Vancouver's cost of housing restrictions are by far the largest in Canada, resulting in a 50% extra cost that's on par with similar studies measuring the extra costs in places like Manhattan. At the other end of the spectrum, home-buying costs in Montreal have stayed pretty close to construction costs.
Why are housing costs so high elsewhere in Canada? We find that restrictions in extra costs on building new housing such as zoning regulations, development charges—which don't apply in Quebec, by the way—and limits on land development are dramatically increasing the price of housing.
What about small businesses? The World Bank conducts an annual “Doing Business” survey that's become the global standard of every country's regulatory and permitting burden. As Ms. Jones mentioned, among the 10 major measures of business regulation and process, the World Bank includes the process time to obtain a construction permit for a small business looking to develop a warehouse in Toronto. This is the only Canadian city that the World Bank considers, and I'll get back to how to fix that oversight that Ms. Jones mentioned.
It would take 248 days. It takes 28 days in South Korea, 36 in Singapore and 65 in Denmark or Finland. Major U.S. cities like New York and Los Angeles see approvals within two to three months, yet Toronto is over eight months.
How do we fix this? To expedite approvals, cities should increase their use of e-permitting. E-permitting is an online platform that connects all relevant building permit and planning processes. Such systems already have a proven track record of success across the globe and are starting to gain traction here. Leading by example, governments should also enact policies that set certain design and development standards for their own projects. The federal government could set an e-permitting system requirement and standard in conjunction with willing provinces.
The problem with e-permitting is not technological, but it is training people currently working in and with today's permitting system, both government and industry. Better training can be funded, in part, by the federal government.
However, e-permitting is just a technical workaround of convoluted permit rules. It addresses the symptom but not the cause. The fundamental root cause is too many different permit requirements for development approvals. Much of this is in the hands of provincial and municipal governments, so what can Ottawa do?
First, the federal government could require that infrastructure grants such as for transit or highways only go to areas in which development is expedited. For example, Ontario can designate affected residential or employment lands as subject to what is called the “development permit system”. This system eliminates multiple application streams and sets strict timelines for approvals. Ottawa can require that provinces adopt that or a similar approval process for nearby areas when they get a federal grant.
However, as Ms. Jones noted, the World Bank study only applies to the City of Toronto. What about other places like York Region or Ottawa? The World Bank only measures the permitting cost in the largest municipal government in the country, unless the government specifically requests that the World Bank take on a subnational study. The federal government could pass a motion asking the World Bank to apply its cost of doing business study across the country.
With that, I look forward to your questions.