Finance Committee on Oct. 23rd, 2023

[Daniel Dufort]

I'm not sure about that specific element of it. One thing that's certain and that worries me is that when you look at the construction sector as an industry, you see that it is one of the very few sectors of the economy—it might be the only sector—that has had no productivity gains for decades. That, I think, is one of the larger issues.

It's a matter of technology. It's also a matter of occupational licensing driving up costs, causing delays and making it so that we're not building any faster today than we were in 1970.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I don't know if we've heard that so far, and we've had many great witnesses.

You're saying that there is a lack of technological development in the construction industry that is holding us up, and I believe your testimony is that we're not building homes any more quickly than we were in 1970. Is that correct as well?

[Daniel Dufort]

We are not. If we go back to 1973, 50 years ago, today we are building the exact same number of units at the exact same pace. The population has gone up by 78%. The pace at which we build has gone up by 0%.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I've had the opportunity to ask this of a number of the panellists, and I'll put it before any one of you who wishes to answer. The CMHC came here before, and they told us that they warned this government in 2018 of an impending housing crisis.

Have you, your institutions' representatives or your city been aware of the impending crisis? I understand we are where we are right now, but I don't understand how, in the last eight years of this Liberal government, we didn't take steps to solve it until now.

[Daniel Dufort]

I think we've been looking at solutions that were targeting the demand side of the equation for way too long, looking at foreign investors or short-term rentals and all of these things that exist at the margin but are not core to the issue. The issue is on the supply side of the equation. You can do anything else, but if you're not targeting supply, it's not going to work. This is not where the problem is.

I saw that there was an increase—8% more than in the past—in the rate at which we're building. That's fine, but there's 244% more to go if we're going to meet the CMHC targets.

[The Chair, Liberal, Peter Fonseca]

Thank you very much.

Now we'll go over to MP Dzerowicz, please.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair. It is indeed an excellent committee.

I'm sorry Mr. Pomeroy left, but I have more than enough questions for all of you.

Monsieur Dufort, I'm very happy that you mentioned the whole aspect of innovation. I actually went up to Kevin Lee, when he came from the Canadian Home Builders' Association last week, and said, “You haven't talked about innovation within the sector. Why haven't you? I'd like to hear more about what it is that you're doing.” I did that after the meeting. I asked him to submit to our committee. I will be following up with him, and I'm putting it on the record that I will be following up with him because I think it is critical and vital for us to mention this.

I'm going to start with Mr. Bourque.

Mr. Bourque, one thing you said—and I want to put it on the record—is that some of the wrong inventory is still being produced. Could you clarify, very quickly, what that is?

[Michael Bourque]

Yes, I can. Fortunately, I'm here with Shaun Cathcart, who's our senior economist. He can speak to this in some data detail that I can't.

[Shaun Cathcart, Director and Senior Economist, Housing Data and Market Analysis, Canadian Real Estate Association]

Thank you.

We're talking about units being completed over the last...you can look back decades. I do panels all the time, and I always get, “We need to focus on purpose-built rentals and social housing. We can't forget about that. Not everyone can afford to buy a home.” Yes, that makes sense, but that's really something that someone would say 10 or 15 years ago.

The only thing that's blown up in response to this housing boom in prices and demand that we've been in, I'd argue, since 2016—we had another one in the early 2000s and we had one in the late 1980s.... Construction normally ramps way up, but historically it's been mostly single detached homes and a lot of apartments. This time.... Single detached home construction has been falling for 20 years: It's gone from 60% of completions 25 years ago to 20% now. The missing middle is still missing. Row homes—the thing that everyone agreed was supposed to replace that—have not done anything. We switched all the way through into apartment units.

One thing that people don't know is that in the last five years, the only thing that has blown up in response to this and really is responding in the way we want all elements of the continuum to respond is purpose-built rental apartments. They're what's killing it right now, with 34% of completions. What we really need is for everything else to ramp up, because what you're seeing is that it's not just that new homebuyers can't afford to buy—they still aspire to buy at the same rates they did before—but that the new stock flowing in is things that can't be bought. That's part of it.

We've been advocating on the missing middle side of things. I know that Mr. Pomeroy and Michael were talking before about neighbourhoods like mine, where you could fit four, five or six townhomes on the lot that my little 1958 house is on. It's going to take some redevelopment, but that's the kind of infill that's starting to happen, and some of the new zoning laws are going to allow for that.

Another problem there, it seems—and I've heard of this from our members—is that it's some of the least profitable stuff to build. It's either the big infill mansion for the wealthy person or the super-high-density units of 600 square feet, where the money's exchanged between the developer and the investor, neither of whom has to live in this thing.

It's that middle supply that's just not responding at all. In fact, as I said, it's something like 10% of completions. It should really be what new Canadians and young, millennial Canadians, who are increasingly older, would be perfectly fine with to raise a family in, with a smaller backyard and a smaller front yard, but it's just not happening.

[Julie Dzerowicz, Liberal, Davenport, ON]

I appreciate that comment. It actually leads to something else I've been thinking about, which is whether we have the right incentives. What are the right incentives we need to put in place—whether at the municipal, provincial or federal level—to actually create what we're looking to create?

This is another comment you made, Mr. Bourque. I want to ask this to both you and Mr. Guthrie, or whoever wants to respond.

Mr. Bourque, you talked about how you want to convene all levels of government and stakeholders to try to see where the issues are, which I thought was a smart comment. It's something I've been thinking about as well, and I'm assuming you're talking about the three levels as well as CMHC, the developers, the non-profits—everybody who's actually trying to create the homes. We have heard numerous testimonies that the issues aren't just provincial and federal; they're also municipal. As much as everything's perfect in Guelph—and we know this—I'm sure there are things that we could correct at the city level also. Could you talk for 30 seconds on that? Then I'll get Mr. Guthrie to respond as well.

[Michael Bourque]

Before coming into this job, I was in the rail sector. The federal government does an absolutely excellent job of using their powers of convening to bring together supply chain participants to solve problems. When there are ships backed up at the port of Vancouver and we need to expand, it involves the highways, the railways, the city. They do a very good job of bringing all of the stakeholders together.

When I came into the housing sector, this was non-existent. It's still non-existent. There are too many one-off, round table-type meetings. We always appreciate being invited to them, but we need to bring the ministers together as a national summit. We need to have the stakeholders there who have all of the ideas. We don't need to invent any new ideas.

You can go back to the Ford government's housing task force. They have 55 recommendations. There are recommendations there that would probably apply across the country. We don't need more ideas; we need the collaboration and the structures to be able to decide which ones are a priority and to get moving on bringing those together.

That's why we keep saying we need a more permanent structure, a round table with some real energy and leadership from the federal government to get behind it so that we can move forward. When you listen to mayors like Mr. Guthrie, you realize that the willingness to collaborate is there. However, we need leadership for this.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Dzerowicz.

Members and witnesses, we have enough time to give each party four minutes before we get back to MP Hallan's motion.

On that, we're starting with MP Morantz, please, for four minutes.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Mr. Chair.

It has been an excellent panel today. Thank you all for your insightful comments.

Mayor Guthrie, I have a couple of questions for you.

I was on Mayor Bowman's executive policy committee for four years as the chair of finance and the chair of infrastructure and public works in the City of Winnipeg. I understand the challenges, certainly, around development and municipalities.

I was curious about one thing, though. Back in April, I read that there was a company in your community called Fusion Homes. They shelved a plan to build a 23-storey, 250-condominium project. Is that correct?

[Cam Guthrie]

That is correct. There's some context to that, though.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Yes, I was going to ask you if you could explain what happened.

[Cam Guthrie]

Certainly.

The application did come forward to council. As the application was being reviewed by our staff, the province changed the zoning in that area to basically require extra steps to be taken by going through two different ministries at the provincial level before approval could be made at the municipal level, because it was in a flood zone.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

I imagine that was frustrating.

[Cam Guthrie]

It was, for a lot of reasons. We need more housing. The developer wanted to get people to work to build more housing. However, I think that the province saw that the area, being a flood zone, also created some environmental concerns, and they wanted to make sure their two ministries were brought to the table before the municipality was able to consider making an approval or any recommendation on that project.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Your city planners and engineers would have analyzed the application, correct? Did they have those same concerns, or was this just a provincial concern?

[Cam Guthrie]

No, it was strictly provincial. If the province had not stepped in to create those issues around the flood zone requirements, then we would have had a recommendation come forward from our staff to council.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Would it have been approved?

[Cam Guthrie]

I don't know what the recommendation would have been, because it was pulled because of the provincial changes.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Okay, fair enough.

On another subject, you said recently that in the last two years homeless encampments in your community have increased from 10 to 20.

[Cam Guthrie]

Yes.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Obviously, that's very concerning.

You've been mayor since 2014. I am curious. When you became mayor, were there any homeless encampments in Guelph?