Ottawa proposes $1.7B fund to help provinces lower cost of homebuilding

CMHC Deputy Chief Economist Aled ab Iorwerth discusses a study he co-authored that analyzes ways Canada can improve housing affordability.

OTTAWA — The federal government is proposing a $1.7-billion fund to help provinces and territories lower the cost of construction and get more homes built — in whatever way they see fit.

The federal funding is meant to help reduce development fees or other levies on new housing to speed up the pace of construction in Canada.

But Finance Minister François-Philippe Champagne, who tabled legislation for the proposed fund on Thursday, said the “beauty” of the program is that the federal government isn’t attaching strings to how the money has to be spent, only that it must help with efforts to scale up housing stock across the country.

“It’s going to be different in different parts of their country,” Champagne told reporters on Parliament Hill.

“With respect to this particular program, we’re going to rely on our provincial and territorial partners to use that money in the most efficient way to increase the supply.”

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While Prime Minister Mark Carney’s Liberal government has set an ambitious goal of doubling the pace of homebuilding in Canada, the hodgepodge of regulations, zoning restrictions and other barriers across provincial and municipal jurisdictions has been an obstacle to scaling up construction.

Ontario said Wednesday it will use its funding to temporarily remove the harmonized sales tax from some newly built homes for one year, a move that came a day ahead of the federal announcement. The province claimed its plan, which would take up to $130,000 in tax off the cost of an eligible new home, would result in the construction of 8,000 additional units.

Champagne said the HST removal was Ontario’s approach, but other provinces may get more value from their allotment by adding funds to existing programs or starting something new. A media release stated the money can also be used to boost productivity in construction and reduce internal trade barriers between provinces and territories to help get more homes built.

Conservative housing critic Scott Aitchison said in a media statement Thursday that the Liberal government is “throwing out billions of taxpayer dollars with no guarantees of results, targets or accountability to build homes.”

Aitchison countered the Liberal proposal with a Conservative pitch to remove the federal sales tax off all new homes valued up to $1.3 million. He also said municipalities that fail to meet targets should not be rewarded for raising building costs.

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The formula dictating how much of the $1.7-billion pie each province and territory would receive is based in part on declining home sales and long-standing housing affordability challenges in each market.

Stalled home sales and falling prices in some markets across Canada can discourage builders from breaking ground on new projects because they don’t see a business case for adding supply.

Champagne told reporters Thursday the funding would be ready to deploy this spring.

This past year, the federal government shifted its annual budget schedule to the fall, which it justified in part as a way to give businesses clarity on federal spending priorities ahead of the spring construction season.

The proposed $1.7 billion funding for the provinces was not included in the 2025 federal budget tabled this past fall.

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This report by The Canadian Press was first published March 23, 2026.

Craig Lord, The Canadian Press