Thank you, Mr. Chairman and committee members.
I am Karen Kinsley from the Canada Mortgage and Housing Corporation. CMHC, as it's most commonly known, was as many of you know founded sixty years ago and has a public policy mandate to improve housing and living conditions for all Canadians.
In the area of mortgage insurance, our public policy objective was and remains to facilitate access to mortgage insurance for all Canadians, regardless of where they live and at the lowest possible cost.
In 1996 we were asked to deliver this public mandate in a commercial manner, and I'm pleased to report that in terms of public policy benefits, over one-third of CHMC's mortgage insurance approvals each year are in areas that are not served, or not well served, by the private sector. We have also led the industry in reducing costs and in product innovation. In terms of our commercial performance we are now profitable and have been able to meet our target for capital reserves. The industry is also flourishing and is now drawing the interest of new entrants into the marketplace.
I'm here to address your questions on vote 10 specifically with respect to the government guarantee of private mortgage insurers. I thought perhaps some context would be useful in your deliberations.
As part of the process of levelling the playing field between public and private mortgage insurers, the government took two significant steps, in our view. The first was, as I mentioned, to require CMHC to follow commercial practices in the operation of its mortgage insurance program. The second was to give the private sector a government guarantee equal to CMHC's, with a 10% adjustment to reflect the fact that CMHC accepts risks in areas and at levels not borne by the private sector.
In closing, Mr. Chairman, we believe in the value of competition where it improves access and affordability for Canadians through both good and bad economic cycles. Healthy competition amongst all suppliers, together with a public sector insurer that also makes sure the gaps left by the private sector are addressed has, I believe, made the Canadian housing system the envy of the world.
Thank you.
I would be happy to answer any questions you may have.