Finance Committee on May 4th, 2021

[Dr. Paul Kershaw]

That's a really interesting question. I also will take a step back to when you were asking Mr. Tremblay about other policy areas we were considering. Just to have that on the record, we're looking at public finance generally, and that actually does coordinate quite well.

As for observations about monetary policy and surtax policy writ large, she gave you an example of the non-taxation of capital gains at REITs levels. There is a big subsidy there, a big incentive for REITs and other big companies to make investments through the housing system, and they're incentivized to do so in Canada. Monetary policy right now is making it very inexpensive for people to borrow. It's a great way for people to think about getting into the market and then, once they are, hoping that they'll get a good return on investment as well. We were looking at those broad ranges of things.

In the case of Generation Squeeze, we have published on tax policy issues in the past. We are not a group that recommends a tax on capital gains on housing for a range of reasons that I'm happy to go into with you in more detail, but we do encourage a focus on a bit of a tax shift. How might we focus on the 9% or 10% of homes that are valued above $1 million in Canada? How could we ask those homeowners—which include me, by the way, in the burbs of metro Vancouver—to contribute more in order to reduce taxes on renters and other low- and middle-income earners or to invest in other important programs?

[Ed Fast, Conservative, Abbotsford, BC]

Yes. I noticed that you mentioned in your exchange with Mr. Julian last time around the fact that maybe the threshold should be $1 million.

When you talk about a tax shift, what exactly are you talking about?

[Dr. Paul Kershaw]

This is something that I think is gaining momentum among a range of parties federally, and with good reason. A tax shift would be about how we want to, generally speaking, raise more revenue for governments by putting more tax on things we want less of and less tax on things we want more of. We would move away from relying so heavily on taxing earnings, especially in that middle- to low-income level, and we think that in this case there's good reason to increase the pricing on pollution. I want to congratulate your party and your party leader for moving in that direction. I think it's critical to build convergence among all parties in Canada right now, and I'm confident it will win you some younger votes.

I would also say we should be taxing wealth. We often hear, particularly on the NDP side, more taxing of wealth at the $20-million range, but there is good reason to be thinking about taxing wealth in a slightly broader part of the population there, thinking about people like me. Houses are hard to hide from the CRA—

[Ed Fast, Conservative, Abbotsford, BC]

Yes.

Because my time is short—

[The Chair, Liberal, Wayne Easter]

This is the last question, Ed.

[Ed Fast, Conservative, Abbotsford, BC]

—I'll focus on the tax shift as it relates to housing. What does that look like?

For the 9% of Canadians who have homes worth $1 million or over, when you talk about a tax shift, are you talking about taxing their equity? If so, that's effectively a home equity tax. Wouldn't you agree?

[Dr. Paul Kershaw]

I tend to interpret people who talk about a home equity tax and not having a home equity tax right now and are talking about introducing that as talking about taxing capital gains. We already have a strong tradition in Canada of taxing property values. We do that in every city across the country. It happens annually. What I'm talking about doing is adding what you might call a progressive surtax on those highest-value homes. It would not be done so much at the municipal level; we'd be thinking about this provincially or federally.

This is an idea that is getting traction with a range of organizations and groups. That kind of thinking, to be frank, has emerged in the solutions labs.

[The Chair, Liberal, Wayne Easter]

We will turn to Mr. McLeod.

Michael, you have six minutes.

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you, Mr. Chair.

Thank you to all the presenters today.

My question is for the self-governing indigenous governments.

Whenever we talk about indigenous governments and refer to indigenous organizations and indigenous there are the NIOs, the national indigenous organizations, and there's the LCC, the land claims coalition, and now the SGIGs. Everybody has a difficult time understanding the difference.

You pointed out, Bertha, that there was a huge challenge for housing. However, recently, a few years ago, there was $1.5 billion announced for the national indigenous organizations to provide housing to indigenous people. How does that work with the self-governing nations? Could you maybe give us a quick explanation?

[Bertha Rabesca Zoe]

As you know, the self-governing indigenous governments were using that label because there are a lot of indigenous governments across Canada that are Indian Act bands. We try to differentiate that with the ones that have self-governing agreements. That's where the SGIG comes in. Because we have a direct relationship with Canada, which is based on our treaties, we lobby very hard to make sure that we have that direct relationship with Canada and we don't go through the NIOs, which don't speak for us.

In terms of that $1.5-billion budget you're asking about, I will ask Matt to answer that question. Matt is the key technical person on the fiscal work we're doing. He's one of the several key technical people, so Matt could just jump in here.

[Matt Mehaffey, Legal Counsel and Senior Advisor, Carcross Tagish First Nations, Self-Governing Indigenous Governments]

On the $1.5 billion, when it came to allocating funds to the Northwest Territories, no first nation communities in the Northwest Territories except for possibly the Hay River Reserve, were eligible for any of that money, so none of it ended up in indigenous communities in the Northwest Territories.

Other self-governing nations did receive some funding as a result of that, but by the time the resources were allocated.... For example, the Carcross/Tagish First Nation received enough funding to build a third of a house a year for three years.

The funds that are being identified to address infrastructure and housing investments in indigenous communities are simply not reflective of the actual requirements. As some of the presenters were identifying, we're running into some of the same issues, in that the costs of addressing those necessary investments, because of the national housing circumstances, have increased in the last 12 months by 30% to 150%, depending on what region of the country you're in, so the gap is growing faster than the investments.

By the time they are allocated across the country, there is simply not enough for any individual community to make any meaningful—

[Michael McLeod, Liberal, Northwest Territories, NT]

Can I interrupt you, Matt?

I would note that $4.3 billion over four years was identified in the budget for the indigenous community infrastructure fund. We expect that it's from there that the request your organization has submitted will receive funding from—pending approval, of course.

Is that something you expect will help meet the housing challenge the self-governing nations are experiencing?

[Matt Mehaffey]

We're hopeful that it will, but again, it's going to be very difficult when you look at spreading that funding out over four years and across the country.

Self-governing nations are prepared to have a shovel-ready kind of approach to addressing affordable housing in the 29 self-governing first nation communities. We're hopeful that some of that will find its way into our communities, and in particular we're optimistic that this time first nations communities in the Northwest Territories will not be left out, thanks to the proposal that self-governing nations have prepared on addressing housing gaps.

[Michael McLeod, Liberal, Northwest Territories, NT]

Why is it important that the funding be direct? Bertha stated in her presentation that the funding should be direct—not through CMHC, but funded directly through indigenous governments such as Tlicho.

[Matt Mehaffey]

Generally our experience is that programs that are developed by CMHC are designed for reserve circumstances. When we enter into comprehensive land claims and self-government agreements, we have a different legal structure and different arrangements.

As a result, oftentimes the programs that are rolled out by CMHC may be very well designed for their intended audience, but they don't always fit for self-governing nations. That's why we are like a broken record on this issue when we come to present to people like yourself. It's about the fact that without a proper self-government lens in the development of programs, it's important to have direct access for those governments so they can actually design and put in place the services that are necessary to meet the needs of their population.

[Michael McLeod, Liberal, Northwest Territories, NT]

I have one more question.

[The Chair, Liberal, Wayne Easter]

We're a little over, Michael, but we'll let you go ahead.

[Michael McLeod, Liberal, Northwest Territories, NT]

Okay. I'll be quick.

In the budget there was $25 million for the Government of the Northwest Territories and $25 million for Nunavut. For a lot of us, it was an important immediate step. We expect that there will be further discussions on the urban, rural and northern indigenous housing strategy. I'm wondering if that is different and separate from what you're talking about.

[Matt Mehaffey]

Yes. We have to remember that there are two different governments that are responsible for the housing. That's going to the Northwest Territories, which has its own responsibilities and its own significant housing deficits. It doesn't necessarily address any of the issues faced by the Tlicho government in their communities.

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you.

I do have to come in here for a second, Mr. Mehaffey. You said it was “a third of a house a year for three years”. That's one house in three years. That's not very good, if you ask me.

What is causing that? Why are we not getting the money where it needs to go and why are we not getting the houses built?

[Matt Mehaffey]

I think there is yet to be a full reckoning with the scale of the housing and infrastructure deficit in indigenous communities. As a result, the investments that are made don't start to put a dent in that deficit. As a result, the resources provided are often used up on temporary band-aid solutions that don't produce a meaningful result. We just continue to throw good money after bad rather than grapple with the scale of the deficit that exists.

[The Chair, Liberal, Wayne Easter]

Thank you.

We'll turn now to Mr. Ste-Marie.

You have six minutes, Gabriel.

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

Thank you, Mr. Chair.

I have to say that I am really upset about what we learned in the last exchange. It is appalling.

I want to acknowledge all the witnesses and thank them for being with us today. I also thank them for their presentations.

I also want to acknowledge my colleague Ms. Kwan, who is joining us this afternoon.

Mr. Tremblay, CMHC just released its 2020 annual report. Are you able to answer any questions that relate to that report?

[Michel Tremblay]

I will try to answer to the best of my ability.