Finance Committee on Feb. 15th, 2024

[The Chair, Liberal, Peter Fonseca]

I call this meeting to order.

Welcome to meeting number 128 of the House of Commons Standing Committee on Finance.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, September 21, 2023, the committee is meeting to discuss the policy decisions and market forces that have led to increases in the cost of buying or renting a home in Canada.

Today's meeting is taking place in a hybrid format. Pursuant to Standing Order 15.1, members are attending in person in the room and remotely using the Zoom application.

I'd like to make a few comments for the benefit of the members. Although this room is equipped with a powerful audio system, feedback events can occur. These can be extremely harmful to interpreters and cause serious injuries. The most common cause of sound feedback is an earpiece worn too close to the microphone. We therefore ask all participants to exercise a high degree of caution when handling the earpieces, especially when your microphone or your neighbour's microphone is turned on. In order to prevent incidents and safeguard the hearing health of the interpreters, I invite participants to ensure they speak into the microphone into which their headset is plugged in and to avoid manipulating the earbuds by placing them on the table, away from the microphone, when they are not in use.

I will remind you that all comments should be addressed through the chair. For members in the room, if you wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order as best we can, and we appreciate your patience and understanding in this regard.

Joining us today, we have, from the Office of the Federal Housing Advocate, Marie-Josée Houle, who is the federal housing advocate.

We also have with us, from the Canadian Housing and Renewal Association, the executive director, Ray Sullivan. He's online with us.

From the Association des groupes de ressources techniques du Québec, we have the director general, Éric Cimon, and the director of communications, Eloïse Houpert.

Welcome. It's great to have all of you here. I know that some of you are here on short notice. Thank you very much for accommodating us and taking yourselves here to Ottawa and our committee.

At this time, we're going to hear your opening remarks before we move into the members' questions.

Madam Houle, please go ahead.

[Marie-Josée Houle, Federal Housing Advocate, Office of the Federal Housing Advocate]

Hello.

I'm honoured to join you today from the unceded and traditional territory of the Algonquin Anishinabe nation.

My name is Marie-Josée Houle.

As the first federal housing advocate, I am here to lead national action to ensure that laws, policies and programs respect the right of individuals to adequate housing.

Since Canada enshrined the right to housing in the National Housing Strategy Act enacted in 2019, it has had an obligation to uphold that right for all. I'm here today as a representative of my office, a human rights accountability mechanism.

Today, I would like to address three points. First, I will talk about the harmful effects of the financialization of housing, a situation that the government must address. Second, I will talk about tenant protection, which must be a priority. Third, I will talk about the fact that the government must invest in the supply of non-market housing.

First, financialization is harming people in Canada. Many of the activities this committee is studying are about treating housing as an asset for profit, and not as a human right. Financialization has jeopardized Canada's affordable housing supply. Our research estimates that 20% to 30% of Canada's rental housing is financialized, with disadvantaged groups most impacted.

It started in the 1990s, when Canada allowed the creation of real estate investment trusts and pension funds to invest in financial markets and instruments. It's not new that these buildings are privately owned. What is new is that they're owned by large institutional investors whose obligation is maximizing returns for shareholders. These firms evict tenants, deny services and dramatically increase rents for profit.

Financialization is contributing to housing unaffordability and violating people's human rights. The federal government must curb financialization with measures like tax reforms that make financialization less profitable, especially for REITs; regulating pension funds so that their investments uphold human rights; and preventing banks from financing the acquisition of buildings if the building plan relies on excessive rent increases or evictions.

This brings me to my second point, which is that we must protect tenants and stabilize rents. Financialization, speculation and inflation are driving up housing costs. This has the greatest impact on renters, like people from disadvantaged groups, people who are one rent increase away from homelessness, people who are being evicted because of financialization and the people most at risk, who cannot afford any housing at all.

Again, curbing financialization is a key measure. The federal government must also work with all governments on rent stabilization measures, ensure national standards for access to justice for tenants facing eviction and expand supports for tenants facing rising costs.

To my final point, governments must invest in housing for the public good and prioritize non-market housing. Our research estimates that Canada is short 4.4 million affordable homes for those in need. Flooding the market with new housing will not solve the problem. We're losing affordable units more quickly than we can build them, and financialization is a major contributing factor.

Supply alone does not result in affordable housing, nor does using public funds on incentives for the private sector without safeguards for affordability.

The way forward is for government to invest in non-market housing. It is the best use of taxpayer dollars, and it creates permanently affordable and accessible housing for a wide range of people. It means that disadvantaged groups have more money for food, medicine and child care.

It has economic value. It benefits everyone, because it is not inflationary. When people are not paying so much for their housing, they spend in other areas, which bolsters economic stability.

Canada can protect and grow its affordable, non-market housing supply. We need the national housing strategy's $82-billion suite of programs to change course to prioritize non-market housing. We need the federal government to create an acquisition fund for non-market and indigenous housing providers to buy, repair and operate existing buildings. We need the federal government to attach conditions to infrastructure funding that mandate the creation of non-market housing in new projects and link funding to affordable housing targets.

Other measures include strengthening affordability criteria for national housing strategy programs, CMHC insurance and other federal programs.

We all know that all levels of government have a role to play, but the federal government must lead the way.

Thank you.

I will be pleased to answer your questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mrs. Houle.

Now we'll hear from Monsieur Cimon.

[Éric Cimon, Director General, Association des groupes de ressources techniques du Québec]

Thank you for having us and for allowing us to participate in the committee's work and to highlight the importance of housing in the current crisis and its effect on the country's public finances.

For those who are not familiar with the Association des groupes de ressources techniques du Québec, it is an association that brings together 25 technical resource groups, or TRGs, throughout Quebec. TRGs are social economy enterprises that, for more than 40 years, have contributed to the creation of nearly 100,000 community housing units in the form of cooperatives and non-profit housing organizations, which account for nearly half of the social housing stock in Quebec. They also have a number of community real estate projects under their belt, including multi-purpose community centres and early childhood centres.

TRGs have been at the heart of housing project development for nearly 40 years. We are present at all stages of the housing project implementation process, from the recognition of needs to the support of projects, to funding arrangements, the supervision of the site, the creation of groups, as well as property and financial management. For 40 years, TRGs have been acting as catalysts to build housing projects that meet the diverse needs of the most vulnerable populations and of all communities.

The construction of community and social housing can have a very significant impact on public finances. Your study is timely, since we, along with a number of Quebec housing stakeholders, took part in missions to Europe last fall. We looked at what was being done elsewhere—in France, Denmark and Austria, among other places. We often find that the integrated model for building social and community housing in Quebec is ahead of the other models in Canada, and we want to spread it across the country, but we realize that, even in Quebec, we are light years behind the capacity of certain European countries in this area. All these countries recognize the importance of social and community housing as a tool to fight inflation and prevent the escalation of crises such as the one we are experiencing today.

I'm happy to be speaking after Mrs. Houle because I completely agree with her economic argument. In addition, community housing helps strengthen our country and our values and enables us to go further by ensuring affordable housing for everyone, by reducing pressure on the market and by meeting a fundamental right. When you have housing that costs less, you free up economic space and you increase household purchasing power. Rent is the first thing people pay, since housing is at the heart of Maslow's pyramid. So when it stays low, people can meet all their basic needs, such as clothing and food, and take care of their children.

Maintaining an affordable housing stock for the most disadvantaged people gives them greater purchasing power. Some quick math shows that the average rent in Vienna is easily 200 euros less than it is here, in equivalent dollars. This represents a significant monthly economic contribution for people, who are then freer to make investments and participate in economic life, and who enjoy a better quality of life. Social housing in Europe is for people who are not rich, not just for the most vulnerable or specific clienteles. People in countries where social housing is well developed have some of the best standards of living in the world.

It is important to make investments to catch up, but just because we are in a crisis does not mean that we have to do things wrong. We need to have a plan and long-term objectives.

In France, the objective is to have 20% social housing in municipalities with a population of more than 1,000. In the city of Vienna, 60% of the housing is social housing. In Denmark, the fund for the construction of social housing has made announcements, since the construction of social housing has an impact on the gross domestic product and the construction industry.

Planning construction during crises or down times leads to better economic outcomes, not only in terms of GDP, development and maintenance, but also in terms of the price on the market, which can increase purchasing power.

In France, they have livret A, a savings booklet that helps support the construction of social housing. From the moment they are born, all French citizens participate in the economy and ensure a good retirement for themselves, while ensuring that the rest of the population is well housed. Labour taxes also make it possible to make additional contributions in order to build housing without having to eat into the government's entire operating budget.

My message to you is that we are light years away from that. We have a lot of work to do to ensure the resumption of community and social housing construction, while preserving our values. The housing crisis makes that necessary. We have to stop thinking about affordability; we have to think about the tool that enables affordable living environments. So we hope that social and community housing will be part of your solutions, given that, in the long term, it is a major component of the solution to the housing crisis.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Cimon.

Members, we're going to need to suspend for a short time. We just have to test Mr. Sullivan's equipment to make sure everything is working.

[The Chair, Liberal, Peter Fonseca]

We are back.

We welcome, from the Canadian Housing and Renewal Association, executive director, Mr. Ray Sullivan, for opening remarks.

[Ray Sullivan, Executive Director, Canadian Housing and Renewal Association]

Good morning. Bonjour. Kwe.

I apologize that I can't be present in person to talk to you about this very important topic.

I'm here in Ottawa on Algonquin Anishinabe territory. I say that because whenever we talk about housing, it's important to remember that indigenous people are disproportionately represented among people who are in housing need, in housing precarity and without housing. We owe indigenous peoples a great debt and that includes a debt of housing justice.

CHRA is the national voice of community housing. Our members are non-profit, co-op and public housing providers, and also provincial and territorial governments, service agencies and advocacy organizations. We are seized with this housing crisis. Your work on this topic has shown that we are in an affordable housing crisis, but the question is why? This is not a temporary or short-term phenomenon, but has been building for decades, and it starts with the undersupply of non-market community housing. As a percentage of overall housing supply, Canada has about half the community housing stock of the OECD average. In fact, it’s even proportionately slightly less than in the United States.

We started down this track 30 years ago, when the federal government withdrew from community housing. We were on track to beat the OECD average, but now we have fallen far behind, and the current crisis is the consequence. An adequate supply of community housing acts as a stabilizing force in the housing market, so we need to focus on the long-term goal of doubling the supply of non-market community housing. I don’t think you’re hearing this for the first time. It was a strong recommendation from Scotiabank a year ago. It was also a recommendation from the National Housing Accord, a group of private sector, academic and community housing experts, and there is growing consensus that this is the target we have to reach. The priority, as we do this, has to be a fully funded for-indigenous, by-indigenous housing strategy. Budget 2023 committed $4 billion over seven years for urban, rural and northern indigenous housing, but the government’s own National Housing Council has estimated the need at $6.3 billion per year. I can assure you that there remains a strong consensus among the broader community housing sector that this is priority number one.

How do we scale up community housing? First, we need stable, predictable funding and financing from the federal government. When interest rates go up, projects can only afford a smaller loan, so grants and contributions are needed to fill those gaps, yet as we saw interest rates go up in 2023, we saw federal grants and contributions go down, making new development projects unviable. We need to restore and increase capital funding under the national housing strategy. This includes predevelopment funding. It costs a couple of hundred thousand dollars to get a project to a shovel-ready application stage. If you were to go to CMHC’s website right now and look up “predevelopment seed funding”, it says that the application portal is closed until further notice and it has said that for many months. Predevelopment funding has to be reliably available all year long as a funded program.

Significantly, we need land. There is a large inventory of federal land that can be made available for non-market community housing, but it is limited by a very small budget under the federal lands initiative. Blow that program up and unlock the potential of federal land by switching to a model of one-dollar, 100-year leases to non-profits, co-ops and community land trusts.

New development takes time and, while we need to increase the pace of building new community housing, there is also an option that can have a quick turnaround and a near immediate impact: acquisitions. For every one affordable home created under the national housing strategy, we are losing 11 affordable rents in the private market. We are actually falling behind. We need to invest in a national acquisitions fund to help non-profits, co-ops and land trusts acquire existing rental properties, protect tenancies and stabilize rents.

All this costs money. Housing is expensive, that’s actually the problem we’re trying to solve, so it's going to take money to solve it, but I have good news for you: Investing in community housing is non-inflationary and has a significant positive impact on economic productivity.

My colleague Mr. Cimon also explained it well.

We released an analysis about 10 weeks ago, prepared by Deloitte Canada, that shows that an increase in the market share of community housing by just 1.5% will improve productivity by a massive 5.7% to 9.3%, and add a non-inflationary boost of $67 billion to $136 billion to the economy. I want to be clear. This isn’t the economic impact from construction activity, but an improvement to economic efficiency from having a greater supply of community housing, so increasing the supply of community housing increases productivity, which improves quality of life, which benefits everyone in Canada.

Thank you very much. Merci. Meegwetch.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Sullivan, for your opening remarks.

Now we are going to move to members' questions.

In this first round, members from each party will have up to six minutes to ask you questions.

We will start with MP Morantz. I understand you may share some of your time with MP Hallan.

MP Morantz, please go ahead.

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

Thank you, Mr. Chair.

Thank you, all of you, for being here on this very important topic.

Ms. Houle, I want to direct my questions to you. I have a fairly straightforward question: How many homeless people are there today in Canada?

[Marie-Josée Houle]

I am not in a position to answer that question today. That is not something that is counted in Canada.

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

Okay. Do you know how many there were in 2015?

[Marie-Josée Houle]

No.

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

How about homeless encampments, do you know how many there are in Canada today?

[Marie-Josée Houle]

The number of people in homeless encampments is not something that is counted in Canada.

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

It wasn't in 2015, I presume, either.

[Marie-Josée Houle]

No.

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

Minister Fraser was here the other day, and he actually said, when we asked him about the housing accelerator fund, that, “It doesn't actually lead to the construction of specific homes.” He also said recently that, “I think it's a generational moral failure that there are people sleeping without a roof over their head in a country as wealthy as Canada.” I think we can all agree on that.

What I found interesting was that, in your report, you said, “There is no systematic data collection on who lives in encampments in Canada.” You stand by this statement, I presume. Is that correct?

[Marie-Josée Houle]

Yes.

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

The minister professes to want to solve this problem, and his government has been in office for eight years, but there's no empirical method or process in place to actually measure the problem. Would you agree with that statement?

[Marie-Josée Houle]

Yes, I would agree with that.

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

The Auditor General issued a report in 2022 on chronic homelessness. It noted that Infrastructure Canada had spent close to $1.36 billion between 2019 and 2021 on initiatives to prevent and reduce homelessness, but found that the department did not know whether the rates of homelessness and chronic homelessness had increased or decreased since 2019. Are you aware of that report?

[Marie-Josée Houle]

Yes.

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

It's consistent with your testimony today that, really, even though the government has spent billions of dollars—$82 billion on the national housing strategy, $4 billion on the housing accelerator plan, and a multitude of other programs—it's clearer, when we see with our eyes, that the problem has become more severe. We know that.

I had the mayor of Guelph here, Mayor Guthrie, in committee last fall. I asked him how many homeless encampments there were in Guelph in 2015, and he said there were none. I said, “How many are there today?” He said, “Twenty.” We see this going on all over the country, but when the government spends—it could be in excess of $100 billion on this problem—and there's no way of measuring whether or not their programs are successful, how are we to trust that these programs are even working?

[Marie-Josée Houle]

I really appreciate the question.

I want to clarify that, across the country, there is a mandated point-in-time count of people experiencing homelessness. Having worked in housing loss prevention, it's really hard to measure, especially in areas in the north where homelessness is not quite as visible, as you would have noted in my Inuit housing condition report. However, the National Housing Strategy Act also requires the government to do a triannual review of all national housing strategy programs. That report is due out March 31, and I am waiting with bated breath, as you are, for that report.

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

Thank you very much.

I promised I'd share my time with my colleague Mr. Hallan, so I turn the mic over to him.