Finance Committee on May 19th, 2020

[Gabriel Ste-Marie, Bloc, Joliette, QC]

If I understand you correctly, CMHC is therefore prepared to move forward by accepting that Quebec has its own way of doing things and is not subject to the same conditions as the other provinces.

[Evan Siddall]

We have agreed to an asymmetric agreement with the Province of Quebec, and that is indeed what we have proposed. They have asked for conditions that are outside of my authority to negotiate. We have informed them of that and hope that we can reach an agreement very soon.

[The Chair, Liberal, Wayne Easter]

You still have a minute, Gabriel.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

My next questions concern the Canada emergency commercial rent assistance. Mr. Siddall, the CMHC's website indicates that the assistance is for small businesses that are administered in the same way, whether or not the property owner has a mortgage or other form of debt.

Could you elaborate on this new information and tell us how it will be managed?

[Evan Siddall]

It will be managed in the same way. A landlord has to get an attestation from his or her tenant that the tenant is in need and is affected by COVID-19. A tenant has to pay 25% of the rent; the landlord contributes 25%; and we contribute the balance of 50% to the landlord in coordination with the local province, which will co-fund it. We do that in agreement with the landlord. In return, the landlord must agree not to evict, and do a few other things. We will fund that bridge effectively for three months.

[The Chair, Liberal, Wayne Easter]

Thank you both again.

Ms. Bowers, if you want in at some time, just raise your hand, and we'll let you in.

[Evan Siddall]

I will throw this to her at some point.

[The Chair, Liberal, Wayne Easter]

It's not a problem.

We'll go to Mr. Julian, followed by Mr. Cumming.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thanks, Mr. Chair, and thanks, Mr. Siddall and Ms. Bowers, for being here today.

We certainly hope that your families are safe and healthy.

I have two questions to start, around the IMPP. Economist David Macdonald estimated that in the previous financial crisis around 2009, the IMPP provided $69 million of support to Canada's largest banks. At the time, the profits coming out of those same banks were about $27 billion. Famously, Edmund Clark of the TD bank gave himself a $4-million bonus and was paid $15 million.

The issue comes up, of course, in my hometown, New Westminster—Burnaby, where people are struggling to find affordable housing. They see the near-zero interest rate from the Bank of Canada. They see as well that when it comes to deferrals, these often come with penalties and interest fees.

I have two questions. First, what is the amount assumed so far on the IMPP? Second, have you insisted in this program that banks lower their interest rates—we see credit unions going down to zero—that the banks actually give people a break, eliminate the fees and penalties, and don't engage in what is speculative with this public support, which includes the payment of dividends and stock buybacks? Has there been any insistence through this program that the banks not engage in those kinds of practices?

[Evan Siddall]

The insured mortgage purchase program we have initiated doesn't include those specific conditions. As I said, and you have the exhibit in front of you, it's priced at about 1.7% to 1.9%. So far, we have purchased nearly $6 billion—$5.8 billion—in mortgages, so not a huge amount. That's because there is a proliferation of other funding sources available to banks, including the Bank of Canada that funds them at about 63 basis points, 0.63%. It's a cheaper form of money, although it's shorter term. In addition, many of them are accessing market funding and not using this funding significantly.

It's really more of an emergency measure. In the early days there were massive concerns about a real liquidity crunch that did not materialize, and we hope won't materialize.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you for that.

I'd like to go on to your presentation. I appreciate the issue of household debt as a percentage of GDP, though I take a different point of view than Mr. Poilievre, given the Conservatives' background in providing a lot of supports to the banking sector. A lot of family debt actually comes from people who can't afford housing, or their medication. They have to borrow because they're having to finance their education as well.

These are things that don't happen in so many other countries. As you correctly point out, Canada's family debt levels are among the highest in the industrialized world. Therefore I'm wondering, putting aside the issue of the IMPP, whether CMHC has evaluated what the impacts would be on the family debt crisis if we were making significant and large-scale investments in affordable housing.

We had an order paper question that showed that over the last five years about 14,000 units of affordable housing have been built. That is far below what is needed in this country. About one-third of Canadians are renters. We haven't seen an expansion of the co-op sector. What would the impact be on those household debt levels if we saw CMHC actually making large-scale investments in affordable housing again, as they did when we used to have a national housing program a few decades back?

[Evan Siddall]

As a result of the national housing strategy, we've made significant investments in housing supply. I'm trying to dig up my numbers. As you correctly say, though, the gap of what's needed is quite significant. One of the ideas behind the national housing strategy and our flagship program called the national housing co-investment fund is to recruit co-funding from provinces, territories, municipalities and private developers to create affordable housing as well. It takes a long time to build houses, unfortunately, and demand pops in an instant. Those are the measures we're taking thus far.

I'll offer Romy an opportunity to comment on some of the things our team at CMHC is doing to make that easier for our clients while I look up some numbers.

[Romy Bowers, Senior Vice-President, Client Solutions, Canada Mortgage and Housing Corporation]

Just to build on Evan's comments, when you look at the national housing strategy, you see that two of the key programs within the national housing strategy are the national housing co-investment fund and the rental housing construction initiative. These two programs are intended to support the creation of supply. As Evan mentioned, it does take time to create the supply. We're nearing the three-year mark of the national housing strategy and we're making progress in terms of meeting our targets. We're on track.

In combination, these two programs will lead to the increase in the affordable housing supply in excess of 125,000 units, but that's over a 10-year period.

One thing that's really important for CMHC is we have teams in place across all regions of Canada working with for-profit and non-profit housing providers to support the creation of housing supply. However, we recognize that these programs alone are not enough. We need to bring more partners to the table, so we have people on the ground working with municipalities and with the private sector to investigate any other opportunities there are to support the creation of housing supply.

[Evan Siddall]

If I might add, under those two programs, to the rental construction financing initiative we've committed $6 billion in loans since the program started in April 2017, and since the co-investment fund launched in April 2018 we have committed $851 million in repairs, $381 million in grants and $545 million in grants for repairs as well. I mixed up some numbers there. We'll get you those data.

[Romy Bowers]

In terms of those programs, we recognize that there are many different types of affordable housing. The RCFi is aimed towards more market housing, but at the lower end of the market, while the national housing strategy co-investment fund is aimed more towards creating housing for the most vulnerable elements of our society.

As Canada's national housing agency, we're trying to address needs of different types of Canadians. We feel that we've been quite successful to date, but there's a lot of work left to do.

[Evan Siddall]

The headline number to give you is $18 billion spent since the launch of the national housing strategy through CMHC on housing in Canada.

[The Chair, Liberal, Wayne Easter]

Okay, so there has been $18 billion spent since the launch of the national housing strategy.

[Evan Siddall]

Yes, $18 billion. Some of that is loans.

[The Chair, Liberal, Wayne Easter]

Okay. Thank you.

Peter, you'll have another round coming a little later.

We'll turn to Mr. Cumming.

[James Cumming, Conservative, Edmonton Centre, AB]

Thank you for appearing today.

Can you tell me what was the rationale in having CMHC deliver the CECRA program rather than the banks, given that the CEBA program was being administered by the banks?

[Evan Siddall]

That's a good question that I'm not sure I can unpack quickly enough.

The short answer is that I believe the CEBA program flows through BDC or EDC. We did talk to ISED, Innovation, Science and Economic Development Canada, the old Department of Industry, about that as an option.

It was easier to operationalize and more efficient to do through CMHC. That's the short answer to your question. That's the answer.

[James Cumming, Conservative, Edmonton Centre, AB]

Have you been set with measurables, deliverables or KPIs? How are we are going to measure the success and the execution of this program?

[Evan Siddall]

I don't think we have specific KPIs. However, at CMHC, we are administering the program in a way to try to minimize the number of evictions.

Unfortunately, there are some businesses that are going to struggle, for which this won't be sufficient support. Indeed, some of them might have been in trouble going in. It's a hard egg to unscramble.

[James Cumming, Conservative, Edmonton Centre, AB]

Have you had to change your staffing contingent?

How are you going to execute this new program? Is it with existing staff, or how is going to be executed?

[Evan Siddall]

Because we're devoted to housing, of course, as a matter of strategy, in a crisis it's all hands on deck and you help where you can, but we designed it in way to minimize disruption to our operations. We've actually outsourced most of this activity to a third party provider, so we're providing oversight.