Evidence of meeting #160 for Finance in the 44th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was canada's.
A video is available from Parliament.
NDP
Don Davies NDP Vancouver Kingsway, BC
Would it be possible for the private sector to create a product that would satisfy that?
Lawyer, As an Individual
I think the private sector is the only sector that can create this product, and I encourage every financial institution to look into it. Hopefully this committee and this government can take steps to encourage them to do so.
NDP
Don Davies NDP Vancouver Kingsway, BC
You touched on this, and I want to give you a chance to expand more on it. It's a very novel proposal and one I don't think we've heard at this committee—at least, I haven't.
What market trends or data support the need for a housing ETF at this time? Again, what do you think would be the result of such a product?
Lawyer, As an Individual
I think the main market trend is the one that I mentioned briefly during my remarks, the extensive amount of speculative-demand, investor-owned housing in Canada, especially in the cities I've read about. In Vancouver, it's 34% of condos. In some cities in Ontario, it's upwards of 64%. I believe 85%, of condos in London are investor-owned.
These percentages are mind-boggling, and a house price ETF could absorb a significant amount of speculative or investor demand. It would give that demand another channel in which to get access to house prices without taking up housing supply, so it would not have the same impact on the families that you talked about that are in need of shelter and houses.
NDP
Don Davies NDP Vancouver Kingsway, BC
Prime Minister Trudeau has noted that his government aims to make housing more affordable for younger Canadians without bringing down home prices for existing homeowners.
On May 24, in The Globe and Mail, he was quoted as saying, “housing needs to retain its value. It's a huge part of people's potential for retirement and future nest egg.” In your view, are those compatible goals?
Lawyer, As an Individual
In response to that, I would say it sounds like all gas with just a bit of brakes, and that is consistent with what the federal government's housing policy has been for quite a long time. I don't mean this particular instantiation; I think it's a frank admission of the perceived political constraints governments face, which is another unintended consequence of the programs I mentioned during my opening remarks.
We know many households are dependent on house prices to finance their retirement, and a lot of people are concerned about that, and I don't think that's wrong. I know that in British Columbia, the average household savings rate for the past 25 years is 0.3% of income being saved. If you strip out the two COVID stimulus years, it's -0.4% over 23 years. Households aren't saving, which goes to the comments from the witness from the MPC, so I understand that people feel constrained and are constrained.
A house price ETF would help loosen some of those political constraints by giving investor demand another channel through which to flow, reducing the pressure on our housing stock and hopefully helping all of us find more tools and more ways to address this problem instead of fewer.
We really shouldn't look the other way when we have new financial opportunities and instruments that could help us solve the problem.
NDP
Don Davies NDP Vancouver Kingsway, BC
Just quickly, what's the role of the federal government in building non-market housing, and how might that impact the situation?
Lawyer, As an Individual
I think the proposal I've put forward today would only complement non-market housing. It's not meant to supplement or detract from it. The federal government can certainly continue to play that role and provide the shelter that people need.
Liberal
The Chair Liberal Peter Fonseca
Thank you.
Thank you, MP Davies.
Now, witnesses and members, we are moving to our second round of questions. The times are a little different in these rounds.
We're starting with MP Chambers for five minutes.
October 24th, 2024 / 4:40 p.m.
Conservative
Adam Chambers Conservative Simcoe North, ON
Thank you, Chair.
Mr. Simser, thank you for your testimony today. Did I hear correctly that none of your proposals actually cost the government any money? Is that right?
It is. Okay. Thank you very much.
It seems to me that you're trying to beef up the Criminal Code versus the existing approach through the proceeds of crime and money-laundering act. Is that correct?
It is. Okay.
Is that primarily because we don't have a great track record of convictions and prosecutions for money-laundering offences?
Barrister and Solicitor, As an Individual
That's correct. We don't have a very good record of charging and prosecuting, and when we do prosecute, we're not all that successful in the outcomes. It takes a long time and we don't get very good jail time.
Conservative
Adam Chambers Conservative Simcoe North, ON
That's right. If I were an alien and I arrived just above Earth and looked at Canada, I would think we have no money laundering in Canada, because we don't have a lot of convictions. Would that be a fair assessment?
Barrister and Solicitor, As an Individual
That's if you were truly an outsider, I suppose, but if you were an organized criminal in a Mexican cartel, this is a playground for you.
Conservative
Barrister and Solicitor, As an Individual
Absolutely, they do.
Right now we have a big problem with fentanyl and methamphetamine on our streets. They are coming from Mexican cartels, and actions the Chinese government took about 10 or 15 years ago created this insatiable demand for Canadian currency and created this money-laundering cycle that we're seeing again and again. We haven't been very successful at interdicting it, though.
Conservative
Adam Chambers Conservative Simcoe North, ON
That's very sobering testimony. Everyone should be concerned about this.
There was a private member's bill that would have made it an offence in the Criminal Code to lie to a reporting entity or a financial institution when you're opening a bank account. Is that something you think would be worthy of exploration?
The government didn't support the bill because it wanted to put the offence in the proceeds of crime and money-laundering act and not in the Criminal Code.
Barrister and Solicitor, As an Individual
The real problem I've identified is that the only way to prosecute for money laundering under the Criminal Code is to connect money laundering to a predicate crime. What we're seeing is professional money launderers who distance themselves from the underlying crime.
Lying to a bank could be fraud. It can be charged under the Criminal Code, but if it were made a specific predicate to support a money-laundering prosecution, as opposed to trying to find the drug case.... The case I talked about, Project Collecteur, added a year to the investigation because the prosecutor said it needed to be linked beyond money laundering to drugs, so they needed to get into where the drug network was. While that was happening, we had suitcases with $200,000 per plane flying from Toronto to Calgary or Vancouver.
Conservative
Adam Chambers Conservative Simcoe North, ON
Yes, and Canada's due for a Financial Action Task Force review. Is that correct?
Barrister and Solicitor, As an Individual
Yes, we're up next year. I think we'll start in the spring of next year on the mutual evaluation by the Financial Action Task Force.
Conservative
Adam Chambers Conservative Simcoe North, ON
We're under obligation, statutory obligation, to review the Proceeds of Crime (Money Laundering) Act and Terrorist Financing every five years.
What will the Financial Action Task Force say about Canada since we've missed the deadline to review that legislation?
Barrister and Solicitor, As an Individual
I think it's something that they will observe.
They look at two kinds of things. They won't look at whether the parliamentary review in and of itself has occurred; they'll ask whether there's technical compliance and whether we're effective at using things. If the review isn't done, though, that certainly will come into the mix.
Conservative
Adam Chambers Conservative Simcoe North, ON
You're familiar with net worth assessments from the CRA. Is that correct?
Conservative
Adam Chambers Conservative Simcoe North, ON
Would it trouble you to learn that the net worth assessments at CRA have gone from about $1,200 or $1,500 a year about seven or eight years ago to under $500?
Barrister and Solicitor, As an Individual
That's very worrying.
Typically, where I would see net worth—and I'm not a tax person—is where a drug prosecution or a proceeds of crime case fails. Then your last resort is to say that the target has a lot of assets and no legitimate income and as the CRA to please look at them, and that's where that process comes in. If it's falling, that's very worrying.