Human Resources Committee on June 13th, 2024

[Véronique Laflamme]

This certainly provides a way out of the crisis.

The City of Montreal is talking about allocating 20% of its total housing stock to affordable housing. This would amount to roughly 40% of its rental stock. In Canada, the rate for all housing stock currently sits at around 4%, which clearly falls short. A growing number of voices are calling for action. Some Quebec municipalities and social and community housing organizations have recently set the goal of increasing the rental stock to 20% within 15 years. The federal government must also work towards this goal and provide clear targets and the resources to reach them. Otherwise, the private market will continue to hold the monopoly, leaving more and more households in the lurch.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Ms. Laflamme and Mr. Boulerice.

That was right on six minutes, so thank you.

We'll now move to Mrs. Gray for five minutes.

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

Thank you, Mr. Chair.

Thank you to all of the witnesses for being here today.

Mr. Finlayson, I'll start my questioning with you.

Mr. Finlayson, do you believe that, currently, economic conditions in Canada are favourable towards new construction?

[Jock Finlayson]

That's a great question. It's been a very challenging environment for developers, certainly for the construction industry, in the last few years. We had the legacy effects of the pandemic, which obviously created a lot of hiccups in supply chains and accessing materials. We then had a tremendous and unexpected surge in inflation that really affected building costs in a significant way. We then went through a period of labour shortages. Those have eased, to some extent, as the economy has cooled off, but we do remain constrained on the supply of skilled labour. Then interest rates went up so that the cost of money for all businesses, whether they are construction companies or home builders and developers, has gone up.

It's been a very challenging macroenvironment. At a time when policy-makers want to see housing starts accelerate, instead they've actually been decelerating over the past couple of years because of that macroenvironment.

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

Thank you. Actually, just on your last point there on interest rates and the servicing costs of debt, are you hearing from your members of projects being put on hold, or being cancelled altogether, because of debt servicing costs, which are, of course, still very high due to the interest rates being high?

[Jock Finlayson]

Yes. Here in the Lower Mainland and in B.C. generally, there are a great many projects that have been paused. In other words, land has been assembled and developers were planning to proceed to build the tower or a townhouse complex. However, because of the higher cost of money, because of the high inflation and the tremendous escalation in building costs, and also increasing charges, levies and fees on new development and the affordability challenges that so many households are facing, it has lead to a significant pause in development activity. I think that will come back if interest rates keep falling, but it's not helping in the short run—that's for sure.

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

Thank you. Will the increase in the capital gains tax increase construction of new homes, or could it hurt investment in new home construction?

[Jock Finlayson]

From the private sector side, increases in capital gains taxation will have a dampening effect on—as I mentioned earlier, in response to one of your colleagues' questions—capital formation in the market economy. Maybe government will use some of the revenue to try to offset that, but in the market economy context, higher capital gain taxes will have a negative effect on homebuilding, for sure.

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

Do you believe the Liberals' budgets, including the most recent one with the spending of billions of dollars, will move the needle on housing affordability?

[Jock Finlayson]

It's a game of margins, really. We are in such a difficult position in Canada with new housing supplies so dramatically lagging the rates of population growth and household formation, especially in in many of the urban areas. I think the measures in the budget and the other components of the housing plan will help and some of what B.C. is doing here in our province will help, but it's not going to fundamentally move the dial in the short run. This is going to take a very long time.

Just as a reality check, if I might, the B.C. government has put $2 billion aside for low-cost financing for non-market hot rental housing and a billion dollars on top of that in grants, so that's a $3-billion commitment and they're expecting an extra 5,000 to 10,000 units to be developed over a period of several years with that pot of money. That's quite a bit of money for our province but a very modest impact.

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

Thank you very much.

I'm almost at the end of my time here, Mr. Chair, so I would like to move the following motion and then I would like to speak to it first.

Housing is so important, and we need to continue this conversation. Therefore, I move:

Given the amount of outstanding work at this committee, the committee instructs the chair to schedule five meetings between July 8 and September 13, in order for the committee to continue its work on Canada’s housing crisis and propose solutions so more Canadians can afford to buy and rent a place to live.

I'll speak to it, Mr. Chair.

[The Chair, Liberal, Bobby Morrissey]

Thank you.

Give me just a moment. Yes, the motion is in order. It has been on notice for some time.

I will simply advise the witnesses that Mrs. Gray has moved the motion, which it is her prerogative to do. I, as chair, have to deal with this motion before we return to the witnesses. I would ask you to stay there while we deal with this.

I'll go to Mrs. Gray to speak on it, and then I have a speakers list.

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

Thank you, Mr. Chair.

This motion is very important. At this committee, we deal with so many issues that are important to residents in my community and across Canada. Of course, housing is one of them.

Even over the last 24 hours, there have been a couple of headlines. Global News wrote, “Calgary shelter for seniors feels housing crisis pressure”. The Toronto Star wrote, “It’s more expensive to buy a Toronto home now than in January—even after the Bank of Canada’s rate cut”. In Quebec, we saw the Vivre en Ville housing director commenting on the fast-approaching July 1 moving day as being “the worst of our lifetimes.”

This allows us to do important work over the summer. This motion is, in a way, to continue the work we can do in the way of scheduling, fairly, some times that work for everyone. That's why it's non-committal on the specific days and times. It allows for a lot of flexibility so that we can continue to work on solutions for the housing crisis Canadians are facing.

Thank you, Mr. Chair.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mrs. Gray.

I have Mr. Fragiskatos, Mrs. Falk, Ms. Ferreri and Mr. Aitchison on the speaking list.

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

Mr. Chair, the Conservatives have every right to put forward a motion, and I see all of them want to speak to it. However, it is more important, from my perspective, that we listen to the witnesses, whose testimony here today is very important.

With that, Mr. Chair, I move that we adjourn debate on the motion.

[The Chair, Liberal, Bobby Morrissey]

It's a dilatory motion that must be dealt with.

Mr. Fragiskatos moved to adjourn the debate on the motion by Mrs. Gray.

We'll have a recorded vote on the motion by Mr. Fragiskatos to adjourn debate.

(Motion agreed to: yeas 7; nays 4)

We will now go to Mr. Van Bynen for five minutes.

Mr. Van Bynen, you have the floor.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Thank you, Mr. Chair.

Having been a municipal mayor for over 12 years, I tend to get a bit frustrated with some of the conversations we have relative to development charges. New developments require things like pipes, roads, waste water and facilities. I sometimes get a bit frustrated with the thinking that municipalities have a money tree they can go to in order to pay for these infrastructure requirements.

Having said that, I totally agree that this takes an all-of-government approach and that the overall model needs to change.

I'll go initially over to Ms. Laflamme. Do you think the lack of investments in co-op and affordable housing over the last 30 years has contributed to the affordable housing stock today?

[Véronique Laflamme]

I gather that you're talking about the impact of the lack of investment. There hasn't been a federal co‑operative housing program since 1992. A new program was announced last week. However, in practice, the funding earmarked for this program will cover very few projects. Yet the clock is ticking.

This situation has indeed contributed to the housing shortage. Every province and a number of municipalities have waiting lists for co‑operative and low‑income housing. In Quebec alone, almost 38,000 households are waiting for low‑income housing. This concerns low‑income people who meet the criteria and who have properly completed an application. People no longer register for the lists because they know that it takes years to obtain housing. The average wait time is five years in Montreal and even longer in Toronto. The wait times are endless. In the meantime, people who have joined a list to obtain low‑income housing become homeless.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Prior to the national housing strategy in 2017, how did your organization work with the federal government on building affordable housing?

[Véronique Laflamme]

Is the question still directed at me?

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Yes.

[Véronique Laflamme]

Canada's national housing strategy was preceded by other programs. The previous Conservative government operated on the basis of agreements. For example, the investment in affordable housing consisted of transfers to the provinces. In Quebec, we really tackled this issue at the provincial level. We worked with the Quebec government to set up a Quebec social housing program. For 25 years, this program funded co‑operative housing, non‑profit organizations and projects developed by municipal housing offices.

The insufficient federal funding in the years leading up to 2017 ultimately helped increase the number of social housing units built in Quebec. However, I repeat, the funding was insufficient. In Quebec, no more than 3,000 units were funded each year. In Quebec alone, 8,000 to 10,000 units were built in certain years prior to the federal government's withdrawal.

We can see the gap and the shortfall, even though Quebec ultimately invested in social housing using, for example, federal funding earmarked for affordable housing.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Thank you.

I'll turn now to Mr. Oleksiuk.

[Véronique Laflamme]

I forgot to tell you how we contributed to this effort. We train our members to set up social housing projects. If you like, I could elaborate on this. Some people aren't as familiar with the work of the Front d'action populaire en réaménagement urbain, or FRAPRU.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Before I turn to my next question then, do you feel that there is the capacity in the social housing and co-op industry, if I can use that term, to access the funds and put together projects and organizations that will respond in a reasonably timely fashion?

Is the management and organization capacity there to go forward to create projects out of the funding that's available, and what are the timelines?