Finance Committee on Oct. 1st, 2025

[Sandra Cobena, Conservative, Newmarket—Aurora, ON]

Thank you.

My next question is for Mr. Moffatt.

You spoke a little about the impact of the GST cut on the housing crisis that we currently have in Canada. We have learned that this GST cut will apply only to new homes that are less than $1 million, and it's only for first-time homebuyers.

How effective do you think this measure is in addressing the housing crisis?

[Mike Moffatt]

I think it certainly helps.

The GST applies only to new homes to begin with. There's nothing to rebate on resale. The $1 million works for most of the country, but it is a problem in the GTA, southern Ontario and the Lower Mainland in B.C., where a high proportion of new homes are over $1 million. That portion of it does carve out some homes.

I think the biggest issue is that it's only for first-time homebuyers, who make up about 20% of primary residence purchasers. It leaves out some very important folks. Think of a couple who own a one-bedroom condo and would like to upgrade into a three-bedroom home that's suitable for raising kids. They have been excluded from this. Seniors who would like to downsize into a new home—which not only helps them but frees up a home for the next generation of families—are not eligible for this.

I do think that limiting it to first-time homebuyers really diminishes the effectiveness.

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

That's the time. Thank you.

Next we have Mr. MacDonald for five minutes.

[Kent MacDonald, Liberal, Cardigan, PE]

Good afternoon. Thanks to all of the witnesses for joining us today.

This was our affordability measure, Bill C-4. We've been asking a lot of questions on the housing.

Mr. Moffatt, if I may, I'll direct a question to you.

One of the persistent challenges in the housing market, which you bring up, is the taxes and fees that different levels of government have been laying on homeowners or new-home builders.

How does removing the GST on new homes under $1 million help these individuals? Can you comment on that?

[Mike Moffatt]

Because the GST only applies to new homes, at the end of the day it's basically a construction tax. There's no real difference from a development charge.

If you remove $50,000 of taxes on a new home, that makes it easier for families to qualify for a mortgage or save up enough for a down payment. It's important to get those taxes....

You're absolutely correct that it is across all three orders of government when, for a modest three-bedroom in London, Ontario, the construction taxes have gone up 600% in 20 years. I think we need to look at reducing those back down to more manageable levels.

[Kent MacDonald, Liberal, Cardigan, PE]

I'll ask Ms. Demers.

In our affordability...or Bill C-4, we have measures in there. The GST cut could add up to $50,000 if it's a $1-million home. We removed the carbon tax. We also have the income tax cut. Whether people like it or don't like it, it's a measure that's going to reduce taxes for 22 million Canadians.

Would you agree that these measures are going to help first-time homebuyers get into the housing market?

[Isabelle Demers]

Bill C-4, as mentioned, is a measure for a reduction of the tax. It's a measure that we support. We're really pleased to see that the government went forward with it.

If we want it to go further, not only would we have to move the start date to the date it was announced but we would need to make sure that the tax reduction would be in effect while the acquisition is being made, as opposed to people having to get a loan with taxes and get the rebate after. It would be nice to see how we could simplify the way that the rebate is provided. That would be something.

It would also be nice to see a measure for students and the elderly. They're not first-time buyers but they're really affected by the crisis. It would be nice to see an opening in terms of the programs for them, if possible.

[Kent MacDonald, Liberal, Cardigan, PE]

Mr. Moffatt, that leads to another question for you.

In the article you published recently, you talked about the GST rebate to all owner-occupied purchases. You stated that if this was wide open, it would cover 60,000-65,000 homes annually with a fiscal cost to the government of about $2 billion.

Where do you think the balance is with the federal government? Where do we strike the balance between expanding the eligibility of the program and staying within reasonable fiscal restraints?

[Mike Moffatt]

If we were in a situation where homebuilding was in a boom, this would have a substantial net fiscal cost, and we could argue whether or not it's necessary, but right now, we have home starts and home sales falling by 60%-90% in our major metros.

With the reduction in sales and the GST and GBA, that's going to cost the federal government $3 billion annually if these trends continue. We need to look at that. We need to examine both the cost of action, which is about $2 billion, but also the cost of inaction, which is going to be in the billions of dollars as well.

Finally, I would note that we need to hit 500,000 new homes. That is the target that the federal government has set, but if housing starts are falling by 4% a year, which the CMHC forecasted for 2027, we're not going to be able to double housing starts. We need to do what we can to lower the cost of homebuilding to allow us to hit those very ambitious housing start targets.

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

That's time.

Next, we have Mr. Garon, for two and a half minutes.

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

Thank you, Mr. Chair.

Ms. Demers, you represent a very large proportion of companies in the residential construction industry in Quebec.

Based on what you hear in the field, are people eager for the planned measure to be implemented?

Are the clients of the members of your association eager to receive their refunds?

[Isabelle Demers]

This measure is certainly welcome and eagerly awaited. It represents a substantial amount for most buyers—

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

So for the people you work with, this is an important political message, and they are eager for Bill C‑4 to be passed.

Is that correct?

[Isabelle Demers]

That's right. They are very eager for this bill to be passed.

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

I will proceed quickly because I only have half the speaking time allotted to the other parties, which is normal.

Do the people in your association tell you that there is no rush to pass Bill C‑4, that the banks are taking care of it, that it will resolve itself and that, basically, it could be passed in 2027 and it wouldn't be a problem?

That is what we have heard from the Liberals today.

[Isabelle Demers]

I'm going to present things differently.

We are currently experiencing a housing crisis, and several measures will need to be put in place to overcome it. In Quebec alone, 100,000 homes will need to be built each year over the next 10 years. To restore affordability, one million homes will need to be built in Quebec.

For the first time since World War II, we are also dealing with a generation that will likely not have access to home ownership.

In the current context, owning a home or dwelling also represents a certain degree of financial and economic stability for households.

However, the members of our association, whether they are builders, renovators, or developers, naturally want to see all the necessary measures put in place to ensure mobility so that people can become homeowners, for example. Mobility also means that when an apartment becomes vacant, someone else can become the tenant.

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

Have you heard people say that they contacted Revenu Québec and the Canada Revenue Agency to inform them that their contract had been signed and their house delivered, but that they were still waiting for their refund?

[Isabelle Demers]

What we heard was that people had been told there would be no refund because their contract had been signed before May 27, 2025.

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

Thank you very much.

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

That's time.

Our final round will start with Mr. Kelly for five minutes.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Thank you. Welcome back to the finance committee.

Mr. Moody, in your opening remarks you talked just a bit about the need for things like tax simplification and the need for real, true affordability measures. I presume you might have been referring to how we need to do something about productivity in this country. We've seen over the last 10 years a decline in per capita GDP, wherein Canadians are actually becoming poorer under this government. In response to Ms. Cobena's questions, you laid out the insufficiency of Bill C-4 as an affordability measure.

Can you comment further on some of the items you touched in your opening statement?

[Kim G. C. Moody]

Sure. Thank you, Mr. Kelly. Yes.

Where I was going with my final comments was about the need for tax reform that ultimately looks at a whole bunch of tax measures, including material tax reduction all the way through the system. Canadians pay far too much in tax. I have written about that very many times. I'll debate anybody who wants to challenge me on that. That to me is real affordability measures. The Fraser Institute, for example, does its yearly study of how much tax is paid—not just income tax, but all levels of tax—as a measure of total income. It's an interesting review. Yes, you can debate the methodologies and conclusions, but tax is far, far too high. My conclusion is that by reducing those tax loads, those are real affordability measures.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

You also talked in your opening statement about financial literacy and how it is challenged by the method by which this government goes about tax changes. You testified at the finance committee late in the previous Parliament about the capital gains tax, which came to mind when you spoke of the chaos over introducing measures, treating them as if they had royal assent or at least leaving Canadians forced to plan as if these changes had royal assent. In that example, they abandoned that poor policy even before Parliament was dissolved.

Can you comment a bit more on how to properly table and deal with tax measures and communicate them?

[Kim G. C. Moody]

Yes, I'm happy to.

I wrote an article about that in the Financial Post two months ago. History serves very good lessons. In 1985, then finance minister Michael Wilson introduced a really good paper—which I hyperlinked in the article for anybody who wants to take a look at it—about this very issue of how to deal with provisional tax administration. There is a need for it. The problem is that right now it's being used for political purposes, as I mentioned in my opening remarks, and in inappropriate things like capital gains administration when it was politically a very hot potato.

I think we should follow the example set out in 1985. We should have statutory provisions that clearly lay out how we should do that. There are good examples in the U.K. to follow on that. I think we have a lot of work to do on that as a country, Mr. Kelly.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Thank you.

I have about a minute left.

Mr. Moffat, could you clarify? You quickly went through some statistics in response to Mr. MacDonald's questions about the state of housing starts. From what you said in response to his questions, it sounds like housing starts are in free fall.

Could you go through some of those statistics on the collapse of housing starts?