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Thursday, June 17, 2004

Builders Push Housing Issues In Canadian Election

by Jim Adair

As the Canadian federal election winds down to voting day, only a few issues relating to housing have commanded much attention. Early in the campaign, New Democratic Party leader Jack Layton made headlines by stating Liberal Prime Minister Paul Martin is responsible for the deaths of homeless people because of his government's lack of action on housing issues. But his remarks sparked more discussion about Layton's campaign style than the issue of housing.

The resale and new-home industries in Canada have been booming for several years, setting sales records and keeping Realtors and new-home builders busy. But the Canadian Home Builders' Association (CHBA) is concerned about a number of federal issues, ranging from housing affordability to infrastructure concerns. It is making a nation-wide effort to get candidates to talk about housing.

"Our association has two main goals: to promote housing quality, affordability and choice, and to build vibrant, prosperous and healthy communities," says the CHBA's election policy statement. "We are interested in seeing and in contributing to clear, measurable results for Canadians in their communities, from both private sector and public sector investments.

The association is promoting a program of portable housing choice vouchers to "help Canadian households in the greatest need to gain immediate access to decent rental housing. There is no need for homeless people to wait; we just require sensible public policy," says the association. It says the three major Canadian political parties all currently support some form of innovation in providing support to low-income housing.

The CHBA's second priority in the election -- and the only one that has created much discussion -- is investing in municipal infrastructure for "clean air, water, and land, and for efficient transport." Toronto Mayor David Miller recently said the Liberals and the New Democrats are offering the best platforms for cities. The CHBA claims a "major win" on this issue because it was "one of the few national organizations pressing for these priorities."

The association also wants to see many changes relating to the federal goods and services tax, to reduce the cost of new homes and renovations, and to address the problem of the "underground economy" where tradespeople work for cash and don't collect or pay taxes. None of the parties has included such GST reform in their programs.

Taxes on new homes are at the forefront of a debate that's currently taking place in Canada's largest city, as Toronto's city and finance committee this week voted to raise development charges on new homes and condominiums to $9,075, more than double the previous charge. That's still much less than some of the suburbs surrounding Toronto, some of which charge more than $20,000 per home.

Canada Mortgage and Housing Corp. said in 2002 that government fees, levies, charges and taxes accounted for 13.6 per cent of the average house cost of a home. The highest percentage in the country was in Halifax, where taxes accounted for 19.7 per cent of the cost of the home, with Ottawa second.

The Greater Toronto Home Builders' Association (GTHBA) says that major increases in the municipal development charges and fees are creating higher house prices, noting that regional governments in the Greater Toronto Area collected almost $700 million in charges last year. The GTHBA says, "On a national basis, new home building and renovating generated 1.13 million jobs, $45 billion in wages and $79 billion in gross domestic product, while contributing $22 billion in taxes, fees and levies to the various levels of government."

In the Toronto area, the association says, "Recent provincial policies to restrict the supply of land for development could undermine the economic impact of the industry. They are already forcing land prices and housing prices higher, raising concern that there will not be adequate or affordable housing for the 90,000 to 100,000 newcomers expected in the GTA each year for the next three decades."

Toronto's committee was been warned that boosting charges in the city could drive new development out of the city. But David Nowlan, a retired professor at the University of Toronto, says that the higher charges would have a minimal effect on the development industry or the availability of affordable housing. City councillors were told that if the development charges were not increased, the costs for expanding roads, transit, sewer systems and other infrastructure would have to be paid for by raising everyone's property taxes.

Toronto's full city council will debate the increased charges next week, and Canadians will elect a new federal government on June 28.

Published: June 17, 2004

Jim Adair is editor of REM, Canada's leading business magazine for real estate professionals. He is also editor-in-chief of Canadian Homes & Cottages, the country's largest building and renovation magazine. Email him at jimhc@pathcom.com

Copyright © 2004 Realty Times. All Rights Reserved.

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