Human Resources Committee on June 3rd, 2024

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Not to be rude, but I'm done with you. I'm moving on to the next person.

[Peter Fragiskatos, Liberal, London North Centre, ON]

I have a point of order, Chair.

I think it's very germane to the discussion to hear the response of the witness. There were a couple of moments in that exchange where he wasn't able to put his view on the record.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Did I lose track? Is it not my time?

[Peter Fragiskatos, Liberal, London North Centre, ON]

A question was asked and we didn't hear the answer.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Maybe you'll get your turn, Peter.

[Peter Fragiskatos, Liberal, London North Centre, ON]

A question was asked and we didn't hear the answer.

[The Chair, Liberal, Bobby Morrissey]

Mr. Aitchison has the floor.

You have a minute left.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Thanks.

Thanks to Mr. Fragiskatos for trying to run the committee.

Ms. Zlatkin, I'll go next to you.

You made a point about the cost of government overall and the impact it's having on mortgage rates and the cost of housing. I wonder if you could expand a bit on that. It's obviously not just the local level that's causing this issue.

[Leah Zlatkin]

In regard to permitting and everything, I believe the costs are substantial for developers.

When it comes to the actual interest rates we're dealing with as a society in Canada right now, obviously variable rates have gone up substantially over the last six or seven years. Most recently, overnight rates went from 0.25% to the current 5%, so that's an increase of 4.75%. When you're looking at what your rates are as a consumer and using a product that increases over time, as opposed to staying as a fixed payment.... These people have more than doubled their mortgage payments. It's substantially painful for the typical Canadian.

In terms of the history of best rates, we can look at the years 2021, 2022 and 2023. Those people are going to be up for renewal in the next three years. They started out with interest rates around the 2% mark. In 2021, it was, on average, 2.15%. When these people renew in the next three years, it is going to be a substantial burden for them to bear.

On top of that, obviously—

I'm sorry.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

We're out of time.

[The Chair, Liberal, Bobby Morrissey]

Thank you. Yes, we're over. You can conclude the thought next time somebody goes to you.

Thank you, Mr. Aitchison.

Mr. Collins, you have six minutes.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

Thanks, Mr. Chair.

I'll start with Mr. Wvong first.

Mr. Wvong, I listened to your opening statement very closely, and I agree with you 100% that supply is a big part of the housing crisis right now. As much as developers are going to play a big role in getting us out of the housing crisis from a supply perspective, our study here focuses on historical investments, or the lack thereof, that governments have made that have led us to this crisis.

One of those issues relates to affordable housing units. I didn't hear the words “affordable housing” in your opening statement. I know that, in your area of the country, metro Vancouver has 18,000 people on their affordable housing wait-list. As much as developers are going to play a key role in this housing crisis, they're not philanthropic to the extent that they're going to provide subsidized rents to people moving into their buildings.

Can I ask what your organization's position is on subsidies from the federal and provincial governments, and if these have played a key role in assisting on that issue?

[Russil Wvong]

I would say we are strong supporters of both market and non-market housing.

The thing about non-market housing is that, even when funding is available, it tends to run into exactly the same barriers with respect to approvals as market housing. We had a situation a little while back where the provincial government was saying it was willing to give us funding to build 600 non-market apartments, putting them pretty close to the downtown area. However, the city still had to say yes. They can't just say, “Oh, we'll take the money.” They have to change the law to allow these apartment buildings to be built. There's a public hearing process, and yes, people were writing in with comments like, “Oh, it's going to affect my view” or “We think there's going to be more crime in this area as a result of this social housing.” I think they confused it with “supportive housing”.

Yes, we would definitely mobilize people. We will advocate for that.

The reason I was talking about market housing is that both market housing and non-market housing help. We need housing of all types. Non-market housing certainly helps directly, because it's available to people lower down on the housing ladder. The thing about market housing is that it scales. The amount of non-market housing we can build is going to be limited by people's willingness to pay additional taxes.

In 2017, with the national housing strategy, I think the federal government invested an additional $15 billion in new investment for the first time since the nineties, probably—since the deficit-fighting years. That's enough, at about $500,000 per apartment, for about 30,000 apartments. It's definitely helpful. However, given the scale of the shortage.... That's why I was talking so much about the need to reduce the approval barriers and the cost barriers.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

That's fair enough. Thanks for that.

Mr. Lombardi, you made the connection between the housing crisis, our drug and opioid crisis and the mental health crisis coming out of the pandemic. I think all levels of government haven't done their part in dealing with encampments. Of course, in budget 2024, on top of the Reaching Home investments, which are additional investments that we're making to help municipalities deal with those living in encampments and living rough, we've announced an encampment fund. We're hoping our provincial partners will assist in matching the $250 million we've included in our budget.

Can you talk about why it's important that all levels of government support resources for those living rough and get those people into transitional homes where they have the supports necessary to stay in those homes and don't find themselves back on the street?

[Eric Lombardi]

I think it's simple just to say that this is a core part of the social welfare state that is supposed to catch people but hasn't for some time. There's not a way to provide people who are in dire need of assistance with housing that can be built by the private market. What's important about funding for this directly is not just the units—which you need. As Russil suggested, you run into a whole host of similar barriers as you do with market housing.

Here in Toronto, at 75 Cummer Avenue, our provincial government waited two years on an approval for 56 supportive housing units that ended up costing the city over a million dollars just in rent on the unassembled, prefabricated building it had.

We need to directly fund that housing, and then we also need to directly fund the wraparound services that enable people to get better and be able to get their lives back on track. There are both the capital investments and the operational investments that are necessary in order to sustainably reduce the level of homelessness in our cities.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

Thanks, Eric.

One thing that we've been dealing with here at committee, especially for those of us who are from the province of Ontario, is how there really are no programs currently that help municipalities in our province. Recently, it was announced that the province defaulted on the money we were giving it to assist with the programs it offers to service managers across the province.

I could sit here for the next 30 seconds and rhyme off all of our programs, from rapid housing to the innovation fund, the affordable housing fund and the apartment construction loan program. The list goes on of those programs that are in the national housing strategy. What programs are people using in Toronto from the Province of Ontario? I'm not aware of any except those resources that flow from the federal government to the province.

Are there programs provincially that your organization or others are using to help with the issues that we've talked about at committee today?

[Eric Lombardi]

I actually don't know of another program, but my organization is a broad-based housing group. We're not specifically a homeless, anti-homelessness and anti-poverty organization, so I would suggest speaking with some of those experts as well.

One of the things to highlight is that about 10% of our hospital beds in Toronto are occupied by people who can't be discharged to stable housing. The actual economic cost of making these investments should save taxpayers' dollars over the long term, because that's just how much more expensive it is to do that.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Collins.

Ms. Chabot, you have the floor for six minutes.

[Louise Chabot, Bloc, Thérèse-De Blainville, QC]

Thank you, Mr. Chair.

I want to thank the witnesses for coming. This study, which they were invited to take part in, focuses on the federal government's disinvestment in social and affordable housing under both the Liberal and Conservative governments. It isn't always worth looking at the past. However, in Quebec, a housing rights organization estimates that around 80,000 social housing units could have been built if the decision had been made to invest.

All three of you said little about social housing. This isn't a criticism. I'm saying this with all due respect. We're talking about supply and demand. That said, the greatest demand for housing comes from people who don't have access to social or affordable housing, or housing that meets a certain income threshold.

My first question is for Mr. Lombardi.

Do you think that major investments in social housing are needed to restore balance? If so, what should be done?

[Eric Lombardi]

I'll address two different types of investment.

One is to address anti-poverty and anti-homelessness. That requires direct capital investment from the government on an ongoing basis, as well as operationally. Earlier this year, we suggested that the Province of Ontario create a $3-billion fund specifically to capitalize creating over 10,000 spaces. That doesn't include the cost of operating the transitional services that are around them.

On the other side of it is that you need to also create housing that can support the working poor, who don't necessarily need the wraparound services. Among some of the best models to do that is through a public builder, which could either both build and construct but also finance projects in the non-market private sector to create affordable units as part of overall market developments.

I think what's really important is that we look at international models of doing so. These public builders do operate on a cash flow-neutral basis, which means that over time they don't require ongoing subsidies for each new building they create. The result of this is a sustainable institution that doesn't drain public capital over the long term while also developing new assets, which means that it creates the overall net wealth of the government that owns it. These builders leverage public land to use that land value to create these units targeted to those with lower incomes.

That model has been proven time and time again. The initial capital you need to invest in that is a capital cost that should not actually over the long term lose value, which means from a books perspective that it should actually be neutral on government finances if done properly.

[Louise Chabot, Bloc, Thérèse-De Blainville, QC]

I just want to make sure that I understand you properly. Let me take this a step further.

This study places great emphasis on housing construction, which can be entrusted to the market and also to non‑market organizations. We don't want to demonize the market. However, we also need to think about non‑market housing. I'm thinking in particular of co‑operative housing, which is a model in Quebec. I imagine that this is the case in other places as well. I don't want to put the provinces on trial. We aren't in a good position to do so.

In terms of federal investments, you're talking about poverty. However, homelessness is also an issue. In Quebec alone, 10,000 people are homeless. The number of homelessness cases has skyrocketed. We know that the government decided to make investments in the most recent budget, but that won't happen until 2025.

How can the federal government help improve the situation of non‑market social housing and combat homelessness?

[Eric Lombardi]

I believe that's addressed to me.

The federal government can do a number of things.

Number one, it can create a capital pool to enable either a public builder or public financing, whether that's done through a new institution or through CMHC, so that these projects can get going, and local builders and local non-profits will have a better sense of some of the better locations.

Another thing it can do is a land bank. The federal government owns a substantial amount of property in our urban areas, whether it be post offices or other government property. A lot of those properties are not well utilized. Doing long-term leaseholds of that public property is a way to provide non-market builders an ability to eliminate the land value component from their overarching building costs.

The other thing to do is to look to exempt federal investment from the same strict rules that would otherwise apply to processes and built forms across Canada, but particularly in areas like Toronto and Vancouver, where the limitations and barriers are extensive. If you pursue also a standardization of different types of building models, you should also be able to reduce costs.

The plethora of doing these things or even applying a national building code on top of it are all ways the federal government can help spur the development of non-market and public housing.

[The Chair, Liberal, Bobby Morrissey]

Ms. Chabot, you have only one second left.

[Louise Chabot, Bloc, Thérèse-De Blainville, QC]

Thank you.

Mr. Lombardi, I imagine that you agree that access to housing is a basic right. Is that correct?

[Eric Lombardi]

Yes, it should be, and access to it should be similar to food, health care and education.