Québec business leaders say housing should be priority No. 1 in the federal budget

37 Québec business leaders say housing should be priority No. 1 in the federal budget

SMBs say housing is the economy’s biggest risk, with solutions requiring public-private partnerships and innovative tax relief measures, a recent KPMG in Canada survey shows

MONTRÉAL, March 27, 2024 /CNW/ – Almost all of Québec business leaders (96 per cent) believe that housing should be the top priority in the upcoming federal budget, calling it the biggest risk to the economy, finds a recent survey by KPMG in Canada.

The survey of 112 small- and medium-sized companies in Québec conducted last month finds that nine in 10 say the rising cost of living, driven largely by housing costs, is forcing them to pay more for labour and affecting their ability to attract and retain already-scarce talent.

“The ripple effects from the high cost of housing and lack of supply are being felt throughout the economy,” says Caroline Charest, an economist and Montréal-based partner at KPMG in Canada. “New and young Canadians are being shut out from purchasing and are finding rentals scarce and costly. Those who were able to enter the market a few years back due to record low interest rates now face the risk of default when their rates reset at upwards of three times what they pay now. All this is weighing heavily on business leaders struggling to attract and retain key personnel and talent, particularly in urban areas that have witnessed the highest increases in the cost of housing and in regions where housing is scarce.”

The research finds that Québec’s business community wants to see more innovative public-private sector housing solutions, with nearly nine in 10 (88 per cent) saying public-private collaboration will be required.

However, the challenge for communities extends beyond housing to infrastructure and services that will be required to support population growth, says Mathieu Bouchard, Executive Director and Lead, Impact Strategy for Industrial and Commercial Innovation, for KPMG in Montréal.

“The central questions are, who are we building housing for, how will it be serviced, and how do we create cities and communities that we all want to live in?,” he says.

“The reality is, despite a joint commitment by the federal and provincial governments to accelerate the construction of residential units in Quebec through a combination of additional funding and smarter regulations, many municipalities don’t have the bandwidth or technology to meet the goals set by the other two orders of government,” Mr. Bouchard says. “It’s not only about the amount of money available to kickstart building but the reliability and sustainability of the source of funding around all of the infrastructure that will be needed to support housing development.”

Key survey findings
  • 96 per cent of 112 business leaders in Québec say high housing costs and lack of supply are the biggest risks facing Canada’s economy and should be the top priority in the upcoming Federal Budget
  • 90 per cent say the rising cost of living (driven largely by housing costs) is forcing their organization to pay more to attract and retain talent
  • 86 per cent are budgeting for higher labour costs due to competition for talent, inflation, and the high cost of affordable housing
  • 88 per cent say that solving the housing crisis will require public-private sector collaboration
  • 86 per cent say the high cost/lack of affordable housing has hurt their ability to attract and retain employees
  • 88 per cent expect inflationary pressures in Canada to persist until the housing shortage and high rents are dealt with
  • 81 per cent say the high cost/lack of affordable housing is a greater threat/risk to the economy than inflation
Innovative tax relief for housing

Just over eight in 10 (82 per cent) believe the government should use the income tax system to make housing more affordable, including making mortgage interest tax deductible. Nine in 10 say the federal government should maintain the current capital gains inclusion rate (50 per cent), as well as the Lifetime Capital Gains Exemption and the Principal Residence Exemption.

Similarly, 88 per cent agree the government needs to introduce innovative, repayable tax measures that provide relief to existing homeowners faced with mortgage renewals, as a buffer against mass mortgage defaults similar to the Tax-Free First Home Saving Account for Canadians saving for a home. 

The federal government, in partnership with other levels of government, has made efforts to reduce red tape and incentivize construction, and has introduced a variety of federal housing-related tax measures in recent years, says Yara Bossé-Viola, a Montréal-based partner in KPMG’s Tax Incentives Practice. These measures include the Underused Housing Tax, a GST rebate on rental housing construction, an “anti-flipping” tax, and a two-year extension of the ban on foreign buyers to January 1, 2027. The government also intends to disallow deductible expenses on certain short-term rentals, she says.

“Our survey revealed strong support from the business community for innovative tax measures to increase housing supply and construction and provide relief to homeowners dealing with higher interest rates and mortgage renewals,” says Ms. Bossé-Viola. “While we can debate whether the tax system is the most-effective mechanism to help address Canada’s housing challenges, there is a clear view among business leaders that further fresh thinking is needed, and that government has a critical role to play.”

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About the KPMG Business Survey – Federal Budget 2024 Edition

KPMG in Canada surveyed 534 Canadian companies between February 3 and February 27, 2024, using Sago’s Methodify online research platform. All respondents are business owners or executive-level decision makers. Of the 112 respondents surveyed in Québec, 35 per cent lead companies with $500 million to $1 billion in annual gross revenue; 28 per cent, between $300 million to $499 million; 31 per cent, between $100 million and $299 million; and, 7 per cent, between $10 million to $99 million. Eighty per cent of the companies are privately held and 20 per cent are publicly traded. Forty-five per cent are family-owned businesses.

KPMG in Québec

KPMG in Québec is a full-service Audit, Tax and Advisory firm with more than 1,100 professionals/employees in four locations across the province serving private- and public–sector clients.

KPMG LLP, a limited liability partnership, is consistently recognized as an employer of choice and one of the best places to work in the country. The firm is established under the laws of Ontario and is a member of KPMG’s global organization of independent member firms affiliated with KPMG International, a private English company limited by guarantee. Each KPMG firm is a legally distinct and separate entity and describes itself as such. For more information, see kpmg.com/ca.

To arrange an interview with a KPMG spokesperson, please contact:

Caroline Van Hasselt

National Communications

KPMG in Canada

(416) 777-3288

[email protected]

Nancy White

National Communications

KPMG in Canada

(416) 777-3306

[email protected]

Julie Perrier

National Communications

KPMG in Canada

(514) 831-3019

[email protected] 


rt Québec business leaders say housing should be priority No. 1 in the federal budget

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