Evidence of meeting #213 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was newspapers.
A recording is available from Parliament.
4:30 p.m.
Liberal
4:30 p.m.
Chief Executive Officer, BILD Alberta Association
I'm completely in agreement with what Kevin said. It's great to be addressing the entry level, getting out of rental and into home ownership, but it's equally important to serve the entire housing continuum and create programs that allow people to continually and moderately upgrade their housing situations, because that's how the system works. We are sitting in a bottleneck right now in terms of unabsorbed housing. This is a good step, but it's not quite enough. I think that's been very well stated.
4:35 p.m.
Liberal
4:35 p.m.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
My colleague on the other side called this “transformational”, but CMHC, which is responsible for running it, has called it “working on the margins”. It's the first time I've seen a “transformational” program where the person responsible for rolling it out has called it “working on the margins”. They estimate that the impact on the market will be only in decimal points.
To go over some of the stats you raised, Mr. Lee, you said that 147,000 were knocked out of the market because of B-20.
4:35 p.m.
Chief Executive Officer, Canadian Home Builders' Association
Yes, it's a combination of B-20 and since then interest rates of risen, knocking out still more with B-20 and the interest rates combined.
4:35 p.m.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
You said it was an April survey, and that 65% of CHBA companies and organizations had started to lay off employees.
4:35 p.m.
Chief Executive Officer, Canadian Home Builders' Association
Yes, we did a national survey, and of the 300 companies that responded, two-thirds of them said that they had already laid off....
4:35 p.m.
Chief Executive Officer, Canadian Home Builders' Association
We don't have those stats.
4:35 p.m.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
Ms. Wyton, correct me if I'm wrong, but of all the construction workers in the province of Alberta, what percentage of them are in residential construction?
4:35 p.m.
Chief Executive Officer, BILD Alberta Association
Thirty-five per cent are in residential construction compared with 12% in non-residential and 16% in industrial construction. It's a huge enabler to the economy and to well-being that is often overlooked, but it is about jobs and the economy.
4:35 p.m.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
My question, then, is for both of you, because both of you work closely with builders or as builders of units in this country. Were either of you consulted before the announcement of the shared equity mortgage program was made?
4:35 p.m.
Chief Executive Officer, Canadian Home Builders' Association
We were in discussions with CMHC about a shared equity mortgage program, but not applied in this nature. It was more of a hand-up program for people in need of core housing, not something for a typical person in the entry-level market or a family that would normally only need basic mortgage rules, as opposed to a special program.
4:35 p.m.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
You mentioned that you had made suggestions about what the program should look like. Do you have any details to share with us on what you thought CMHC should be doing? They came before this committee and they were also before public accounts. They had no clue and no details, and the board of CMHC found out that they were doing shared equity mortgages the night of the budget. That's a quote from the CEO of CMHC. Do you have any details on the program, or something you suggested they should do?
4:35 p.m.
Chief Executive Officer, Canadian Home Builders' Association
We don't have those details. We made our recommendations for a different type of program. Our recommendation with respect to typical first-time homebuyers would be 30-year insured mortgages, adjustments to the stress test, that sort of thing.
4:35 p.m.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
Do you think the impact of B-20 on the market will be offset by these shared equity mortgages?
Ms. Wyton, you can comment on that as well.
4:35 p.m.
Chief Executive Officer, Canadian Home Builders' Association
No, it's aimed at a different part of the market, as you said. It's more on the fringes. B-20 is flat out the entire market.
4:35 p.m.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
Ms. Wyton, can I get you to comment on Alberta specifically? We don't hear enough about Alberta here.
4:35 p.m.
Chief Executive Officer, BILD Alberta Association
I would agree with Kevin. This isn't going to change the situation in Alberta,. As Kevin said, people are being laid off. Small contractors are going out of business. This will not be the fix for that.
The only thing that is going to turn this around is a restoration of consumer confidence. Some of that is coming back because the economy is coming back around, but without a change to the mortgage rules, without a change to the stress test, there are tens of thousands of working Albertans who still are not going to qualify for a mortgage. If they can't buy, the builders won't build, and jobs will go away.
4:35 p.m.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
On B-20, specific to Alberta, do you think one-size-fits-all policy-making coming out of Ottawa is the way to go? What kinds of changes would you like to see to B-20?
4:35 p.m.
Chief Executive Officer, BILD Alberta Association
Well, one of the opportunities we have in Alberta is to work with credit unions and Alberta Treasury Branches, our provincial financial institutions. However, because of the way national banking rules are written and federal policies are written, there isn't that avenue to create a local market response. If the B-20 isn't going to change, then some flexibility with respect to recognizing regional differences will be critical.
4:40 p.m.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
How much time do I have, Mr. Chair? I'm trying to be respectful.
4:40 p.m.
Liberal
4:40 p.m.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
Okay. In the lead-up to B-20, if you look at the CIBC economic report, it shows that the average mortgage origination done by someone with a credit score of 751 or more—which is an excellent credit score, better than mine, honestly—was going up; it was about 52% of all mortgage origination. It also shows the market after B-20. It didn't affect the size so much but it excluded a lot of people, which confirms what you said, Mr. Lee.
Do you think B-20, in the form it's in, was a wise decision by the government?
4:40 p.m.
Chief Executive Officer, Canadian Home Builders' Association
I think there was so much going on—and no question, there was a lot of froth in Toronto and Vancouver. The problem now is there were so many changes occurring so fast that one didn't have a chance to play out before the next. What we've seen with the stress test is that it turns out to have been excessive, and that's where we are right now. We need to be careful in thinking that it's done and its effects are going to start to fade. All of our sales forecasts suggest it's going to get still worse before it starts to balance out. We would suggest it has been too much, but there is still an opportunity to fix it, at this point.
