Evidence of meeting #156 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was extension.
A video is available from Parliament.
Liberal
The Chair Liberal Peter Fonseca
Thank you, Mr. Ste‑Marie.
We're glad that we got Mr. Claus back on.
Now, I will go to MP Davies, please.
NDP
Don Davies NDP Vancouver Kingsway, BC
Thank you.
I'd like to direct my questions initially to you, Ms. Tessier.
In the 1970s, 1980s and right up until the early 1990s, my research indicates that the federal government, I think via the Canada Mortgage and Housing Corporation, pioneered a very successful national co-op program. Can you tell us approximately how many of those 2,200 co-ops that exist in Canada today were built through that program with federal assistance in the seventies and eighties?
Acting Executive Director, Co-operative Housing Federation of Canada
Yes, indeed. That was the beginning of the growth, and it's too bad it stalled. I don't have exact numbers, but definitely.... I would say that it's near a third of what we have, but we will follow up with the exact numbers.
Acting Executive Director, Co-operative Housing Federation of Canada
The federal government definitely helped launch the growth of the sector.
NDP
Don Davies NDP Vancouver Kingsway, BC
I can tell you that in my riding of Vancouver Kingsway, somewhere between 12 and 15 of those co-ops are still successfully being run today and providing homes, stable homes, for hundreds and hundreds of families in our riding.
In 1992, the Brian Mulroney Conservative government cut that federal co-op housing program in its final budget before Mulroney resigned. Can you outline what impact that decision by the federal government to exit the federal co-op support program had on the development of new co-op housing units across the country in subsequent years?
Acting Executive Director, Co-operative Housing Federation of Canada
Yes. Definitely one big impact that we've been trying to address is the capacity to build. We used to have resource groups. In fact, in Quebec, those resource groups were maintained because they still had funding programs. The resource groups that helped with building—development, building the knowledge, the technical expertise—really dissipated.
Another key is affordability. We can build, but not necessarily affordably. With that capital and a program from the federal government, it allows that leg up,. It allows it to be affordable. It's all about the numbers.
NDP
Don Davies NDP Vancouver Kingsway, BC
Of course.
You mentioned the recently launched co-operative housing development program, and you quite rightly point out that it can play a critical role in helping to develop the next generation of co-operative housing.
How many units is it expected to produce in its current form?
Acting Executive Director, Co-operative Housing Federation of Canada
That's a really good question.
Again, it was alluded to by almost all of the witnesses here that the cost of construction has gone up dramatically, which is why we're also, in our ask, speaking about the Canada rental protection fund. Assuming an average across the country, because some cities are more expensive than others and some don't necessarily require a partner, but knowing that some partners such as municipalities or others will come in, there will probably be between 3,200 and 3,300 units, as we call them.
Acting Executive Director, Co-operative Housing Federation of Canada
Yes.
NDP
Don Davies NDP Vancouver Kingsway, BC
Thanks.
I was talking earlier today with the financial wellness lab that operates out of Western University, and they've done extensive research. They told me today that housing and rent costs are the number one economic concern of Canadians today. They also said that Canada loses $54 billion in lost productivity every year due to the impact of financial stress. Putting those two things together, the major source of financial stress is housing costs. We lose $54 billion in productivity.
I noticed that, in your pre-budget submission, Ms. Tessier, you said that the problem of lagging productivity requires policy intervention and growth-minded policy that will benefit parts of society. You identified that building not-for-profit housing, including co-ops, will generate more wealth for everyone and increase productivity.
Can you expand on that for us, the connection between housing and productivity?
Acting Executive Director, Co-operative Housing Federation of Canada
Yes, and we can go to dinner after, and I can continue.
Generally speaking, we're also seeing a link to economic development. There are many towns and cities that don't have affordable housing and, therefore, businesses can't be open.
This is recurring. We are hearing this a lot. I've also heard that the younger generation may not have kids or may wait longer for kids. All of these do impact.... There's the stress, obviously, when we're seeing, sadly, more leaves taken. All of these impact the ability to maintain your employment, stay healthy and be a productive contributor to society.
I would address your question that way and be happy to speak a bit more.
NDP
Don Davies NDP Vancouver Kingsway, BC
I have a quick question then, Ms. Tessier. How many affordable housing units do you estimate can be preserved with the $1.5 billion allocated to the Canada rental protection fund that you mentioned?
Acting Executive Director, Co-operative Housing Federation of Canada
Given that construction costs are way higher—and I gave you an approximation of what the $1.5 billion will do for new growth—on a ballpark basis, we could be increasing that probably by 20% or so, so it is probably more in the area of 4,000 and 5,000, depending on where we buy. There are definitely—I myself have looked—private rental apartment buildings for sale in places like Winnipeg that cost much less and are more affordable.
Again, generally speaking, it depends where we target and what's available.
Liberal
The Chair Liberal Peter Fonseca
Thank you.
Thank you, MP Davies.
Members and witnesses, we're now moving into our second round of questions.
We're starting with MP Chambers for five minutes.
Conservative
Adam Chambers Conservative Simcoe North, ON
Thank you, Mr. Chair.
I appreciate the opportunity to have a number of great witnesses here today.
Mr. Cyr, I apologize that we won't be able to hear from you, but rest assured that we did receive your submission, and we may look for another opportunity to invite you back. We'll talk about that off-line. I appreciate the work that you've done to advance procurement opportunities and in paying for outcomes.
For the Canadian Council of Innovators, Mr. Bergen, you referenced a couple of things I'd like to expand on a little more. You mentioned some challenges with SR and ED. Can you elaborate briefly?
President, Council of Canadian Innovators
Yes, for sure. For those not familiar, SR and ED is an expenditure of $4 billion a year for the government. It's actually our largest expenditure in terms of innovation—about 18,000 companies receive it. When you dig into it, a handful of companies receive close to 25% of every SR and ED dollar, and it turns out that a good chunk of those are actually foreign multinationals.
In a space like the innovation economy where unemployment is effectively zero, we're subsidizing the R and D of foreign multinationals, while making it more challenging for our own domestic firms to be able to hire and create opportunity for their firms. This has consequences such that you're no longer creating IP-rich companies, which is where wealth and prosperity have really moved to, and you're supporting firms that are ultimately taking the wealth out of the country.
To indicate how systemic this is, up until 2021, Huawei was still receiving a considerable amount of money from this program, indicating that we're funding not only the R and D of foreign firms, but also foreign firms that we've actually deemed to be a national security risk and which we view to be confrontational to us as a nation.
Conservative
Adam Chambers Conservative Simcoe North, ON
I'm sorry, but I just have to confirm. Are you suggesting that Huawei was still receiving rebates under the SR and ED program?
Conservative
Adam Chambers Conservative Simcoe North, ON
Wow. Isn't it also true that about 30% of the program is spent on a cottage industry of consultants, who help people with the paperwork to fill out these applications?
President, Council of Canadian Innovators
Yes, I think there are two pieces here. First, where is the money going? Is it actually leading to outcomes that are leading to wealth and prosperity?
Listening around the room, it really sounds like we have a revenue challenge in this country. We can't pay for housing. We can't pay for arts and culture. By creating opportunities where we're able to drive and support domestic firms in programs like SR and ED, and making sure that those dollars are being allocated to the right outcomes, that's one step—definitely looking at it from that framework. The other is also the cost. SR and ED hasn't really been updated in more than 40 years. We have a program for which companies basically have to contort themselves in order to access the funding. It requires a gambit of different types of consultants and agents, so an entire SR and ED cottage industry has built up in many practices.
Programs do need overhead and you need to cost things, but when it's close to 25% to 30% going to consultancies rather than driving outcomes, then we have a real challenge here, a real issue.
Nicholas Schiavo Director, Federal Affairs, Council of Canadian Innovators
If I can just add on that quickly, this is not something new. Here at CCI, we've been calling for reform to this program for almost a decade. We secured a win in budget 2023 to have some kind of consultation. That consultation process has now happened twice. In both cases we've participated. However, speaking on behalf of our members in the industry, I would say if we don't see concrete reforms to update the program for the 21st century in the fall economic statement, many of us would consider that a failure, so we do hope for the best.
Conservative
Adam Chambers Conservative Simcoe North, ON
Thank you very much.
I think I have about a minute left. On the capital gains tax, just so I'm clear, the feedback from your members is that it will create incentives for them to look south of the border. Is that your testimony?