Finance Committee on May 20th, 2021

[Ken Neumann]

You'll have it before the end of this session.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

We'll turn now to Mr. Vis, followed by Mr. Fragiskatos.

Go ahead, Brad, for six minutes.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Thank you, Mr. Easter, and thank you to all of the witnesses for their thoughtful submissions this morning.

I'm first going to turn to Habitat for Humanity, because I was very interested in a couple of the final points made regarding the co-investment fund and improving the application process.

Across Canada, people are very thankful for the co-investment fund, and I recognize that, but I've heard unanimous consent that more needs to be done to get the application process moving faster so we can see more organizations like Habitat for Humanity leverage these investments by the federal government to get more homes built.

Ms. Deans, you mentioned a renewed partnership. What would a renewed partnership look like, and what type of red tape could we cut to improve that partnership?

[Julia Deans]

We are probably a bit unique—well, not unique, but we have had good experience with the process, and it's partly because we're able to bring 50 local Habitat organizations together and work with CMHC on a portfolio basis, which has made life easier for them and certainly for our local organizations. Engaging in processes like this can be very hard for a charity that may be working very hard on the ground in trying to devote time towards this. Our experience has been positive.

On our renewal, we hope we will be renewing under the co-investment fund, which would bring us the contribution we need, as opposed to a loan, which would not. I do believe that further outreach to smaller organizations that may not have the wherewithal that we do and continuing the customer service work that CMHC has been investing in will be key to having more participants in the co-investment fund and other CMHC programs.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Thank you, Ms. Deans.

The rapid housing initiative has received generally positive accolades in respect to the timeline utilized to have projects approved. If we had a similar approach with the co-investment fund, do you think more affordable homes would be being built in Canada right now?

[Julia Deans]

I'm not sure I'm in a position to comment on that. I think we all appreciated the speed of that approach. It was not something that Habitat Canada was involved in, because it focused primarily on modular rental housing. That wasn't something we participated in.

Certainly it's a model that I would hope CMHC is looking at learning from to apply to other programs.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Thank you so much.

I will note that you did mention Mission, British Columbia, in my constituency, and right up the road from where I work there will be a new Habitat project completed in the very near future. Thank you for what you're doing to improve access to home ownership across Canada. I think that irrespective of party we recognize the good work that you guys are doing in Canada and the leadership that you provide in improving government processes and acknowledging where some issues reside, as Mr. Brush outlined very clearly, and what we can do to improve our processes under the national housing strategy.

[Julia Deans]

Thank you.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Mr. Lee, you mentioned in your remarks that one of your recommendations was to provide the option of a 30-year amortization period for first-time buyers. How would a 30-year amortization period improve affordability for a first-time homebuyer?

[Kevin Lee]

In simple terms, it just allows you to lower your monthly payments and also, of course, it enables you to have a little bit more buying power out in the marketplace, because you're spreading your amortization over 30 years instead of 25. It's particularly important for first-time homebuyers. Everybody has been seeing for quite a while now the challenges for first-time buyers entering the market, and it's also important to note that first-time buyers are very low risk. In fact, when you talk to the mortgage insurance companies, you'll hear that they are the best profile in terms of low risk, and it would be a great way to help first-time buyers get into the market.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Thank you, Mr. Lee.

You also mentioned that we need to support longer-term affordability along those lines by extending mortgage terms to seven or 10 years. I know from previous discussions with industry officials in the mortgage sector that the Interest Act hasn't been updated for 140 years as it relates to mortgage. What could the federal government be doing to give Canadians more flexibility and security by looking at the Interest Act and the types of mortgage options available to first-time homebuyers and others?

[Kevin Lee]

You're exactly right that the act has been around for a long time, and as a result of the wording of that act, we are much more focused on five-year terms for mortgages. Reviewing that act and providing more flexibility to enable financial institutions to more easily move to seven- and 10-year terms would provide a lot more stability in the marketplace and give encouragement to make use of those terms.

That, of course, would help with anyone concerned about even 30-year amortizations or lowering the results of the stress test. If you were able to go to seven or 10 years, some of those financial risks would start to be mitigated even more with that kind of length of term.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

What you're saying is that by addressing the Interest Act, we could amend the mortgage stress test and perhaps make it easier for first-time homebuyers to qualify for that first purchase.

[Kevin Lee]

Yes. That's certainly been one of our recommendations when we look at the stress test. If you wanted to step it down, how do you reduce the risk, since the stress test is about addressing risk? The longer people have a locked-in term instead of having to renew in seven and 10 years....

The stress test is very much about when you renew. If you're able to get a seven- or 10-year mortgage term much more easily, by the time you come to renewal, you're that much further along in increasing your equity through your career. Probably your income as a family has gone up and you're in a much better position if in fact mortgage rates have gone up at that time.

[The Chair, Liberal, Wayne Easter]

We will have to move on. Thank you all.

We will go to Mr. Fragiskatos, followed by Mr. Ste-Marie.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you, Mr. Chair.

I appreciate all the witnesses today.

Ms. Deans, I do not have time, unfortunately, in the six minutes to ask questions of Habitat for Humanity and you, but thank you very much for the work you do in London as an organization. You mentioned London in your opening remarks. It is deeply appreciated in the city, and for very good reason. The organization has a really sterling reputation in our community. Please keep it up. I'm always happy to help where I can. What a wonderful group it is.

Ms. Masotti, it's nice to see you again. I know that you've appeared before, and we've spoken in the past. It's always interesting when we have witnesses who come and speak about the budget and their point of view is shared by other witnesses who came earlier in the week. Your thoughts on the extension of the sickness benefit from 15 weeks to 26 weeks, as found in the budget, are shared by many, including David Macdonald, who is the senior economist for the Canadian Centre for Policy Alternatives. When the budget was released, he said the following about this specific reform. I'm quoting here from the Toronto Star, where he said, “These are positive long-term changes.” As well, “You can get EI if you lose your job, but you can also get EI if [you're] sick. So if you’re struggling with cancer...you can now receive EI for longer.”

Obviously, I know you agree with that, and your testimony reflects that, certainly, but for those for whom your organization continues to advocate, how critical is this change?

I ask in light of the fact that I've heard some colleagues hinting—this is certainly not universal, but some colleagues—that they think the budget goes too far, that it expands the role of the state, that it is too generous. They haven't used those words, but I do get that feeling sometimes in hearing colleagues speak about it, particularly my Conservative colleagues.

Could you speak about the importance of this change?

[Kelly Masotti]

I sure can. Thank you very much for the question.

This change is critical for people who are living with cancer. As I stated in my opening remarks, cancer in certain instances can actually be looked upon as a chronic disease—not in every case, but in some—and people are interested in getting back to the workforce. An extension to this benefit is critical, because it would allow people the time off they require to go through treatment, to recover from treatment, and to then return to the workforce, which is what we know they want to do.

Twenty-six weeks is an incredible start. This is a historic investment in the sickness benefit. It will cover many people. We know that right now three-quarters of the people who apply for and use the employment insurance sickness benefit exhaust it and take additional time off. Therefore, we know that, at minimum, 26 weeks will help many Canadians right now who are living with cancer.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much, Ms. Masotti. I appreciate that.

I have less than three minutes, so I will go to Mr. Lee from the Canadian Home Builders' Association. It's nice to see you again, Mr. Lee. We've spoken in the past.

A lot of things in your testimony stood out to me. I certainly share your enthusiasm about the rapid housing initiative. Thank you for sharing your thoughts on that and how it could indeed be strengthened going forward.

You said, and I wrote down the quote here, that there is “much that can be done” to increase supply in Canada as far as housing is concerned, and that there are levers that exist at the federal level to make that happen. Could you expand on the levers? I know you did so in your testimony, but I think it would be worthwhile for all of us to hear more on that idea.

[Kevin Lee]

I think there are probably two different areas.

One, which I spoke to, was the ability to provide more objective information through CMHC on zoning issues and on some of the better practices that can be used to help accelerate getting more market-rate supply into the market at the municipal level.

As well, Nimbyism is such a huge factor for building anything pretty much anywhere these days. In fact, the only times you don't see that phenomenon is when you build greenfield development. Ironically, we're all trying to build smartly upwards and inwards as well, through densification. That's the hardest thing to get done, so some work there would be really important.

The other real levers that the federal government also has are funding mechanisms. The government is committing to more infrastructure funding, for example, and tying it to good housing outcomes could be really important to make sure we get the desired type of density around transit stations and including market-rate housing in it. There's obviously a focus on social housing and supportive housing, which is really important, but we also need to look at how we also support market-rate housing, and the levers that the government has through such things as infrastructure can really help that.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much.

The question is asked in light of the fact that we continue to see, especially where I am in the southwestern part of Ontario but in southern Ontario in general, an exponential rise in the average cost of homes.

Are there any ideas at the federal level that would address that issue? Some of the comments that you just made would involve zoning issues. Clearly that's a municipal matter, but there are things the federal government could do further to what it is already doing, which are important steps in the right direction.

I really appreciate your having an opportunity to share your thoughts on what more can be done. Thank you very much.

[The Chair, Liberal, Wayne Easter]

Thank you.

We will have to move on to Mr. Ste-Marie, followed by Mr. Julian.

Gabriel.

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

Thank you, Mr. Chair.

Good morning, everyone.

Thank you to the witnesses for being here and delivering presentations.

Mr. Chair, we just received the document you requested. I appreciate the witness providing it so quickly.

I want to start by clarifying something in connection with what Mr. Fragiskatos and Ms. Masotti were just talking about. Unless I'm mistaken, the majority of the House supported extending EI sickness benefits to 50 weeks. The Bloc Québécois put forward the motion, which was supported by the NDP and the Conservatives but opposed by the Liberals. Unfortunately, it's clear from the budget and Bill C-30 that the government disregarded the will of the House. I just wanted to provide that context.

My questions are for Mr. Céré.

Mr. Céré, thank you for being here and making your presentation. You cited the IMF, which cautioned the government against withdrawing income support programs too quickly. You made clear your concerns about divisions 35 and 36 of part 4 of the bill, in relation to a new iteration of EI, one that will come into force in September for a period of one year, as well as the CRB.

To my knowledge, the minister has the power, by regulation, to extend the CRB until November, but she cannot change the amounts, which would require a change to the act. You, of course recommended that we propose amendments to the bill. We will propose amendments, but they still have to be deemed in order by the chair. We will try to come up with appropriate wording.

I want to follow up on division 36 of part 4, which amends EI. For the one-year period from September 2021 to 2022, you identified two gaps, the variable divisor in calculating the benefit rate and the benefit period.

Could you elaborate on those gaps in the bill and tell us who will be affected?

[Pierre Céré]

Thank you for the question, Mr. Ste-Marie.

These are technical issues, of course. When we talk about the divisor, it's as though we were speaking Martian. The divisor is what will calculate the benefit rate, that is, the money a person will get, the unemployment benefit. In other words, it's the bread and butter. Then the benefit period is the duration. It is somewhat inexcusable or inexplicable to go back to the status quo, because we already have temporary measures until September 2021, with a single eligibility criterion of 420 hours and the famous single divisor of 14 for all Canadians. That means that the calculation of the benefit rate will be based on the best 14 weeks, and that figure is, of course, linked to the eligibility criterion of 420 hours.

The first blind spot is that this 14 divisor is not renewed. Instead, a variable divisor based on the unemployment rate could be used. There is a telling silence in part 4, division 36 of the budget implementation bill.

Let's take the example of a seasonal worker who has worked 15 long 50-hour weeks and has accumulated 750 hours. They would be more than eligible for EI benefits. They would normally expect—I say “normally”—that their salary would be averaged. If they worked 50 hours a week for 15 weeks at $20 an hour, that works out to an average of $1,000 a week for 15 weeks. A benefit rate of 55% of that average of $1,000 would result in benefits of $550 per week.

However, the EI administrative regions are very large, the boundaries are very arbitrary and there are a number of different employment realities within the same region. So if you reintroduce the variable divisor by unemployment rate, someone in the same situation but living in another EI administrative region could be subject to a divisor of 20. That means that the $15,000 earned in 15 weeks would be divided by 20, which would give an average salary of $750 per week, rather than $1,000. That individual would receive 55% of that average of $750, which amounts to a benefit of $413. So the person would lose $137 a week.

If we look at the benefit period in the tables in schedule 1 of the budget implementation bill, we see that we are back to the status quo. If a person has 750 hours of work, that will give them, based on a regional unemployment rate of 6% to 8%, between 14 and 18 weeks of benefits at most.

The pandemic isn't over. Everyone is worried. Some employment sectors have not yet gotten back on track. There are people who will feel the consequences for many years to come. So please, let's keep helping people. What will help them is the bread and butter of the calculation of the benefit rate and the benefit period. That's why we're asking you to amend division 36 of part 4 of this budget implementation bill and go back to what currently exists, that is to say a fixed divisor of 14 and a benefit period of 50 weeks for all Canadians, temporarily, for 2021-22. The government will set up a commission to study the EI program, and we hope one day to have a real permanent reform.

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

Thank you.

[The Chair, Liberal, Wayne Easter]

Mr. Céré, I'm sorry. We're out of time on that round.

Mr. Julian is next, followed in the next round by Mr. Falk.

Go ahead, Peter.