TODOROVA: Feds neglect infrastructure funding for communities

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Ontario is in the midst of a housing crisis, but new research shows housing is taxed more like alcohol and tobacco — as if society wants to punish it. These huge taxes add to the already high cost of housing. Local government budgets are now in a tight spot, and the idea of ​​raising taxes at a time of high inflation and high housing costs would compound the problem. Something has to change.

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More homes need to be built across Ontario and supportive public infrastructure in place for Ontario to grow. City hall budgets are on the verge of breaking point and high taxes on new housing are making it more expensive to build much-needed new homes, worsening housing affordability. To create new homes and increase supply, governments can best help by streamlining the permitting and regulatory burden to get shovels into the earth faster.

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Immigration can help expand our workforce—and this is where Ontario and the federal government get it right. Both governments have recognized that immigration will be a key factor in addressing the current labor shortage in the construction industry. Recent immigration reforms aim to make it easier for industry to recruit the skilled tradespeople they need to keep up with demand for new critical infrastructure projects and housing to support Ontario’s growing population.

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However, to meet the challenges, governments must facilitate housing construction and invest in key public infrastructure such as roads, transportation, sanitation and water systems. Here the declared goals of the federal government are in contradiction to their own actions and something has to change.

Housing affordability is becoming a significant drag on our economic potential and too many are homeless. On the purchase price of a new home, which is $1 million, there is $310,000 in taxes, with the federal government collecting 39% of all residential taxes. In stark contrast, however, the federal government contributes only 7% of the funds from all three tiers of government to help build infrastructure in our communities.

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These are all findings from a new study from the Canadian Center for Economic Analysis (CANCEA) commissioned by the Residential and Civil Construction Alliance of Ontario (RCCAO).

This imbalance has resulted in public infrastructure investment being 30% below the economic analysis recommendations. In Ontario, the municipal infrastructure deficit is estimated at around US$60 billion, with roads and bridges alone accounting for US$34.7 billion according to recent studies. The City of Toronto’s good-condition refurbishment backlog is expected to increase from $7.4 billion in 2022 to $16.3 billion in 2031. Such backlogs are not a recipe for long-term economic competitiveness or success for anyone.

The CANCEA study found that the tax burden on new homes is double that of the rest of the economy. Given the high tax burden on housing and low investment in public infrastructure, the research makes it clear that the federal government is in a unique position to meet these challenges by funding its fair share of public infrastructure. Without them, Ontario cannot meet its economic and immigration growth goals.

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The political realities of municipal budgeting make it difficult to plan and expand public infrastructure without long-term, sustainable funding. The annual demands and negotiations between Ottawa, provincial governments and municipalities are unsustainable.

The federal government should provide municipalities with long-term and sustainable funds to enable greater investment and planning in the development and maintenance of public infrastructure. It will help communities thrive and maintain the infrastructure we all depend on, while allowing for more consistent implementation of government policies to achieve stated goals, benefiting communities large and small.

Nadia Todorova is Executive Director of the Residential and Civil Construction Alliance of Ontario (RCCAO)