Finance Committee on Jan. 24th, 2022

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you.

I would like to turn to Ms. Laflamme, who could tell us whether the plan to manage supply and demand and ensure housing equity is on track.

We recently announced $4 billion to remove procurement barriers at the municipal level in order to build more housing faster. It's called the housing accelerator fund. I gather from listening to Mr. Perrault that it's important to help municipalities build more housing.

We also announced $2.7 billion to help affordable housing developers acquire land and buildings, in part to expand the co‑operative model.

We also implemented a first‑time homebuyer incentive. We announced that we would provide a break. Ms. Laflamme or Ms. Raza said that it was difficult for young people to purchase a home.

There's also a rent‑to‑own program. Obviously, measures are in place to prevent speculation. We're talking about an anti‑flipping tax on residential properties, requiring properties to be held for at least 12 months in order to reduce speculative demand in the market.

Can these measures help address the issues that you raised?

My question is for Ms. Laflamme and Ms. Raza.

[Véronique Laflamme]

Thank you for the question, which is relevant and key to our current discussions on rising housing costs and assistance for tenants in core housing need. They're, in theory, the primary focus of the national housing strategy and the new announcements regarding home ownership assistance measures. These are two different issues that affect each other.

We must look at the big picture to ensure that more urgent needs aren't overlooked. We have the impression that the announcements made since the election campaign focus only on home ownership and that the many households in core housing need, according to Statistics Canada, are being forgotten. As I said earlier, this amounts to 1.2 million households across Canada. This figure goes back to before the pandemic. The new programs don't help these people. Across Canada, these people have incomes under $25,000 and therefore can't afford to own a home.

That said, we must also keep in mind that, when we encourage home ownership, it isn't always easy. It can sometimes have a domino effect. For example, when people buy a duplex and reclaim possession of the unit, they drive out tenants. This causes issues for those tenants, who didn't have any before.

[Sophie Chatel, Liberal, Pontiac, QC]

There are also issues with rental housing.

[Véronique Laflamme]

Exactly.

[Sophie Chatel, Liberal, Pontiac, QC]

Madame Raza, did you raise this issue about new buyers, first-time buyers, having difficulty in buying houses? Do you think this new measure to help them will help?

[Sahar Raza]

I'm honestly not particularly familiar with this measure. I could get back to you. I will say that what we have heard from our partners over and over again is that it won't be just one program that will solve this issue: It's the financialization of housing, the way our system operates. We're not regulating the ability for folks to still drive the market with profit-driven interest.

Even if a few folks are benefiting from these programs en masse, almost 50% of a whole generation of generation Zs and millennials—I've looked at surveys—have given up on the dream of home ownership. This program is not going to address this crisis, which is also upcoming, so I think there's a lot more to be done to meet people's needs.

[Sophie Chatel, Liberal, Pontiac, QC]

As you said, it's a multi-angled issue—

[The Chair, Liberal, Peter Fonseca]

Thank you, Madame Chatel.

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you. That's the time.

We are moving to the Bloc.

Monsieur Trudel, you have two and a half minutes.

[Denis Trudel, Bloc, Longueuil—Saint-Hubert, QC]

Thank you, Mr. Chair.

I would like to respond to Ms. Chatel. She was talking about the first-time home buyers incentive. I don't know whether she is aware, but that government program has been a disaster.

The program was funded with millions of dollars, but the criteria were much too strict. Actually, I believe that they have been changed. But the program has not been used. There were millions of dollars in the fund—I don't know the exact amount. After three years of the 10 years considered, only 10% or 12% of all the money has been used. The criteria are too restrictive. They must be reviewed, because it's not working at all.

As Ms. Laflamme mentioned, this is not the main problem we have at the moment. I would actually like us to go back to Ms. Laflamme, because we did not have enough time. I always say that, in Parliament, we do not have enough time to discuss the most important matters.

We are now starting to talk about acquisition funds. Two and a half years ago, it would have been crazy to think that we would be putting $400 billion into the system to deal with a health crisis. Everyone would have said that it made no sense and that we would never get it done. But we did get it done because there was a major crisis.

The major crisis at the moment is in housing. We do not have enough housing for the most vulnerable. That's the problem we are facing. We in the Bloc Québécois propose taking the amounts earmarked for affordable housing and for making owners rich, and putting it back into the system, for those building the houses that meet the needs of the people.

Could Ms. Laflamme talk to us about that?

[Véronique Laflamme]

Some municipalities are making that request. If I am not mistaken, the Federation of Canadian Municipalities is also making that request. They are asking for an acquisition fund to buy buildings and housing units on the private market that are still affordable. This is to protect them from speculation and to take them out of the market so that they can be used to set up not-for-profit organizations, cooperatives, or public housing.

Ms. Chatel mentioned that fund, but, to my knowledge, it has not yet been announced. It would certainly meet some important needs, but we need to make sure that the fund is used for housing units on the private market. That would also help to fight against the financialization of housing, to stop major investment funds from gaining access to housing. Getting out of the mindset of speculation would allow us to put the right to housing at the centre of everything we do. However, if we want that to be done quickly, there has to be major investment. This is already being done in Quebec. Small municipalities, even Montreal, have started to do it. But, without major financing from higher levels of government, the leverage effect can not be as big.

If that had been done earlier, hundreds of housing units could have been protected and we could have avoided the erosion of private rental housing that is still available for the average tenant.

That is another possible solution. We actually are asking for all the money intended for affordable housing to be redirected to housing outside the private market.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Laflamme.

[Denis Trudel, Bloc, Longueuil—Saint-Hubert, QC]

I think my time is up.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Trudel.

We are moving to the NDP and Mr. Blaikie for two and a half minutes.

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

Thank you very much.

Mrs. Raza, you mentioned earlier in your testimony the idea of having tax measures that would essentially pile up, for lack of a better word, as people own multiple properties. In New Zealand, it's not a tax measure, strictly speaking, but they have required that people purchasing second, third and fourth properties pay an escalating percentage of the value of the property as a down payment in order to try to dissuade people from owning multiple properties.

I wonder if you want to speak a bit more to that issue, both on the types of taxation you were proposing in your own testimony and on the initiative in New Zealand to try to accomplish a similar effect through the amount of down payment required.

[Sahar Raza]

New Zealand is definitely an example that a lot of international human rights experts tend to draw on. It's a good one.

What I am proposing is, frankly, any sort of disincentivizing action that would stop people from wanting to park their capital in additional investment properties. An incremental tax makes sense. I've been reading tons of articles about folks who own multiple properties and who say themselves that they should be taxed and that there should be more regulation. They're just utilizing a market that has made it easy for them to accrue huge amounts of profit very quickly by leveraging their previous equity and then reinvesting it.

If we genuinely believe in the human right to housing, this is an obvious space to intervene in some way. It could be taxes. It could be some other sort of regulatory measures, but if we truly want every Canadian to have access to housing, we cannot just let a few people hoard wealth and property. Whether that's through a tax or something else is up to you folks.

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

Thank you.

Chair, how am I doing for time, in my two and a half minutes?

[The Chair, Liberal, Peter Fonseca]

You have a little more than half a minute.

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

Fair enough. That's not a ton of time, but I might just try to lay some foundation for my next question.

My question will have to do with the subject of non-profits, co-operatives, and so on, the folks who are trying to in effect build non-market housing. They're having a really hard time competing and snatching up land and buildings as they become available. I think one of the real virtues of the former national housing strategy in its heyday in the mid-nineties was that the regularity of funding allowed organizations to plan. They knew there was going to be funding available every year. They could hope to acquire land and then plan what they were going to build on it, as opposed to having to spot land available, come up with a plan and figure out how to fund it all on a very tight timeline.

I do want to speak a little bit to that—

[The Chair, Liberal, Peter Fonseca]

That will be in your next round.

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

—or ask some questions on that in the next round, Mr. Chair. I recognize that my time has elapsed in the current round.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Blaikie.

We're now moving to the Conservatives.

Mr. Chambers, you have five minutes.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much, Mr. Chair.

Mr. Perrault, thanks for being here today. I'd like to thank all our witnesses, of course.

You mentioned in your opening statement “inflation expectations”. The Bank of Canada itself in October, in a monetary policy statement, said its outlook on risk of inflation included increased inflation expectations on behalf of businesses and consumers, as well as more persistent wage inflation. It was in the bank's own outlook survey with businesses just last week that two-thirds of businesses expect inflation to be over 3% in the next year, and 80% of businesses expect wages to be higher over the next 12 months.

Are we not thinking about inflation and expectations? We're kind of past this transitory supply chain narrative. Do you have any other observations on this point?

[Jean-François Perrault]

I think, quite honestly, people are a little bit spooked about inflation. Whether that's because there were supply chain issues last year, or weather effects or whatever it is, or a combination of all these things, the reality is that both households and businesses are starting to build that into their view of inflation over the next couple of years. That's the expectations challenge. That's what central banks try to keep in check, because it makes their job harder than if they were just dealing with traditional economic things.

There's no question that inflation expectations are going up, and that's making policy-makers' jobs much harder than they otherwise would be.