Need urgency from federal government on housing: Goring

Key Concepts

• Streamlining Home Building: The Canadian government's initiative to reduce timelines, costs, and emissions in home construction.
• Co-investment: A strategy where the government partners with the private sector and other levels of government to fund housing projects.
• Development Charges and Taxes: Government fees and taxes that significantly contribute to the overall cost of housing.
• GST Break for First-Time Home Buyers: A tax incentive for individuals purchasing their first home.
• Speed of Approvals: The efficiency and timeliness of the government's permitting and approval processes for development projects.
• Federally Owned Land: Land owned by the Canadian federal government, which can be utilized for development.
• Shovel-Ready Projects: Development projects that are prepared and ready to commence construction.

Summary of Discussion on Canadian Federal Budget and Housing Initiatives

This discussion focuses on the Canadian federal government's recent budget plan aimed at accelerating home building by addressing timelines, costs, and emissions. Derek Goring, CEO of Northrest Developments, provides insights into the feasibility and impact of these initiatives.

Northrest Developments' Toronto Project

• Scale of Project: Northrest Developments is involved in building approximately 30,000 new affordable homes in Toronto.
• Project Scope: This undertaking is described as building "a city within the city," encompassing not only residential units but also essential infrastructure such as community centers, parks, and schools.
• Estimated Budget: The overall budget for this massive project is estimated to be around $30 billion.

Federal Government's "Build Canada Homes" Initiative

• Government Investment: The Canadian government plans to contribute approximately $13 billion towards "Build Canada Homes."
• Co-investment Model: Goring emphasizes that the government's approach is not to solely fund these projects but to co-invest with the private sector and other levels of government. This strategy aims to leverage private capital and unlock significant housing development.
• Types of Investment: Investments include infrastructure such as new roads, sewers, and water systems, as well as direct contributions to make housing more affordable.
• Rationale for Co-investment: This model allows the private sector to make investments that generate necessary returns, thereby facilitating project realization. Goring views this as a prudent approach given the federal government's limited resources.

GST Break for First-Time Home Buyers

• Initiative Details: The budget includes a Goods and Services Tax (GST) break for first-time home buyers on purchases under $1 million.
• Advocacy for Extension: Some housing advocates suggest extending this benefit to all home buyers.
• Goring's Perspective: Goring believes that reducing the numerous non-development costs associated with home building is crucial. He highlights development charges and taxes as significant contributors to housing costs. Any measure that can reduce these costs is seen as beneficial for increasing housing supply and lowering delivery costs.

Challenges in Canadian Home Building

• High Government Fees and Taxes: Goring states that approximately 30% of the cost of housing units, depending on the location, is attributable to government fees and taxes, which he considers high.
• Speed of Approvals: The slow pace of development approvals is identified as a major problem that the budget aims to address. While improvements have been noted from the City of Toronto, provincial, and federal governments, Goring reiterates that "time is money," and project delays directly increase costs.

Development on Federally Owned Land

• Northrest's Project Location: While Northrest's specific site is privately owned, it is adjacent to significant federally owned land.
• Collaboration with Canada Lands Company: The company is working closely with the Canada Lands Company, the adjacent landowner, to facilitate development in the area.
• Vision and Planning: The project in Down View Park, Toronto, has involved five years of collaboration with the city and local residents to develop a comprehensive vision. Construction is imminent, with the project being "shovel ready."
• Budget's Role as Catalyst: Goring sees the budget's investments as key catalysts for enabling shovel-ready projects to proceed more rapidly than initially planned.

Urgency and Execution of Budget Initiatives

• Intent vs. Delivery: Goring acknowledges the "intent to be urgent" in the budget regarding housing. However, the critical question is whether the government can "actually deliver."
• Challenges in Government Spending: He points out that governments often face difficulties in spending large sums of money on infrastructure and housing projects due to their inherent long timelines and the government's need for due diligence to avoid frivolous spending.
• Execution Risk: The time required for due diligence and disbursing funds can be a significant challenge for these programs. Goring expresses hope and encouragement regarding the budget's intentions but emphasizes that the actual execution and speed of fund deployment remain to be seen.

Conclusion

The discussion highlights the Canadian federal government's ambitious plans to streamline home building through co-investment and tax incentives. While the intent is positive, the success of these initiatives hinges on the government's ability to efficiently execute its spending plans and address the persistent challenges of high development costs and slow approval processes. The co-investment model and the focus on reducing non-development costs are seen as crucial steps, but the practical implementation will determine the ultimate impact on housing supply and affordability.