Thank you.

My name is Beau Jarvis, and I'm president and CEO of Wesgroup Properties.

We are one of the government's largest housing providers and partners via CMHC's apartment construction loan program. I'd like to offer a perspective directly from a large Canadian home builder, an important observation.

Ninety-five per cent of housing in Canada is built by private sector developers using private and institutional capital. This means that most of our housing comes from non-government sources, yet, for decades, we've perpetuated a damaging narrative that often casts for-profit home builders in a negative light. This perception is pervasive across all levels of government, leading to policies overly focused on not “enriching developers”. I have many examples of this.

This is a crucial issue because we are in the midst of a housing crisis, widely acknowledged to be caused by a supply shortage. Our housing paradigm in Canada relies on the private sector, which must achieve a risk-adjusted return on capital to continue building. In simpler terms, developers need a profit to take on the substantial and ever-growing risks of new housing projects. However, years of regulatory expansion have only increased the complexity, along with ever-growing levies and taxes, making home building in Canada extremely risky. In fact, the risk is becoming untenable.

Metro Vancouver, for example, is experiencing the highest levels of court-ordered sales of development land in recent memory. Many of our largest home builders are now investing as much or more in the United States as in Canada. Stop and think about that for a moment. In the midst of a housing crisis, some of our largest home builders are building as much or more housing in a different country as they are in Canada. Before we say, “That's not right,” we should try to understand the reasons.

We must urgently change the narrative of private sector home builders in Canada. Sustainable policy creation will not happen until we do. The narrative surrounding the homebuilding industry often contrasts sharply with how the government treats other industries. For example, the recent announcement of tax credits and subsidies for electric vehicle battery plants with companies like Honda and Volkswagen, both for-profit companies, shows a clear government strategy in response to the climate crisis.

Just as government recognizes the need to incentivize and support the electric vehicle industry to combat climate change, it should also recognize the need to support the housing industry to address the housing crisis. Both crises demand urgent action and innovative solutions. However, while government is willing to offer tax credits and incentives to other industries, it remains hesitant to do the same for housing. In fact, the opposite is true regarding taxation.

We must reflect on why private capital is flowing out of our country to build homes elsewhere. The answer lies in the general narrative and the imbalance of risk versus reward in Canada.

Regarding taxation, many reports, including from CMHC, estimate that 20% to 30% of a new home's cost goes to taxes, with collective governments earning more than three times what a builder makes, significantly hindering housing affordability and delivery. The Urban Development Institute reports that levies and taxes make up 29% of the average condo price in Vancouver. This doesn't even include the full scope of the new metro Vancouver development cost charges.

Between 2015 and 2027, the City of Vancouver's DCCs will have increased by 130%. Metro Vancouver's DCCs are expected to soar by 1,943%, adding $21,000 per unit.

The federal government's role is also problematic. This government is charging GST on almost every input of a new home purchase, including interest on construction debt. Moreover, GST is being charged on DCCs that we pay to the municipalities. The federal government is charging housing taxes on other levels of government housing taxes.

The issue with DCCs is even more concerning, as there is little to no in-stream protection for existing projects. Imagine if the auto industry faced similar conditions. A manufacturer buys inputs to produce a vehicle at a certain profit margin, and while working with the government to obtain plant approvals, the same government imposes a retroactive levy on those inputs previously acquired as inventory. This would disrupt the entire business model, and this is exactly what is happening with DCCs and housing. We must change taxation on new housing.

Regarding capital, numerous experts' recommendations suggest improving municipal processing time, simplifying building codes, standardizing processes, etc. While these suggestions are indeed vital, the scale of the crisis and our ability to respond effectively are often overlooked.

Key to addressing this crisis is the availability of capital, which I believe receives insufficient attention. Numerous reports claim that Canada is exporting capital at an alarming rate. Anecdotally, I witnessed the increased frequency of decisions by my peers and colleagues to deploy capital in jurisdictions outside of our borders.

In closing, to solve the housing crisis, Canada must attract capital to be deployed into housing by creating an environment with competitive risk-adjusted returns. Without this, housing projects to the necessary scale will not progress, infrastructure will not be built, and new technologies will not advance.

Thank you, and I would love to answer questions.