We all lose when we don’t build enough homes
It’s a familiar story. A young family moves away from the GTA after a fruitless search for a home that fits their budget, pushed out by our region’s critically low supply of new homes and declining affordability.
Some people see nothing wrong with this story. “Those who can’t afford it here should just move,” they might say.
I wonder whether these people realize the full cost, to all of us, of our region’s failure to solve our generational housing supply and affordability challenge. We are not just failing to provide homes and workplaces for families. We are also failing to harness the economic benefits — the growth, the jobs and the taxes — that residential and commercial construction would bring to the GTA. Thanks to a new report by Altus Group Economic Consulting, commissioned by the Building Industry and Land Development Association (BILD), we now have a complete and accurate picture of the economic contributions of the industry.
In 2021 alone, the construction sector, including new residential, non-residential, commercial and repairs, contributed over $60 billion to overall economic activity in the GTA through direct spending and indirect benefits to the economy, including consumer spending by those employed in the sector. The industry’s economic activity helped support more than 235,000 person years of employment and $17 billion in wages, salaries and employee benefits.
These figures underline the important role the sector plays in the region’s economy, and they are equally impressive when we put them in context. According to the report, total residential and nonresidential construction investment accounted for almost eight per cent of all GDP in Ontario in 2021, and close to half of that construction occurred in the GTA.
Residential and non-residential construction activity also generates enormous tax revenue for all levels of government. Altus Group estimates that in 2021 the federal government received $2.13 billion in federal income tax, $833 million in CPP premiums and $220 million in EI premiums from construction activity in the GTA, not including the federal portion of the HST.
The provincial government received $793 million in provincial income tax and $165 million in employee health tax, and billions in HST and land transfer tax revenues. Municipalities across the GTA receive $1.9 billion every year in development charges and $216 million in parkland cash-in-lieu revenues from the construction of new homes and commercial spaces.
These tax revenues finance the infrastructure, transit and transport networks that connect the GTA, and they support programs and services enjoyed by citizens across the region, province and country. Clearly, we all benefit when homes and offices get built in the GTA.
Unfortunately, we have made the building process too complex, too lengthy and too expensive, taxing new homes at a higher level than in any other jurisdiction in North America. All of this is pushing home prices up and affordability down.
If we fail to fix our housing supply and affordability crisis, more and more families will make the difficult choice to leave the GTA. And all of us will feel the pain — in lost economic growth, jobs and tax revenues.