I agree. With the average person being priced out of the housing markets in Toronto and Vancouver, if anything, government should be encouraging rentals.
But because of the hot market many speculators, including many people within the city itself, are buying houses/condos simply as investments and then renting out those houses/condos. If speculators weren't buying up these places, they'd be more affordable to buy for people who actually are going to live in them.