Is The Fast-Track Too Fast?

Toronto Politics

8 minute read

May 29, 2020

Call this “Stir The Pot Friday,” if you want to.

Maybe I felt the readers didn’t have enough to debate through the week thus far?

My Auntie Ellie told me when I was in my late-teens, “In social situations, there are three things you don’t discuss: money, politics, and religion.”

Well, we regularly discuss two of the three…

Politics is a thorny subject, and despite our differences here in the cozy confines of Canada, it’s nothing compared to the Sharks and the Jets that represent the United States’ version of West Side Story.  I mean, it’s one thing here to be an NDP supporter and find out your neighbour is a Liberal, but down south?  It has to be like finding out your best friend is a vampire.

Hopefully today’s topic isn’t too divisive, but it’s a story I came across this week that’s not directly related to real estate, but enough-so that I want to bring it to your attention.

This article appeared in Tuesday’s Globe & Mail

“Ontario Issues Special Orders To Approve Developers’ Plans And Quash Opposition”

Having spent the last two hours on this blog, I’ll circle back now and say: I’m not sure how I feel about this.

On the one hand, I understand the need to build, for a litany of reasons.  First and foremost, and while some might not agree on this point, I believe that there still exists, and forever will exist, a massive deficit in supply in the residential real estate market.  If condo investors stay on the sidelines and the country closes its doors to new Canadians, and net migration in Toronto halts, we would only then experience a balanced market.  I also understand just how difficult it is to get projects approved in the City of Toronto, but that’s a whole other topic.

I also see the need to build as much infrastructure as possible in the Greater Toronto Area, both in the private and public sector.  Few cities are proactive with respect to urban development, and our city remains underbuilt in 2020.

On the other hand, I don’t like when the government acts with impunity.

What’s happening right now at a federal level is just criminal, in my opinion.  Prime Minister Trudeau gets to do whatever he wants, whenever he wants, with nobody to answer to, and with zero checks and balances in place, since Parliament is closed.

I know many of you don’t like Rex Murphy, but he wrote a column on this very subject a few weeks ago, and I enjoyed this excerpt, with my favourite part in BOLD for those of you skimming:

 

The melody line that sweeps through our sad aria today is the abrupt abandonment of Parliamentary government, Canadian Confederation’s defining institution, sometime in the spring months of 2020. It could easily bear the title: From Commons to Cottage: Lament for a Notion.

What a waste it was. Parliamentary government I mean. All that ceremony and history: The sergeant-at-arms, the great silver mace, the speech from the throne, the Speaker of the House, guardian of its rights and privileges. The Commons itself, a chamber rich in memories, where still abide the souls of prime ministers and great Parliamentarians past. The chosen arena for all issues and events in our national life, gone. All gone now.

Instead we have its super-duper modern replacement, a pure dream of a government, one without opposition, free to gush money wherever it wishes, in whatever amounts it chooses, to whomever it favours. All executed during what is called a “morning briefing.” Which consists of its leader appearing, alone, making announcements of huge amounts of money to be fired off in all directions, to an attentive and dutiful press gallery, all under a plastic or canvas tent in front of Rideau Cottage, on the grounds of the Governor General’s residence.

Allow me to name the new politics. It is the Liberal Government at the Bottom of the Cottage Doorsteps (LGBCD), presided over by the nation’s most honoured tenant, Trudeau, the Prime House Guest (PHG). It is so streamlined.

So far, over the 40 days we have had this innovation, a lowball estimate puts the total amount dispensed at an immense $200 billion. In the old system, to get that amount approved and out the door would have taken months. It would have necessitated the presentation of a budget and would have been subjected to the harassment of question period, House finance committees, and the oversight of the Parliamentary Budget Officer.

 

This is a complicated subject; the pros and cons to opposition parties are many, and we could debate it for hours.  When Andrea Horvath steps up and says that it’s time for Doug Ford to stop the rhetoric and start doing more COVID tests, I kind of think to myself, “How is this helpful?  Why are you talking?  Wait, who are you?  I forgot you even existed.”  But without opposition and their voices, any political leader can get drunk on his or her power, and rule with impunity.  That’s dangerous, no matter the time or place.

So what do we make of the Ontario Progressive Conservatives being able to bypass regular protocols for development, and avoid any opposition from the public?

Well for starters, I fear this is an issue that few are actually aware of.

From the article:

 

Ontario’s Progressive Conservative government has issued a series of special orders to approve a handful of plans from prominent Toronto-area developers and quash any potential opposition, saying the projects are needed to help the economy recover from the COVID-19 pandemic.

Known as minister’s zoning orders (MZO), they allow Municipal Affairs and Housing Minister Steve Clark to make a final ruling on how a piece of land is used in the province with no appeals, such as those from citizens or environmental groups before Ontario’s Local Planning Appeal Tribunal.

In just over a year, Mr. Clark has issued eight new zoning orders, more than his Liberal predecessors did over their entire last decade in office. He issued four orders in one day alone last month, including one to okay the destruction of three small protected wetlands to make way for a large warehouse and distribution centre in Vaughan and another to allow a retirement community to be built on farmland in Markham and Whitchurch-Stouffville.

The Ford government started issuing MZOs last year, after it scrapped a contentious bill that would have allowed municipalities to request the right to pass “open for business” bylaws exempting local projects from various provincial rules, including environmental laws and those protecting the development-free Greenbelt area.

Some critics charge the moves are rewards for well-connected lobbyists and Premier Doug Ford’s PC Party donors. The directives, they say, unfairly circumvent the normal planning process and override the province’s own policies – and are being misused while public attention is focused on the novel coronavirus.

“It looks as though the provincial government under Doug Ford has found them to be somewhat of a magic wand that they can wave when their friends come calling for a special favour,” said Taras Natyshak, the Opposition NDP’s ethics and accountability critic.

Julie O’Driscoll, a spokeswoman for Mr. Clark, called any suggestion that political connections play a role “categorically false.” She said the orders are a way to cut red tape for key projects that will create jobs and housing. Each of these eight MZOs, she said, has been supported by votes from local municipal councils.

“These Minister’s Zoning Orders will help speed up the planning process so that municipalities can be ready, once the COVID-19 emergency declaration ends, to move forward on these projects,” Ms. O’Driscoll said.

In one of four MZOs issued on April 24, Mr. Clark approved plans from a group of developers, including Condor Properties and Robert De Gasperis’s DG Group, who have promised a $500-million, 2,000-job warehouse and distribution centre for a major retailer in Vaughan, north of Toronto, near Highway 400. The project, subject to a public hearing last June to which a council report says no one showed up, would require the destruction of three small but protected wetlands.

The developers, represented by lobbyist and former PC cabinet minister Frank Klees, have offered to create larger, enhanced wetlands nearby, with the blessing of the Toronto and Region Conservation Authority. But they say the province’s Ministry of Natural Resources and Forestry, which also supports the plan, does not have the power to lift the existing protections quickly.

 

Would it be fair for me to speak out of both sides of my mouth, and suggest that Mr. Trudeau shouldn’t be able to give away billions of dollars every morning after sipping hot cocoa in front of the fireplace in his cottage without any approval process whatsoever, but that Mr. Ford and the Ontario PC’s should be able to bypass an appeals process that’s in place, in part, to avoid disturbing Ontario residents, preserving green space, and ensuring diligence and fairness in the approval?

I’m honestly not sure.

On the one hand, Mr. Trudeau is doing what he feels needs to be done to avoid chaos in our country.  We’re in unprecedented times, and nobody really knows what to do.  I would probably argue that a former high school drama teacher isn’t the person we want in charge of the country’s fiscal and monetary policy while we teeter on the edge of a recession, but apparently Mr. Ford was one of Toronto’s largest hashish dealers in the 1980’s, so who knows.  A leader is a leader, right?

I can see this from both sides, I really can.

But I still see a difference, and you may all feel free to disagree with me if you so choose.

I see Mr. Trudeau giving money away, hand-over-fist.  Yes, much of this is necessary to keep society from imploding, I think we all recognize the damage done by the pandemic and that we all need to help carry the burden forward.

Money must be provided to Canadians during this time, but how much, to whom, and under what circumstances is up for debate.

On the other hand, Mr. Ford’s government isn’t circumventing opposition to give money away, but rather, in my opinion, to stimulate the economy and build for the future.

Take this excerpt for example:

 

In one of four MZOs issued on April 24, Mr. Clark approved plans from a group of developers, including Condor Properties and Robert De Gasperis’s DG Group, who have promised a $500-million, 2,000-job warehouse and distribution centre for a major retailer in Vaughan, north of Toronto, near Highway 400. The project, subject to a public hearing last June to which a council report says no one showed up, would require the destruction of three small but protected wetlands.

 

The fact that “no one showed up” is somewhat telling.

But even if peopled showed up to oppose this development, should we still stop it from being approved?

We’re in a pandemic, job losses are plentiful, and a $500 million construction project that creates 2,000 jobs is exactly what the economy needs.

Am I wrong?

Is this a matter of “The ends don’t justify the means?”

I don’t know anything about these “three small but protected wetlands,” to be fair.  So in my uninformed opinion, I will go out on a limb and say that a 2,000-job factory that creates $500 million in spending, during a pandemic, outweighs the importance of this wetland.

Now, what about eliminating farmland for real estate projects?  Is that something we should do, when all the while, using the MZO’s to avoid any opposition?

Again, if we’re going to look at where we are in the world today – a pandemic, surely we would conclude that growing food at a time when people are hoarding it would outweigh the importance of another factory, right?  Surely there are other places we could build factories, or sub-divisions?

So I see both sides to this problem, and if I try really hard, I can argue it both ways.

Should the Ford government be able to fast-track much-needed residential housing projects and commercial real estate projects that would create thousands of jobs, hundreds of millions of dollars in new tax revenue, and perhaps billions of dollars of construction spending?

Yes.

Should the Ford government be able to fast-track projects that could jeopardize our food supply for the next hundred years, without the opportunity for objection?

No.

See the problem?

Also from the article:

 

He issued four orders in one day alone last month, including one to okay the destruction of three small protected wetlands to make way for a large warehouse and distribution centre in Vaughan and another to allow a retirement community to be built on farmland in Markham and Whitchurch-Stouffville.

 

Recent news events would probably lead us all to have more sympathy for those living in retirement communities, would they not?  Has there ever been a worse news cycle about what goes on in retirement homes than in the past few days?

So does the fast-tracking of a retirement community, built on farmland, justify what we’re giving up?

Man, I don’t know.

My inner NIMBY is screaming, “Isn’t there somewhere else this can be built?”

My logical side says, “Leave the farmland for farming!”

But my free-market side suggests, “It’s up to the owner of that land to determine the use of the land.  Full stop.”

Sure, the owner of a downtown Toronto parking lot can’t decide, unilaterally, that he’s going to build a 120-storey condo, instead of the 35-storey condo that’s permitted via zoning laws, so there is a case to be made that land used for farming could be designed as farmland, from now until forever.  But if a buyer of that property wants to build houses, should we stop them?  Can we?

I’m into another debate now, I know.

But watching what’s happening in the United States right now, with the abuse of democracy and due process, it merely underscores why I think the checks and balances are important.

Then again, what’s the difference between checks and balances, and red tape?

Some would suggest they’re one and the same.

I agree with the fast-tracking of these projects, but I don’t like when a door is opened like this, for fear that the next time a politician wants to walk through, they drive an eighteen-wheeler through instead…

Written By David Fleming

David Fleming is the author of Toronto Realty Blog, founded in 2007. He combined his passion for writing and real estate to create a space for honest information and two-way communication in a complex and dynamic market. David is a licensed Broker and the Broker of Record for Bosley – Toronto Realty Group

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24 Comments

  1. Appraiser

    at 9:27 am

    I know it’s deriguer to pass off the Prime Minister as a has-been drama teacher, but he also taught other subjects – which never get mentioned:

    …Trudeau, he taught math, French, humanities and drama between 1999 and 2001 at Vancouver’s elite private school West Point Grey as well as public high school Sir Winston Churchill Secondary.” https://www.huffingtonpost.ca/2015/10/23/justin-trudeau-teacher_n_8372502.html?g

    P.S. if Trudeau (64% approval rating) was to run for election right now he would win in a landslide. http://angusreid.org/trudeau-tracker/

    Rex Murphy is still a sell-out wanker. He offers only whiny criticisms, semi-articulate sophistry and rabid anti-liberalism. His best before date was a long time ago.

    Doug Ford is a natural-born doofus (and yes, a former hash dealer) https://www.theglobeandmail.com/news/toronto/globe-investigation-the-ford-familys-history-with-drug-dealing/article12153014/ ) who, as Premier of the province, is in way over his head, which is painfully obvious to all but the most partisan political hacks.

    Happy Friday!!

  2. Appraiser

    at 9:30 am

    On the current state of the real estate market:

    “…we’re starting from (and are still at) a position of low inventory (supply), 30% below 7-yr averages for 416 freehold and 41% below for 416 condos.” ~Scott Ingram CA, CPA

    https://twitter.com/areacode416/status/1266214265352073216

    1. Chris

      at 10:00 am

      Wow, that article that Scott retweeted is quite something!

      “In 1989, pre-recession, Wood Gundy suggested Toronto home prices would drop by 25%. TREB called the report “inflammatory” & OREA stated “a large price decline is unlikely because the real-estate market doesn’t work like that”.”

      “This is how avg GTA prices shook out after:
      90 -6.8%
      91 -8.1%
      92 -8.3%
      93 -3.9%
      94 +1.2%
      Total -24.6% over first four years.”

      – Scott Ingram

      And that was the extent of the decline with mortgage rates falling by over 5%, and immigration increasing! Tough to see either of those happening this time around.

      1. Caprice

        at 10:32 am

        Since we’re all cherry picking:

        “And not (sic) that was coming off this ridiculous run-up:
        86 +27%
        87 +36%
        88 +21%
        89 +19%
        So 1989 peak average of $273,698 was a four-year run-up of 150% (1985 avg of $109,094).
        2019 avg was $819,316, a 32% climb in 4 yrs from 2015’s $622,116. ”
        – Scott Ingram
        https://twitter.com/areacode416/status/1266214262734819329

        1. Chris

          at 11:10 am

          Would be interesting to see growth in the mid to late 80’s compared to growth more recently, with both adjusted for inflation. Probably the late 80’s growth would still be higher, but inflation was certainly significantly greater back then.

  3. Caprice

    at 10:57 am

    Question for the blog dogs. With the almighty CMHC predicting a decline in housing starts of between 50-75%, what will the impact on supply and prices be 3-4 years from now?

  4. Pragma

    at 11:27 am

    So totally off the topic of this post but here’s some food for thought:

    In 2019 construction and real estate contributed 20 to 25% of Canada’s GDP. That is obscenely high. To put that into context, at its RE FOMO peak, the US was around 10% before the crash. It is now 6%. Australia is very similar to us and is currently sitting around 12-15%. (GDP calculations are an art, not a science). Other countries in the past that have had RE fueled growth have been Ireland, Portugal, Spain, UAE, amongst others. You are welcome to look into how those economies have fared. Will Canada avoid the same fate? Sure, anything is possible. This is another data point for me that suggests the next 10% is more likely to be downwards than upwards. For me it’s just a trade that presents asymmetric risk.

    From an economic/social/patriotic level, this is dangerous because it is self defeating. We are supposed to be an advanced developed knowledge based economy. But we are allocating a disproportionate of our resources to non-productive assets. Our investment has been dropping, our non-mortgage consumption is dropping, we have no innovation or productivity growth. I worry about the future of our country. We could very well see a decade lost to stagnation. We need to invest in the right places today so that our kids can graduate into a vibrant diversified economy and hit the ground running.

    1. Bal

      at 11:45 am

      Just letting you know that all new builders are still increasing the price…if they sense the housing market is going to decline…wont they stop increasing the price and start giving promotions? So they might know something that what we dont

      1. Thomas

        at 1:00 pm

        Hi Bal, The new builders are not going to reduce the prices until the market starts reflecting it. It will probably take 6 months to a year after and if the market changes. The new builds are being offered at a premium for a while now. Unless your top priority is a new home and customization, new builds dont offer a lot of value. In most localities you will find older ready to move in homes in bigger lots at cheaper prices.

    2. Thomas

      at 11:53 am

      Well said Pragma! This is a lot more than bears vs bulls. What we need is sustainable growth

        1. Bal

          at 1:30 pm

          Yes, maybe they are just trying…who knows…

    1. Bal

      at 1:31 pm

      Thank God I don’t have their share….lol…but hope other banks don’t follow this bank

    2. condodweller

      at 9:30 pm

      Their payout ratio is 74%, not surprising with a 79% cut in income. Stock only fell 9% on the news. Not too bad. The big banks’ ratio is around 50% and income was down around 50%. Should be fine for now and in the future if this quarter was a low. Which may be a big if.

      1. Chris

        at 9:34 pm

        Oh, I think the big banks will be fine, and will probably continue to pay their dividends as usual. But, I also don’t think they’ll be supportive of continued mortgage deferrals beyond the six months. So we’ll get to the “deferral cliff” Siddall warned about.

        1. Natrx

          at 10:11 am

          With record level of stock market activity, gas prices recovered, with oil recovery on the way, it’ll be hard pressed for Governments to keep spending, record level debt financing so rich cats on Wall Street will continue to reap record level bonuses while the average schmuck’s government payments and deferrals have run out.

    1. Bal

      at 9:37 am

      Hello J G…i know this blog related to real estate but I feel you have lots of knowledge regarding the stock market….would you be able to guide me if I want to invest…..i really don’t know what type of stocks I should be investing….

  5. Libertarian

    at 2:05 pm

    Good post David about the age-old debate about the role of government.

    I’m glad to see people are starting to question how the three levels of government have responded to the crisis, but it might be too late in terms of the damage has been done, so now our hands our tied moving forward.

    The one silver lining that I hope comes out of this is when things are relatively normal again, the three levels of government will have to say no to any discretionary spending projects because we are beyond broke. I doubt that actually happens because more and more people are starting to believe that the government can and should simply print more money.

  6. Chris

    at 5:00 pm

    In other news:

    “Canada’s annual immigration intake is expected to decline in 2020 by half from last year’s levels as a result of the global pandemic, raising concerns over the impact on the country’s newcomer-fuelled economy.

    Canada welcomed 341,000 permanent residents in 2019 and was set to usher in another 370,000 this year, but that number is forecast to be down by as many as 170,000, according to a RBC report released Friday.”

    https://www.thestar.com/politics/federal/2020/05/29/canada-immigration-intake-expected-to-fall-by-half-due-to-covid-19.html

    1. J G

      at 8:02 pm

      “Tsunami of foreign money”

      1. Chris

        at 8:40 pm

        “I’ve been thinking a lot about population growth in Canada. Scary thought, but there’s a non-trivial chance that we see outright population declines in coming quarters, something we’ve never seen before.”

        https://twitter.com/BenRabidoux/status/1266472653566750723

        Full series of tweets from Ben Rabidoux is quite interesting.

  7. Natrx

    at 10:08 am

    While it definitely seems like we’re in the clear, and those may have missed the FOMO opportunity despite prices not dropping as much, you realize the next economic or virus crisis, is going to require even more stimulus. This time, Canada has money printing in the US model for the first time ever. So you can pat yourself on the back, but ultimately, in this obsession that we can’t ever suffer, I fear will one day lead to a reckoning of all the short-cuts we’ve taken.

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