Finance Committee on Nov. 6th, 2023

[Catherine Fournier]

Would you please tell me which program you're referring to?

[Rachel Bendayan, Liberal, Outremont, QC]

It's the accelerator program, I think, that enables land purchases.

[Valérie Fortin, Policy adviser, Union des municipalités du Québec]

I think you're referring to the housing accelerator fund, the HAF.

That fund applies somewhat differently in Quebec. An agreement was reached and our understanding is that it will operate differently in Quebec than it does in the other Canadian provinces.

[Rachel Bendayan, Liberal, Outremont, QC]

That's exactly right.

Do you have any comments on that for the committee?

[Catherine Fournier]

As regards the agreement that was reached, I'd say that it's a good thing the federal government was open to establishing terms and conditions specific to Quebec. That's done in various agreements, and that was the case in the instance of this housing agreement. We understand that the HAF has specific criteria and offers various forms of assistance.

The terms and conditions applicable under the agreement haven't yet been made public, but fortunately we've known since October 13 that there's an agreement and that $900 million will be transferred to Quebec.

We're waiting for an economic update from the Quebec government that should come tomorrow. I hope we get some good news about that agreement.

The specific terms and conditions regarding land purchases, for example, could be different in Quebec, as Ms. Fortin said. I think one of the municipalities' major priorities is to acquire additional funding to build social housing units. The terms and conditions of the agreement's implementation and allocation of the funding for the projects or land purchases will be determined more by the financial package for the projects.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Bendayan.

We're going to MP Ste-Marie, please.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

I'm going to keep directing my questions to the mayor of Longueuil.

Ms. Fournier, from what I know about federal lands, they have to be sold at market value. What we're asking is that they be sold at a discount, or even given away, for the construction of social housing units. For example, there are lots of federal lands, even beautiful lands, in Longueuil. That might be a potential solution.

We also welcome the agreement between Ottawa and Quebec on the transfer of $900 million. Like you, Madam Mayor, we're eager to see the terms and conditions. You noted in your statement that Quebec had received as much as 13% of funding under the national housing strategy, whereas it represents more than 20% of the population of Canada. We see, too, that it takes a long time for the announced funding to show up on the ground. That's a definite disadvantage given that there's considerable inflation in construction.

In the conclusion of your statement, you referred to the flexibility and agility of federal programs, how important it is that they align with Quebec's programs and the speed with which we agree with Quebec. Would you please discuss that at greater length?

To help you build social housing units, what can Ottawa do to accelerate the entire process and give Quebec its share?

[Catherine Fournier]

Thank you.

The federal and Quebec governments took a little time to agree on the $900 million from the housing accelerator fund. The terms and conditions remain to be seen, but we're hearing good things and good news. So that's proof that we can be flexible on both sides and come to an agreement.

Here's another example. In my opening remarks, I discussed another program that has worked very well, the rapid housing initiative, the RHI. That initiative has produced tangible results for the municipalities. Thanks to it, we've managed to close the financial packages for many social housing projects in our cities. Unfortunately, no provision was made for the RHI in the last federal budget.

When the federal and Quebec governments come to an agreement and the program is effective, they should rely on that example and fund it so it continues to produce positive effects.

What's unfortunate is that they try instead to come up with new solutions or terminate the funding. However, the program works well and produces tangible results. It can succeed, but it has to be funded so that it meets the needs.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Ste-Marie.

MP Blaikie is next, please.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much, Mr. Chair.

Ms. Toor, Scotiabank has published a report that says Canada's social housing stock is about 3.5% of Canada's entire housing stock and that we'd need to double it in order to meet the OECD average. When asked a question about these numbers in the House of Commons, the Conservative leader said Canadians don't want a “Soviet-style takeover of housing”. I'm wondering if you agree with the Conservative leader that Scotiabank's proposal to double social housing amounts to a “Soviet-style takeover of housing” in Canada.

[Jasmine Toor]

I'd have to apologize. As a representative of a mortgage industry association, I don't think I'd be the best person to speak to non-market housing. Perhaps you may want to direct that question to one of the other witnesses.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

I'm happy to have anyone take that question. Is there anyone who agrees that Scotiabank is advocating for a “Soviet-style takeover of housing” in Canada? I certainly have an opinion on the matter, but it seems to me not to be an apt description of Scotiabank's work on social housing. We'll maybe leave it at that for now.

According to another comment that the Conservative leader made, we should withdraw funding from municipalities that don't build enough housing in their community.

Do you think the municipalities wait until the federal government threatens to withdraw their funding before they do any real work on the housing issue?

If not, what kind of partnership with the federal government are you thinking of? And what federal government approach would have the best chance of actually resulting in the construction of housing units?

[Catherine Fournier]

As I mentioned, the cities certainly know they have a major responsibility to facilitate housing construction within their city limits. They are fully aware of that. A local government is directly in touch with the public. As a result of climate change, the housing issue is currently people's main concern. Cities have stepped up to find solutions, but that has to be done in collaboration with the other levels of government. The key word, I think, is “collaboration”.

How can we achieve greater success together? How can we align our development policies and visions regarding infrastructure? It's one thing to say that municipalities must establish the conditions necessary to build more housing, but quite another then to have infrastructure that can accommodate the public's growing needs.

We obviously have to discuss all this together, as partners would do.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Blaikie.

MP Morantz.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Mr. Chair.

Ms. Keesmaat, I have a question for you; I have so many questions for you. I'll start with the issue of density.

I think if you did a poll and asked people if they believe we should have more density in urban centres, you'd have an overwhelmingly positive response, but when somebody buys a 100-foot lot across the street from your house and wants to subdivide it into two 50-foot lots, all hell breaks loose, and I think that's the fundamental problem we have.

You touched on zoning being part of the solution to this problem, I'm wondering if you could—as briefly as you can, because my time is limited—talk about the types of zoning changes you think municipalities should be adopting that would make more development for housing as a right.

[Jennifer Keesmaat]

It's a really critical question.

The good news is that in many Canadian cities, we've already crossed the Rubicon in terms of recognizing that we need higher-density development. That is for two reasons. One is that newcomers are obviously priced out of housing, but it's also that people are seeing the next generation of Canadians being priced out of housing and are recognizing that we need a fundamentally different approach.

As-of-right zoning, which is being facilitated in some ways through the housing accelerator fund requirements and pressures from the Minister of Housing today, is having a profound impact on upending exclusionary zoning across Canada.

In Toronto we did this almost two years ago, but Calgary, Edmonton, Vancouver and some other smaller municipalities have already followed suit. They are now allowing up to four units on a single lot. I think we will see additional municipalities embrace that. That is a very incremental form of change.

We also really need to be building significant density around our transit infrastructure to ensure that new Canadians have the choice of getting where they need to go without a car.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Mike Moffatt recently co-authored a report with the Canadian Alliance to End Homelessness. I believe you know him, and you've written with him, as well.

I found that report very interesting. There were recommendations around tax changes. We haven't really talked much about it at this table, but it seems to me that there could be significant changes to the Income Tax Act that could incentivize home building. There could be things like allowing a deferral of capital gains tax, for example, when the money is invested in new low-income housing, or an accelerated capital cost allowance for a similar type of purpose.

I remember, back in my early days practising law, there was a program called the multi-unit residential building program, which allowed people to deduct the capital cost allowance against soft costs and personal professional income. That program got hundreds of thousands of units built.

What do you think of those types of approaches in addition to the zoning change?

One of the witnesses said here recently that we need the Swiss army knife approach to getting over three million houses built in this country by 2030.

Would you agree that these types of tax changes would be helpful?

[Jennifer Keesmaat]

Absolutely.

I mentioned there are things we need to do with land, which is the zoning. There are things we need to do with design, building different types of housing, from secondary suites to six-storey buildings. There are also financial mechanisms that need to change. The model you referenced is the model that's used south of the border. Almost every single affordable housing unit built in America is built as a result of a very unique approach to tax incentives that results in the investment in affordable housing. These tax credits have fundamentally changed the delivery of affordable housing in America.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Mr. Butler, you have a very colourful Twitter feed. I love the tweet about the debt. It says:

This Is Such A Striking WTF Moment: DOUBLE The Debt Is Just Awful

You're commenting on another quote that's showing the federal government has actually doubled our federal debt of about $600 billion in 2015 to about $1.2 trillion.

Can you comment on your concerns about that?

[Ron Butler]

There was a comment earlier about getting back to 2% interest rates. The 2% interest rates are genuinely dangerous. They genuinely are. There is a reason prices expanded so rapidly in the decade of extremely low interest rates. The bottom line is.... People alluded to the idea of why we are investing so much money in real estate. If it's an 80% or 95% leveraged investment at a rate that's below inflation, you're going to have many participants, and that will drive up the price of houses.

That's my answer to that question.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Morantz.

We'll now go to MP Dzerowicz.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

I want to start off by saying a huge thanks to all the presenters. This is a very important discussion with lots of excellent recommendations and options for our committee to consider as we move forward.

I'm going to start with a question to Ms. Keesmaat.

Ms. Keesmaat, leaders like Maureen Fair, who runs West Neighbourhood House.... They are probably one of about six groups that have approached me over the last few years. They have land, they have capital, and they have drawings. They've done a lot of work and are trying to build affordable housing or housing for our most vulnerable.

You talked about the incentives not being there and said there's not enough money. I wonder if you could be more specific about what more we can do, whether at the federal, provincial or municipal level, to help support groups like West Neighbourhood House to get going on building on the land and using their capital.

[Jennifer Keesmaat]

Access to capital is really critical for the delivery of affordable housing specifically. The cost of capital can be the deterrent to being able to build that housing.

The RCFI program, which delivered a significant amount of rental housing specifically in the city of Toronto over the course of the past decade, has more recently been criticized, because it also delivered luxury rental housing. There was this assumption that any rental housing was affordable housing, which we all know in large metropolitan centres is not the case.