern: Thank you so much for watching and listening. Our producer is Meredith Martin, and our editor is Sean Foreman.

Mike Moffatt: And if you have any thoughts or questions about my deep dislike for false binaries, please send us an email to missingmiddlepodcast@gmail.com.

Cara Stern: And we’ll see you next time.

Additional Reading/Listening that Helped Inform the Episode:

Generational Disconnect In Canada Ipsos Equalities Index 2025

Trends in Intergenerational Income Mobility and Income Inequality in Canada

International Fairness Day 2024

A retreat from opportunity: Is the Canadian dream still alive?

StatCan Intergenerational Income Mobility

Brought to you by the Missing Middle Initiative

Development charges (DCs) in Ontario have skyrocketed over the past two decades, from being a relatively minor expense to adding over $100,000 to the cost of a middle-class family home. For example, over the last 25 years, DC fees on single-detached homes have increased by 5,186 percent in the City of Toronto, compared to a 72.1 percent inflation rate during this period. If prices for consumer goods had risen by the same rate as DC fees, then a cup of coffee costing $1.25 in 2000 would cost $66 in 2025, and a family purchasing a sedan for $24,000 would have to pay nearly $1.3 million today.

This problem requires practical solutions that don’t involve simply transferring the cost of infrastructure on to the property tax base.

Earlier today the Ontario Real Estate Association released the report A Pathway to Development Charge Reform, providing seven practical recommendations on how Ontario can lower development charges in a prudent, fiscally responsible way. MMI’s Mike Moffatt and Alex Beheshti are co-authors of the report.

The seven recommendations in OREA’s roadmap to reducing devleopment charges are as follows:

Seven ways to reduce development charges

1. Provide immediate relief to homebuyers and accelerate housing construction through a two-year DC suspension program.

2. Lower tax bills and interest costs by reducing infrastructure construction costs through alternative financing mechanisms, such as municipal service corporations and municipal utility districts.

3. Substantially lower the price of new homes by removing tens of thousands of dollars in interest costs and tax-on-tax by implementing a transparent direct-to-buyer DC billing model that exempts DCs from Harmonized Sales Tax (HST) and Land Transfer Tax (LTT).

4. Lower the price of new homes by removing population growth-related costs from DCs.

   • Remove community-wide services, such as long-term care, public health and emergency services, from DC eligibility.

   • Create a performance-based funding model based on population growth.

5. Reduce DCs and eliminate waste in the system by increasing transparency and standardizing methodologies across municipalities.

   • Eliminate non-committed, aspirational, or unfunded wishlist projects from DC background studies.

   • Prevent hidden DC escalation by ending automatic indexing and requiring council votes on rate changes.

   • Standardize key assumptions to reduce disputes and improve fairness.

6. Reduce cost pressures on municipalities by improving coordination of infrastructure planning, including transit and roads, between all levels of government.

7. Improve accountability and public trust by increasing transparency and reporting of DCs.

   • Enhance transparency standards through uniform reporting and disclosure.

   • Establish independent oversight through a DC Inspector’s Office.

The full report can be found on OREA’s website.

Canada’s housing numbers look encouraging at first glance. In 2025, the country recorded nearly 260,000 housing starts, well above historical averages and higher than the year before. On the surface, that suggests Canada is finally making progress on its housing shortage. But a closer look at the data reveals a more complicated and concerning reality.

Most of those new units are small apartments and condos, not the family-sized homes many Canadians are looking for. At the same time, the way Canada measures housing starts means the data often reflects investment decisions made two or even three years earlier. For large high-rise projects in Canada, the “housing start” is recorded once the foundation reaches ground level, long after the project was first approved and financed. That makes housing starts a poor indicator of what’s actually happening in the housing market today.

If you enjoy the show and would like to support our work, please consider subscribing to our YouTube channel. The pod is also available on various audio-only platforms, including:

Apple Podcasts

Spotify

Podbean

Below is an AI-generated transcript of the Missing Middle podcast, lightly edited.

Mike Moffatt: Our housing data is lying to us, or we’re mishearing it.

In 2025, Canada recorded nearly 260,000 housing starts, well above our average and 14,000 more than the year before. That sounds like good news, but it’s misleading in two big ways. First, more than 170,000 of those units were apartment rentals and condos. [More than] double 2014 levels. And most of those were studios or one-bedrooms, not exactly family homes. Second, housing starts reflect decisions made years ago and don’t reflect current conditions.

Pre-construction sales tell a different story. An industry facing its toughest conditions since the 1990s.

Sabrina Maddeaux: Now, we’ve had a few comments lately about how negative Mike has been, and given that intro, I can only imagine we’ll get a few more at the top here. You made three specific claims, and I’d like to go over them one at a time. You mentioned that housing starts don’t accurately reflect current housing conditions. Why is that?

Mike Moffatt: Yeah, I think when most people think of a housing start, they literally think when the crew shows up on the site for the first time and starts digging the hole. But that’s not how Canada and the CMHC define a housing start. In fact, it’s when they’ve dug the hole and started the foundation work and completed so much of the foundation work that it’s actually reached grade or ground level.

For a single detached home, there’s really not that much of a difference from when you start digging the hole to when the foundation is done. It might be a month or two at the most, so it’s really not that much different. But when you’re building a high-rise, particularly a high-rise with a parking garage, that can actually take 18 to 24 months from the start of digging the hole to which you’ve built the entire parking structure.

If we are looking at the data for high rises, housing starts today might have actually started in the digging-the-hole sense in February of 2024. And the investment decision - whether or not to go ahead with that building- was probably made in the summer of 2023. So there is this really big disconnect between the data, which is supposed to be measuring current conditions, but is really reflecting investment decisions made two or two-and-a-half years ago.

Sabrina Maddeaux: Obviously not ideal.

You released a piece recently that showed that Canada is unusual in how we measure housing starts, which we’ll link to in the show notes. So how do they do it in other countries?

So it’s really closer to the beginning of the process. So you have it in some countries where it’s literally you start digging the hole and, bang, that’s counted as a housing start. Others are basically when you’ve reached the bottom of the hole, which is considered a housing start. So it’s more of a real-time indicator of the housing market.

Now, there is always some concern here that it is possible for one of those holes or one of those foundations not to turn into an actual building. I think that’s the reason why the CMHC defines it so late in the process. But what the piece argues is that we lose a lot in that definition - that it doesn’t really work as a real-time indicator of current housing conditions or housing market conditions. But that’s how the government, the media, and even policy wonks like me use the data. But it’s not really appropriate for that purpose.

Sabrina Maddeaux: Okay, so if the data is misleading us, how do we fix it?

Mike Moffatt: Well, one thing we could do is adopt an international definition. We could blow up the definition of housing starts. We say, No, we don’t have to go that far. Because if we did that, we would lose the ability to do comparisons over time. If we change the definition in 2026, then we lose access to all of that past data. Or at least we couldn’t do year-to-year comparisons.

So what we suggest is that we could keep housing starts as they are, but we need other indicators. Maybe we need an indicator that is when that hole starts to form. We could look at things like excavation permits and so on. So this is really a call for the CMHC to have additional indicators, because what we have isn’t that bad, it’s just the wrong tool for the job. We’re not using that data correctly. We’re misleading ourselves with how we use that data.

But even if we fix that, though, it wouldn’t address the issue that we count all housing starts as being the same. That a shoebox condo is one housing start, a three or four-bedroom home is one housing start, a McMansion is one housing start. And those are very different things that serve very different purposes, because you’re not going to want to raise a couple of kids in a shoe box condo.

And one thing that I hear all the time is that homes keep getting bigger and bigger. So I have to ask you: do you feel that your generation is living in larger homes as my generation did when I was your age?

Sabrina Maddeaux: Absolutely not. I’d say living in smaller homes and in different types of homes - condos, apartment buildings, basement units, very small, often with poor layouts and not ideal areas. And [my generation is often] in these homes for much longer without any hope of moving up the property ladder. So even if homes are larger overall, and this is a theme I keep returning to in Canada, when we look at overall averages or trends, unless you break that down by age, you’re not going to see the very different lived experiences.

I think seniors are probably living in much larger homes than they ever have in Canadian history, and even families that got into the market 15, 20 years ago. But young people are living in smaller homes than they ever have before.

So I’m curious what the data says here, though. Does it tell us that homes are continuing to get larger?

Mike Moffatt: That’s a great question. And today, we’re going to introduce: Reality versus Data! How the data isn’t saying what we think it’s saying. And I hope this is going to become a recurring segment on this podcast.

It’s true, for a long time, median home sizes were getting bigger and bigger and bigger. The 60s, 70s, 80s, 90s, going into the 2000s and up until about 15 years ago, the square footage of homes kept going up and up and up. But that’s really not the case anymore. Over the last decade, while the average detached home has gotten bigger, the average home overall has actually gotten smaller.

Let me explain: In much of the country, we stopped building 1200-square-foot single-detached starter homes like the one I bought in 2004, but we didn’t replace those with giant McMansions. Instead, we replaced them with small high rise apartment units, rentals, and condos. We swapped 1200 square feet on a small lot for 5 or 600 square feet in a tower. Detached homes look bigger on average because the smaller ones basically disappeared. And that’s what statisticians call a composition effect.

Sabrina Maddeaux: Interesting to note that you talk about the smaller homes being in towers. So you’re not taking into account things like backyard space and outdoor space that a lot of young people don’t have access to now, either.

The final thing you mentioned in your intro was pre-construction sales. I know there’s a lot of media discussion on how the collapse in pre-construction sales is isolated just to condos in downtown Vancouver and Toronto, but I think you have some numbers that suggest differently.

Mike Moffatt: Absolutely. So I took a look at 2025 pre-construction sales numbers that come from Altus Group, which cover not just apartment condos, but townhomes and other forms of housing relative to 2024. And we see that pre-construction sales are down. They’re down 16% in Edmonton, 39% in Calgary, 45% in the GTA, 52% in the Greater Golden Horseshoe around the GTA, and 56% in Vancouver.

Now we have to keep in mind that those are pre-construction sales, so they don’t consider the purpose-built rental market. But it’s a clear indication that it’s more than just a Toronto and Vancouver condo problem. And, if you don’t have pre-construction sales this year, you’re not going to have housing starts in 2027, 2028 and so on.

Sabrina Maddeaux: On that last point, the CMHC would back you up. A few weeks ago, they released their 2026 Housing Market Outlook, which we’ll link to in the show notes.

It forecasts that housing starts will fall each of the next three years, and that there will be over 40,000 fewer starts in 2028 than there were in 2025 because of the lack of new supply. They show that home prices are going to start creeping up again, which is, of course, the last thing we want to see. So these are important stats to pay attention to.

Thank you so much for watching and listening. And to our producer, Meredith Martin and our editor, Sean Foreman.

Mike Moffatt: And if you have any thoughts or questions about statistical concepts such as composition effects, please send us an email to: MissingMiddlePodcast@gmail.com

Sabrina Maddeaux: And we’ll see you next time.

Additional Reading/Listening that Helped Inform the Episode:

CMHC Housing Report

Funded by the Neptis Foundation

Brought to you by the Missing Middle Initiative

They break down the structural reasons behind the shortage, from restrictive building codes and zoning laws to outdated fire safety regulations. Using examples from Europe, they explain how alternative approaches could make family-sized apartments more feasible, while highlighting the unintended consequences of Canada’s regulatory framework on families and urban life.

Finally, Mike and Cara discuss the broader implications for Canadian cities, from population dynamics to economic vitality. They explore what’s required to create a housing system that truly supports families, emphasizing that meaningful change will need both policy innovation and political will.

If you enjoy the show and would like to support our work, please consider subscribing to our YouTube channel. The pod is also available on various audio-only platforms, including:

Apple Podcasts

Spotify

Podbean

Below is an AI-generated transcript of the Missing Middle podcast, lightly edited.

Mike Moffatt: So, Cara, I heard you’re looking for a rental while you’re doing a big home reno. How exactly is that search going?

Cara Stern: Well, it’s tough out there. And the rental market for a family-sized unit is not great. And there’s four of us. Two adults, two kids and a do. So we need, at minimum, a two bedroom. And I know I’m privileged to be able to do this. I’m not complaining at all, but it did get me thinking. What if I wasn’t looking for a temporary home? We can find something small. We’d be considered under housed in a few years by the city.

If we wanted something that was a suitable size for our family structure, we would eventually need a three-bedroom unit. And whoa, does it look bleak, once you start trying to find a three-bedroom apartment at a reasonable price point.

Mike Moffatt: And I’ve got some bad news for you. That’s going to be a tough slog, because three-bedroom apartments don’t really exist in Canada at any scale.

If we look at Census 2021 data, there were roughly 9 million homes with three or more bedrooms, which I tend to refer to as family-sized homes. A full 85% of those homes are either single of detached, semi-detached or duplexes. An additional 8% were townhouses. Now there are some three bedroom apartment units with low rise apartments. That is an apartment with five or fewer stories, accounting for about 5% of all family-sized homes, and another 1% were high-rise apartments. So overall, you’re looking at about 6% of the family size housing stock is in apartment units.

Now, just to be clear, in much of Canada, family-sized apartment units aren’t really a thing. And people looking for three bedrooms or more often opt for townhouses rather than apartments.

Cara Stern: But if you go to cities like Paris, or if you go to cities in Germany, you’ll see families living in apartments in high density neighbourhoods. And that’s just normal. I did some research, and it looks like a lot of the unit sizes in Europe. They are getting smaller and rents are on the rise in places like Berlin. But what really stands out to me is that culturally, Europeans seem a lot more okay with the idea of raising a family in an apartment in a city versus the Canadian and American obsession with raising a family in a single family home. Why is that?

Mike Moffatt: So this is a bit of a hot take, but I actually don’t think that’s the case at all. We often hear that Canadians have a cultural bias against living in apartments, but I don’t really see that, because right now you’ve got a lot of families who are squeezed into tiny apartments, and you don’t think that they would love to have more space? You don’t think they would love to have a larger size apartment unit?

Instead, I think the answer is more straightforward: All of those great European style three-bedroom apartment units are illegal to build in Canada.

Cara Stern: How so?

Mike Moffatt: Well, the short answer is the building code. The European-style apartments most people think of are in those low-rise apartments that I talked about earlier. That’s already a problem, as zoning in much of Canada tends to favor building super tall high rises. And the project economics don’t really make larger units feasible in those high rise buildings. In Europe, low rise apartment buildings are typically built around a central staircase, known as a point access block.

This type of design allows for a bunch of larger corner units. This not only allows for larger units, but you can get things like cross breezes and so on.

Cara Stern: That’s much nicer to live in in a place where you can get that airflow. I’ve definitely thought about that when I’ve lived in those buildings that are just, one window on one side, that it’s not as comfortable.

Mike Moffatt: Yeah, absolutely. But in North America, you traditionally can’t build that way. It violates the fire safety sections of various building codes. Instead, you get units that have a staircase on either side of the building, and you have this long hallway through the center.

If you want to have three bedrooms and you need each bedroom to have a window, you’re gonna have to build these massive units with strange layouts and wasted space. They don’t really work for families with kids. Instead, you get a lot of one- and two-bedroom units that are shaped like bowling alleys. And that’s even before you get into other issues like North America’s bespoke rules around elevators, which makes them far more expensive than in the rest of the world.

Cara Stern: I get why the rules were implemented in the first place. I know it came from a bunch of fires that happened in the 1800s, and this was a solution to lower the risk based on what they could do at the time. But we can now look and see that it has had some big consequences.

Mike Moffatt: Exactly. There’s been all kinds of unintended consequences. In North America, our building codes are very prescriptive: Do things this way. Don’t do things that way. In Europe, the building codes are in many cases more flexible and more outcomes-based. They want to make sure that people are safe, but they create more options on how to ensure that safety, such as sprinklers, the use of different materials and construction, and so on.

Cara Stern: Back in the early days of The Missing Middle podcast, we’ve talked about this with some experts. One was with Stephen Smith from the Center For Building In North America, and he has a great article on this that we’ll link to. We also did a really interesting interview with Conrad Speckert, an architectural designer, on how the building code makes it more expensive to build.

It seems to me, though, that changing the building code is almost like a third rail issue, because the code is based on safety standards. The argument I’ve always heard is that if we made it so that you only needed one set of staircases, that would impact people’s ability to escape during a fire. And no one wants to be someone advocating for less fire safety.

The thing that got me to change my mind on this issue is: having two staircases doesn’t actually give us a higher standard for fire safety. So when we look at which countries are the safest for fire safety, you’ll see places like South Korea, Germany, Switzerland. They all allow single staircases up to 6 or 8 storeys, whereas here it’s only up to three storeys.

And that’s because there’s much more effective ways to increase fire safety, by using different materials, sprinkler systems, those have a lot less of an impact on the layout and quantity of housing.

Mike Moffatt: Yeah, absolutely. And we should recognize that most families live in a building with one staircase. It just happens to be a single-detached home or a semi-detached home. But we should be clear that this simply isn’t an issue of our rules being out of date. It’s actually deeper and a bit more structural. Building codes are regularly updated so stuff gets added to them all the time.

And when items get added to the building code, they’re often advanced by well-meaning advocates, but there’s a real lack of scientific rigor to the process. There’s a lack of any strong cost-benefit analysis to determine whether or not the new provisions make economic sense. And once a rule is in, there’s no review process to see whether or not it worked or if it had any unintended consequences or so on.

So you end up getting a building code that gets layered with more and more things on it, like barnacles. And to be clear, many or even most of those provisions are actually worthwhile and would, in retrospect, pass a cost-benefit analysis. But we don’t actually know which ones are and which ones aren’t useful because that analysis never takes place.

Cara Stern: That’s so annoying. They never look back at it. They just put new rules and they never look back to see if it was a good rule.

Mike Moffatt: Yeah, absolutely. And the frustrating thing about this is that it connects directly to everything else we talk about on this show. These rules make it impossible, or at least cost prohibitive, to create family-sized apartments. So families with young kids flee cities, and our most dynamic local economies lack young people.

Cara Stern: Or they’re just not having kids at all. Which is pretty sad because it’s great for the economy. But it’s also a lot of fun and probably the most fulfilling thing I’ve ever done — even if I’ve never been as tired as I am right now.

We did an episode on why seniors don’t downsize, and one of the answers we got is that there’s nothing worth moving into. But a ground-floor point-access unit in their current neighborhood, with windows on two sides, a bit of outdoor space — that sounds like a decent place for seniors to live. They might be willing to downsize if it was a good unit.

We need responsible government and leaders. They need to do hard things and make rational choices, because improvements in building materials have significantly decreased fires over many years. So it really is time to modify the code to make it easier to build places that families want to and can live.

Mike Moffatt: We really do need to, but honestly, fixing the building code isn’t enough. It needs to happen, but in most of the country, we don’t build low-rise apartments due to zoning restrictions, as the vast majority of land is either zoned for low-rise single-family homes or for high-rise apartments. Could say that the middle is missing and there’s nothing in between.

Now, we do have some cities like Toronto who are trying to create areas to build low-rise apartments, but they’re pushing all of them onto arterial roads, which is typically the last place that families with kids want to live.

Cara Stern: And even when you get zoning reform, there can still be problems. The City of Toronto voted to allow laneway houses ad garden suites even before the provincial government imposed it on the rest of Ontario. They voted to allow six-storey buildings on major roads. So you’d think that they’d be easy to build here, but there’s still pushback from city councilors — even ones that voted for the changes. They ask for amendments and carve outs, and they make it more complicated again.

Mike Moffatt: Yeah, and while it’s true that we need to change the building code and zoning and elevator rules and what have you, the core problem here is larger and it’s more structural around how we regulate basically anything in our society. We layer on well-intentioned rule after rule after rule, and rarely analyze how those pieces fit together or examine any of those unintended consequences.

So we find ourselves in a situation where, as a society, we claim we want family-sized apartment units, but we have a whole regulatory structure that prevents that from happening. So while it is important we tweak this rule or that rule, we actually need to fundamentally change how we design and redesign regulations in this country. So unfortunately, I hate to be a pessimist — and we get a lot of emails and comments suggesting I am — point taken. But I really don’t see this happening anytime soon.

Cara Stern: I think I’m more optimistic. There are politicians out there who care about it. So if we can get some to be true leaders on this issue, we could see them change it. There’s a lot of people growing up now who maybe will be politicians who care about it. We just need people who can step up and really focus on changing it, harmonizing the different levels of governments and their building codes and trying to make sure that everyone’s on the same page to make it easier to build homes.

But I do know it will take a lot of time and a lot of political will.

I know that this has been a very deep-in-the-weeds conversation, so thank you to everyone for sticking with us. It’s so important that people understand how these rules are hurting our supply of family friendly units.

Thanks to two optimists on our team: producer Meredith Martin and our editor Sean Foreman.

Mike Moffatt: If you have any thoughts or questions about how tiring it is to be a mom of young children, please send Cara an email to missingmiddlepodcast@gmail.com.

Cara Stern: And we’ll see you next time.

Additional Reading/Listening that Helped Inform the Episode:

Why we can’t build family-sized apartments in North America

Why Single Stairways are Heaven for Homebuilding

How Elevator Rules Cost Us Homes

North America’s Elevator Problem

Addressing the concerns around single-staircase apartments

Why We Don’t Build More Apartments for Families | Odd Lots

Broken Zoning: Why We Can’t Fix the Housing Crisis Without a Map

Single Stair Buildings for San Francisco: The Key to Building Small Scale Infill Housing

Why Are Housing Costs So High? The Elevator Can Explain Why

While many Canadians dismissed the comparison outright, arguing that GDP per capita doesn’t capture quality of life, the discussion reveals broader questions about Canada’s economic trajectory and whether the country is becoming complacent about declining prosperity.

Sabrina and Mike also explore the cultural and political factors shaping Canada’s economic mindset, including the country’s tendency to compare itself primarily with the United States and its reluctance to acknowledge declining performance relative to other developed nations. They discuss how this mindset can create complacency and make it harder to recognize problems early enough to fix them.

Is Canada still as prosperous as we think, or are we becoming complacent about a slow decline?

If you enjoy the show and would like to support our work, please consider subscribing to our YouTube channel. The pod is also available on various audio-only platforms, including:

Apple Podcasts

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Below is an AI-generated transcript of the Missing Middle podcast, lightly edited.

Sabrina Maddeaux: The Globe and Mail recently published a big piece with the headline, Out of Nowhere Canada Became Poorer Than Alabama, and the reaction from a lot of Canadians was basically, How dare you!?

People were dunking on the comparison, saying GDP per capita is meaningless, pointing to our health care system, our gun laws, our social programs, etc., etc., but I wrote a response in the National Post arguing that this exact reaction - the pearl clutching the smugness - actually proves the problem. Canada has developed this really dangerous economic hubris that’s caused, and will continue to cause, a massive decline in living standards and prosperity.

Let’s start with the basics: The globe piece is based on GDP per capita, which is the size of the economy divided by the number of people. And it’s often used to measure a country’s standard of living. And by that measure, Canada has, at least temporarily, fallen below Alabama. But a lot of economists pushed back and said, that’s not the whole picture.

So, Mike, I’m curious. Is Canada actually poorer than Alabama? What does the data really show? And is GDP per capita the right thing for us to be looking at?

Mike Moffatt: Okay, so it’s time for Professor Mike to get some definitions out of the way here. So GDP per capita measures the total monetary value of all the final goods and services produced within a country’s borders within a year, divided by the population. That’s the per capita. That’s important. It’s an important measure because it measures how much economic activity is occurring within a country. And you need that economic activity to support life, to generate tax revenue, to pay for everything we need. That said, GDP per capita is not the same thing as well-being or quality of life, though it is obviously strongly correlated with it.

When it comes to the actual comparison, there are different ways of measuring GDP to take into account relative prices and things like that.

Sabrina Maddeaux: So the immediate Canadian response was basically: Fine! Maybe the GDP number is true, but GDP per capita doesn’t capture everything. We have public health care, stronger social programs, and more equality.

But I think that reaction is exactly the problem and doesn’t really capture the decline in quality of life experienced by a lot of Canadians, but especially younger Canadians locked out of asset wealth via homeownership.

We both wrote columns on this issue. Yours was at The Hub, and mine was in the National Post, and we’ll link to them in the show notes. Yours looked at broader quality of life measures and showed that Canada isn’t doing as well as people think. What did you find?

Mike Moffatt: So there’s one side to this whole Canada-Alabama argument that diminishes the importance of GDP. And they suggest GDP is important. But we need to be looking at things like life expectancy, crime, clean air and so on. And they argue that if you look at well-being through a broader lens, Canada looks better. And that’s probably true relative to Alabama, but it’s actually 100% wrong when we compare ourselves to 200 other countries around the world, because GDP per capita is, in fact, one of the areas where we excel.

So we need to look at different measures of well-being, and there are a few different ones we can look at. The UN has its human development index: 30 years ago, we ranked fourth in the world, and today we’re 16th. The measure does show that quality of life in Canada has increased over time, but we’ve made little progress in the last decade. And while other countries have continued to make progress, they’ve passed us in the rankings, which is why we’re now 16th.

There is another measure which comes from a different UN initiative called The World Happiness Report, and that combines economic data with polling data from the World Gallup survey. When that report was first released in 2012, we ranked fifth in the world in the latest release. We’re all the way down to 18th.

A year ago, the report examined happiness by age group. Canadians over the age of 60 were the eighth-happiest in the world relative to their peers. But young people, those aged below 30, ranked 58th globally.

A big reason for that is the affordability crisis that’s plaguing young people, who lack the freedom to buy a home or move to a big city because they’ve been priced out.

I know I threw a lot of data at you, I’ve got one more. The OECD also measures 38 of the world's richest countries in its well-being monitor. On most measures, we finished middle of the pack, though some we do quite well in. Ironically, one area in which we excel is household wealth, thanks to our out-of-control home prices. So, folks like me, who bought a home 20 years ago, we’ve got a whole lot of household wealth, and that’s showing up in the data.

So, we have these three different indicators that use three very different methodologies that all basically say the same thing, specifically that Canada used to excel at well-being. But now we’re ranked in that 14 to 20 range, globally.

And they all point to the same reasons: high inequality, high gender wage gaps, high rates of deaths of despair, and a generation of young people who are being blocked from truly contributing to Canada’s society and our economy.

Sabrina Maddeaux: Your breakdown of the Happiness Index is so key, in my view, of Canada’s current situation, and that a lot of people look at overall medians or overall trends, but the experience of living in Canada and wealth in Canada is so vastly different. Based on your age group at this point, unless you break it down into younger generations versus older, you really aren’t getting a picture of how dire things are for younger Canadians in particular; they’re practically living in a different country than older Canadians.

Mike Moffatt: I think that’s absolutely right. And one of the areas where we do particularly poorly on that index is freedom. But it’s not freedom in the way that we traditionally think about it - the government saying that you can’t smoke weed or can’t do this or can’t do that, but it’s based on your options. It’s based on the things you can do. So it’s not your freedom to drive a car in the sense of government saying you can and can’t do that, but rather your freedom - your ability - to own a car, and the sort of economic and social indicators around that.

And there we fare quite poorly, particularly among young people, because we’ve priced young people out of taking a great job, moving to a new city and so on.

But that’s enough about my column. Let’s discuss yours, because you had a fantastic one as well. And you made a specific comparison that I thought was really striking. You wrote that a 28-year-old in Alabama can still hope to own a home and build a family if they don’t have both already, but the same can’t be said for a lot of their peers in Canada.

Now, Alabama has a lot of problems, and we’re not trying to gloss over that. But as you point out, this floor is different from Canada. So walk us through your argument.

Sabrina Maddeaux: Alabama’s floor is very low, but it’s stable. It’s their current trajectory, which will hopefully raise that floor and continue to raise it for people. But Canada is different because ours is falling for large portions of the population. And it keeps falling, especially for young people. So that floor is getting lower and lower and lower. And the most visible version of this is housing.

Median home value in Alabama is around 315,000 CAD. Yet in Canada, the average is around 650,000 CAD. But it’s not just housing on its own. Housing is the entry point to the whole package of what a middle-class life is supposed to look like. It has looked like this for a very long time in Canada, particularly when starting a family.

So when you’re locked out of homeownership, you’re also delaying family formation - having kids. You have no wealth-building mechanism. You can’t see yourself retiring. You’re much more economically precarious. And this isn’t hitting everyone equally.

Older Canadians are largely insulated because they were able to get into the market in a very different era. And from their vantage point, the country looks fine. The status quo is actually quite good. But the floor is falling out from under young people, and we’re in a state of remarkably rapid decline for them.

Some examples here: food bank use is growing among employed people with degrees. Homelessness in Ontario is up 8% last year alone, with 85,000 people. The idea that in Canada, a university degree leads to a full-time job or a stable life, and a so-called middle-class salary, isn’t true anymore; you’re still locked out of that middle-class lifestyle.

So I’m curious if you can actually walk us through what that looks like in data.

Mike Moffatt: Absolutely.

The numbers are pretty stark. In the 1980s, the typical senior in Canada was about four times wealthier than the average person in their 20s. Today, seniors are nine times richer than their millennial grandchildren. For the first time, men past retirement age are actually earning more than men aged 25 to 34. That’s a complete reversal from a few decades ago. (That’s something we’ve talked about in a previous episode.)

Seniors’ poverty has dropped to 5%, and that’s a genuine success story. That’s amazing. That’s something that Canada should be very, very proud of. But child poverty is triple that. More than 40% of Canadian millionaires are aged 65 and older. Real incomes for Canadians in their prime working years have stagnated.

So as the OECD well-being data shows, we’re near the top of the world for household wealth, but we ranked particularly poorly for housing affordability and inequality. And ironically, all three of those have the same root cause, which is home prices that have become detached from incomes.

But I’d like to pivot back to your column. Economists have a concept known as a resource curse, where a country blessed with a lot of natural resources, such as Canada, can experience low economic growth and high inequality as the wealth generated by the resource sector can crowd out other parts of the economy. And to be clear, that doesn’t have to happen. It only happens under certain conditions. But it’s a well-known phenomenon that economists study.

Now, you didn’t phrase it this way. I’m interpreting this through an economist's lens, but your piece seems to be making the argument that Canada is experiencing the costs of a resource curse without the actual benefits. Can you walk us through that?

Sabrina Maddeaux: That’s exactly it.

Countries with abundant natural resources often fail to diversify. They underinvest in productivity and develop a built-in excuse for not competing as hard because their resource wealth becomes a crutch, and they become complacent. In Canada, it takes an average of 17.9 years to get a new mining project off the ground. And we still lack a credible path to new pipelines. So we are complacent. The assets are there, but we can’t, or won’t, convert them.

Canada is unique. The really weird part here is that we’ve developed the psychology of a complacent, resource-rich nation without even having the actual receipts, or riches, to show for it. Usually, when a country gets lazy, it’s at least cashing in on these natural resources. Meanwhile, we’ve managed to internalize all the complacency and none of the wealth. A nd our version of the excuse isn’t: We’re rich, so why hustle? It’s: We’re good people with good values, why hustle?

So we’ve substituted this moral self-image for economic performance. And the cruellest part is that the good intentions actually justified a lot of the specific policy choices that are directly responsible for the outcomes we’re now living with. Which makes me curious, with you being an actual economist, what’s your take on Canada’s economic psychology?

Mike Moffatt: There’s this old criticism of economists that when we can’t explain something with economics or data, we turn into amateur sociologists and we throw up our hands and say: Oh, it’s a cultural problem. The head criticism of economists is 100% accurate. So let me commit some amateur sociology.

I happen to think our biggest problem, particularly here in the Ottawa policy bubble where I reside, is that we can’t stop comparing ourselves to the Americans. There’s this mindset that there are only two solutions to any problem. It could be health care, inequality, crime, what have you. Either we keep doing what we do, or we do what the Americans do, and there’s no other possible solution.

And when you do that, Canada does look pretty good on measures of inequality, crime and child mortality and things like that. When we compare ourselves to the United States. But when I point out that other countries are doing better and have found workable solutions to these problems, it’s dismissed. Particularly if that data to those solutions doesn’t come from a G7 country.

And things, in my view, won’t change until we get rid of that mindset.

Sabrina Maddeaux: So, let’s end with this: is it fixable? Because the problems we’re talking about aren’t new. A lot of them have been getting worse, particularly over the last decade. So, what actually has to change? And what does Canada look like if it doesn’t?

Mike Moffatt: Well, go back to my previous answer. The first thing that we need is a mindset change. The single biggest thing we could do to improve our situation is to stop comparing ourselves to the Americans. And I know that’s going to be really difficult, but we’ve got to try. It’s a big world with 200 different countries, and surely the other 198 have something that they can teach us.

The second thing we need to do is get out of this mindset that if we’re critical of Canadian performance, it’s that we hate Canada. I’m hard on Canada because I love Canada and I want it to do better. We really should be the best country in the world, and we’re squandering that potential. I believe in Canada, so I know that this isn’t the best that we can do.

We really are our own worst enemies, and that’s reflected in our policy. A lot of what we need to do is simply get out of our own way. We need to harmonize the regulations, we need to make it easier to build, and we need to recognize that having more gatekeepers and more rules doesn’t make us safer. It just creates more complex systems that are less likely to be monitored and more likely to break down.

And most importantly, we need to start caring about people who aren’t us. Boomers and Gen Xers like me need to start making ourselves aware of what’s happening to Millennials, Gen Z and Gen Alphas and the little Gen Betas, and commit to creating a better Canada for all of them.

So that’s my take. I’d love to get yours.

Sabrina Maddeaux: You hit on something really important to me. Criticism isn’t just okay, it’s good. If done in a healthy and constructive fashion, it doesn’t mean you’re not patriotic or that you’re a hater. It’s acknowledging that Canada has very real problems, and if we don’t fix them or acknowledge them, things are going to get even uglier really quickly. So that first step, in my mind, is getting rid of that complacency in that sense of superiority.

Because you can’t fix a problem that you refuse to admit you have. The Alabama comparison stings precisely because it cuts through that self-image we hold so dear. And we’re no longer better than Alabama in the ways that really matter most to a 28-year-old trying to build a life. And that’s a big problem. That should be something we have a lot of urgency to fix.

Thank you so much, everyone, for watching and listening. And to our amazing producer, Meredith Martin and our editor, Sean Foreman.

Mike Moffatt: Now, if you have any thoughts or questions about Alabama or the best things to order at Waffle House, please send us an email to the Missing Middle podcast at gmail.com.

Sabrina Maddeaux: We’ll see you next time.

Additional Reading/Listening that Helped Inform the Episode:

Sabrina Maddeaux: Canada didn’t become poorer than Alabama ‘out of nowhere'

Canada’s global performance rankings are in freefall

How Canada became poorer than Alabama

World Happiness Report 2025

Funded by the Neptis Foundation

Brought to you by the Missing Middle Initiative