Canada’s housing policy still a fixer-upper: Senator Gignac
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It’s 1991. Wayne Gretzky leads Team Canada to a sweep of the United States in the Canada Cup final. In the housing market, 95% of new homes can be had for less than $450,000.
Even better, houses below that price qualify for a partial GST rebate, which helps keep costs down for buyers and drives demand for more construction.
It’s now 35 years later, and a lot has changed—but not the cut-off point for that tax rebate. Back in the 1990s, buyers of virtually all new homes in Ontario would have been eligible. These days, only new builds in the province’s remote north might qualify.
This is just one reason why Canada finds itself in a housing crisis, according to a new report from the Senate Committee on Banking, Commerce and the Economy. The report, Out of Reach: Unlocking Canada’s Housing Affordability Crisis, also shows how municipalities have increasingly turned to development charges to fund essential infrastructure and services, while the construction industry itself has been slow to adopt new technologies and less labour-intensive ways of building.
The report makes 12 recommendations to get more homes built quickly.
We note, for example, that the GST rebate threshold from the 1991 New Housing Rebate was supposed to be tied to inflation. This never happened, even as housing prices soared.
Witnesses agreed that expanding the tax rebate for new housing would spur new construction and reduce housing prices; the federal government has itself proposed a much more generous rebate threshold in Bill C-4, which is now in the Senate. That rebate, however, would apply only to first-time home buyers. Given that just 20% of new-home purchases are made by first-time buyers, we recommend this credit be extended to all buyers of new homes.
We specifically recommend that the federal government consider a 100% GST/HST tax rebate on all new housing below $1 million, with the rebate phased out for homes between $1 million and $1.5 million. The $1-million threshold should be tied to inflation.
An outdated tax rebate is not the only obstacle to more plentiful and affordable housing. Municipalities have become increasingly dependent on development charges to fund emergency services and infrastructure such as roads, transit, water and waste management.
The average development charge varies across the country but is as high as $200,000 on a single-family home in Toronto. Compounding the problem is the fact that these charges are embedded into the final price of a new home, meaning that the taxes incurred on those sales are effectively taxes on development charges — in essence, a tax on a tax.
This underscores that responsibility for resolving the housing crisis does not rest with the federal government alone. Municipal decision-making, as well as the extent to which provinces and territories are willing to fund municipal services, can improve the situation or make it worse.
This is why we recommend that the federal government work with the provinces/territories and municipalities to bring transparency to fees and eliminate “tax on tax” situations. The federal government should also provide infrastructure funding to municipalities on the condition that they make equivalent reductions in fees.
The federal government has already made some changes to Canada’s housing policy, which our committee examined.
One of the primary objectives of the new Build Canada Homes agency is the use of modular and factory-built housing to control costs, and to spur innovation in a construction sector that has become set in its ways.
Witnesses agreed that this approach to housing could well drive down construction costs and timelines. In Sweden, for example, nearly 80% of homes have at least one component built offsite. Government subsidies there had created a baseline demand in the 1960s, but it is now a widely adopted private-sector solution. There is the potential for similar success in Canada.
It’s time to bring Canada’s housing policy out of the past so we can begin to address the urgent needs of today.
Senator Clément Gignac is chair of the Senate Committee on Banking, Commerce, and the Economy, a former Quebec cabinet minister and an economist. He represents Quebec (Kennebec) in the Senate.
This article was published in The Hill Times on January 28, 2026.
It’s 1991. Wayne Gretzky leads Team Canada to a sweep of the United States in the Canada Cup final. In the housing market, 95% of new homes can be had for less than $450,000.
Even better, houses below that price qualify for a partial GST rebate, which helps keep costs down for buyers and drives demand for more construction.
It’s now 35 years later, and a lot has changed—but not the cut-off point for that tax rebate. Back in the 1990s, buyers of virtually all new homes in Ontario would have been eligible. These days, only new builds in the province’s remote north might qualify.
This is just one reason why Canada finds itself in a housing crisis, according to a new report from the Senate Committee on Banking, Commerce and the Economy. The report, Out of Reach: Unlocking Canada’s Housing Affordability Crisis, also shows how municipalities have increasingly turned to development charges to fund essential infrastructure and services, while the construction industry itself has been slow to adopt new technologies and less labour-intensive ways of building.
The report makes 12 recommendations to get more homes built quickly.
We note, for example, that the GST rebate threshold from the 1991 New Housing Rebate was supposed to be tied to inflation. This never happened, even as housing prices soared.
Witnesses agreed that expanding the tax rebate for new housing would spur new construction and reduce housing prices; the federal government has itself proposed a much more generous rebate threshold in Bill C-4, which is now in the Senate. That rebate, however, would apply only to first-time home buyers. Given that just 20% of new-home purchases are made by first-time buyers, we recommend this credit be extended to all buyers of new homes.
We specifically recommend that the federal government consider a 100% GST/HST tax rebate on all new housing below $1 million, with the rebate phased out for homes between $1 million and $1.5 million. The $1-million threshold should be tied to inflation.
An outdated tax rebate is not the only obstacle to more plentiful and affordable housing. Municipalities have become increasingly dependent on development charges to fund emergency services and infrastructure such as roads, transit, water and waste management.
The average development charge varies across the country but is as high as $200,000 on a single-family home in Toronto. Compounding the problem is the fact that these charges are embedded into the final price of a new home, meaning that the taxes incurred on those sales are effectively taxes on development charges — in essence, a tax on a tax.
This underscores that responsibility for resolving the housing crisis does not rest with the federal government alone. Municipal decision-making, as well as the extent to which provinces and territories are willing to fund municipal services, can improve the situation or make it worse.
This is why we recommend that the federal government work with the provinces/territories and municipalities to bring transparency to fees and eliminate “tax on tax” situations. The federal government should also provide infrastructure funding to municipalities on the condition that they make equivalent reductions in fees.
The federal government has already made some changes to Canada’s housing policy, which our committee examined.
One of the primary objectives of the new Build Canada Homes agency is the use of modular and factory-built housing to control costs, and to spur innovation in a construction sector that has become set in its ways.
Witnesses agreed that this approach to housing could well drive down construction costs and timelines. In Sweden, for example, nearly 80% of homes have at least one component built offsite. Government subsidies there had created a baseline demand in the 1960s, but it is now a widely adopted private-sector solution. There is the potential for similar success in Canada.
It’s time to bring Canada’s housing policy out of the past so we can begin to address the urgent needs of today.
Senator Clément Gignac is chair of the Senate Committee on Banking, Commerce, and the Economy, a former Quebec cabinet minister and an economist. He represents Quebec (Kennebec) in the Senate.
This article was published in The Hill Times on January 28, 2026.