At 6 p.m. on a weeknight, billionaire Peter Gilgan has just arrived home. The slow elevator ride to the 43rd floor of Toronto’s Four Seasons Hotel, where he’s living while his famous penthouse suite is being transformed, gives the founder and CEO of Mattamy Homes a chance to regale me with the story of his two recent hip surgeries.
A bicycling accident led to complications, but all's well now.
In fact, a titanium hip isn’t the only shiny new thing in 68-year-old Gilgan’s life. The installation of the hip joint in March roughly coincided with the launch of Mattamy Asset Management (MAM), a new venture to broaden the reach of Canada’s largest residential home builder. Gilgan is eager to talk about that and more, but he has priorities. The elevator opens onto a vast, luxurious suite, and Gilgan heads for the kitchen.
“It's six o'clock,” he says. “That means it's time for a cocktail.”
He pours two martinis, loads two industrial-size olives into each, and we settle in with a floor-to-ceiling view of the city stretching to the north.
What’s your sense of the real estate market in Canada right now?
Actually, I think it’s in a very healthy position. The appetite and desire for home ownership is as strong as I’ve ever seen it. What’s different today from two years ago is that people who were buying a new home contract and speculating that, by the time the home got delivered, they could sell it for more money—those buyers are no longer in the market. They left 24 months ago.
I personally advocated slowing the market down, and I’m a strong supporter of what happened. Increases in house prices were massively out of step with inflation generally, including inflation in wages.
What do you think of the mortgage stress test?
It was a great idea at the time, and I think it has outlived its usefulness. Look, there’s always been risk when you buy a house. There’s always been the risk that when you go to renew the mortgage, it’s going to be higher.
I think the stress test was put in place partly because of concern about levels of debt, but also as the federal government's way of slowing this runaway inflation.
Are you concerned about debt?
I am. I would like to believe that as long as we have reasonable restrictions, reasonable credit valuations and so forth, at the end of the day, Canadians are responsible people. They'll know when they're up to here. I don't think a central authority should be telling them what to do.
Twenty years ago in Toronto, the price-to-income ratio for a two-income household and an average home was 4.5. Now, it’s double that. Would you agree there’s an affordability crisis?
Strongly agree. If you want to lay blame anywhere for why some young people today are struggling to buy a house, you can smack it right onto government policy.
You’re not in favour of government intervention.
I'm in favour of the opposite.
Get the hell out of the way and let us bring more product to the market. Economics 101, lesson one: supply, demand. That's the problem. In Metropolitan Toronto and the Greater Golden Horseshoe area, where there has been great job growth leading to great population growth, the ability to keep pace with that has been massively curtailed in the past 20 years. The largest component cost of a home is the land, because the province has put so many limitations on supply.
Now, it gets sticky. Because most of the limitations on supply are under the auspices of protecting the environment. And you may not know much about me, but I can tell you I'm very much an advocate for the environment.
So would you protect the Greenbelt?
I would protect nature.
You’re making a distinction between nature and the Greenbelt?
Two or three more of these [he gestures at his martini], and it would be crystal clear. I believe modern science should be applied to evaluating, without politics, without rhetoric, without emotion. Let's recognize the role this regional economy has, and let's responsibly—and I mean responsible to all stakeholders, including Mother Nature—use science, rather than rhetoric.
Most politicians don’t want to give scientists the power to make these decisions.
I'm not sure scientists should make the decision. They should opine on what's reasonable.
Do you feel the Greenbelt is unreasonable?
You have to start with first principles. What is it that society wants to preserve? Give society the trade-offs, and let society tell us—society broadly, not a fringe group. Let's give the silent majority a voice. The silent majority, I think, is starting to make the connection between what's going on and the fact that they or their children can't afford to buy a house.
That all of this land isn’t available.
Correct, sir. See that height of land right out there? [He points to a long ridge of land to the north.] That's the Oak Ridges Moraine. Do you know how it came to be? I do. Glaciers scraped across thousands of miles, and when they melted, they deposited remnants of gravel tens to hundreds of feet deep.
So that land we're looking at is really a great big pile of gravel.
Gravel is porous. Those are the sources of our river systems. I get it. I respect it. But I'm saying, shouldn't there be room for modern soil science, building science, engineering science to be able to demonstrate that a particular development can be done without polluting?
Broadly speaking, more people are moving into the city. What’s the future of the suburbs?
I see the future as really bright.
The more aspirational people are about home ownership, the more inclined they are to live in the suburbs. As it becomes an increasingly important part of defining who they are or what they want for themselves, they will strive that way. Sometimes that’s the more executive-type person or a new Canadian. They are willing to do whatever it takes—to live, as many of our ancestors did, two or three families in a house to afford it.
Let’s talk about MAM. You once said, “There is an element of timing in this business.” Why is the time right for MAM?
The time is right in the evolution of the whole organization. Ten or 12 years ago, I said, I want this home-building business to thrive beyond Peter Gilgan. The only way to do that would be to start to conduct ourselves somewhat akin to the discipline of a public company.
So you brought in the board.
Yes, sir. So the business is set up in a manner where Peter Gilgan is not nearly as needed.
Another element is the adage about not putting all your eggs in one basket. That's a truism I have not ascribed to for the past 40 years, and it is now time to do it. Our 10-year plan in Canada has only modest growth.
We don't currently believe the opportunities exist, based on the risk profile of legislation, for us to invest more in Canada. It makes no goddamn sense. We would need to see different signals from government before we would want to be more aggressive in growing our business in Canada.
So what are you going to do with MAM?
What am I going to do with the money I have been fortunate enough to make? My intention is that it is intergenerational money—that myself and my children and my grandchildren are custodians of that money, and we use it wisely. We use it for good things, including growth of the businesses and doing good things for society. Part of that is having a variety of asset classes.
There's certainly some money set aside for a startup in an area of passion of mine specifically, which is the intersection of sustainability and technology.
You’ve talked in the past about the fact that your kids aren’t involved in your business.
They're not involved in the home-building business.
They're involved in our family office, and they have become increasingly involved in some of the investment activities. I've got a son studying to be a doctor. I say, “Do what you want to do, not what Daddy wants you to do.”
But is the creation of MAM at least in part a way to address this need to have your kids involved?
That's a very insightful question.
Wow. [He looks away.] How honest do I want to be about that?
Hell, yeah! Hell, yeah! If I've got a kid who doesn't like mud and sticks, but he likes the idea that he could be involved in something around sustainability? Absolutely.
You are a big-time philanthropist. The last figure I saw was $175 million. It’s probably more now.
Yes, sir. And you’re going to see a big announcement in June. It’s gonna be pretty impressive.
Should Canada’s wealthy do more than they’re doing right now?
I would say yes. I can say I have never missed one dollar I've given, and it has brought me immense gratification in my life.
You’re the first billionaire I’ve had a chance to ask about this: Do you worry about wealth disparity?
One might say, if you want to be cynical, “Why are you so wealthy?
Why do you need all this money?” You need all this money in order to grow industries and capital, and continue to support the economy. You can't run a business without having a balance sheet.
It's like, 20,000 people work for this business, and would they all have jobs without it? I'm not sure. A lot of what we do is create opportunities for others.
What do you say to people who are frustrated that the benefits of society are beyond their reach?
Do you know what our income tax rate is in Ontario? Like, the combined federal and provincial tax rate? Once you get past 100,000 bucks or something, it's 54%. And with the other 46%, you pay GST on everything you buy. We have a massive taxation regime here in Canada.
So you don’t agree with Bill Gates and Warren Buffett and Ray Dalio and other billionaires, who say they want to pay more tax?
I'd like to see our taxes being used more efficiently—how's that? Look, when I was riding my bicycle on Sunday morning, I rode down Bay Street. And on every goddamn corner, there is a guy sleeping. Do you think that doesn't bother me? Yes, that bothers me. Is that my responsibility? Not directly. One individual or one family can't do everything. And you've got to know there's so much inefficiency in what we do with our taxation.
What happens with all that money, man? Where the hell does it all go? So let's raise taxes so the government can become more inefficient? I don't think so.
Trevor Cole is the awardwinning author of five books, including The Whisky King, a non-fiction account of Canada’s most infamous mobster bootlegger.