Evidence of meeting #6 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was sector.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Susie Grynol  President and Chief Executive Officer, Hotel Association of Canada
Stephen Saretsky  As an Individual
Devorah Kobluk  Senior Policy Analyst, Income Security Advocacy Centre
Sophie Prégent  President, Union des Artistes

4:40 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

I'm sorry about that. I will take this round, if you don't mind.

4:40 p.m.

Liberal

The Chair Liberal Peter Fonseca

Go ahead, Mr. Poilievre.

4:40 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Thank you.

My question is for Ms. Grynol from the hotel association.

Would you support splitting the bill to adopt more quickly the assistance for the hotel and hospitality sectors while we scrutinize some of the other income support programs separately?

4:45 p.m.

President and Chief Executive Officer, Hotel Association of Canada

Susie Grynol

That's a great question. I would support whatever it takes to ensure that the tourism and hospitality recovery program can pass without delay before Christmas.

4:45 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

The Conservatives have moved for a split of the bill. It is something that we're on record as favouring procedurally.

Mr. Saretsky, you work in real estate. You know, the CMHC, the largest and most powerful government housing agency in the country, predicted that COVID would bring a 10% to 14% drop in housing prices. It made sense. There was no immigration, wages dropped, people were frightened, they didn't know what their future was and they were not even allowed to go and visit the houses they were considering purchasing. But yet, after a brief drop, housing prices actually rocketed up a third since COVID began.

To what do you attribute that sudden explosion of house prices that began in spring 2020 and continues to this day?

4:45 p.m.

As an Individual

Stephen Saretsky

That's a good question. First off, part of it is certainly psychological and the fact that with people working from home, there's obviously a greater demand to increase their living space. But I think the other thing we have to look at is that ultimately, in order to make that purchase, you need money and you need access to credit. I think what happened was that as much as government was trying to help, there's an argument to be made that we perhaps overstimulated and that the overstimulation is showing up in house prices.

As I said, if you look at money supply growth, it's up 20%. If you look at residential mortgage credit growth, that's where the banks have been lending their money. Today you can still pick up a variable rate mortgage at 1.3% with inflation now running basically at 5%, so you're looking at a real mortgage rate of negative 3%. That's very compelling to purchase hard assets such as real estate. We're seeing obviously a growing investor base, which the Bank of Canada has flagged more recently as well.

4:45 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

I find it ironic that the Bank of Canada has flagged these investors as the culprits when, since the Bank of Canada began its quantitative easing program, mortgage lending to investors is up 100%, according to the Bank of Canada. So it's the money that the central bank is creating that these investors are using to make their investments. Do you find that ironic?

4:45 p.m.

As an Individual

Stephen Saretsky

Yes, I mean, I think that, as I said, for every action there is a reaction. Maybe it was well intentioned, but I think the knock-on effects are certainly higher asset prices. I know that we're now wondering why all the investors are active in the market. I can tell you, at least in terms of my clientele, that we just look at it and say, okay, well, look at all the money going out the door. This is typically, historically speaking, very good for hard assets such as real estate, and that's certainly drawing more and more Canadians into the housing market.

One of the big trends we're seeing right now is that normally if you have a condo, for example, you sell it and upsize into a house. You sell one asset to buy the other asset. What we're seeing now is that it's very common for people to keep that existing condo, convert it into a rental property, refinance it, and then go out and buy their house. They're opting to keep multiple properties.

I think that's as a result of the bull market we've had in Canadian housing. I mean, with home prices growing at more than 20%, where else would you put your capital? So yes, there are certainly some knock-on effects—

4:45 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

It really is. You mentioned that people want more space, but even condos are up by 15% in inner cities. Those prices are up as well.

You point out that the wealth just keeps rolling over and over. What the super-rich do is they watch their asset price inflate and then they borrow against that asset to buy another asset, which then inflates, and then they borrow against those assets to buy more. It just multiplies and multiplies, and they consume more and more of the available housing stock. The real value of their debt goes down, because inflation reduces its real worth.

This inflationary economy is wonderful for the ultra-rich investor class even if it is terrible for working-class renters. Would you agree with that, Mr. Saretsky?

4:50 p.m.

Liberal

The Chair Liberal Peter Fonseca

Thank you, Mr. Poilievre.

4:50 p.m.

As an Individual

Stephen Saretsky

I would say so. Yes.

4:50 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Thank you.

4:50 p.m.

Liberal

The Chair Liberal Peter Fonseca

Thank you, Mr. Saretsky.

We're moving to the Liberals and Madame Chatel for five minutes.

December 9th, 2021 / 4:50 p.m.

Liberal

Sophie Chatel Liberal Pontiac, QC

Thank you, Mr. Chair.

I have a question for Ms. Grynol from the Hotel Association.

As you know, the labour shortage is important for all of us in this room. My own riding has a rural community, and in some parts—for example, in Maniwaki—there are only two main hotels.

When we talked earlier about labour shortages in this sector in particular, I wondered what you think of these statistics. Statistics Canada has shown that the population that is of working age—24 to 64—has grown by 8% over the last 10 years, while the population that is 65 and older has grown by 42.3%. At the same time, as my colleague mentioned, we have an issue with immigration.

To me, the bigger problem with labour shortages is really the aging of our population, and I want to confirm that you have also seen that trend.

4:50 p.m.

President and Chief Executive Officer, Hotel Association of Canada

Susie Grynol

Yes, that trend is accurate. I also have seen that from Statistics Canada.

Statistics Canada also has another interesting stat. It suggests that 80% of Canada's future workforce needs to come from immigration, so we will be putting a proposal to government for how we build back out of this crisis, particularly as it relates to these hardest-hit sectors. It is our hope that there will be some urgency applied to allowing more workers into this country, at all skill levels, and to most immediately fixing some of the blockages that exist today as related to working applications that have been paused because of COVID. We are planning now for the summer. We are trying to get international students into this country. We have a working holiday visa. Those applications have been paused.

We need to unlock some of the existing systems to allow us to get as many workers as we can for this summer, but we also need to deal with some systemic issues around affordability and the fact that we have housekeepers who are commuting three hours a day back and forth because they can't afford to live in the city in which they work, and obviously those are more long-term issues.

4:50 p.m.

Liberal

Sophie Chatel Liberal Pontiac, QC

Yes. Thank you. It's a really big issue, and integrated, so the conclusion of the CERB is not the main issue here.

I have one other question about the labour shortage and the importance of passing this bill.

As you mentioned, if we don't pass this bill, what will happen is that, on the wage subsidy, the employer-employee relationship will be broken at a time when the season, as you said so passionately and hopefully, will pick up in the summer. The consequence for the labour shortage if you break those relationships that you have struggled to maintain will be huge. If we really care about labour shortages, we should pass this bill. I just wanted to confirm that.

4:50 p.m.

President and Chief Executive Officer, Hotel Association of Canada

Susie Grynol

Absolutely. We need to keep the businesses intact, and we need to maintain as many of those employee-employer relationships as we can, because if we don't have our employees by the time we need to recover, then we will not be in a position to recover. We need both. They go hand in hand. This bill is absolutely critical to making that happen.

4:50 p.m.

Liberal

Sophie Chatel Liberal Pontiac, QC

If we don't make that happen and the season comes, it will have a cascading effect, in the sense that tourism is such a big sector for our economy. We'll be in pretty poor shape if we don't pass this bill, as I understand it.

4:50 p.m.

President and Chief Executive Officer, Hotel Association of Canada

Susie Grynol

That is correct.

4:50 p.m.

Liberal

Sophie Chatel Liberal Pontiac, QC

That's excellent.

Chair, do I have more time?

4:50 p.m.

Liberal

The Chair Liberal Peter Fonseca

You have 40 seconds.

4:50 p.m.

Liberal

Sophie Chatel Liberal Pontiac, QC

I have a quick question for Madame Prégent.

Ms. Prégent, the money for the Fondation comes mostly from Québec. Why did the Government of Québec withdraw and stop allocating those funds?

Thank you.

4:50 p.m.

President, Union des Artistes

Sophie Prégent

You would have to ask Ms. Roy, because she managed the envelope on a discretionary basis. As I understand it, the envelope was hers and she decided to put $2 million into the fund and then, later, another $3 million. The first $2 million were spent very quickly. One month after the form was published on the foundation's website, it had to be taken down, because they knew that all the money was going to be spent. Then a second grant of $3 million came in and, a month and a half later, the form was taken down again.

4:55 p.m.

Liberal

The Chair Liberal Peter Fonseca

Thank you.

That's your time.

Now we are moving over to the Conservatives with Mr. Chambers for five minutes.

4:55 p.m.

Conservative

Adam Chambers Conservative Simcoe North, ON

Thank you, Mr. Chair.

As is the case for some of my colleagues here, my riding, significantly, is home to many of Canada's premier tourism destinations, including, I would like to say, Georgian Bay and lots of great lakes.

Ms. Grynol, I think I have a number of your members in my riding, those who are in the hotel association or those who are in the same industry. I have heard a lot of feedback on the labour shortage, which I agree is acute.

Something I have heard feedback on is the challenges of mixed messaging from the government regarding travel and promoting travel, as well as the challenges with PCR tests at the airport, which are also affecting people's willingness to recover and come back to the tourism market.

Would you like to comment on some of the challenges from the government policy side?