Evidence of meeting #138 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was products.
A video is available from Parliament.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot, QC
Can you forward that to the committee as well?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes, as soon as it is completed, we will forward it.
Liberal
NDP
Alexandre Boulerice NDP Rosemont—La Petite-Patrie, QC
Mr. Giroux, last November, the Office of the Federal Housing Advocate recommended that the federal government, with the provinces and municipalities, of course, set a target of 20% of off-market housing—social and community housing—to improve housing affordability for many families and workers. In your opinion, would reaching that target have a significant impact on the real estate market as a whole?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
It probably would. The more housing there is, the greater the number of housing units available, and the easier it is to reach affordability. Having a target of 20% off-market housing would probably be an important step in restoring affordability, which is currently at a very low level.
In that regard, we analyzed the various programs offered by the Canada Mortgage and Housing Corporation and the federal government in general and found that the definition of “affordable housing” varies from one program to another. Some large programs define affordable housing as having a rental price below the market median. In regions such as Toronto or Montreal, a unit renting for under $2000 per month could therefore be considered affordable. Yet that is not what is generally considered to be affordable housing. Paying $2000 in month is not generally affordable for families with average and below average incomes.
NDP
Alexandre Boulerice NDP Rosemont—La Petite-Patrie, QC
You have estimated the suppressed demand for housing. We hear a lot about forced relocation, as well as adult children who continue living with their parents for a long time, known as the “Tanguy” situation in reference to a movie from a few years ago.
Further, we have seen reports on Radio-Canada recently about people who are forced to live in a motel or even in their car. Does your estimate also include those situations?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Suppressed demand is based on demographics, the rate of household formation that we usually expect to see in a normal economy or when the housing market is normal. We compared that with the actual rate of household formation. This is a macro-economic measure that reflects all suppressed household formation. Those effects include the situations you mentioned, but not exclusively.
Liberal
Conservative
Adam Chambers Conservative Simcoe North, ON
Thank you very much.
Mr. Boswell, I understand that you recently received some correspondence from the Superintendent of Financial Institutions about a recommendation you had to allow uninsured mortgage holders to shop at renewal without going through the stress test. Is that correct?
Commissioner of Competition, Competition Bureau Canada
Correspondence...?
Conservative
Adam Chambers Conservative Simcoe North, ON
I believe that OSFI responded to a recommendation that the Competition Bureau made.
Commissioner of Competition, Competition Bureau Canada
I believe they responded publicly to the recommendation that the bureau made, yes.
Conservative
Adam Chambers Conservative Simcoe North, ON
I'm interested in retention rates, at financial institutions, of uninsured and insured borrowers. With rates that have gone up very quickly, my understanding is that the retention rate of uninsured borrowers at financial institutions is the highest it's ever been—i.e., they do not shop around. What are the benefits of having a mortgage holder being able to shop around?
Commissioner of Competition, Competition Bureau Canada
In our submission to Finance, we pointed to specific data that shows the benefit of shopping around, in terms of the interest rate you are going to pay. When you have the ability to go to different institutions and say, “Do you want my business?”, you're going to get competition. I'm sorry that I can't remember off the top of my head what those basis points were, but it was a certain number of basis points for which studies have shown you'll pay less in terms of mortgages.
Conservative
Adam Chambers Conservative Simcoe North, ON
Thank you very much.
The government has allowed insured mortgage holders to shop at renewal. Your testimony, which I think is logical, suggests that if you can't shop you'll pay a higher mortgage, and if you can shop you'll pay a lower mortgage, so it turns out that uninsured mortgage holders will be paying higher rates for a mortgage than the insured. If you take it to the logical end, uninsured mortgage holders have put more than 20% down, so by definition they are at less risk to default and yet may end up subsidizing the insured mortgage holder rate because that pool of customers gets to shop around. Are you concerned about that?
Commissioner of Competition, Competition Bureau Canada
I think that from a straight competition perspective, it hinders competition, requiring the stress test and therefore making people stick to the institution where they have their mortgage now, even in a situation, as we pointed out in our submission, of a straight switch. Everything remains the same, effectively. It's just a new mortgage term.
Conservative
Adam Chambers Conservative Simcoe North, ON
Thank you very much.
Before I go to my last question for Mr. Giroux, I have just one final question for you.
In terms of greenwashing, have you looked at any claims by financial institutions or the financial services sector about their products and how they're good for the environment?
Commissioner of Competition, Competition Bureau Canada
What I can tell you is that it's public that we have received what we call “section 9 applications” with respect to that.
Conservative
Adam Chambers Conservative Simcoe North, ON
Is that specifically with respect to financial or mutual fund companies?
Commissioner of Competition, Competition Bureau Canada
Yes. Certainly there has been one financial institution. With these section 9 applications, any six residents of Canada over 18 can make a complaint about an alleged violation of our laws, and we will go forward and investigate—
Conservative
Conservative
Adam Chambers Conservative Simcoe North, ON
That's okay. You're excellent.
For my last question, Mr. Giroux, we've talked before about the unannounced measures in the budget. The government released $1.8 billion in this fiscal year in the unannounced measures. I get the need for secrecy and non-disclosure, but why, as a parliamentarian, do I not know how much money is sitting on that line in each fiscal year? I don't know for next year whether they will have $20 billion on that line that they could all of a sudden release, or whether it will be $2 billion or maybe $1. As parliamentarians, we see only the change in that account from update to update.
Is that something you might be able to help us with?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
It's something that is of concern to me, because there can be, as you pointed out, very valid reasons to disclose an aggregate amount without itemizing it, but not disclosing its changes and the items that are financed from this line makes it much more difficult to follow the money, so to speak. It's of concern.
