Finance Committee on Oct. 6th, 2025

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

On the topic of development charges, do you agree that development charges have increased up to 600%, roughly, in the last decade?

[Richard Lyall]

We've done work on that and we've worked with Mike Moffatt on that. Depending on which scale you pick, it can be up to 2,000%. They've certainly outstripped incomes. There has been virtually no real income growth; meanwhile, these costs have just gone right through the roof. Effectively, a down payment today, especially for first-time homebuyers, is basically an increase in two taxes in just over 10 years—in development charges and sales taxes.

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

Then it's no surprise that we have a housing crisis and that Canadians cannot afford a home.

Does the bill we're looking at, Bill C-4, impact development charges?

[Richard Lyall]

No.

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

Would the bill accelerate the timeline for municipalities to approve projects?

[Richard Lyall]

No.

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

Is it true that housing starts in Toronto fell to their lowest level since 1996?

[Richard Lyall]

Yes. In fact, with where sales are going, we're really at the beginning of this crash. This is why any and all steps need to be taken, but it's also why we will welcome positive measures. Certainly, when governments say they're going to do something and actually do it, we have to respond favourably to that.

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

How much would you say housing costs have increased in the last 10 years, roughly, particularly in the GTA?

[Richard Lyall]

They've gone through the roof. There's no pun intended.

I mean, you've had a massive increase in costs. In the city of Toronto, in one year, development charges increased 43%. Over a 10-year period, a DC that was $8,000 per unit went up to $88,000 per unit. How can consumers afford that increase? It's impossible.

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

Further to that, RBC's “Housing Affordability” website mentions that home ownership costs have increased about 54% in the last 10 years, so it's a serious situation here.

I have another question, though. How much of an average person's income goes toward mortgage payments?

[Richard Lyall]

Well, in Toronto, the most recent numbers I've seen were in the 60th percentile range, which is crazy.

At one point in time, there were people who wanted to redefine affordability because it was so bad. The CMHC has had a long-standing measure that it shouldn't be more than a third of your income, basically, so we're way out of whack. Even though prices have come down, we are still facing other things. We've had increased construction costs and so on. Rates are obviously important, but the bottom line is that the—

[The Chair, Liberal, Karina Gould]

Mr. Lyall, could you just wrap up for this round of questioning, very briefly?

[Richard Lyall]

I was just going to say that the bottom line is the tax issue. That is the most important thing right now.

[The Chair, Liberal, Karina Gould]

Thank you.

Thank you, Ms. Cobena.

I'll go over to Mr. Sawatzky.

You have six minutes.

[Jake Sawatzky, Liberal, New Westminster—Burnaby—Maillardville, BC]

Thank you, Madam Chair, and thank you to the witnesses for joining us today.

Ms. Keesmaat, you've been clear that Canada's housing system isn't working for an entire generation of young people, who are now shut out of home ownership. As the committee studies Bill C-4, we're looking at measures like the GST relief on new homes and the creation of the Build Canada Homes agency, both of which aim to make it possible to build and buy the kinds of entry-level homes people need.

Given your experience in aligning policy, planning and market incentives, I'd like to explore how these changes could help with pathways for younger Canadians to enter the housing market. You've often said that our housing funding model has been broken for years, so how does removing the GST on new homes under $1 million and reducing it on builds up to $1.5 million help rebalance project economics so that builders can produce the entry-level, attainable homes that families actually need?

[Jennifer Keesmaat]

One of the strange things that have happened over the course of the past several years is that we've moved into a high interest rate environment, and during COVID, we went into a supercharged environment in terms of the cost of construction. Every cost went up. Now there's uncertainty around costs because of tariffs.

What that's done is introduce a tremendous amount of uncertainty, in addition to additional new costs. We find ourselves in a very strange situation, because whereas several years ago development projects could tolerate these types of charges—when I was chief planner for the City of Toronto, I'm very proud that we frequently secured things like new community centres and new parks as part of a development approval—that is no longer a viable model. It's no longer sustainable. The cost of borrowing is too high and the cost of construction is too high, so we need to fundamentally recalibrate housing delivery.

Importantly, I and many others in the GTA know of sites where, even if we zero out the cost of land in a development, it is still not a viable project, given the cost to borrow for construction and to actually build the home.

What that means is that we need a fundamentally new model for how we deliver, and it starts with eliminating these taxes and costs that projects could bear five or 10 years ago but that they can no longer bear in this current environment.

It also means—and I think Build Canada Homes is an excellent example of this—that we need to look at using public land in a fundamentally different way. At the very least, we need to zero out land in our pro formas, in addition to getting rid of a whole series of onerous costs. When we do that, we can begin to piece together viable developments that do build homes for new Canadians.

We have a great example in our Merton project. Land contributed by the City of Toronto was assembled with some of our land, and as a result, 30% of that housing is deeply affordable. We're building 450 new homes. That project was approved in an expedited process and is being built in this existing market. It's a really big clue, and I think it builds on many of the principles that you see in Build Canada Homes.

[Jake Sawatzky, Liberal, New Westminster—Burnaby—Maillardville, BC]

Thank you.

Do you see the GST reduction as a practical incentive that will accelerate new builds?

[Jennifer Keesmaat]

It's a piece of a puzzle. There are a variety of pieces that we're working on. There's no golden goose. There's no one way to fix housing delivery. There's no one way to fix a pro forma.

I've spent a lot of my time with my financial team looking at our various sites and our projects and figuring out what the trigger points are that can tip a project into viability. Sometimes it's reducing the parking a bit or getting a shortened approval timeline on rental buildings. For sure, the GST forgiveness on rental buildings has been absolutely critical for rental buildings. It's a piece of a larger puzzle.

Right now, there's a lot we need to eliminate, including DCs, in order to start getting more projects. Not all of them will become viable as a result of these changes, but some will, and that's what we need to work towards.

[Jake Sawatzky, Liberal, New Westminster—Burnaby—Maillardville, BC]

Do you think a national GST rebate will signal to the private sector that the federal government is more serious about creating the conditions to build?

[Jennifer Keesmaat]

I think that's true. I think every move that's made has a positive implication.

I'd just like to say that making it not just for first-time homebuyers but for any primary residence is an important amendment. That would have a bigger impact on movement within the housing system for many people. I'm in this category myself; I'm an empty nester. I still live in the home where I raised my children. Between the land transfer tax and the cost of GST on a new home, there's a disincentive for me to downsize into a more rightsized home. If I did so, I would, of course, be freeing up a home for a young family.

Looking at the entire housing system and removing the GST on any primary residence is really critical.

[Jake Sawatzky, Liberal, New Westminster—Burnaby—Maillardville, BC]

I have one last question.

You mentioned lowering DCs. Do you happen to have any suggestions or recommendations on what a path forward with that could be?

[Jennifer Keesmaat]

I do. The federal government has signalled that it is interested in doing so. I think it's critical for the government to act very quickly and make it clear to municipalities that it will make them whole for any project that is shovel-ready within the next two or three years, ready for shovels in the ground.

It won't be perfect. As we know, different municipalities have different DCs—

[The Chair, Liberal, Karina Gould]

Thank you, Ms. Keesmaat. We're going to have to end it there.

Thank you, Mr. Sawatzky.

Mr. Garon, you have the floor for six minutes.

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

Thank you.

I'd like to thank all the witnesses for being here today.

Mr. Lyall, the Quebec equivalent of your organization, the Association des professionnels de la construction et de l'habitation du Québec, or APCHQ, testified before the committee last week. The representative expressed some reservations to the committee about the date on which the GST rebate on new homes would apply. She explained that the measure was first announced in March by the Prime Minister, before the election campaign. Then there was the election campaign, and when parliamentary work resumed, a motion was introduced in Parliament. That explains why the GST rebate starts for contracts signed as of May 27, if I'm not mistaken.

The APCHQ explained that some people thought that the program was in place from the time of the Prime Minister's announcement. As a result, they started signing contracts and acquiring their homes before the measure came into effect.

In light of this, do you think it would be appropriate for the government to move up the new home GST rebate implementation date to the time of the Prime Minister's announcement in March?