A new federal bureaucracy will not deliver the affordable housing Canadians need, argues the MEI
Montreal, June 26, 2025 – Governments are not real estate developers, and Canada should take note of the failure of New Zealand’s cancelled program, highlights a new MEI publication.
“The prospect of new homes is great, but execution is what matters,” says Renaud Brossard, vice president of Communications at the MEI and contributor to the report. “New Zealand’s government also thought more government intervention was the solution, but after seven years, its project had little to show for it.”
During the federal election, Prime Minister Mark Carney promised to establish a new Crown corporation, Build Canada Homes, to act as a developer of affordable housing. His plan includes $25 billion to finance prefabricated homes and an additional $10 billion in low-cost financing for developers building affordable homes.
This idea is not novel. In 2018, the New Zealand government launched the KiwiBuild program to address a lack of affordable housing. Starting with a budget of $1.7 billion, the project aimed to build 100,000 affordable homes by 2028.
In its first year, KiwiBuild successfully completed 49 units, a far cry from the 1,000-home target for that year. Experts estimated that at its initial rate, it would take the government 436 years to reach the 100,000-home target.
By the end of 2024, just 2,389 homes had been built. The program, which was abandoned in October 2024, has achieved barely 3 per cent of its goal, when including units still under construction.
One obstacle for KiwiBuild was how its target was set. The 100,000-home objective was developed with no rigorous process and no consideration for the availability of construction labour, leading to an overestimation of the program’s capabilities.
“What New Zealand’s government-backed home-building program shows is that building homes simply isn’t the government’s expertise,” said Mr. Brossard. “Once again, the source of the problem isn’t too little government intervention; it’s too much.”
According to the Canadian Mortgage and Housing Corporation, Canada needs an additional 4.8 million homes to restore affordability levels. This would entail building between 430,000 to 480,000 new units annually. Figures on Canada’s housing starts show that we are currently not on track to meet this goal.
The MEI points to high development charges and long permitting delays as key impediments to accelerating the pace of construction.
Between 2020 and 2022 alone, development charges rose by 33 per cent across Canada. In Toronto, these charges now account for more than 25 per cent of the total cost of a home.
Canada also ranks well behind most OECD countries on the time it takes to obtain a construction permit.
“KiwiBuild shows us the limitations of a government-led approach,” said Mr. Brossard. “Instead of creating a whole new bureaucracy, the government should focus on creating a regulatory environment that allows developers to build the housing Canadians need.”
The MEI viewpoint is available here.
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The MEI is an independent public policy think tank with offices in Montreal, Ottawa, and Calgary. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.
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