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Costly construction isn’t the culprit behind unaffordable housing

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From the Frontier Centre for Public Policy

By Wendell Cox

Land restriction creates what amount to land cartels. A now smaller number of landowners gain windfall profits, which, of course, encourages speculation

The latest Demographia report on housing affordability in Canada, which I produce for the Frontier Centre for Public Policy, reveals that over half of the 46 Canadian housing markets we assess are severely unaffordable. In fact, Vancouver and Toronto rank as third and 10th least affordable, respectively, among the 94 major global markets included in our latest international housing affordability study.

To evaluate housing costs, we utilize the “median multiple,” which divides the median house price within a given market (census metropolitan area) by its median household income. A multiple equal to or less than 3.0 is categorized as “affordable,” while anything exceeding 5.0 is labelled “severely unaffordable.”

Among the major Canadian housing markets, Vancouver (with a median multiple of 12), Toronto (9.5), Montreal (5.4), and Ottawa-Gatineau (5.2) fall into the severely unaffordable category. Vancouver has maintained a high median multiple for several decades, while Toronto has been in this range for approximately two decades. The increased prevalence of telecommuting has recently contributed to Montreal and Ottawa-Gatineau’s affordability challenges, leading to a surge in demand for larger homes and properties in more distant suburbs. In contrast, housing in Edmonton (4.0) and Calgary (4.3) remains comparatively affordable.

In Toronto and Vancouver, the implementation of international urban planning principles, particularly those promoting anti-sprawl measures like greenbelts and agricultural preserves, has led to unprecedented price hikes. This “urban containment” approach has consistently driven up land values where it has been adopted. And high land values rather than increased construction costs are what explain the substantial disparity between severely unaffordable and more budget-friendly markets.

Land restriction creates what amount to land cartels. A now smaller number of landowners gain windfall profits, which, of course, encourages speculation. Maintaining or restoring affordability requires eliminating windfall profits by ensuring a competitive market for land.

Another issue arises from urban planners’ preference for higher-density housing, such as high-rise condos. Some households may prefer high-rise living, but families with children typically seek housing with more land, whether detached or semi-detached. When they’re priced out of good housing markets, their quality of life suffers and they may even fall into poverty.

The troubling paradox is that unaffordable housing is far more common in markets like Vancouver and Toronto, which have embraced the planning orthodoxy — which is supposed to produce affordable housing. The same applies to international markets like Sydney, Auckland, London and San Francisco, where urban containment and unaffordable housing have gone hand in hand.

What’s the solution? Give up on urban containment and make more land available for housing. But wouldn’t that threaten the natural environment, as critics of Ontario’s recent attempt to allow development of a sliver of its greenbelt argued?

Not at all. It’s true that land under cultivation in Canada has been declining steadily over the years. But the culprit is improved agricultural productivity, not urban expansion. According to Statistics Canada, between 2001 and 2021, agricultural land shrank 53,000 square kilometres. That’s about equal to the land area of Nova Scotia. And it’s about triple all the area urbanized since European settlement began. Even in Ontario and B.C. where most of the severely unaffordable markets are concentrated, urban expansion from 2016 to 2021 took up less than one-quarter of the agricultural loss over that period. Urban expansion is not squeezing out agricultural land.

Given all this, what should we do about affordability? In my view, three things:

First, it’s essential to acknowledge that Canadians are already addressing the issue by relocating from pricier to more affordable regions. Housing is more affordable in the Atlantic and Prairie provinces and areas in Quebec east of Montreal. So it’s not surprising there is now a net influx of people to smaller, typically more affordable, locations. In the past five years, markets with populations exceeding 100,000 have collectively witnessed over 250,000 people moving to smaller markets.

Second, make more land available for development in increasingly unaffordable markets like B.C., southern Ontario, and the Montreal-Ottawa corridor. One way is with “housing opportunity enclaves” (HOEs), in which traditional, i.e., not high-density, housing regulations would apply, but essential environmental and safety regulations would. The aim would be to provide middle-income housing at the price-to-income ratios that were typical before urban containment came along and housing across the country was largely affordable.

Market-driven development would be ensured by relying on the private sector to provide housing, land, and infrastructure, a model that has been successful in Colorado and Texas. Current residents would maintain their property rights but could sell to private parties and First Nations for development.

HOEs would be situated far enough outside major centres to take advantage of low-priced land, prioritizing areas with the largest recent agricultural land reductions. Communities likely would resemble Waverly West in Winnipeg or The Woodlands in Houston, with ample housing space and yards for families with children.

These new communities would attract people working at least partly from home. Jobs would naturally follow, creating self-contained communities where most commutes occurred within the HOE. To ensure a competitive market and prevent land cost escalation, HOEs must have ample land available.

Third, public authorities should allocate an ample amount of suburban land to safeguard reasonable land values in the Prairie and Atlantic provinces, as well as in Quebec east of Montreal. This would allow currently more affordable markets such as Quebec City, Calgary, Edmonton, Winnipeg, Moncton and Halifax to accommodate interprovincial migrants without jeopardizing their affordability.

Provincial and local governments would need to monitor housing affordability multiples on at least a five-year cycle, and legislatures, land use authorities and city councils would have to allow enough low-cost land development to maintain price-to-income stability.

It’s not enough just to provide enough building lots to meet projected demand. The goal should be to enable builders to provide housing at prices middle-income households can afford. The key to that is affordable land.

Wendell Cox is a Senior Fellow at the Frontier Centre for Public Policy. He is the author of 2023 Edition Of Demographia Housing Affordability In Canada and has been featured on Leaders on the Frontier – Cost of Living Under Crisis With Charles Blain.

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Parks Canada right to back down from deer-cull boondoggle

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From the Canadian Taxpayers Federation

By Carson Binda 

Taxpayers are glad to see Parks Canada backing away from a $12-million deer cull on Sidney Island.

“Parks Canada’s plan to blow $12-million on a deer cull was ridiculous from day one,” said Carson Binda, B.C. Director for the Canadian Taxpayers Federation. “Parks Canada is right to cancel the project, but it’s worrying that it took them this much wasted money to figure it out.”

Parks Canada used so-called sharpshooters in helicopters, firing down on invasive fallow deer from above, during phase one of the cull which occurred last December. The so-called sharpshooters killed 84 deer, but only 63 were the correct species. The cost for phase one came in at $834,000, roughly $10,000 per deer.

Subsequently, Parks Canada erected fencing made of fish nets around the 12-square-kilometer Island to trap the deer, in anticipation for a second round of culls which were scheduled for Nov. 15.

Several animals became entangled in the netting, painfully thrashing themselves to death.

“Seeing deer thrashing to death because of bureaucratic incompetence is heartbreaking,” Binda said. “Parks Canada needs to explain how this happened and how much taxpayer cash was wasted on this project before the cancellation.”

Residents of Sidney Island and local hunters have been culling deer on the island for years, for free. Last fall 54 deer were culled by local hunters at no cost to the taxpayer.

“Local hunters filling their freezers at no cost to the taxpayer is obviously better than Parks Canada blowing millions of dollars to shoot the wrong deer from helicopters and leaving others to suffer in a net,” Binda said. “Hopefully the bureaucrats learn from their mistakes with this boondoggle.”

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Canada’s struggle against transnational crime & money laundering

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From the Macdonald-Laurier Institute

By Alex Dalziel and Jamie Ferrill

In this episode of the Macdonald-Laurier Institute’s Inside Policy Talks podcast, Senior Fellow and National Security Project Lead Alex Dalziel explores the underreported issue of trade-based money laundering (TBML) with Dr. Jamie Ferrill, the head of financial crime studies at Charles Sturt University in Canberra, Australia and a former Canada Border Services Agency officer.

The discussion focuses on how organized crime groups use global trade transactions to disguise illicit proceeds and the threat this presents to the Canada’s trade relationship with the US and beyond.

Definition of TBML: Trade-based money laundering disguises criminal proceeds by moving value through trade transactions instead of transferring physical cash. Criminals (usually) exploit international trade by  manipulating trade documents, engaging in phantom shipping, and altering invoices to disguise illicit funds as legitimate commerce, bypassing conventional financial scrutiny. As Dr. Ferrill explains, “we have dirty money that’s been generated through things like drug trafficking, human trafficking, arms trafficking, sex trafficking, and that money needs to be cleaned in one way or another. Trade is one of the ways that that’s done.”

A Pervasive Problem: TBML is challenging to detect due to the vast scale and complexity of global trade, making it an attractive channel for organized crime groups. Although global estimates are imprecise, the Financial Action Task Force and The United Nations Office on Drugs and Crime (UNODC) suggests 2-5% of GDP could be tied to money laundering, representing trillions of dollars annually. In Canada, this could mean over $70 billion in potentially laundered funds each year. Despite the scope of TBML, Canada has seen no successful prosecutions for criminal money laundering through trade, highlighting significant gaps in identifying, investigating and prosecuting these complex cases.

Canada’s Vulnerabilities: Along with the sheer volume and complexity of global trade, Canada’s vulnerabilities stem from gaps in anti-money laundering regulation, particularly in high-risk sectors like real estate, luxury goods, and legal services, where criminals exploit weak oversight. Global trade exemplifies the vulnerabilities in oversight, where gaps and limited controls create substantial opportunities for money laundering. A lack of comprehensive export controls also limits Canada’s ability to monitor goods leaving the country effectively. Dr. Ferrill notes that “If we’re seen as this weak link in the process, that’s going to have significant implications on trade partnerships,” underscoring the potential political risks to bilateral trade if Canada fails to address these issues.

International and Private Sector Cooperation: Combating TBML effectively requires strong international cooperation, particularly between Canada and key trade partners like the U.S. The private sector—including freight forwarders, customs brokers, and financial institutions—plays a crucial role in spotting suspicious activities along the supply chain. As Dr. Ferrill emphasizes, “Canada and the U.S. can definitely work together more efficiently and effectively to share and then come up with some better strategies,” pointing to the need for increased collaboration to strengthen oversight and disrupt these transnational crime networks.


Looking to further understand the threat of transnational organized crime to Canada’s borders?

Check out Inside Policy Talks recent podcasts with Christian LeuprechtTodd Hataley  and Alan Bersin.

To learn more about Dr. Ferrill’s research on TBML, check out her chapter in Dirty Money: Financial Crime in Canada.

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