Finance Committee on May 29th, 2006

[John McCallum, Liberal, Markham—Unionville, ON]

I think I speak for the Liberals, but I may not, in thinking that we've heard what we need to hear on this business, and I'm certainly prepared to vote immediately for number 10.

We asked the question, what was wrong with it, and nobody came up with any good answer that I could discern. So speaking for myself, and possibly for all of us, I would like to proceed to a vote very quickly, as quickly as we can, on number 10.

[The Chair, Conservative, Brian Pallister]

Mr. Loubier, your comments.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Like our colleague, Mr. McCallum — and it does not happen often that we agree — we have heard what we wanted to hear and understood what we needed to understand. We are ready to move to the vote.

[The Chair, Conservative, Brian Pallister]

Thank you.

Madam Wasylycia-Leis.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Thank you.

I appreciate John's feelings that this issue is a fait accompli, or his perception that there were no concerns raised at all, but that was certainly not my read of discussions. We've had a number of presenters indicating that they felt it would be important to attach some sort of conditions to the motion.

We had very clear wording presented to us from the Desjardins group, and we also had some suggested wording from the Real Estate Association, and others felt that it was important to ensure safeguards were put in place around this proposal.

This is not a cut and dried issue; it is not one in which there is absolute unanimity. There were all kinds of concerns raised, and it's not appropriate to simply hear a number of witnesses, as we've done all afternoon, and then simply have no discussion as a committee. How are we going to handle these concerns? Is there a way we could present some amendments? Are there some qualifiers we could attach? Should we invite Finance officials to answer some questions about what studies they've done? Should we ask for a brief in terms of the impact of this on potential access by consumers all across Canada for mortgage insurance? Are there any studies to show that there's a problem now? Are there certain areas of the population now not benefiting from mortgage insurance at CMHC? Is it out of reach for some? What's the general lay of the land? Surely to goodness, we would want to give this some thought. Why did we go through this?

[The Chair, Conservative, Brian Pallister]

Madam Ablonczy, and then Mr. Savage.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

As I understand it, Mr. Chair, the vote would be to consider opening up the industry to further competition, subject to the background checks by OSFI and subject to the minister's discretion.

None of the witnesses here today said we should not do that. Every single one of them said they favour competition, and a number of them said this decision should not be put off any further.

I can't quite see what the issues are. If the issues are how OSFI should be regulating this, then that's not part of this vote, as I understand it. We could certainly pursue that matter later, but this vote is simply to, in principle, open up the industry to further competition, and I think that's a fairly simple issue. We don't really need a lot more study there.

[The Chair, Conservative, Brian Pallister]

I'll just interject. We have other speakers, Madam Wasylycia-Leis, so I'll just go to them first.

I'm instructed that this issue can be a study of the committee. However what's before us today is the estimates, and we have a choice either to vote for or against the estimates today.

Mr. Savage, I'm sorry, you were next.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

I agree with what Ms. Ablonczy just said. There were a couple of organizations that I asked...further to their indicating that they had some concerns. But they indicated that we should go ahead and vote for vote 10, so that satisfies me.

We have had finance department officials before us. Mr. Turner I think brought up vote 10 before with finance department officials.

In my view, we have spent some time on this and it's time to have the vote.

[The Chair, Conservative, Brian Pallister]

Thank you, sir.

I would again make it clear, though, that voting for this particular estimate item today does not preclude a further study by the committee. That would be up to the committee.

Mr. Dykstra.

[Rick Dykstra, Conservative, St. Catharines, ON]

On that note, Mr. Chairman, perhaps there is an opportunity--after implementation of let's say six months--that the Department of Finance has a chance to report and perhaps respond to a couple of these points.

[The Chair, Conservative, Brian Pallister]

Mr. McKay.

[John McKay, Liberal, Scarborough—Guildwood, ON]

The problem with this is that it's a straight-up, straight-down vote.

I wouldn't disagree with Diane, that the competition should be enhanced. I think she's right, that pretty well all witnesses supported that. It's subject to the OSFI review and the Minister of Finance's discretion, etc.

However, we have not explored the perverse consequences of competition. The perverse consequences, as some witnesses have suggested, are that there may actually be less insurance available to some segments of the market. We heard that as a concern, rather than as evidence. We didn't deal with whether the threshold should be raised from 75%, because frankly 75% to 80% is just freebie insurance. For any insurer, that's just cream money. Why that will continue to cost consumers a lot of money, I don't really know. And I don't know why CMHC should have a 100% guarantee, but not all the other competitors. Those are concerns--legitimate concerns.

I'm going to favour the notion of opening up competition. But I do feel that without some serious undertaking on the part of the government to support a committee inquiry into concerns, such as the 75% threshold and CMHC having the 100% guarantee, it makes it very difficult to support vote 10 and ultimately, I guess, Bill C-13--though I'm not clear how Bill C-13 interacts with the amendments process.

Those are the reactions I have. If the parliamentary secretary could give some assurance to the committee about making all officials, elected and otherwise, available to the committee for this issue so that the study will actually be meaningful and will actually have impact, then I think I could, in conscience, support the vote. If in fact it's just something for gathering dust--a cute little study by a cute little committee--well, we missed our opportunity.

[The Chair, Conservative, Brian Pallister]

Madam Wasylycia-Leis, you had your hand up earlier. Would you like to speak?

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

I would love to speak again. Thank you.

First of all, with respect to our deadline for estimates, I think we need to review that for a moment. There is really no obligation for us, other than the agenda of you, Mr. Chair, or the Conservative government, to necessarily push this through at the present time. As I understand it, we have until November before the main estimates are deemed to have been approved, unless we say otherwise. So there is no deadline that it has to be this June.

It's quite separate and apart from the budget and Bill C-13, for which there are certain deadlines you are interested in, as we've heard on numerous occasions. But with the estimates, we have the opportunity to actually do a thorough review on clause 10 before approving it. If we can't do it all this spring, we can always come back to it in the fall. You may not like that schedule, but there is nothing that requires us to pass the estimates right now.

I want to say two more things. One, we had some very specific suggestions from a couple of presenters about how we could put some guarantees in place that would actually make it possible for some protections against the possible negative implications that some of us foresee around opening up this competition.

Second, Mr. Chair, you'll have to agree with me when I say that I think we've only heard one side of the story. I know time was of the essence when this was set up. We may not have had everybody at the table that we should have. But I did make a suggestion that Michael Shapcott, who is well known in the field of housing, appear. He couldn't meet the timetable. However, he did send a brief that he asked to be circulated to the whole committee. I don't believe that has happened yet. I think in fact that we owe it--

[The Chair, Conservative, Brian Pallister]

On behalf of Madam Wasylycia-Leis, I should point out that the brief is in translation and will be distributed. I urge committee members to have a look at it.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Right, which I appreciate.

I would hope that at least we delay a decision on vote 10 until we've had a chance to look at another viewpoint. There are other viewpoints out there. Today we heard mainly from the business community, the financial world. We heard from mortgage insurers, bankers, lenders, home builders, and real estate operators. We didn't hear from the cooperative section. We didn't hear from the housing coalition and from all those people who struggle to find affordable housing for people and who deal with a very critical situation today. So I think we should allow for at least one other view to be considered before making a final decision.

[The Chair, Conservative, Brian Pallister]

Mr. Turner.

[Garth Turner, Conservative, Halton, ON]

Thank you.

The reason I flagged this issue initially was what I tried to outline in my first remarks: the stakes of the marketplace. I believe that the marketplace has developed in a certain fashion, in that the stakes of mortgage insurance are a lot higher than many of us think.

Competition is good. I have nothing against competition. I think every witness we heard basically mouthed those words. What I'm concerned about are the unintended consequences of competition, and there may be consequences that are not immediately apparent from the witnesses we had. I am concerned that people with poor credit risk will have less credit extended to them by way of insurance. I am concerned about the American experience, in which $750 million in premiums were paid by homeowners that went into the pockets of insurers without resulting in lower insurance premiums for buyers. I'm concerned that the benefit to homebuyers has been overstated. I don't know the answer to those questions because—and I agree with you, Judy—I don't believe we've had all sides of the question presented to us.

I've also heard from a number of people I respect at the table who say they view the situation as being important and in need of some kind of regulation and oversight in going forward. I agree with that.

I agree with my colleague, Mr. Dykstra. I believe that if we're able to have some assurance—a problem that perhaps your secretary can help us with as well—that we can come back and have a look at how this marketplace is performing down the road, then I'm prepared to support it.

But I am concerned about unintended consequences. I want to get it on the record to make sure that if we're making this kind of change—to an environment I truly believe is more important than we give credit—that we have a mechanism that allows us to come back and ask if it's working.

[The Chair, Conservative, Brian Pallister]

Thank you.

Mr. Loubier, to conclude.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Chairman, I think that we are confusing the issues here. I just listened to Mr.Turner talking about debt load of families, people who have poor credit rating, those who could be left out and so on.

We are experiencing this situation at the moment. When the risks are greater, the Canada Mortgage and Housing Corporation assumes them, and when they are less significant, it may be Genworth that assumes the risks. However, as the Desjardins representative said earlier, we are forcing a company like Genworth to accept even the risks that are not necessarily the best ones.

Consequently, we cannot deal with the financial situation of families here, under this vote or with a bill. At the moment, we are talking about increasing competition in a duopoly, a market where 70 per cent is covered by a Crown corporation and 30 per cent by a private company, the only one for which the government provides a guarantee.

With respect to oversight, if there is a financial sector in the world where there is oversight and even too much oversight, by the Office of the Superintendent of Financial Institutions, for example, that sector is definitely in Canada. So let us stop confusing the issues. If we want to talk about social housing, we can debate that and try to get the $4.5 billion surplus at CMHC or try to encourage the government to invest in this area. But let us not try to deal with the entire problem facing households that want to purchase their first home and with the whole problem of oversight, when we already have some very commendable institutions that oversee all areas of financial activity.

That said, I think we should move to the vote. I would mention in passing that we were supposed to end at 5:45 p.m. I would call for the vote, Mr. Chairman.

[The Chair, Conservative, Brian Pallister]

On a point of order, Madam Wasylycia-Leis.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Yes. I think Mr. Loubier needs to consider, when he talks about others mixing apples and oranges, that—

[The Chair, Conservative, Brian Pallister]

I'm sorry, Madam Wasylycia-Leis, you don't have a point of order.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

I do. You haven't heard my point, Mr. Chairperson.