By Richard Lyall – Daily Commercial News

Ask just about anyone in the construction industry about the construction regulatory environment in Ontario and they will tell you it is out of control.

There are no established standards governing the review of existing regulations. There are no established principles governing the creation of new regulations.

In its last budget, the Ontario Government expressed the intention to modernize regulations and in doing so, in my view, catch up with other jurisdictions. The regulatory impact on the supply side of construction economics needs to be examined. Unnecessary delays and inefficiencies have an enormous public impact given the size of our industry and the need for infrastructure and affordable housing.

New housing has the dubious distinction of being the most heavily regulated and taxed product in the province after tobacco and alcohol, notwithstanding the comparative social policy benefits. It is therefore not surprising that housing costs are at an all time high. A recent study of GTA development charges show they have increased 100 to 300 per cent in the past five years. By way of comparison, automobiles have not been cheaper since the 50s. This is an odd turn of events given the government would like people to drive less and live better.

Inasmuch as the need for regulatory modernization is now recognized, recent developments would suggest the game plan has not yet been passed on to the players. The current initiative relative to fire sprinklers is a noteworthy example. In a well-intended but nonetheless knee jerk response to fires in old homes without functioning smoke detectors, the government announced an extraordinary emergency interim code review to consider mandating sprinklers in new high rise residential buildings. Aside from the apparent disconnect between cause and effect, the measure will do nothing to address fatalities in old buildings.

At the same time, there is no new analysis to assess the merits of sprinklers in new buildings. Among other things, the government body charged with tracking fire-safety performance does not yet keep track of fatalities and the age of buildings.

If approved, the measure would impose an enormous regressive regulatory burden on new home buyers without a measurable benefit. It would prevent many potential home buyers from buying comparatively safer new housing. Those least able to afford new housing would pay the highest cost even though housing affordability is a serious concern to government. At $5.25 a square foot x 22,000 units x 750 average square feet, sprinklers will cost new home buyers $90 million per year, not including maintenance costs, which have yet to be determined.

These are incredible numbers in a market where 37 per cent of new home mortgages now have 40-year-amortizations. And unlike the U.S., Canada does not allow the interest paid on mortgages to be deducted from income taxes. Aside from builders, there is no obvious group which defends new home buyers from these kinds of imposed costs.

New regulations should not be introduced without factual and compelling relevant analysis about their costs and benefits. Ontario Building Code changes should not be made simply on what other jurisdictions are doing especially given the fact other building codes do not include the many other fires safety provisions which are contained in Ontario’s code.

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