Finance Committee on Oct. 22nd, 2024

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

To Community Food Centres Canada, you identified that nearly one in four people in this country experiences food insecurity—that is, inadequate access to food due to financial hardships. I think all of us should be shocked and ashamed that a country as wealthy as Canada has nearly 25% in that position. Can you outline the main factors that are contributing to high levels of food insecurity in Canada?

[Anthony Musiwa]

Thank you, Mr. Davies, for the question. It's a very important one.

There are a multitude of factors that are driving food insecurity. In our statement, we mention that poverty is the number one factor that is driving food insecurity, and that encompasses a multitude of factors. When you look at the cost of living, it has been increasing over time; on the other hand, we haven't had any significant increases in people's disposable incomes. For example, from 2021 to 2022 the cost of living, in terms of inflation, rose by nearly 10%. This is not a recent phenomenon. If we cast a wider look, say for the past 25 years, we've actually seen that the cost of living has risen by roughly 67% in terms of the consumer price index, but when you set that aside and look at the increases in personal income, you actually see that it has risen by only 36%.

In other words, what we're saying is that the cost of living has increased twice as much as people's incomes have increased, so that leaves households with little to afford their basic needs.

[Don Davies, NDP, Vancouver Kingsway, BC]

Are there any immediate federal actions that you recommend to this committee to address that escalating crisis of food insecurity? What should we do about this?

[Anthony Musiwa]

The easiest one—which we highlighted in our statement and in our pre-budget submission—would be to create the groceries and essentials benefit. That would build on a system that we already have in terms of the GST/HST credit. The government has done that before, when they provided the one-off top-up to Canadians who were experiencing hardship due to inflation in 2023. That's a system that provided money to households quickly and directly, but it was only temporary, so we can build on that.

The groceries and essentials benefit is simply a matter of increasing the amount that families could receive while also ensuring that it's within the tax system that we already have and it's kept in terms of the amount that goes to households. For example, if we look at the benefit thresholds, it actually—

[The Chair, Liberal, Peter Fonseca]

Mr. Musiwa, I'm going to need you to wrap it up in five seconds.

If you want to close with anything before we move on, go ahead.

[Anthony Musiwa]

What the groceries and essentials benefit typically does is provide money to households that need it the most, households that are living on less than $25,000 a year.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Davies.

Members and witnesses, we're moving to our second round. Times are a little different here in terms of questions.

We're starting with MP Kelly for five minutes.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Thank you, Mr. Chair.

Mr. Butler, it's good to see you here at committee.

Can you talk a little bit about the affordability crisis? People know that housing is very expensive in Canada, but I'd like to hear some of your street-level experience with young people trying to buy homes. I fear that we have actually already descended into being a country where, in many cities, there are really two kinds of families: those who already own real estate and those who maybe never will. Families, through co-signing and sharing equity in existing homes, are what it takes to make home ownership possible.

Can you comment, at the individual consumer level, about the challenges and barriers to home ownership?

[Ronald Butler]

When I started in the mortgage business nearly 30 years ago, there was a constant flow of people coming to mortgage brokers who worked as assistant managers at Loblaws or as practical nurses. There were a number of people with absolutely median-level incomes who easily accessed housing through CMHC and other means. These people don't exist anymore.

Without family help, without co-signers and without significant gifts of down payments, in major centres across Canada there are no opportunities for people with a moderate income of $55,000 to $65,000 to enter the housing market, except in the tiniest, microscopic levels of living in a condominium of less than 500 square feet. That's a tragedy. That's the only way to describe it.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Over the last nine years, have we reached the point where home ownership is no longer a reasonable middle-class expectation?

[Ronald Butler]

For young people, it's gone, unless they have significant help from their family.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Will increasing the insurable mortgage ceiling to $1.5 million and extending the amortization period over which people can repay the money change or increase access for middle-class people to become homeowners on their own?

[Ronald Butler]

At the maximum level of the new CMHC program, the income required is $352,000. There is no opportunity, no chance and no reasonable hope that that encompasses people of average earning.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

What about young people?

[Ronald Butler]

Without parental assistance.... The old cap was $1 million. The number of people who could take advantage of the CMHC program near the cap is microscopic. If you talk to CMHC, the numbers are incredibly small. Again, without parental assistance, the barriers to home ownership in this country for young people with moderate incomes are vast, unless they live in very small rural communities in the Prairies or in Atlantic Canada.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

We've heard from Dr. Mintz that per capita incomes are dropping, so people's incomes are actually not rising to this new price structure. They're going the opposite way.

[Ronald Butler]

Yes.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

What is it going to take for young people to have some hope of attaining home ownership like their parents did?

[Ronald Butler]

I operate a small business, with many of my employees under the age of 35. None of them are homeowners. We're in the business of getting people homes. We're in the mortgage business. Their ability, financially, to accomplish this is simply not there.

There have to be major changes, structural changes. Some of it is a fed-prov problem, in that we have incredible costs layered into municipalities and at the provincial level, just to get a new home built. For a developer to build a new home, it's 30%. Unless we start to approach some of these critical issues, it's unlikely they're going to improve.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Is the problem in the short term going to get worse than on the other end? We see that per capita incomes are falling. The population is increasing, but the supply of homes is not increasing.

What, from your experience, can you tell us about the supply of homes?

[Ronald Butler]

The supply of homes in Ontario and British Columbia in 2025 will go into a free fall. The whole building structure of homes is 80% high-rise in those two very populous provinces. High-rise has stopped. In the last 10 months of this year, of 78 sales offices that opened to sell condominium units in the city of Toronto, 75 just shut because there was no ability to pre-sell enough units to get to the point that they could commence construction. We're going to reach a point in four years where—I've seen the estimates—the total number of new homes constructed in the 416 area will be 1,550 homes in 2029. That's the direction in which we're headed.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Now we'll go to MP Sorbara, please.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Chair.

Welcome, everybody, to the committee. There was some great testimony today.

There are a couple of things I'd like to highlight today, which I think are very important.

First off, welcome, Mr. Mintz. It's great to see you. I enjoy reading the literature and the research you put out. I try to read everyone's, from C.D. Howe to MLI, Fraser and sometimes even the Canadian Centre for Policy Alternatives, which tend to be more to the centre on the other side.

Today is a good day, I think, in a lot of ways. No only is today a great day, but I think this decade is Canada's decade. I say that based on the investments of our government and based on the resources and the human capital we have in this beautiful country.

The IMF came out with their economic forecast today. In 2025, Canada will lead the G7. I was looking at the numbers earlier here. It says that Canada will have a 2.4% economic growth rate for 2025. That's better than the United States, the Euro area—and every country within the Euro area—Japan and the United Kingdom.

As we know—and I say this to everyone gathered here—economic growth is hard to generate in a country. You have to have a lot of things in there. The recipe has to be done right. I think we've largely done a lot of good things.

The other thing I wanted to note is that the report talks about inflation. I'm going to take a minute to read what it says about the inflation we very much experienced. There are two different types of inflation. You know this, Mr. Mintz, and so do many of the folks here. You're going to have it driven by central bank policy, like in other countries in Africa or in Venezuela with the printing of money, or you can have a supply-and-demand shock, which we had during COVID.

I pretty much respect the folks at the IMF and the World Bank and the economists there. They have people who have Ph.D.s and master's degrees in economics. They are people who do really interesting work and lead, I would say, the global economy in many ways. It is led by individuals on the ground, like my wonderful residents.

In its “Word Economic Outlook” for October 2024, it says:

...the war in Ukraine led to spikes in commodity prices. Evidence suggests that the pass-through of sectoral price pressures to core inflation and the steepening of the inflation-slack relationship—that is, the Phillips curve—are essential to understanding the global surge in inflation. This evidence is consistent with key sectors hitting their supply bottlenecks as demand rotated across sectors and was boosted over time by a drawdown of savings. This chapter offers a new lesson and confirms an old one for monetary policy. In extreme cases when sectoral supply bottlenecks are widespread across an economy and interact with strong demand, inflation can surge....

We had some bottlenecks during COVID. Then we had commodity prices in Ukraine. That's where we got our inflation, not the other way around. I think that's important to understand, because now inflation has come back down. The chapter is called “The Great Tightening: Insights from the Recent Inflation Episode”.

As an economist, as someone who did a graduate degree and could have gone on to do a Ph.D., I chose to go to Wall Street instead.

This is important, because this is policy, and we know that policy is important. I needed to put that out there, because, yes, this is Canada's decade. It absolutely is. We need to do a few more things, for sure, but I think we largely got it right. To the per capita GDP argument, we had a population surge in Canada with temporary foreign workers and students. We're getting there.

My question is actually for Mr. Couillard.

[Voices]

Oh, oh!