Finance Committee on Oct. 1st, 2025

[The Vice-Chair (Jasraj Hallan), Conservative, Jasraj Singh Hallan]

Thank you very much. That was less than five minutes.

Next, we have Mr. Moffat from Missing Middle Initiative.

You have five minutes, please.

[Mike Moffatt, Founding Director, Missing Middle Initiative]

Thank you for having me here today.

I will speak to the first-time homebuyers' GST rebate in Bill C-4. While it is a step forward, it should be expanded to match the existing GST rebate and apply to all buyers of primary residences.

Taxes on new homes have priced the middle class out of the market.

In 2004, I bought a new home in London, Ontario, for $168,000. Back then, development charges, PST and GST totalled under $16,000 after rebates. Today, those same charges exceed $110,000 on a similar home—a 600% increase in 20 years. If we add in other fees, land transfer taxes and interest on development charges, the tax bill on a home today approaches the entire cost of the home I bought in 2004. In the GTA, that alphabet soup of taxes can top $300,000 on a new home.

The golden rule is that a middle-class family shouldn't buy a home that's worth more than three times their income. For a $100,000 household, that's $300,000. When the taxes alone on the new home are that high, we've priced the middle class out of home ownership. Sales prove it. In the GTA and greater Golden Horseshoe areas, preconstruction condo sales are down 89% and ground-oriented home sales are down 70%. If buyers can't afford homes, they won't be built.

Governments must cut input costs. Ottawa has already acknowledged the harm of high housing taxes by rebating 100% of the GST on purpose-built rental construction. It has also recognized that through a commitment to lowering development charges. However, when the GST was introduced in 1991, a commitment was made to adjust the GST new housing rebate for inflation on a regular basis. Over 30 years later, that promise has never been kept.

Yes, tax cuts have fiscal costs, but inaction has bigger ones. A 2023 CANCEA report found that a $940,000 new Ontario home generates $110,000 in federal tax revenue. Based on CMHC housing start forecasts, a decline in owner-occupied starts in the GTA alone is projected to cost the federal government $2.4 billion annually. If we add Vancouver to that cost, the losses are well in excess of $3 billion annually. That's more than the annual cost of Build Canada Homes in lost tax revenue.

It's not just tax revenue. Jobs are at stake. If this slowdown persists, as many as 100,000 housing jobs could be lost nationwide. When 15,000 automotive jobs were at risk during the financial crisis, governments acted. We need the same resolve now.

There are three points I would like to leave the committee with. First, Canada cannot double housing starts if they're falling. The CMHC projects that housing starts will fall through 2027. We can't go up and go down at the same time. Second, that inaction drains the revenue needed for housing programs. The very money you need to fund Build Canada Homes is not going to be there if housing starts fall. Third, if housing is a human right, we can't keep taxing it like alcohol and tobacco. We can't keep taxing the middle class out of this market.

I look forward to your questions.

[The Vice-Chair (Jasraj Hallan), Conservative, Jasraj Singh Hallan]

Thank you. That was also below five minutes.

We'll move into our first round of questioning.

First, we have Mr. Lefebvre for six minutes.

[Éric Lefebvre, Conservative, Richmond—Arthabaska, QC]

Thank you, Mr. Chair.

Thank you all for being with us as we study Bill C‑4.

I said earlier, at the outset, that this bill essentially incorporates three commitments made by the Conservative Party: income tax cuts, GST rebates on new homes, and the elimination of the carbon tax for consumers. We would have liked to have gone further, but it's already a step in the right direction.

However, we see a problem. We were talking dollar for dollar. For every dollar spent, there had to be a dollar saved. However, that's not what we're seeing right now. Before spending money, we should have had a budget, which we did not.

I'll start with you, Mr. Moody.

You're an accountant. You write about tax measures. I would like you to tell me what you think of the Parliamentary Budget Officer's comments when he tells us that the most important fiscal anchor is the debt-to-GDP ratio, that the government isn't on track to meet that fiscal target, that this is the first time in 30 years that there has been a ratio projected to increase in this way, that the path we're currently on isn't sustainable and that everyone should be concerned.

I, for one, am concerned. I would like to know if you are as well.

[Kim G. C. Moody]

Yes, I am obviously concerned. I concern myself with taxation measures and look at increasing debt costs and increased spending. With my expertise, I often wonder how it's going to be paid for, given taxation policy measures.

Overall, putting on my layman's economic hat, of course I'm concerned. When there's that kind of strong and blunt language, every Canadian should take notice.

[Éric Lefebvre, Conservative, Richmond—Arthabaska, QC]

Thank you.

My next question is for Ms. Demers.

First, I want to report a conflict of interest related to my former professional activity. I was a member of the APCHQ for a number of years. At one time, I owned a factory specializing in the manufacture of roof trusses and beams. I'm familiar with the organization and was actively involved in it.

Ms. Demers, how could we help our contractors? They're in a unique situation right now because of the bureaucracy. As Conservatives, we believe it is important to cut red tape. We need contractors on the ground who are building houses and housing, not filling out paperwork.

What can we do here?

What measures could the current Liberal government put in place to help our contractors?

[Isabelle Demers]

I'd like to thank Mr. Lefebvre for his question.

I want to point out to the committee that I wasn't working at the APCHQ when Mr. Lefebvre was a member of the organization.

You're asking me what the government can do to help contractors do their job, which is to build houses and housing.

I can tell you that the APCHQ has proposed a number of measures to the federal government in recent years. One of the proposed measures was indeed to remove the GST for first-time homebuyers.

Other measures have been proposed, such as measures to facilitate access to housing through tax or financial measures. For example, we propose relaxing the rules related to the stress test or those related to access to that test. That would make it easier to access loans or financing. That's one of the things that should be possible. Someone who pays their $2,500 rent every month and who, for a number of years, has demonstrated sound management when it comes to paying rent should be able to access bank financing. That access is more difficult now, given the rising costs.

We also made recommendations not only to help people access home ownership, but also to stimulate supply. Stimulating supply would give contractors more predictability. This would make it possible to simplify the regulations, of course.

It would also make it possible to ensure easier access to Canada Mortgage and Housing Corporation, or CMHC, programs. Instead of taking a one-size-fits-all approach, we need to adopt approaches where we're able to carry out projects that don't force contractors to choose between affordability and energy efficiency, which is counterintuitive. There should be additional measures. That's one of the things we recommend to increase supply.

There's also the whole issue of regulations. Canada has a very diverse set of regulations, not to mention the fact that the construction code is interpreted very differently from one region of Quebec to another. Regulatory harmonization would certainly help provide predictability.

The other thing I want to mention is that we also need to make sure we don't lose homes that have already been built. It's not just about building more homes. Our housing stock in Quebec and Canada is aging. We have to make sure that it is renovated and maintained. The most affordable housing is housing that already exists, that's already built.

That's work for the renovation sector. It's as important as building new homes.

[The Vice-Chair (Jasraj Hallan), Conservative, Jasraj Singh Hallan]

Thank you. That's the time.

Next, we have Mr. Lavoie. You have six minutes.

[Steeve Lavoie, Liberal, Beauport—Limoilou, QC]

Thank you, Mr. Chair.

I would like to thank the witnesses for being here today. Their comments are very interesting.

Ms. Demers, in my riding of Beauport—Limoilou, on the outskirts of Quebec City, there are many young families.

In your opinion, is the GST rebate measure included in Bill C‑4 good news?

Is this measure a good one? If so, why?

[Isabelle Demers]

The GST rebate is a measure that the APCHQ has been calling for a long time. The 15% GST and QST tax represents a huge barrier for first-time buyers.

These taxes are paid in cash. It is important to remember that citizens pay for goods with money that has already been taxed. Citizens therefore set aside money for a down payment to purchase a property that will also be taxed. Yet housing is essential. Without housing, no social and economic development is possible.

That said, while our organization welcomes the GST rebate measure, its effective date should be the day it was announced. The announcement prompted many buyers to take action and sign agreements. They were then surprised to learn that the measure would take effect retroactively two and a half months later and that they would therefore have to pay even more than expected. This is unfortunate.

This is a good measure, but the APCHQ recommends that it take effect retroactively on the day it was announced, not on May 27, 2025.

[Steeve Lavoie, Liberal, Beauport—Limoilou, QC]

Thank you, Ms. Demers.

Mr. Moody, thank you for joining us today.

I read the articles you recently published in the Financial Post. I'd like to focus on one of the topics you discussed, namely the idea of spending less to invest more. This idea is often repeated in the new government. It really strikes a chord with me because, as a former banker, I am very familiar with this principle. However, in everyday life, for the average person and for young families, is this good advice?

Let me give you a concrete example. Imagine that instead of buying a luxury car, a family buys a less expensive car. They reinvest the money they save, whether it's $15,000, $20,000, or $30,000, in a Registered Retirement Savings Plan, or RRSP, or in a Registered Education Savings Plan, or RESP, for their children.

Does that make sense to you?

Is this kind of financial decision good advice for a young family?

[Kim G. C. Moody]

Off the bat, I find the messaging of “spend less, invest more” very vacuous. As an accountant, it means absolutely nothing. To most Canadians, it should mean absolutely nothing, because it means nothing. When you combine that with the separation of the operating budget from the capital budget, that's very deceptive, and I have criticized that quite often in my writings.

To answer your question, buying a less expensive car and putting the savings into an RRSP, for most people.... Obviously, it would depend on the facts, but for most people, that would make some sense. Saving is typically always a good strategy.

[Steeve Lavoie, Liberal, Beauport—Limoilou, QC]

We agree that spending a little less on luxury items and reinvesting the savings is good advice to give to a young family. We understand the principle.

However, a government can act in the same way as young families and ordinary people. It can decide to be careful with its spending in order to invest where there will be returns, much like people who invest in RRSPs or RESPs. This can pay off over time. It's about investing your money where there will be gains later on.

Can a government act in the same way, i.e., choose to spend less and invest the money saved elsewhere today in order to have greater financial leverage later?

[Kim G. C. Moody]

I think a young family that has the excess cash available to invest in an RRSP and a government that does not have cash are completely different. When you are borrowing to spend more or to invest, that makes absolutely no sense. The comparison is just unrealistic and not comparable.

[Steeve Lavoie, Liberal, Beauport—Limoilou, QC]

However, young families take out loans to buy a car or a house. It is therefore possible to compare a government and a young family taking out a loan. It's the same thing. Instead of borrowing $50,000 to buy a car, I borrow $20,000.

Doesn't that make sense?

[Kim G. C. Moody]

Your original example was to take the savings and to put it into an RRSP. If you have the cash and you're putting it aside for savings, that is very good in most cases, but if you're borrowing it to put into your RRSP, then I challenge anybody to show me the mathematics of how that might make some sense. In some cases it might. Believe me, I've run those numbers many times throughout my career, but that's the equivalent comparison to what you're talking about with a government that wants to borrow more money to invest. Of course, the issue is this: What does investment mean in a government context? It's not easy to define.

[The Vice-Chair (Jasraj Hallan), Conservative, Jasraj Singh Hallan]

That's time. Thank you.

Next, we have Mr. Garon for six minutes.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Mr. Chair.

Since I don't think the federal government will be going back to school or retiring, I won't be advising it to contribute to RRSPs.

Instead, I'd like to address the issue of GST rebates for new homes.

Ms. Demers, I will therefore be speaking mainly with you.

I understand that the Prime Minister first announced the measure on March 20.

Is that correct?

[Isabelle Demers]

The announcement was indeed made on March 20, 2025.

[Jean-Denis Garon, Bloc, Mirabel, QC]

At the time, Mr. Carney was not a candidate for the leadership, and we were not in an election campaign. The campaign was launched on March 23, 2025.

Is that correct?

[Isabelle Demers]

Indeed, the election campaign was launched on March 23, 2025.

[Jean-Denis Garon, Bloc, Mirabel, QC]

A prime minister was therefore in office, and he had not recalled Parliament. He could not table a motion of ways and means so that this measure could be implemented as soon as possible. That's correct. Parliament had then been prorogued.

I have the impression that, if the government had been sitting at that time, it would probably have introduced this bill on March 20, 2025, and that is the date that would appear on it.

However, because of the election, which is part of the democratic process, we are now telling people that they have lost about two months.

Would a reasonable person who does not spend much time in Parliament have believed that the measure could reasonably be implemented as of March 20, 2025?

[Isabelle Demers]

Obviously, I can't know what everyone thought. However, I can tell you what our contractors and developers told us.

Many of them found themselves having to bear the brunt of this change, which was tragic for some households. In fact, they had to explain to them that the government measures did not apply because the contracts had been signed before May 27, 2025.

Contractors cannot terminate a contract to accommodate a buyer. It is not possible. The regulations don't allow it.

One thing a contractor can do is accept, for example, a request from the buyer to cancel the contract. However, the buyer must then pay the costs associated with such a cancellation and then find another property on the current market, which is not necessarily simple or easy for them.

And for their part, a contractor or developer may refuse to terminate a contract for their own reasons.

[Jean-Denis Garon, Bloc, Mirabel, QC]

I believe that this measure is intended to simplify the lives of first-time homebuyers. There is nothing simple about what you have just described regarding the methods that could be used to bring the policy in line with what people initially understood. We could simply change the date.

There are probably reasons why the government decided to make some people lose two months, and one of them is the cost.

Does the APCHQ have a way of assessing what it would cost the federal government, at least for Quebec, to change the date to March 20, 2025, instead of sticking with May 27, 2025?

[Isabelle Demers]

Yes, we have done an assessment. According to that assessment, it would cost the government $53 million to change the date to March 20, 2025. This does not only apply to Quebec, but to Canada as a whole.