THE STANDING SENATE COMMITTEE ON BANKING, COMMERCE AND THE ECONOMY
EVIDENCE
OTTAWA, Wednesday, October 29, 2025
The Standing Senate Committee on Banking, Commerce and the Economy met this day with videoconference at 4:15 p.m. [ET] to examine and report on Canada’s housing crisis and the challenges currently facing Canadian home buyers, with a particular focus on government taxes, fees and levies.
Senator Clément Gignac (Chair) in the chair.
[Translation]
The Chair: Good afternoon, honourable senators. My name is Clément Gignac. I am a senator from Quebec and chair of the Standing Senate Committee on Banking, Commerce and the Economy.
I would like to welcome the people watching us today on the sencanada.ca website.
Before we begin, I remind you to consult the cards on the tables in the committee room for guidelines to prevent audio feedback incidents.
I would now kindly ask my fellow committee members to introduce themselves.
[English]
Senator Varone: Toni Varone, Ontario.
[Translation]
Senator Dalphond: Good afternoon. Pierre Dalphond from the De Lorimier division, in Quebec.
Senator Henkel: Good afternoon. Danièle Henkel, representing the Alma region, in Quebec.
Senator Ringuette: Pierrette Ringuette from New Brunswick.
[English]
Senator Yussuff: Senator Yussuff, Ontario.
Senator McBean: Marnie McBean, Ontario.
Senator C. Deacon: Colin Deacon, Nova Scotia.
Senator Wallin: Pamela Wallin, Saskatchewan.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
Senator Martin: Yonah Martin, British Columbia.
The Chair: Thank you, colleagues.
[Translation]
Honourable senators, today we are continuing our special study on Canada’s housing crisis and the challenges currently facing Canadian home buyers, with a particular focus on government taxes, fees and levies.
I now wish to welcome the witness joining us this afternoon, Armine Yalnizyan. This is not your first appearance before a committee. You also appeared before the Standing Senate Committee on National Finance. We are really looking forward to hearing from you here, as well. I understand that you have an opening statement, which will be followed by a question and answer period. The floor is yours.
Armine Yalnizyan, Economist and Atkinson Fellow on the Future of Workers, as an individual: Thank you, Mr. Chair.
Honourable senators, thank you for inviting me to appear before you today. I hope to provide you with a different perspective on your study of the impact of government measures on the housing crisis in Canada and home ownership.
[English]
I will draw your attention strictly to two uniquely federal interventions that will shape not only today’s but tomorrow’s housing crisis. The first is Employment Insurance, or EI, which is not recession-ready. Prolonged trade wars and economic uncertainty guarantee more job losses. At last count, 1.6 million Canadians are unemployed, but only 550,000 of them receive regular jobless benefits. EI benefits provide 55% of insurable earnings. Unemployed workers recently earning six-figure incomes — which is not unusual for unionized workers with overtime in auto, steel, aluminum, mining and lumber — will see an income replacement rate closer to a third of their previous earnings, because the maximum insurable earnings limit under EI is less than of $66,000.
When only one third of the jobless receive any kind of jobless benefits help, and when well-paid workers’ incomes drop by two thirds when they lose their jobs, the economy’s automatic stabilizer, EI, is not fit for purpose.
Recent federal measures have been helping steelworkers. Those measures foresee up to half of current employees laid off. Auto may suffer the same fate. Thousands of households won’t be able to cover monthly mortgage payments or refinance mortgages. They will move into an already undersupplied rental market, and that will push up rents.
As people cut back on shopping and going out, more workers in retail and hospitality will also lose their jobs. Many of those workers earn around the minimum wage. It is impossible to survive on 55% of the minimum wage.
More people won’t make rent, but there’s nowhere cheaper to move to.
Without action on EI, we could witness a cascade of economic dislocation, in large cities but also in smaller communities, where shutting just one production facility unleashes a contagion of economic decline.
Essential EI reforms include raising maximum insurable earnings limits, increasing minimum benefits and lowering the hours of work that trigger eligibility. I detailed these in my pre‑budget submission to the Department of Finance, which your clerk has circulated to you.
The second concern relates to the lack of guardrails on the well-intentioned goal of significantly increasing private sector investment. Without more and better checks and balances in chronically undersupplied markets like child care, health care, long-term care or housing, we expose ourselves to completely avoidable risks. A stock of aging purpose-built rental buildings in need of repair and renovation, particularly in Canada’s biggest cities, is about to come onto the market. Older owner-operators will sell to investors when their own children do not want to take over the family business, and the investors are ready. The rapid rise of private equity includes $2.5 trillion in dry powder, available to purchase real estate and make cosmetic or substantial changes. Whether those assets are resold or held, rents will rise.
The U.S. just opened up $9.3 trillion in individual workers’ retirement savings to marketers who will promise lucrative returns if they invest through private equity.
According to the Library of Parliament, the foreign buyer ban, which is in effect until January 1, 2027, does not apply to larger, multi-unit residential buildings or to commercial properties. The rental market is, simply put, unprotected against deep-pocketed investors, whether they are Canadian or foreign. Without guardrails on investments in housing, we may lose more affordable rental housing stock, and we will certainly lose it faster than we can build it. If more American investors buy our rental properties, more of our hard-earned dollars won’t stay in our own economy. In January, Blackstone in the U.S. bought out Canada’s Tricon Residential for $2.5 billion, and rents for 5,500 units will soon be flowing to the United States.
So I propose that you put in some investment guardrails, including extending the foreign buyer ban to rental stock, lowering the Competition Bureau’s market share thresholds in housing markets, applying limits to debt-to-equity ratios in leveraged buyouts and requiring Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC, disclosure on the ultimate beneficial owners in asset managements. Investments should be solving, not creating, problems in the housing market.
In closing, I recently suggested to the Senate National Finance Committee that they consider launching a study on the growth of private equity in Canada. Given the rich contribution that Senate studies have historically made to critical public policy issues, and given how little information Canadians have about this fast‑evolving form of financialization and its potentially destabilizing impact on markets that are already stressed — like housing and the care economy — I hope you, too, will seriously consider this possibility.
Thank you.
The Chair: Thank you for your opening remarks.
Since we have a full house of members around the table, we will target four minutes rather than five, if you don’t mind, for each intervention.
Senator Martin: I’m earlier than usual. I was hoping to hear all the good questions my colleagues had.
Thank you for your testimony today. I feel as if you need to unpack everything you said with a lot more details in terms of the EI not being recession-ready. You outlined what we need to look at, what the dangers are and the lack of investment guardrails.
We have been hearing about these high municipal and development charges, and that is a huge issue. Given your focus on the future of workers and building a fair economy, what impacts are those high municipal and development charges having on labour market mobility and affordability for workers in urban and rural housing markets?
Ms. Yalnizyan: Thank you for your question, senator.
I deliberately chose to focus on EI and on guardrails on investments because, while your focus on development charges and buying homes for the people who don’t already have them is very reasonable, I think the housing crisis is coming to the rental market. I gave you the reasons why I think that is the case. If you do not expand your perspective on what needs to be done to protect the housing crisis from getting worse, you’re going to miss the big story, which is not, in my view, as much about home ownership as it is about people getting knocked out of the home ownership market and moved into the rental market. That market is currently extremely exposed to further increases in rents, loss of control over living standards and people jockeying for a place in a shrinking supply of affordable housing, by policy design.
If we don’t do something around both of the things I’ve said — fixing EI so that people don’t lose their homes in the first place and putting guardrails on who will buy distressing assets or assets that are being transferred intergenerationally, which are older assets that will need renovation — we are making the housing crisis worse.
I recognize that I’m throwing a curveball at you, but when some of those pitchers throw curveballs at batters, if they connect, it can be a home run. I’m hoping somebody connects with my comments.
Senator Martin: That is a very good metaphor, given what is going to happen tonight during the game.
You have introduced two very important issues for us to look at as a committee.
You mentioned Blackstone. Can you talk a bit more about that danger scenario where this is happening? What are the risks, and what can we expect as a result of that?
Ms. Yalnizyan: As I mentioned, we have made it very clear that Canada is open for business, and we are trying to attract investment, but there are no guardrails on any sector in terms of home ownership. I have been told many times by people from Finance that we have the foreign buyer ban. And it has been extended to 2027, but that is only for single detached homes for homes that have up to three units. Anything to do with long-term care residences or rental apartments is not covered by that legislation. That is why my first recommendation to you is that you suggest to your colleagues in the other place that they may want to extend what the foreign buyer ban includes.
But it won’t be just foreign buyers; we have private equity growing domestically. We have large investment companies like Brookfield that have made their name in real estate. If they choose to buy more and more of the market share of rental apartments, they will be able to set the prices more effectively or even introduce algorithmic pricing for rents. Therefore, we need to be very mindful of who will own our housing, particularly the housing that we can’t own — the housing that we must rent.
Senator Martin: So we’re lacking the investment guardrails. Do they have guardrails in the United States or in other jurisdictions that are far more protective than ours?
Ms. Yalnizyan: I’m not an expert on investment guardrails in the United States, but in reading the news, since January 2025, it has been all about reducing rules and guidelines, and easing the enforcement of rules. The Trump administration just opened up $9.3 trillion in individual people’s retirement savings that had been previously protected. Private equity used to be something that only accredited investors could participate in before.
What is an accredited investor? It is a company, an individual or a pension fund that has over $100 million in savings; they have deep pockets. First, they are less likely to make bad investments. Because they have so much money, they get great advice. Second, if they lose their money, it is not as big a blow to their asset base. That is unlike 401Ks in the United States, which are like our RRSPs here, and opening that up to the marketing of the private equity market that will promise you above-market returns — that is their game. Their game is to say, “I’m going to give you higher returns than you can get anywhere else.” And there are no guardrails on how that marketing will get done.
So whether there are better guardrails elsewhere is not the issue; the issue is that we know what’s coming to our own shores and are doing nothing about it. This was a discussion about what government impacts are.
Senator Loffreda: Thank you for being here, and it is nice to see you again. I love your solid recommendations regarding the guardrails. Of course, guardrails depend on how much capital the country has, and the U.S. has much more capital than Canada does. We need the guardrails much more.
You described the previous government’s housing plan as the most comprehensive set of policies we have seen since the Second World War, and you welcomed its focus on the rapidly expanding population of renters. In Budget 2024, a commitment was made for an additional $19.5 billion over five years for housing, and the new Liberal government has made housing a top priority, as they should, through Build Canada Homes, a new federal agency that is dedicated to building affordable housing at scale.
My question is straightforward but perhaps not that simple, and it will give you a chance to expand upon your recommendations: In your view, how successful has the government been so far in addressing the housing affordability crisis? Additionally, looking ahead, what lessons or best practices should inform the work of the new Build Canada Homes agency?
Ms. Yalnizyan: Thank you once again, Senator Loffreda, for doing your homework. It is always an interesting process to have your own words thrown back at you, and I really appreciate the fact that you have read what I have said.
Although the previous government said they were doing the first national housing strategy in Canada, that is not true. The first housing strategy in Canada happened in 1948, after the return of the veterans from World War II, because we knew we were going to have an affordability crisis. People weren’t going back to their farms; they were headed to the big cities, and there simply weren’t enough places for them to live. We had a housing strategy that wasn’t vaunted as a housing strategy, but that is precisely what it was.
When you ask the question regarding how well we have done, we have done a lot since 2019; I think that is when the money first started flowing. But then the pandemic happened. That was a natural break on whatever building was going to happen. Then prices spiked, so interest rates spiked. That was a second break in the process.
We have been building, but my point is that we cannot build fast enough if we do not protect the stock of affordable housing we currently have. We will continue to build, and I’m very happy to see that so much focus has been put on affordability, but the definition of affordability by the Canada Mortgage and Housing Corporation, or CMHC, is 30% of income. There are many different incomes in most neighbourhoods. The definition of affordability by many programs is 80% of median market rent, which isn’t very affordable for lower-income people.
So maintaining the stock of affordable housing that we have is absolutely critical, which is why I raised what I did. Those units will be coming onto the market if the children of older owner‑operators don’t want to take over the family business. Investors are ready to snap them up. We’re seeing it already, left, right and centre. We’re also seeing it with long-term care homes that have been around since the 1960s and 1970s. They are in bad need of renovation, and the owners don’t want to spend the money on it because it doesn’t provide enough of a return.
Therefore, we are losing more stock than we have the ability to build right now. That’s the message I want to give you. It is not whether the government did a good job or a bad one, because who could have predicted what has happened since 2019? Nobody could have predicted or controlled for it, but we can predict and control what is about to happen. That is my goal in raising those issues here.
Senator Loffreda: Thank you. As always, you have been very insightful.
Senator Fridhandler: I just want to correct something. I think your reference to $100 million in terms of that being the threshold for an accredited investor — unless you were misreading your notes — is a little bit inflammatory. In Canada, an accredited investor is someone that has net liquid assets of $1 million and earns $200,000 a year, before taxes, or $300,000 with their spouse, before taxes. Those are numbers that have been in place for 30 years and are debated as perhaps being too low. Anyway, it is a lot different than $100 million.
Ms. Yalnizyan: You’re correct. Thank you, senator.
Senator Fridhandler: You’re very focused on rental housing. I don’t know if I’m reading into this, because we have all grown up, at least those of us on this committee, in a culture of home ownership. That is how you partially save for retirement: You have an asset that is tax-free if you sell it at the end of your use of that asset, and you have money for retirement or, as we see today, reverse mortgages.
Are you suggesting that we recalibrate our cultural approach to home ownership? I think there is balance in there, but what are your thoughts on that?
Ms. Yalnizyan: The reason I gave the presentation I did, senator, is because rental housing was completely absent from the gamut of the study. Home ownership is a cultural and economic reality and something people strive for in this country, but more people are being left behind in the rental market, and more people will be shunted to the rental market if we don’t pay attention to what is happening. That is why I wanted to raise the issue.
If there is a housing crisis, it isn’t just in how we own homes but in the very question of whether someone will ever own a home. No one can own a home if the cost of renting for young people and people who can’t afford to own doesn’t drop. They will never get into the housing market if more and more of their income gets sucked up by rent instead of going to savings. That’s why I raised it.
Do I think it’s wrong to focus on home ownership? Absolutely not. However, my job is to do what I was asked to: weigh in on the housing crisis more generally and bring you a different perspective on what it is you’re studying. I’m certainly not suggesting you substitute what I’m saying for it but, instead, maybe add to it.
Senator Fridhandler: Thank you.
Senator Marshall: Thank you for being here today.
You seem to be focusing on rental housing. I think you said earlier that you didn’t want to judge the government on their housing programs, but there are billions of dollars being put into different types of housing, including affordable apartments and rental housing. Do you have an appreciation or a feel for how successful these programs are at this time? There’s very little information available with regard to what these programs are achieving. We get all the announcements that this is going to be built in the future, but we don’t hear much about what was actually built and what has actually been occupied.
Listening to you speak, it seems like the rental housing is getting a back seat to other types of housing. You’re involved in this at a really detailed level. What’s your perception? Do you think the government is on the right track with regard to rental housing and housing for lower-income people, or do you think this is something that is lost to the side somewhere? I haven’t seen any data that would show whether it’s actually happening. What can you tell us about that?
Ms. Yalnizyan: I can tell you that, up until this government, the previous administration spent most of its money regarding rental housing in the form of repairing existing rental housing. That was long overdue — badly needed and long overdue — especially in the biggest markets, where there was bona fide affordable housing, which was, in many cases, social housing. It had been in disrepair for decades, and no one had the money for it.
Most of that money went there. You didn’t see an increase in the stock; what you saw was an improvement in the living conditions of the people who live in such housing. They have those numbers, and I don’t know why they are not publicizing them. I don’t understand why governments don’t publicize their successes. I understand why they don’t publicize their failures.
To my mind, what was happening was a successful mission to make those units more livable so you don’t have to build. It’s a cheaper way of getting better-quality housing for more people, because some of those places were condemned.
In terms of building new things — first, let me be clear that I am not an expert on housing, and I do not know what has happened to the amounts of money that have been allocated for building affordable housing.
I only know that affordable housing is deemed to be 80% of market rate because of what I learned about the other things, so I don’t actually know how affordable it is. There are things that could be done that are pretty “low rent,” that wouldn’t cost the federal purse that much but would, again, maintain the stock we already have.
My fear is that it doesn’t matter how much we’re building. If we’re just saying that we’re open for business and investment, we’re going to lose affordable housing stock faster than we can build it. That’s the one thing I want to put into your minds: You must contemplate that it isn’t how much we’re spending; it’s how much we’re going to have to spend if we let the market run away with this stuff.
Senator Marshall: The issue for me is that a lot of the money has been spent and we don’t really know where it went. Did it go into housing for higher-income people or did it go into rentals? Are these units completed and are they being occupied?
It just seems as if there’s a lot of information about what is going to be done in the future, but I can’t seem to find any information about what has already been accomplished so far with the billions of dollars that have been spent. I thought you might have some inside information that would enlighten us.
Ms. Yalnizyan: I don’t have inside information. The same problem exists in Ontario, when you try to find out such things. They made a big deal out of investing in long-term care facilities, but we’re shutting down more units than we’re building. It’s the same phenomenon.
Governments don’t want to show their dirty laundry, regardless of who is in power. Yet I think the power of a committee like this is to be able to ask ministers or senior public servants to come forward, knowing ahead of time that you have a specific list of questions that you want them to provide answers to. They do have the data, so the question is whether you can get them to reveal it.
Senator Marshall: It would be great to see the data. Thank you.
Senator C. Deacon: Thank you for being with us today.
I live in a rural community where a lot of folks are really struggling and where there is not an awful lot of building of what they can afford in terms of rental properties and so on. Also, we have the phenomenon of an aging community, because the jobs have not been there. That’s much of rural Nova Scotia. You’re seeing folks needing to move out of single-family dwellings into care or communities where they don’t necessarily need a car and have a more affordable way of life.
But they’re struggling with homes that quite often aren’t worth a lot of money. They’re in communities to which people aren’t tending to move. That transition is a really tough one for a lot of young families as well as older folks; it’s not focused on just one age group.
We’ve seen an example called Tapestry Community Capital. There is money in Nova Scotia, but most of it is sent to Toronto via these big banks and invested out of Toronto. It’s not invested in our communities by people in our communities.
Are you aware of structures and models that could be used to start to direct more of our savings — as individual taxpayers — into our own communities, for investing in rental properties, businesses or whatever else? To me, that’s crucial. We need to have our money invested in our communities to grow them. It should not be sent to Toronto, and then we must hope and beg to have some of it come back.
Ms. Yalnizyan: Those are excellent questions. I don’t have a lot of solutions for you, but I will raise three things.
First, pension funds now mostly invest abroad. As workers, that is our money being invested for us for when we retire. Historically, there was a cap of only 10% of that money being allowed to leave the country to make returns. Now there’s no cap, and most of the money is offshore.
So I think there is an argument to be made, and former finance minister Chrystia Freeland made it, to encourage — maybe just through moral suasion — the “Maple 8” to repatriate some money. They are the biggest single pool of capital in this country so far, though that might change. We’re seeing some indication that repatriation might happen. It’s possible that workers, through their unions, could embarrass their pension funds into investing more where those people live and work.
The second point is that we do a lot of P3 investments, where governments and private sector partners deliver certain outcomes and the private sector partner gets a return on investment for their capital. There is no similar measure for philanthropies, charities and foundations to do the same thing to preserve or create housing. It used to be nuns and priests who would create these multi-residential homes for the aged, as well as hospices. The nuns are dying out, but the money is still there. They’re looking for partners with the government to be able to create and maintain affordable housing units.
When I talk about rental, I should actually be making it just more general to multi-residential, because the foreign buyers ban does not extend to either of those things or commercial property, but that includes long-term care facilities and residential facilities, like retirement homes, which is partly what you’re talking about, I think.
So there are vehicles like P3s to improve the ways we keep our money in our own communities, but they need a public sector partner to do that.
Senator Ringuette: Thank you very much for bringing up the issue of older homeowners moving out of their units right now. That’s very important, because the federal government is giving a tax credit or rebate on HST only if you buy a new home — not if you buy an older home. There’s an entire segment of young families who, because of their income, might only be able to afford to purchase an older home and slowly renovate it.
What kind of incentives should we recommend to ensure that these older homes stay in the home ownership market — instead of becoming rentals — and stay in the hands of more moderate‑income, often young, families?
Ms. Yalnizyan: Again, I’m not an expert in the housing market. My understanding is that the story regarding single detached homes — the existing ones, not the newly built homes — is that this has not become an issue in Canada, unlike the United States, where investors have come in. That doesn’t seem to be the issue here. The issue of investors eyeing the housing market regards multi-residential housing, which is either retirement homes, long-term care facilities or apartment buildings.
If your goal is it to improve home ownership among the next generation, and most of the housing market is not in new homes — it’s in resales — I suppose you could suggest a GST credit attached to the new homeowners, like the first-time buyers’ benefits — but they have other tax benefits, too, like the First Home Savings Account.
Yes, you could add another tax credit for first-time home buyers who are not buying a new home.
Senator Ringuette: A newly built home?
Ms. Yalnizyan: Yes. My understanding, too, was that the GST credit was going to the builders.
Senator Ringuette: Either way, as long as it’s passed on in regard to the price of the home. Hopefully, that’s what is happening.
Ms. Yalnizyan: As you know, as we discovered during the pandemic when prices started to spike up, we don’t know what the pass-through is; when input costs go up or down, we don’t know what the pass-through is. It depends upon the degree to which the owner of the good or service controls market share and can set prices.
Senator Ringuette: In regard to the definition of “affordability,” you said CMHC is at 30%. That has been the benchmark since probably before the Second World War. The economy and environment have changed, but they have not changed that benchmark. What would you suggest?
Ms. Yalnizyan: They’re not talking about affordability in the same way we’re now talking about it. They’re saying, basically, if you’re doing your own budget and can keep your housing costs to a third of your income, that’s pretty good. That’s really what you want to do. But we’re finding that young people, in particular, are less and less able to do that because wages have not kept up with inflation in both home ownership prices and apartment prices.
I wouldn’t recommend something different. That’s the right metric, having a third of your income going to housing costs, but that’s just not the reality. We should all be aiming for that. It’s not a wrong metric; it’s just not realistic.
Senator Ringuette: Thank you.
Senator Wallin: I have two questions that are unrelated. In terms of your victory bond suggestion, I read with interest an announcement that I missed totally at first from the Prime Minister, announcing a Veridian Matrix AI investment platform, promising a minimum amount of $355 to be invested by an individual, and then they would be guaranteed a passive income of $4 to $10, monthly. I don’t know how that works.
Is your victory bond idea more to raise capital for governments than to supplement the passive income of citizens and potential homeowners?
Ms. Yalnizyan: When I first raised the victory bond idea, I wrote two Toronto Star columns about it. I have tried to pitch it to the Finance Department. It wasn’t to supplant other forms of raising bonds. They have a fixed financial requirement. Their budgets tell them how much money they need to raise because of the size of the deficit.
Rather, it was to say that we are at war. We are involved in an economic war. In fact, we have been told that is the situation we are in, so why not turn to the people of Canada who want to do more than just buy Canadian? They want to save Canada. Maybe we could save Canada through our savings, because there’s no retail bond. The Canada Savings Bond Program was axed in 2017 because their rate of return was so bad that no one would put their money in there. There are so many other ways of saving money.
Frankly, the whole Finance Department could design it any way they want. It’s the way they market it, to bring people along who can say, “I’ve got a little extra money. I’m going to get some kind of return. I’m not going to lose my money. I want to participate in saving Canada.”
Senator Wallin: So this doesn’t accomplish your goal. The program they’re talking about is just to subsidize just the small investor. Anyway, that’s separate.
I wanted to ask a separate and quick question on EI, because, as you said, only half a million people collect it, but t1.5 million are unemployed.
This has to do with the changing nature of work. What is your plan for trying to capture gig workers and people who work part‑time? That’s the new nature of work, so employers can avoid paying benefits and all of those things.
Is that really a modern mechanism to do this, given that the nature of work is changing so radically?
Ms. Yalnizyan: What an excellent question. The EI numbers we’re seeing, the 1.5 million unemployed people, are not because of the changing nature of work. It’s because businesses are shutting down. That’s a version of the changing nature of work, but usually that phrase is a side eye at technology.
Technology may or may not change the future of our work; that’s hard to tell. We’ve been talking about the future of work being changed by technology. This is my third rodeo with this conversation. Every time we have this existential discussion, saying, “Oh, my God, the robots will eat all of the jobs,” on the other side of that debate are more and better-paying jobs.
Maybe this time it’s different; I don’t know. Will EI save us? No, it will not, if the robots eat all the jobs. I don’t know if they will. I don’t think so, but I could be wrong. This time could be different.
As for extending EI to the gig worker, we know how difficult it is to extend something like a mandatory tax to someone who is self-employed. At what point can they say, “I’m unemployed”? Who will determine that their hours of work were sufficiently cut to deem that they are unemployed? It’s very difficult to trigger the eligibility.
Senator Wallin: That’s why I’m asking whether we should be talking about EI in that system. Because it’s out of date, the whole mechanism. It works through employers and more traditionally employed people than, as you say, a gig worker or even a part-timer in the hospitality sector.
Ms. Yalnizyan: When I worked at Employment and Social Development Canada, or ESDC, in the Deputy Minister’s Office, we were trying to assess the size of the gig worker economy. It’s very small, and it continues to shrink every time the job market expands. The so-called gig economy is what people do when they can’t find other work, when there are no other forms of work. Yes, some people will only ever want to do gig work, but they’re a very small part of the population. We have 21 million people in the job market. Most of them do not want to be self‑employed.
Senator Wallin: Thank you.
[Translation]
Senator Dalphond: Good afternoon and welcome to the Senate. It’s a pleasure to see you in person.
[English]
In your brief, you suggested something I would like to explore a bit further — that we should consider the surplus of the pension funds as being an asset. You referred to the surplus of Employment Insurance. That was the magic trick that former prime minister Stephen Harper used to have $50 billion or $60 billion of the deficit disappear. Do you propose we do the same thing with the surplus for the Employment Insurance? Would you mind explaining further?
Ms. Yalnizyan: It was not the surplus in Employment Insurance. I was suggesting that we look at the surplus in the Canada Pension Plan, or CPP, if you bring it on-book. Now it’s off-book. It’s not part of the story at all.
Senator Dalphond: Would that be a consolidation from an accounting perspective?
Ms. Yalnizyan: Yes, that’s all it is. If you did that, you would remove a lot of the pressure because it has to, due to its fiduciary responsibilities, generate a surplus. It has to be in surplus. You’re not taking anything from it, unlike what Harper did. It’s just because it’s in your consolidated funds, so it is registering as an offset against some of your other deficits.
I don’t know whether that’s a good idea. I’m just so fed up with us only talking about how we’re going to cut taxes and cut spending. Is there another revenue mechanism? That’s why I raised the victory bond. That’s why I’m raising this idea. It’s very creative to look at redoing operating and capital expenditures. We already do some version of amortizing capital expenditures because of accrual accounting. We’ve been doing that for decades.
Alberta introduced capital and operating separation, I think in 1992, under Ralph Klein. Within a couple of years, they had eliminated their deficit, right? It’s a lovely trick. I don’t know why we haven’t adopted it earlier, but there are other ways of doing the same thing.
This is a bean-counting exercise, but the real costs of austerity are not bean-counting. They will affect human beings. To be able to liberate our space to operate, in the context of an unprovoked economic war, is extremely important.
This idea that I put into that pre-budget submission might be completely cuckoo, but are we thinking about all of the cuckoo ideas? Are we thinking about all of the ideas, including revenue ideas, that might give us a bit more breathing room? Because we are going to need it. The worst is yet to come.
Senator Dalphond: Interesting. So far, there has been no response from the Finance Department, then?
Ms. Yalnizyan: Crickets.
Senator Dalphond: In July 2024, you wrote in the Toronto Star that renters, not mortgage holders, are taking the biggest beating in the inflation fight. You also refer to the mortgage holders who will be renewing, and you said that in 2025, about half of the mortgage market will go to renewal — $675 billion. You were very worried in your piece and said this is becoming too tight. Some people are moving back to becoming renters because they can’t afford the mortgage renewal.
But since July of last year, the Bank of Canada has reduced the interest rate from %4.5 to %2.25; that’s half. Have you seen an impact on the market from that? And what you described as people leaving their mortgage to become renters again, is that something which is slowing down now? Because in the Toronto area, for example, the average price is going down.
Ms. Yalnizyan: Again, I’m not a housing expert. I do not watch this all the time. When you write a column for the Toronto Star, you’re an instant expert because you spent about three days learning how to write about the topic that everybody’s talking about. I’m a five-minute expert. I’m not going to say that I know to what degree —
Senator Dalphond: In the U.S., they would say it’s fake news.
Ms. Yalnizyan: Close. Well, it’s not fake news. It’s not fake data — let’s put it that way. I don’t want to give you fake data now.
I don’t know to what degree the shift from home ownership to rental has occurred, for all the reasons that you have mentioned. I’m just concerned that more people are going to lose their jobs, particularly in smaller communities. If it’s a saw mill, if it’s a mine, or even in some places like Brampton or Oshawa — where are you going to move to if you lose your job? And if you can’t renew your home, I don’t know what is going to happen.
So my goal is not to say that I was right then but I’m wrong now because interest rates are down and because housing prices are down — because unemployment is up.
Senator Yussuff: Thank you for being here. I would love to debate the three things that you wanted to talk about; unfortunately, that’s not what we’re studying, even though I appreciate a debate about whether the Canada Pension Plan net income should be accounted for differently than it is right now.
I live in the city of Toronto, and there is a real challenge for people on many fronts in Toronto. There are home ownership challenges that young people are dealing with. The social housing stock hasn’t been growing at the level the population has, obviously, in the city.
And of course, co-op in rental is equally a challenge. There are more rentals on the market because of private stock, but in terms of co-op housing in the city — which at one time was significant around the waterfront and the downtown area — it is still there and, to a large extent, it is important for the people living in it because it provides security. They can actually pay their rent and have at least a reasonable attempt at a decent life.
In the context of the crisis, I know there are many things we need to look at, but we can’t look at them separately because they’re all part and parcel of how we help people pay a reasonable amount of rent for their housing.
I hear your point about how the stock that is becoming available that will likely end up with foreign buyers, but can you comment more on the broader issue of social housing, co-op housing and how we can deal with that? Because these are significant challenges that have been solved previously in the history of the country, to get people into places where they can afford to live and have decent housing without having to spend a fortune.
Have you looked at that in the context of your work, recognizing that maybe we need to grow the stock we already have in our inner cities? And more importantly, have you looked at some of the investment that the federal government is doing and how you partner with municipalities to make sure that happens? In some cases it would be the unions that would invest, because they want their members to have at least a decent place to live.
Ms. Yalnizyan: I agree with everything you said. I will repeat, for the third time, I’m not a housing expert. I have not been promoting myself as a housing expert.
I think we do need more social housing, and increasing the stock is not an easy task. But there are unions, foundations, charitable groups, religious organizations and partners that would very much want to partner with some public financier for that, but that hasn’t been the focus.
To Senator Fridhandler’s point, the focus of the conversation about the housing crisis has been housing ownership. And since that is electorally and politically what everybody has been losing their minds over, that is where most of the national housing strategy money has gone.
Now, if we were able, through a committee like this or through other processes, we would need to raise the importance of rental housing and talk about the need for more social housing. You have to kind of raise that part of the story before you can start talking about expanding social housing, because most of the oxygen has been sucked up by the question of how we are going to get people to own their own homes.
To my mind, Senator Fridhandler, I think that story — as I look around this room — is the story we all grew up with. I don’t think my children are going to be growing up with that story.
To the extent you want to modernize the narrative, the political system is still responding to a very old narrative for a different generation.
So what you are raising, Senator Yussuff, is very important to bring into the conversation as you discuss the housing crisis in this august committee.
Senator Yussuff: I don’t know if you have any data, but it would be helpful if you could provide it to us.
Given the point that you made earlier about how much of the private stock is owned right now is likely to come on the market in the near future, or currently, what is the data on that? Because it puts us in the context to understand that most of that stock — if you don’t have a Canadian purchaser for that stock, it will end up in foreign hands.
The government should be thinking about this because it will create an existential challenge for us to handle if we don’t control where that stock is going to land. Is there any data that you can provide the committee that would be of help?
Ms. Yalnizyan: I wish I could provide it to you. This is why I’m asking you to set up a study committee on private equity, and in particular in housing.
I had asked the feds for this information; they’re not monitoring it. Somebody has to start doing so.
[Translation]
Senator Henkel: Thank you for being here and for everything you have shared with us. It’s interesting to step outside the realm of taxes.
You analyzed the fact that an annual pre-tax income of $84,000 is necessary for a worker to have a decent wage, for example in Toronto. The committee has heard that taxes, fees and government levies can account for 25% to 30% of the total cost of new housing in major urban centres. If these charges were eliminated, would that really be enough to make housing affordable? If not, what are the real levers?
[English]
Ms. Yalnizyan: I’m not sure. Again, I’m not a housing expert. My understanding is these charges, levies and taxes are placed on the builders of the new homes. The degree to which these cost savings — should you magically wave a wand and get rid of them — get passed through to the new buyer is an unknowable. It depends on who it is doing the building and what the market conditions are at that time.
So even if you waved your magic wand and got rid of all of them, would they see a 25% cut in the price? It is very doubtful.
But I will ask this question: If you cut all those development charges and levies, how are you going to produce the infrastructure that is required for the new housing developments? Somebody has to pay for that. Somebody has to pay for the electricity, the water service, the waste service and the road building.
I understand why you want to cut taxes. That is the flavour of the month. That has been the flavour of the month since 1980, when Ronald Reagan said that government isn’t the solution; government is the problem. We have been talking about tax cuts since 1980.
It is 2025, and we still don’t have a solution for how we address public infrastructure when we grow our communities.
[Translation]
Senator Henkel: Keeping the existing rental stock in good condition is considered just as crucial as building new housing so as not to increase pressure on supply. However, part of the financialization process involves the acquisition and renovation of existing rental properties, which often leads to a rent increase, of course.
How do you think the federal government could intervene to strongly encourage renovation rather than demolition of existing stock, including social and community housing, to specifically promote the transfer of aging rental assets from the speculative private sector to non-profit organizations, such as cooperatives?
[English]
Ms. Yalnizyan: I gave you my four recommendations about the guardrails on investments. I would point you back to that. I would be happy to discuss that with you more.
I would also reiterate that there are community foundations, religious organizations and philanthropic foundations that would be happy to partner with the government, whether it’s municipal, provincial or federal, to maintain the stock of housing and make it livable, but there are no mechanisms for that right now.
Senator Varone: I applaud the discourse on Employment Insurance. It is timely, and the discussion with respect to income replacement is incredibly important in this day and age, especially for all the sectors that face the layoffs you’re talking about.
However, I’m confused by your statement that the Blackstones and Brookfields of the world are going to be buying up all the affordable housing stock. The reason I say that is because they are not coming into this marketplace across Canada, because the provinces have all instituted rent-control regimes. Since 1974, rents in Ontario, Quebec and B.C. have all been controlled. That was for everything built.
The point is that the federal government’s intervention in that is that every year in December, they set the rate increase that all builders, landowners, Toronto community housing — whoever it is, including all the community non-profits I could talk about — can increase the rent to. With those controls in place, I have yet to see the Armageddon scenario you’re talking about such that these companies are coming in to buy everything. If the rent is controlled, there is no incentive for them to come in and buy.
So unless you have other evidence, can you just elaborate on that point?
Ms. Yalnizyan: Absolutely.
Have you heard the term “renoviction”?
Senator Varone: Absolutely, but those are —
Ms. Yalnizyan: It is when you buy a dilapidated apartment building and gradually move people out, which I have seen in my own family. My children have been exposed to it. You watch people getting shoved out because the apartment is unlivable. The people leave. Some kind of renovation gets done; sometimes, it’s cosmetic and sometimes it is profound. Sometimes, the whole building gets redone. Sometimes, the building gets bought, and because it is in such poor shape, it gets knocked down and rebuilt.
That’s so long as somebody isn’t living in the unit. If it is an empty unit that is being rented, it will go for a higher rent.
When you say you have not seen the Armageddon yet, the purpose of my presentation to you is to say this: Let’s not shoot ourselves in the foot. Let’s not welcome the Armageddon; let’s stop it before it happens.
Senator Varone: But it hasn’t happened. Renovictions, for all intents and purposes, are controlled. They have to go through a process. In the Province of Ontario, you have to set the reasons why, set your costs and then set your rent, which some other government body has to approve. If the ultimate goal were the improvement of the unit, it has to be commensurate with the rate increase they’re asking for. There is a process.
I would understand the comment that the landlords are fighting that process, because it’s tough as nails. It’s not simple.
So I understand the terms you’re talking about, but it is just not happening.
The Chair: Time is running out, and we have two minutes left. The second round is simple. Senators, could you ask your questions in one minute? I will give two minutes for the answers.
Senator Loffreda: I will take 30 seconds.
You have spoken before on an ownership society, noting that adulthood and success don’t necessarily depend on owning a home, but do you think that an ownership society has long-term sustainability in Canada? You also co-authored a piece that says we have a lot of ideas but no vision for social, educational and health needs, but if there is a brain drain and if we have problems attracting new talent because of housing affordability, will that not affect our social, educational and health resources?
The Chair: The next senator will ask their question, and then you can answer.
Senator C. Deacon: I’m just looking at strategies to get apprenticeships to smaller builders in rural communities. They all tend to head to the big cities and big opportunities, and our smaller builders are disappearing if we want to deal with housing-building needs in our smaller communities. Smaller builders need those apprenticeships.
Ms. Yalnizyan: Very quickly, there are two ways that you build your own economic security: You get a better education, and you buy a house so you don’t get kicked out. Those are the two things that are the best things you can do for yourself. Of course, people want to own their own home. It reduces the capriciousness of a landlord who can get away with rent increases or destroying your home because they will not repair it.
I understand why we want an ownership society, but we are making it very difficult for people to attain their own economic security. If all they have is to rely upon themselves, we’re making it really difficult for them to rely upon themselves.
When it comes to bringing apprenticeships into small communities, then the way we have been dealing with it over the past few years is bringing in temporary foreign workers. That might be the best way of doing it. Here, we have an incredible dearth of young people in these communities. It is an infusion of younger, working-age people in populations that are aging out. They are fully ticketed, and they’re cheap. The only problem with it is that we don’t have a pathway to permanence. If we could figure out how to do that, you could kill two birds with one stone.
It is too bad that he left, because I wanted to say something about that, but I will say it to him afterward.
The Chair: Thank you. It has been very informative — and provocative, to some extent, but that is the purpose.
Ms. Yalnizyan: I love your attitude.
The Chair: I know you have a busy schedule, so we appreciate your time.
[Translation]
Honourable senators, we will now continue our special study on the housing crisis.
For the second group of witnesses, we welcome David McKay, Partner and Vice President, MHBC Planning Urban Design and Landscape Architecture. I understand that you have prepared five minutes of opening remarks. Those remarks will be followed by questions and answers.
[English]
You have five minutes for your opening remarks. The floor is yours. Welcome.
David McKay, Partner and Vice President, MHBC Planning Urban Design & Landscape Architecture: Thank you very much for having me here this evening. I am a Registered Professional Planner with MHBC. I have been in the development business for 28 years, working for the public, private and non-profit sectors on a variety of applications. Currently, I have approximately 50,000 residential homes in application processes in the Greater Toronto Area.
My focus today is to speak about the approvals process, as a lot of economics have been spoken about. I’m not an economist, but, essentially, delays in the approvals process equates to housing cost increases. That is both for ownership and rental.
I’ll speak broadly, because I only have five minutes. I can elaborate during the question-and-answer period.
Over the course of my career, the approvals process has increased substantially. A modest approval project when I started my career was a year to a year and a half in the GTA. Looking at recent projects, we’re looking at three to four years for the approvals, not including construction or building permits. If it’s a more complex project, you’re looking at longer: four to seven or more years.
Those things add to the costs of housing, as confirmed by CMHC. In recent studies, in 2018 and 2022, they confirmed that where regulations were complex and lengthy, that added to housing unaffordability, specifically in the GTA and the Greater Vancouver Area, or GVA. Where those processes were less complex and less time-consuming, prices were lower, such as in the Prairies, Atlantic Canada and Quebec.
Further, in 2024, Altus Group undertook a study looking at the Ontario site plan approval system, and they determined that there was a significant cost to the economy — $3.5 billion annually. As an example, they looked at a 100-unit apartment building, and they averaged that the delays in approvals cost approximately $58,000 per unit for those units. So it is a real thing.
In terms of why this has occurred, I look at three main reasons. First, our regulatory regimes are antiquated, to say the least. They are not nimble or agile to meet the market demand that has occurred. That means that every application and anything of significance requires planning approval and, therefore, an approvals process.
Second, that approvals process has become much more complex and bureaucratic. There are a few different aspects to that. One is that we have multiple approvals processes: You have the rezoning, site plans, subdivisions, condominium applications — all those things lead to each other, are often not concurrent and some of the issues continue to be raised and raised again, causing delay.
Part of that process, when you’re in it, is that application requirements have increased substantially. When I started my career, you could do a rezoning with maybe 10 items submitted to the municipality and get through the process. My research is that it is now 30 to 100 items for an application, involving multiple disciplines, again leading to delays in submissions and review and costs to housing, obviously.
Third, in terms of that process issue, there are multiple reviews that occur, often with completing interests from different departments or agencies that, then, conflict and create further delays for further submissions. I recently had an application in Toronto. I’m on my eighth submission dealing with trees on the sidewalk.
Third, we’re seeing significant shortages in adequate and appropriate staff to review applications, both in the public and private sectors. There is an education problem that we have in this country relative to the land development system.
How do we fix that? It is a complex system; there are no easy solutions, as we have heard. The provinces are trying. Ontario, for example, is revising its system, policies and legislation, trying to get housing built. Municipalities are trying to do the same thing, but they are tinkering with the antiquated system. We need a full-scale review, nationally, on how to fix things.
The federal government can take the leadership role on that. We can get all governments on a clear mandate that housing comes first. It sounds simple, but when you have competing interests, it sometimes gets lost in the language.
It is about bringing industry leaders together, conducting studies and coming up with best practices. We don’t have to look outside of our borders; there are many examples of good approval practices happening in Calgary or Atlantic Canada that can be brought forward.
Then, if we can, we need to create a uniform national system — a baseline system — that works for everybody as much as possible. Within that, I think some of the tenets of that would be trying to remove the approvals system as much as possible, pre-zoning sites and removing rigid zoning standards to facilitate that.
Obviously, the federal government can help in that regard through financial incentives to municipalities that actually act upon those elements to get housing built, eliminate multiple processes and reduce the study requirements.
One item I would like the committee to think about is the reliance on experts. We tend to peer review everybody. The architects and civil engineers are reviewed again and again. We don’t need that; it can be done once. Rely upon their certifications.
Finally, regarding the staffing shortages, I would say the federal government can emphasize, through funding as well as universities and colleges, the land development disciplines as well as making this sector a priority sector for immigration. I think we just heard about foreign workers coming in. Give them a pathway to get permanent residency if they are skilled and have those disciplines.
Thank you.
The Chair: Thank you, Mr. McKay.
Colleagues, I propose four minutes each for this first round. We will start with our deputy chair.
Senator Varone: My question, very simply, is this: Are we ready? The previous witness questioned whether, if we wave a magic wand and reduce the cost for market-entry housing by reducing the taxation that is on that housing, the prices will reflect those efforts. Will the prices reduce?
The question I have relates to supply and demand. Do we have enough supply in the pipeline to warrant that there is enough competition such that if and when the government were ready to reduce the costs or the barriers of entry, would supply and demand work its magic in the marketplace to keep the prices down?
Mr. McKay: That is a complex question in terms of there being a lot of different variables.
On the supply and demand perspective, we don’t have enough supply, period. What is under construction today was approved five to seven years ago, and those buildings were planned five to seven years before that. So we’re dealing with a multi-year- or multi-decade-long process to get housing to occupancy.
So we will never catch up on the supply side to meet demand if we continue how we are, and that includes the taxation portion, the development charges. I think that will assist in moving projects to fruition, especially in difficult climates like we have now.
Also, there is removing the approval system, reducing it as much as possible to get things to the building permit stage faster. If you take two or three years out of the process, you’re delivering those houses two or three years earlier, and that will help to meet that supply, which we don’t have today.
There are a number of professionals who say we have a lot of approved supply; the reality is that’s already accounted for in the numbers. We still need 1.5 million more homes to make things more affordable and more attainable.
Senator Varone: The Province of Ontario, through legislation, mandated that the municipalities accelerate the approval process. The municipalities created a preapproval process that just shifted all the burden before you can actually apply. Can you explain how that works?
Mr. McKay: The province basically put a financial disincentive to municipalities: If you don’t process the applications in a timely manner, you have to refund the application fees. For a tower project in Toronto, you’re talking $1 million in terms of an application fee. It’s not cheap.
So that created this incentive for them to say they know they have to deal with the process and do it all up front: do a preconsultation, give their comments and get the project perfect before they formally submit the application. If you don’t, we’re just going to deem the application incomplete and you’re stalled.
So where people were willing to work with the municipalities and do that — if they saw eye-to-eye, it worked — it didn’t slow down the system. You’re taking eight months or a year of negotiation in a formal process and putting it up front without any guarantees that’s going to lead to an outcome.
So a lot of the stats that come from the municipalities — which Mr. Norman talked about — in reduction in time frames were because of that shift, because they were only looking at the formal application process.
[Translation]
Senator Henkel: Thank you for being here, Mr. McKay.
The environmental cost of demolition is often overlooked. What planning and design policies could encourage municipalities and builders to prioritize renovation and the reuse of the existing envelope and structures over systematic demolition, in order to preserve the existing stock and reduce the carbon footprint?
[English]
Mr. McKay: Thank you for that. It’s difficult, obviously, if you’ve renovated your house. It’s a lot cheaper to tear down completely than to renovate, so there’s that component of the cost that’s involved with it.
From an environmental perspective, sometimes that’s better. Sometimes these buildings have so many issues structurally, as well as asbestos and other issues, lead and whatnot, that it creates an impossible situation to make the financials work to renovate.
It comes down to incentives to help renovate those buildings, if they can. Density bonusing would be one option, without having to go through an approval process, per se. You could look at financial incentives, obviously.
It really comes down to this: If you can do the renovation and there’s an upside of the approval process, people will jump at that.
We see a number of big development applications where heritage resources are involved, and they take the plunge to keep those heritage resources, renovate them — if they can — or incorporate them into the new development. And there is bonusing and incentives involved with regard to that in many municipalities.
Senator Marshall: Thank you for being here. I found your opening remarks very helpful.
You said that the approval process could take anywhere from one year up to four years, and that’s just the approval.
How long would it take to construct something? What would be the average time frame? If it takes four years for approval, how long do we wait before we can move into our new apartment?
Mr. McKay: Thank you. It depends on the type of product you’re looking at and the scale of it. If you’re looking at a mid‑rise building, up to about 10 storeys typically, with, perhaps, two levels of underground parking, the process for construction is about three to four years. If it’s a larger building, like some of those in downtown Toronto, very large, multi-storey buildings, it could be up to five to six years. It depends on the complexity of the structure and how much underground construction they have to do.
Usually once you’re out of the ground and above the podium component of it, the base building, the actual tower component is pretty much a template — it’s standardized. That then speeds up the process a bit, but you’re still talking years of construction.
Senator Marshall: The government is putting billions of dollars into all types of housing projects. If you’re talking about one to four years for approval, then you’re talking about three to four years for construction, some of these housing programs that are being announced now, we’re not going to see those housing units until five or six years down the road. Would that be an average, or do you think that’s too long of a runway or that I’m overly pessimistic?
Mr. McKay: I don’t think you’re overly pessimistic at all, and that’s what my discussion is around. That approval process, that portion which we control, that government controls, can be shortened.
There’s no reason why a mid-rise building in Calgary can get an approval in eight months and in Toronto it takes four years. There’s no reason for the same building and the same type of land; it doesn’t matter. It shouldn’t take that long.
And part of the problem is that we’ve made things so complex. We’ve brought various issues in to deal with trees, servicing, architectural design, et cetera, and then the industry resolves it, goes through and reiterates and tries to fix things, saying, “Oh, it didn’t work on this project, so let’s try to fix it on this one.” It adds to the complexity. We don’t need it.
What we should be focusing on is that we want housing built. Is it appropriately sited on a site? Can it be serviced? And that is servicing and traffic. What guarantee do you have to build it? How quickly can you, as the builder, begin? If I’m going to give you an approval, I want you to apply for a building permit and get shovels in the ground rather than pontificating on where the trees should go in relation to the face of the building and the curb, over and over again.
Senator Marshall: I just it incredible that we’re seeing announcements by the federal government for high-rise buildings and construction of 1,000 housing units and — after hearing you speak — most likely nobody will be moving into those new housing units for maybe six years.
The government is establishing all these new programs, plus Build Canada Homes and new agencies, they’re laying all this groundwork, and we’re not going to see a lot of the fruits of the labour until six or seven years down the road. Is that what you’re telling us?
Mr. McKay: Yes. If we keep the approval systems the same — and B.C. and Ontario have the worst ones — you’re correct. We won’t see those occupancies for years.
Senator Marshall: Thank you very much.
Senator Fridhandler: Thank you. Towards the end of your presentation, you started to talk about solutions. You triggered for me — when you talked about relying on certifications of the experts — the analogy that I draw to you and the airline industry, including, perhaps, Boeing and the manufacturing side, but I won’t go there.
In terms of most airlines, their maintenance shop is certified to self-police what they’re doing. They get inspected once in a while, but they are certified to run their operations. I’m just thinking, in the building industry, at least with the mature level of builders — your one-offs are not going to do it — but could you conceptually see large builders being certified to largely self-police the development of a project? So taking three years out of city hall and maybe having inspectors come and look at these larger builders who self-police their compliance with their development rules?
Mr. McKay: That does happen to a large extent in the building permit process. The building permit reviewer reviews it versus the code, and if they meet the code, then that architect or civil engineer or structural engineer is stamping it and it goes out the door. So your building review or permit process, depending on where you are and the size of the project, is a day to maybe three months.
You could do the same thing in the approvals process. There’s no reason why my certification as a professional planner should be questioned all the time if I meet all the various policies and regulations set out for me. It is similar to an architect. They know their architecture. We shouldn’t have other disciplines, non-architects, saying to the architect, “I think you should do it differently.” And then you get into a spin cycle of comment and review, comment and review issues. It is similar with civil engineers. They stamp their drawing, they know what they’re doing and they’re trained for it. You could certify them, rely upon the certifications and do spot checks, as you said. Like anything, there will be people who have a reputation. If I don’t know if I trust someone, I’m going to give them the gears on this, because their projects keep failing in little ways and we need to fix that. But there are other people you can rely upon. I think that’s a possibility.
Senator Fridhandler: Get the planning departments out of the process a little bit.
Mr. McKay: I hate to say that about my colleagues, but I think we’ve put ourselves in a position where we’re now gatekeepers rather than facilitators, and we need to be facilitators to solve this nationwide problem.
Senator Fridhandler: In the same vein, you’ve identified a bunch of issues, and at the end you presented a few solutions. Is there anything else left on the table you haven’t told us about because you’re going to insult your colleagues regarding what solutions might exist here?
Mr. McKay: I’m not going to insult my colleagues in any way, but we need to focus on what matters. It’s a change in how the industry looks at itself. Get away from the gatekeeper mentality, facilitate developments, facilitate housing, and you’re not going to always get it right, but again, I go to Calgary and work with that planning department. They facilitate the development approvals process. I go to other municipalities, and I don’t get the same thing. It can be done.
Anecdotally, I did all the work for Target in Ontario when they came into Canada. At one point, we had a 1.8-million-square-foot distribution facility approved and permit-ready in two months in Milton, Ontario, because the municipality facilitated it and wanted it done. We can do the same thing with housing.
Senator Wallin: It is sort of a good news/bad news thing here, Mr. McKay. Lucky thing you’re not in the mining industry, where, in Western Canada, it takes 19 years to get mine approval, to get some critical minerals out of the ground, so —
Mr. McKay: My colleagues do pits and quarries, and, yes, it takes them decades to get things done.
Senator Wallin: Exactly. And the other issue is we all want and keep asking about a national scheme, but we’re having trouble doing the minimum bit on internal trade. I’ve got a couple of simple, quick questions.
Which is the easiest to get approved — high-end condo or low-income housing?
Mr. McKay: I would say it depends on where you are because you’ll have different issues. If you propose an affordable housing project in the middle of Forest Hill, you’re going to have a problem. If you’re in a low-income area and propose affordable housing, you may have a problem because there is a viewpoint, there is negativity towards it. It’s a balancing act. At the end of the day, most affordable housing projects are government sponsored in some manner as the economics don’t work. So it’s mixed-income housing, where it’s partnerships between the developer and government, that really works. The redevelopment of Regent Park in Toronto was an incredible success with a lot of affordable housing and a lot of mixed-income projects. So it’s mixing it that makes the most sense to me.
Senator Wallin: Good answer; that’s helpful.
This is a little arbitrary, but where is the biggest block: health and safety, the environment, bike lanes, trees? You’ve said trees a couple of times, but that’s a design issue.
Mr. McKay: That’s a pet peeve of mine right now. Don’t get me wrong — there are important issues dealing with trees and sidewalks and things like that. The problem I see is that we are talking about those in the wrong process. Those are details that can be worked out on-site versus in an approval process. We need to streamline that approval process. Generally, you’ve got the trees and things in the right place. Let’s work it out on the construction site. That’s what happens. It happens now, when you come up with something and it doesn’t work. We have to change it. We quickly change it and get it done. “Inspector, is this good? Yes? Let’s go.” That’s what should happen. The problem is we’re so focused on the nitty-gritty minutiae of details that it’s bogging down the prime result, which is an approval for housing and, frankly, any asset class.
Senator Wallin: Yes, before the shovels are in the ground.
Mr. McKay: Before shovels are in the ground.
Senator Wallin: And before deciding on the decorative aspects of the front entrance. That’s good. Thank you.
Senator Yussuff: Thank you for being here. I live in the city of Toronto, so I deal with gridlock and could have a whole other conversation about that reality.
Obviously, the experience in Calgary is worth studying, as to why that experience is so dramatically different than that of Toronto and places like Vancouver. I also know that in Toronto, we don’t have as much land available for the building going on in the city, so it’s pretty precious land where you can build on. There is always a multitude of debates around how we do this in a way that makes the city more balanced in terms of income stream but also provides enough option for people to live in.
Given most of the challenges we face at the municipal and provincial levels, other than the federal government calling a meeting to tell people that we need to do better, how do we get to this in a way that will change the country’s attention and make a significant difference in the time frame and how we build things in this country? The example you’ve given is a great one about Calgary; it’s just beyond the pale. How do we change that attitude, given the municipalities do not like to be told things by the federal government and the provincial government figures it’s their domain? This is a practical question, but I’m asking, from your experience, what would you suggest?
Mr. McKay: First, I think people are getting it. I’ve seen a change in the last two years in terms of the approvals process from various municipalities. They recognize we’re at a crisis point. I think that is a helpful thing.
In terms of the federal government, when I was watching the various debates on this, someone said it comes down to money. It comes down to incentives or disincentives.
Again, I know municipalities don’t like Big Brother — or Bigger Brother — telling them what to do, but sometimes they have to because it’s for the good of the country. You have to take some good advice and try to change things. The status quo isn’t going to work.
Frankly, my son has decided he’s not living in Toronto. He’s staying in Halifax because it’s much more livable and affordable. People are going to make significant changes to their lifestyles because of this crisis we’re facing.
As I had mentioned about the immigration system, that’s something the federal government controls, making those disciplines a priority and then working with the various professional accreditation associations, making those streamlined for newcomers. There’s no point in bringing a civil engineer in from elsewhere and then saying they can’t be a civil engineer for five years because we don’t recognize their accreditation from another country. It is the same thing with doctors.
There are ways where, unfortunately, our system is such that the provinces have a lot of control, and I think that’s where that leadership role can help, especially across different jurisdictions.
Senator Yussuff: My colleague asked you a question in regard to what Ontario is doing to try to, in a way, get the municipalities to move a bit faster.
Mr. McKay: Yes.
Senator Yussuff: Regarding the incentives and disincentives, is there evidence to suggest that they are changing the habits of municipalities in how they are dealing with issues?
Mr. McKay: Certainly on the disincentives side, I’d say it was a significant bad outcome because municipalities basically determined they were not going to lose the income from application fees because they were too slow, so they changed the rules. They will force the developers to go through a process before making that application so they can then make a decision in that time frame.
The other side of the coin is if they didn’t do that, they accepted the application. Even if they liked a project, they would turn it down because they had to make a decision. They also turned it down because there’s still a lot of issues they had to sort out — I’m not going to say trees again. There are a lot of issues to sort out so, therefore, they turned it down because they needed to make a decision and didn’t want to lose that revenue stream. I don’t think any developer, that I’m aware of, actually forced the municipality to refund those fees in that system.
The other part of it is that the province said to municipalities that if they approve building permits in a timely manner based on how many they’re approving in a given year, the province was going to give them money to finance certain aspects of the municipalities. The municipalities reacted positively.
Senator C. Deacon: Thanks very much for your directness, even if it focuses on vegetation. Incentives are so important.
Listening to you, I’m struck by the thought that regardless of the target market that a developer may be aiming at — subsidized housing versus high-end housing — the process we have right now increases the base cost per square foot to the point where the luxuriousness of it is a rounding error at one end. We’ve really pushed up the entire market cost, regardless of what we’re building. If we don’t address that issue, we’re not going to make headway. Is that a fair summary?
Mr. McKay: Yes, that’s a very fair summary. My firm has done very well getting out the approvals for people, and we’re a successful business because of that. If you take those costs, 4% to 5% of the costs out of the system in terms of the approvals process in a pro forma, that’s going to make a difference.
Senator C. Deacon: Because it’s upfront and people need to get a return over 14 years on that.
Mr. McKay: Yes. And the problem is, as I said, it’s not just the private sector; non-profits are facing the same issue.
Senator C. Deacon: That’s what I’ve very much been struck by here. Regardless of what end of the market you’re at, the whole cost is up, to the point where the luxury level is a rounding error at the top. You’re not choosing a house at $500 per square foot and one at $1,500; they’re all at $1,500 and up. I think federal incentives are really important.
What examples do you have of municipalities focused on doing approvals in parallel rather than in series? Does that help, just driving something rather than that sequential —
Mr. McKay: As I said, one of the issues with the municipalities, when Ontario tried to change their system, a lot of municipalities said they were only accepting one application at a time. That was, again, an unintended consequence of that action.
Up until that point, we always ran applications concurrently. Part of the problem is we’d have an official plan amendment, a zoning bylaw amendment, a site plan approval and a plan of subdivision just in that first part of it. You’ve got multiple processes, and if you run them consecutively, it’s going to take forever. If you run them concurrently but ask for every detail and revisit the minutia over and over, that’s going to cause delay. Simplify the system as much as possible — one approval and then a building permit.
Senator C. Deacon: You don’t need to answer this here, but if you have data that starts to show how the whole system cost has gone up, if there’s a report you can point us to, that would be very helpful. I think of subsidized housing as being low cost and luxury at very high cost, but what we’re seeing is those two numbers are a lot closer together because of this process. If you’ve got any data to back that up, that would be really great. Thank you.
Mr. McKay: Thank you.
Senator Dalphond: Welcome to the committee. You’re in Toronto. Two weeks ago, Build Canada Homes announced a major project in Toronto, in the Black Creek area. The federal government is going to pump money into doing the sewer systems to ensure that the development can be done. That’s fine because it belongs to the Crown — it’s Crown land. If you develop and you are a private enterprise, you would have to pay for the development costs, so they gave subsidies in Toronto to develop the sewer system and the water system. That’s fair. It’s a good thing. That’s going to unlock the ability, apparently, to build up to 350,000 doors in that area, which is significant. But they say that, right away, they’re going to build 440 new homes in Arbo Downsview in Toronto. In listening to you, do I understand that they will build 440 new homes five years from now?
Mr. McKay: Thank you, senator. The planning approvals for the Arbo project were done in 2019. The approvals have existed for a long time; it just hasn’t been built.
I would say that those 400 or 500 homes are probably likely. When I think of those lands, as far as I am aware, it’s a mid-rise building and a tall building scenario, so you’re looking at three to five years for the construction to occur. The approvals were done long ago.
Senator Dalphond: I see. That part was done.
Mr. McKay: Yes.
Senator Dalphond: Last week, I think they sent a request for qualifications, or RFQ, to build these 400 to 500 houses. The selection will be to identify design build teams with proven expertise in factory-built homes and other methods of construction, including prefabricated and modular buildings. Would that make the process go faster than three to four years? Could it be completed by next year?
Mr. McKay: It won’t be next year, but it would save time, depending on the product they choose.
What is involved with a number of those components is that they’re built off-site and then brought onto the site and attached to the building or brought into the building.
Mass timber, for example, is built in a factory and then shipped cross the country and installed on-site. That does save time because you’re not doing it on-site; you’re bringing it in and installing it.
Senator Dalphond: So I understand the project was approved already. They’re going to use innovative techniques and prefabricated components so could we see the project realized or completed to at least be livable — maybe not with the lawn and trees, but the buildings as homes could be ready by a year from now, two years from now maximum?
Mr. McKay: I’m not a construction expert, but I still stick by around three years for a mid-rise project. You might save six months, based on those different techniques.
A lot of that component is whether there is underground parking or surface parking. That saves a lot of time and effort as well.
Senator Dalphond: And how many projects are already approved and waiting for developers to put them in the ground, in total?
Mr. McKay: I’ve heard the number as being 100,000 homes that are preapproved.
Senator Dalphond: Is that homes or doors?
Mr. McKay: Those would be units. I believe those numbers include areas that are prezoned, where there’s no actual developer that has come forward with an application.
And certainly those numbers are increasing as the economy gets worse. A lot of developers have pulled back from construction. They’re all looking at it and saying they need their approvals; they will get them done and then be ready when the market turns.
Senator Dalphond: And if a developer were showing interest, how much time would it take to get the project approved?
Mr. McKay: It depends on where it sits in the process.
Senator Dalphond: If it’s already preapproved. Could you send the answer by writing?
Mr. McKay: Yes, or we could talk afterward.
Senator Loffreda: David, welcome and thank you for joining us. It’s great to have the perspective of both an urban planner and a residential developer.
You’ve left us with four bullet-point recommendations: The first is the federal government taking a leadership role — housing first. I think they have done that. We all know that it’s pretty clear to all.
The second is bringing industry leaders together. I think it’s our second crack at doing this here in our Banking, Commerce and the Economy Committee, where we have a lot of experts around the table, and we’ve brought in a lot of experts.
I will focus on the last two. You said the baseline system works for everybody. If you can and have time to, could you elaborate on that?
But what I’m concerned with and what I have heard so far is that taxes are a big issue. We’ve dealt with taxes and know that’s a huge issue: The tax on the developers and whether they pass it on to the consumer. I think they will, a portion of it at least.
But what bothers me the most is the zoning standards, multiple processes, studying, analysis, one to four years for approval and three to four years for construction.
Given that planning and zoning are municipal responsibilities, what role do you believe the federal government can play in promoting high-quality, human-centred design in housing developments?
Are there incentive models or funding criteria that could better align with good design and sustainable outcomes? What do you recommend on that?
Multiple processes — like in a corporation, with multiple levels of management — are like layers of clothing; you never know what temperature it is. You get further and further from the client, further and further from reality, and this is what’s happening the housing market.
Mr. McKay: You’re right, it’s difficult for the federal government to really do direct —
Senator Loffreda: Like Senator Wallin said, we can’t even do interprovincial barriers. If you knock them off, it will increase our GDP by 3%, and we can’t do it.
Mr. McKay: That’s the big, big struggle. I think that this study, in talking about it, and further studies to try to educate — the provinces and municipalities are getting it. It’s a matter of how we quicken that pace of them getting to a system where we have less process.
The incentive part is really a big component of it. I know that basically goes back to money, but I’m not sure how else the federal government could influence the other levels of government to come to the table and get things done, especially when it’s ultimately in their power to hold back and control everything. That’s really a quandary that I don’t have a good answer to.
Senator Loffreda: That’s the question. If we look at Quebec, the minute even great incentives are put forward, the provincial government says, “Hey, this is our region.” And the same across Canada. We’re so distinct.
I don’t know if there is a solution, if it’s going to be pragmatic. The recommendation is great — the zoning standards — if we find a solution, but you don’t seem to have one, and I haven’t heard many, to be honest with you.
Mr. McKay: I think it comes down to continuing to recognize we’re in a crisis and changing that mindset by continuing to repeat that we have to solve the problem. People will eventually get it.
It’s like watching the news cycle. As soon as the news cycle moves away from whatever disaster has happened, everyone forgets about it. So it’s keeping that focus on it if we can.
Senator Loffreda: If we make it conditional to what the federal government does control — for example, we could fund transport if they do this in housing — that could be a recommendation.
Mr. McKay: That would be a conditional approval. There’s a lot of emphasis on transit-oriented development, funding the subways, buses, and whatnot — the federal government saying they will do it if you build housing around those stations immediately.
Senator Loffreda: At least we have a solution.
Senator Ringuette: I have a quick question. When we started this study, we were told by the powers that be in federal housing that for many years they have been investing millions to reduce “municipal red tape.” Have you witnessed a reduction in municipal red tape?
Mr. McKay: In certain jurisdictions, yes. In the ones that have the most acute housing crisis, no. Outside of the Lower Mainland of Vancouver and the GTA, you do see a reasonable process has occurred. I don’t know if it’s a reduction, but it is certainly not a long process; in those other areas, you haven’t. And that’s where the provinces are trying to tackle it in different ways to speed things up.
Senator Ringuette: Thank you.
Senator Martin: I am the last questioner, but I’ve heard a lot and some of my questions were answered. You said we don’t need to go beyond our borders, that we have good examples in Canada, and you’ve outlined what is wrong and what we need to fix.
What makes Calgary or Milton so effective compared to those other jurisdictions?
Mr. McKay: Again, I think it’s a mindset in the municipality, in the planning departments, to be facilitators and to try to get things built and advanced.
In the case of Calgary, they’ve simplified their systems so that you don’t go through multiple processes. Calgary has always been pretty efficient, and Edmonton as well.
I don’t have time for an anecdotal story, but it has been that you could get things built very quickly in Alberta without the red tape.
Where we have red tape, we have to change the mindset. Instead of layering a process and making it complex, keep the eye on the goal of delivering housing as quickly as possible and removing the layers. Peel back the onion and get things done.
That’s a mindset issue. In the case of Milton, it was a mindset of them wanting that there, recognizing it’s a huge economic driver and asking what they could do to get out of the way.
Senator Martin: It would be good to have all the cities — to have somewhere where we could compare and incentivize the cities to do better, because we have these good examples.
This is an interesting question. Your firm represents both developers and municipalities, is that correct?
Mr. McKay: That’s correct.
Senator Martin: So how do you balance the interests of housing affordability with municipality revenue stability when it comes to development charges? What work do you do with municipalities?
Mr. McKay: Our work is not around the development charges finance part of it. We focus on policy development and, in many cases, come in and act as the planning department in smaller and mid-size municipalities and facilitate those processes.
Senator Martin: So would those municipalities you work with have a more streamlined process based on your counsel?
Mr. McKay: We try. Sometimes, it depends upon the issues we’re facing. As Senator Wallin said, with pits and quarries, there are a lot of issues and environmental things; it’s complicated. But for a housing solution, yes, we try to facilitate that as quickly as possible.
The Chair: Thank you. We have time for one extra question, from our deputy chair.
Senator Varone: David, we had a previous witness who talked a great deal about as-of-right zoning and the official plan that granted that as-of-right zoning. Is there room for the federal government to incentivize official plans with as-of-right zoning to create a speedier system?
Mr. McKay: I think what the senator to my right said is to tie things back to other funding mechanisms — things that you control. Transit is a great example where, instead of going the bare minimum of what exists today in terms of densities or only a bit higher — to, say, three-storey buildings — take those away and say that we can create a lot of housing near transit and that the federal government is going to invest in that.
Part of that could be if we’re trying to create transit-oriented communities, that transit investment is not just the transit part of it but the civil engineering and servicing components — like they have done at Downsview to try to incentivize the housing.
Take away those rules. Ultimately, you’ll still see a great community at the end of the day without all of these rules impeding those places. Calgary is a great place. Other municipalities that don’t have these crazy controls on their approvals processes are still livable communities, so we don’t need them to create great places.
The Chair: Mr. McKay, thank you for your flexibility in being a witness at this time of the day. I know you have a busy schedule; it is very appreciated.
Colleagues, before concluding this meeting, let me thank our interpreters, our analysts and all the technical staff for making this meeting possible. The next meeting is tomorrow, Thursday, October 30, at 10:30.
(The committee adjourned.)