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Ontario and Ottawa will spend billions to help cut municipal housing development charges in an effort to spur new builds across the province, Prime Minister Mark Carney and Premier Doug Ford announced Monday.
The federal and provincial governments will each spend $4.4 billion on housing-related infrastructure over the next 10 years, Carney announced alongside Ford and Toronto Mayor Olivia Chow at a joint news conference in Etobicoke.
The deal will cut development charges in half for three years, Carney said. Development charges are used by municipalities to pay for infrastructure that supports housing, like roads, sewers and water.
Experts warn municipal development fees have inflated the cost of homebuilding in recent years, making it harder to build much-needed supply, something Carney echoed Monday.
“They’ve been growing at an unsustainable rate, increasing the cost of every new home, compressing margins for builders, and they’ve been stalling new builds, stalling construction,” Carney said.
The majority of the $8.8 billion in funding is intended to help cover infrastructure costs for municipalities that lower development charges, Carney said, though municipalities will also be expected to help pay for the cost of reductions.
Ford said it’s now up to municipalities to “step up.”
“You come to the table, and we’re going to give you the infrastructure you need and save the taxpayers within your community a tremendous amount of money,” he said. “We can get more shovels in the ground across Ontario and keep the dream of home ownership alive.”
Ontario will work with municipalities and partners to put forward a list of infrastructure projects for approval.
The funding deal is the first to be announced through the federal government’s Build Communities Strong Fund and is meant to help municipalities cut development fees by 50 per cent for the next three years.
Deal follows HST rebate for buyers of new homes
The deal comes after Ford’s government announced plans in its newly-tabled budget to temporarily remove the Harmonized Sales Tax (HST) for buyers of new homes. The 13-per-cent tax will be removed from new homes valued up to $1 million from April 1, 2026 to March 31, 2027.
WATCH | Ontario housing minister on scrapping HST for new homes under $1M:
Ontario, feds agree to scrap sales tax on new homes under $1M for a year
Ontario is partnering with the federal government to remove sales tax for buyers of new homes valued under $1 million. Ontarians can get up to $130,000 in rebates for just one year, Ontario Housing Minister Rob Flack tells Power & Politics.
That’s on top of an existing HST rebate for first-time buyers of new homes valued up to $1 million, announced last year by the provincial and federal governments.
The scrapped HST, combined with lower development charges, could reduce the cost of a new home by up to $200,000, Carney told reporters Monday.
The Ford government announced in 2022 that it planned to get 1.5 million more homes built in the province by 2031. The province has since backed off that goal, which it is not on track to meet, saying it is now a soft target.
Ottawa recently announced it was earmarking $1.7 billion for all provinces and territories to boost housing supply however they see fit.
Billy Bishop takeover, new waterfront transit
At Monday’s news conference, Ford and Chow appeared together after having been at odds this month over Ford’s plan to take over city-owned land at Billy Bishop airport.
Chow and city council voted last week to formally oppose the takeover. But Ford said last week that the federal government, which governs the airport in a tripartite agreement with the city and Toronto Port Authority, is on board with the province’s plan.
Carney told reporters Monday that the federal government was in talks with the province about the takeover, but would not say whether he approved of Ford’s plan.
Carney, Chow and Ford also announced plans for a new transit line serving the waterfront east of Union Station, including the Port Lands. Chow said the line will serve over 150,000 people.
