Evidence of meeting #71 for Finance in the 42nd Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was changes.
A video is available from Parliament.
President and Chief Executive Officer, Canada Mortgage and Housing Corporation
I'm sorry for your disappointment. It's my job to be impartial. I don't represent a particular sector. I represent the Government of Canada and CMHC. Those people have people they represent, and I would suggest that you may want to take that into account.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
This is another case of government saying, “I know better than the people who are out on the street, the people who elect all of us.” This is government sitting in Ottawa saying, “I know better than the people who are dealing with this on a daily basis.” How can you say that you're contributing to long-term economic growth when we have multiple witness after multiple witness giving us concrete examples of how their business has dried up because of this one decision?
President and Chief Executive Officer, Canada Mortgage and Housing Corporation
Their businesses have dried up because the government was involved in a market in providing stimulus, and the Minister of Finance decided to remove some of that stimulus. It's like you're at a party, and the party has got too strong and you remove the punch bowl.
Conservative
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
Thank you very much, Mr. Chair.
Thank you for coming.
In fact, the only opinion spoken was not as Mr. Liepert stated. In fact, we spoke, on this side, anyway, of the significant concerns, especially to the taxpayers who back a lot of the insurance. Should the market fail, or should people not be able to pay for their homes, it's actually the taxpayers who are on the hook.
In terms of the support that the government provides, you talked about it, and you talked about it with my colleague as well, but you said there is major support in the mortgage market. You just alluded to your analogy here. Can you elaborate so Canadians know, people who have invested in their homes? Also, what are the risks if the models are correct and if the indebtedness is too high, and a crash occurred, or even a drop in terms of affordability and people being able to pay for their mortgage?
What are the risks associated to taxpayers, given the fact that the government actually supports the mortgage market in the ways that we do? Mortgage lenders acknowledge some of the highest support in the world, when comparing us with the U.K., Australia, etc.
President and Chief Executive Officer, Canada Mortgage and Housing Corporation
Yes, the Canadian state, the Canadian government, provides very substantial support in the housing market. I suspect it's close to, if not at the world peak in several programs. First of all, mortgage loan insurance is about $1 trillion of government guarantees. The homebuyers' plan is a federal program that allows first-time homebuyers to withdraw up to $25,000 from their RRSPs. There are also provincial and municipal policies that offer further support. The capital gains exemption on one's principal residence is a further form of support. Then finally, our securitization programs allow constant funding for people in the mortgage business. We're quite active in the housing market.
The concern is, as I said about removing the punch bowl, that the consequences can be quite significant. It's not just a housing adjustment and people losing their homes; it's people losing their homes because of unemployment. If I'm in a position where I have too much debt and I don't buy a car, then somebody who works at a plant in Oshawa may lose their job. That's the direct economic consequence of having too much indebtedness in an economy, people don't have degrees of freedom.
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
Thank you. I appreciate that clarification, because we heard testimony that seemed to conflate the issue with first-time homebuyers having access to the market, but really this is intended to deal with indebtedness. Whether someone has overspent on a mortgage, or has a mortgage and other consumer debt, this is what the stress test is all about. This is the concern.
As I think you stated in your comments, it's not about slowing particular markets.
President and Chief Executive Officer, Canada Mortgage and Housing Corporation
It's not at all about slowing particular markets, nor, frankly, is it about directly removing first-time homebuyers from the market. It's making sure that people.... Because the government's involved in this marketplace, first do no harm, and then make sure you're not making matters worse. That's the idea.
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
Thank you, and I'm sorry, I don't mean to cut you off but I have to get to some other questions.
We also heard a lot of testimony about the lack of consolidated data. The real estate associations have some. Banks have some. Mortgage lenders have some. I understand that Minister Duclos has asked for this as well in terms of your mandate and providing comprehensive data to understand things like foreign investment. He laid out a number of data requests.
Have you been doing this? Do you feel that it's significant enough to bridge the gap of the very clear missing data to help us fully understand the problems moving forward?
President and Chief Executive Officer, Canada Mortgage and Housing Corporation
The short answer to your question is that it's not enough. Of course I'm going to sit here and tell you that we're doing things, and we are. We've been working on our own to address the share of foreign ownership in condo units, where we can get those data; the turnover rate in rental markets, and we can get those data; and the price in square foot data for newly built condominiums in centres of more than 50,000 people.
We're working with StatsCan on some new data—I'm being quick for you here—and we have plans over the next two years to acquire more.
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
Thank you. I can't stress how important that is. To steal a term, the idea of delinquency rates as a predictor, it's a rear-view mirror. Without that data moving forward, that data you're speaking about, we can't predict and project properly in the economy.
President and Chief Executive Officer, Canada Mortgage and Housing Corporation
That's correct.
February 13th, 2017 / 4:15 p.m.
Conservative
Ziad Aboultaif Conservative Edmonton Manning, AB
Thank you.
To move on to a bit of a different topic, you said there was some talk about the steps taken that were not intended, and then, in the meantime, there appeared to be unintended consequences. If we were to take all this out there and say that you intended to do what you did, that means....
We hear back from builders in our communities, in our ridings. We know that people lost money, or they cannot sell their properties anymore and they end up with no profit, or below zero. We know that there's another interpretation to what you did, which was to encourage more or less the rental market versus the home builders, which was another consequence of the whole thing.
Another perception is that you are imposing policies on Canadians, especially first-time homebuyers, in terms of their dreams, their opportunities, and what they want. If we look at the Alberta market—we represent Alberta—we see that this policy has impacted Alberta a lot, including small businesses. During the difficult time of the economic downturn in 2007-08 until now, Albertans managed to really hold their market and to hold their mortgages, and we've seen the best results of all.
With these controversies surrounding what you have suggested to the Minister of Finance, can you clarify exactly why you think your policy is of benefit to Canada and Canadians? We know that Vancouver and Toronto markets have driven your policy, in many cases. What does that represent percentage-wise compared with the rest of the Canadian markets? Is it a good blanket policy that's really fair for all Canadians?
President and Chief Executive Officer, Canada Mortgage and Housing Corporation
The Minister of Finance makes policy for the nation as a whole, and it's on that that we advise him. He did not, and we did not in our advice, target Toronto and Vancouver. House prices and indebtedness are up across the country. Again, I would refer to the Bank of Canada's FSR for evidence of that.
With regard to the impact on first-time homebuyers, it wouldn't be fair to say that we were targeting them or that we intended to hurt first-time homebuyers. In fact, we were quite sympathetic to the impact on those individuals. What we were trying to do was save the long-term economic growth of this country from the possibility of a recession triggered by high house prices and high levels of indebtedness.
Conservative
Ziad Aboultaif Conservative Edmonton Manning, AB
We've seen in evidence in Alberta that Alberta has weathered the economic difficulties and we haven't seen any move right there. After 10 to 15 years, we haven't seen.... Isn't that enough evidence for you to really think before you put forward such recommendations to the minister?
President and Chief Executive Officer, Canada Mortgage and Housing Corporation
We certainly took that into account, as we did the price adjustments in Toronto. We were concerned about the future. The past does not predict the future.
Conservative
Ziad Aboultaif Conservative Edmonton Manning, AB
How much do the Toronto and Vancouver markets represent of the overall market in Canada?
President and Chief Executive Officer, Canada Mortgage and Housing Corporation
Steve, do you have the data here? We can respond later if we don't have it with us.
Senior Vice-President, Insurance, Canada Mortgage and Housing Corporation
I don't have the exact data with me.
President and Chief Executive Officer, Canada Mortgage and Housing Corporation
We can provide that to you.
Conservative
Ziad Aboultaif Conservative Edmonton Manning, AB
We need to know that for sure. We need to know that impact on the rest of the market, because if we're going to come up with a policy, it has to be fair. This has to be balanced somehow. The evidence we have here is that this policy was not really balanced whatsoever. Some people get looked after, somehow. The government has taken the steps, the Bank of Canada's recommendation, your recommendation. You hold almost $1 trillion in mortgage insurance across the country. You look after your best interest, but on the other side, there are a lot of people around the country who get hurt. A lot of new homebuyers, new generations, or baby boomers, who were looking for that first step in investment and they don't have that anymore.
