Finance Committee on Nov. 20th, 2023

[Amanda Riddell]

This rebate is designed to apply to purpose-built rentals at all values. One of the advantages of this is that it creates units across the full spectrum. There are a lot of people who don't move out of their houses, for example, and into purpose-built rentals because there just isn't the type of unit they might need—for example, families needing larger units, or people who are currently overhoused but have no apartments to move into. The idea behind the rebate is to create a wide spectrum of purpose-built rentals that will help meet the needs of a wide variety of people looking for housing.

As you were saying, this opens it up. If people move out of their houses and into apartments, the houses become free. Therefore, the overall supply should loosen and become more plentiful.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

From the perspective of my constituents in Etobicoke Centre, if there are more purpose-built rentals, the units that become vacant—because folks have moved into those new purpose-built rentals—become available to people, perhaps at a lower price than they would have been otherwise.

[Amanda Riddell]

Perhaps. I can't speak about the price, but yes, they would.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Absolutely.

All other things being equal, more supply equals a lower price.

[Amanda Riddell]

Exactly.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

I appreciate that. Thank you.

How much time do I have, Chair?

[The Chair, Liberal, Peter Fonseca]

You have a minute and a half.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

When I speak to my constituents in Etobicoke Centre, I hear primarily about two issues: about the cost of housing or renting a home and about the cost of life, particularly groceries. I want to switch to the issue of groceries, if I can.

To my mind, the big three grocers—I'm talking about Loblaw, Sobeys and Metro, the big players in the grocery market—sort of squeeze out the opportunity for other players to enter the Canadian market. That means less competition. Less competition, generally speaking, results in higher prices, or higher prices than we would have if we had more competition.

How does the bill that we're studying now lead to less concentration in the grocery sector and therefore lower prices for my constituents?

[Mark Schaan]

Thank you, Mr. Chair, for the question.

I think this bill attacks a number of really important aspects related to affordability and competition in the grocery sector. There's obviously a lot of general application, so it will apply in all sectors, but these measures were included, in part, because of their particular salience for the grocery sector.

One is that it makes transparent information and recommendations about the nature of the market so as to help understand its dynamism and potentially make recommendations about its overall structure. By allowing market study powers to actually extend to the full information of corporations, it allows for that kind of transparency to potentially raise issues and bring to light particular aspects of the marketplace. I think that helps other competitors, but it also helps governments and other regulators that have been helped by market studies in the past.

Second, removing the efficiencies defence would essentially not allow for any further mergers that are premised on the notion that there are going to be future benefits for Canadians that potentially are okay, because they are essentially wiped out by the significant lessening of competition that would occur for Canadians. Obviously, that's only on a prospective basis for new mergers. However, I think it sets the tone in terms of the overall context for how consolidation would potentially look on a go-forward basis.

That also needs to be complemented by what's in the fall economic statement, which I'm not here to talk about today, but obviously it makes some additional changes on—

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Schaan. We're well over time.

Thank you, MP Baker.

Now we'll go to MP Garon, please.

Welcome to our committee.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you for that welcome, Mr. Chair.

Hello, ladies and gentlemen.

It seems that it is impossible at present to build housing for the poorest people, for the people who spend a large portion of their income on housing.

In the documents prepared by the analysts for the meeting today, we see that at present, without eliminating the goods and services tax, the GST, it is not possible to build rental housing, even at market price, in Canadian cities. We know that this price is very high.

What I understand is that the GST-related measure would make certain construction projects involving housing that would rent at market price, which is extremely high, marginally profitable. We are talking about $2,000 to $2,500 or even $2,700 per month in my riding. I would therefore like you to confirm that there will be no affordable housing in these projects, which will instead be for market price units.

Out of the new units that will be built as a result of eliminating the GST, there will be no affordable units.

Is that correct?

[Pierre Mercille, Director General, Sales Tax Legislation, Sales Tax Division, Tax Policy Branch, Department of Finance]

There is no affordability criterion in the bill.

[Jean-Denis Garon, Bloc, Mirabel, QC]

There will be no affordability criterion. Thank you for your candour.

Groups like Option consommateurs have submitted briefs. They say that we should drop the GST-related measure and improve the national housing strategy to help poor people find housing.

Has the department evaluated that option?

[Pierre Mercille]

Those are tax policy questions and we are here to talk about Bill C‑56.

[Jean-Denis Garon, Bloc, Mirabel, QC]

I agree that that is not your job.

Have you obtained an estimate of the number of units that will be built in Quebec, for example as a result of this GST-related measure, during the life of the policy?

[Pierre Mercille]

I have not, but I am more involved in the legislative aspect. The question was put to the Minister earlier today, and she quoted the study by a professor, but I have not seen the study in question.

[Jean-Denis Garon, Bloc, Mirabel, QC]

So the department has not done any studies on this subject.

This GST-related measure is supposed to be the cornerstone of a new housing policy in the government's economic statement. We know there will be no affordable units; that is what the documents say. As well, we do not know how many new units will be constructed.

In my riding, there are numerous regions where no 20‑unit buildings, or five- or six-unit buildings, will be constructed in order to increase density in the suburbs. If we want a denser population, particularly around transportation corridors, whether by train or otherwise, duplexes and triplexes will have to be built.

Buildings like that, which would be constructed quickly, are generally built by small landlords. Rent increases would then be lower than what is usually sought by big landlords. And yet they are not eligible for the program.

Have I understood the situation correctly?

[Pierre Mercille]

The eligibility criteria will be determined by regulation.

The Department of Finance released a backgrounder on September 14, and according to the tax policy decision that has been made, there will have to be at least four private units.

[Jean-Denis Garon, Bloc, Mirabel, QC]

It is important to clarify that, particularly for my constituents. It affects people's lives.

If someone wants to build a triplex near a transportation corridor, for example, near the Saint-Janvier station in Mirabel, there will be no GST rebate.

Is that correct?

[Pierre Mercille]

This new rebate would not apply in that case, according to the backgrounder released by the Department of Finance.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Right. I understand.

According to the documents we have received and what the ministers have said in the House, which is also a useful source of information for us, it is very important that Ottawa collaborate better with Quebec when it comes to building housing.

The economic statement says that there will be a 5% rebate on the GST, but the Department of Finance strongly urges the provinces to propose a similar measure for their own taxes. This amounts to interference in matters that are under the provinces' jurisdiction in relation to indirect taxes.

Was Quebec consulted before the economic statement was revealed, to find out whether it wanted to collaborate?

[Pierre Mercille]

Yes, because the measure was announced on September 14, and the statement was released last week.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Right.

To your knowledge, has the Government of Quebec announced that it was going to follow the federal government's measure and that it was consistent with its own housing policy?

[Pierre Mercille]

I do not have that information, but the provincial governments will decide whether they want to give these rebates.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Right.

So collaboration consists of announcing a policy and hoping that the provinces will feel obliged to follow the federal government's measure.

My next question is about the Competition Act.

My colleague Mr. Ste-Marie asked a topical question earlier. The Minister's hypothesis is correct in many markets: if there is more competition, the people who raise their prices too much will leave the market. That is the competition effect.

However, in a place like Louvicourt, in Abitibi-Témiscamingue, in Lebel-sur-Quévillon, or on the highways in the Gaspé, there is sometimes only one service station, so there is a natural monopoly. If there are two competitors, both of them will go bankrupt, because there are fixed costs for operating a business.

In those situations, we have a business that exercises monopoly power naturally and will have the opportunity, under the scheme you are proposing, to raise its prices. The bill proposed by Mr. Singh sought precisely to limit price increases in this type of situation.

Why was it decided to do nothing for people outside urban areas who live in these situations?