The federal and Ontario governments will spend billions of dollars to cut development charges in major cities like Toronto by 50 per cent as they look to boost a struggling housing sector.
Prime Minister Mark Carney and Premier Doug Ford were among the politicians at a major event Monday morning to unveil the overhaul of how new housing and its infrastructure are paid for in Ontario.
Between the two governments, the announcement is worth $8.8 billion over the next decade — money that will go to helping cities reduce the fees they charge homebuilders.
“To expand housing supply, increase housing affordability and create tens of thousands, if not hundreds of thousands, of careers in the skilled trades, we’re announcing this new Canada-Ontario partnership to build,” Carney said.
“More homes, lower housing costs, tens of thousands of new careers in the skilled trades. We’re looking to reduce the cost to build, help Ontarians save on the purchase of a home.”
The agreement goes to addressing the cost of development charges, which are fees charged to homebuilders when they embark on new housing projects in Ontario.
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Builders have long complained that those fees are too high, suggesting they are passed directly onto new homebuyers, raising the price of housing sometimes by hundreds of thousands of dollars.
Municipalities, however, have guarded against reducing them. The fees, they say, ensure new projects and new residents don’t cost current taxpayers more — they say the fees are needed for new roads, libraries and transit systems, along with water and wastewater.
“Our government will continue to deliver on our plan to protect Ontario in partnership with the federal government and municipalities by lowering the cost of building, getting shovels in the ground faster, cutting red tape and investing in workers,” Ford said in a statement.
The Ford government has tweaked the charges and how they’re administered, but has stopped short of either eliminating or introducing major caps to what municipalities can charge.
Now, the Canada-Ontario agreement will offer massive incentives to municipalities to give them funding to help pay for infrastructure, so they can reduce development charges by 50 per cent over the next three years.
“Municipalities will also be expected to support DC reductions, so that all three levels of government are supporting increased housing supply and affordability,” a news release announcing the agreement explained.
“Funding will also be made available for non-DC levying municipalities as well as for infrastructure projects prioritized by Ontario.”
Ford echoed the expectation, saying he wanted to see municipalities now begin to work to lower their costs to build.
“If you don’t cut DCs, you aren’t getting any money,” he said on Monday. “But if you do, we’ll be there to support you.”
Toronto Mayor Olivia Chow, who also attended the announcement, said her city would cut the cost of building in the hope of spurring new homes.
“When you see cranes in the sky at construction sites in Toronto, city incentives — supported by the federal and provincial governments — made that possible,” she said.
“The city is ready, homeowners are ready, a program is in place, and there’s absolutely no time to waste.”
Ontario also unveiled a plan with the federal government last week to waive the harmonized sales tax on eligible new builds for the next year.
The latest funding announcement comes a few days after Ottawa announced it was earmarking $1.7 billion for all provinces and territories to boost housing supply however they see fit.
— with files from The Canadian Press
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