Walk With Joy: Unintended Consequences of Reform

After 15 years of public policy-loving provincial government, it is understandable that the development industry would seek a thorough review of the myriad legislative, regulatory, zoning, building code, and other provincial and municipal policy reforms that have come to force during this period. A strong case can be made that when combined, these reforms represent “red tape” that works against the broader objectives that they seek to achieve — or become the source of unintended consequences — but are we knee-jerking towards an over-correction?

As North America’s fastest growing metropolis for over 20 years, it might not surprise an external observer that provincial and municipal governments have sought to harness and control this economic juggernaut. Public policies were introduced to ensure that development is consistent with such objectives as minimizing the cost and pressures of public infrastructure expansion; maximizing the opportunities to sustain public transit; reducing the use of carbon-producing energy; broadening the economic opportunities for more residents; protecting farmland; and rehabilitating old industrial lands.

Whether public policy is entirely to credit, the Toronto region has evolved into one of the most compact urban regions in North America. With an urban density that rivals many great European cities and among the highest transit ridership of North American cities, Toronto amazingly ranks as one of the most resilient cities in the world according to a research report by Grosvenor, which cites good governance and planning as major factors. The GTHA has actually exceeded its greenhouse gas emission reductions, and socially, we are world’s most diverse population (more than 50 per cent foreign born) and consistently rank amongst the most liveable cities globally.

A lot of things are going right. And yet, we have our share of challenges. Commute times, for example, are second only to New York City in North America. And of course the biggest failure is housing affordability, which now dominates the public policy discussion and the politics that go with it. A recent report places Toronto as the fifth most unaffordable city in the world when factoring in the residential housing market relative to income.

A 2018 Altus Group report helps explain why. In the period between 2009 and 2017, the average price of low-rise homes in the GTA had increased by 167 per cent, while high-rise units rose by 80 per cent, versus a consumer price index inflation of 14 per cent. Such shocking spikes in prices have naturally led many to blame government actions and inactions: too much constraint on land supply, too slow and cumbersome an approval process and too many charges layered on top of home purchase prices.

Many believe the obvious solution is to undo most of the cumulative reforms of the past decade, unshackle the development industry and “flood the market” with an over-abundance of new housing supply. Undoubtedly, such a response could be achieved, and home prices could be bent further downward much as they have already over the past year. But where will this ultimately lead us?  Will allowing more low-density greenfield expansion while reducing development charges not add costs to municipalities and ratepayers as they are forced to increase per capita infrastructure expansion, all while losing a traditional source of revenue? Doesn’t the push for a high-order suburban transit expansion become more challenging when new development or intensification targets no longer sustain necessary ridership growth?

The laundry list of proposed public policy reforms is long and growing. This includes: curtailing the power of conservation authorities; limiting heritage architecture protections; weakening employment land protection; reducing rent controls; reforming (again) the planning appeal process; removing inclusionary zoning to create affordable units; embarking on regional governance reforms; uploading the subway system; and so on. It is a healthy thing for a new government to take stock of the policies of its predecessor, but great care should be taken to ensure that the fixes to current challenges not become the source of future ones.

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