Conservative leadership frontrunner Pierre Poilievre announced plans on Thursday that would see federal funding withheld from "big city gatekeepers in municipal governments," who Poilievre says are blocking affordable housing.
A press release from Poilievre says his plan would pay a "Building Bonus" to municipal governments that let housing get built.
"I will require severely unaffordable big cities like Toronto and Vancouver to increase home building by 15 percent or lose some of their federal infrastructure funds,” said Poilievre.
This penalty will not apply in any municipalities with a population of less than 500,000 people, the statement says.
"I will create a building bonus that pays municipalities $10,000 dollars for every extra home built, and I will require cities to pre-approve permits for high density housing and employment at the future stations of all federal funded major transit projects," he said.
The statement lays out the problems, including the rising price of homes and aspiring homeowners feeling as though they are shut out of the market
"With so much land and so few people, housing should be cheap in Canada," Poilievre says. "Yet our housing bubble is the second worst in the world."
Figures from Demographia show that Vancouver and Toronto are the world's 3rd and 10th most unaffordable markets in the world. That places them higher than New York, Singapore and London, England—"places with more money and people and less land. This is a made-in-Canada problem," he states.
"What is causing it? Half the problem is artificial demand from the federal government creating $400 billion in new cash in the last two years and pumping it into the financial and mortgage system. Investors have borrowed the money, bought up homes and bid up prices.
The other half is lack of supply: "Canada has the fewest homes per capita in the G7, even though we have the most land with the fewest people. Why? Government gatekeepers are blocking supply" said Poilievre.
According to the CD Howe Institute, the governmental cost for every single unit of housing in Vancouver, for example, is $644,000. "That's the cost of getting your approval, getting the zoning change, getting the permit, and paying all the fees directly to the city and to the many consultants you have to hire to get it done," Poilievre said in a video explaining the housing crisis.
The CD Howe Institute calculates "Vancouver's housing regulation costs are by far the largest in Canada, resulting in an extra cost of $644,000 for the average new house. Elsewhere in Canada - Vancouver, Abbotsford, Victoria, Kelowna, Regina, Calgary, Toronto and Ottawa-Gatineau - homebuyers paid an average $230,000 extra on a new house because of limits on supply."
"In Toronto, the City Government just released a report for public consultation on their development charges, which proposes increasing them by 49 percent in one year. That is on top of Toronto area municipalities already collecting $5 billion more in taxes on new housing than they spend on infrastructure for new homes—costs that are all passed on to homebuyers.
"The only solution politicians have offered so far is more government spending. Big city mayors demanded and received vast increases in federal housing dollars. The Federal government brags it has spent $40 billion more on affordable housing—after which house prices actually doubled. The recent federal budget promised yet another $10 billion—money that will go to the same municipal government gatekeepers who have caused housing inflation in the first place," Poilievre explains.
The government claims the money will incentivize faster permitting and supply; however, it offers to give municipal governments the money upfront with no guarantee of results. It funds process and bureaucracy without tying the number of dollars to the number of completed homes. "It is more money for nothing to the same big city politicians who caused today's bubble" said Poilievre. "Rewarding bad behavior will only cause more of it."
The Poilievre Plan: Fire Gatekeepers. Build Homes.
"The federal government must reward more building and punish gatekeeping" said Poilievre. "Only carrots and sticks will get results."
"Big city politicians care about one thing: money. They like to spend other people's money—particularly when other levels of government collect it."
"A Poilievre Government will make clear to big city politicians that they will not get what they want until the people get what they need: homes built," the Carleton MP writes.
That means no more funding good intentions, bureaucratic procedures or promises of future actions. Instead, money will come after results are completed. A Poilievre government will:
Poilievre's plan would:
- Require municipal governments of "severely unaffordable" big cities to increase homebuilding by 15 percent annually or have a portion of their federal funding withheld (municipalities with less than 500,000 people will be completely exempt) and bring in penalties for big city governments—those with over a half-million people—for egregious cases of NIMBYism and gatekeeping
- Grant municipalities $10,000 per home on all growth in their home building, paid out only after the units are built and occupied.
- Require municipalities seeking federal funds for major transit projects to pre-approve building permits for high-density housing and employment on all available land around stations.
- Sell off 15 percent of the federal government's 37,000 buildings with covenants requiring they become affordable housing.
- Prevent the federal government from creating cash to fund government deficits. That will end the inflationary bubbles that the central bank has helped to create in the housing market.
- Municipal governments of "severely unaffordable" big cities will need to increase homebuilding by 15 percent annually or have a portion of their federal funding withheld. Municipalities with less than 500,000 people will be completely exempt.
- Only cities of 500,000 people or more with "severely unaffordable" median home prices based on Demographia's definition (median house prices are more than five times median income) will be captured by this initiative. This list currently includes Toronto, Montreal, Ottawa, Mississauga, Vancouver, Brampton, Hamilton, and Surrey.
How the policy will work
"Right now, the federal government provides $2.2 billion in the Canada Community-Building Fund (formerly, the Gas Tax Fund). Municipalities also receive rebates from the federal government for the money they spend on GST.
Under the Poilievre Plan, there will be no change to either of these funding programs for municipalities of less than 500,000 or those whose median house prices are less than five times median income. Their Community Building Fund and GST rebate allocations will continue to increase under the existing formula," Poilievre writes.
"However, municipal governments with more than 500,000 people which also have 'severely unaffordable' housing, will need to increase dwelling completions by 15 percent annually or lose up to 15 percent of their Community Building Fund allocation and GST rebate. The penalty will be equal to the amount by which the municipality misses the target. For example, if a big city government is 10 percent short of its target, 10 percent of its funding for these programs will be withheld.
"Those big cities whose funding is withheld because of gatekeeping will see their share given to other municipalities in the same province that speed up approvals and build more housing," Poilievre said.
"A Poilievre government will also bring in penalties for big city governments—those with over a half-million people—for egregious cases of NIMBYism and gatekeeping. Local residents and entrepreneurs will be empowered to file complaints about NIMBYism with the federal infrastructure department. When complaints are well-founded, the federal government will withhold infrastructure dollars from the offending big city politicians until they remove the blockage and home building begins.
"The recent budget promised $10 billion in new spending on housing—much of it going to the same local government gatekeepers who have caused the problem in the first place. A Poilievre government will cut this spending in half and convert the remaining $5 billion into a Building Bonus for municipalities that remove gatekeepers to boost homebuilding," Poilievre said.
"Municipalities will get $10,000 per home on all growth in their home building, paid out only after the units are built and occupied. For example, if Normalville averaged 1000 new homes per year, but increased it to 1100, it would win an extra $1,000,000 in Building Bonus ($10,000 X 100). 'Severely Unaffordable Big Cities' will need to first increase homebuilding by 15 percent before the Building Bonus kicks on additional builds. For all other municipalities, the Bonus kicks in on the first home of extra completions.
"To be clear, the $10,000 is not the cost of building or servicing the house. It is a reward for municipalities getting out of the way so that private builders can supply more to homebuyers," he added.
"Money for this 'Building Bonus' will come from halving the $10 billion in new funding announced in the Liberal's 2022 Budget. This funding will support building bonuses of over 500,000 housing units above current construction levels.
By using spending already in place, there will be no additional cost to taxpayers for the proposal. Because it would incentivize more building, the policy will likely generate new tax revenue by having more construction workers earning paycheques, businesses selling building supplies and GST on new home sales.
The government has announced billions of new spending on housing in the budget. The money would fund good intentions, promises, and bureaucratic procedures. This money rewards the same local government gatekeepers who caused the problem in the first place.
"Municipalities can open the gates to new home building by speeding up building permits, allowing more flexibility in land use, quickly approving conversions of empty office buildings into condos and allowing more basement suites or extra units on existing homes. They could donate municipal land to non-profits building housing for the less fortunate. Allowing the private sector entrepreneurs to find the simplest and most economical way to add or better share living spaces would increase the number of dwellings and give the municipal government a larger Building Bonus," he said.
Homes Around Transit
"Transit exists for people. To use it, people need homes and jobs near the stations," Poilievre said."
"A Poilievre government will require municipalities seeking federal funds for major transit projects to pre-approve building permits for high-density housing and employment on all available land around stations. That will guarantee that low-income people and youth who cannot afford cars can live and work near transit," he added.
Offices to Homes
"A Poilievre government will sell off 15 percent of the federal government's 37,000 buildings with covenants requiring they become affordable housing," the statement said.
Stop Printing Money
"Later in the campaign, Poilievre will reveal new plans to prevent the federal government from creating cash to fund government deficits. That will end the inflationary bubbles that the central bank has helped to create in the housing market," the statement concludes.
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