A recent Senate report has shed light on the significant delays and escalating costs associated with housing projects across Canadian municipalities, urging federal funding to be contingent on cities’ ability to expedite approvals and reduce development fees. The findings reveal stark contrasts in the time taken for housing project approvals, with Toronto’s cumbersome regulatory processes standing in sharp relief against faster-moving cities like Calgary.
Disparities in Approval Timelines
The standing Senate committee on banking, commerce and the economy conducted an extensive review of housing affordability and revealed that in Toronto, the approval process for housing developments can stretch over two years. In contrast, Calgary manages to complete the same approvals in approximately ten months. In more alarming revelations, the committee discovered that it may take an astonishing eleven years for a housing project in Toronto to go from initial proposal to completion.
Toni Varone, the deputy chair of the committee, highlighted the inefficiencies in Toronto’s system, where up to 50 different agencies can be involved in a single housing proposal. This is in stark contrast to other cities, which often require input from far fewer agencies. Varone emphasised the need for better coordination, remarking, “There’s no reason why Calgary can go from first application to building permits in months and Toronto needs years, and there’s no apparent difference in the outcomes.”
Rising Development Costs
The report identified that development charges contribute significantly to the final cost of new homes. In Toronto, these fees can add around £200,000 to the price of a single-family home, while in Moncton, the same charges amount to a mere £10,000. Originally intended to help cover the costs of necessary infrastructure for new developments, these charges have ballooned and are often used to subsidise broader city expenses, leading to a lack of transparency in their application.
The committee has called for urgent reforms, including the elimination of GST/HST on new housing units valued under £1 million, as well as a reduction in tax for homes up to £1.5 million. Varone pointed out that despite significant federal funding allocated to municipalities, there has been little movement in reducing development charges or expediting approval processes.
Government Response and Expert Opinions
In response to the Senate report, a spokesperson from the Department of Finance, Marie-France Faucher, indicated that the government remains committed to lowering costs through tax reductions and increasing housing supply, though specific comments on the report’s findings were not provided.
Critics of the federal government’s housing policies have highlighted the report’s recommendations as vital improvements, particularly targeting the excessive development fees. Benjamin Tal from CIBC Capital Markets stated, “We have to realise that a reduction of development charges of 30 or 40 per cent will not be sufficient. We have to basically eliminate them for it to make a difference.”
The report indicates that development fees in Toronto have surged by approximately 800% over recent decades, with many fees now being used for unrelated city expenditures.
A Call for Coordinated Action
Mike Moffatt, who leads the Missing Middle Initiative at the University of Ottawa, suggested that relying on development charges to fund city expenses unfairly burdens new homeowners with increased mortgage costs. He argued for a federal move to cut the GST/HST as a swift means of alleviating housing costs, stating, “All of the other recommendations take time. This is something the government can do with a stroke of a pen.”
Premier Doug Ford of Ontario echoed this sentiment, advocating for a reduction of the provincial portion of the HST on new home purchases. He noted that previous attempts to cut the tax exclusively for first-time buyers had minimal impact on housing starts.
Why it Matters
The findings of this Senate report underscore a critical juncture in Canada’s housing landscape, highlighting the urgent need for regulatory reform and cost reduction to address the ongoing affordability crisis. As housing prices continue to escalate and delays in project approvals become the norm, the recommendations set forth in this report could serve as a blueprint for action. Streamlining processes and reducing financial burdens on developers may not only facilitate the construction of much-needed homes but also create a more equitable housing market for all Canadians.
