Finance Committee on June 20th, 2011

[Mark Adler, Conservative, York Centre, ON]

There's been a huge return on investment, in other words.

[Dr. Cindy Bell]

Yes, definitely.

[Mark Adler, Conservative, York Centre, ON]

It's money well worth spending.

[The Chair, Conservative, James Rajotte]

You have one minute left.

[Mark Adler, Conservative, York Centre, ON]

In terms of commercialization to reach that point, does Genome Canada get involved in venture capital funding at all, or attracting it, or anything to that effect?

[Dr. Cindy Bell]

No. That is not our role. However, what we do try to do is ensure that linkages are made. We have a memorandum of understanding with the Business Development Bank of Canada to try to identify projects that would be of interest to them, for example.

[Mark Adler, Conservative, York Centre, ON]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Adler.

We'll go to Mr. Jean, please.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Thank you, Mr. Chair, and thank you to the witnesses today.

I have three questions. The first has to do with CMHC. Of course, the Canadian taxpayers underwrite CMHC and the risks associated with it. Based upon the evidence given and the history of this file, CMHC in particular, there's a very low default rate based on the return on investment to taxpayers. Is that correct?

[Karen Kinsley]

Yes.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

The increase from $200 million to $300 million, as suggested by Mr. Marston, actually will not increase the percentage of risk to the taxpayers at all. Is that fair to say? You've got an increase in the amount of capital that you can lend, but it's not going to increase the percentage of risk to taxpayers.

[Karen Kinsley]

This is the increase for private insurers you're speaking of? You're asking...I'm sorry.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Will it increase any risk to taxpayers on a percentage basis?

[Karen Kinsley]

I think to the extent it's reflective of the growth in the overall mortgage market and the fact that any borrower who puts down less than a 20% downpayment needs to be insured...I would say whether it's insured by the private insurer or ourselves, the risk would be the same.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Exactly.

My second question is in relation to the private mortgage market and the amount of CMHC's involvement: $500 billion. In essence, that would suggest that the private mortgage market would be about $150 billion to $160 billion. Is that fair to say?

[Karen Kinsley]

We think it's about $200 billion.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

CMHC would be about 65%, then, in essence.

Not to quibble about that, is it fair to say that it's necessary for the private mortgage market to keep a 10% amount in a trust fund to in some way minimize the risk so that if there is a major catastrophe, they would be financially capable of meeting any kind of demand? Is that kept in a trust account? How is that money kept?

[Karen Kinsley]

This is an arrangement they would have with the Department of Finance. I wouldn't be privy to those details.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Mr. Poschmann.

[Finn Poschmann]

My understanding is that 10% to 10.5% of premiums are set aside. They are expensable for the insurance company, but they're set aside in their own account.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Is it a trust account? What kind of account is it?

[Finn Poschmann]

I don't know the details.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

What amount would that be? Would that be $15 billion, in essence? Or is it the amount of the premium?

[Finn Poschmann]

You're talking about a percentage of the premium written each year.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Can anybody do a calculation on that? Is it $22 million or $23 million?