Federal government’s effort to shed underused office space falling short, audit finds

Canada’s Auditor General recently released a report indicating that the 10-year plan to reduce federal government office space by half is falling behind schedule. Auditor General Karen Hogan’s audit revealed that the initiative, which began in 2019, has only just commenced due to a lack of funding.

Before the onset of the COVID-19 pandemic, Public Services and Procurement Canada (PSPC) estimated that 50% of federal office space was underutilized. The department had started strategizing to dispose of certain properties for alternative purposes such as housing. However, over the past six years, the federal office space portfolio has only marginally decreased from 64.6 million square feet to 63.5 million square feet.

Last year, the federal government pledged $1.1 billion to aid PSPC in achieving the 50% reduction target over a decade. The anticipated savings from reaching this goal are estimated to be $3.9 billion over the next ten years, with additional annual savings of nearly $1 billion.

Despite the allocated funding, PSPC projects a reduction of only 33% within the specified timeframe. The operational expenses for the federal government’s buildings amounted to approximately $2.14 billion in the 2023-2024 fiscal year.

Repurposing surplus federal land and buildings for affordable housing has been suggested as a positive outcome of the plan to decrease federal office space. The Canada Mortgage and Housing Corporation (CMHC) received $200 million for the Federal Lands Initiative, aimed at converting surplus federal properties into affordable housing. The initiative initially aimed to secure commitments to construct 4,000 housing units by 2027-2028, but the audit predicts that only 1,951 units will be built by the deadline.

The audit highlighted that 39% of the projects supported by the Federal Lands Initiative would not benefit Canadians living in areas with the most significant housing needs. CMHC attributed this to a limited supply of government properties available for conversion in certain regions.

Furthermore, the audit revealed that while CMHC met the affordability criteria for the initiative, it was not tailored to provide housing affordable for the lowest-income households. The initiative has primarily supported rental housing, neglecting emergency shelters, transitional housing, and social housing. CMHC officials explained that the lack of ongoing financial support makes it challenging to accommodate a broader range of housing options.

Efforts to maximize the potential benefits of repurposing federal properties for affordable housing are crucial in addressing the housing shortage in Canada. The audit’s findings underscore the need for strategic planning and adequate funding to ensure the successful implementation of initiatives aimed at reducing federal office space and expanding affordable housing options for Canadians in need.