Finance Committee on Nov. 14th, 2023

[Adam Chambers, Conservative, Simcoe North, ON]

There was a new courthouse built close by here that's going to cost a billion dollars, but there are more than three courtrooms.

[Ron Butler]

I think there are about 25 or 30.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Chambers.

Now we'll go to MP Baker for five minutes.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thanks very much.

Joe, I'd like to invite you back, if you'd be so kind.

His popularity here in this committee is surmounted only by his popularity in Etobicoke Centre.

[Voices]

Oh oh!

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Joe, I want to go back to the land value tax. Could you speak a bit about any other jurisdiction that has implemented a land value tax?

[Joseph Polito]

Again, Professor Condon has illustrated that in the last hundred years it's been used in numerous places. He talks about Vienna. He talks about Pittsburgh. He talks about Vancouver.

The impact was always positive. It meant more construction and lower rents, but once it was tinkered with or vested interests who were trying to make money on land got involved, it fell apart. Pittsburgh has retained somewhat....

He has also mentioned that in Cambridge, Massachusetts, they have established a 100% inclusionary zone region, and that's a big part of this process of a land value tax. It works very well. The two work very well together.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

I think that one of the things I want to drill down on is the impact on all the various groups of folks who are touched by this. This won't be an exhaustive list, but we talked earlier in my previous line of questioning about the impact to the municipality's revenue pool. The way you proposed implementing land value taxes is that, at that same revenue pool, the tax would be set in such a way that the city would be receiving the same amount of revenue as it currently does through property taxes. That's how I understood it.

Can we talk about this briefly? I'm going to go through this pretty quickly. The landowners or the developers presumably have a stronger incentive to develop the land now, because they're paying the same land value tax whether they have a building on it or not.

[Joseph Polito]

That's right.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

They're going to want to optimize the value of that land and, therefore, build to the greatest economic benefit to them and to maximize the economic value. That could be the value of the overall development and/or it could be any economic activity like storefronts, businesses or whatever other economic activity, I presume.

Let's look at the consumer for a moment, or the individual, or the constituents like mine in Etobicoke Centre where we live, and others. Could you just tell us quickly what would be the benefit of this to the average constituent?

[Joseph Polito]

They'd be living in a more affordable community. One of our big problems is that a lot of people can't afford to live in the community in which they work. This would make that community more affordable. They would be living in a community where the business sector would be able to develop more, provide more jobs, produce more goods and services, increase our standard of living and, therefore, increase the income of the people living in that community. It's a win-win.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Is that because you're creating an incentive for greater maximization of the use of land?

[Joseph Polito]

Yes. You're removing the barrier to development. You're removing the barrier to build and removing the incentive for people to hoard land and make it idle because they're looking for speculative value. It's like collecting paintings or something and putting them away. Obviously, this is for a universal need—housing and real estate construction.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

If we follow that logic through, there is less incentive to speculate. Is it fair, then, to conclude that as the result of less speculation...? Some folks who've come before this committee have said, look, the speculation that we see, whether domestically driven or by investors from elsewhere, leads to housing prices or land prices going up more quickly than they would have otherwise.

By what you've said, you're suggesting if we have less land speculation, that suggests that we would have less of an effect of climbing housing prices.

[Joseph Polito]

Right. That should freeze the housing market so that it's not going up and down. It may even knock it down a little.

The other thing is that, if the banks aren't funding these vastly overpriced housing bubbles, then they're going to be funding productive industry. They're going to be putting their money toward productive use, things that return investment like [Technical difficulty—Editor].

[Gabriel Ste-Marie, Bloc, Joliette, QC]

We didn't hear the last response, since the witness's mike is switched off.

[The Chair, Liberal, Peter Fonseca]

Can you please repeat what you just said?

[Yvan Baker, Liberal, Etobicoke Centre, ON]

You were saying that there would be less speculation.

[Joseph Polito]

If the banks are not funding the housing bubble, then they will be investing the money in productive industries. They'll be raising our standard of living. They'll be putting the money toward capital. There's a big concern that Canada's productivity hasn't been keeping up because there hasn't been enough investment in capital. That money could be redirected to capital investments.

[The Chair, Liberal, Peter Fonseca]

That's the time. Thank you very much.

Thanks, MP Baker.

We're getting close to the end of our time for the first panel. We have just enough time for each party to ask one question of our witnesses.

We'll start with MP Lawrence for the question.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Perfect.

I would ask either Ms. Livingstone or Mr. Courtice to retake the hot seat, as it were.

[Scott Courtice]

It will be my turn.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Perhaps I got a little too specific in my last question, but for the benefit of the most vulnerable and for all the individuals in the city of London, would you support policy generally that reduces the cost to heat one's home?

[Scott Courtice]

Yes.