Hi. Good afternoon.

My name is Eric Lombardi, and I'm the president and founder of More Neighbours Toronto, an advocacy group based here in the city that's dedicated to ending the housing crisis that is afflicting our generation, those who are renting and those who are poor and getting increasingly left behind.

The housing crisis in this country is putting downward pressure on living standards to begin with, and it will continue to worsen and deprive our country of its prosperity until it's addressed. It doesn't fall on all Canadians equally. It has created a substantially difficult situation for the middle class, particularly renters, and a very hard situation for the young.

Housing has always been a challenge for the poor and those who are suffering from mental illness, addiction and poverty, including those with disabilities. However, recent trends have made a difficult situation an effectively intolerable one for many in this group.

We can't solve the rising homelessness crisis without some direct capital investments in shelter and supportive and transitional services that address the different circumstances people face, including addiction and mental health. This issue should be simultaneously seen as a housing issue, as well as a health care issue and a security one. It is a complex challenge, and it requires complex solutions. Many of these need to be delivered at the provincial level, and many provincial governments have really neglected their policy focus in this area in particular. That is a role the federal government can play in encouraging solutions.

Housing will also continue to be a problem until substantial land-use and planning reforms, along with major changes to the tax code, are made, particularly when it comes to how we fund our infrastructure needs at the local level. This is something that is particularly true at the provincial level, without which solutions are basically impossible to meaningfully address in a systematic way.

I also want to address one of the questions around how we support and fund non-market housing. The vast majority of global markets that are sustainable over the long term have some degree of public investment in housing. However, this public investment is typically driven by a cash-flow positive—which means that it is marginally profitable—and a Crown corporation that is able to operate at arm's length from the governing institutions.

It is important that any model that pursues a public builder to pursue non-market housing investments is able to operate at arm's length from political interference, similar to entities like the Canada pension plan. With additional non-market housing in the economy, you are able to leverage public land to create value that would enable governments to deliver far more housing needs that address the poor end of the spectrum, which will never be served by market development.

This is not to say that we can ignore solutions in the private housing market. One of the key issues that Canada has not grappled with is the bizarre way that we apply taxation to new housing. I'll paint a picture for you. In 2000, the cost of a benchmark Toronto condo of around 950 square feet was $145,000. In 2023, that amount would be equivalent to $245,000. Now, the benchmark price of a condo in Toronto—which is now below 800 square feet—is $750,000, which is three times the real, inflation-adjusted value of what a benchmark condo cost 25 years ago in the year 2000.

If you want to build a new condo of around 750 square feet, it would be almost impossible to sell that condo for less than $1 million. Laden within that, both the price that gets charged to the consumer as well as the taxes that they pay on top of it, is over $250,000 of taxes that would be applied. For the HST, if you're a first-time homebuyer, you'll save $24,000, so you're looking at $130,000 minus $24,000. If you're looking at land transfer taxes in Toronto, you're looking at $30,000, and you can subtract about $8,000 if you're a first-time homebuyer. Plus, there is about $80,000 to $120,000 in development charges, another $20,000 in community benefit charges and another six types of levies and fees. Of the 12 that CMHC has suggested, all new housing apply to this.

Governments in Canada now charge more in taxes on every incremental unit of housing in this country than housing used to cost just 25 years ago. The economic disincentives this creates for our economy and our society at large are increasingly even more bizarre.

The first one is the land transfer tax, which disincentivizes labour mobility and the mobility of people who are trying to change their housing situation by immediately reflecting, in the economics of their personal choice, a disincentive to doing so. This overall affects the productivity of our greatest urban centres and, therefore, affects the overall amount of taxes collected by all levels of government as well as the types of jobs and opportunities that exist in our society.

As Russil addressed, a big important piece here is how this actually incentivizes speculation in the broader housing market, because it requires the price floor and all new housing to rise. What investors and homebuyers are willing to pay for new space can be justified based on what they expect the price of existing housing to do. This policy is also part of the particular challenges we're facing.

Thank you.