Evidence of meeting #121 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was grocery.
A video is available from Parliament.
6:05 p.m.
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
We can't give you an estimate or a specific number.
6:05 p.m.
Conservative
6:05 p.m.
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
No.
In general, the rebate is intended to make a meaningful impact on the cost of constructing purpose-built rentals, which, of course, should translate into an impact on the supply. However, because there are so many market forces at play, it's very difficult to come up with a specific estimate on the number of units that it would create.
6:05 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Then you can't tell us how many units will be built or how quickly home prices might go down by virtue of the passage of this affordable homes act. Is that correct?
6:05 p.m.
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
That's correct. This measure is—
6:05 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Okay.
Let me just move on to the issue of groceries.
There's a piece that I read, and I found it very interesting. Are any of you familiar with Michael Osborne? He's the chair of Cozen O'Connor's Canadian competition law practice.
6:05 p.m.
Mark Schaan Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry
Yes, we know the competition law practice.
6:05 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Do you know who Michael Osborne is?
6:05 p.m.
Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry
Probably.
6:05 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
He wrote, “The federal government has introduced a bill, C-56, containing amendments to the Competition Act that the government claims will make groceries affordable again. Some of the amendments are good, more are bad, but most are useless.”
Would you agree with that assessment?
6:05 p.m.
Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry
I would contend that the Bill C-56 changes to the Competition Act will fundamentally and importantly shift the overall playing field in favour of greater competition, including in the grocery sector.
6:05 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Will grocery prices come down right away after the act is passed?
6:05 p.m.
Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry
Competition Act reforms are an important foundational element that contributes to the overall move towards the stabilization of prices in the grocery sector.
6:05 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Okay.
He went on to say that “the amendments in Bill C-56 are mostly useless because competition law, which seeks to prevent monopolies and cartels, is not designed to solve macroeconomic problems like inflation.”
How long will this act take to actually bring down the price of groceries? It is called the “affordable housing and groceries act”. Will it take a week? Will it take six months? Will it take six years?
6:05 p.m.
Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry
I think it's important to understand the role framework law plays in setting the overall context of the economy. Some of these—
6:05 p.m.
Conservative
6:05 p.m.
Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry
Mr. Chair, can I finish the answer?
6:05 p.m.
Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry
Thank you.
Some of these provisions are quite substantive, in the sense of.... When we look at vertical collaborations, for instance, that has the capacity to impact markets immediately after its coming into force. It will prevent the capacity of grocers to potentially do agreements with their landlords that currently freeze out competitors in the marketplace. That is an important driver on overall prices and on choice available to consumers.
I don't think it would be fair to contend that these changes will not have an important impact, including immediately after the passage of the bill.
6:05 p.m.
Liberal
6:05 p.m.
Liberal
Yvan Baker Liberal Etobicoke Centre, ON
Thanks very much, Mr. Chair.
Thank you, all, for coming to the committee, speaking with us today and answering our questions.
At the finance committee, we've been hearing from folks. We've been performing a study on the rising cost of living in general. We've heard from a lot of folks who talked about the housing market and what's driving the increased cost of housing—from my constituents and, frankly, constituents across the country. The primary reason they've said it's happening is that there is a lack of housing supply.
I guess my question is, how do you see this bill we're studying today, Bill C-56, increasing housing supply throughout the housing spectrum?
6:05 p.m.
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
This rebate is intended to remove the GST from purpose-built rental housing. It's a specific type of housing. I know MP Lawrence was talking about.... It's not singles and it's not owner-built. This is not what the measure was designed to do. It was designed for and aimed at purpose-built rental housing to ensure that this type of housing gets on the market. It was designed in such a way that it would lower the price for builders producing this type of purpose-built rental housing, because we heard that a lot of these projects just don't “pencil out”. That is the expression they use. In a higher interest rate environment, especially, in order to ensure they can pencil out a lot of these projects....
The rebate will help them take on projects that might not have moved forward and allow them to move forward. It will help supply in the sense that you've lowered the cost for builders. It will allow projects to be profitable. It will allow a lot of projects to go forward. You would assume that if there's more supply in the market, this would, in turn, reduce prices.
6:05 p.m.
Liberal
Yvan Baker Liberal Etobicoke Centre, ON
Let me repeat back what I think I heard.
We have a lack of supply in housing. That's the main reason prices are so high across the country. To address this, we need to build a lot more housing very quickly. One of the ways we can do that is by making housing developments that previously weren't profitable for the developers, builders, etc. become profitable. The GST removal on purpose-built rentals is designed to make the construction of purpose-built rentals a bit more profitable. This means that a whole bunch of projects that previously weren't profitable and never would have happened are now going to happen.
Is that a good summary?
6:05 p.m.
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
That is a good summary. Thank you.
6:05 p.m.
Liberal
Yvan Baker Liberal Etobicoke Centre, ON
Okay. Thank you.
One thing I've heard and read is that, even though the GST rebate we're talking about is focused on purpose-built rentals, as you just indicated, there's a chain. If you create more purpose-built rentals, there's a series of moves that happen throughout the housing market. Folks who weren't in purpose-built rentals move into the new purpose-built rentals, and this creates openings in other parts of the market.
Is that correct? If so, what does that do for affordability in those other segments of the housing market?
