Housing Minister Sean Fraser's ambitious goal of achieving 3.9 million new housing starts by 2031 is unattainable, builders warned the Commons human resources committee Monday.Blacklock's Reporter said despite proposed incentives, including a costly tax holiday for apartment builders, the construction industry faces significant slowdowns.“We are staring into a pit,” said Richard Lyall, president of the Residential Construction Council of Ontario. “What we are saying is that when cranes are coming down, they are not going back up.”Current housing starts average 244,000 annually, merely a third of the required pace to meet the government's target. Last year saw a seven percent decline in starts, according to the Canada Mortgage and Housing Corporation (CMHC).“Are those numbers and trends similar to what you are seeing?” asked Conservative MP Tracy Gray (Kelowna-Lake Country, B.C.). “Yes, and I would suggest it’s a little worse,” replied Lyall.“Claims were made in Budget 2024 that they would build 3.87 million homes by 2031,” said Gray. “How realistic is this?”“Not a chance,” replied Lyall, citing high financing costs and development charges as significant barriers. “We’re slowing again,” he testified. “We have hundreds of framing crews sitting at home now. It’s working its way through the process.”The cabinet has approved a GST holiday on new construction of purpose-built apartments until 2036, costing taxpayers $5.8 billion, according to a May 9 Budget Office report, "Foregone Revenue From Enhanced GST Rental Rebate On Purpose-Built Rental Housing."Despite the tax holiday, Lyall emphasized that it would not prevent further declines in housing construction. “Changes to the purpose-built rental taxation situation are very helpful in terms of keeping some projects going, but we’re headed down in a big way,” he said. “Our subtrades’ pipeline is dry. It’s drying up.”“We’re in a crisis moment,” Lyall stated. “It’s not just a crisis of housing, it’s growth management. The data points are truly shocking.”Municipal development charges pose a significant problem, Lyall testified. “How much are the taxes, fees and levies on new housing now?” he asked. “It varies across Canada, but in the Greater Toronto Area, it is 31% of the cost of new housing. In British Columbia, they did their own study; it was 30%.”“That is by far the highest in North America, and it’s not sustainable,” said Lyall. “It particularly hits the first-time buyer the most. We effectively tax housing like alcohol and tobacco. It’s like a sin tax. It doesn’t make sense.”“The first-time homebuyer is pretty much extinct,” Lyall continued. “This crisis has been decades in the making.”Conservative MP Scott Aitchison (Parry Sound-Muskoka, Ont.) highlighted the impact of development charges, which have surged by an average of 400% over the past decade. “Who pays the development charges?” Aitchison asked.“It’s a development tax,” replied Lyall. “It’s a tax paid by consumers. It’s regressive, it’s not income tested, and the people who get hit the hardest by those taxes are the ones who can least afford housing, which is very un-Canadian among other things. They’ve been out of control.”
