Finance Committee on Dec. 7th, 2023

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

I'm not clear on what you're saying. My question is pretty clear, though. A charter is a document that grants rights from a government to its citizens. Does this charter, as the minister said, grant rights to Canadian citizens, yes or no?

[Chris Forbes]

I'll have to go and check yes or no. It does not grant any new rights to Canadian citizens.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Okay. Well, the minister just said that it did.

[Chris Forbes]

I'm not sure—

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

I heard her say it. Everyone was here.

Thank you for your testimony.

[The Chair, Liberal, Peter Fonseca]

That's the time, and now we're going to MP Baker, please, for the next six minutes.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thanks very much for being here, Mr. Forbes, Mr. Johnson and Ms. McDermott, and for all your work in serving Canadians every day.

On the prior exchange, I want to say that I think it's highly hypocritical to have a Conservative MP try to identify or lament housing construction types that aren't covered by the GST rebate—those for which the GST rebate wouldn't apply—when the leader of the Conservative Party introduced a private member's bill that would effectively remove the GST rebate on broad sections of rental housing construction. We've had witnesses here speak about the fact that in Mr. Poilievre's private member's bill, his proposal for the GST rebate would actually lead to far less construction of purpose-built rental units and therefore do a lot less for housing affordability across the country.

I wanted to point that out, because I think it's important for MPs on all sides. When we speak, we should be very clear about where we stand. Mr. Poilievre has made it very clear where his party stands on this. He believes the GST rebate shouldn't apply to all of the rental housing unit types we've applied it to.

One thing we've heard a lot about is the issue of short-term rentals. The minister spoke about this, but I also hear it from folks in my community, Etobicoke Centre.

When I hear about that, I think about Airbnb. I know there are other types, but Airbnb is the dominant provider of short-term rentals. What Airbnb does is allow people who own a property to rent it out for short-term periods. One of the challenges I hear about from my constituents is that it takes a housing unit away from a potential long-term rental. When people have short-term rentals.... I appreciate the benefit being able to rent it out in the short term has for the landlord, but right now we're facing a crisis of affordability in housing. It's very important that people have access to long-term rentals.

Can you talk about what the government is doing to address that very issue—making long-term rentals more affordable for Canadians?

[Chris Forbes]

Thank you for the question.

There are a couple of things I would say.

First and foremost, I think you see how municipalities and provinces across the country are stepping up, in many cases, with regulations on what qualifies for short-term rental. That's not uniform. Obviously, different municipalities have different approaches. Sometimes it's province-wide. I think, in the case of Quebec and B.C., what the fall economic statement did primarily was put in place tax measures to reinforce local regulations or rules around qualifications for units to be eligible as short-term rentals. Basically, what we're doing is saying that from the tax system standpoint, your income tax—if you're claiming any deductions for running a short-term rental unit—has to be compliant with local or provincial regulations. It has to be registered and, effectively, be a legal unit to rent. That's to provide reinforcement for jurisdictions choosing to go down that road.

The second piece is an offer to provide enforcement assistance for municipalities, going forward. That program has not been launched yet, but it will be coming. That, again, is to help with enforcement of local regulations that are looking to limit short-term rental usage.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

What I hear you saying is that we're working with municipalities that want to limit the number of short-term rentals because they are trying to provide more space for long-term rentals and therefore more housing for Canadians.

Is that a fair way to summarize?

[Chris Forbes]

Yes, I think that's a fair way to say it.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Okay. Thank you very much.

Mr. Chair, how much time do I have?

[The Chair, Liberal, Peter Fonseca]

You have two minutes.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

I have two minutes.

In my community of Etobicoke Centre, when I'm out knocking on doors or getting phone calls, one of the issues I hear about most from folks every day is how they're struggling with rising interest rates and the cost they are bearing on their mortgage. The concern is in two categories. One is that folks who have a variable-rate mortgage have seen the cost of servicing that mortgage on a monthly basis go up. Two is that even folks with fixed mortgages who are renewing have now had to renew at a much higher rate. This is costing folks a tremendous amount of money. For a lot of folks, it's a real struggle.

In the fall economic statement, we brought in a number of mortgage protections. I'm wondering if you could speak about these in the remaining minute or so. What are some of the most impactful protections?

[Chris Forbes]

I will ask my colleague Mr. Johnson to take that one.

[Grahame Johnson, Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance]

Thank you, Deputy Minister.

Thank you for the question.

I'll speak a bit to the new mortgage charter, which is, I think, what you're referring to.

This really brings together and highlights certain things with respect to mortgage holders who are under stress, those who hold mortgages on their principal residence. This is targeted at them. This is not for investors. This isn't for someone's second home; this is for their principal residence.

If there are Canadians who are at serious risk of defaulting and losing their home, there are things they should be able to expect from their financial institution, such as working with their financial institution to discuss lengthening amortization for a fixed period of time. That will reduce their payments, but they will want to get back to their amortization as soon as they're able to, because ultimately it's in their best financial interests to pay the debt off as quickly as possible.

This allows someone, if they are at risk of going into negative amortization, which can happen on some of the variable-rate loans you were referring to, to make lump sum payments without paying a fee on them.

It requires the financial institutions to reach out four to six months in advance of someone's mortgage coming due to discuss their options and to discuss different things that can be done for them or for those mortgagors in distress.

It also says that banks should not be putting interest on interest in cases of negative amortization.

Finally, it looks to banks and financial institutions in general—I should be clear—to waive fees or penalties on some of these actions that are taken to get the homeowner through this period of stress. It will help reduce the risk.

[The Chair, Liberal, Peter Fonseca]

We're well over time, so thank you.

Thank you, MP Baker.

MP Ste-Marie, go ahead, please.

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

Thank you, Mr. Chair.

I would like to officially welcome Mr. Forbes, Mr. Johnson and Ms. McDermott. I thank them for being here.

My congratulations on your new position, Mr. Forbes. I want to sincerely thank you for being here today. To my knowledge, your predecessor, Mr. Sabia, never came to a meeting of the Standing Committee on Finance. In fact, the only times I ever saw him was on highway 50, when we were travelling in the same direction, so for you to take the time to meet with members means a great deal to me.

I have several questions to ask about some small technical points. I am not expecting complete answers from you today. My goal is to raise these questions. Please feel free to send your answers to the committee in writing if need be.

Before beginning my technical questions, I want to make you aware of two things. I know they are not within your jurisdiction, but I no longer know how to come at the problem. I am talking about the in camera sessions when economic statements and budgets are tabled, and the question of closure and the time that is then allocated in committee.

We have had Bill C‑56, for which a super gag order limited the time in committee. We had to draft our amendments at the same time as we were hearing witnesses. That does not work and we cannot do our work in committee properly like that.

I am not expecting answers from you. I just want to invite you to advocate, insofar as it is within your powers, that we be allowed more time so we can function in committee when a super gag order is imposed. We would be very grateful.

The same thing applies to in camera meetings. During the pandemic, an ingenious system was put in place to enable all officials to answer our questions by telephone, remotely. It worked during the pandemic, but since the end of the pandemic, it has no longer worked. Since then, the minister, her team, and the parliamentary secretary answer every time that they are going to fix it. When the officials are online, it does not work. We get no answers to our questions. We would prefer to have a lot fewer officials present in a big room with all the opposition parties, like before. That way, we are able to get answers to our questions and it is more constructive. I do not expect to get answers to this, but I would like to make you aware of it, because we get told yes every time and we are always disappointed during in camera meetings.

With that said, I will get to my questions.

First, we have been approached by the Recreational Vehicle Dealers Association of Quebec. Its members sell motor homes and trailers that are hitched behind a vehicle. According to an interpretation given by the Canada Revenue Agency, since the vehicles imported from the United States go through Ontario, the Agency is asking association members to pay Ontario sales tax retroactive to 2012, telling its members that they can get reimbursed afterward. This is something very technical, but it creates a cash flow problem for the dealers. I am going to email you and the minister the relevant information. The directors of the association have told us that they met with Department of Finance representatives, whose answer was that the association was right and this problem should be resolved, but it is not a priority at the moment. Do you have any comments on that?

[Chris Forbes]

Thank you for the question. This is a completely new subject for me. If you have a letter on the question that would explain things a little more for me, we will get back to you and give you our views.

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

Yes. Thank you. When the committee meeting is over, I will send you the details. I will do the same thing for the minister, as I told her.

Australian wine producers have brought an action against Canadian wine producers. Although time was limited at the committee, we were able to exclude cider and mead producers. However, berry producers, like producers of pear cider, maple cider and berry cider, are not excluded, even though they present no problem for Australian wine producers. Is the minister looking after these small artisanal producers?

[Chris Forbes]

That question would be better for the people in my former department, Agriculture and Agri-food Canada. I do not know where we are in the program or what is going to happen. That would be a question to ask Mr. MacAulay and his team.

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

Right. Thank you. We will certainly follow up, but those items were part of the recent budget implementation act.

[Chris Forbes]

Yes. I understand. I just want to say that the rules of the program are made by that department.

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

That's fine. Thank you. That helps me a lot. That is the first time I have had such a concrete response from the department. We are very grateful.

Microdistilleries, small artisanal producers of spirits, are part of a relatively recent sector of expertise. They provide livelihoods for our regions and we are proud of their know-how.

Is the department currently working to develop a progressive tax program like the one that exists for microbreweries? When small beer producers produce a little, the excise tax is lower, but the more the volume increases, the higher the tax.

[Chris Forbes]

That is not something on my radar. It is an issue that involves the Department of Agriculture and Agri-food and my department. However, if support needs to be given, it would not come from us. The support would perhaps be provided by the provincial government or another department. So I am not very up on what is needed, what is being requested, and pressures concerning that question. It is not something I have thought a lot about.

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

Right. Thank you.