Evidence of meeting #67 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was mortgages.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Sylvain Leduc  Deputy Governor, Bank of Canada
Michel Tremblay  Senior Vice-President, Policy, Research and Public Affairs, Canada Mortgage and Housing Corporation
Carolyn Rogers  Assistant Superintendent, Regulation Sector, Office of the Superintendent of Financial Institutions
Michel Laurence  Vice-President, Housing Markets and Indicators, Canada Mortgage and Housing Corporation
Don Coletti  Advisor to the Governor, Bank of Canada
Alex Ciappara  Director, Credit Market and Economic Policy, Canadian Bankers Association
Jeff Morrison  Executive Director, Canadian Housing and Renewal Association
Christopher White  Vice-President, Government Relations, Canadian Credit Union Association
Stuart Levings  President and Chief Executive Officer, Genworth Canada
Robert Martin  Senior Policy Adviser, Canadian Credit Union Association
Robert Hogue  Senior Economist, Royal Bank of Canada
Winsor Macdonell  Second Vice-President and General Counsel, Genworth Canada

6:30 p.m.

NDP

Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC

Okay.

Is there still a need to improve the diversity or richness of available data?

6:30 p.m.

Senior Economist, Royal Bank of Canada

Robert Hogue

You're speaking to an economist, so basically, the more data, the better.

6:30 p.m.

NDP

Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC

Actually, I'm asking the question to follow up on a question I asked the previous panel. The federal government made the decision to change the greatest constraints on property access, and at the same time, the BC government decided to impose a sales tax on buildings purchased by foreign interests. A price decrease followed, which can be attributed to one or the other, or both. Is there a way to differentiate the respective impact of these two measures?

6:30 p.m.

Senior Economist, Royal Bank of Canada

Robert Hogue

It's very difficult with the existing data. Some of the measures were mentioned, but others were established to regulate the real estate industry. A set of factors led to that.

6:30 p.m.

NDP

Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC

There has been a decline in housing prices in Vancouver. There wasn't…

6:30 p.m.

Senior Economist, Royal Bank of Canada

Robert Hogue

It is still slight.

6:30 p.m.

NDP

Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC

At least it has stabilized.

6:30 p.m.

Senior Economist, Royal Bank of Canada

Robert Hogue

It's mainly resale that has dropped a lot.

6:30 p.m.

NDP

Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC

Toronto hasn't experienced the same strong effect from these measures, isn't that so?

6:30 p.m.

Senior Economist, Royal Bank of Canada

Robert Hogue

Basically.

6:30 p.m.

NDP

Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC

I think it's the same in Montreal.

6:30 p.m.

Senior Economist, Royal Bank of Canada

Robert Hogue

Yes, but as has been mentioned previously, it is still very early to pass judgment on the measures that have been put in place.

6:30 p.m.

NDP

Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC

Would it be going too far to conclude that what happened in Vancouver, at least in terms of the stabilization of prices, is more a factor of the provincial decision than of that of the Department of Finance?

6:30 p.m.

Senior Economist, Royal Bank of Canada

Robert Hogue

Since the provincial decision came before the federal government decision, in theory, it should have had a greater effect on the market.

6:30 p.m.

Liberal

The Chair Liberal Wayne Easter

I think Mr. Morrison wanted to add something as well.

January 30th, 2017 / 6:30 p.m.

Executive Director, Canadian Housing and Renewal Association

Jeff Morrison

Yes.

I will answer in English.

On the general question of the need for better and more data, and more and better research within the housing spectrum, I think your questions really underscore the need for a dedicated body, a dedicated forum, whereby greater demands for data and for research can be conducted.

As we move very shortly into a new national housing strategy framework, which Minister Duclos will be announcing shortly, there will probably be an even greater need for that data, for which CMHC at present does not have the capacity. Let's have a dedicated forum in which we can do that.

6:30 p.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Martin.

6:30 p.m.

Senior Policy Adviser, Canadian Credit Union Association

Robert Martin

I have just one follow-up on that. We are aware that CMHC is actually trying to expand the data it's going to make public and also what it collects. The credit union, as a system, is beginning work with them to be able to provide a conduit for expanded data in the future. I think they're doing it with other institutions also. Alex could speak to that.

6:30 p.m.

Liberal

The Chair Liberal Wayne Easter

Thanks to all of you.

Ms. O'Connell.

6:30 p.m.

Liberal

Jennifer O'Connell Liberal Pickering—Uxbridge, ON

Thank you, Mr. Chair.

Thanks to all of you for being here.

I want to speak to you, Mr. Morrison, because you spoke about social housing and the housing strategy. Often when we're studying these impacts, those low-income earners are a somewhat different issue. One issue is about getting into the market, but the other is about anything that's somewhat affordable and just being able to get there.

I wanted to talk a bit about some of the things you raised. This is of particular interest to me because I tried to fight for a lot of these things when I was in municipal government, but there are a lot of barriers. You mentioned three things in particular that the federal government could do or should do to help. In listening to all three of those, I saw that you still need the provincial and municipal governments, even if, as you proposed, there are federal aspects in the use of social housing. Unless you build only social housing in that area, or if you build only social housing on those lands, that actually goes against a lot of provincial and municipal ideas. One that I hold personally is that you don't build social housing in one area; the community needs to be fully integrated.

The second issue is that you have the municipal and the provincial governments, and if you allocate certain land or certain units to be affordable, how do you ensure.... First of all, our definitions of affordable are very different. I know that in Ontario from the municipal side our definition of “affordable” is way off kilter. Also, then, what do you do if you actually have an affordable unit?

Let's say the federal government makes some recommendations, you have an affordable unit, and that person sells. That's now on the open market. How do you not lose those affordable units? What regulation or legislation would you like to see? Even though the federal government can impose on other tiers of government in terms of housing, they must necessarily deal with this. How would we work with other levels to ensure that it trickles all the way down and we keep those affordable units?

6:35 p.m.

Executive Director, Canadian Housing and Renewal Association

Jeff Morrison

Thank you.

Before I answer, I want to say, on behalf of CHRA, that our hearts and prayers go out to the victims of the Quebec situation yesterday.

You raised a number of excellent points, and we would agree with what you've said. One of the things we were very heartened to see, with respect to the national housing strategy that Monsieur Duclos is currently leading, is the very strong engagement he has had with provincial, territorial, and municipal governments.

I was fortunate a week and a half ago to present before the big city mayors' caucus, right after the Prime Minister. The mayors have made investment in and policy regarding affordable housing a top priority. Their commitment to the Prime Minister was to work very closely to align federal policy with municipal policy, and we know that provincial governments have said the same.

In terms of what federal levers are present, I did mention the three. Those were three out of 24 recommendations that we had provided in keeping with the scope of this particular study today. We wanted to keep the focus on social housing serving as a sort of platform or springboard for folks who want to move into the ownership space.

What we currently have is essentially operating agreements that mandate providers to maintain a certain number of units at what we call RGI, within an RGI framework—a rent-geared-to-income framework. With respect to the new policy framework that the national housing strategy will build upon, we want to make sure that the maintenance of existing units is protected, using whichever mechanisms are introduced and ideally, of course, to see that market grow, because as we all know, especially with regard to the Toronto area, wait-lists for social housing have grown significantly.

So, yes, there needs to be a maintenance and protection of what we have, and we need to grow what we have, using various.... I think the mayors have said they want to work with the federal government to do just that.

6:35 p.m.

Liberal

Jennifer O'Connell Liberal Pickering—Uxbridge, ON

Following up on that, one of the ideas suggested, which could be somewhat of a finance directive for current and existing social housing providers, is to ensure that the stock is maintained if not grown. There are regulations in terms of how much can be borrowed against the asset, because it's a public entity. There is public ownership of the units. If they could borrow against that asset even to a 20% hold or whatnot, they could actually do a lot without direct cash from, let's say, the federal, provincial, or municipal government. Also maybe some of the restrictions around the existing assets in these communities could be loosened.

Do you have a position on that? That's an idea that was presented, and I'm looking for further insight.

6:35 p.m.

Executive Director, Canadian Housing and Renewal Association

Jeff Morrison

We agree with two of the ideas you just mentioned. We've talked directly with CMHC about the fact that within the operating agreement framework in some cases there are very extreme restrictions on innovative delivery of service and on transformation of operating agreement models. We've asked that a number of those restrictions be removed so that providers can experiment, can innovate, can shift RGI focus, ensuring that the same number of units remain RGI.

We've also recommended, as a second point, that alternative financing mechanisms be put in place as part of the overall strategy. Although the strategy has not been announced, of course, we understand that setting up essentially a housing bank, a housing financing authority—call it what you will—with a dedicated program to provide that kind of lending capital to providers is being given serious consideration.

6:40 p.m.

Liberal

Jennifer O'Connell Liberal Pickering—Uxbridge, ON

I asked this question in the earlier round and I'll open it up to anyone.

You talked a lot about the targeting. It's all relative, right? As I said before, if there's indebtedness, no matter what region you live in, if your debt is risky compared to your income, that indebtedness factor, that test, is going to be relative across the board versus if you start implementing it from one region to the next. In the case of Toronto, in the GTA, we tend to feel that if there are any changes in Vancouver, then the reaction pops up in Toronto, instead of there being a standard stress test of indebtedness. Is that not the type of target we should be moving towards? It seems more realistic to do something like that.

6:40 p.m.

President and Chief Executive Officer, Genworth Canada

Stuart Levings

Yes, we agree with the concept of a stress test. To that end, it would be a national stress test because indebtedness is indebtedness. However, we feel that the current stress test is too severe. The impact of it is quite devastating. The level of stress could be refined and then it would be a very sensible thing to have, but not just for the insurance space, which is the first-time buyer. It makes sense for the entire mortgage industry because that would really help to cool some of the overheatedness in some of the markets that we're talking about.