Finance Committee on Feb. 13th, 2024

[Mathieu Bélanger]

I would say that ICIP, the investing in Canada infrastructure program, was quite significant and helped municipalities put in place infrastructure to sustain growth. Also, the current housing accelerator fund makes infrastructure investments eligible. This is something positive.

For ICIP, all projects had to be prioritized by March 31, 2023. All these projects will be on the ground between now and I think 2026 or 2027. We can see a gap coming in infrastructure funding for making sure that municipalities are able and ready to welcome growth and make the national project we are doing right now something positive.

It's essential, from our perspective, to understand that this country needs more units, as more units would have a direct impact on affordability. However, what's also required is to put in place the infrastructure that will sustain these units—the pipes required in the ground and the quality-of-life equipment, such as parks and transit, that is needed. More funding is needed on this side, because with the current state of infrastructure, just the rehabilitation required is quite important.

You mentioned the specific context of densification, which is quite interesting. Very often we're under the impression that development charges can basically cover the cost for additional units or the additional infrastructure required in the ground. That could be the case in greenfield development, but very often in the case of urban intensification, when you densify a neighbourhood there is also a need to add capacity. That's not just adding capacity on the pipe in front of the house, but expanding, for example, the water treatment plant at the end of the line. All of this basically demonstrates that needs are very important.

FCM did research a couple of months ago on the cost per unit of infrastructure to sustain any new housing built in Canada, and we arrived at a number of $107,000, which is quite significant. If you multiply it to the scale of the 3.5 million homes needed as defined by CMHC, you see the amplitude of the national project we have in front of us.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Blaikie.

Members, we don't have time for a full round, as we have very little time, but we have enough for about two minutes for each party to ask a question or two.

We're starting with MP Morantz.

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

Thank you, Mr. Chair.

This is for FCAC.

Ms. Robertson or Mr. Lofranco, last year, there was a news story based on an access to information request saying that between 2019 and 2023, there were 27,323 complaints filed with your offices and none of them were responded to. I want to give you an opportunity to address that.

My basic question is, why allow people to make complaints to your agency in the first place if your agency doesn't respond to them?

[Judith Robertson]

Thank you very much for that question. I'm very happy to address it.

I read that news story. I found the news story accurate, but the headline was not.

We have a centre where consumers can make complaints, but we are not a complaint-resolving entity. We have a system for complaints, which has recently been significantly improved.

Our role in complaints against banks is to supervise this system. Banks have an obligation to have effective complaint handling. It's been significantly upgraded as a result of the framework. If consumers are unsatisfied, they have the right to go to an external complaint body, which we also supervise. We're moving to a single one. That's the complaint resolution system.

We receive complaints for information in case there is some compliance issue we should be aware of. These get reviewed by a supervisor in case we need to take action as a regulator. It's also good information generally to know what's going on in the marketplace.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Morantz. I know it went quickly.

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

That was short but sweet.

[The Chair, Liberal, Peter Fonseca]

MP Weiler, go ahead, please, for two minutes.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you, Mr. Chair.

Thank you to the witnesses for being here today.

The first question I'd like to ask is for FCM.

I was hoping you could share with this committee whether you see it as possible for municipalities to do their part to solve the housing crisis if infrastructure funding is withheld until after housing targets are met.

[Mathieu Bélanger]

On a daily basis, municipalities do their part to try to solve this housing crisis.

Earlier, I mentioned the current housing accelerator fund. It basically helps address some planning, approval and permitting issues within municipalities, which is something great. However, before this program, municipalities started to streamline approval to make sure units could get built.

The numbers we're seeing right now in some jurisdictions.... For example, in B.C., Victoria and Vancouver had the highest number of units permitted in the third quarter of 2023.

Municipalities are on the line with the resources they have right now, but the existing fiscal model for municipalities in Canada is broken. This is why FCM is calling on the federal government to convene provinces, territories and municipalities to look at this and redefine what the right approach is to make sure population growth and economic growth can be a success.

[The Chair, Liberal, Peter Fonseca]

Thank you.

MP Weiler, you can make another comment, but we have about 15 seconds. I'm trying to hold everybody to the time.

Go ahead quickly.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Sure.

What role do you see the federal government playing in funding public transit to ensure we can support the type of housing density we need to build?

[The Chair, Liberal, Peter Fonseca]

Give a very quick answer, please.

[Mathieu Bélanger]

FCM is calling for an acceleration to the permanent public transit fund that was announced recently, which is supposed to kick in in 2026. It's certainly a first part to the solution.

[The Chair, Liberal, Peter Fonseca]

Thank you very much. Well done.

It's now over to MP Ste-Marie.

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

Thank you, Mr. Chair.

My question is for you, Mr. Bélanger.

I assume that you are aware of the study commissioned by the Union des municipalités du Québec, which shows that 80% of municipalities have had to postpone one or more municipal infrastructure project in 2022, mainly because of rising costs.

What does this mean for future construction starts, and what can the federal government do to help speed up the completion of current and future municipal infrastructure projects?

[Mathieu Bélanger]

Obviously, inflation costs have a direct impact on municipalities' major infrastructure projects. As you mentioned, Mr. Ste-Marie, this will consequently have an impact on the ability to deliver units. In many cases, the infrastructure will not be available.

I would also point out that federal infrastructure programs do not currently factor in costs linked to inflation or additional costs. In some cases, for example in certain cities such as Windsor, Ontario, where a large-scale project to adapt to climate change is under way, it is difficult to go ahead precisely because of the additional costs. These costs were obviously not foreseen when the project was launched and the contracts were initially awarded. So there is certainly an impact.

[The Chair, Liberal, Peter Fonseca]

Thank you.

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

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Ste-Marie.

MP Blaikie, you'll be the final questioner for this first panel.

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

Thank you, Mr. Chair.

Ms. Robertson, obviously for some folks who already have some negative amortization or other measures to provide relief, the tailored approach is important because, as you've said, not everybody's situation is the same. However, it does raise the spectre of people within one financial institution getting different treatment and folks between institutions getting different treatment.

I wonder if you think eliminating the stress test for folks who already have an insured mortgage would allow more competition for Canadians' financial services. It might incent banks, as a market mechanism, to provide better types of relief so that we don't see some banks with a captured market—which is folks who have an insured mortgage and can't leave—decide to exploit that while others don't and folks are trapped wherever they happen to get their mortgage from in the first place. Do you think that kind of competition would be useful?

[Judith Robertson]

The guideline is intended to address exactly the issue you raise, which is the risk of inconsistency across institutions. Within institutions is, I suppose, also a possibility. One of the main drivers for us to issue it was to make it clear to the industry what the expectations were.

The guideline also contains some clarity around the expectation that people in the situation of receiving relief should not receive a less advantageous rate than otherwise. That, again, deals with the issue of prohibited behaviour—which is about taking advantage—being more explicit in this particular circumstance.

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

Will increased competition help enforce that guideline? The guideline isn't, strictly speaking, enforceable. Would increased competition make it more likely that financial institutions observe the guideline?

[Judith Robertson]

We are very comfortable that institutions are observing the guideline and will observe the guideline. Of course, the guideline isn't law. It is our communication to industry about how we will apply the law, so in that sense, it is absolutely enforceable.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Blaikie.

I want to thank our witnesses for accommodating us in terms of the time, because we started a little late. Thank you for your testimony on this housing study.

At this time, members, we will be transitioning to our second panel.

[The Chair, Liberal, Peter Fonseca]

We're back.

It's great to have the Minister of Housing, Infrastructure and Communities, the Honourable Sean Fraser, with us today. Of course, he's no stranger to the finance committee, because he sat on this committee for a number of years.

Welcome back.

We also have PS Fragiskatos, who sat on this committee for many years.

Joining the minister is the Canada Mortgage and Housing Corporation interim chief financial officer and senior vice-president of policy, Nadine Leblanc, as well as the chief economist for CMHC, Bob Dugan. Welcome.

From the Office of Infrastructure Canada, we have deputy minister Kelly Gillis. Welcome.

Minister, you will now have the opportunity to make some opening remarks, and then we'll get into the members' questions.