There's no shortage of land in Canadian cities or really any western city in a housing crisis today. The problem is that this land is squandered on lower density development that is illegal to improve into higher density development thanks to zoning mandating low density. Zoning must keep up with job growth or else you end up with the situations we see today: wealthy people entering bidding wars on an 80 year old originally working class home.

Crown land is controlled by the provinces. The feds only control national parks, military bases and areas covered under Indigenous title.

The provinces hand over crown land to municipalities for development all the time.

Land isn't the problem. The lack of density within desired metropolitan areas is the problem.

Would anyone live on that 1% of land ? Should the government build houses there ? And give them away for free, or sell them (at what price) ?

I'm not sure what your suggestion would solve.

Sorry, is Canada lacking in empty land? You are using percentages but what's the percentage of total land?