Human Resources Committee on June 10th, 2024

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Thank you for that.

The government tabled documents recently in the House of Commons, showing that $153.6 million from the five fiscal years from 2019 to 2023 was spent on government bureaucracy to administer federal government programs on reducing homelessness.

Is this spending helping to reduce homelessness, or is it just creating more red tape and bureaucracy?

[Tim Richter]

I don't know how they spent the money, so I'm not entirely sure how I can answer the question.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Thank you.

Since you spoke to this committee regarding the housing crisis last year, housing starts have gone down 9% and rents have gone up 9.3%. Is this the worst you've seen Canada's housing market in your time as a housing and homelessness advocate?

[Tim Richter]

I think it's fair to say this is among the most challenging rental housing environments that I've seen, yes.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Liberal ministers, in their 2024 budget, state that they will build 3.87 million homes by 2031, or around 550,000 homes per year.

Is building 550,000 homes attainable in 2024, given what you're seeing and hearing?

[Tim Richter]

You'd have to ask the development community that. In fact, my colleague, Steve Pomeroy, might be better positioned to answer that question than I am.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Thank you very much.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mrs. Gray.

We will now move to Mr. Collins for six minutes.

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

Thanks, Mr. Chair.

Thanks to the witnesses for their attendance today.

I'll start with Mr. Horwood. You probably heard the opening from Mr. Pomeroy, who talked about some of the financial changes made over several administrations, both Liberal and Conservative, that reduced the amount of resources that flowed through to the housing sector, in particular the affordable housing sector.

In your opening, you referenced legislative changes made at the federal and provincial levels that disincentivized your sector to build more units. The national housing strategy has sought to incentivize for-profit organizations to build more supply. That is certainly the goal of the apartment construction loan program. I know you've participated in that program.

Can you talk about your experience with that program, and whether it played a role in your decision-making to build new supply, not just in Hamilton, but elsewhere?

[David Horwood]

Thank you, MP Collins.

Speaking to the programs offered by the CMHC, the apartment construction loan program in particular—at the time of our applications, it was known as the rental construction financing initiative—was instrumental and vital in allowing us to refine our construction budgets in order to proceed with new rental construction. Very simply, without the RCFI and the apartment construction loan program, we would not have started the buildings that are under way today.

The CMHC has been very good about reaching out and consulting within the development industry, and talking to and connecting with apartment managers, such as us. It has been very consultative.

That being said, there remain improvements and tweaks that could and should be made, which I believe will continue to have a very impactful result in bringing new supply to market. Changes that are made are sometimes hard for us to understand in short-term doses, but when we have a better opportunity to review and consult with the CMHC, and to do that more regularly, I believe it will listen and try to find ways to continue to improve the programs.

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

Thanks, Mr. Horwood.

There's been a lot of debate here over the last several months about the GST waiver on purpose-built rentals. You've given some great recommendations for us to consider. The debate is centred around whether or not that waiver should continue in the affordable rental market for those non-profits and municipalities that are building new units in that area, as well as whether that GST waiver should extend to your industry for purpose-built rentals in the market sector of the housing industry.

Can I get your opinion on whether or not that's going to assist with the legislation as it's written right now, understanding that you need to see the regs?

Also, should that continue for the next several years as it relates to incentivizing new supply in the market area?

[David Horwood]

Absolutely. Thank you.

I would point out that the question isn't whether it should continue. It is, why was it ever introduced for residential apartment construction? Where we have no input tax credits on revenue, why would we be paying HST or GST?

That being said, that is a decision that long predates my involvement in the industry.

What I can say is that the reduction or the proposed rebate of the GST from our basket of construction costs is a major step forward. I do believe that when the regs are introduced and when we understand—and as importantly, when the lenders to our industry understand—the mechanism for that reduction or elimination of that line item as being major, and ideally with corresponding provincial matching, that will go a very long way. It would serve to reduce a construction budget by, theoretically, something in the 10% range.

That is a major reduction in expense. That should allow projects that were marginal or slightly below a reasonable threshold—both from a developer's perspective, as well as from a financing perspective—to go ahead.

I do think this is a critical lever that is being pulled. I do hope that the regulations relating to it get defined very quickly.

As I've suggested, there are ways it could be broadened to include projects that have not yet made their final HST or GST self-assessment. If there were some way that the potential incentive or the potential reduction in cost could be grandfathered to existing projects, so long as it gets reinvested in a subsequent and incremental new construction project, I think that would serve to bring experienced builders back to the table very quickly and ultimately bring more supply to the table.

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

Thanks, Mr. Horwood.

Mr. Pomeroy, in the minute or less that I have remaining—

[The Chair, Liberal, Bobby Morrissey]

You have 20 seconds.

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

You talked about how we've lost 330,000 units from losing the programs that we had in the seventies, eighties and nineties. There was reference earlier to the MURB program.

Can you talk about whether that's something that needs to come back?

[The Chair, Liberal, Bobby Morrissey]

Give a short answer, Mr. Pomeroy.

[Steve Pomeroy]

They're two different things.

I spoke about affordable housing or social housing. The MURB was specifically for the private rental sector as a stimulus. It essentially replaced.... It brought back tax changes that were implemented in 1972, temporarily, for eight years from 1974 to 1981. As Mr. Horwood indicated, that did have a positive effect on stimulating rental construction during that period.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Collins.

Ms. Chabot, it's over to you for six minutes.

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

Thank you, Mr. Chair.

Thank you to the witnesses. I would like to say to those of you who are reappearing before the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities that your suggestions and insights are very helpful to us.

Mr. Richter, thank you for coming back.

I know that the issue of homelessness is a priority for you and the Canadian Alliance to End Homelessness. This is a matter of great concern, because while homelessness has always existed, it has exploded in many parts of Canada. In Quebec, more than 10,000 people are homeless. That is a considerable number.

In the Parliamentary Budget Officer's report of May 2024, as well as in the national housing strategy, which was mentioned earlier, the initial goal was to halve the number of homeless people in the country by 2027‑28. However, the government extended the deadline to 2030. In any case, the Parliamentary Budget Officer said that, to reduce chronic homelessness by 50% by 2030, the government would need to invest $3.5 billion a year. That is seven times more than what is currently provided for under the national housing strategy.

Do you have any comments on that finding?

[Tim Richter]

Thank you for your comment. I'm thrilled to be back.

Honestly, I think the Parliamentary Budget Officer's report was actually quite flawed. Reaching Home is a program and, by itself, won't solve homelessness. You could add lots of money to Reaching Home and you likely wouldn't solve homelessness unless you solved the housing crisis.

To my mind, a critical component of that is going to be increasing—probably doubling—the percentage of social and deeply affordable housing in Canada's overall housing system. That would be about 655,000 units, which, on its own, is probably an investment worth $700 billion and not something the federal government can do on its own.

What I think is important here is that the homelessness goal, the homelessness objective.... I'll remind the committee as well that the government, in a Speech from the Throne, I believe in 2020 or 2021, committed to the elimination of “chronic homelessness”. I think it's important that the homelessness goal be matched with a housing strategy, and there needs to be a strategy to plan this. How are you going to achieve that goal? This is the challenge.

We have a national housing strategy, and we have a new housing plan, and there are some excellent elements in both that I'm very supportive of. Reaching Home is a program; it's not a strategy. In simply putting more money into that program—if you don't align the homelessness, don't align the housing strategy to that goal, produce a lot more deeply affordable and social housing, have a healthy rental market, and begin to work on fixing the ownership market as well—you're going to really struggle to end homelessness.

Unfortunately, I think that the Parliamentary Budget Officer's report was deeply flawed, and I would point the committee to the Auditor General's report of, I believe, last year.

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

The last time you were here, we were studying the financialization of housing. You made seven recommendations to address the housing affordability gap. One of them has also been put forward by other groups. It's the idea of creating an acquisition fund to allow NGOs to purchase and renovate rental housing, thereby protecting low-cost rentals.

Among the recommendations you made, are there any that you feel are more likely to lead to solutions to the housing crisis? The crisis is the big problem right now, yet we don't understand the full scope of it.

Would you like us to focus on any of your recommendations in particular?

[Tim Richter]

I'd have to remember what all of them were, but to your specific point about acquisition, I think the idea of acquisition and preservation of existing stock is really important. If you're in a hole, as they say in English, you've got to stop digging. I think that's really important. My colleague here, Steve Pomeroy, is much more an expert on the acquisition program. I do think that you'd have to do it on a much larger scale than currently envisioned to materially support, or to stop the erosion or loss of, housing at scale.

Again, getting back to the housing crisis, I do think that ultimately we need a healthy housing system. We need adequately affordable social and non-market housing, which would be on the scale of 655,000 units. In my mind, we need a healthy, balanced rental market, and there's been some really important progress made there in the government's current housing plan. We need to ensure as well that there's a healthy ownership market, because the whole housing system is a system that is interconnected.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Ms. Chabot.

Madam Zarrillo, for six minutes, please.

[Bonita Zarrillo, NDP, Port Moody—Coquitlam, BC]

Thank you, Mr. Chair.

I'm going to ask Mr. Pomeroy my questions first.

You made some disturbing comments earlier about not having data and the lack of access to data, and I think that's part of the reason we're here today. It's that there was information in silos that was not laid over or between those silos.

In a report that you did in 2019, you highlighted the fact that purpose-built rentals at that time accounted for only “40 percent of all rentals”, with “investor-owned condominiums” becoming more pronounced and making up more than a quarter of all starts in the major markets.

Mr. Pomeroy, do you think there are current federal policies encouraging the development of unaffordable housing? What I mean by that is, is the market lens, the market housing, fixing this problem?

[Steve Pomeroy]

In the report you are referring, I think what we saw happen essentially between 1996 and 2016 was a very, very low level of private rental production, roughly less than 10% of all starts, when a third of us are renters. That has increased massively in the last six years from 20,000 a year to 80,000 a year, so we have significantly increased rental construction, but that was primarily, as you say, on the private rental side. It was not specifically directed to creating affordable units.

Obviously, as Mr. Horwood has pointed out, the market doesn't create affordable units. We need the non-market sector, the community housing sector, to do that for us. With the lack of investment on that side, we're missing addressing the kind of issues that Tim Richter is talking about of housing that's affordable to folks exiting homelessness.