Finance Committee on Jan. 21st, 2022

[Greg McLean, Conservative, Calgary Centre, AB]

Let me cede my time to Mr. Poilievre, then, please.

[Pierre Poilievre, Conservative, Carleton, ON]

Thank you.

I would just point out, Mr. Chair, that when Mr. Trudeau took office, the typical home in Canada cost $435,000. Now it's $811,000. That's over 85% inflation in six years. Last year, home price inflation hit 26%, which the Canadian Real Estate Association chief economist said was “the biggest gain of all time”. That followed $400 billion of newly created cash that the government pumped into financial markets, much of it lent out in risky, variable rate mortgages well below the rate of inflation. These negative real rates literally pay people to borrow and bid up prices.

Housing inflation is homegrown. Bloomberg reports that Canada has the second most inflated housing bubble in the world. The average family must spend two-thirds of gross income on monthly payments in Toronto and Vancouver, which Demographia calculates are the fifth and second most unaffordable housing markets in the world.

Banking rules, mortgage insurance, monetary policy and money laundering are all federal; so is housing inflation, here and now under this government. That's “Justinflation”.

I would like to move that the committee ask OSFI to indicate to the finance committee what share of new mortgages issued in the last year has been with downpayments of 5% or less and that it provide that information as quickly as possible; and that the CMHC indicate not only the total exposure it has to mortgage default loss insurance in force and other guarantees, but also indicate how much it has set aside to meet any losses that may occur.

That is my motion, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you. We are well over your time.

Now we will be moving to Ms. Dzerowicz for the Liberals for two minutes.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you, Mr. Chair. I hope you can hear me.

I want to thank everybody for being so patient, particularly our witnesses.

My question, Ms. Bowers, has to do with one of the things happening in my riding. There are these small apartment buildings being bought up by developers. The rent is affordable and there are people who have lived in them for long periods of time, and these buildings are being replaced with big condo buildings or bigger sorts of buildings.

To what extent is there a role you could see for CMHC where it could help to protect some existing affordable spaces within our cities, particularly smaller apartment buildings? I'm not sure if that's something that CMHC does today, or if you see that as a potential role that CMHC could take on moving forward.

[Romy Bowers]

With respect to our existing programs, we don't have any funding in our national housing strategy programs that could be used by organizations to purchase these kinds of buildings, if that's the question. We do have some mortgage insurance products to support acquisitions by developers and others, but I think the issue that's being raised is that there's a lot of competition for these types of assets in large cities and that the cost can be quite prohibitive, depending on who the buyers are.

[Julie Dzerowicz, Liberal, Davenport, ON]

As a quick follow-up on that, has CMHC ever had a fund—in the past, or ever in its history—to make these types of purchases, or to be able to create things like land trusts to help different types of organizations, like arts and cultural groups, to defend spaces in large cities? Has that ever existed in CMHC's history?

[The Chair, Liberal, Peter Fonseca]

Give a very short answer, please.

[Romy Bowers]

I can't talk about the long, 75-year history of CMHC, but I can tell you that we currently have a program called the “innovation fund”, which has a little more flexibility about the use of funds for housing development and creation. That's a possibility for some of the uses you mentioned, but I can't comment on the longer term view.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Dzerowicz.

We're now moving to Monsieur Ste-Marie for a minute-plus for questions.

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

Thank you, Mr. Chair.

I will use my time to make a comment rather than ask a question.

In my opinion, the housing shortage we have been experiencing in Canada for several years, if not decades, has nothing to do with jurisdictional or zoning issues, or even nimbyism. I believe that Ottawa is much to blame. I remember when Jean Chrétien's Liberals slashed investments in social housing. I'm not talking about the catchall concept of affordable housing, but social housing. That's where the problems originated.

In my view, it's important to reinvest in this area. The current government is doing it, but timidly. The fact is, we've seen appalling delays in getting agreements signed, and even longer delays in transferring funds.

The solution needs to be implemented by this government in Ottawa, and the solution is to build a lot more social housing, and do it much faster than what we're seeing now.

[The Chair, Liberal, Peter Fonseca]

Thank you, Monsieur Ste-Marie.

To conclude this round and today's hearings, we have Mr. Blaikie.

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

Thank you, Mr. Chair.

Ms. Bowers, in your previous conversation with Mr. Baker, you said that the $500-a-week CERB benefit played an important role in avoiding defaults in the mortgage industry.

Since the CERB, the government has reduced the amount of pandemic benefits by 40% to $300 a week. In the fall, it substantially restricted access to those pandemic benefits to workers within certain industries and it restricted access to the wage subsidy.

In the context of the omicron wave, when a lot of people are having a hard time making hours or reporting to work, do you think that the reduction in benefits and the access to those benefits poses a higher threat of default in the mortgage industry?

[Romy Bowers]

I can't comment on those specific changes that you spoke about. What I would do is reiterate the first part of my response and note that the pandemic recession has been very unusual in impacting renters more than homeowners. That's something that needs to be considered.

When I'm looking at the risks that are in CMHC's book, our observation is that there has been less income interruption than you would have expected during any other recession, because of the very particular circumstances of this pandemic.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, Mr. Blaikie.

On behalf of all committee members, the staff, the interpreters and the analysts, we want to thank Ms. Bowers, Mr. Dugan and Mr. Routledge for appearing before us and for all of your answers. I know that some of the answers require you to bring back some information to the committee. We'll look for that and we thank you for that.

As we do this study on inflation in the Canadian economy, we thank you for all the information that you've provided to inform our report.

That will conclude our meeting.

[Adam Chambers, Conservative, Simcoe North, ON]

Mr. Chair, my hand was up.

[The Chair, Liberal, Peter Fonseca]

I'm sorry. I did not see it.

Go ahead, Mr. Chambers.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you, Mr. Chair.

I circulated to both you and the clerk—who was waiting for a bit of input from my colleagues—a list of some of that supplementary information from these institutions that would be helpful. I'm happy to read it into the record if it is helpful, or we could circulate it with the help of the clerk. We're looking for some additional documentation, if it exists. This is off the shelf. I'm not asking for additional research, but I'm looking for existing analysis that would help the committee.

I can read it into the record now, or if you want to circulate it, we can. I'm looking for a motion.

[The Chair, Liberal, Peter Fonseca]

I think what you were looking for was captured by the witnesses, but if you'd like to let us know—

[Adam Chambers, Conservative, Simcoe North, ON]

I have a motion to request additional information, if I may.

[The Chair, Liberal, Peter Fonseca]

Okay. Go ahead.

[Adam Chambers, Conservative, Simcoe North, ON]

It asks that CMHC and OSFI provide the following information, if it exists, within two weeks to support the committee in our very important study.

It would be any CMHC modelling on meeting supply targets, both for affordable housing and for market rate housing, and for rental supply; research on expected population growth in Canada over the next decade and its impact on housing supply and prices, in particular with special focus on the GTA, Vancouver and Montreal; CMHC research on average building approval times, taxes and fees for costs of construction over the past decade or for any period; research on the average cost of a new build related to government taxes or regulations; reports or modelling that both CMHC or OSFI has done about the vulnerability of households and financial institutions in the event of a housing correction; subnational debt figures from OSFI, if that is a measure they track; minutes of the senior advisory council meetings for the last three years, including any reports and studies discussed specifically related to an overheating housing market; analysis or recommendations on the government's vacancy tax proposal, in particular, how many homes would be subject to the tax and in what regions are these homes; CMHC research on the residency of new Canadians, mainly, how many are moving to areas outside the GTA, greater Vancouver and Montreal, and what efforts, if any, has CMHC undertaken to encourage residency outside of these housing markets; CMHC reports on government proposals that we discussed and I asked about with respect to the first-time homebuyer incentives, doubling the first-time homebuyer tax credit and rent-to-own proposals; and, finally, information on the first-time homebuyer incentive that is an existing government program, looking for some confirmation on take-up and how that program is performing.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Chambers.

That is beyond what I heard during the questions and answers. If you want to table that—and maybe we could discuss at a further meeting—that would be great, just so that the members would be able to get hold of it and be able to see it, etc., especially for the witnesses. They may or may not have that information. If you would like to table it, we can discuss at a future meeting.

I do see some hands up. I have Mr. Baker and then Madame Chatel.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thanks very much, Chair.

I was going to make a couple of comments. You've made some of the same ones.

First of all, I think there was a fair amount there that wasn't discussed in the questions and answers. To me, this is more than just a follow-up in writing on the items that were discussed. There's a lot of additional information being requested here. That would be my first thought.

Secondly, I've just checked my email and haven't received this in writing yet, and of course I would ask for it in both official languages. I think it's important that we have a chance, as committee members, to go through this list and consider this before we are asked to opine on it. I would suggest that we table this and discuss it at the next meeting.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Baker.

I now have Madame Chatel and then Mr Poilievre.

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you.

I will echo what my colleague said, which is that I would like to read it.

To me, what's important is that Mrs. Bowers is working for Canadians, not to produce documents she doesn't have, or certainly doesn't have at the moment. It would be great if the Conservatives were asking for off-the-shelf documents that are easy to produce and confidential, but in the reading of Mr. Chambers' motion, I didn't hear that, so it's important for me to read it.

We want the officials, especially during a housing crisis, to work for Canadians and to resolve that. That's very important.

Thank you.