Finance Committee on Nov. 20th, 2023

[Timothy Ross]

Housing co-operatives in Canada are not-for-profit associations incorporated under provincial or territorial legislation or federal legislation, like a business act or a non-profit act. They are an association of members whose mutual purpose is to develop and provide housing at cost on a not-for-profit basis. Members elect a board of directors to oversee the co-operative and hire the management to ensure the co-operative is well run, runs as affordably as possible and maintains a good state of repair.

Those are some essential elements of a housing co-operative in Canada.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Who owns the housing in a co-op?

[Timothy Ross]

The members who live in the co-operative own the co-operative.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

There's nothing “Soviet-style” sounding in that to me.

The irony is Mr. Poilievre's concern about co-ops being a “Soviet-style takeover of housing”, which they're clearly not, while he seems to be okay with a “Soviet-style takeover” of Ukraine. However, that's a conversation for another day.

Mr. Ross, could we talk about the GST rebate for a moment and how that is going to impact housing supply? We all know housing supply is one of the key reasons we've seen the price of housing go up. The GST rebate is focused on purpose-built rentals. We've had witness after witness come forward here at the finance committee and tell us the GST rebate on purpose-built rentals will help increase the supply of purpose-built rentals. Obviously, all things being equal, if you increase the supply, that should help with the price of housing.

I'm wondering what your thoughts are on this. If you build more purpose-built rentals and folks move into the new rental units that are constructed, presumably they vacate other units—other forms of housing of all kinds. Do you think the GST rebate will impact the pricing, the affordability or even the supply of other forms of housing outside of purpose-built rentals?

[Timothy Ross]

I would agree with the many experts who have indicated that the rebate will incentivize the creation of multi-unit residential rental housing, now including co-ops thanks to this legislation.

As to whether that supply is affordable or not, I would say it's very difficult to create affordable supply in today's market with the high cost of land and construction, the supply and labour issues and the high cost of borrowing. The starting rents that are being asked for new multi-unit residential housing today will not be affordable to those with low and moderate incomes. That's why it's important to complement this with other initiatives that directly invest in funding and financing of new supply of non-market housing, non-profit housing and co-operative housing.

Research indicates that in 2021 we had a supply deficit of 1.4 million homes affordable to low- and moderate-income households. This rebate is very important, because it will increase supply and will be the difference between making some projects go forward or not. However, it's also important to complement it with strong investments in community housing and co-operative housing to make sure that everybody has access to housing in Canada.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Baker.

MP Ste-Marie, go ahead, please, for two and a half minutes.

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

Thank you, Mr. Chair.

Mr. Castiblanco, in my party, we prefer to provide more support for social housing, which includes cooperatives, as a housing intervention measure or strategy. We have problems with the term "affordable", because affordability is not based on ability to pay, and affordable housing is very often not really affordable. The Minister was very clear earlier: in Bill C-56, the GST credit is for all housing units, not just affordable units. The Minister would have had the power to define it, but she decided that what is wanted is simply more housing.

Since the bill was presented to us, we have been asking the Minister and her team to show us their studies, their projections, their figures, and we have been given an undertaking by them that they will do so. The measure is expensive and targets all housing, so we wanted to know what more it would provide. Just now, the officials seemed to say that there had been no studies, and the Minister quoted a study by an academic, Mike Moffatt. That is all.

My question is this: is the GST credit for all housing units a good measure? Should we support it? Can you remind us of what has to be done and, if you have the time, the importance of having data or models on which to base decisions of this kind?

[Carlos Castiblanco]

Thank you for the question.

The measure as it stands in the bill is clearly insufficient. Yes, it is intended to stimulate supply, but it is not very precise. There are a lot of low-income people who will not necessarily benefit from it. We welcome the inclusion of housing cooperatives in all new apartment buildings, because that will expand the supply that is more intended for the communities that really need them.

We also have to understand that this is just one mechanism. Increasing supply is not about just increasing one type of supply; it is not just about increasing the supply of rental units. We also have to increase supply in general, to give everyone the right to have decent housing. It is important to base decisions on studies that may show this. According to a number of presentations that have been made, in Canada it is only 3.5% while in other countries in Europe it is 15 to 30%.

We are also not wanting to eliminate the construction of rental housing. We are really wanting to increase general supply so that everyone, regardless of their income, has access to decent housing.

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

Thank you.

Thank you, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste-Marie.

MP Blaikie, go ahead, please.

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

Thank you.

This is for either Mr. Ross or Ms. Houle.

I'm curious to know whether in your travels you've become aware of non-profit or non-market housing projects that received or were awarded federal grants, federal funding or federal financing under the national housing strategy and that have since been put on pause because of rising interest rates. Do you think applying this GST rebate to those projects might help them get back under way?

[Marie-Josée Houle]

Do you want to speak to that, Tim?

[Timothy Ross]

Yes.

We know of many projects that are stuck right now because of the rising cost of borrowing, so it's important that we do two things. One, the rebate certainly helps, but from the co-operative housing sector's point of view, the second very important thing is that the federal government launch as soon as possible the co-op housing development program first committed to in budget 2022. There is a lost opportunity cost in the time that it has taken to get this program to market, and we know of many projects that are waiting for this program to launch that would be ready to go.

We are very appreciative of the rebate. We know that the fall economic statement has also increased the contribution level to the co-op housing development program. That is absolutely critical to making the program create projects that are economically and socially viable and at an appropriate affordability level. All that being said, we would really love to see the program launch as soon as possible.

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

I hear you.

Ms. Houle, are you aware of projects in that vein?

[Marie-Josée Houle]

Yes, absolutely.

I think Ray Sullivan from the Canadian Housing and Renewal Association commented on the GST rebate moving forward, especially wishing that it could also be applicable to projects that were started a couple of years ago and then stalled. Through interim financing and the interest rate going up, the numbers have changed from the inception to what's happening now, so a lot of projects have stalled and it's unfortunate because they're not housing people.

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

Where CMHC is involved, do you think it would be useful to lock in the interest rate earlier in the project? I'll put this to both of you again, perhaps Ms. Houle first and then Mr. Ross.

[Marie-Josée Houle]

Well, at least you know what you're looking at. When you do construction—and I was a developer for many years—you have your interim financing and you have your rate for that. Then, when you're ready to move in and you get your occupancy permit, you lock in your interest rate, and the ground has moved so quickly.

However, there are ways to decrease that amount. It's to have a direct relationship with government and not have all these middle groups having their cut along the way—so relationships with banks. Co-ops and non-profits need a direct funding relationship with government to decrease that rate.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Blaikie.

Now we'll go to MP Chambers.

I haven't heard from you.

[Adam Chambers, Conservative, Simcoe North, ON]

Thanks very much, Mr. Chair.

I'm okay. I'm here. I'm glad to participate, as always.

[The Chair, Liberal, Peter Fonseca]

That's good.

[Adam Chambers, Conservative, Simcoe North, ON]

Mr. Boswell, there were a number of significant Competition Act changes made in the first budget bill in 2022. Is that correct?

[Matthew Boswell]

That's correct.

[Adam Chambers, Conservative, Simcoe North, ON]

The process, as I understand it, was that draft regulations were proposed and there was a round of consultations. Normally in such a case, the government would circulate final regulations for a final round of consultations. That didn't happen. Is that correct? Are you aware of the process?

[Matthew Boswell]

Was that in 2022?

[Adam Chambers, Conservative, Simcoe North, ON]

Yes, it was 2022.