The Progressive Conservative Party of Ontario should think about taking a page out of its federal counterpart’s playbook and cut taxes— or at least
.
The Ontario PC Party under Premier Doug Ford has an opportunity to do just that, albeit indirectly. Ford can ameliorate his constituents’ cost of living by cleaving construction taxes foisted by municipalities onto developers, which are ultimately paid by home-buyers.
According to
from the Canadian Centre for Economic Analysis, taxes, fees and levies, first imposed upon developers but ultimately paid for by home-buyers, comprise 35.6 per cent of the price of a new Ontario home.
Municipal governments justify development charge increases by claiming that “growth pays for growth.” However, because there’s little to no oversight over where the money goes, much of the local building industry believes those tax revenues are spent on other capital expenditures.
The City of Toronto, which is sitting on a development charge reserve funds in excess of $3 billion, keeps crying poor and
despite few noticeable improvements to its infrastructure. So the industry isn’t necessarily off base.
And while some of the blame lies with avaricious municipal bureaucrats, the truth is that the buck stops at Queen’s Park — specifically at Premier Ford’s feet.
However, after amending the 28-year-old Development Charges Act via the languorously named Protect Ontario by Building Faster and Smarter Act, which received royal assent on June 5, the government has an opportunity to signal to Ontarians that it is taking the cost of living crisis seriously.
Among the legislation’s most salient provisions is that it does away with upfront development charge payments — which is important because developers currently rely on lenders to finance the cost, with interest, which ultimately inflates the final cost borne by home purchasers.
The bill also stipulates what municipalities can use development charges for, thereby introducing a guardrail against hoarding tax dollars.
But, because the Development Charges Act is provincial legislation, the PCs can still do more. It’s important to remember that development charges are just one of the many taxes, fees and levies that developers pay, and while it’s probably unrealistic to expect that they will be removed entirely, the Ford government can at least introduce substantive rules designed to forestall municipal greed.
Developers, for example, are required to produce a superfluity of reports — some planning departments demand upwards of 17 different environmental assessments. This only serves to help bloated bureaucracies look busy and protract construction timelines, which, again, requires institutional financing with heavy interest rates.
It’s no wonder, then, that the down payment for a home in the Greater Toronto Area is often in the six-figure range. Worse still, there’s a major housing correction in the region’s high-rise sector, a commonplace consequence of which is that home-buyers are unable to close on their purchases and are getting sued by their builders.
The condo market has softened because too many buyers have been priced out of the market and, among those who can afford to buy, living in a 500-square-foot shoebox that’s inconveniently located next to a garbage chute and elevator isn’t all that appealing — especially for the price of a house with a big backyard just a couple hours further afield.
Prime Minister Mark Carney has promised to address out-of-control development charges, but what that will look like is anyone’s guess. However, the Liberals have demonstrated time and again that they understand housing about as well as
stocks.
But this isn’t the prime minister’s problem to fix. Besides, he wouldn’t be a Grit if he didn’t just throw money at the problem, which is precisely the reason that the systemic issues within Ontario’s housing market will persist if the Development Charges Act isn’t further revised.
Doug Ford’s legacy won’t be written until he leaves office. So far, he’ll be
a below-grade transit system that, by global standards, is bafflingly pathetic. But considering that Ontario had a net inter-provincial migration loss of 24,432 in the year leading up to Oct. 1, 2024, he might be remembered as the premier whose province’s exorbitant housing costs chased an entire generation away.
Premier Ford can alter course and pen a hero’s ending. But he’ll have to remove his head from the sand first.
National Post
Neil Sharma is a Toronto-based journalist who covers the economy, housing market and federal politics.
