Finance Committee on April 9th, 2024

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you, Mr. Chair.

Mr. Ross, I'd like to address some questions to you, if I could.

Bill C-59 would make co-operative housing corporations that meet certain prescribed conditions eligible for the 100% GST rebate for new purpose-built rental housing. Can I get your views on whether the conditions that are described are appropriate?

[Tim Ross]

Generally, yes. Officials have been in contact with our policy team at CHF Canada and we are optimistic that the exemptions will be in place for co-operatives and co-operative developers as we're building new co-operative housing supply.

[Don Davies, NDP, Vancouver Kingsway, BC]

This might be a tough question, but generally I'm trying to get a sense of the quantum of the impact of this legislation. What quantitative impact do you think this measure will have in the construction of new purpose-built rental housing co-operatives across Canada?

[Tim Ross]

There are a few ways you could look at that.

One would be that it reduces the end cost so that this rebate makes more projects viable and able to go forward. With the current interest rates and the very high cost of supply, labour and property, it's very hard to meet the economic conditions needed to go forward. We hope this induces projects to be more viable and get a green light to go forward from a financial perspective.

The other way to quantify this is by looking at the absolute reduction in the end cost of delivering a unit. For the federal rebate that can be tens of thousands of dollars. Because many provinces have come on board—

[Don Davies, NDP, Vancouver Kingsway, BC]

Is that per unit?

[Tim Ross]

Yes, on a per unit basis.

[Don Davies, NDP, Vancouver Kingsway, BC]

Okay.

[Tim Ross]

Because provinces are also coming on board, that often increases substantially as well based on the provincial rebate too. Those tens of thousands of dollars knocked off the delivery price mean a more economic and more affordable housing charge or rent structure for the initial occupants, and that affordability grows over time because of the co-operative model delivering more stable housing overall.

[Don Davies, NDP, Vancouver Kingsway, BC]

Bill C-59 also enacts the department of housing, infrastructure and communities act, which would transfer part of the federal housing portfolio to the Office of Infrastructure Canada. What impact, if any, do you believe this reform will have on public infrastructure and housing outcomes in your sector?

[Tim Ross]

I'm not really sure, to be honest with you. I have heard the intention and rationale of this reorganization is to create more alignment between communities and infrastructure. Because housing development is often connected to infrastructure, that alignment does make sense from a conceptual perspective. Many of the general duties and powers of the minister remain fairly consistent, but it remains to be seen what material impact this will have. I guess only time will tell.

[Don Davies, NDP, Vancouver Kingsway, BC]

In my riding of Vancouver Kingsway, we still benefit from the renaissance of co-op housing built in the 1970s and 1980s. It was a federal program. I have Trout Lake, Kaslo Gardens and Still Creek. There's an indigenous co-op. There's Flesher. Literally thousands of people still benefit from that.

This may be before your time, but what was it that made the federal government's co-op program in the 1970s and 1980s result in tens of thousands if not hundreds of thousands of co-op units being built? How can we make that happen today when we have a housing crisis? What do we need to do to replicate that situation?

[Tim Ross]

What was effective in those programs in the 1970s and 1980s, which were supported by multiple governments, goes back to the significant level of investment. That's not just a one, two or three-year program, but a multi-year program so that you can really plan ahead. Those programs featured financing and capital contributions in the form of either grants or operating subsidies.

The other feature that was quite exceptional about these legacy programs was that they also offered rental assistance to low-income households. There were actual rental assistance subsidies available to make housing co-operatives and non-profits even more inclusive and to meet the housing needs of low-income and more vulnerable households.

[Don Davies, NDP, Vancouver Kingsway, BC]

Are we pursuing those same programs today at the federal level?

[Tim Ross]

Well, if you look at the federal supply programs, there are a few federal programs that are contributing to new non-profit and co-operative housing supply, although it's not at the quantum that we saw in 1970s and 1980s. Twenty-five per cent of all new rental construction starts in those decades were attributable to co-op and non-profit housing development. It's much lower today.

We do have some hope that the forthcoming co-op housing supply program will be quite welcome as a dedicated supply program. However, it has taken quite some time to launch that program. The budget commitment was first made in 2022. In a housing crisis, it would be great to see faster implementation of budget commitments.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Davies.

Members, just as in the last panel, we have limited time. We started a bit late with this panel of witnesses, so we are going to do one round of two minutes for each party.

We'll start off with MP Morantz.

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

Thank you, Mr. Chair.

Mr. Ross, I want to circle back. We were getting into something that I thought was quite interesting around the correlation between productivity in the country and the development and construction of co-op housing units. Would it be fair to say that the low productivity in relation to the United States correlates to fewer co-operative housing projects being built in Canada?

[Tim Ross]

What the research suggested was not a correlation but a causation between investment in new co-op and non-profit housing supply and an increase in productivity levels. The recommendation is to at least double the supply of community and co-operative housing in Canada to restore a level of affordability and catch up with OECD comparators.

It's not just construction that supports productivity. It's at the household level. It's the effect of having an affordable and safe place to call home that's connected to community. Once you have the economic relief of having an affordable place to call home, it induces economic behaviours that support greater productivity outcomes. That's what the research demonstrates.

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

Thank you. I appreciate that.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Morantz.

Now we are going to MP Thompson.

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you.

Mr. Ross, I'm going to stay with you.

It's interesting that in my riding of St. John's East, there has traditionally not been a lot of co-operative housing, even though this is a model that I support. Since the GST link for the new co-operative builds, there's been energy among the groups in wanting to come together, seize the moment and spread the word on how important co-operative housing is to a full and robust housing strategy that really ensures no one is left behind.

Do you feel that moving this legislation forward, Bill C-59, is important to growing the co-operative movement and building co-operative housing in Canada?

[Tim Ross]

Certainly, the GST rebate in particular helps, as I said earlier, to ensure either that development projects become viable because of the challenging economic conditions we are all facing, or that what is developed is more affordable to the end-user.

That's very much welcome in the legislation, but what also needs to happen is the timely launch of the co-operative housing development program, which was first committed to in budget 2022. We did hear from ministers that the expected launch of that program is early 2024. I hope we can see that happen very soon because every day that goes by, costs continue to rise, and we need to lock in construction projects now. In our industry, we know there is about a billion dollars' worth of fundable construction starts for co-operative housing development in 2024-25. That development program is needed to support those projects in going forward.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Thompson.

Now we'll go to MP Lemire.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Mr. Chair.

My question is for Ms. McNeece.

Bill C‑59 addresses the issue of revising the Competition Act. Do you think we're not going far enough? Could we have gone further in this review? Are there issues that we may have to come back to in another bill because we left things on the table?

Is this bill too late? We all agree that large oligopolies have already been created in Canada. We can think of grocery stores, telecommunications and the oil industry, for example.

Could more vigorous action have been taken to encourage a stronger return to competition in Canada, notably by enabling the dismantling of certain monopolies that disadvantage consumers?

[Kate McNeece]

In my personal view, I think Bill C-59, along with a number of other reforms that have come up in the last couple of years, is quite comprehensive and really does represent a sea change in the approach to competition and enforcement.

I think this does go far enough. There are a number of questions that this bill and the collective changes to the Competition Act have raised in terms of how enforcement will play out, how some of these private actions will increase enforcement, what is addressed and how they address them.

I am personally of the view that we should let these amendments sit in place and settle to see if we get some more clarity as to how courts would interpret the law and how the bureau has interpreted the law and to see if we get greater guidance so that our business communities can understand what this new version of the Competition Act means and can ensure that they are modelling their practices to comply with it.