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Solving the Housing Affordability Crisis With This One Cool Trick

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The Audit

 

 

David Clinton

The Audit has a growing library of posts addressing the housing crisis. I’m particularly proud of my Solving Canada’s Housing Crisis because of how it presents a broad range of practical approaches that have been proposed and attempted across many countries and economies. But the truth is that the affordability end of the problem could be easily and quickly solved right here at home without the need for clever and expensive innovation.

As you’ll soon see, local and provincial governments – if they were so inspired – could drop the purchase price on new homes by 20 percent. Before breakfast.

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It’s all about taxes and fees. This post will focus mostly on taxes and fees as they apply to new construction of relatively expensive detached homes. But the basic ideas will apply to all homes – and will also impact rentals.

Here are some estimated numbers to chew on. Scenarios based on varying permutations and combinations will produce different results, but I think this example will be a good illustration.

Let’s say that a developer purchases a single residential plot in Toronto for $1.4 million. In mature midtown neighborhoods, that figure is hardly uncommon. The plan is to build an attractive single family home and then sell it on the retail market.

Here are some estimates of the costs our developer will currently face:

  • Construction costs on a 2,000 sq. ft. home (@ $350/sq. ft.): $700,000
  • Land transfer taxes on the initial land purchase: $35,000
  • Development fees: $100,000
  • Permits and zoning/site approvals: $40,000

Total direct development costs would therefore come to $875,000. Of course, that’s besides the $1.4 million purchase price for the land which would bring our new running total to $2,275,000.

We’ll also need to account for the costs of regulatory delays. Waiting for permits, approvals, and environmental assessments can easily add a full year to the project. Since nothing can begin until the developer has legal title to the property, he’ll likely be paying interest for a mortgage representing 80 percent of the purchase price (i.e., $1,120,000). Even assuming a reasonable rate, that’ll add another $60,000 in carrying charges. Which will bring us to $2,335,000.

And don’t forget lawyers and consultants. They also have families to feed! Professional guidance for navigating through the permit and assessment system can easily cost a developer another $25,000.

That’s not an exhaustive list, by the way. To keep things simple, I left out Toronto’s Parkland Dedication Fee which, for residential developments, can range from 5 to 20 percent of the land value. And the Education Development Charges imposed by school boards was also ignored.

So assuming everything goes smoothly – something that’s far from given – that’ll give us a total development cost of $2,360,000. To ensure compensation for the time, work, investments, and considerable risks involved, our developer is unlikely to want to sell the home for less than $2,700,000.

But various governments are still holding their hands out. When the buyers sign an agreement of purchase, they’ll be on the hook for land transfer taxes and – since it’s a new house – HST. Ontario and Toronto will want about four percent ($108,000) for the transfer (even though they both just cashed in on the very same transfer tax for the very same land at the start of the process). And, even taking into account both the federal and Ontario rebates, getting the keys to the front door will require handing over another $327,000 for HST.

Here’s how development fee schedules currently look in Toronto:

And here’s a breakdown of the land transfer taxes assessed against anyone buying land:

In our hypothetical case, those fees would give us a total, all-in purchase price of $3,135,000. How much of that is due to government involvement (including associated legal and interest fees)? Around $695,000.

That’s $695,000 our buyers will pay – over and above the actual costs of land and construction. Or, in other words, a 22 percent markup.

Let’s put this a different way. If the cost of the median home in Canada dropped by 22 percent, then around 1.5 million extra Canadian households could enter the market. Congratulations, you’ve solved the housing affordability crisis. (Although supply problems will still need some serious work.)

Now it’s probably not realistic to expect politicians in places like the Ontario Legislature and Toronto City Council to give up that kind of income. But just lowering their intake by 50 or even 25 percent – and reducing the costs and pain points of acquiring permits – could make a serious difference. Not only would it lower home sale prices, but it would lower the barriers to entry for new home construction.

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Just what were all those taxes worth to governments? Let’s begin with the City of Toronto. Their 2023 Financial Report tells us that land transfer taxes generated $944 million, permits and zoning applications delivered $137 million, and development fees accounted for $1.45 billion. Total city revenues in 2023 were $16.325 billion.

We’re told that all that money was spent on:

  • Roads and transit systems
  • Water and wastewater systems
  • Fire and emergency services
  • Parks and recreation facilities
  • Libraries

Well, we do need those things right? We can’t expect the city to just eliminate fire and emergency services.

Wait. Hang on. I seem to recall being told that revenue from my property tax bill covered those services. Yes! My property tax did fund those things. Not 100 percent of those things, but a lot.

Specifically, Toronto property tax revenues cover 65 percent of the municipal costs for roads and transit systems, 85 percent of fire and emergency services, 75 percent of parks and recreation facilities, and 95 percent of library costs (even though very few people use public libraries any more).

Granted, property tax revenue covered only five percent of water and wastewater systems, but that’s because another 40 percent came from user fees (i.e., utility bills).

So revenues from land transfer taxes, developer fees, and permitting aren’t an insignificant portion of City income, but they’re hardly the linchpin propping the whole thing up either. City Council could respond to losing that income by increasing property taxes. Or – and I’m just throwing around random ideas here – they could reduce their spending.

Now what about the province? I couldn’t get a good sense of how much of their HST revenue comes specifically from new home sales, but Ontario’s 2023–24 consolidated financial statements tell us that provincial land transfer taxes brought in $3.538 billion. That would be around 1.7% of total government revenues. Again, a bit more than a rounding error.

Politics is about finding balances through trade offs. Sure, maintaining program spending while minimizing deficits is an ongoing and real challenge for governments. On the other hand, they all say they’re concerned about the housing crisis. Foregoing just one to five percent of revenues should, given the political payoffs and bragging rights that could follow, probably be an easy pill to swallow.

A few weeks ago I reached out to the City of Toronto Housing Secretariat and the Province of Ontario’s Municipal Affairs and Housing for their thoughts. I received no response.

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Flying saucers, crystal paperweights and branded apples: inside the feds’ promotional merch splurge

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By Jen Hodgson 

“It’s like the government had a contest to see which department could come up with the dumbest way to spend taxpayers’ money and they all won”

Bamboo toothbrushes and beeswax wraps. Temporary tattoos and hockey pucks. Maple candy and “chocolat bon bons.” Tractor-shaped air fresheners and Yukon soap. Moccasins and socks.

The feds seem eager to slap a logo on just about anything and pay any price to make it happen. Federal departments and Crown corporations spent about $13 million on branded promotional items since January 2022, according to government records obtained by the Canadian Taxpayers Federation.

“It’s like the government had a contest to see which department could come up with the dumbest way to spend taxpayers’ money and they all won,” said Franco Terrazzano, CTF Federal Director. “This is what happens when you have too many bureaucrats with too many tax dollars.”

The government shelled out $207,000 on various hats across all departments, $607,000 on different types of bags and $40,500 on Yeti and Stanley drinkware.

In an apparent shout out to former prime minister Justin Trudeau, the feds collectively splurged on $51,800 worth of socks.

The feds spent $25,600 on maple syrup and maple products.

The government released the data in response to an order paper question submitted by Conservative MP Michelle Rempel Garner (Calgary Nose Hill). Rempel Garner asked for records of all branded or promotional products purchased by departments or Crown corporations from Jan. 1, 2022, to June 6, 2025.

The CTF reviewed the 900-page release package – a virtual catalogue of capricious spending.

The Royal Canadian Mounted Police was the biggest spender by far, with a merch price tag of $4 million. However, the Mounties declined to submit a detailed inventory of expenditures.

Canadian Heritage was next in line for the feds’ spending spree. The department dropped about $2 million on purchases including branded hockey pucks, candle holders and lip balm. And not even the good kind of lip balm – it’s specifically “without sun protection.”

National Defence spent nearly $1.4 million on branded merch. That works out to about $34,000 on average each month.

Farm Credit Canada spent a total of $870,500, including $32,600 on tractor shaped air fresheners.

Export Development Canada blew $4,100 on climate change card games, $3,400 on Yukon soap, $10,700 on apple peel notebooks with bamboo pens, $4,500 on branded apples and $1,100 on “chocolat bon bons.”

Destination Canada spent $26,900 on moccasins, $13,300 on candles and $9,000 on charcuterie boards. Natural Resources Canada spent $3,200 on phone wallets and $1,350 on temporary tattoos.

VIA Rail spent $11,400 on “Pride” paraphernalia and $2,600 on belt bags. The Department of Immigration spent $12,000 on bamboo toothbrushes and terry towels for various “outreach events” and the Masters Indigenous Games.

The Royal Canadian Mint wrote a cheque for $41,800 for leather journals and laser pens. The National Capital Commission spent $12,000 on bicycle lights. Canada Lands Company spent $1,800 on flying saucers.

Canadian Race Relations Foundation dropped $2,400 on wool-blend branded toques and $2,800 for branded fleece blankets – for a board meeting.

The list goes on and on.

Prairies Economic Development Canada dipped into the public purse to the tune of $1,300 for bamboo cutlery and $3,800 for beeswax wraps. Pacific Economic Development Canada dropped $12,000 on beeswax wraps alone.

But remember, it’s hard being a government bureaucrat. Across all departments, the feds bought $11,900 worth of stress balls.

“Government bureaucrats dropping thousands of dollars on stress balls really stresses taxpayers out,” Terrazzano said. “Unless the temporary tattoos show the national debt to remind bureaucrats to cut spending, it’s a waste of money.

“Prime Minister Mark Carney needs to tell government bureaucrats to knock it off with the card games, charcuterie boards, laser pens and flying saucers.”

Some federal agencies refused to spill the beans on their branding budgets, leaving taxpayers to imagine a clandestine empire of logoed mugs and pens.

CBC/Radio-Canada did not bother to track their spending on promotional materials at all. The CBC claims it didn’t have time to provide accurate information in response to the request.

The lack of transparency didn’t end there. The Canada Border Services Agency and the National Arts Centre also claimed they lacked the time and resources to submit expenditure details.

The Canada Mortgage and Housing Corporation had “nothing to report.” Parks Canada dropped $847,000 on promotional items, but provided no details on itemized spending.

The Canadian Security Intelligence Services confirmed it purchased promotional material, but declined to say what it bought or how much it spent – because, you know, it’s probably spy stuff.

“Carney said he’s going to cut waste and if he’s serious he would put the government’s promotional merch spending spree on the chopping block,” Terrazzano said. “Anyone who claims there’s no fat to cut needs to be reminded that the government is spending millions of dollars on branded merch.”

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Trans Mountain executive says it’s time to fix the system, expand access, and think like a nation builder

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Mike Davies calls for ambition and reform to build a stronger Canada

A shift in ambition

A year after the Trans Mountain Expansion Project came into service, Mike Davies, President and Chief Operating Officer at Trans Mountain, told the B.C. Business Summit 2025 that the project’s success should mark the beginning of a new national mindset — one defined by ambition, reform, and nation building.

“It took fifteen years to get this version of the project built,” Davies said. “During that time, Canadian producers lost about $50 billion in value because they were selling into a discounted market. We have some of the world’s largest reserves of oil and gas, but we can only trade with one other country. That’s unusual.”

With the expansion now in operation, that imbalance is shifting. “The differential on Canadian oil has narrowed by about $13 billion,” he said. “That’s value that used to be extracted by the United States and now stays in Canada — supporting healthcare, reconciliation, and energy transformation. About $5 billion of that is in royalties and taxes. It’s meaningful for us as a society.”

Davies rejected the notion that Trans Mountain was a public subsidy. “The federal government lent its balance sheet so that nation-building infrastructure could get built,” he said. “In our first full year of operation, we’ll return more than $1.3 billion to the federal government, rising toward $2 billion annually as cleanup work wraps up.”

At the Westridge Marine Terminal, shipments have increased from one tanker a week to nearly one a day, with more than half heading to Asia. “California remains an important market,” Davies said, “but diversification is finally happening — and it’s vital to our long-term prosperity.”

Fixing the system to move forward

Davies said this moment of success should prompt a broader rethinking of how Canada approaches resource development. “We’re positioned to take advantage of this moment,” he said. “Public attitudes are shifting. Canadians increasingly recognize that our natural resource advantages are a strength, not a liability. The question now is whether governments can seize it — and whether we’ll see that reflected in policy.”

He called for “deep, long-term reform” to restore scalability and investment confidence. “Linear infrastructure like pipelines requires billions in at-risk capital before a single certificate is issued,” he said. “Canada has a process for everything — we’re a responsible country — but it doesn’t scale for nation-building projects.”

Regulatory reform, he added, must go hand in hand with advancing economic reconciliation. “The challenge of our generation is shifting Indigenous communities from dependence to participation,” he said. “That means real ownership, partnership, and revenue opportunities.”

Davies urged renewed cooperation between Alberta and British Columbia, calling for “interprovincial harmony” on West Coast access. “I’d like to see Alberta see B.C. as part of its constituency,” he said. “And I’d like to see B.C. recognize the need for access.”

He summarized the path forward in plain terms: “We need to stem the exit of capital, create an environment that attracts investment, simplify approvals to one major process, and move decisions from the courts to clear legislation. If we do that, we can finally move from being a market hostage to being a competitor — and a nation builder.”

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