Finance Committee on Jan. 17th, 2022

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

I would like to ask you a question on the same subject. What are the highlights when that data is broken down?

[The Chair, Liberal, Peter Fonseca]

Could we have a very short answer, please? Thank you.

[Heidi Ertl]

Renters are harder hit in the western provinces than in other provinces, but the effects are the same for home owners across the country.

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

Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Now we will move to the NDP and Mr. Blaikie again, for two and a half minutes.

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

Thank you very much.

A big component of the committee's study is taking a look at the housing market and trying to get a better handle on what these rapidly acting cost drivers are that are making housing so unaffordable. We're also trying to think about cost of living increases generally for Canadians.

We've talked a bit about housing. We've talked a bit about grocery prices. In the opinion of Statistics Canada, can you tell us what some of the other sectors are that are driving the cost of living increases for Canadians? If there are many that you think the committee should be looking at, which ones do you think are better targets for government policy action in order to try to moderate or diminish those cost pressures?

[Anil Arora]

First, there's a bit of a conceptual difference here. I think it's important. We don't measure specifically the cost of living, per se. We have other measures that I've talked about, such as market basket measure and poverty, and we talked about household expenditures by quintiles and so on. However, the CPI is not a true measure of the cost of living per se, because you see decisions that are delayed, substitutions that happen and all sorts of different decisions that [Technical difficulty—Editor] when faced with fiscal challenges.

The CPI is a measure of consumption and how it's changing on a consistent basis over time. It's not that we don't care about the cost of living—of course we do—but as I said, that is not built into the CPI as a constant measure of looking at both the price change and the changes that Canadians make in order to adjust to those kinds of changes, such as delaying or accelerating certain things.

From a consumption perspective, the basket is a very good representation of what it is that everybody.... Why do I say that? It's because the survey of household spending takes every single dollar that a household is spending and reconciles it. All of the categories in the CPI account for pretty close to 100% of the expenditure of that household.

We talked earlier about assets and the amortization of those assets and investments. There's a whole set of decisions about RESPs and RRSPs and all of those aspects, not to mention the asset valuation over time and the difference if you're a renter or if you're an owner. Over the course of a lifetime, you have to look at all of those aspects as well. We do measure those, but they're not as frequent. We will look at those kinds of patterns and see what changes there are.

I hope that helps.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Arora.

We're moving to the Conservatives, and we have Mr. Poilievre for five minutes.

[Pierre Poilievre, Conservative, Carleton, ON]

In what category of CPI are the principal payments on a house covered? I just want the category.

[Anil Arora]

We have them in the shelter, and then there's a breakdown from furnishings to—

[Pierre Poilievre, Conservative, Carleton, ON]

No. Is it under owner accommodation? Is it under replacement cost? Where would that be baked into the overall CPI?

[Anil Arora]

It's owner accommodation, as well as the rental index, depending on age.

[Pierre Poilievre, Conservative, Carleton, ON]

Owner accommodation is up 5% year over year. Nobody in Canada believes home prices are up 5%. I realize there's a difference between an asset and consumption, but you actually do have to pay for the asset. It's not free.

[Anil Arora]

It's over time.

[Pierre Poilievre, Conservative, Carleton, ON]

Yes, it's over time, but you still have to pay for it. Nobody believes that it's up 5%. Where is the 25% or 26% increase actually captured here?

[Anil Arora]

It is amortized over the period of time that you pay your mortgage and you pay your insurance—

[Pierre Poilievre, Conservative, Carleton, ON]

Fair enough. What percentage of the CPI does it comprise, then?

[Anil Arora]

Shelter comprises 30%—

[Pierre Poilievre, Conservative, Carleton, ON]

No, not the shelter. I'm sorry. We have very limited time. I'm asking about the principal payments.

[Anil Arora]

It's included in the—

[Pierre Poilievre, Conservative, Carleton, ON]

I know that, but what share of the overall CPI do principal payments on housing represent? Now I'm just looking for a number.

[The Chair, Liberal, Peter Fonseca]

I see Ms. Ertl's hand is up. She may have an answer.

Ms. Ertl.

[Pierre Poilievre, Conservative, Carleton, ON]

Just a number....

[Anil Arora]

Please, go ahead.

[Heidi Ertl]

I'm sorry. I don't have that number.