An Act to amend the Income Tax Act (Home Buyers' Plan)

This bill was last introduced in the 39th Parliament, 2nd Session, which ended in September 2008.


John Cummins  Conservative

Introduced as a private member’s bill. (These don’t often become law.)


Not active, as of June 10, 2008
(This bill did not become law.)


This is from the published bill. The Library of Parliament often publishes better independent summaries.

This enactment amends the Income Tax Act to increase the eligible amount for the Home Buyers’ Plan to $25,000.


All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament. You can also read the full text of the bill.

Income Tax ActPrivate Members' Business

June 10th, 2008 / 6:30 p.m.
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John Cummins Conservative Delta—Richmond East, BC

Mr. Speaker, I would like to thank those members of Parliament who spoke in support of Bill C-520 today and on April 15. I would like to highlight some of their comments briefly.

Bill C-520, as has been said, will increase from $20,000 to $25,000 the amount of money first time homebuyers can borrow from the savings they have accumulated in their RRSPs. That, of course, would increase the amount a couple could utilize from $40,000 to $50,000.

This will be the first adjustment in the borrowing limits since the homebuyers plan was created in 1992. Of course, much has changed since 1992 and it is time to bring the plan up to date so it can be of even greater use to first time homebuyers.

Canadians like the homebuyers plan today and they have liked it from the moment it was brought forward by a former finance minister, Don Mazankowski, and was enacted by Parliament.

Canadians have used the homebuyers plan more than 1.8 million times since 1992 and have borrowed more than $18 billion from their own savings, using the plan to make down payments on their first homes.

The homebuyers plan of Bill C-520 will help Canadians realize one of their most fundamental desires: the desire to own a home of their own.

This bill has received strong support from members of all parties represented in the House: the Bloc, the NDP, the Liberals and the Conservatives. Their support is a testament to the support the bill has throughout the country.

I have received hundreds of letters of support from members of the Canadian Real Estate Association and their local chapters and associations across the country. Their hard work in support of Bill C-520 is much appreciated. They are on the front lines and know just how helpful the bill will be to young Canadians hoping to own their first home.

The Canadian Real Estate Association and its provincial associations were at the forefront of the creation of the homebuyers plan and have been working to renew the homebuyers plan for the future. They deserve special thanks for all their hard work on behalf of all homebuyers.

In conclusion, I would like to ask that all members of the House lend their support to Bill C-520. First time buyers are relying on us to get on with the business of amending the homebuyers plan so they can make greater use of their own savings to put together that all important down payment on the purchase of their first home.

Income Tax ActPrivate Members' Business

June 10th, 2008 / 6:20 p.m.
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Leon Benoit Conservative Vegreville—Wainwright, AB

Mr. Speaker, I appreciate the opportunity to speak very briefly to this bill. Private member's Bill C-520 brought forward by my colleague from Delta—Richmond East allows first time home buyers to take up to $25,000 from their RRSPs, rather than the $20,000 limit that is in place right now. It is an update of what has been accepted and available in Canada for some time now.

This is an excellent measure. I am confident the bill will be passed by the House. We can tell that from what members have said.

The other thing that our government did in the last budget was to put in place a tax-free savings plan which allows wage earners to put aside up to $5,000 per year and the interest earned on that $5,000 accumulates tax free. This plan will commence in the 2009 tax year.

These plans, along with some other changes to the tax law that have been brought about by this government over the last two and a half years will make it much easier for first time homeowners to accumulate the money required for a down payment on a house.

Other members have mentioned the problems caused by having no down payment or a very small down payment. We have seen the mess that has been created in the United States and which has spread around much of the world. This measure is a very good step toward allowing an amount, in this case up to $25,000, to be taken from registered retirement savings plans accumulated over whatever period of time and put toward the purchase of a new home. Of course that money over a 15 year period would be put back into the registered retirement savings plan. Therefore, the integrity of registered retirement savings plans and the purpose of RRSPs, which is to save for retirement, would be maintained as well.

I want to commend the member for Delta—Richmond East for bringing this bill forward. The bill certainly demonstrates the incredibly beneficial measures that can be brought forward through a private member's bill. I commend him for that as well.

Income Tax ActPrivate Members' Business

June 10th, 2008 / 6 p.m.
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Peter Goldring Conservative Edmonton East, AB

Mr. Speaker, it is a privilege to rise to support the bill brought forward by my colleague, the member for Delta—Richmond East. He is to be commended for not only identifying a situation that could be improved, but he has also offered to the House the means to provide that improvement.

Bill C-520 is an act to amend the Income Tax Act with respect to the home buyers' plan. It is a simple bill with a clear intent to make housing more affordable for Canadians by increasing the maximum amount that can be withdrawn from a registered retirement savings plan to be used under the home buyer's plan.

Home ownership is a dream and a goal that is just about universal. When young Canadians finish their education and head out into the workplace for the first time, they need a place to live. For most, this is the first time they are truly living independently from the parents and it is a challenging experience.

With the first job, frequently comes the first apartment, most likely to be shared, to be affordable, but still it is a rented space that is a place to live, not really a place to be considered a long term home. It is a way station in life, not intended to be permanent. The permanency comes with home ownership, a place that can be truly called their own.

Owning a home is something to which most Canadians aspire and purchasing a home is usually the biggest financial transaction most of us will make in our lives. With the passage of this bill, that dream and goal of owning a home would become a little more possible for many Canadians.

The home buyers' plan was first introduced in February 1992 by the Conservative government. The wisdom of the program is self-evident and the subsequent government kept it in operation. The idea was and is to encourage and reward thrift by allowing individuals to withdraw money from their registered retirement savings plans, tax-free, as long as the money is used for a down payment on a first home and is re-deposited to the RRSP over a period of 15 years. The maximum amount that can be withdrawn for an individual is $20,000.

The repayment plan is within the means of most Canadians. The participants have 15 years in which to repay the amount they borrowed from their RRSP or face paying taxes on the money as income. That is certainly manageable with careful budgeting, especially given that the participants have already shown that they know how to save since they managed to save the money in the first place.

However, since the introduction of the home buyers' plan, about 1.5 million Canadians have taken part in the program, borrowing more than $15 billion from their RRSPs to be used as a down payment on that first home.

This is an example of a government program that works the way it should. There has been no need for extensive advertising to convince people that this is a good idea. Right from the beginning, Canadians embraced the home buyers' plan. Canadians understand the need to plan for the future and the importance of owning their own home is part of that plan.

The existence of the home buyers' plan has encouraged young Canadians to start planning for the future at perhaps an earlier age than they would have otherwise, opening RRSPs with the intent of using that money as down payment for their first home under the home buyer's plan.

Saving for the future is not as common as it once was. Statistics Canada tells us Canadians are not as thrifty as they were a generation ago. A personal savings rate is a fraction of what it once was, which makes the savings that come from an investment in a home even more important. Any decline in savings is a matter of some concern and it is good to encourage Canadians to prepare for their futures.

Programs like the registered retirement savings plan and the home buyers' plan encourage thrift, which should help provide for more pleasant golden years for our senior citizens, not to mention the joys of home ownership when that first home is purchased.

The hon. member for Delta—Richmond East is to be commended for the bill which will further encourage Canadians to plan for the future. I know he is well aware of the success of the home buyer's plan and is equally aware of how housing prices have soared in the country since the plan was first introduced in 1992.

In 1992, when the home buyers' plan was started, the average price of a house in Canada was $149,000, but by the year 2006 that number had risen to $276,000, and that is more than an 85% increase.

In Edmonton the average sale price of a house was $109,000 in 1992, considerably below the national average. By 2006, in just over a decade, that average cost had risen to $250,000, a 228% increase.

However, the maximum amount allowed to be withdrawn from an RRSP under the home buyers' plan remains unchanged since 1992 at $20,000. It seems to me that given the increase in housing prices in the past 16 years, that an increase in the maximum is in order, and the hon. member for Delta—Richmond East has proposed in the bill a very reasonable increase to $25,000.

Buying a house today means spending more money than when the home buyers' plan was first introduced in 1992. By supporting the bill, the House is acknowledging that reality and doing its part to encourage Canadians to be thrifty.

We all are aware of the economic difficulties that have plagued the housing industry in the United States in the past couple of years. Thousands of first time home buyers have lost their homes, in many cases literally abandoning properties they could not afford to keep.

The economic fallout from the situation of subprime mortgages and asset-backed commercial paper has had a ripple effect throughout the entire American economy and indeed around the world.

Perhaps, if the United States had a different model for home ownership, and perhaps, if it had a home buyers' plan such as Canada, its housing picture would not be as bleak.

The home buyers' plan encourages potential homeowners to save for their purchase. By making a substantial down payment they not only reduce their monthly mortgage payments but immediately will have built up some equity in their property, equity that can be used as collateral if their circumstances change.

In the United States, those who are abandoning their homes frequently bought their homes with the minimum or no down payment and were unable to build up any equity in those homes before interest rates rose and housing prices dropped. They were unable to meet the payments and could not sell the homes for what they owed. It is small wonder that they walked away from their purchase. They really had nothing invested in it.

I have noted with concern that some lenders in Canada have adopted similar measures to make housing more affordable for first time buyers. The traditional 25-year mortgage can now be stretched to 40 years, and the down payment that used to be 25%, then 10%, can now be 5% or even 0%. While that may make purchasing a home easier, it does not always make keeping that home easier.

The home buyers' plan does make keeping that first home easier. It encourages thrift and responsibility, two notable Canadian values.

Certainly, there is support for the bill from across the country. It makes sense that a good idea such as this one is being endorsed by real estate industry groups and financial organizations, as well as Canadians in general.

As a nation we have encouraged our citizens to prepare for their retirement. This marriage of real estate and the registered retirement saving plan is a logical one. Real estate generally appreciates in value and certainly in the long term it is usually cheaper to own than to be paying rent for the rest of one's life. When the mortgage is paid off, hopefully before individuals retire and their income drops, their monthly expenses go down.

It seems wise for the House, therefore, to adopt the idea of the hon. member for Delta—Richmond East and increase the limit that can be applied to the home buyers' plan.

For the participants, this is a matter of short term pain for long term gain. In fact, one can argue there really is no short term pain involved here. Assuming the home buyer follows through with the 15-year repayment schedule, what is lost is the interest the money would have accrued over that 15-year period. But that is counterbalanced by the savings involved in being able to make a larger down payment on a residence than would otherwise be possible. As I see it, both the home buyer and the country comes out ahead.

To summarize, it is my honour and privilege to support the bill brought forward by the hon. member for Delta—Richmond East. I commend him for his forethought and urge the House to consider it favourably.

Income Tax ActPrivate Members' Business

June 10th, 2008 / 5:50 p.m.
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Guy André Bloc Berthier—Maskinongé, QC

Mr. Speaker, I am pleased to speak today to Bill C-520, An Act to amend the Income Tax Act, which would amend the federal government's home buyers' plan.

I would like to thank the member for Delta—Richmond East for introducing this bill. I would also like to highlight the excellent work my colleague, the member for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, has done on this issue.

The bill we are examining today would increase the ceiling on RRSP contributions that an individual could use to purchase a new home from $20,000 to $25,000.

This bill could be very interesting to young couples. It would enable them to purchase their first home, but contributing to an RRSP from a young age also enables them to develop good savings habits. With this bill, the ceiling on contributions would go from $40,000 to $50,000 for a couple with enough money in their RRSP.

Obviously, the Bloc Québécois supports this measure, because it will make it easier for many young Quebec families to purchase homes.

Furthermore, during pre-budget consultations, the Standing Committee on Finance indicated in its report that the government should quickly adopt this measure. It is not expensive, it would help support the construction industry, and, as I said, it would help young couples purchase homes.

In its supplementary opinion on pre-budget consultations, the Bloc Québécois said it supported the recommendation to increase the amounts available under the home buyers' plan in order to make home ownership more accessible. The government did not include this, and many other recommendations, in its recent budget. Let us hope that this bill will help move things along as quickly as possible in the interest of the people we represent.

The federal government's home buyers' plan currently allows an individual to withdraw up to $20,000—$40,000 for a couple—from their registered retirement savings plan to purchase or build their first home. This program works and it is time to increase the amounts involved, given the increase in the cost of housing.

As I just said, the purpose of this plan is to help young families buy their first home. It encourages buyers to save money to put a down payment on a house. By putting the emphasis on the down payment, this plan helps the buyer reduce their debt load over the years by significantly reducing their mortgage payments.

Since its creation in 1992, this plan has clearly been effective. Since that time, roughly 2 million people have used this plan with the goal of buying their first home.

To a certain extent, this type of program has helped Canadians and Quebeckers avoid the difficulties that a number of borrowers in the United States have experienced lately. We are all aware of the crisis that climbing mortgage costs have caused.

As I was saying earlier, Bill C-520 proposes to increase the ceiling to $25,000 for an individual and $50,000 for a couple.

Obviously, this amendment was created to respond to the significant increase in the price of houses that we have been seeing in recent years. In the riding I have the honour of representing, the price of houses has risen considerably. Whether in the Trois-Rivières-Ouest area or in Lavaltrie, Lanoraie or Berthier, house prices have risen steadily for a number of years now. It is becoming increasingly difficult for some people to buy their first home.

Improving the program as Bill C-520 seeks to do will help matters somewhat. In addition, I believe that this program will encourage economic development and social cohesion in our regions. More and more young families may choose to move to the regions and contribute to the strengthening of local communities.

As well, adopting this bill is a positive and necessary measure in increasingly uncertain economic times. With the price of gas going up, although the Conservatives prefer to ignore the effects on our communities, it is obvious that the prices of many essential consumer goods, such as food, transportation and of course houses, will unfortunately continue to rise.

In Quebec today, La Presse published an article about how the cost of fuel is causing families' transportation costs to go up. For example, a person living in Lavaltrie who commutes to Montreal every day is now spending $50 to $60 more per week. These costs are significant. We have to lower the interest rates that these young people, and many not-so-young people have to pay to buy their first homes, a purchase that can, in many cases, improve their lives and their living conditions. That is why it is so important to provide our fellow citizens with programs that can help them somewhat.

As legislators, we want to help families buy their first homes, and at the same time, we want to encourage them to save. I think that the committee will have to make some amendments to improve certain aspects of this bill. For example, there is the matter of indexing amounts. This measure is important because it will ensure that in 10 years, for example, the amount set out will still be enough and will still be relevant with respect to changing costs of buying a house. We should not have to come up with a new bill every time.

I will conclude by saying that the Bloc Québécois will support this bill for families because it is in the interest of all Quebeckers and therefore of all Canadians.

As a responsible party, we are prepared to work with the other members to improve the socio-economic status of the people we represent. But I should point out that there are other pressing housing needs. We must not forget that there is still a critical need for social housing. Recently, we have seen that social housing is also a problem in regions such as Rouyn-Noranda and Rimouski. Investment in social housing is also needed.

In conclusion, we need to help low-income individuals and families and the middle class obtain adequate, affordable housing. The federal government needs to step up to the plate on this issue, especially since it can afford to, with its surplus. This money should be used to improve the living conditions of all those who are in need and who need our support to improve their quality of life.

The House resumed from April 15 consideration of the motion that Bill C-520, An Act to amend the Income Tax Act (Home Buyers' Plan), be read the second time and referred to a committee.

Income Tax ActPrivate Members' Business

April 15th, 2008 / 6:25 p.m.
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Gurbax Malhi Liberal Bramalea—Gore—Malton, ON

Mr. Speaker, I am pleased to speak today in favour of Bill C-520, An Act to amend the Income Tax Act (Home Buyers' Plan).

Prior to my election to the House of Commons in 1993, I worked for many years as a real estate agent in the greater Toronto area. During that time I remember the introduction of the home buyers' plan in 1992.

My work in real estate helped give me insight into the importance of home ownership in Canadians' lives. That is why I spoke in favour of extending the plan in one of my first speeches in the House of Commons on February 1, 1994.

The Liberal government made the home buyers' plan permanent in its budget three weeks later. Since then the program has helped hundreds of thousands of Canadians purchase their first home. It has assisted thousands of Canadians with disabilities in finding a home more suited to their needs.

The home buyers' plan seemed like a good idea when it was first introduced and over the years has proven to be a great success.

The program has minimal cost to the government and because participants must quickly repay the money they take out from their RRSP, in most cases it has no negative long term effect on retirement savings. In fact, due to the importance of home ownership in the retirement plans of many Canadians, it could be argued that the plan adds to participants' financial security after they leave the workforce.

Thus, it seems that the only major problem with the home buyers' plan is that the $20,000 allowable amount is set in the Income Tax Act and therefore has not increased since it was first created.

Bill C-520 aims to fix that problem, at least for the time being. It raises the allowable amount to $25,000, a more appropriate amount given today's financial realities.

The need for this increase is great. In the past 16 years real estate prices in Canada have risen at historic rates making the home buyers' plan an even more important incentive, especially for urban Canadians.

The Canada Mortgage and Housing Corporation reported in February 2005:

It is interesting to note that the proportion of participants in the HBP in Toronto, Montreal, Vancouver, Calgary, Ottawa, Gatineau, and Quebec, was higher than the proportion of these cities’ population in the Canadian population. In other words, the Home Buyers’ Plan take up is more heavily concentrated in Canadian urban centres.

It is not hard to see why that might be the case. Since I was first elected to the House of Commons in 1993 the average multiple listing service sale price of a home in Toronto has risen from $196,000 to an incredible $352,000 in 2006.

Prices in some other cities have grown at even faster rates. According to the Canadian Real Estate Association, the average sale price of a home in Calgary was $415,000 in February of this year--

Income Tax ActPrivate Members' Business

April 15th, 2008 / 6:15 p.m.
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Macleod Alberta


Ted Menzies ConservativeParliamentary Secretary to the Minister of Finance

Mr. Speaker, I appreciate the opportunity to speak to Bill C-520, introduced by my Conservative colleague, the member for Delta—Richmond East.

Before I continue, the member has long been recognized as a strong advocate on behalf of his constituents, effectively bringing their concerns to Ottawa since his initial election back in 1993, a stellar record. We applaud the member for Delta—Richmond East for his longevity and his ongoing contributions to Parliament.

We now turn to his latest initiative, a private member's bill that proposes an expansion of the home buyers' plan through amendments to the Income Tax Act.

For those unfamiliar with the home buyers' plan, this program allows a first-time home buyer to withdraw up to $20,000 from an RRSP tax-free to purchase or build a home, as long as the amount is repaid within a specified timeframe of the plan in equal amounts over 15 years. No tax is paid on the amount withdrawn.

The plan's intended objective has been to make home ownership easier for the first-time buyers, while still encouraging long term retirement savings. Since its introduction in 1992, it has helped approximately 1.6 million Canadians to purchase their first homes.

Bill C-520 would modify the plan by increasing the maximum amount a first-time home buyer would be permitted to withdraw from an RRSP tax-free to $25,000 per individual.

We all recognize that the Canadian housing market is extremely robust, especially in British Columbia and the rest of western Canada. Indeed, the number of new homes started in Canada was at the second highest level in nearly two decades in 2007. That trend is expected to continue into 2008. More relevant to the discussion on Bill C-520 is that since 2002, the average selling price of an existing home has risen by almost 10% annually.

I believe all parliamentarians would agree that encouraging a robust, free market economy, including the acquisition of private property, is a basic tenet for a healthy democracy. As the revered economist, F.A. Hayek, asserted “private property is the most important guaranty of freedom”.

The most important piece of private property for the most number of Canadians is a home. Additionally, for most, buying a home will be the single largest investment Canadians will make throughout their lives. For these and other reasons, encouraging widespread private ownership is a goal that we should all share. Make no mistake, the Conservative government has introduced noteworthy measures to ensure home ownership is more affordable for more and more Canadian families.

First and foremost, we did something the previous Liberal government refused to do. We cut the GST, reducing it down to 5%. This one measure alone is having a major positive impact for those who have purchased or will purchase newly built homes. The Canadian Home Builders' Association heralded the GST cut as “great news for both home buyers and owners”. The Canadian Real Estate Association cheered the lowering of GST as “savings to new home buyers”, adding it would also “help Canadians pay for their home renovations”.

Indeed, our GST cut will translate into more than $1 billion in annual savings for the housing sector, returning money back where it belongs into the pockets of Canadians. For instance, an individual or family looking to buying a new $250,000 home will now save $3,200 because of our GST cut.

A lot of Canadians, especially new home owners, are very happy with the GST reduction because it is making a big, positive difference in their lives, people like the newlywed couple building a house in the riding of Fredericton, or that young professional woman who just bought a condominium in the riding of North Vancouver, or that family of new Canadians purchasing their first home in the riding of Oakville.

Unfortunately, each and every one of those individuals and families is currently represented by a Liberal MP in the House, an MP who is not really happy that those people are happy as the Liberals are strongly opposed to our GST cut. What is worse, all of the Liberal MPs support a Liberal leader who keeps saying he might raise the GST.

In effect, Liberal MPs want to go to those new homeowners, that newlywed couple, that single professional woman, that family of new Canadians, and reach right back into their pockets, grab the money that they saved through our GST cut and funnel their money back to Ottawa to pay for the boondoggles and scandals that would inevitably result from another Liberal government.

To those Liberals who say to Canadians that the Liberals would never raise the GST, I ask them to explain the words of their own leader who, when asked if he would raise personal taxes like the GST, said, “We will consider that”. I would ask them to explain why the Liberal finance critic, the member for Markham—Unionville, when asked specifically if the Liberals would raise the GST, revealed, “It's an option. All I can say is that it is consistent with“--the Liberal--“approach”.

What has Canadians nervous, especially present and future new homebuyers, is the current Liberal leader and Liberal Party who subscribe to a tax and spend philosophy, including advocating for a huge hike in the GST. Even some--

Income Tax ActPrivate Members' Business

April 15th, 2008 / 6:05 p.m.
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Bill Siksay NDP Burnaby—Douglas, BC

Mr. Speaker, I am pleased to have the opportunity to participate tonight in the debate on Bill C-520, an Act to amend the Income Tax Act (Home Buyers' Plan), a private member's bill from the member for Delta—Richmond East.

As we have heard a number of times tonight, this private member's bill seeks to increase the eligible amount for the home buyers' plan from $20,000 to $25,000. That is the amount one would be able to take out of RSP savings to put toward a first home purchase. For couples who both have RSPs, that would mean from $40,000 to $50,000 to put toward their first home.

The money borrowed from the RSP has to be repaid over 15 years. If the yearly minimum is not paid, that balance has to be added to one's taxable income in that time. Also, if one defaults on the yearly repayment, that money cannot later be repaid into the RSP. It is lost to the RSP if there is default on the repayment plan.

The current limit was established when the program was created in 1992 and has not been adjusted for inflation since then. The $25,000 proposal is almost the adjustment for inflation. It would have been slightly higher than $25,000, but that is the overall intention of this legislation.

I have to say that it seems to be a reasonable proposal from the member and it is supportable. Over its existence, this has been an important program for millions of Canadians. It has helped many people enter the housing market for the first time. In fact, the Canadian Real Estate Association has reported that 1.8 million Canadians have used this plan since it was first created. That has resulted in over 900,000 home purchases.

One of the concerns that has been raised, and the member from Delta—Richmond East raised it as well, is that upon analysis of the home ownership rate, one can see that it increased between 1991 and 2001, the year statistics are most readily available, from 62.3% to 66.1%. However, when one looks more closely at the statistics, one sees that it is older folks who benefited most in terms of moving into home ownership. People aged 55 and older benefited most from being able to move into home ownership in that period.

Therefore, it is hard to say that a program like this actually increased the ability of younger folks to purchase a first home, since the rate of first home ownership in all the other age groups actually went down, most significantly in the lower age group. It is of concern that this may not have addressed one of the intended purposes, which was to ensure that younger Canadians were able to enter the housing market for the first time.

There were concerns raised about this program when it was first implemented. A number of analysts saw it as a regressive program and said that it was in fact more helpful to wealthy Canadians, to people who are most likely to be able to set aside money for their retirement in an RSP, than it was for other Canadians of more modest incomes or low incomes. A lot of those folks are not able to put money aside in an RSP. A lot of those folks do not qualify for mortgages as easily as wealthier Canadians and therefore would not have the ability to access this program.

In a sense, then, as an affordability measure of increasing the availability of Canadians to participate in the housing market, it is not well targeted. It does not target the folks who are most in need in terms of ensuring they have a home and a roof over their heads. Other programs, such as tax credits or homeowner grants, would work much better in terms of targeting people and ensuring an affordable housing approach to this kind of program.

We also need to point out that younger Canadians, the original target group for this program, face significant student loan issues because student loans have risen dramatically in recent years. I think the average debt of most students after they graduate from university is $24,000, which increases their difficulty to take advantage of an RRSP.

Similarly, child care expenses for young families are rising. Many young families need to put significant resources into child care, which limits their ability to put money into an RRSP.

We also need to look at how people's ability to make repayments affects their retirement savings. Some of the information that I saw, albeit early on in the program, showed that almost one-third of the participants in the program failed to make their yearly required repayments and, by defaulting on the amount, the amount went into their taxable income. I think one-fifth of the total amount due was defaulted on back in 1995.

When people default on their repayments, that money in their retirement savings is lost and it cannot be backfilled. People cannot go back years later and put that money back into their retirement savings. Their ability to contribute is lost for the year they defaulted on the repayment. That is something else we should look at. We should get more up to date information on the failure to make repayments and find out how that affects people's retirement income generally as a result of their participation in the homebuyer's plan.

Housing prices have skyrocketed, particularly in some urban centres. We have already heard that there is relatively more help for people who live in an area where the real estate market is not as hot as it is in a place like Burnaby. There is significantly more assistance to people in a real estate market that is a little calmer than the one in metro Vancouver for instance. This might be another issue for us to take a look at when we are examining this program and how it has worked.

The homebuyer's program has been important for millions of Canadians. Many people have been able to buy their first home partly because of the assistance they received through the homebuyer's plan and the fact that they were able to use some of their RRSP savings to purchase their first home.

This is only a piece of the puzzle when we are looking at the housing crisis in Canada. There is a significant problem with finding affordable housing. Far too many Canadian families are spending too much of their income on housing. Thousands of Canadians are homeless and many more are in danger of becoming homeless.

A measure like this, while it is important, does not address those needs in particular and certainly does not replace the need for a national housing program that would actually build affordable housing for people already spending too much of their income and who are at risk of becoming homeless. Nothing can replace that kind of participation by the federal government.

I was disappointed to see in the most recent budget that the federal government made no new commitment to a national housing program. The only measure in the budget is a very limited pilot project.

I am also very concerned that the government has made no commitment to extend the residential rehabilitation assistance program beyond next year, a program that helps people upgrade their homes and ensure they are still liveable.

As these programs are significant to Canadians, we need a commitment from the government that these programs will be in place in the coming year.

Nothing can replace those commitments: the commitment to build homes for the homeless and the commitment to programs that help Canadians stay in their homes now. We need to ensure those commitments are not forgotten as we address this specific measure that, undoubtedly, has been of assistance to many Canadians as they enter the housing market for the first time. This program is an important piece of the puzzle around housing in Canada but it is a small piece. We also need to ensure that other important and critical issues are addressed when we look at housing policy in Canada.

Income Tax ActPrivate Members' Business

April 15th, 2008 / 5:55 p.m.
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Paul Crête Bloc Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC

Mr. Speaker, I would like to begin by thanking my colleague from Delta—Richmond East for introducing this bill, which will increase the amount of money people can borrow from their RRSPs to buy a house from $20,000 to $25,000. For a young couple, that means the limit will increase from $40,000 to $50,000.

I think there was a need to fix the existing situation. This is a good program, and this measure helps give people access to property. In my riding in particular, many young couples will have a greater incentive to become homeowners thanks to this measure. They will vacate housing that can be occupied by other people, because in some of the municipalities in my riding, there is a real housing shortage. This change will have a positive ripple effect.

I would also like to thank my colleague for the fact that the Standing Committee on Finance's prebudget consultation report recommended doing something like this. The Minister of Finance did not follow that recommendation this year. However, let us hope that the situation will be improved by the progress of this bill, its adoption, or some other measure.

In its supplementary opinion, the Bloc Québécois explained why it supported this measure and why the party thought it was important to make the proposed improvements to the program.

It is clear that this whole issue is also about encouraging people to save money. I think that adopting this bill will solve the non-indexation problem that has been around since 1994 and will also create a ripple effect to improve access to housing. I think we will all benefit by making this happen.

Following my colleague's speech a few minutes ago, I also got the impression that he would likely be open to the possibility of an amendment so that in the future, that amount can be either fully or partially indexed so that in five or ten years, the amount will still be realistic with respect to housing prices.

These types of actions, which have already been around for a number of years, as well as the other conditions under which homes are being built, have certainly helped Quebec and Canada avoid experiencing all of the difficulties being faced in the United States, where interest costs are fully deductible. I think that the actions that were taken in Canada were the right ones, and this bill only improves the situation. That is why the Bloc Québécois will certainly support this bill.

As I was saying earlier, the maximum amount for the home buyers' plan has not been increased since 1994, and is set at $20,000 per individual and $40,000 per household. Bill C-520 would increase that to $25,000 per year, to a maximum of $50,000 per household. Thus, individuals who have contributed to their RRSPs will have be able to have a larger down payment and therefore a smaller mortgage payment. This is a real and direct incentive for home buyers.

We know that couples often put a large part of their expenditures towards rent. With this measure, couples will have financial security while they are getting older and establishing a family.There is definitely a positive incentive in the existing program and even more so in the improvement provided by the bill.

This increase is justified by the spectacular rise in the cost of homes over the past years. Paradoxically, the cost of homes is not rising only in large cities. In my riding, along the shores of the St. Lawrence, the baby boomers are arriving, wanting to retire in the country with nice surroundings. And this has increased the costs of homes all along the St. Lawrence. This often means that young couples who have just moved to the area do not have access to these properties. However, in a number of towns not on the river, houses are becoming available. Often, as is the case with young couples, while two people work in a factory or in their first job, they have student debt to pay back.

They need more time to save the money they need to purchase a home. This program makes it easier for them to become homeowners.

In a way, the program aids regional economic development. In many communities where the population is aging, more homes are coming on the market as seniors leave their homes to live in residences or, sadly, die. The program encourages young people to settle in these towns and villages. Ultimately, families with children will justify keeping schools open. Obviously, this is not the only factor to consider, but it is one of the reasons we support this bill.

The assistant chief economist at RBC said:

Nationwide housing affordability deteriorated in every quarter throughout 2007 to end up at the worst level since...1990. Back then, soaring interest rates and a recession sparked much of the trouble. Today, however, a long upward trend in house prices, driven by sounder macroeconomic fundamentals such as job growth, is primarily responsible.

Passing this bill will send a clear message that legislators have the will to tackle the negative effects and move forward with a positive measure. Many people have asked why this situation has not already been indexed. If it had been, we would not have had to take this step now. The hon. member must be congratulated for taking the initiative to move forward to correct it.

Nonetheless, as I was saying, the Bloc Québécois would like the indexing to be incorporated into the bill during review in committee. Depending on the testimony we hear, we could study the possibility of doing so. Ultimately, we should have seen this type of measure in the last budget, but that was not the case. The hon. member's initiative can help correct the situation. Let us hope this bill is passed quickly.

During this economic downturn we are currently experiencing, this is a small tool that could be used to help maintain growth through domestic consumer spending, which we are in great need of to respond to the decline in consumer spending in the United States and the huge number of homes available in that country. We are all aware of the ripple effect, the domino effect this situation has on the economy and the entire forestry industry.

Since this bill introduces such a tool to correct the situation, at least partially, the Bloc Québécois will support it in good faith. In the presence of positive and constructive measures, we are indeed capable of working together with the government or with other hon. members of this House to pass such bills that will improve the situation, especially for our young families.

Income Tax ActPrivate Members' Business

April 15th, 2008 / 5:30 p.m.
See context


John Cummins Conservative Delta—Richmond East, BC

moved that Bill C-520, An Act to amend the Income Tax Act (Home Buyers' Plan), be read the second time and referred to a committee.

Mr. Speaker, Bill C-520 will increase from $20,000 to $25,000 the amount of money first time homebuyers can borrow from the savings they have accumulated in their RRSPs. This will be the first adjustment in the borrowing limit since the home buyers' plan was created in 1992.

This increase in the $20,000 loan limit to $25,000 will help first time buyers in every region of the country and will allow couples to withdraw up to $50,000. This increase will allow new homebuyers to maximize their down payment.

The home buyers' plan was proposed by finance minister Don Mazankowski to allow homebuyers to have access to their own retirement savings. Mazankowski viewed it as a win-win. In the 1992 budget he said, “The Plan will stimulate the housing market without reducing tax revenues or risking retirement savings”. It was a win-win in 1992 and it is a win-win in 2008.

Canadian homebuyers like the plan. According to the Department of Finance, Canadian homebuyers have used the plan more than 1.6 million times since 1992. They have borrowed more than $16 billion from their own savings.

Clearly, homebuyers prefer to borrow from their own savings rather than borrow from the banks and pay interest. As popular as the home buyers' plan is with homebuyers, its value has been eroded since 1992 by the dramatic increase in the cost of housing in many parts of Canada.

Home prices have climbed 152% in metro Vancouver since 1992, severely eroding the value of the original home buyers' plan put in place by Don Mazankowski. If the home buyers' plan were to keep pace with the rise of home prices in metro Vancouver, the plan's borrowing limit might have increased to well over $50,000.

The increase proposed in Bill C-520 is a very modest proposal that builds upon recent tax measures, such as the reduction in the GST from 7% to 5% and the creation of the new tax-free savings account, all which give Canadians an increased opportunity to buy their first home. This is the least we can do for aspiring homeowners in British Columbia and, indeed, throughout Canada.

The British Columbia Real Estate Association told the finance committee earlier this year that the borrowing limit should be increased to $25,000. It was a laudable recommendation, worthy of our support today.

The finance committee agreed. In its February report on the budget it recommended that the Minister of Finance:

--increase the amount that can be withdrawn from a registered retirement savings plan to purchase or build a qualifying home for the holder of the plan or for a related person with a disability.

Bill C-520 will enact the increase recommended by the B.C. Real Estate Association and supported by the Canadian Real Estate Association. While a recommendation to increase the borrowing limit to $25,000 may have come from British Columbia, it also has widespread support throughout the country.

The actions that will flow from this private member's bill will address one of the most fundamental desires shared by most Canadians: to own a home. A home is more than just a roof over one's head or a place to hang one's hat. It is a symbol of permanence, an investment in something bigger than one's own property. It is a connection with the community.

The privately owned home is perhaps the strongest keystone in the building blocks of a community and the strongly shared values that flow from being part of a community. We are often buoyed when we hear that the housing market is booming because we know that housing construction is a huge economic driver. In some parts of the country, it is the only economic driver.

We have also welcomed news in the last decade that has pointed to the growing rate of home ownership. In fact, some would argue that the home buyers' plan introduced in 1992 helped to drive the expansion of home ownership with a rate of home ownership increasing from 62.3% in 1992 to 66.1% in 2001.

However, we must dig deeper into the statistics to see an alarming trend that runs contrary to the positive results I have just quoted. Statistics show that young people are struggling to meet the promise of home ownership. Home ownership rates in the first time homebuyer age groups are well below the level of two decades ago.

According to research by the Vanier Institute of the Family in a 2004 report entitled “The Current State of Canadian Family Finances”, the home ownership rates for those households aged 34 and under fell from 44% in 1981 to 41% in 2001.

Among households aged 35 to 44, home ownership rates plummetted from 72% in 1981 to 67% in 2001. The report reveals that both of these groups had flat earnings for almost two decades.

The lower home ownership rates are confirmed by a Statistics Canada analysis which indicates that there was a slight increase in the proportion of young adults living with their parents and 41% of Canadians aged 20 to 29 were living with their parents in 2001 compared to 33% in 1991 and 28% in 1981.

The decline in home ownership among the young is due to factors which are not measured in traditional analysis of affordability. The latter generally concentrate on mortgage payments on a typical dwelling versus average incomes. Such analyses tend to exaggerate the effects of lower interest rates and do not take into account other important factors which together determine whether someone is able to afford to purchase a home. For many young Canadians, purchasing their first home is extremely difficult, particularly accumulating a down payment.

The challenges faced by first time homebuyers are not clearly understood by many housing analysts and policy makers. It is important to note that the decline in home ownership rates among the young is not a reflection of diminished desire to own a home. Research shows that this desire is as strong as ever. While most people wish to own a home, home ownership has become less viable for a large proportion of Canadians.

This bill takes direct aim at that decline. It helps young Canadians meet the challenge of coming up with a down payment. The home buyers' plan is unique in that it both encourages savings and it maximizes down payments available to homebuyers.

It addresses directly two important Canadian desires that strengthen the economic health of our nation by strengthening the economic health of individual Canadians: buying a home and putting away savings. These are worthy financial goals for ordinary Canadians and worthy goals for a nation that believes in home ownership and believes people are most able to care for themselves when they have cared for their long term financial success.

The program is only of value if it reflects the realities of the marketplace. Bill C-520 does just that. It raises the borrowing limit for registered retirement savings plan holders to a level that is close to its real value when it was introduced in 1992, when we compare it to the rate of inflation identified by the CPI. It recognizes that the average price of a home has risen more than three times as fast as the rate of inflation since the program was introduced.

By encouraging home buying activity we would be driving an important economic engine that produces many economic spin-offs. These spin-offs include increased tax revenues that will flow to government. I have not done the economic modelling necessary to verify any figures but my belief is that this measure in terms of its tax deferral implications should be revenue positive.

It is worthwhile to take a brief look at the history of the home buyers' plan. The home buyers' plan exists today because of the determination of two finance ministers, one Conservative and one Liberal, Don Mazankowski and the member for LaSalle—Émard, to let homebuyers have access to their own retirement savings when borrowing for their home.

Then finance minister Don Mazankowski, in his February 1992 speech, announced a plan to allow homeowners to use their retirement savings for down payments for first home purchases. Mr. Mazankowski told Parliament that the plan would stimulate the housing market without reducing tax revenues or risk retirement savings.

The Mazankowski plan was introduced as a temporary measure. As one of my first statements in the House, I rose on January 31, 1994, to ask the new government to extend the home buyers' plan. While I do not claim any credit for the extension of the plan, the new Liberal government made the plan permanent in the 1994 budget a short time later.

The finance minister of the day, the member for LaSalle—Émard, indicated that he made the program permanent so as to continue supporting the housing market and further encourage home ownership. In his 1998 budget, the former finance minister amended the home buyers' plan to enable persons with disabilities to have greater access to the plan by allowing existing homeowners to use the home buyers' plan to purchase a more accessible home or a home for a disabled, dependant relative.

It is worth noting that the regulatory impact statement printed in the Canada Gazette on January 6, 1999, when these changes were made, did not identify any cost to the federal treasury in extending the plan to persons with disabilities. I take this as another indication that Finance Minister Mazankowski was correct in 1992 when he said in the House that the home buyers' plan did not create any revenue loss for the federal treasury.

The House of Commons finance committee in February recommended to the Minister of Finance that the 2008 budget:

—increase the amount that can be withdrawn from a registered retirement savings plan to purchase or build a qualifying home for the holder of the plan or for a related person with a disability.

This recommendation had all party support.

The Bloc Québécois, in its own chapter in the finance committee's report, specifically supported an increase in the amount that a home buyer could borrow from a retirement savings account:

To make home ownership more accessible, the Bloc Québécois supports the recommendation to increase the amounts available under the Home Buyers’ Plan (HBP).

I would now like to address a number of questions that arise when we talk about increasing the borrowing limit from an individuals' earnings to $25,000, or $50,000 if both spouses have an RRSP.

First, has the home buyers' plan been successful? Over the last five years, almost 600,000 Canadians have made withdrawals from their RRSPs under the home buyers' plan, totalling over $16 billion. Since the introduction of the home buyers' plan in 1992, about 1.6 million Canadians have borrowed from their savings accounts for their first-time home purchases. On the average, first-time home buyers borrow $10,000 from their retirement savings accounts, for a total of $16 billion. That is $16 billion borrowed without any cost to the government and without any cost to home buyers, because home buyers borrow from their own savings. It is a program that first-time home buyers absolutely support. Clearly Canadians prefer to borrow from themselves rather than borrow from the banks and pay interest to the bankers.

Second, is there a negative impact on the government's tax revenues? There is no impact. The former minister of finance, Don Mazankowski, who introduced the home buyers' plan, advised Parliament in February 1992 that the $20,000 would have no impact on government's tax revenues:

The Plan will stimulate the housing market without reducing tax revenues or risking retirement savings.

If the $20,000 limit had no impact on government tax revenues in 1992, then $25,000 would have even less impact on government tax revenues in 2008.

Third, does the home buyers' plan assist retirement security for Canadians? Yes. Before the home buyers' plan, Canadians had to make a choice, either save for retirement or save for a house. The home buyers' plan allows Canadians to do both. The home buyers' plan is a means to strengthen home ownership at no cost to the Canadian taxpayer. Borrowed savings are invested in a principal residence, which is a pillar of security for retirement.

Since the home buyers' plan was introduced in 1992, the rate of home ownership has increased from 62.3% in 1991 to 66.1% in 2001. The home buyers' plan is unique among support programs for home ownership in that it encourages savings and maximizes down payments. By emphasizing the down payment, the home buyers' plan helps the home buyer to minimize the level of indebtedness over time.

Fourth, what has happened to home prices since 1992? Residential home prices rose 85% nationally between 1992 and 2006. Since 1992, home prices in metro Vancouver have increased 152%. The 152% increase in home prices in metro Vancouver has eroded the value of the home buyers' plan. Nowhere in the country is the need for an increase in the borrowing limit in the home buyers' plan to $25,000 greater than in metro Vancouver.

In closing, let me reiterate that there are no negative consequences to increasing the amount that first-time homebuyers can borrow from the savings they have accumulated in their RRSPs from $20,000 to $25,000. Rather, this increase would result in a greater number of young Canadians being able to participate in the dream every young person has, to own their own home, which would be very positive both for young people and for Canada.

Income Tax ActRoutine Proceedings

March 3rd, 2008 / 3:20 p.m.
See context


John Cummins Conservative Delta—Richmond East, BC

moved for leave to introduce Bill C-520, An Act to amend the Income Tax Act (Home Buyers' Plan).

Mr. Speaker, I am pleased today to speak to my bill, An Act to amend the Income Tax Act (Home Buyers' Plan) This bill would amend the Income Tax Act to increase the home buyers' plan loan limit from $20,000 to $25,000.

The home buyers' plan currently allows individuals to borrow up to $20,000 from their RRSPs to purchase their first home. Home prices are substantially higher today than when the $20,000 limit was put in place in 1992. The home buyers' plan is the only mortgage program that focuses on first-time home buyers. The increase in the loan limit to $25,000 would help first-time home buyers in every region of the country.

(Motions deemed adopted, bill read the first time and printed)