Human Resources Committee on June 6th, 2024

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

Thank you for that. I'd like to move to Ms. Mahboubi now.

In terms of the costs to build in this country, what are the biggest factors affecting the cost of building housing in Canada?

[Dr. Parisa Mahboubi]

I'm not a housing expert, but based on the research that I've done and looking at the research that the C.D. Howe Institute provided in its publications in terms of housing costs, one major part is the development charges that contribute to the cost of land. Something I want to highlight is that there are significant variations from one region to another and also from one province to another. It's something that we need to take into consideration, as I also highlighted in my remarks.

In terms of the cost, there are several factors that could contribute to the housing costs. The cost of land in terms of development charges seems to be a significant one that passes to homebuyers, and also the cost of, for example, labour. However, in regard to labour, we don't see significant increases in terms of the wages when it comes to the construction industry and those workers. We experience significant job vacancies and people are talking about the labour shortages, but we don't see significant increases in terms of the wages, ensuring that there's a shortage there.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Aitchison.

We'll now go to Mr. Long for six minutes. He may be sharing his time with Mr. Fragiskatos.

Mr. Long.

[Wayne Long, Liberal, Saint John—Rothesay, NB]

Indeed, I am, Chair. Good morning to you.

Good morning to my colleagues.

Thank you very much to our witnesses for your testimony. It's very much appreciated.

I have just a few comments before I ask Mr. Irwin a couple of questions.

We came forth in 2017 with the national housing strategy, and I think we recognized that the federal government needed to take a larger role in the building and development of apartments, houses and what have you. We all recognize that it's provincial jurisdiction, but the federal government has a role to play.

Whether it's through programs like the coinvestment program, the rapid housing initiative, the housing accelerator fund or other initiatives, we are taking a leadership role. I know certainly in my riding of Saint John—Rothesay, my communities appreciate the funding that has come from the federal government.

I actually want to also mention that the Conservative Party voted against all of those gestures. I know the role of the loyal opposition is to oppose programs, and that's fair. However, I think it's also incumbent on them to come up with solutions as opposed to just criticize. To this date, I have yet to hear anything constructive to address the problem.

Mr. Irwin, I want to talk to you about my province of New Brunswick. There's an article that came out here a few weeks ago, and I'll just read it. It says, “Housing starts in New Brunswick lagging further behind Maritime neighbours in early 2024”. They did a comparison to Nova Scotia and Prince Edward Island, and our housing starts are far behind.

I would very readily say that Premier Higgs has been derelict in the responsibility of taking a leadership role in housing here. Obviously, he doesn't feel that the removal of the GST tax has any impact, and he didn't match that like Nova Scotia and Prince Edward Island did.

Mr. Irwin, how important was the move that we made to spur apartment builds? What are your comments on whether the premier made the right decision by not joining us on that?

Thank you and good morning.

[Tony Irwin]

Good morning, sir. Thank you for your comment and your question.

I'll just start by saying that I would encourage Premier Higgs to follow suit. As I said in my remarks, I would encourage any province that has not done so, to do so.

In terms of that initiative or that measure, yes, we think it's positive. Unfortunately, it came at a time when, as we know, interest rates were quite a bit higher. In some ways that mitigated the benefit of it, but we're all hoping that interest rates are going to start to come down and we're going to be able to see all of these measures work harmoniously and really start to see results.

It came at a time when we were dealing with other economic pressures that were not favourable to us, which none of us could really control, but we're really hoping that we'll be able to move forward from that and start to see the benefit from things like GST and PST.

I would simply say that we should all be supporting any initiatives that we think can be helpful. I've said that before and I'll say it again. Why wouldn't we want to be supporting things like that if it can result in getting more housing built? Frankly, we don't have the luxury not to support something like that at this time.

[Wayne Long, Liberal, Saint John—Rothesay, NB]

Thank you very much.

It's over to MP Fragiskatos.

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

Thank you, Chair.

Thank you, witnesses.

To Mr. Irwin, Parliament recently saw, sir, a proposal that, in terms of apartments, would take away the waiver from market builds. Obviously, I take from your comments that you would be opposed to that.

What would be the effect of that, particularly in the context of what you've raised here—high costs and high interest rates?

[Tony Irwin]

Thank you for your question.

I think it would make it certainly less effective if that were to be done, so we would encourage anyone considering that to not do that.

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

I also ask you about a measure in the federal government's housing plan—which received, I think, comparatively less attention—and that's the change on accelerated capital cost going from 4%, in terms of writeoff, to 10%. What do you expect that will do?

I mean, obviously that will help, but I'd love to hear your commentary on exactly how and what you've heard from members so far on it.

[Tony Irwin]

Admittedly, I'm not a housing economist, but I certainly speak to members every day about all these different actions, and I will say that you heard it before from others. There's no one thing that really will move the needle, but when you look at them together—both our GST and capital cost allowance, and a more positive interest rate environment and inflationary pressures that, hopefully, will be reduced—we certainly think that all of these things are going to help projects go from red light or yellow light to green light. That's what we need to happen.

As I said in my remarks, the increase in the capital gains inclusion rate seems a bit at cross purposes to some of the other things that we're talking about, but I do think that, when you put the positive measures together, they will definitely help get projects over the starting line so we can actually get residential housing built.

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

Finally, sir—and we can talk about various examples, as the housing plan is quite a fulsome plan—with respect to the GST waiver and changes around accelerated capital cost, would you say that any party that's serious about dealing with the housing crisis will get behind measures like that, yes or no?

[Tony Irwin]

I would say yes.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Fragiskatos.

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

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

Thank you, Mr. Chair.

I want to thank all the witnesses for joining us.

Our housing study is important. This isn't our committee's first study on the topic.

We need to get away from the wording of the motion. It's highly partisan, unfortunately. The wording seeks to find out who did better; which party, the Conservatives or Liberals, has disinvested in housing since 2006; and what the effects of this disinvestment have been. Everyone knows the consequences. We also know about the failure of the national housing strategy. That said, we can't lump all the programs together.

The objective of the strategy was to build and develop an affordable housing stock. Clearly, we're going through a crisis and the strategy has failed to offset the effects of disinvestment. At least, that's our view.

Mr. Irwin, according to the Canada Mortgage and Housing Corporation's statistics, 3.5 million housing units must be built by 2030. You also said this. This is a staggering number. How can this be achieved?

You think that eliminating the goods and services tax would be a good measure. How will this help lower a tenant's rent? How will this affect affordability over the long term?

[Tony Irwin]

Thank you for your question.

I think the biggest thing that things like the GST and capital cost allowance will do will be to make rental housing projects economically viable. That is what will be achieved first and foremost. Right now, we need to get housing built, including purpose-built rental housing. It is, in our estimation, the most affordable housing option for Canadians, and we need to get on with building. Initiatives that help to make these projects pencil and make them economically feasible are a huge benefit to Canadians who need housing.

Getting more rental housing units online and building them in communities all across Canada.... There's always a conversation around large cities and, yes, we do build in large cities, of course, but all across Canada we have members who build different housing types with different rents that meet different needs, and we need to get more of them built. We need to get more building happening. These types of initiatives will help make projects a reality, and that is a benefit to millions of Canadians.

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

What's your definition of affordability?

[Tony Irwin]

With respect to affordability, the more supply we have, the better. That will certainly have a corresponding impact on rents. We know that right now vacancy rates across Canada are extremely low. There's far more demand than there is supply. If we get more supply going.... Again, that is not all just at one end of the spectrum, but if we can make numbers work to build rental housing at different rents, that will have impacts on affordability.

It is about getting more supply built and being able to do it in a way that meets different needs and budgets, and that's how it will impact affordability. We will be able to provide rental housing that does—

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

Mr. Irwin, sorry to interrupt you, but I have only six minutes.

Thank you. You answered my question. Housing is a right. Affordability should be measured by the percentage of an individual's income spent on housing.

Ms. Hughes, from the Royal Canadian Legion, thank you for your remarks. I hope that you have a good 80th anniversary. I greatly respect your commitment. I want to talk about support programs for homeless veterans. The government has announced funding over three years, starting in 2024, administered by Infrastructure Canada in collaboration with Veterans Affairs Canada, to launch a new support program for homeless veterans. Does this type of budget have a positive impact, or does it fall short?

[Carolyn Hughes]

I believe it's too early to see any impact on it yet. Our program basically is to get them established with VAC, to get them some financial support coming in, and then, in a lot of cases, we help to find them an apartment. Once we can get them off the street, we usually will furnish an apartment for them. We'll get them bedding and dishes and get them started. The impact...? It's wait and see.

I haven't seen any change yet in the numbers coming to us, because we're also expanding across the country. As we expand, we're finding more. The difficulty is those veterans who don't go to shelters. They're not on the street; they're living in friends' basements or in their cars. We're finding that women are not comfortable going to shelters, especially when they have children, and they will go to a friend's house. They will stay there for a while and then maybe go to another friend's house or a family member's house, or we've found some who are living in their car with their children.

As for an impact, I have not seen anything yet, but my fingers are crossed that it will make a difference.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Ms. Chabot.

Mr. Boulerice, welcome again to the committee. You have the floor for six minutes.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you, Mr. Chair.

I want to thank all the witnesses for joining us this morning.

Mr. Irwin, you submitted a brief to this committee on the financialization of the real estate market. You argued that no single player in the market has the power to raise rents above the rules of supply and demand. We agree that this is a highly neoliberal view.

Last April, CBC reported that, in Ontario, a mere 20 companies were responsible for over half the requests for an exemption from the province's guidelines for limiting rent increases. Moreover, most landlords own small properties. For a number of people, this showed that a major concentration of the real estate market is taking place. A single company, Starlight Investments—one of the largest housing stock owners in Ontario—accounts for 10% of all requests for rent increases above the allowable limits. These investment funds and the large corporations that you represent submitted over half of all the requests for rent increases above the allowable limits in Ontario. These requests must usually be justified by dramatic increases in municipal taxes or urgent repair and renovation needs.

Do you think that these requests for rent increases above their province's allowable limits are made in good faith? Do they show a lack of investment in maintaining the quality of these units, which then require a considerable rent increase that significantly affects tenants? Don't your members sometimes fail to maintain and renovate their apartments in order to make the most profit as quickly as possible? They then urgently say that they must ask for a rent increase above the allowable limits. Otherwise, they can't rent out their apartments. What's your take on this? I think that these figures are alarming.

[Tony Irwin]

Thank you for your question. There is a lot to unpack there.

What I would say first off is that the majority of renters in Ontario live in rent-controlled units, so their rent increases are governed, of course, by the annual rent guideline increase, which for the last few years has been subject to a cap brought in by the previous government of 2.5%, far below all the cost increases that rental housing providers have been facing.

When you look at Ontario, certainly a significant percentage of the market is smaller landlords who are renting out basements, single-family homes, and that's a big part of the industry.

However, what you're talking about I think relates to what is part of the rent control system in Ontario, and that is a provision that allows for rental housing providers to apply for above-guideline increases in cases where there are significant capital investments required in older buildings. As I said, the vast majority of our rental stock is quite old, and it is at a point in time now where it needs significant capital investment to bring buildings up to today's standards in all kinds of ways. Their carbon footprint needs to be improved. All kinds of major work is needed that cannot be paid for through the rent control system that we have. There is simply not the opportunity to be able to get the rent that is necessary to pay—

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Mr. Irwin, sorry to interrupt you, but I have only two minutes left.

I'm really taken aback by the figures from Ontario. Over half the requests for excessive rent increases come from investment funds or the large corporations that you represent.

I represent people from Rosemont—La Petite‑Patrie, in Montreal. Most people have duplexes or triplexes. They have tenants above them. They take proper care of their apartments, because they want to provide good service to their tenants. I can see that, when a large numbered company—in a sense an immaterial one—is the landlord, it's only for speculation purposes. I see examples of this on Papineau Avenue, Rosemont Boulevard or Saint‑Zotique Street, where large apartment buildings are neither maintained nor renovated.

To make a profit with real estate and housing, should the investor or tenant be responsible for the investment? I find that, when large investment companies are the landlords, negligence occurs. The tenant then takes on the risk and ends up enduring excessive rent increases so that the landlord can pay for renovations that should have been done 10 or 20 years ago. What are your thoughts, Mr. Irwin?

[Tony Irwin]

I'm trying to understand the question. I guess what I would say is that we have an aging rental stock and we have members who take their buildings and their residents very seriously. Many offer all kinds of resident support programs, but these are buildings that are very old. They require significant capital investments to upgrade them and modernize them. In some cases, again, that must be approved by the landlord and tenant board. In the case of Ontario, there's an opportunity to apply to receive some increase in rent. It doesn't cover the whole cost, and nor should it, but there's an opportunity to recover some part of that improvement through an additional rent increase. It's something that is taken very seriously by our members.

We do have an aging rental stock. It does need to be maintained so that we can go on and live in our rental housing system for the next 50 years and beyond. We are at a point in time now when we do have to talk about how we upgrade and modernize these buildings and, given the systems we have in place, about the best way to go about paying for that. It is a difficult conversation in some cases, but it has to happen.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Boulerice.

Ms. Ferreri, you have five minutes.