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.

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

Mr. Speaker, I am pleased to join the debate on Bill C-285, legislation that would require CMHC to transfer surpluses from its reserve to the provinces.

With some conviction, I can speak to a common belief among parliamentarians that Canadians ought to have a fair chance to own or rent their own home and that we acknowledge the importance of stable, affordable and good quality housing.

While the intent of Bill C-285 is commendable, in that it seeks to encourage the supply of affordable housing, it would, in truth, have the effect of negatively impacting on Canada's national housing system. It would make it harder for future governments to respond to the changing housing needs of Canadians.

Before discussing the specifics of Bill C-285, let me briefly provide some context regarding the role of CMHC. The main objective of CMHC is to assist Canadians obtain safe, quality and affordable housing. It accomplishes this through the provision of funding for affordable housing, as well as for renovations and repairs that benefit low income Canadians. It also accomplishes this through mortgage loan insurance.

CMHC mortgage loan insurance allows consumers to buy a home with as little as 5% down at interest rates comparable to those reserved for homebuyers with a down payment of 25% or more.

Since its initial offering in the 1950s, mortgage loan insurance has been used to facilitate the financing of nearly nine million homes. This helps many Canadians realize home ownership.

This brings me to why Bill C-285 is so problematic. The mortgage insurance business is characterized by long term, cyclical patterns. During strong housing markets, mortgage loan insurance sales rise and claims paid out decline.

However, the reverse is true during economic downturns, which was the case in the 1980s and the early 1990s. In order to manage the risks inherent in the insurance business, CMHC follows the prudent business practices set out by the Office of the Superintendent for Financial Institutions.

CMHC has earnings set aside for capitalization of $3.4 billion against the $274 billion worth of outstanding mortgages insured as of December 2005. These earnings set aside for capitalization represent 1.2% of its portfolio. This is consistent with OSFI directives.

CMHC's reserves provide a cushion to ensure its mortgage loan insurance business will not have to rely on additional taxpayer dollars to meet its obligations, even in bad economic times. This is why it is essential that CMHC continue to have adequate reserves. This will allow its mortgage insurance business to remain commercially viable and sustainable over the longer term rather than dependent on government subsidies.

Bill C-285 ignores the need for prudent business practices and would transfer CMHC's retained earnings that are set aside for capitalization, thus jeopardizing mortgage loan insurance's availability for future generations of Canadians. Parliament should not erode this cushion.

Another consideration is that all of CMHC's income is already included in the accounts of the Government of Canada. It is public money; that is to say that CMHC's net income has been recognized in the government's revenues dollar for dollar. CMHC is a federal crown corporation so its financial results are accounted for on a fiscal year basis and consolidated with the government's financial statements.

As I noted earlier, the federal government, through CMHC, provides approximately $2 billion each year for the ongoing support and management of assisted social housing for over half a million households. Through its mortgage loan insurance and assisted housing programs, CMHC helps respond to market circumstances as well as Canadians' evolving housing needs.

By taking the CMHC reserve out of the federal fiscal framework, Bill C-285 would tie the hands, not just of future Parliaments but also this one. Reducing the flexibility of both CMHC and Parliament to respond to developments in the housing market does not appear to be a wise way to secure the future of Canada's housing system.

I would remind the House that the former Liberal government echoed these sentiments in the previous Parliament by voting against a nearly identical private member's bill, Bill C-363. Speaking for the Liberal government, the current member for North Vancouver noted that legislation would tie the government and Parliament to an inflexible formula. The member further noted that CMHC's capital reserve helps ensure this crown corporation remains self-funding with no need for government subsidies.

As I alluded to before, Bill C-285 seeks to ensure funds transferred from CMHC to the provinces are utilized for both social and affordable housing purposes and to contribute to the creation and development of housing co-operatives.

However, Canada's new government is already taking concrete actions to strengthen our housing system. Budget 2006 contains several concrete examples of that commitment. The budget aims to support families, build safer communities and, indeed, a stronger country, including, by necessity, housing.

Accordingly, in Budget 2006 our new government made a one time strategic investment of up to $1.4 billion. This was for the establishment of three housing trusts with the provinces and territories for affordable housing, northern housing and for aboriginals living off reserve.

In addition, the budget announced an immediate one percentage point reduction of the GST, a measure which is already putting money back into the pockets of hard-working Canadians and stimulating the economy.

The reduction is also having a positive impact on the overall housing industry by making housing more affordable to Canadians. As Stephen Dupuis of the Greater Toronto Home Builders Association remarked, this reduction will have a tangible impact for prospective new homeowners. “On a $300,000 home, it could be as much as $2,000 in the buyer's pocket”.

Likewise, Dave Benbow, president of the Canadian Home Builders' Association called the GST cut a major benefit to new homebuyers, stating, “This action improves housing affordability for many Canadians”.

These measures complement existing Government of Canada initiatives to maintain the existing affordable housing stock. In that respect, funding for the residential rehabilitation assistance program and several related housing renovation and adaptation programs have been renewed for the fiscal year 2006-07, an extension which represented our commitment to $128.1 million.

Additionally, at a cost of almost $135 million, the Minister of Human Resources and Social Development also extended the national homelessness initiative, including the supporting communities partnership initiative until March 2007.

On top of those measures, the government is in the process of delivering on the $1 billion affordable housing initiative in collaboration with provincial, territorial and local partners. Thanks to this funding, new affordable housing is being created in communities across the country.

As I think all hon. members will realize, Canada's new government is moving forward on the objectives set out in Bill C-285 without embracing the flawed manner proposed in the legislation. Consequently, I call upon the House to consider the prudent course of action and reject the inflexible formula proposed in Bill C-285.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Mr. Speaker, I am pleased to speak to the bill brought forward by the member for Québec. Bill C-285, An Act to amend the Canada Mortgage and Housing Corporation Act. The bill asks the government to enact legislation that would see the corporation distribute a share of its profits to the provinces for social and affordable housing purposes.

The area that I represent on Prince Edward Island has, for some time, benefited greatly from programs sponsored by CMHC. I can think of the RRAP, for example, which has helped a large number of low income constituents in my riding. In particular, I can think of a number of people who, with the assistance of the RRAP, were able to improve their homes and their ability to heat them easier in the winter and greatly extend the life of their homes because of the upgrades the program provided.

As well, there are a number of home repair programs, such as home adaptation for seniors independence, to assist seniors over 65 years of age to stay in their homes longer. As well, the emergency repair program assists low income individuals deal with unexpected problems, such as leaking roofs, furnace problems and other such emergencies. It has provided that extra help when such unforeseen emergencies appear.

Those are the kinds of everyday problems that occur in the home and are looked after by CMHC staff who provide assistance to the homeowner to see that they receive fairness. This is why I feel very strongly that CMHC funding should continue to be delivered by CMHC to ensure nothing is funnelled away and used in other provincial programs.

CMHC has provided excellent service to Canadians in the provinces where CMHC is the delivering agency, such as in the case on Prince Edward Island. I know I have always said these programs could stand to have more funding, but I would like to point out that the annual funding not only assists homeowners, but it also injects dollars into the economy.

As a rural politician in Atlantic Canada, I feel it is crucial that the delivery of these programs stay with the federal government so decisions made in regions of the country are consistent and we do not end up with a patchwork of programs and the most vulnerable in our society suffer. In this regard, I can say without a doubt that the federal government is of critical importance.

With that, I would like to move to the first view to be taken of this bill, which relates to the fact that it calls for the Canada Mortgage and Housing Corporation to transfer money to the provinces. The objection here is clear and simple: It is not the mandate of a crown corporation to allocate funds to provincial governments. That responsibility lies with the federal government. Crown corporations are state controlled enterprises that are not in the business of making transfer payments. That is clear enough.

Now suppose for a minute that we could dispense with this idea and allow CMHC to begin allocating money to the provinces. Should the Mint then begin to siphon off it profits for redistribution and allocation across the country? What about Canada Post? Where would this leave us? Could there ever be an end to this? This would displace existing federal-provincial relationships of transference in contravention of our system of federalism and, as such, it is not a feasible proposition.

This leads us to another objection of perhaps a more constructive nature that must also claim our attention. This bill is an attempt to amend the Canada Mortgage and Housing Act when it should in fact be attempting to amend the National Housing Act.

The National Housing Act is an act to promote the construction of new houses, the repair and modernization of existing houses, and the improvement of housing and living conditions. Part X of this act already deals with public housing. In order for CMHC to do what this bill proposes to do, the National Housing Act would have to be amended as well.

Another important and problematic aspect of this bill relates to the profits credited to fund the purposes of this legislation. Where the bill states that the Canada Mortgage and Housing surplus would be distributed to the provinces, the calculation of this surplus is unclear. There is no clarity as to exactly which surplus the bill is referring. The lack of precision here gives rise to confusion and a number of unanswered questions. Are we talking about the capital surplus or about the revenue surplus? Is the bill referring to gross or net moneys?

Further, the current CMHC surplus is estimated at $4.4 billion, but of that, $3.4 billion has already been set aside by CMHC as a capitalization figure in the event of future losses. Is the bill asking for the remaining $1 billion or for the entire $4.4 billion? Or is there some other definition of profit sharing being used?

These are only a few of the unanswered questions among others that arise due to the vagueness of this part of the bill. The lack of clarity in this regard is a serious flaw since it makes it impossible to determine exactly what the bill is asking for.

To the difficulties already mentioned, I would also like to add that the type of distribution proposed in this piece of legislation would be problematic in terms of accountability and equity of distribution.

The bill in its current form would effectively eliminate parliamentary review by allowing this calculated fund to go directly to the provinces on a per capita basis. Further, once in the provinces' hands, the Auditor General would be unable to audit the use of the money. The chain of audit responsibility would be broken and Parliament would be eliminated from reviewing these expenditures. Surely we do not want to support bills that weaken the accountability and lessen the Auditor General's ability to provide oversight of taxpayer dollars.

With respect to the idea of calculation on a per capita basis, it should also be recognized that certain provinces are more urgently in need of affordable housing projects and programs than others.

Whereas affordable housing is readily available in Newfoundland and Labrador, it is much less so in regions of Alberta, for example, where the booming oil industry is attracting a great number of workers across the country, or in British Columbia where a strong economy and immigration are driving housing costs upward at an accelerating pace. Distribution based on a per capita basis would fail to give proper consideration to provinces experiencing such different circumstances and could deepen regional tensions felt over per capita allocation methods.

Again, an examination of the bill's implications regarding accountability and equity of distribution shows it to be unreasonable and imbalanced.

Without a doubt, as I mentioned earlier in my remarks, CMHC and the RRAP program have done an awful lot in my area, but it could not be emphasized more that it is so important that these programs remain under the direction of the federal government and under the control of the House of Commons. We want to make sure that they are distributed properly across the country.

If we look at CMHC's record, and I know for sure if we look at it in my area in Prince Edward Island, I will always say we could use a lot more funds, but the fact of the matter is what CMHC does is done so well. It is so important that these programs not only remain where they are but also probably it would be very important for the federal government to put more dollars in them because, as has been mentioned here in the House previously, it allows people to remain in their own homes. If we can keep people in their own homes, they can stay there more comfortably. That is where they want to live. It is cheaper for government and of course better for the older persons.

Finally, in summing up the consideration stated in this speech, allow me to say that on a whole, this bill is not viable. With that, I would like to say that although I absolutely recognize and support the goal of providing affordable housing for Canadians, after a proper examination, I have come to the conclusion that this bill is fundamentally flawed and cannot be remedied in committee.

[Irene Mathyssen, NDP, London—Fanshawe, ON]

Mr. Speaker, in my riding of London—Fanshawe there is a desperate need for affordable housing.

Families are struggling to find housing for their children so that these children have a safe place to live and from which to go to school. Young mothers are struggling to find the housing they need to escape abusive relationships. Seniors whose pensions have not kept up with inflation now need to find affordable housing. None of this needs to happen. This bill would help to alleviate the housing burden placed on people in my riding and across Canada.

Canada Mortgage and Housing Corporation plans to fund only 8,217 new affordable housing units this year. This is down from over 20,000 last year. Alarmingly, CMHC is projected to build only 1,642 affordable housing units in 2007. This significant decrease will put more Canadians at risk of homelessness.

This bill, sponsored by my hon. colleague, would have CMHC profits that exceed 0.5% distributed to the provinces for social and affordable housing, encourage the supply of quality housing at affordable prices, increase housing choices for people, and create and develop housing cooperatives. I would like to stress the importance of each of these.

First, on cooperative housing, the last federally funded co-op, Talisman Woods, was built in my riding in 1993. This project was extremely important to the community. It allowed the people at Talisman Woods to purchase their units from a landlord who had neglected necessary repairs. This community changed a mouldy, leaky, rundown three storey walk-up into homes in which they could take great pride.

More federally funded projects would definitely benefit those in need in other communities. Cooperative housing not only provides affordable housing but it also provides a community for people to come together.

Social and affordable housing is a critical need in many cities across this nation. There are approximately 150,000 homeless people in Canada. This represents close to 0.47% of the Canadian population and does not include people living in substandard, overcrowded or temporary housing. Based on statistics of shelter use across Canada, nearly one person in every 200 is homeless in Canada.

We also need the supply of quality housing at affordable prices. The economy in provinces like Alberta is booming right now--we have all heard about that--and the cost of housing has skyrocketed. The housing market cannot keep up with demand, especially the demand for affordable housing. People are left with few options and no place to live, and winter is coming, winter in Alberta.

Choice in housing is also crucial. Often, affordable or social housing options are relegated to certain neighbourhoods or apartment buildings. This can hinder the homelessness problem rather than solve it. For example, most affordable housing is in apartments which are not always ideal for families. Often more space is needed. By relegating social housing to certain communities, it very often forces families to move out of their own home communities. People are removed not only from their homes and their communities, but also from their friends and the support and safety networks that they need. Children may be forced to change schools.

As members can see, the case for increased housing choice is critical.

There are two more points I would like to make here. First, I want to emphasize the importance of this bill, especially in light of the Conservative government's current assault on affordable housing. The budget for CMHC has been cut by $45 million. This could have a very real impact on CMHC's ability to administer affordable housing in this country.

According to documents obtained by my office, the cuts, we are told, are merely lower than forecasted interest rates and lower than expected inflation. Either the Conservative government is actually making cuts to the program or it is just shuffling numbers. I really cannot believe that the government is touting that it is saving $45 million because interest rates are lower than expected. That is not something that the Conservative government did, nor can it take credit for it. That money belongs to the Canadian people and should be invested in affordable housing and it should be invested now. No one in Canada should have to face a cold winter without a roof over his or her head.

In my riding of London—Fanshawe, the minister responsible for CMHC promised last August that all SCPI funding had been allocated. When that was found to be untrue, after intense community and media pressure, the money was quickly re-promised. We now find today that this money has still not been received by nine of the ten organizations that were guaranteed their funding was in place. These organizations include the London Homeless Coalition, the AIDS Committee of London, Street Connection, the London Housing Registry, Youth Action Centre, and two first nations organizations. The clock is ticking and one by one these organizations will be forced to scale down, lay off workers or even shut down all together.

It is very clear to me that the government is not making housing, shelters or advocacy for the poor a priority.

The agenda appears to be to give organizations their money as late as possible in the fiscal year. By doing this the government makes it impossible for these groups to spend the money before the end of the fiscal year, March 31. This allows the Conservatives to stand up and declare that funding can be cut because these groups did not use all the money they asked for. This is dirty politics and it is simply not acceptable.

It is very clear that this bill needs to pass so that some money will have to be allocated to affordable housing in this country.

Last, it is my grave concern that this same money may in the end not amount to very much. The recent changes to mortgage insurance which opens up mortgage insurance to competition will negatively affect the profits of CMHC. The current system allows for people who cannot afford a full down payment on a home to still have an opportunity to purchase that home.

It allows low and middle income families across the country access to mortgage insurance. This helps provide working families with safe quality housing. The system also allows for community based groups to have access to insurance rates so that they can build and maintain supportive and other special needs housing.

The current system of a lower flat rate available to everyone is necessary for the housing market and critical for affordable housing developers. If the rate of mortgage insurance premiums are too high, it makes it very difficult, if not outright impossible, to build affordable housing.

Mortgage insurance is a good business for the government. It generates money. In 2005 the net income from mortgage insurance for CMHC was $951 million. While the market has already been partially opened to allow a private company to also provide insurance, the government is now opening up the competition to others leaving no protection for low or middle income families and no option for funding affordable housing.

By opening up the market and letting more corporations compete to provide mortgage insurance without any safeguards, fair access for higher risk and rural Canadians may be in jeopardy. Think of those rural Canadians, Mr. Speaker. We need to provide some way to ensure equality of access by region and by income strata.

As a crown corporation, CMHC must be concerned about profits certainly, but since its only shareholder is the Government of Canada, it has the ability to address the welfare of Canadians instead of just the bottom line.

I have seen no evidence that opening up the system to a number of competitors will actually help people who are looking for mortgage insurance. Nor have I seen any studies that have shown the status quo is problematic. A significant portion of CMHC's business is in markets that are not served by the only existing private mortgage insurer. Opening up the market to more insurers will not bode well for CMHC and will compromise its ability to reinvest money into affordable housing.

This bill has the potential to reach out and help more Canadians who need safe, affordable housing. I encourage all members to support it because, what more important use of public resources is there than securing safe and affordable housing for the community that is the public.

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

Mr. Speaker, I would like to express my sincere gratitude to my colleague, the member for Québec, for introducing this bill, and for defending it with such feeling. The Bloc Québécois is proposing that CMHC limit its capitalization capacity by paying out some of the huge surpluses it has accumulated over the past few years to Quebec and the provinces.

Bill C-285 will enable Quebec and the provinces to invest in housing—specifically, to build social, community and affordable housing. In Quebec, nearly 450,000 households urgently need housing, and in all of Canada, approximately 1.7 million need it.

To learn more about people living in substandard housing and the homeless, I criss-crossed Quebec and Canada last summer. I went to Trois-Rivières, Montreal, Rimouski, Quebec City, Victoriaville, Sherbrooke, Granby, and in my riding, Magog. I also travelled around Canada, visiting Toronto, Winnipeg, Saskatoon, Edmonton, Red Deer, Regina, Calgary and Vancouver. In all of these cities, the people and the volunteers who look after those living in substandard housing are desperate for help.

What really struck me was the lack of permanent housing for vagrants and the homeless. How can we lend a helping hand if there is no housing to give them a fresh start?

The situation is becoming increasingly difficult given the growing income gap. In Canada I have seen so many women, elderly people, entire families living on the streets and aboriginal people without a decent place to live. Even a French travel guide, the Routard guide to Western Canada, talks about it as though it were a Canadian phenomenon. Imagine, it says that Canada has an inordinate number of homeless people in comparison to what Europeans are used to. This is scandalous in a country as rich as ours.

In CMHC's latest annual report, the crown corporation acknowledged that 15% of all housing in Canada is substandard. Consequently, the 15% living in inadequate housing can be added to those without housing.

Edmonton is in the midst of a boom and rents are rising so rapidly—in one case, from $85 to $1,100 per month—that a growing number of individuals and families are living in temporary shacks, despite and even because of full and highly-paid employment. The situation is the same in Regina and in Calgary. People who work in this sector have urged us to publicize this and the fact that there is a need for shelters, cooperatives and housing that is affordable for everyone. Seniors—especially elderly women, single-parent families and unskilled workers, the working poor are being left by the wayside amidst the prosperity in Alberta, Quebec and all Canadian cities.

Since 1998, CMHC has accumulated a surplus of $5.3 billion. It has never been required to have a reserve fund like a bank. Its mandate is to help households obtain quality housing that is affordable for all, including the most disadvantaged.

CMHC is not a private corporation; it is a crown corporation that serves the citizens of Quebec and of Canada. Thus, it makes no sense, and is even immoral, for it to turn away from its mandate and accumulate such a large surplus when most metropolitan areas in Quebec and Canada are currently experiencing a shortage of affordable housing.

This bill will limit CMHC's reserves to 0.5% of its loan portfolio, or just over $1 billion, enabling it to establish an annual reserve of approximately $100 million. According to experts, this amount is more than sufficient to deal with any reasonable eventuality.

In addition, the consolidated revenue fund has always been the ultimate guarantee. In fact, the legislative mandate and the objectives of CMHC are to promote housing construction, repair and modernization; access to regular, affordable housing for everyone, including the most vulnerable in our society; housing for families with three or four children—this no longer exists, you have to buy a home if you want enough space for three or four children; the availability of low-cost financing, in order to include the working poor one day; and stability for the homeless.

This mandate must be reflected in the plan of the crown corporation known as CMHC.

It is our responsibility as the government to ensure that CMHC carries out this mandate and does not get sidetracked into market forces that do not apply to it. This makes poverty a barrier to a just and equitable society.

The government is swimming in recurring surpluses while the poor in our society are drowning because they are unable to pay market rent. I often think about elderly women.

There are two schools of thought now. Europe is abandoning government housing for market housing. However, it is paying for the poor to live there. Until 1993, England, Australia, the United States and Canada helped house the poor in a more traditional manner. Now, the government seems to want to do neither. Has it lost its mind? How can the government of a developed country give up housing its citizens?

Last week, the minister told us that the government was investing $2 billion a year in affordable housing. Let us be clear: this $2 billion is only for mortgage payments on homes built before 1994.

There has been nothing new since then, except for a paltry $800 million from Bill C-48 in the winter 2005 budget. That is far too little money for the government to live up to its responsibilities in Quebec and the rest of Canada. The federal government has completely given up on developing new social housing units. Once again, it has offloaded this responsibility. It is easy to understand why people are disillusioned with this government.

This disengagement on the part of the government, which has the money, has had a devastating effect on low-income households, both in Quebec and in Canada. CMHC is not an insurance company or a bank. Why is it departing from its role? Is it government neoliberalism that is making its way into government institutions such as CMHC?

By creating a reserve fund, CMHC pretends to be engaging in fair play with the big Canadian banks, but it is not playing fairly with the 5 million Quebeckers and Canadians who live below the poverty line, and the 1.7 million households that do not have proper housing, or any housing, for that matter. Its true reserve fund is constituted by subsections 29(1), 29(2) and 29(3) of the Canada Mortgage and Housing Corporation Act to provide assistance for housing, not to provide assistance to the Office of the Superintendent of Financial Institutions.

I must emphasize that the losses from CMHC activities are guaranteed by the government's consolidated revenue fund. With this bill, the Bloc Québécois and the other responsible parties of this House would like to return CMHC to its mandate, which consists in investing its retained earnings in social housing, affordable housing, cooperative housing, and upgrading the 15% of homes that are not up to code.

We are convinced that the provinces are in a much better position to decide how to use this money most effectively. There is therefore no reason not to give this money to the provinces, which will manage it perfectly.

There is therefore no problem with the fact that it is handing this money over to the provinces, which will manage it perfectly.

[The Deputy Speaker, Bill Blaikie]

The time provided for the consideration of private members' business has now expired, and the order is dropped to the bottom of the order of precedence on the order paper.

Pursuant to order made on Thursday, September 28, the House shall now resolve itself into committee of the whole to consider Government Business No. 10. I do now leave the Chair for the House to go into committee of the whole.

[For continuation of proceedings see Part B]

[Continuation of proceedings from Part A]

(House in committee of the whole on Government Business No. 10, Mr. Blaikie in the chair)

The House resumed from October 3 consideration of the motion 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.

[The Acting Speaker, Andrew Scheer]

Order. I would again ask all hon. members who need to carry on conversations with their colleagues to use the government lobby or the opposition lobby so that the House can get to the rest of private members' business.

Resuming debate, the hon. Parliamentary Secretary to the Minister of Citizenship and Immigration.

[Ed Komarnicki, Conservative, Parliamentary Secretary to the Minister of Citizenship and Immigration]

Mr. Speaker, Bill C-285 seeks to require CMHC to transfer funds from its reserve to provincial governments. There is no question that the objective of the bill is laudable in the sense that it encourages social housing. This is something that is already being done by this government and the Canada Mortgage and Housing Corporation.

However, a simple mechanical formula, as that expressed in Bill C-285, is in isolation and without regard to all of the factors that must be taken into consideration and without regard to all the players involved in Canada's housing system.

Canada's housing system involves many players working together to help meet the housing needs of Canadians. The federal government itself, through the auspices of CMHC, is a key player in the system, providing funding and working to promote partnerships that will increase the supply of affordable housing.

Additionally, the federal government helps maintain the existing housing stock and supports research that helps identify new ways to ensure the housing and support requirements of those in need are met.

However, the government does not act in isolation. Provincial governments play a pivotal role in providing housing, funds for housing and support services. Furthermore, municipal governments, community associations and others help with the on the ground delivery and management of housing and associated services. Working with these partnerships is at the core of CMHC's mandate. Through active involvement with partners and stakeholders, CMHC has been serving Canadians for the past 60 years. Beginning in 1946, CMHC was given the job of helping to house more than one million returning war veterans and to lead Canada's national housing programs.

There is also another function of CMHC and that is the insurance and securitization component. In that respect, it is meant to be a commercial enterprise that operates in the private market with others that provide mortgage insurance. With respect to the introduction of mortgage insurance by CMHC relating to building or house loans, it operates as a business, a business that earns its income from insurance premiums and fees but at rates that are competitive with and on a level playing field with other business enterprises offering a similar service.

This bill essentially requires, in accordance with an inflexible formula, the transferring of CMHC's mortgage insurance profits to the provinces for social housing purposes. This initiative would not require further parliamentary debate or approval where all parliamentarians would have the opportunity to examine and put the initiatives to the test. It plans to have an arbitrary formula based on specific percentages without regard to those items that might essentially cause a need to have a greater reserve. The bill proposes to have the transfer made automatically without any parliamentary consultation whatsoever.

The clause, as it now reads, intends to amend section 29 that establishes a reserve fund. It states that moneys get placed to a reserve fund after taking into account a series of events like bad debts, depreciation and anticipated future losses. I find that some of those are calculable but the anticipated futures losses are dependent, in a large part, on the economy, on interest rates and a whole series of factors. To arbitrarily fix it at a specific rate, as being proposed in this bill, does not bear relationship to those factors and certainly is not something I could support.

While CMHC is not a private insurer, it is subject to the same risks and follows the same guidelines set by the Office of the Superintendent of Financial Institutions for capitalization for prudent management and in order to maintain a level playing field with private mortgage insurers. The reserves required by the OSFI serve to protect the Canadian taxpayer from potential future costs arising from mortgage defaults. If, indeed, the interest rates were to go up substantially, there would be a significant claim on the reserve fund. If that fund were transferred out according to an arbitrary formula and without regard to potential loss, it could have significant effects on the Canadian taxpayer because, in the end, it is the Government of Canada that guarantees the due performance of the mortgages.

In order for CMHC to be competitive with other institutions that are operated privately to provide the same services, it needs to establish a reserve to properly capitalize its assets to ensure that if there is an economic downturn it can cover those losses.

Currently, to purchase a home in a low equity ratio of say 95% or 5%, those loans are insured by CMHC, which is backed by the Government of Canada that has a stake in this matter. It can provide housing to first time homebuyers at a very low down payment of 5% in this case and interest rates that generally would not be available unless one had a 25% down payment. This insurance is financed by premiums that go into the CMHC revenues.

Without a doubt, the CMHC plays a distinctive role in our housing system and delivers substantial benefits to Canadians. For example, CMHC mortgage insurance has helped one in three Canadian families buy a home of their own with as little as 5% down and at interest rates comparable to those for homebuyers with a down payment of 25% or more.

I have less difficulty with the objects of the use of the funds proposed to be transferred from CMHC than the formula suggested to raise those funds. Those objectives are: first, for social and affordable housing purposes; second, to encourage a supply of quality housing at affordable prices; third, to increase housing choices for the people in the provinces; and finally, to contribute to the creation and development of housing cooperatives.

It is also important to recall that the government is already taking action in all of the four aforementioned areas. For example, through CMHC, the federal government has demonstrated its commitment to social and affordable housing by spending $2 billion annually, primarily in support of some 633,000 households.

In addition, a major component of CMHC's assisted housing efforts are directed toward Canada's aboriginal population, both on and off reserve. CMHC provides funding for specialized housing construction and renovation programs, capacity development and ongoing subsidies for existing portfolio of assisted housing on reserve.

Moreover, we are encouraging the supply of quality housing at affordable prices. For example, we are moving ahead with the $1 billion affordable housing initiative and working with provincial, territorial and other stakeholders to deliver affordable housing for Canadians.

More broadly, the one percentage point reduction of the goods and services tax is helping Canadians by making housing more affordable. As well, the budget includes a provision for a strategic investment of as much as $1.4 billion to establish three housing trusts. These trusts will focus on affordable housing, northern housing and housing for aboriginal people living off reserve.

Likewise, we are also working to increase housing choices. Funding for CMHC's residential rehabilitation assistance program, commonly referred to as RRAP, and several related housing, renovation and adaptation programs has been extended for 2006-07 at a cost of $128 million. RRAP provides financial assistance to repair homes occupied by low income people. This program is also used to create housing by converting non-residential buildings into residential use.

We are also providing resources for cooperative housing. Across Canada, where CMHC administers, there are about 53,000 households living in some 2,000 non-profit housing co-ops currently in operation. In addition, where CMHC administers on behalf of the federal government, CMHC will provide some $100 million in 2006 to federal cooperatives under various programs. This is how it should work, where parliamentary appropriations address the needs envisioned by the objectives outlined.

However, the proposal to use profits in a mortgage insurance business for social housing purposes means essentially that the premiums are, in effect, being used for social objectives and are, in effect, being funded by individual homebuyers as opposed to the Government of Canada.

Bill C-285 would lock the government and Parliament into a very rigid formula that would circumvent, not only Parliament's direction but also do it at the expense of first time homebuyers and those purchasing mortgage insurance.

It is for these reasons that I cannot support the bill. We cannot use moneys collected from premiums made by first time homebuyers and use those funds for social housing objectives or any other objectives for that matter. Those types of objectives should be made by Parliament and by appropriation from this House where everyone has an opportunity to contribute to the process and actually have a vote because in the end it is the taxpayer that is responsible.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I am pleased to participate in this debate on private member's Bill C-285, an act to amend the Canada Mortgage and Housing Corporation Act related to the distribution of profits to the provinces.

I think the bill, in terms of its intent, is a laudable goal. In fact, it certainly covers some of the objectives which a number of other programs within the Government of Canada already share.

The bill basically calls for the distribution of profits from CMHC, being a crown corporation, and the appropriation of the profits and the reserves from the crown corporation would be distributed to the provinces on a per capita basis. The bill provides for somewhat of a formula for doing this.

Ultimately, the objective of the bill is to provide 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 co-operatives.

Prior to becoming a member of Parliament, I had the opportunity to serve on the board of the Peel Regional Housing Authority. It was a jointly funded housing authority with the Province of Ontario in cooperation with the region of Peel and Peel non-profit, which is the region's own not for profit housing service.

The Peel Regional Housing Authority took care of some 2,000 housing units. Half of them were senior units, who usually paid their rent on time, and the units were well kept. The other half were family units, 75% of which were lone parent situations, mother-led families usually, often with financial difficulties.

It is an extremely difficult job to be in the social or so-called affordable housing business. It takes the collaboration of not only the municipalities, the regions and the provinces, but also the federal government. A number of initiatives have evolved over the years to ensure that some of these objectives are being appropriately dealt with, whether it be rent geared to income arrangements or rent supplement where people are permitted to pay what they can afford, and it deals with developers.

Housing is not solely a federal responsibility. Social housing is a provincial responsibility and that has been seconded to the regional level of government. I know that our offices often deal with these situations. People who have the pressures of the demands for affordable housing invariably have other problems that they have to deal with. It may be children's issues or personal financial issues and people are looking for some advocacy by their member of Parliament to help them out of a difficult situation. Many times they have other social situations and disabilities within their children. It is probably one of the toughest areas, I must admit, that has been prevalent in my work as a member of Parliament over some 13 years, and I have tried to be sensitive to the needs.

This particular bill is sensitive to those needs and seeks to look to the Canada Mortgage and Housing Corporation, which is a crown corporation, but is also a commercial business. It has reserve requirements based on its housing stock and on capitalization needs. There are established financial standards within the office of the Superintendent of Financial Institutions. It operates within the guidelines provided to it to ensure there is proper coverage for its portfolio and for its exposures and liabilities, and it must be competitive. When we think about it, some $2 billion is being made available for the purpose of achieving its overall objectives.

In just a general sense, CMHC, the Canada Mortgage and Housing Corporation, lends money to individuals who do not have enough money for down payments. It offers, for an additional cost, mortgage loan insurance which enables people to buy houses. Potential buyers, who only have 5% of the capital needed to buy a house, can receive a mortgage loan from CMHC in addition to the mortgage loan they receive from the bank. As we can see, a significant role is being played.

There is another aspect to the bill, or that is related to the bill, that must also be taken into account. It has to do with a term that we have discussed quite a bit in this Parliament and that is accountability.

The profitability or the operational income or loss of any crown corporation is consolidated into the consolidated revenue fund. In fact, the financial position and performance, the surplus or deficit for a year, of the Government of Canada on an annual basis includes the operations of these crown corporations to the extent that there are prior year surpluses that have been accumulated to provide the financial protection for the exposure that CMHC has made. These have already been accounted for. To the extent that we take these profits out, one of the things that it will do on an annual basis is actually, on a comparative basis, reduce the surplus or increase the deficit of the government's financial position, simply because prior years had the profitability from this commercial venture.

The other issue is that the bill seeks to have this money simply transferred to the provinces, effectively on a per capita basis. If we were to do that, we would be dealing with matters which relate, not only to equalization but also to program funding, which we have. It means that cash, over and above which has been agreed upon by the provinces, would now be appropriated to the provinces. However, once the federal government loses that or delivers the money, we do not have a string to say that the money is there for this purpose and it should be used for that purpose.

However, what if it is not? What if we do not achieve our objectives? How does the federal government that taxes Canadians to achieve the revenue requirements to support programs and operate crown corporations, to run viable commercial ventures in areas where Canadians need support, and to make a reasonable profit competitive with the industry in which they are participating, take those moneys, which belong to Canadian taxpayers and transfer it to the provinces and not have some sort of accountability? The bill does not provide for that accountability and it is probably one of the biggest flaws of the bill.

It is not good enough for any level of government to collect money basically from its constituents, its taxpayers, and to use that money to give to someone else for whatever purpose without having those rigours.

Crown corporations are subject to review and audit by the Auditor General. If those funds are being transferred, the operation and use of those funds would be outside of the purview of the Auditor General. We would not even have a mechanism to ensure that the funds were properly safeguarded and used for the purpose for which they were intended.

As we can see, in general I am sure that all hon. members will agree that the spirit of the member's bill, Bill C-285, is certainly laudable. It is certainly an objective of all Canadians to ensure that affordable housing is in reasonable supply for those who need it.

Social housing is a slightly different issue because now we are talking about those who are unable to have housing. They would be on the streets otherwise and these are generally outside the purview of the Government of Canada in its role as it works. To suggest that this is dealing with both social and affordable housing issues would tend to provide an intrusion of the Government of Canada into provincial jurisdictions. This raises yet another issue and certainly there has to be respect. The Constitution provides for the constitutional responsibilities that have been assigned to the provinces.

Having said all that, I want to congratulate the member on raising an important issue about the need to be sensitive to the needs of Canadians with regard to affordable social housing, but unfortunately, this bill is perhaps not the instrument we need to enhance that objective.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Mr. Speaker, I am pleased to rise this evening in support of Bill C-285, an act to amend the Canada Mortgage and Housing Corporation Act. We believe this bill will help alleviate the housing burden placed on people, not only in my riding but right across Canada.

The bill would have CMHC profits that exceed 0.5% distributed to the provinces for social and affordable housing, to encourage the supply of quality housing at affordable prices, to increase housing choices for people, and for the creation and development of housing co-operatives.

In the city of Toronto, where I come from, there are about 65,000 households on a waiting list for assisted housing. It can take up to 12 years for a family on the list to get a three bedroom apartment. Housing is clearly in crisis.

In my own riding of Parkdale—High Park, a mere 12 affordable homes have been completed since 2001, according to a June 2006 report from the City of Toronto's Shelter, Support and Housing Administration, and another 21 are under development. But this is a riding where there are more than 24,000 people living below the poverty line and more than 10,000 very low income households, that is, households with annual incomes below $20,000.

These very low income households can afford a rent of about $500 a month based on the standard calculation that they should spend no more than 30% of their annual income on shelter. The average market rent in my riding of Parkdale—High Park for a typical two bedroom apartment is $1,085. This is double what the poorest households can actually afford.

The real culprits behind this crisis are the federal and provincial governments, which have cut funding and then downloaded housing responsibilities. The federal government cut new affordable housing funding in 1993 and Ontario followed in 1995. The federal government downloaded most federal housing programs to the provinces and territories in 1996, and Ontario followed in 1998 by downloading to the municipalities.

As homelessness and housing insecurity have grown following the housing cuts, governments have tried to respond with a patchwork of funding and programs, but the federal homelessness programs are due to sunset at the end of fiscal year 2006. Literally thousands of services that provide critical relief to tens of thousands of homeless people are at risk.

The federal government recently allocated $1.4 billion of the $1.6 billion in housing funding from Bill C-48, which was a result of the NDP's amendment to the last Liberal budget, passed in 2005, but that is nothing more than a down payment set against years of cuts, downloading and neglect.

There are some people in this country who are now recognizing that we have a housing crisis even in the province of Alberta. Retiring Alberta Premier Ralph Klein announced Tuesday that he would allocate $16 million for new affordable housing in Calgary.

He stated this week that the struggle of the homeless and working poor in places like Calgary and Fort McMurray is unfortunately more of a challenge today than ever. He said it is a great concern to see that half of Calgarians who are homeless right now have a job and are simply not making enough money to afford appropriate accommodation.

I should say that I have introduced a federal bill to increase the minimum wage to $10 an hour, which would also help people who fall under federal jurisdiction.

Mr. Klein at least is doing a little. It is very late, but it is great to see that at least one Conservative is finally starting to get it.

We need now to deal with homelessness and housing insecurity. We need to make sure that the levels of government that have the funds to deal with housing are putting money into housing.

In May 2006 a United Nations committee of experts in Geneva released its latest review of Canada's compliance with international economic, social and cultural rights and called homelessness and affordable housing a crisis in Canada that is a national emergency. I certainly agree with that assessment.

I want to emphasize the importance of this bill, especially in light of the Conservative government's cuts to housing funding and affordable housing in general.

It is my grave concern that the money that could come as a result of this private member's bill may not amount to much because the recent changes to mortgage insurance, which opens up mortgage insurance to the market, will negatively affect the profits of CMHC.

CMHC insurance is important to people who cannot afford a full down payment on a home, but still want to have the opportunity to purchase a home.

Mortgage insurance is a good business for the government to be in. It generates money. In 2005 the net income from mortgage insurance for CMHC was nearly $1 billion. As a crown corporation, CMHC must be concerned about profits, but since the shareholder is the Government of Canada, it has the ability to address the welfare of Canadians instead of just the bottom line.

Assuming the goal is not to have CMHC removed from mortgage insurance altogether, it is very likely that new competitors will take the more profitable and stable contracts, leaving CMHC with only the higher risk and less profitable ones. This would put housing insurance at risk for lower income families as CMHC would have fewer funds to access. Any hopes that profits from CMHC mortgage insurance could be used to create affordable housing in Canada would then be greatly reduced or eliminated.

The real solution here is that we need a national housing strategy that needs all levels of government to make significant investments in affordable, supportive and co-op housing. This bill does not solve all of those problems. We do have a national crisis, a national emergency, in affordable housing in this country, but we believe that this bill is one positive step and that is why we support it.

[Louis Plamondon, Bloc, Bas-Richelieu—Nicolet—Bécancour, QC]

Mr. Speaker, the Bloc Québécois proposes that the Canada Mortgage and Housing Corporation transfer any surplus from its reserve fund to the provinces for them to provide social housing. The Canada Mortgage and Housing Corporation must respect its mission, which is to help Quebeckers and Canadians purchase safe, affordable, quality housing, as mentioned in the activity report. To do so, the corporation must first stop accumulating its undistributed profits and setting them aside for capitalization. That is the crux of the matter.

I was talking with my colleague from Vaudreuil-Soulanges and she told me that ordinarily in her riding there is always an accumulation of 30% that is kept with a view to a second phase for housing. There are now accumulations of 75% because this money cannot be used to carry out a second phase. It is actually kept and controlled by the Canada Mortgage and Housing Corporation and consequently transferred to capitalization. This is not the role of the Canada Mortgage and Housing Corporation. Its mission is clearly defined. Its primary role is to provide affordable housing.

For example, in the riding I was talking about a while ago, housing is required so that workers can live near their work. In that region, the cost of a house or a condo is so high that workers cannot afford them. In such places, the search for skilled middle-class workers is difficult for these companies because there is no easy access to housing. This is the problem the Bloc wants to fix.

First, the corporation must stop accumulating these undistributed profits for capitalization, as it has been doing since 1998, and promote investments in social community, and affordable housing. These surpluses now account for $5.3 billion. The needs are obvious, in both Quebec and the rest of Canada. In Quebec, there are 450,000 households with pressing housing needs, while for Canada as a whole, there are 1.7 million such households.

The Bloc is calling for negotiations to resume for the compete transfer of responsibility and funds for housing, because, as it correctly says, this is a matter under provincial jurisdiction, and this transfer must take place as soon as possible and as smoothly as possible so that Quebec and all of the provinces are able to direct the construction of this housing, making sure that the cost associated with renewing the housing stock is included.

The purpose of this bill is therefore to limit the capitalization capacity of the Canada Mortgage and Housing Corporation, for the reasons I have stated, and to reinvest those undistributed profits instead of systematically capitalizing them when the need is so urgent. The bill will limit the potential equity of the Canada Mortgage and Housing Corporation to 0.5% of its loan portfolio, or over $1 billion, which is really very reasonable. This will also enable it to establish an annual reserve of about $100 million. Those amounts are more than enough to cover any eventualities, particularly if we consider the fact that this is a crown corporation and not a private insurance company.

In more specific and more concrete terms, this bill will limit the power of the Canada Mortgage and Housing Corporation to capitalize, by limiting the amounts that can be retained in the reserve fund to 0.5% of the housing loans for which the corporation insures against risks, and to 10% of its equity. What these measures will do is ensure that anything in excess of the mandated amounts in the reserve fund and in equity will be returned to Quebec and the provinces so that they can invest the money to meet what is becoming an increasingly urgent need, as I said earlier.

If we look at the balance sheet for 2006, 0.5% of $264 billion amounts to $1.3 billion. That is the maximum amount that the Canada Mortgage and Housing Corporation may retain in equity, and 10% of $1.2 billion is $132 million, the maximum amount that the Canada Mortgage and Housing Corporation may retain in its reserve fund.

The surplus equity, which is nearly $4 billion, and any surplus in the reserve fund, there being none at present, will go directly to Quebec and the provinces.

The Bloc Québécois believes that the federal government, which has the resources, must invest massively in social and community housing. The reinvestment must ultimately amount to the equivalent of 1% of government program spending, or nearly $2 billion per year at the end of three years. However, as I said earlier, the provinces, and Quebec in particular, must be the ones in charge of all of these reinvestment efforts.

As well, the Bloc Québécois believes that the housing market is a matter within the prerogative of the Government of Quebec. It is important that this transfer carry with it full financial compensation to remedy the historic injustices that Quebec has suffered in respect of social housing.

We would point out that this is not inconsistent with the mission of the Canada Mortgage and Housing Corporation, whose statutory mandate is to encourage residential construction and the repair and modernization of existing housing; to help provide access to a wide choice of affordable homes; to improve housing conditions; to ensure that low-cost financing is available; and to sustain a vibrant housing market. It must therefore stop capitalizing and put the money to work in order to fulfil its own mission.

At the same time, this mandate will be reflected in the corporate plan through the objectives that CMHC has set for itself as the main instrument of the federal government’s housing policy. Its objectives will therefore be to improve housing choice and affordability for Canadians and Quebeckers, improve housing and living conditions for Quebeckers and Canadians, support market competitiveness, job creation and housing sector well-being, and be a progressive and responsive organization. Be progressive says it all. That does not mean become a capitalist business. Quite the opposite, it is about social investment with limits, as provided by the parameters in this bill.

Canada Mortgage and Housing Corporation has an accumulated surplus of $4.4 billion, which will reach $7 billion by 2008 if current trends continue. These surpluses are due primarily to the fact that, since 1998, almost all the retained earnings from its insurance activities have been devoted to capitalization.

Liberal critics said at the time all over the place that they were already spending 1% of the government’s program expenditures on social housing, except that these expenditures went mostly to paying mortgages on social housing built before 1994. There was nothing new, no new construction.

After that, the federal government completely withdrew from building new social housing units, at least until 2001. Needless to say the federal government’s 11-year withdrawal from the building of social and community housing had a devastating effect on moderate-income households in Quebec. Now that the Conservatives have been elected, they remain silent, which is hardly any better.

The Conservative position was very clear during the election campaign. They promised $200 million a year and federal tax credits administered by Canada Mortgage and Housing Corporation to encourage developers to build and restore affordable rental housing. The funding would be distributed among the provinces on a per capita basis but minimum funding would be guaranteed to the smallest companies. That is what the Conservatives promised. But now they remain silent.

What I find even more scandalous is the fact that these MPs from the Quebec City area, the 10 Conservative members from Quebec, remain completely silent, not only in this regard but in regard to Kyoto as well. The Kyoto protocol is simply being killed, and they remain silent. They remain silent too on the purchase of military equipment to the tune of $17 billion without consulting the House. On this social housing project, which is essential to the Quebec City area and all regions of Quebec, they remain silent. Not one of them has risen to defend Quebec’s interests. I want to ask them, therefore, if they were really elected to defend Quebec and not just their extreme right-wing party, to rise and defend this bill in the interests of their fellow citizens.

[Mark Warawa, Conservative, Parliamentary Secretary to the Minister of the Environment]

Mr. Speaker, I welcome the opportunity to speak to Bill C-285. I followed the debate with interest and I am pleased to have the opportunity to contribute to the discussion.

I share the views expressed by my Conservative and Liberal colleagues, who argue that the Canada Mortgage and Housing Corporation should stay the course in terms of prudently managing its self-sustaining commercial activities.

As the House has heard before, 100% of CMHC's surplus relates to the self-sustaining activities and CMHC has a mandate to operate its insurance and securitization activities in a commercially viable manner. To do that, it sets aside capital reserve to ensure that sufficient capital is available to meet future risks.

Let me illustrate this with actual figures. In 2005 CMHC capital reserve was 1.2% of the outstanding mortgages it had insured. More specific, that is $3.4 billion against $274 billion in insured mortgages. This is consistent with directions set for private sector insurers by the Office of the Superintendent of Financial Institutions.

Also, CMHC's surplus, including amounts set aside for capitalization, forms part of the Government of Canada's accounts and is included in the calculation of the government's surplus or deficit position. This means that both budgeted and actual federal annual surplus figures include CMHC's net income. CMHC's retained earnings have serviced to reduce the government's accumulated deficit over time.

Beyond the arguments regarding prudent financial management, Bill C-285 would also mandate a rigid approach to housing policy, an approach that would not serve the interests of Canadians as it would legislatively mandate housing investments without regard to the current need of Canadians and how those needs may evolve.

Moreover, the bill would distribute funds to provinces on a per capita basis, thus ignoring the needs of aboriginal people, whose housing conditions remain well below those of most Canadians. Housing supply shortfalls, crowding and inadequate housing on reserves in the north and remote communities are of particular concern.

Our first budget recognized these needs and investments in a $300 million northern housing trust and a $300 million off reserve aboriginal housing trust. This new funding will be a source of housing solutions for aboriginals and will address the cost of housing and extent of housing needs in the far north. In addition, the budget also included an investment of $450 million over two years for education, water services and housing on reserves, as well as to generally improve social economic outcomes for aboriginal women, children and families.

Most Canadians never have to wonder whether they have a safe warm place to come home to. However, many segments of our population are in need of safe and adequate housing.

Let me take this opportunity to highlight some of the innovative ways the Government of Canada through CMHC is dealing with some of the issues addressed in Bill C-285.

Imagine, for example, a single mother who is fleeing from domestic violence, trying to raise three small children in a shelter or cramped studio apartment. CMHC's shelter enhancement program assists in repairing, rehabilitating and improving existing shelters for women and their children, youth and men who are victims of family violence. Through its assisted housing programs, CMHC can provide people affected by violence a way of transition out of the shelters when they are ready.

Seniors are a fast growing segment of the Canadian population. Many senior citizens want the simple dignity of being able to stay independently in the house that they have come to call their home for over 30 years. CMHC home adaptations for seniors independence program helps homeowners and landlords pay for minor home adaptations. This means that seniors with low to medium incomes can continue living in their homes longer.

These are just a few examples of how the Government of Canada, through CMHC, is already tackling the issues addressed by Bill C-285.

Moreover, I would like to remind the member for Québec that we also are taking concrete action on housing renovations. Our housing strategies seek to maintain the existing affordable housing stock in addition to creating new units. In this regard, funding for the residential rehabilitation assistance program and several related housing renovation and adaptation programs has been renewed for 2006-07 at a cost of $128.1 million.

Using these figures once again to illustrate the impact of these programs, in 2005-06, 12,150 units were rehabilitated, close to 3,000 units were repaired on an emergency basis, some 1,220 shelters for victims of family violence were renovated, and 1,945 seniors were helped to live independently.

The Bloc Québécois has suggested during this debate that spending approximately $2 billion per year primarily in support of some 644 households is not good enough. I would like to remind the Bloc that we are in fact in the process of delivering on the $1 billion affordable housing initiative in collaboration with provincial, territorial and local partners. Thanks to that funding, new affordable housing is being created in communities across this country as we speak.

As of June 2006, over $659 million has been committed or announced to create a total of over 27,000 new units of affordable housing. Through agreements with each province and territory, this funding is being used to create affordable housing for a wide range of Canadians, including seniors, persons with disabilities, new immigrants and low income families. Recognizing the importance of affordable housing, the 2006 federal budget also provided for an investment of $600 million to help increase the supply of affordable housing.

These are all examples of programs and investments that meet the changing housing needs of Canadians. They are in place because, as parliamentarians, we have the ability to ensure that our housing investments do in fact respond to the changing housing needs over time while delivering results and targeting those most in need. In contrast, Bill C-285 would force CMHC and future Parliaments into a rigid, inflexible stance on the question of budgetary reserves.

I have to say that I agree with the Liberal member for Cardigan who stated during the first hour of debate that this bill is problematic from an accountability perspective, noting that it would eliminate parliamentary review of housing expenditures. The hon. member for Cardigan also briefly highlighted the fact that Bill C-285 is problematic in terms of equity of distribution, as he put it.

The federal government has an important role to play in ensuring that the housing needs of Canadians, which are so different from region to region, are adequately met. How would an automatic annual per capita distribution of funds to provinces and territories ensure that federal housing dollars are delivering results where they are most needed? Clearly Bill C-285 would take away the government's ability to be responsive to the changing and diverse housing needs of Canadians. We would not only in effect be tying the hands of future governments, we would also be weakening CMHC's ability to adapt to changing market conditions and to address the true needs of Canadians.

It is for the aforementioned reasons that I urge all hon. colleagues to join me in doing the right thing and voting against Bill C-285.

[The Acting Speaker, Andrew Scheer]

The hon. member for Québec has five minutes to conclude the debate.

[Christiane Gagnon, Bloc, Québec, QC]

): Mr. Speaker, five minutes is not much to talk about the issue of social housing. I can see that the Conservative Party and the Liberal Party have more or less the same view on this issue, which is nevertheless important for the Canadian and Quebec population as a whole.

When I am given the list of repairs that have been done in social housing that already exists, I have to believe that there have been some. Still, what we want to deal with in this bill is not only the renovation and restoration of already existing housing, which dates to before 1994. Of course attention is required when roofs leak, hot water heaters have to be replaced and windows are broken. So 1% of expenditures for all government programs, or $2 billion, goes to pay social housing mortgages that already exist, as well as repairs.

What Bill C-285 is seeking is new social housing. When we look at the situation, there are 450,000 households in Quebec that need social housing and $1.7 million in all of Canada. Why? Because families are living below the poverty line. Families are living with annual incomes of $10,000, $15,000 and $20,000. We know there has been an increase, in all the large Canadian cities and in Quebec, in the cost of housing and rental housing. Rents are higher. So families cannot find affordable housing, social housing.

The Conservatives share the same view as the Liberal Party. They say that we cannot go looking for money from the CMHC in spite of its surpluses because, we are told, it needs its reserves.

I think that the Bloc Québécois is responsible enough to recognize that reserves are necessary. Even the Office of the Superintendent of Financial Institutions says that it could keep 1% of its capital. If the CMHC has $233 billion in loan guarantees, there could be 1%, which would mean over $2 billion in reserve. The $2 billion remaining could be transferred to social housing.

They try to pass us off as people who lack common sense, who wanted to strangle CMHC, while it could also have a reserve.

I believe that there are urgent needs. We know that CMHC is not a private business but a crown corporation. It must return to its social mission. That is what we are asking for.

To respect its social mission, CMHC could ensure that more Canadians have access to decent housing with the money available in their budgets, which is often very limited.

Often, when a person does not have much money, housing is too expensive; if you earn a low salary and are not able to pay for it. Living accommodations cost at least $450, $500 or $600. Many people living alone cannot afford that on their salary or pension. They need help. In any case, there must be a sense of sharing, a feeling of community, and a social sense to be able to help all the people in that situation get decent housing.

I think it is a slight exaggeration when people say that the Bloc Québécois wants to take all the money, all the assets of CMHC, for affordable housing. I would like to bring CMHC back to a more social vision. I am not surprised by the position of the Conservative party. As for the Liberal party, when they were in power they did nothing; they ignored the problem.

I remind the member who just spoke that 1.7 million people in Canada need social housing. I ask the member who just spoke to lean a little more to the left, to have a heart that is a little more sensitive to the reality of people who often live in housing that is not only unaffordable but also unhealthy because they cannot get anything better.

In looking at my colleague, I realize that what I am saying does not arouse in him the least sensitivity toward the situation. I have the feeling that I am talking to a blank wall.

[The Acting Speaker, Andrew Scheer]

The time provided for debate has now expired.

The question is on the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

No.

[The Acting Speaker, Andrew Scheer]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Acting Speaker, Andrew Scheer]

All those opposed to the motion will please say nay.

[Some hon. members]

Nay.

[The Acting Speaker, Andrew Scheer]

In my opinion the nays have it.

And five or more members having risen:

Pursuant to Standing Order 93, the division stands deferred until Wednesday, November 22, immediately before the time provided for private members' business.

It being 7:38 p.m., the House stands adjourned until tomorrow at 10 a.m., pursuant to Standing Order 24.

(The House adjourned at 7:38 p.m.)

The House resumed from November 8 consideration of the motion 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.

[The Speaker, Peter Milliken]

Pursuant to order made on Tuesday, November 21, the House will now proceed to the taking of the deferred recorded division on the motion at second reading stage of Bill C-285, under private members' business.

The question is on the motion.

(The House divided on the motion, which was negatived on the following division:)

Vote #78

[The Speaker, Peter Milliken]

I declare the motion lost.

It being 9:15 p.m., the House stands adjourned until tomorrow at 2 p.m. pursuant to Standing Order 24(1).

(The House adjourned at 9:14 p.m.)