MESSAGES FROM THE HOUSE OF COMMONS — Bill to Authorize Certain Payments to be Made Out of the Consolidated Revenue Fund for the Purpose of Improving Housing Supply

Moved second reading of Bill C-26, An Act to authorize certain payments to be made out of the Consolidated Revenue Fund for the purpose of improving housing supply.

She said: Honourable senators, Canada’s housing affordability crisis has become one of the defining challenges of our generation. For too many Canadians, the dream of finding good, affordable homes has slipped out of reach. Young families are delaying major life decisions; first-time homebuyers are struggling to enter the market; renters are facing rising costs and limited options.

In Toronto, where I’m from, and across the Greater Toronto Area, or GTA, the situation is particularly acute. While home prices have come down from their peak and borrowing conditions have improved somewhat, they remain misaligned with local incomes. As a result, many prospective buyers are still priced out or are choosing to wait on the sidelines.

At the same time, the GTA has experienced a growing inventory of unsold condominium units, as affordability challenges have pushed many prospective buyers out of the market. This imbalance has created the appearance of abundant supply, but the reality is more concerning. As sales have slowed, developers have pulled back on launching new projects, reducing the pipeline of future housing construction, which keeps prices too high. I see this to be like closing the doors to an event, with more and more people gathering in line but not more seats available for the show, and no one is getting in the door.

The consequences are already being felt across the construction sector, with tradespeople and skilled workers facing layoffs and reduced work opportunities. If this trend continues, we risk losing both housing supply and construction capacity at precisely the moment when more homes are needed.

This is the ripple effect: If carpenters, framers, plumbers, electricians, masons, roofers, drywallers, cabinet makers and many more lose their work, they will find other work, and we’ll lose these important skills and we’ll lose capacity. As they look to find new work, they may need to turn to government programs for EI supports. We are at a critical moment.

This situation is why I agreed to sponsor Bill C-26, An Act to authorize certain payments to be made out of the Consolidated Revenue Fund for the purpose of improving housing supply. Simply put, Canada needs to build more homes — homes that Canadians can actually afford — and Bill C-26 can help do that.

The Parliamentary Budget Officer estimates that 290,000 units per year are needed to close the supply gap. To restore affordability to 2019 levels, the Canada Mortgage and Housing Corporation estimates the need for up to 480,000 units annually over the next decade. This is an achievable goal. In 2025, 258,000 units were built, so the bump required is 30,000 to 220,000 more units. This will take an “Own the Podium” type of effort.

Bill C-26 will help get projects moving, support construction workers and deliver more homes for Canadians. This legislation — a single provision in two parts — will deliver a $1.7-billion federal investment to provinces and territories to support measures that increase housing supply. This is a one-time cash infusion that will be sent to the provinces upon Royal Assent. This is about moving quickly and supporting the provinces and territories in their quest to increase housing supply and affordability.

These funds could, for example, help lower development fees or levies on new home construction. They can also strengthen existing provincial and territorial programs already focused on building more homes through targeted, incremental investments.

This federal investment can also support provincial and territorial efforts to streamline regulations and boost productivity across the home construction sector. But different provinces and territories need different solutions; flexibility from coast to coast to coast is essential.

A good example of these measures in action is Ontario’s new HST rebate on homes. Backed by federal support through this bill, the province will eliminate the 13% HST on new homes up to $1 million, putting up to $130,000 back into buyers’ pockets. Homes valued between $1 million and $1.5 million would receive a partial rebate more than this.

This is a significant measure. Housing taxes are ultimately embedded in the cost of new homes. When governments reduce those costs, they make housing more affordable for purchasers while also improving the financial viability of new housing projects. In a market where many developments are stalled because of high costs and tight margins, reducing the tax burden can help move projects forward and increase the supply of homes.

Although it is still early days, indications suggest that the measure is already having an impact. In the GTA, sales of new homes reached 1,100 units in April, almost three times higher than the 384 homes sold in April of last year, according to data compiled by the Altus Group for the Building Industry and Land Development Association, or BILD. This suggests that when governments take steps to reduce costs, buyers and builders respond.

The agreement with Ontario demonstrates exactly the kind of collaborative, supply-focused approach that Bill C-26 is designed to support. Rather than imposing a one-size-fits-all solution, the legislation enables provinces and territories to pursue practical measures that respond to local housing challenges while advancing the broader national goal of increasing housing supply and improving affordability.

Colleagues, it is not one problem, so Bill C-26 does not prescribe one solution. Moving from building 258,000 units to 480,000 units won’t happen without an agile plan. In some jurisdictions, excessive fees and charges are a major obstacle. In others, the priority may be supporting infrastructure, expanding existing housing programs or creating incentives that improve project viability and encourage new construction. Bill C-26 recognizes these regional differences while maintaining a clear national objective: increasing housing supply.

Importantly, the approach reflected in Bill C-26 is consistent with the findings and recommendations of the Standing Senate Committee on Banking, Commerce and the Economy’s recent report, Out of Reach: Unlocking Canada’s housing affordability crisis.

The committee, of which I am a member, heard from economists, builders, municipalities, housing advocates, financial institutions and other industry experts. Based on the evidence presented, the committee’s report was clear: Improving housing affordability in Canada requires increasing housing supply, and policy efforts should prioritize building more homes rather than measures that simply enable Canadians to take on additional debt to compete for a constrained supply of housing.

The committee’s top recommendation reflected that conclusion and is the primary focus for Bill C-26. The report called on the federal government to significantly expand the GST/HST rebate on new homes by providing a 100% rebate for homes valued under $1 million, with a gradual phase-out for homes valued between $1 million and $1.5 million, with future indexation to inflation.

This recommendation recognized a simple reality. Existing GST/HST rebate thresholds were established decades ago and no longer reflect the price of housing in many Canadian communities. They are about as relevant as thinking that $4,000 represents meaningful property ownership. As home prices have increased, the value of the rebate has diminished, reducing its effectiveness as a tool to support affordability and encourage construction.

The recent federal-Ontario agreement directly reflects this recommendation and demonstrates how evidence-based public policy can influence government action.

However, I will add that the committee’s report did not stop there. One of its most important findings was that development charges, municipal fees and other government-imposed costs are contributing significantly to housing prices. In some major urban centres, these charges can add tens or even hundreds of thousands of dollars to the cost of a new home.

Our Banking Committee recommended the federal government work collaboratively with provinces, territories and municipalities to reduce reliance on development charges, which have become a significant contributor to rising housing costs. Governments should explore alternative and more sustainable municipal funding models that can support infrastructure without placing an excessive burden on new home construction.

Options for provinces and territories could include removing capital costs from development charges in cases where builders already install infrastructure that municipalities would otherwise fund. It would also enable municipalities to recover certain infrastructure costs over time, particularly for revenue-generating services such as water, waste water and electricity, rather than requiring large upfront payments.

Another important recommendation from the committee focused on transparency. Homebuyers often have little understanding of how much of the purchase price of their home consists of taxes, fees, levies and other government-imposed charges. The committee recommended improving transparency so that policy-makers and the public can better understand the role these costs play in housing affordability. These items — commonly baked in — increase purchase price, down payment minimums, property tax and mortgage payments for decades to come.

Our committee also recognized the need for innovation within the housing sector. Canada has historically lagged behind other countries in adopting modular, prefabricated and factory-built technologies. These approaches can reduce construction timelines, improve productivity and lower costs. Encouraging greater adoption of innovative construction methods can help Canada build more homes faster.

Taken together, the recommendations contained in the Senate report Out of Reach provide a practical road map for addressing Canada’s housing affordability crisis. They recognize that increasing supply requires more than government spending. It requires tax reform, regulatory modernization, reduced development costs, innovation and cooperation across all levels of government.

Colleagues, the housing crisis was not created overnight, and it will not be solved overnight. With sustained commitment, evidence-based policy-making and cooperation among all levels of government, we can make meaningful progress. We can move toward the podium and be part of putting housing back within reach.

Bill C-26 is not a complete solution to the housing crisis. No one piece of legislation could be. But it is an important step in the right direction. By enabling partnerships such as the HST rebate agreement with Ontario, the bill provides governments with additional tools to reduce costs and stimulate housing construction. By supporting measures that increase supply, it addresses the fundamental imbalance at the heart of Canada’s housing crisis.

Canadians are looking for action. They want governments to move beyond rhetoric and pursue practical solutions. Solving Canada’s housing challenges requires immediate action to bring down costs, cut red tape and build homes more quickly.

The government’s approach focuses on expanding Canada’s housing stock by reducing building and financing costs, improving productivity in the home building sector and boosting the supply of affordable housing.

The total suite of federal measures, estimated at over $140 billion in spending and foregone revenues over the next five years, covers the entire housing continuum, from homelessness to market-rate housing.

Senators, I invite all of you to support the passage of Bill C-26 so that it can deliver support to Canadians in a timely manner. Thank you.

Would Senator McBean take a few questions?

Yes.

First, Senator McBean, why does Bill C-26 authorize the Minister of Finance to access the Consolidated Revenue Fund to make this $1.7-billion payment “. . . at the times and in the manner that the Minister of Finance considers appropriate”?

That’s what Bill C-26 says. It is my understanding that this is an unusual occurrence to allow a minister to access the Consolidated Revenue Fund like this.

Yes, I believe it is unusual. There are other instances where it has happened.

During the pandemic, the minister accessed similar funds to help during the pandemic. One of those programs was to help schools improve their HVAC systems in a timely way. I believe the minister sees this housing issue as a crisis and is moving quickly.

With these funds, the idea is to unlock in an immediate manner both Canadians’ ability to purchase homes and developers’ ability to sell these homes so that future permits and housing starts will kick-start affordable housing.

Yes, it’s interesting that the government would use a COVID-level pandemic response in this way for this bill.

Bill C-26 contains only one clause with two subclauses. The first subclause says only this:

The Minister of Finance may make payments to the provinces and territories, the total of which is equal to $1.713 billion, for the purpose of improving housing supply. The amount of each payment is to be determined by the Minister of Finance.

What are all of the amounts that the Minister of Finance has determined to pay each province and territory? Why aren’t these listed in the bill or a schedule? Are payments to only some provinces determined right now? Why does this bill leave these payment amounts to the sole discretion of the Minister of Finance?

I asked a similar question in my briefing. I was told that the allocations and distributions to all of the provinces and territories have been communicated to the provinces and territories. They are aware of it, but it is not public at this time.

It’s not public, but we’re being asked to approve a bill.

I would like to know for my home province: What is the amount for Saskatchewan?

I am afraid I cannot answer that question at this time. Based on the conversations I had in my briefing, I was told that the Province of Saskatchewan would know this, but it has not been made public at this time.

Yes.

Yes.

As the minister said, funding is being directed where housing demand and housing supply pressures are the greatest. That is how it is being distributed. One could assume that, as the minister said, a significant amount will go to Ontario, as it is experiencing the largest pressures for housing affordability right now.

I believe, as the minister said here, that the allocations will go to where the greatest pressures are. He did say in front of us here that a large portion would be going to Ontario, followed by British Columbia, and the rest of the allocations would follow to the provinces and territories as the housing supply crisis and demand dictate. So, no, it is not based on population; it is based on need.

No, I don’t think that’s the situation. The minister is looking at a housing crisis where the supply gap and the affordability gap are making it next to impossible for Canadians to find their homes. The question isn’t who has the money, but who needs to find a home to live in and where the home development has been stalled.

This money will be released almost immediately into the provinces and territories where the agreements and the disbursements have been made. The minister has expectations in those conversations with them; the expectation is this money is to unlock housing supply, and that is not based on population or square miles or square kilometres. It is based on where Canadians are living and working and where they need to find homes.

Is it your pleasure, honourable senators, to adopt the motion?

Some Hon. Senators: Agreed.

An Hon. Senator: On division.

(Motion agreed to and bill read second time, on division.)