Finance Committee on April 1st, 2021

[Evan Siddall]

That would have behind it—I'm sorry to talk over you—insurance for the credit exposure.

[Pierre Poilievre, Conservative, Carleton, ON]

So, there's some double counting, understandably.

[Evan Siddall]

Yes.

[Pierre Poilievre, Conservative, Carleton, ON]

But, at the end of the day, we're talking over half a trillion dollars that taxpayers could be on the hook for in the event of mass mortgage default loss.

[Evan Siddall]

Could be, although I do want to reassure committee members that we are very confident through our stress testing that we have sufficient capital on hand to absorb most foreseeable losses—any foreseeable losses.

[Pierre Poilievre, Conservative, Carleton, ON]

Pray that you're right.

[The Chair, Liberal, Wayne Easter]

Thank you very much, both of you.

Next is Ms. Koutrakis, followed by Mr. Ste-Marie.

You have six minutes, Annie.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you, Mr. Chair.

Thank you to all of our witnesses for their testimony before the finance committee this afternoon.

I'm going to start with Mr. Siddall. I'd also like to congratulate you for your service and hard work. For a minute I thought it was an April Fool's joke because I hadn't heard anything about your leaving your post. I'd like to wish you a great next chapter in your life, and thank you again for your service.

In your testimony, you spoke about the rapid housing initiative and that we had exceeded the target of 3,000 units and were able to construct just a little bit over 4,700 permanent affordable housing units for Canadian families. Can you comment on how we were able to extend the funding of the program beyond the original targets?

[Evan Siddall]

Thank you for your kind remarks. By the way, I'm very proud that Romy Bowers, from inside the company, a terrific leader, will succeed me. She takes over on Monday, as announced.

Basically, it's because the provinces and territories in general, in large part, were willing to support those projects to a greater extent than we expected.

[Annie Koutrakis, Liberal, Vimy, QC]

Great.

We also heard in your testimony that you have concerns about the housing market, as I do, of a potential housing bubble. We all know that one size does not fit all. Every city is not in the same situation. I'm wondering if COVID has played any role in that. What are your concerns, specifically? What can we do to mitigate the potential downside to avoid any unintended consequences, such as creating imbalances in the housing market?

[Evan Siddall]

Well, we have significant imbalances in certain housing markets.

I would say that, given how prices have grown ahead of economic fundamentals, there's certainly more risk of downside than risk of upside in housing markets. What we've done, the principal measure right now, in addition to strict underwriting.... The underwriting done in Canada by banks and by mortgage insurers is very strong.

People should not be worried about the stability of the financial system. As I said, our banks are sound. It's homeowners we should be worried about, because when prices fall, a number of these people will be exposed to very significant losses after paying real estate fees and insurance fees, and with very minimal equity. That risk of foreclosure is quite significant to homeowners, and people who lose their jobs—younger people tend to lose their jobs more quickly—could actually be exposed to great tragedy.

The problem is that this can accelerate upon itself. Housing markets are given to boom and bust cycles. Just as they run up, they run down. I know we don't think that's the case, but of the 46 financial crises for which we have housing data, two-thirds of them—this is globally—were preceded by housing boom and bust cycles in real estate.

Therefore, we should be worried about those homeowners. The stress test, which is something that creates a buffer above current mortgage rates, helps protect homeowners from that. It's an extra buffer that helps protect them from that eventuality.

[Annie Koutrakis, Liberal, Vimy, QC]

I'm also concerned about the affordability aspect. Should the Government of Canada be taking steps to address the rapid rise in housing prices, especially in certain urban areas? How does that look over the short term and the long term?

[Evan Siddall]

That, I'm afraid, is a question for the Government of Canada and the ministers responsible, and the advice I give them is secret.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you for that. I do appreciate your response.

My next question is for Ms. Coates.

I have heard from my own constituents, the independent travel agents in my own riding of Vimy, that time and time again they feel that your sector is the forgotten sector. I truly would like to find a solution to help them, because I think it's a great service that you offer and it would really be a shame if the support you need is not there.

You mentioned in your testimony that one of the recommendations is for the government to create a $200-million special fund for travel agents. Could you expand a bit on that recommendation? What would you like to see in that program? How would it work? Have you any thoughts? I think it's an interesting suggestion. Perhaps you could share that with us and expand a bit on it.

[Judith Coates]

Brenda is going to answer that question.

[Brenda Slater, Co-founder, Association of Canadian Independent Travel Advisors]

Hello there. Thank you very much for the question.

We are told by ACTA, which is the Association of Canadian Travel Agencies and is a little different from us, that there is $8.5 billion in future travel credits out there. This equals $200 million in commissions that currently are sitting either [Technical difficulty—Editor] 15% of those right now have already been clawed back, so travel agencies and independent advisers have already paid those, but the following 85%, if those future travel credits get converted to refunds, would also be clawed back from us.

We're asking for that fund to be set up so that initially advisers can go to the fund to apply for a refund for the 15% that already has been clawed back and then, moving forward, so that the airlines and their subsidiaries, their tour operator companies, such as Air Canada Vacations and WestJet Vacations, would be able to go to that fund instead of coming back to us for refunds of the commissions.

[The Chair, Liberal, Wayne Easter]

I'm sorry, Annie, but we're going to have to move to the next questioner.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you.

[The Chair, Liberal, Wayne Easter]

Next is Mr. Ste-Marie, who will be followed by Mr. Johns.

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

Thank you, Mr. Chair.

Good afternoon, everyone. Thank you for your presentations. You're a very interesting panel of witnesses. Ms. Slater, Ms. Coates, and Ms. Wilson, the situation in which you and your colleagues find yourselves makes no sense. Hopefully the government will find ways to help you. The documents you have provided us with are full of solutions. We want you to be heard.

Mr. Siddall, you are the president and CEO of Canada Mortgage and Housing Corporation. I want to applaud you and thank you for the work that you have done. I wish you all the best in the future. I also want you to thank all your teams, who have worked very hard during the pandemic. I can't resist coming back to a topic you raised on May 19, almost a year ago. At that appearance, we talked about forecasts. I told you that many economists were expecting real estate prices to rise. Of course, I hope your forecasters have learned from this crisis. It is always difficult to make forecasts. That said, thank you again for all the work you have done.

Ms. St-Onge and Mr. Laflamme, when you come to testify here, it is always troubling. You are saying that two-thirds of self-employed workers in the cultural sector are in a state of psychological distress. Only one-third of them apply for or have access to the Canadian recovery benefit (CRB). This is very troubling. It must be further noted that self-employed workers as a whole are facing difficulties. The president of Travailleurs autonomes Québec mentioned the same problem with respect to the CRB. She also reminded us that, whenever there is a small problem, an investigation is launched and it takes months to resolve the matter.

If your members are facing the same problem, can you elaborate?

Do you see a connection between the very high rate of psychological distress and the lack of resources in existing programs?

[Pascale St-Onge]

I will start with your second question. In my opinion, because of the precarious situation in which they find themselves, self-employed workers in the cultural sector have not been able to accumulate enough savings to be able to get through periods of crisis. The current crisis is dragging on. The situation is unprecedented, but it is still a reality every day, every month or every week for the tradespeople of the sector, since they operate project by project, on contract. What has become obvious to us is that the precarious situation of the people in our sector can no longer continue. The crisis has proved that we were ill-equipped to deal with such a situation.

The CERB has been very useful. The CRB is less so. I will let Mr. Laflamme further explain why the CRB is inherently problematic.

It's clear to us that we need to work on the socio-economic status of artists, because if we don't, the cultural sector across Canada will be impoverished. Forty per cent of our members are thinking of leaving the profession, which is a serious concern.

There are labour shortages in other sectors. We don't want to have shortages in the cultural sector when the time comes to resume cultural activities.

Mr. Laflamme, do you have anything to add?

[Julien Laflamme, Coordinator, Research and Women's Services, Confédération des syndicats nationaux, Fédération nationale des communications et de la culture]

Yes. I will be brief. I would group the problems with the CRB into three broad categories. First, unpredictability. The income of cultural workers varies a great deal. Filing taxes and figuring out how much to repay will be a huge problem. Clearly, people who anticipate this may have questions. That's one problem.

Second, it is not clear how the program is being applied. One of the things mentioned earlier was the job search requirement. As you know, the EI system includes the concept of suitable employment for wage earners, which means that people are not required to take a job that pays less or is in a different field of expertise than their own. In the case of the CRB, the rules are less clear. It is a new program with which self-employed people must become familiar. The way it is presented by the Canada Revenue Agency is not always clear either.

Third, the duration of the program is problematic, as it is supposed to end in June and will likely have to be extended, unfortunately.

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

Along these lines, just before you, we heard from representatives of the Alliance de l'industrie touristique du Québec. In order to make programs such as the wage subsidy more predictable, they asked that we announce that the latter will be extended until at least 2022. You said that the CRB should be extended for as long as it is needed. It would be good if the government could announce in the budget that will be tabled in two weeks that this subsidy will be extended until 2022, at least for the sectors you represent. What do you think about that?

[Pascale St-Onge]

It would be great if it could be extended over a longer period of time to allow for predictability. At the same time, it would set the stage for the work that needs to be done on how to establish a social safety net for self-employed workers.

I absolutely agree. The longer it's extended, the better.

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

That's the basic issue you just raised—