Bill C-285 (Historical)

An Act to amend the Canada Mortgage and Housing Corporation Act (profits distributed to provinces)

This enactment requires the Canada Mortgage and Housing Corporation to distribute any surplus from its reserve fund to the provinces for social and affordable housing purposes, to encourage the supply of quality housing at affordable prices, to increase housing choices for the people in the provinces and to contribute to the creation and development of housing cooperatives.

Canada Mortgage and Housing Corporation Act

[Christiane Gagnon, Bloc, Québec, QC]

moved that Bill C-285, An Act to amend the Canada Mortgage and Housing Corporation Act (profits distributed to provinces), be read the second time and referred to a committee.

[Tom Lukiwski, Conservative, Parliamentary Secretary to the Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, I rise on a point of order on Bill C-285. Without commenting on the merits of this private member's bill, it is the government's view that this bill requires a royal recommendation.

Mr. Speaker, in the 38th Parliament you ruled that a similar bill, Bill C-363, did not require a royal recommendation. I would like to submit additional information on the issues raised during that ruling and I would ask you to review that decision based on this new information.

Bill C-285, like its predecessor, would require the Canada Mortgage and Housing Corporation to distribute its profits to the provinces. On October 3, 2005, Mr. Speaker, you noted that a royal recommendation is required only when an appropriation is made from the consolidated revenue fund and not from other sources. You disagreed with the assertion that:

--because moneys from the reserve fund are integrated into the consolidated revenue fund on an annual basis they may be considered to form part of the general revenues under the control of the Crown.

Mr. Speaker, I would ask you to consider two points. The first point is whether assets held by the crown corporations properly fall within the definition of “public revenue”, which is safeguarded by section 54 of the Constitution Act, 1867, and Standing Order 79. I would submit that the assets of the CMHC do fall within this definition.

Section 2 of the Financial Administration Act defines public money as follows:

“public money” means all money belonging to Canada received or collected by the Receiver General or any other public officer in his official capacity or any person authorized to receive or collect such money, and includes...

(c) money received or collected for or on behalf of Canada, and

(d) all money that is paid to or received or collected by a public officer under or pursuant to any act, trust, treaty, undertaking or contract, and is to be disbursed for a purpose specified in or pursuant to that act, trust, treaty, undertaking or contract....

The CMHC is a crown corporation and an agent corporation under the Financial Administration Act, the Canada Mortgage and Housing Corporation Act and the National Housing Act. It is responsible to Parliament through a minister of the Crown. CMHC's activities are directed by the government. Its finances are subject to an audit by the Auditor General of Canada and to parliamentary oversight.

While section 128 of the Financial Administration Act allows crown corporations to have a separate bank account rather than directly depositing their assets in the consolidated revenue fund, this does not make this crown corporation's revenue any less “public money”.

CMHC's net financial results are accounted for on a fiscal year basis and consolidated with the government's financial statements, which means that CMHC's net income is recognized in the government's revenues dollar for dollar. This income is still in the federal purse and is therefore available for future appropriations as determined by Parliament.

The second area of new information I would like to bring to your attention, Mr. Speaker, relates to your June 13, 2005 ruling, in which you noted that the key issue in determining whether a royal recommendation is required is whether a bill:

--does anything more than rearrange the method of accounting for public funds. If not, then no royal recommendation is required: how public funds are recorded in the government's ledgers does not constitute an appropriation for which a royal recommendation would be required.

In that case, Mr. Speaker, regarding the matter of transferring funds out of the consolidated revenue fund into a separate account with a specific and limited purpose, you found that a royal recommendation was required because:

--these moneys are no longer available for other appropriations Parliament may make. These funds would no longer be available because, in effect, they have been spent....

I would submit that the principles in that rule should apply in the case of Bill C-285. In this case the accounts of the CMHC are consolidated with the government's revenue and available for future appropriations determined by Parliament. By transferring this money to the provinces, Bill C-285 is effectively an appropriation. In other words, the passage of Bill C-285 would have the result that money which was previously part of the public revenue would be directly transferred to the provinces on an annual basis.

This is clearly more than a rearrangement of accounting for public funds, since the money would be out of reach of the government and Parliament. In short, Bill C-285 would result in a new expenditure for a new purpose not anticipated by the existing act. Accordingly, I believe the bill in its entirety requires a royal recommendation.

Mr. Speaker, I trust this additional information will be useful to you in considering this important financial issue.

[Christiane Gagnon, Bloc, Québec, QC]

Mr. Speaker, we have already introduced this bill, as Bill C-363. At the time, we sought a ruling from the Speaker on this bill, and we were told that nothing was preventing CMHC monies from being transferred to the consolidated revenue fund and being used for another purpose. Thus, we have already had a ruling that Bill C-363 could not be prevented from being introduced, because this is not a matter relating to the appropriation of monies from the Crown and, accordingly, does not infringe on the financial initiative of the Crown. We had a Speaker's ruling concerning Bill C-363 during the previous Parliament .

In the same context, my colleague from the Conservative party would like to revisit a ruling that has already been given, and we were told that we were right: we could introduce Bill C-363.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, on May 31, the Speaker outlined in great detail the aspects related to the requirement for a royal recommendation. Indeed, I believe that 10 out of 30 bills that were put on the order paper were flagged.

This particular bill was not flagged by the Speaker on May 31 as requiring a royal recommendation. I have made inquiries of the staff who look at the requirements and advise the Speaker. I have asked if any matters had been raised of which they were not aware when they did their review of the bills in the first instance to advise the Speaker on the likelihood of a royal recommendation. The answer the last time I asked was no. I believe the question should again be posed to the Journals Branch with regard to the arguments just raised by the government House leader.

Again, the review has been done based on the rules as outlined by the Speaker on May 31. The review indicated that there was in fact no requirement for a royal recommendation and this bill was not flagged as so. I would simply recommend to the hon. member that she ask the same question as to whether or not any of the items raised by the government House leader this day brought up items which the Speaker was not aware of when the staff made their first assessment. I think the member will find the answer is no.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Mr. Speaker, I do not understand why my Conservative colleague is asking this question, since a ruling has already been given.

I would point out that when he read everything about where the money came from, he missed only one point, that is, that the money did not come from revenues or proceeds, or other such things. The Canada Mortgage and Housing Corporation already has the money and is entitled to it. This does not involve any new revenue or tax money, not at all. It already has this money and is returning it to its coffers, which is very different. Everything that he read does not apply to this bill.

[The Acting Speaker, Andrew Scheer]

I thank all hon. members for their interventions on this matter. As this is second reading, we will proceed with the second reading of the bill. As for any decision as to whether or not this will proceed to third reading, the Speaker will make it at another time. For now we will continue with the debate. The hon. member for Quebec.

[Christiane Gagnon, Bloc, Québec, QC]

Thus, Mr. Speaker, you are not allowing us to discuss this bill today or for as long as it takes to get an answer? Is that what you are saying?

Yet, a decision has already been made in the case of BillC-363 to the effect that the bill did not appropriate Crown funds and consequently, did not infringe on the financial initiative of the Crown. This decision was made with respect to a similar bill on May 5, 2005. The same questions were raised. We were told that the bill could not be tabled because it would change the conditions and qualifications of the royal recommendation. I believe that if we do not debate this bill today, it indicates—

[Some hon. members]

Yes, we are debating it.

[Christiane Gagnon, Bloc, Québec, QC]

We are debating it? That is not my understanding.

[The Acting Speaker, Andrew Scheer]

I apologize for the misunderstanding. We now will debate the bill at second reading. Should the Speaker find it necessary to rule on this matter, he will do so at a subsequent time.

We will continue with second reading.

[Christiane Gagnon, Bloc, Québec, QC]

Mr. Speaker, I was preaching to the choir. Thank you.

We can see to what extent the Conservative Party is against this bill. The cat is out of the bag. We know the attitude and sensitivity of the Conservative Party toward the least fortunate in society. The purpose of this bill is to help the least fortunate in society to find better and affordable housing.

I would like to begin my speech by speaking to this new bill, Bill C-285, An Act to amend the Canada Mortgage and Housing Corporation Act (profits distributed to provinces).

To start I would like to provide some background on social housing in Quebec.

I would describe the attitude of the current Conservative government and the attitude of the Liberals, who formed the previous government, as insensitive and irresponsible when it comes to the situation experienced by more than 400,000 families in Quebec and by 1.7 million families in Canada. These families devote over 30% of their income to housing.

The former Liberal government always said that a billion dollars was allocated annually to social housing and that, every year, more money was invested in it. That is not our focus. Our focus is the additional billion dollars. Some two billion dollars are needed annually for social housing in order to develop new units.

The billion dollars allocated to social housing goes to paying mortgages and making very minor repairs—such as patching holes. The money is not used for major repairs. A number of the older housing inventories need serious repair to allow people to live in healthy, quality housing.

Bill C-285, a bill that I introduced as the member for Québec, is a bill for which our party's social housing critic, the hon. member for Brome—Missisquoi, is responsible. This bill is being reintroduced because we would like it to be passed here in the House of Commons and are confident that it will be.

My colleague from Brome—Missisquoi, the social housing critic, could very well have introduced this bill. Private members' bills are drawn in a lottery and my name came up before my colleague's did.

Given the urgency of adopting such a bill, a votable bill, we will be able to see and analyze how each member of this House feels about the government and the CMHC making a bigger contribution.

The CMHC—Canada Mortgage and Housing Corporation—lends money to individuals who do not have enough for a down payment. It also offers, for an additional cost, mortgage loan insurance, which enables people to buy houses. Potential buyers who have only 5% of the capital needed to buy a house can receive a mortgage loan from the Canada Mortgage and Housing Corporation in addition to the mortgage loan they receive from a bank. The Canada Mortgage and Housing Corporation has been accumulating a surplus.

This bill would require the Canada Mortgage and Housing Corporation to return a certain percentage of its surplus to the provinces and territories so they can meet the needs of their populations.

While certain regions and neighbourhoods across Canada urgently need affordable housing—450,000 families in Quebec and 1.7 million families in Canada—the CMHC is squirrelling away surpluses exceeding $5.2 billion.

Apparently, if this keeps up, the surplus will reach $7 billion within the next three years.

Given that the CMHC's mission is to help both Canadians and Quebeckers find safe, healthy housing, it should make more of an effort. The CMHC is not a commercial institution that should be amassing surpluses, investing them and making a profit. Its mission is not commercial.

Over the years, the CMHC has strayed from its mission and has been making money rather than giving that money back to communities. We hope this bill will be passed so that the CMHC can return to its social roots and its original purpose, which is to enable people living below the poverty line and working for minimum wage to find better housing.

In some neighbourhoods, the cost of housing is rising at an alarming rate, especially in core urban neighbourhoods that have become gentrified over the years. There has been a lot of real estate speculation. Some segments of the population should be able to get help finding decent housing from the government through a Crown corporation known as the CMHC.

I criticized the Liberal Party earlier because this underfunding of affordable, social and community housing and accommodation has been a problem since 1993. In fact, not one new dollar has been invested in the development of new social housing units. Yet, $1 billion was spent each year to pay for the existing stock of social housing and the related mortgages. For now, we hope to change the minds of Conservative Party members and get them to look at the situation with a little more compassion. The Conservatives say they want to help Canadians. Well, this would be a good way to do it, while respecting provincial jurisdiction. This is an important vote that will reveal the true face of the Conservative Party.

As I was saying, we want to see the surplus reduced. We are not against the notion of the Canada Mortgage and Housing Corporation generating a surplus, but $5.3 billion in 2006 and $7 billion in 2008 is a great deal of money and we could be much more proactive in creating more social housing units. It is crucial that we start investing in social, community and affordable housing programs.

There are three essential needs in life: shelter, food and clothing. But how can those basic needs be met when 50% to 80% of one's meagre salary or income must be handed over, forcing that individual to live below the poverty line? Although the economy is booming, particularly in the Quebec region, certain jobs are still not paid well enough.

We therefore hope to see renewed negotiations regarding the complete transfer of responsibilities and funding related to the housing sector.

Renovation costs should also be included, because that is where the problem lies. We know that the billion dollars that the government gives each year for social housing often does not take into account the extent of the deterioration of some buildings.

The government can boast that it is giving a billion dollars a year for social housing, but this is not enough to overcome all the challenges and provide better housing for people in financial need.

As I said, CMHC should go back to helping people have better housing. It should stop being a private insurance company that builds up a surplus. I will explain how the government could distribute this surplus directly to Quebec and the provinces.

We would like CMHC to keep a maximum of 5% of the $264 billion invested as equity. CMHC could therefore keep no more than $1.32 billion in equity. In addition, CMHC could keep no more than 10% of that $1.32 billion in its reserve fund. So there is equity and a reserve fund.

If the surplus totalled $5.3 billion, we could deduct $1.3 billion, which would leave $4 billion. The surplus reserves, that currently are not recognized, would go directly to Quebec or the provinces.

Thus, we can see that CMHC is withholding an excessive amount. It is acting as though it were a private company with assets. Consequently, it can make investments and accumulate more and more profits rather than limiting itself to its primary mission of truly assisting Canadians and meeting their needs.

Fifteen minutes is too short a time to talk about a matter that is dear to my heart. Since 1993 social housing has been one of my main responsibilities here in this House. I am pleased to join with the member for Brome—Missisquoi who has inherited this file and about which he is passionate. He is aware of the challenges.

We hope that all parliamentarians in this House will help the most vulnerable in our society who are paying 30%, 50% or 80% of their meagre income. I see a Conservative member shaking his head, but in disagreement with the suggestion of my affinity for the most disadvantaged in our society. I would say to the member that there are vulnerable individuals in our society and we must take care of them.

[Lynne Yelich, Conservative, Parliamentary Secretary to the Minister of Human Resources and Social Development]

Mr. Speaker, I want to make a comment acknowledging the member opposite for her concern about the housing needs of all Canadians.

I do have some reservations regarding the underlying assumptions regarding CMHC's surplus. I want to note that when asked about this issue, the former Liberal minister of housing and the former member for London North Centre, Joe Fontana, stated, “I not think CMHC's surplus is scandalous”. Why? Because CMHC retains its insurance net income to meet adequacy guidelines set out by the Office of the Superintendent of Financial Institutions for mortgage insurance companies. Following prudent business practices, as of December 2005 Canada Mortgage and Housing Corporation sets aside $3.4 billion against the $274 billion in outstanding mortgages that are insured. This represents 1.2% of its portfolio and is consistent with the OSFI directives.

Would the member opposite please inform the House why she believes that CMHC should not follow these prudent business practices?

[Christiane Gagnon, Bloc, Québec, QC]

Mr. Speaker, I outlined prudent practices: we could very well limit both equity and the surplus in the reserve fund by decreasing the reserve fund and the equity. The CMHC would not be at risk in terms of its ability to offer mortgage rates because the mortgages bring in a lot of money for the CMHC over time.

I know there is some risk in providing loans. The banks do it and so does the CMHC, but this would nonetheless give them quite a lot of flexibility. I did not say that CMHC should not make a profit. I talked about a 5% decrease in its equity and a 10% decrease in its reserve fund.

I think the hon. member should review the figures of the surplus the CMHC brings in and agree that the CMHC has enough money to survive.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Mr. Speaker, we know that CMHC is supposed to be offering affordable housing for Canadians. After all, that is one of its mandates.

To keep a homeless person in a hospital bed costs at least $10,000. It costs $4,333 to keep that same person in a jail cell. It costs $1,932 for a bed in a homeless shelter. To provide a social housing unit it costs only $200 a month.

Does the member think the former Liberal government was, and now the Conservative government is being fiscally irresponsible in not spending the billions of dollars of profit of CMHC to build affordable housing, given that last year there was a record 30,000 tenants in Toronto alone facing eviction which is 10% higher than in 2004 and which we know is a sign of more trouble to come? Is it fiscally irresponsible for the government not to spend those billions of dollars in affordable housing through the provinces?

[Christiane Gagnon, Bloc, Québec, QC]

Mr. Speaker, I thank my colleague for her question.

This is, indeed, an urgent situation. There has been no new money invested since 1993. The government could invest new money, but there is another solution. The CMHC brings in huge surpluses that are not doing anything. They generate profits, but our society is suffering because it is impossible to find better housing. Vacancy rates in some regions, provinces and cities are 0.5%, 1.2% or 1.5%, which puts pressure on the cost of rental housing.

I remember describing the Liberal government as irresponsible. This is not my first speech on social housing. I made a speech when the Liberal government was in power and now that we have the Conservative government, I would more or less put them in the same category at times like this when we are talking about social housing. It is utterly irresponsible. This shows insensitivity to a sector of the population that cannot find affordable, safe and healthy housing.