Finance Committee on Nov. 9th, 2023

[The Chair, Liberal, Peter Fonseca]

I call this meeting to order. I know our witnesses are waiting, and we have excellent witnesses.

Welcome to meeting number 115 of the House of Commons Standing Committee on Finance.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, September 21, 2023, the committee is resuming its study of policy decisions and market forces that have led to increases in the cost of buying or renting a home in Canada.

Today's meeting is taking place in a hybrid format, pursuant to the Standing Orders. Members are attending in person in the room and remotely using the Zoom application.

I'd like to make a few comments for the benefit of the witnesses and the members.

Please wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon to activate your mike, and please mute yourself when you are not speaking.

For interpretation for those on Zoom, you have the choice, at the bottom of your screen, of floor, English or French. For those in the room, you can use the earpiece and select the desired channel.

Although this room is equipped with a powerful audio system, feedback events can occur. These can be extremely harmful to interpreters and cause serious injuries. The most common cause of sound feedback is an earpiece worn too close to the microphone. We therefore ask all participants to exercise a high degree of caution when handling the earpieces, especially when your microphone or your neighbour's microphone is turned on. In order to prevent incidents and safeguard the hearing and health of the interpreters, I'd like participants to ensure they speak into the microphone into which their headset is plugged in, and to avoid manipulating the earbuds by placing them on the table away from the microphone when they are not in use.

I will remind you that all comments should be addressed through the chair. For members in the room, if you wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order as best we can, and we appreciate your patience and understanding in this regard.

In accordance with the committee's routine motion concerning connection tests for the witnesses, I am informed by the clerk that all witnesses have completed the required connection tests in advance of the meeting.

Before we go to the witnesses, PS Bendayan has asked for the floor.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you, Mr. Chair.

At our last meeting, we adjourned on the motion that we had before us. I am of course very aware that the witnesses have come here to provide important testimony, and I look forward to getting to that testimony, but, Mr. Chair, following discussions with members, I understand that the majority of members would like to get back to that motion and vote on it today.

Mr. Chair, I therefore move:

That the Chair of the committee immediately report to the House, that the committee:

1. Celebrates the Canada Pension Plan as the foundation of a secure and dignified retirement for tens of millions of Canadians and a pillar of Canada's economy;

2. Recognizes the important contribution of the Quebec Pension Plan which was established independently at the same time as the Canada Pension Plan; and,

3. Stands with the majority of Albertans who are opposed to Premier Danielle Smith's dangerous plan to withdraw from the Canada Pension Plan that threaten the pensions of millions of seniors and hardworking Canadians from coast to coast.

Mr. Chair, I trust that we can get to a vote on this quickly in order to hear from our witnesses.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, PS Bendayan.

MP Blaikie and MP Ste-Marie have their hands up, and MP Lawrence's hand is up too.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Mr. Chair, I am happy to get back to debate on this. I think it's an important motion.

I wonder if we might be able to have unanimous consent to let our witnesses do their opening statements or even have the first six minutes of questions for each party so that witnesses don't feel put out by having come. I respect the business of the committee and I respect the motion, but this might be a way to just ensure that witnesses have the opportunity to participate, notwithstanding the other important business before the committee.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Blaikie.

I'll look to PS Bendayan and others to see if we have unanimous consent for this.

[Some hon. members]

Agreed.

[The Chair, Liberal, Peter Fonseca]

We do have UC for this. Thank you for that.

We will get to our expert witnesses right now.

We have Isabelle Demers, Vice-President, Développement stratégique, affaires publiques et innovation, of the Association des professionnels de la construction et de l'habitation du Québec.

From the Canadian Federation of Independent Business, we have the vice-president of national affairs, Jasmin Guénette, as well as the director of national affairs, Christina Santini.

From the Canadian Union of Public Employees, we have the senior officer of human rights, Aditya Rao. Joining Aditya Rao is senior research officer, Emily Niles.

From Dream Unlimited Corporation, the chief responsible officer, Michael Cooper, is with us today.

From IceCap Asset Management Limited, we have the chief investment officer, Keith Dicker.

From Kindred Works, we have the chief executive officer, Tim Blair.

We will start with the Association des professionnels de la construction et de l'habitation du Québec, please, for five minutes.

Thank you.

[Isabelle Demers, Vice-President, Development, Public Affairs and Innovation Strategic, Association des professionnels de la construction et de l'habitation du Québec]

Mr. Chair, thank you for welcoming us to the Standing Committee on Finance as part of your study on government policy decisions and market forces that have led to increases in the cost of buying or renting a home in Canada.

The Association des professionnels de la construction et de l'habitation du Québec, or APCHQ, is a private, non-profit organization that brings together more than 20,000 housing and construction businesses in 13 regional associations.

The APCHQ has specialized in housing and renovation, and since 1995 it has been the employer representative that negotiates collective agreements on behalf of 16,000 employers in the residential sector.

Our mission is to be a unifying agent of change for the benefit of Quebec society by representing and supporting professionals in the residential construction and renovation industry.

Through their residential construction and renovation activities, APCHQ's 20,000 members provide homes for Quebeckers and support the social and economic development of Quebec. Our industry generates an economic impact of $45.6 billion and provides 270,000 direct and indirect jobs.

More specifically, 70% of our members work in the renovation sector and 30% in new construction. Lastly, our members work mainly in the residential sector.

The housing market has been in serious disequilibrium since the 2000s. The resale sector is systematically a seller's market, and home prices have quadrupled. Affordability is now at its lowest level in the last three decades.

Home ownership is in decline in Quebec. Quebec now lags behind the rest of Canada for the first time in its history, and young people are the ones suffering from it most. The home ownership rate is 59.9% in Quebec, compared to 66.5% for Canada as a whole.

We are therefore collectively creating the first generation that will not be owners. Given the impact that access to ownership has on household wealth, this is a major concern.

Furthermore, the rental vacancy rate has now fallen below the equilibrium level of 3% across the province, having declined from 2.5% in 2000 to 1.7% in 2022. In the absence of supply, this puts strong upward pressure on rents, thus causing what could be called a perfect storm.

Turning from the present state of affairs to the causes of this historic decline, the problem is structural, not situational. In recent decades, new housing supply did not outstrip demand. As is the case elsewhere in the country, there is now a strong consensus that companies have been underbuilding in Quebec for many years. Housing starts have already declined some 37% in the first three quarters of 2023.

As a result of the sharp increase in construction costs—of nearly 40% since the pandemic—and, more recently, the rise in financing costs, many housing projects are still on ice because they simply are not financially viable.

According to APCHQ, there will be 37,000 residential housing starts in Quebec for 2023, a 35% decline, and a very minor increase of 11%, with 41,000 starts, in 2024. In short, we are headed for the worst year for residential construction since 2001.

APCHQ proposes a number of measures to spur housing starts in the next few years. We welcome the elimination of the goods and services tax, the GST, on rental housing construction. That's a structural measure that is particularly appreciated by the industry.

However, we need to keep working, in particular, by providing better financing for social housing; improving and enhancing certain programs offered by the Canada Mortgage and Housing Corporation, or CMHC; and allowing a longer maximum amortization period for the purchase of a new energy-efficient home in order to lower the price of new homes relative to those of existing ones and to modify buyer behaviour while increasing the energy efficiency of the housing stock.

However, that won't be enough because demand remains very strong and is getting stronger. Our migratory balance has reached record levels. The federal government announced last week that it still plans to accept 500,000 newcomers in 2025, a target that will be maintained for the next few years. We will also have to continue to taking in large numbers of temporary workers in the next few years as a result of the general labour shortage and aging population.

In conclusion, we invite the federal government to spare no effort, to work closely with the Quebec government and municipalities and to do so in an agile manner. It will take targeted, strong and concerted action by all housing sector stakeholders to resolve the crisis.

Thank you for your attention. We are now ready to answer your questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Demers.

Now we'll hear from the Canadian Federation of Independent Business.

I understand that you'll be splitting the time. Jasmin Guénette will be going first, followed by Christina Santini.

[Jasmin Guénette, Vice-President, National Affairs, Canadian Federation of Independent Business]

Good morning.

My name is Jasmin Guénette, and I am vice-president, national affairs, of the Canadian Federation of Independent Business. I am joined by my colleague Christina Santini.

As I'm sure you know, the Canadian Federation of Independent Business, the CFIB, represents 97,000 owners of small and medium-sized businesses, or SMBs, in all economic sectors across the country. We have more than 9,000 members in the construction industry alone.

I want to thank the members of the committee for inviting us to attend this meeting.

It goes without saying that most of our members support any measure that can increase the available housing supply for Canadians, particularly for workers.

Some of our members tell us stories about how hard it is for their employees to find housing near their workplaces, in major urban centres, for example.

Some members of Parliament have also told us about similar problems in their constituencies, where businesses lack workers, particularly because there is a lack of available housing near their workplaces.

Today we want to focus on two issues that slow down housing construction. The first is the labour shortage in the construction industry, and the second is rising interest rates.

Seventy-three per cent of our construction industry members cite the skilled labour shortage as the main factor limiting production and sales, while 39% of CFIB members in the construction industry also feel that the shortage of unskilled and semi-skilled labour is one of the main factors limiting production growth and sales.

Most people obviously acknowledge that we have to build more housing faster, but I would ask committee members not to forget that the low construction rate can't be attributed to a single phenomenon, such as excessive and complex regulation. We also have to keep in mind the impact that the labour shortage is having in the various construction sectors.

To build homes, we need people in all trades, tinsmiths, electricians and many others. At the moment, it's very hard for businesses to recruit and hire all the necessary workers to complete projects promptly and start new ones.

This labour shortage has a cost. We estimate that the labour shortage in the construction industry has resulted in a revenue shortfall of $9.6 billion for SMEs, $1.5 billion for the residential construction sector alone.

To build more homes, we will obviously need more tradespeople in our construction businesses.

Another factor currently limiting new housing construction is rising interest rates. My colleague Ms. Santini will tell you more about that.

[Christina Santini, Director, National Affairs, Canadian Federation of Independent Business]

In a survey that we conducted in September, our members told us that rising interest rates were a factor, and 59% of members in the construction industry confirmed that rising interest rates were having an impact on their businesses.

Higher interest rates mean that businesses have to pay more to borrow, and some of them can't afford to borrow in order to carry out projects or to buy machinery and equipment, for example.

Construction ranks fourth among all the sectors that CFIB represents and that report they are affected most by rising interest rates. That can obviously slow down housing starts. Input cost increases and administrative delays are also significant factors noted by our members.

Ultimately, it's essential that we expand the pool of available workers, and immigration and training policies can play a significant role in that regard.

Thank you for your attention. We are eager to answer your questions.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Now we will move to the Canadian Union of Public Employees.

I understand Emily Niles will be first. She'll be sharing time with Aditya Rao, who will be second.

[Emily Niles, Senior Research Officer, Canadian Union of Public Employees]

Thank you for the opportunity to make this presentation today on such a pressing matter for workers in Canada.

The Canadian Union of Public Employees is Canada's largest union, with 740,000 members, including workers at publicly owned housing corporations, homeless shelters, long-term care homes, and other social and health care services at the front line of the housing affordability crisis. Many CUPE members are also suffering under the same crisis as wages fail to keep up with rising costs.

One reason the cost of buying or renting a home in Canada has increased so dramatically is that people and institutional investors have treated housing like an investment, specifically as a means to fund retirement. Our research has found that Canada's inadequate public pension system has been a factor behind the current housing affordability crisis. To put it simply, too many people must rely on the value of their homes going up, which worsens affordability for future generations, in order to have dignified retirement.

Retirement security in Canada was supposed to be a three-legged stool: the Canada pension plan, old age security and a workplace pension plan, but more than 60% of Canadians don't have a workplace pension plan, which leaves the majority of workers with a very wobbly stool.

One way people have been making up for this gap is by treating housing like an investment rather than a basic right. Recent surveys indicate that around 40% of Canadian homeowners rely on the appreciation of their homes to fund their retirement, and the federal government has actually promoted this view of housing. Up until a few weeks ago, the Government of Canada website dedicated to retirement planning proposed selling your current home and buying a less expensive home or getting a reverse mortgage as retirement income options.

Federal tax policy has also fed into this phenomenon because equity gains in primary residences are not considered taxable income. There is also the homebuyers' plan, which allows people to withdraw from their RRSPs to build or to buy homes.

Encouraging Canadians to count on their homes as investment vehicles for retirement income is very risky. It leaves people at the mercy of the boom-and-bust cycle of the housing market. It also means that homeowners can see efforts to bring down house prices as a direct threat to their retirement. This misplaced fear of falling house prices can lead homeowners to fight against more affordable housing in their neighbourhoods.

There's a second piece to this, and that's how workplace pension plans have fed into the financialization of rental housing as they search for the high returns for their members. More and more, pension funds are investing in purpose-built rental housing in Canada, and unfortunately, the way those pension funds view housing is no different from REITs or other asset managers who seek to maximize profit.

Investors profit from both value appreciation and a stable form of income in the form of tenants' rent. Investors often reposition their real estate holdings to make even more money: They buy existing affordable housing, evict tenants, and then replace them with more expensive units. Our union wants our members' pension funds to achieve decent investment returns, but not at the expense of workers and the Canadian public.

We implore this committee to focus on the more than 1.4 million people in core housing need, nearly one million of whom cannot afford monthly housing costs of more than $1,050 a month. It is those people for whom the consequences of inaction are the most dire.

This committee heard it from a representative from Skyline earlier in the study. The private market, by definition, will not deliver below-market affordable housing; it's against its interests to do so. The current path is not working. Government should stop using public subsidies, financing and forgone revenue to support for-profit investors as they build unaffordable housing. Instead, for those who are in the most need, we need direct public investment in affordable housing, which Governor Macklem has confirmed would not be inflationary spending.

The committee can use today's study to refocus the national housing strategy towards social, non-profit and co-operative housing, investments that would actually advance the right to housing.

The federal government can also use its spending power to require greater protections for tenants from the profit-seeking imperative of their financialized landlords. For all Canadians, government should guarantee a good pension for all through old age security and the Canada pension plan, and stop encouraging Canadians to count on their home sales to pay for retirement.

My colleague, Aditya, will now add some brief additional remarks.

[The Chair, Liberal, Peter Fonseca]

Go ahead, please.

[Aditya Rao, Senior Officer, Human Rights, Canadian Union of Public Employees]

Thank you, Mr. Chair.

To follow up on the points that Ms. Niles raised, we would like to add the following. Our union represents international students and migrant workers across Canada. So we're seriously concerned by the fact that too many people say, on the one hand, that there's a causal link between international students and temporary foreign workers arriving in Canada, and, on the other, that this puts upward pressure on housing prices. This is a baseless argument that could destabilize our national consensus on immigration.

The members of our communities, who are already more likely to be marginalized and who are victims of the housing crisis, are being told that they're the cause of that crisis.

Migrants are not pushing rents up. Landlords are choosing to increase rents. Government is allowing investors to gamble with housing and to push prices up. There is no peer-reviewed evidence showing a causal link between immigration and the housing crisis, but there is evidence showing that predatory, deep-pocketed investors rely on weak tenant protections and a virtually unregulated real estate market to inflate prices and to profit from them.

Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Now we will move to Dream Unlimited Corporation.

Michael Cooper, go ahead, please.

[Michael Cooper, Chief Responsible Officer, Dream Unlimited Corp.]

Thank you so much for having me here, and with a different point of view.

My name is Michael Cooper and I'm the founder and chief responsible officer of the Dream group of companies. Dream is a Canadian real estate company with a global reach. For over 30 years, we've been building communities across the country, across all major asset classes. We have about $24 billion in assets under management, from both public shareholders and institutions.

We've always tried to build our business not only to achieve financial returns, but also to achieve social and environmental goals. Please refer to the backgrounder for information on our impact goals and implementation.

Over the last three decades, governments have significantly reduced their investments to create affordable housing. For many years, purpose-built rental housing for the private sector was not a viable investment and the government wasn't doing it. CMHC projects that 5.8 million homes will be needed by 2030, with a supply gap of 3.5 million housing units. At an estimated $550,000 per unit, it's going to cost $3.2 trillion to fill that gap. I believe that one of the impediments to solving the crisis is a lack of understanding of how much capital is required to actually address it.

Since 2019 in Toronto, development charges for two-bedroom apartments have increased by 47%. Hard costs have increased by 45% and interest rates have increased by 204%. Current uncertain markets make it very difficult to attract risk capital to build new rental housing today. These conditions affect all providers of housing, whether they're not-for-profit, government or private.

We recognize that this is a shared problem, with each sector having different levers and roles in delivering the solutions to unlock supply across the housing continuum. This will require coordination among all levels of government and throughout all the various sectors.

We have three thematic recommendations for your consideration today regarding capital, labour and innovation, with a focus on capital.

First, capital is required on a major scale to provide housing. With the valuable waiver of HST, we are still able to provide only a 4.5% return on the total cost of building housing today. Pension funds and others require a return of 5.5% or more. This is because they can receive a 5% return by buying a Government of Canada bond or an 8% return by buying a good-quality company bond, and they can get 11% or higher from all sorts of other readily available relatively safe investments.

CMHC has done a lot to help solve the crisis, and they're an important partner to deliver housing. We have successfully partnered with CMHC many times. We proposed a CMHC program enhancement, such as increasing the size of the RCFI program. We think we need to have interest rates reduced to build a lot more housing, and we think that locking in the interest rate earlier in the process will allow people to have the certainty to be able to raise the capital to build more housing.

The housing challenge itself is very much a math problem. Given that government can loan money to facilitate construction of purpose-built rental housing to for-profit, not-for-profit and governments, and all of the money they lend ends up being repaid within 10 years, we recommend that the federal government consider a big and bold plan to lend money for rental housing on a large scale and provide reduced interest rates to attract capital to fill the supply gap.

Today, the 10-year cost of money is about 3.7%. If CMHC were to loan money at 2%, builders from all sectors, profit and not-for-profit, could attract the equity capital to proceed to develop housing that they cannot do today. If we allocated $55 billion alone a year, we could add another 100,000 units a year. If we did it for 10 years, it's a million units and the government will get all the money back over the next 20 years. The cost of providing the discount on interest will work out to be about $35,000 per unit, once, maybe 6% of the total cost.

Currently, the interest rate can only be set under RCFI programs three days before you borrow the money. That is too short to be able to convince investors or boards that you know what the returns are when you start spending the millions of dollars required to get RCFI financing. Like the Canada Infrastructure Bank, they lock in the rates earlier, and I think if CMHC could provide more certainty—maybe three to six months in advance—more units would be built.

As far as the underwriting goes, right now it takes one year for CMHC to underwrite an apartment, and that's much too long. I think that can be done in under three months.

In the 1970s, we had a program to create housing that accelerated depreciation. In five years, 200,000 units were built. All the money gets paid back by taxes later on, but it certainly helps attract capital now.

On the labour front, first, I want to commend the government. There have been a lot more immigrants coming in who are skilled workers since the changes in June, and that's a great thing. We also think that these are very high-paying jobs, so a lot of people born in Canada should be encouraged to go into skilled labour. Colleges should be better funded, and I think we need a campaign to encourage people. The average pay is $100,000 a person. That's a good living.

As far as innovation goes, for whatever reason, in Canada the amount of time it takes to build a house is the longest in the world, and there's a lot more to be done to speed that up. I think reducing the time will also help reduce the cost.

As a final thought, it's obvious that providing accessible, inclusive, suitable, sustainable and affordable housing is a priority, as the economic and social well-being of our country depends on it. In order to achieve this, I think we all need to work together.

I'm happy to answer any questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Cooper.

There will be a lot of time for questions, hopefully.

We're going to hear from IceCap Asset Management Limited and Keith Dicker, please.

[Keith Dicker, Chief Investment Officer, IceCap Asset Management Limited]

Hello, everyone.

I would like to thank the committee for the opportunity to speak with everyone here today.

We manage investment portfolios for families right across Canada, and we also manage money for investors outside of Canada. Our focus on markets is what we would call global macro factors. What that means, if you're not familiar with that, is that it's really focused on the very large moving trends that affect the price of housing, such as interest rates, inflation, economic growth, monetary policy, fiscal policy, things like that. What we tend to focus on primarily is risk first, and then we're able to anticipate where markets may or may not move.

With regard to the current challenges we have here in Canada with the housing market, we tend to look at, first of all, the short-term challenges and then the longer-term challenges.

The short-term challenges have basically been brought on by a mismatch between supply and demand factors. It is our view that supply has not been able to grow as fast as it should have been, and demand has been greatly affected by the policy responses from the COVID pandemic back in 2020. This includes the monetary policies from the Bank of Canada and other global central banks, as well as fiscal spending from the government side. All of this put together allowed the demand side to increase while supply was not able to increase and grow at a normal rate.

What I really want to look at next is the longer-term factors. I think that's what is being missed in a lot of these conversations. What I want to share with you is what may be developing. It's something that may not be expected by Canadians. As this goes, we could be having a different conversation a very short time frame from now, so instead of trying to increase supply for the housing market, this could very quickly flip around to a conversation about demand, what happened to demand all of a sudden.

First of all, I would like everyone to appreciate that all markets around the world are significantly affected by the long-term interest rates. Overnight rates for central banks count, but long-term rates are even more important.

In the early 1960s all the way up to 1982, long-term rates using the American markets proxy went from about 5% almost up to 20%. Maybe some of your parents had a mortgage back in the early 1980s at 20% to 24%. You know what I'm talking about.

From the early 1980s all through the 1980s, and then the 1990s and the 2000s, long-term interest rates went from effectively 20% down to 0%. When that is happening and you overlay it with globalization, you're going to have a growing market in a lot of different industries, including the real estate world, but it also helps with the cost of funding. It goes lower and lower and lower.

When the American housing market broke in 2008-09, this was a critical moment that really set the stage for the growth in the Canadian housing market 25 years onward. It is that interest rates should have been allowed to reset. Instead, central banks around the world, including the Bank of Canada, anchored overnight rates at 0% or near 0%. The Europeans and the Japanese went to negative overnight rates. Also, a lot of the central banks used quantitative easing to help suppress what we would call the global U curve, or they prevented price discovery from taking place. Then we have a full decade of lack of pricing taking place in the bond market, which means borrowing rates are kept lower and lower. This has enabled governments and households to continue to borrow and borrow until the day comes when we're having what we're experiencing right now.

Now we have 40 years when the Canadian economy has never experienced a moment with long-term rates going higher and the ability to continue to borrow at lower and lower rates. Also during this time, the Canadian economy has never experienced a national recession or an economic crisis of any kind. Alberta will have experienced one, because they are in a cyclical industry exposed to oil, but not the rest of Canada.

What I'm sharing with you today is that we view the world now as having global risk being synchronized. The challenge for Canada is that we do not get a soft landing. We actually have a recession that's deeper than what's being projected by a lot of economic platforms. Instead, what that's going to do is reduce employment. It's going to force, or cause, commercial banks to become restricted with credit and lending. It's actually going to cause mortgage rates to go even higher. This will cause the effect of housing prices coming down. Rental prices may come down as well.

You will get your wish, but at the same time, we're going to be facing another challenge at the exact moment when you're looking for something else.

That's my closing statement for everyone.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Dicker.

We'll now go to Kindred Works.

Tim Blair, go ahead, please.

[Tim Blair, Chief Executive Officer, Kindred Works]

Good morning, Mr. Chair and members of the committee. Thank you for the opportunity to speak to you today.

Kindred Works is a developer and manager that is creating a scalable, systems-based solution to the housing crisis and the climate crisis. We're unlocking the potential of some of the largest urban infill land banks in the country. Our goal is to build 20,000 new rental homes over the next 15 years. We currently have 18 projects and about 3,000 units in various stages of development. It's our aim to have one-third of our rental homes at below-market rent to meet core housing need. This is a measurement that allows housing affordability to be tailored to people's unique needs in their respective communities.

We all know that rents are increasing rapidly across Canada. This is caused by a lack of accessible, climate-friendly, affordable and purpose-built rental units to house our growing population. This issue disproportionately impacts Canada’s most vulnerable populations. It's also pricing working Canadians out of the communities where their skills are needed, threatening economic growth.

To provide enough housing units to accommodate individuals and families and to return housing costs to acceptable levels of affordability, we need, according to CMHC, 5.8 million new homes of all types before 2030. That is approximately tripling Canada’s historic homebuilding rate, and it requires trillions of dollars of investment. We know that government can't do this alone. We need to attract private capital and private investment with social responsibility.

Kindred Works is a participant in the national housing accord, which provides a framework for industry and government to address housing affordability, particularly recognizing the need to build two million new rental units by 2030. A key recommendation from this framework has been adopted—namely, eliminating the GST on purpose-built rentals. This will have a significant positive impact on bringing new supply forward and getting more shovels in the ground sooner, but this is offset by the higher interest rate environment, construction costs and labour costs.

I also want to highlight the importance of the continued availability of debt financing for new construction of rental housing. This can be supported by the federal government through either the national housing strategy or CMHC loan insurance programs. Ultimately, we need to think of housing, particularly rental housing, as infrastructure.

Programs such as the rental construction financing initiative, RCFI, have a meaningful impact on incentivizing new construction by providing low interest rate loans in exchange for a percentage of the units being at below-market rates. We see from our portfolio underwriting that when we use RCFI interest rates, we can deliver 20% to 30% of the units at below-market rents that meet core housing need, particularly for moderate-income working families or multi-person households that are increasingly being priced out.

We also see from our experience working with non-profits that to deepen affordability to meet low-income or the very low-income quartiles, all levels of government need to make substantial investment to fund these deeply affordable units. This can be done through capital grants, such as the co-investment program's forgivable loans. However, the inconsistency in the program criteria and the percentage of the forgivable loan limits its effectiveness. Overall, CMHC needs to do further work to streamline the approval process, and we recommend assessing affordability based on core housing need data.

I also want to raise environmental standards. At Kindred Works, we're committed to creating a carbon-neutral portfolio by 2030 because it's smart and necessary. However, CMHC programs and local step codes are inconsistent in their environmental requirements. This results in undue cost and complexity. We need simple, consistent and effective requirements, such as a single bar of entry to access federal funds.

In closing, I would like to thank you for the opportunity to share our perspective and ideas. The issue of housing is a shared responsibility, and we're committed to working with all levels of government and industry to tackle this crisis.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Blair.

Thank you to all of our witnesses for their opening remarks.

Members, there was an agreement to go through at least one round.

MP Ste-Marie, go ahead.

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

I have a point of order, Mr. Chair.

I get the impression there'll be a lot to say about the motion introduced by our colleague Ms. Bendayan. Consequently, I would like to see unanimous consent for two rounds of questions with the witnesses, not one, before we go back to the motion. I also propose that witnesses be allowed to leave the meeting when we come to the debate on the motion.

[The Chair, Liberal, Peter Fonseca]

I'm looking to the members.

[Rachel Bendayan, Liberal, Outremont, QC]

Mr. Chair, there was unanimous consent for one round of questions.