It was this morning. Okay. That's excellent.
The letter that was received even later by committee members was clearly an attempt by the minister to give Liberal members cover and avoid this study. This letter provides no new information and no new explanations, and it restates some of the unpersuasive arguments that the government has previously made. For example, the minister said that this committee should wait for more details before undertaking a study.
First, I would respond by saying that it was the minister and this government that announced this program. Should they not have the information and details available before they announce a program? If the minister would like to provide more details, we are requesting him to come to this committee and provide them.
Second, he says the intent of the program is to purchase at “below market rates”. That's a little vague, because we've heard discussion of purchasing at cost and at market rates, and those are two very different things. I'd like to know what the cost of those units is, the market rate the government is proposing to pay for them, and if there's any delta between those two. Again, the minister could come and explain that.
He rehashes and trots out this analogy, which is, unfortunately, extremely inapt: “When you buy something that's on liquidation, you don't say to yourself, I'm supporting a bailout for the store.” That is an inapt analogy because we're not at liquidation. If we wanted to buy on liquidation, the government would let these condos go into distress or, after letting the banks and developers absorb the losses, buy them at an even more reduced price. In fact, what they're doing is preventing a liquidation sale at the cost and expense of the taxpayer and the next generation of homebuyers.
Lastly, the minister tries to address our concern and this committee's concern about who was lobbied for this program. He said that neither he nor the Prime Minister were directly lobbied. That's interesting language—“directly lobbied”. Were they indirectly lobbied? Were their staff directly lobbied instead of them? Maybe we'll see that in disclosures when those are published in the future, or maybe we won't, and that will raise further questions.
This study matters, because we are in one of the worst times in a generation for young Canadians to buy homes. The average salary no longer buys the average home nearly anywhere in Canada, let alone in places like Vancouver or Toronto. Home prices have outpaced income growth for a decade—a decade during which this party was in government—and that means that the price-to-income ratio for a home has risen dramatically.
The age of first-time homebuyers is higher than it has ever been. It's about 36 nationally, about 40 in Toronto and 46 in Vancouver. That has real consequences for families. Family formation is delayed, and some people don't even start families because of these concerns with owning a home. Those ages are among the highest in the world. Even if you scrape your way into the market, mortgage payments today are eating up a larger and larger share of your income—over 50% of income. We call that being house poor.
A missing middle analysis done about two years ago, I think it was, showed that Canada has the worst housing affordability out of all of the countries in the OECD. The sad part is that Canada is actually unique, because they looked at other countries where affordability had improved or had not deteriorated at the same rate as in Canada. It's simply untrue to claim that Canada's deterioration is the same as everybody else's. Actually, Canada's is far worse.
This condo bailout changes nothing for Canadians seeking to enter the market. If anything, it makes it worse by preventing the natural correction in one of the most expensive housing markets in the world.
Let me end by recounting a brief story in the Prime Minister's own words from his own book. During his time at the Bank of Canada, he spoke with banks and financiers during the financial crisis who were exposed to their own mess. He had some thoughts for them, which I think are apt today.
I'm going to read two paragraphs from his book Value(s), and I hope he will remember these values in considering this bailout. He said:
And when the music stopped, these masters of the universe turned to the state. I remember that, once I became Governor of the Bank of Canada in early 2008, I would receive delegations of investors in [asset-backed corporate papers] or bankers that were exposed to the mess. Their requests had the benefit of being consistent—consistently self-interested. They would argue that it was the responsibility of the Bank of Canada to take on their risks. We shouldn’t be unduly worried: the market had momentarily taken leave of its senses.
They left out the bit about why Canadians, who had never had a chance to ask the questions unvoiced by these masters of the financial universe, should take on the burden. And they left out the implications such behaviour would have for moral hazard in the system, for if banks and markets were bailed out from their mistakes, then what was to stop them from taking on greater risks in the future—a continuation of “heads they win, tails we lose” finance? How would that promote the values of responsibility, accountability, prudence and trust that are essential to sustainable finance?
I would ask him the same questions today. Why should Canadians take on this burden? Why should he now continue to allow developers to engage in a “heads they win, tails Canadian homebuyers lose” housing development plan? How does this condo bailout promote the values of responsibility, accountability, prudence and trust, which are essential to sustainable finance and a sustainable housing market for the next generation? I hope he takes heed of his own values.
Thank you, Mr. Chair.