Finance Committee on June 20th, 2011

[Ling Wang]

Yes.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Thank you.

[The Chair, Conservative, James Rajotte]

Do you have one more question, Ms. Glover?

[Shelly Glover, Conservative, Saint Boniface, MB]

It sounds to me as if we're having a bit of a debate outside the scope of the bill, Mr. Chair. If we want to study the housing market, we certainly can do that following the next four years that we have to study different things in committee. CMHC versus private insurers, and what the caps are, etc.--that isn't addressed in the bill specifically. I'd like to stick to what's in the bill.

When we talk about urgency, and I would ask the officials to confirm this, the reason I see it as being urgent is that when we look at other countries, like Greece and Italy—this morning I was listening to the news—we see there is risk worldwide economically. This just ensures that there actually is oversight. Without this bill, if unfortunately there were a downturn we wouldn't have legislated oversight, which is why this is an urgent bill.

Is that correct? Do you want to add anything or expand upon that?

[Jane Pearse]

It does enhance the stability of the housing finance market. Currently there are contracts that are outstanding between the government and the private mortgage insurers. To date those have worked very well, but putting it into legislation does increase the transparency and does increase the government's ability to make timely changes when required.

[The Chair, Conservative, James Rajotte]

Thank you.

Ms. Nash, please.

[Peggy Nash, NDP, Parkdale—High Park, ON]

What I'm seeing in this bill is the figure of $300 billion, which is different from $200 billion, which it was five years ago, and different from $250 billion. I guess I don't understand how increasing Canadians' liability to $300 billion from $250 billion or $200 billion, which it was five years ago, is not an increase in public liability or in the amount that Canadians are on the hook for.

In my view, this is something that is complicated. It affects a great number of Canadians. We heard the head of the Bank of Canada just last week talk about his concern in regard to a dramatic increase in housing prices in some parts of the country and his concern that perhaps there could be a correction of those housing prices, which has happened in the U.S.

A lot of things have happened in the U.S. That doesn't mean they're going to happen here, but certainly a steep correction in the housing market could leave Canadians vulnerable, put some of their mortgage responsibilities at risk, and therefore increase the risks to Canadians who are backstopping those mortgages--for certain ones.

To me, this is complicated. It is significant. What I would urge is that we examine this further to make sure we're making the right decision. There were decisions made in the U.S. that were not challenged publicly at the time and increased the liability and the risk for all Americans, with devastating results. I would just argue for a little more time, given that this is a significant change.

[The Chair, Conservative, James Rajotte]

Did one of the officials want to address this?

Ms. Pearse.

[Jane Pearse]

I'm not sure I can speak to the issue of how your committee chooses to deal with this part of the act--

[The Chair, Conservative, James Rajotte]

In terms of the $300 billion limit.

[Jane Pearse]

Pardon me?

[The Chair, Conservative, James Rajotte]

In terms of the issue of the amount of the limit.

[Jane Pearse]

Oh. We have a number of pieces of legislation that interact. In the financial institutions legislation we have a requirement that all mortgages over 80% have mortgage insurance, so on the one hand, we have a requirement that a mortgage lender must receive mortgage insurance from either CMHC or a private mortgage insurer in order to take on the mortgage of a Canadian who wishes to purchase a house with a down payment of less than 20%. With that mandatory requirement in legislation, the government would be under an obligation to ensure that mortgage insurance is available.

If the question is whether we are increasing the government's liability, I suppose the absolute number is increasing, but the question this piece of legislation is addressing is whether we should be moving into legislation the contracts that currently exist for private mortgage insurers. So I see it as being a slightly different question. I don't think this piece of legislation is increasing the liability to the Government of Canada.

[The Chair, Conservative, James Rajotte]

You're saying that the model we have in place in Canada requires that the loan limit be increased.

[Jane Pearse]

Yes, because of rising house prices and the rising number of people purchasing houses.

[The Chair, Conservative, James Rajotte]

But it doesn't change the model, it doesn't change the amount that is leveraged, and it doesn't change the actual liability of the government.

[Jane Pearse]

Well, the liability of the government, as you say, will be going up in absolute numbers, yes.

[The Chair, Conservative, James Rajotte]

Yes, but as a proportion.

[Jane Pearse]

Yes.

[The Chair, Conservative, James Rajotte]

Okay. I think we obviously have different views here. If members of the opposition aren't comfortable, they can vote against that, but I'm not.... My sense is that the government wishes this section to be included.

Ms. Nash.

[Peggy Nash, NDP, Parkdale—High Park, ON]

If there's no ability to postpone this to deal with it more thoroughly, then we'll be voting against this section.

[The Chair, Conservative, James Rajotte]

Okay.

Can I deal with clauses 20 to 26 inclusive? This is part 7.

(Clauses 20 to 26 inclusive agreed to on division)

(Clauses 27 to 33 inclusive agreed to)

[The Chair, Conservative, James Rajotte]

Are there any questions on part 11, clauses 34 to 36?

Mr. McCallum.

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

Yes, I have some concerns about this and I have some questions I'd like to ask.

Right now I believe only certain departments, like Public Works, are allowed to provide shared services to other departments. The changes in this bill could result in radical change in the way government operates, with the potential for tens of thousands of layoffs. How does the government plan to make use of these shared services measures, and which departments are being targeted?

I note that the in-effect date for these changes is retroactive to June 1 of this year, so that would suggest the government has some pretty concrete plans in mind. Has the government had any discussions with our public sector unions on how these measures might be used?

[The Chair, Conservative, James Rajotte]

We have officials at the table, so I would just ask the officials to introduce themselves and provide an answer.