Human Resources Committee on Oct. 8th, 2024

[The Chair (Mr. Robert Morrissey (Egmont, Lib.)), Liberal, Bobby Morrissey]

I call this meeting to order.

Welcome to meeting 128 of the House of Commons Standing Committee on Human Resources, Skills and Social Development, and the Status of Persons with Disabilities.

Today's meeting is taking place in a hybrid format in accordance with the committee's routine motion that was adopted by the House of Commons. It covers members attending virtually and in person in the room.

I would like to make a number of comments.

To those in the room who wish to participate, please raise your hand to get my attention. Wait until I recognize you. For those appearing virtually, use the “raise hand” icon and wait until I recognize you before participating.

Today's meeting is taking place, according to House of Commons rules, in both official languages. You can participate in the official language of your choice by using interpretation services on the microphone in front of you. I would advise witnesses, as well as committee members, to familiarize themselves with the translation services. If you're English, make sure you're on the English channel before you tell me that you cannot hear translation, or that you're on the French one if you want to hear it en français. If you're appearing virtually, click on the globe icon at the bottom of your Surface and choose the official language of your choice.

Also, for those in the room, please turn off any devices you have that may have alarms on them that could go off, in order to protect the translators. Please refrain from tapping on the microphone, because the sounds can be harmful to the translators.

With that, I want to first introduce the witnesses appearing today—

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

Mr. Chair, I'd like to—

[The Chair, Liberal, Bobby Morrissey]

Before I introduce the witnesses...?

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

Yes, please.

[The Chair, Liberal, Bobby Morrissey]

Okay.

Madame Zarrillo, the meeting has been called to order and you raised your hand.

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

Thank you, Mr. Chair.

I know that everyone on this committee has heard stories from their constituents about how housing has become unaffordable, that their rents continue to rise and that they worry about making ends meet. I know that everyone on this committee believes that Canadians deserve to know whether their landlords are illegally price-fixing.

There was an opportunity to address this weeks ago in this committee, but debate was adjourned by the Liberals and the Conservatives. I'll move a motion to resume that debate. It is my hope that the committee will vote quickly—hopefully unanimously—so that we can go back to the study and the witnesses that we have here today.

With that, I move that the committee proceed to resume debate on the motion I moved on September 19, which reads:

Given that,

while families are increasingly making hard choices about paying rent or keeping food on the table, corporate landlords have been contributing to rising rents in Canada by buying up previously affordable apartments and raising rents to increase profits for investors;

that one of Canada's largest corporate landlords, Dream Unlimited, has admitted to using AI software that the U.S. government has alleged allows landlords to illegally coordinate rent increases, and that the software is commonly used by as many as 13 companies in Canada with more than $5 billion in revenue;

that today the biggest real estate investment firms collectively own close to 20% of the purpose-built rental units in Canada, nearly 400,000 rental units, up from zero in the 1990s;

and that the Public Sector Pension Investment Board, also known as PSP Investments, has significant investments in multi-family housing in partnership with Starlight Investments,

pursuant to Standing Order 108(2), the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities undertake a study of the role of financialized landlords on rising costs in Canada's rental market, including how the use of algorithmic pricing tools is contributing to rent increases and how pervasive this practice is across the Canadian rental market; and

that the committee invite the president of Dream Unlimited, Michael J. Cooper; CEO of Starlight Investments Daniel Drimmer; CEO of Boardwalk REIT Sam Kolias; CEO of Mainstreet Equity Bob Dhillon; CEO of Canadian Apartment Properties Real Estate Investment Trust (CAPREIT) Mark Kenney; president and CEO of PSP Investments Deborah K. Orida; and other experts and stakeholders;

that the committee hold a minimum of four meetings and report its findings and recommendations to the House; and that the government table a comprehensive response to the report.

People must know whether corporate landlords in Canada are using the same artificial intelligence software to manipulate rent prices that the United States is currently taking legal action on. There is no time to wait, Mr. Chair.

I've reshared with the clerk this motion in both official languages. I look forward to a very quick vote.

Thank you.

[The Chair, Liberal, Bobby Morrissey]

Committee members, I'll suspend for two minutes. I want to confirm that the text of the motion currently being read is the one that was there. I'll suspend for two moments.

[The Chair, Liberal, Bobby Morrissey]

Committee members, I've reviewed the motion. There is a minor difference, but it does not change the intent of the motion.

At this time, I'm calling a vote on this motion. Does the committee wish to resume debate on the motion by Madame Zarrillo?

We do not.

We will have a recorded vote.

(Motion negatived: nays 10; yeas 1)

We'll return to the agenda of the committee.

With that, I want to introduce, from the Canadian Home Builders' Association, Kevin Lee, chief executive officer, who is appearing in the room.

We also have, from Fédération des travailleurs et travailleuses du Québec, Nicolas Trudel, assistant director, as well as Philippe Lapointe, labour relations adviser. They are appearing by video conference, and Mr. Lapointe is the only one we have confirmed at this time.

Finally, in person from Habitat for Humanity Canada, we have Alana Lavoie, national director, housing policy and government relations.

We will begin with Mr. Lee. You have five minutes. At five minutes, I will advise you to wrap up your comments.

You have the floor, Mr. Lee.

[Kevin Lee, Chief Executive Officer, Canadian Home Builders' Association]

Thank you very much for having me, and good morning.

I'm happy to bring my perspectives from the Canadian Home Builders' Association on advancements in homebuilding technologies.

There's no question that we have many challenges ahead of us as we try to address a variety of crises, from housing affordability to lack of housing supply to climate change mitigation and resiliency. We have a shrinking workforce when we actually need to be building many more homes. Technology, innovation and, most importantly, creating an environment where those can be more readily adopted need to be part of the solution.

I'm hoping most of you here are familiar with our CHBA sector transition strategy. I know many of you are, and I've provided it to the clerk to provide it to you if you haven't received a copy.

This strategy is very much about how we transform the homebuilding sector to make better use of factory-built home technology to improve productivity, while also addressing many of the other issues I mentioned above. It has a heavy emphasis on explaining what the barriers are and how we overcome those barriers.

The short version of how we move to much more factory-built construction in the sector is that we need to create much more certainty and de-risk the types of investments that are required to move from low-overhead site-built approaches to high-overhead factories. Whether you're talking about modular construction, panelized systems or even 3-D printing, the investment requirements are high, and the risks in the boom-and-bust nature of the housing market are even higher.

Things like volume-based low interest loans, tax credits, grant funding to support transition, modular construction finance insurance and much more are needed.

We also need a more steady pipeline of housing, which can be fixed by changes of the kind we are seeing in the mortgage rule system to drive more buyers and hence more construction. I would include that there is a remaining need to address the stress test.

One of the biggest barriers to getting more innovation, including factory-built systems, into play is not financing or technology; it's the barriers at the municipal level: the differences from municipality to municipality in terms of zoning, bylaws, site plan rules and the ridiculously wide range of completely different interpretations of the exact same building codes, all of which prevent scaling technology, house plans and investments.

We need the provinces, with the support of the federal government, to step in and create harmonization at the municipal level. We also need a national code interpretation centre that is binding, so that code solutions that are proven in one town aren't rejected in the next town.

We also need a less expensive and more nimble Canadian construction materials centre that can help new technologies become acceptable solutions in the building code more quickly.

We need to stop over-regulating. Regulation is the enemy of innovation, and it is what we are facing right now. There are way too many requirements going into building codes and standards these days. The pace of change is more than the industry can handle, more than building officials can handle and more than the code development system can handle.

Regulation is getting rushed through, which ends up creating unintended consequences, like overheating in homes. It's driving up prices and slowing productivity. Instead of spending time innovating, industry is spending time in hundreds of codes and standards meetings, trying to bring reality to a system that if left to its devices, will create gold-plated houses that no one will be able to afford and that may cause massive problems for their occupants.

Meanwhile, voluntary standards and the innovative and cost-effective approaches to meeting new challenges are not nearly enough the focus for government and industry that they should be, yet this is where smart innovation and solutions occur.

Are there new technologies emerging? Yes, there are many of them, but we need to create an environment where more adoption can happen faster. That doesn't come from regulation. We need a huge emphasis on affordability. We need affordability as a core objective of the national building code and all the standards it calls up. We need a full press on government research, in collaboration with industry, to drive down the cost of construction through innovation, because lower-cost innovations are always adopted faster by the industry.

We're also a very resilient industry, because we are an industry of small businesses and micro-businesses. However, in this market, trial and error can be very expensive, and potentially devastating to deal with as a business. We need technology adoption programming that helps our industry members try new technologies with full de-risking and lessons learned feedback loops to support industry and manufacturers to continue to advance.

There are some super-promising technologies, like AI, for accelerating municipal planning and approval processes. We are keenly watching AI-driven robotics that could make investing in a modular or panelized factory a fraction of what the cost is today.

I'm happy to talk to you about these emerging technologies and many more, but I'll end with one thing as we look at emerging technologies: We need to acknowledge the actual realities of the industry, why it is structured the way it is, and the importance of affordability as a key driver in innovation, and we need to create a better policy environment for industry to be able to adopt emerging technologies. With that environment, we can accelerate change at a much faster pace to face the myriad challenges ahead.

I look forward to talking about all of this with you.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Lee.

Mr. Lapointe, you have five minutes.

[Philippe Lapointe, Labour Relations Adviser, Fédération des travailleurs et travailleuses du Québec - Construction]

Good morning.

My name is Philippe Lapointe and I am here with my colleague Nicolas Trudel. We are the representatives of FTQ‑Construction, an association that represents close to 44% of the construction workers in Quebec.

I particularly want to speak with you about the three challenges facing the construction sector in relation to the adoption of new technologies and new manufacturing methods: skills adaptation, health and safety adaptation, and the need for culture change.

It is important to understand that the construction industry is very slow to innovate. First, the capital needed for starting up in construction is extremely low. For a majority of contractors, all that is needed is a tool box, and this means that the capacity to acquire advanced technology is weak, or it is often completely out of the question.

Even today, home building is more of an artisanal than an industrialized activity. In fact, our industry remains untouched by Fordism. Every build is unique and is supplied piecemeal. Even if the plans are identical, the way in which the work is done will invariably be different because of workforce mobility, bad weather and the unique characteristics of each site. In these circumstances, the expertise of the workforce and workers' capacity to adapt are crucial for completing a project.

Nonetheless, many new technologies do get introduced and improve productivity. As a representative of the largest association of workers in Quebec, I want to warn you: In order for incorporating new technologies to succeed, it must be done in collaboration with workers. They must be part of the process.

In my presentation, I will be giving concrete examples as experienced by our members that illustrate implementation on the ground.

With regard to skills adaptation, the workers have to interpret plans, adapt the way they do their jobs to the changes, and align the completion of their steps with the other steps completed before them. They must know how to work with the new materials and use the new methods, even before arriving on site, because there is no time for learning per se when a construction project is getting started. The workers put innovative initiatives and projects in place and bring them to life. There are numerous risks, and good initiatives may fail if the workers who are to put them in place are not trained on the innovative methods.

Vocational training is crucial if workers are to build infrastructure properly. For example, consider the installation of the new insulated tarps, which are extremely energy efficient. However, if they are installed improperly, the work has to be redone, then that conflicts with other steps and they have to be taken down and redone several times, and this can cause problems: Every time the tarp is ripped, it loses its air tightness, and so the lack of preparation means that it is then ineffective.

In Quebec, FTQ-Construction requires each journeyperson to have a DEP, a vocational studies diploma. A DEP can be obtained through continuous study before entering the industry or by splitting time between work and school during an apprenticeship until the person achieves journeyperson status in their trade. This has not been acted on by the Government of Quebec.

The next issue is the need to adapt in relation to health and safety. The construction industry is the highest mortality industry. We lost 68 workers in 2023 because of industrial accidents and diseases and there were 9,500 non-fatal but still serious injuries on the job.

New technologies must be introduced in a way that respects the lives of the workers. I would point out that asbestos was originally supposed to be a miracle material, and yet it ended up being the biggest cause of death in the industry, with people experiencing serious respiratory problems 15 or 20 years after being exposed. Innovations or new miracle materials must not also turn out to be fatal.

Another example is when workers share spaces with autonomous machines, which calls for considerable adaptation on site, but also in relation to how to set up the machines. When it comes to machinery, the dangers have to be eliminated at the source. Today, heavy machinery manufacturers offer the ability to control steam shovels or dump trucks remotely or completely autonomously. These vehicles should not be used when there are large numbers of people present, when sites are unpredictable and complex, or on sites located near the public. The people who manoeuvre these machines should be relatively close to the machinery, so they can step in if there is an accident. If a machine is in northern Quebec but is being controlled out of Toronto, it is then a bit difficult to react when danger arises.

As a final point, the new project management and planning technologies should also not become tools for overseeing workers. In recent years, we have seen management tools that monitor workers in continuous time, via geolocation or CCTV, rather than monitoring the work on sites. Precautions have to be taken so as not to violate workers' rights and freedoms in the name of productivity.

I did a site visit with Boston's robot dog Spot. I do want to talk to you about that, but I see that I need to conclude my presentation.

The construction industry is seasonal and subject to cyclical fluctuations. In general, construction is done intermittently, with periods of uncertainty on sites. Work on sites is done on the spot and organized by project, piecemeal. To make a decent living, workers have to work on multiple contracts over the year and they are competing with one another. It is very important to understand that.

[The Chair, Liberal, Bobby Morrissey]

Mr. Lapointe, your five minutes have gone by.

Ms. Lavoie, you have five minutes. I will advise that it is five minutes.

[Alana Lavoie, National Director, Housing Policy and Government Relations, Habitat for Humanity Canada]

Thank you so much for the opportunity to be here with you today and to contribute to this study. It may seem a little bit unusual that we are here, but hopefully that will become clearer as we go along.

My name is Alana Lavoie. I am the national director of housing policy and government relations for Habitat for Humanity Canada. We are Canada's only national affordable home ownership organization.

Our organization is composed of 45 local habitats that serve communities from coast to coast. We are part of an international organization operating in 70 countries.

Working with donors, governments and communities that give their money, time and materials, we build homes and sell them at fair market value to eligible low- or middle-income families.

Families that buy Habitat for Humanity homes do not pay a down payment, and their mortgage never exceeds roughly 30% of their income.

To be eligible for a Habitat home, families must need improved housing, be able to carry the costs of owning a home and paying a geared-to-income mortgage, and be willing to commit 500 volunteer hours to Habitat for Humanity. Many of our future Habitat homeowners have in fact traditionally helped to build their own homes. Habitat provided financial literacy courses and homeowner education and seminars. It really is a true partnership and a very unique pathway to home ownership at a time when it is very difficult to achieve that.

In 2023, almost half the families who partnered with Habitat were led by single mothers. One in five families had one member living with a physical or mental disability, one in 10 families had at least one member who identified as indigenous, and one in 10 families were newcomers to Canada.

Families have a chance to build equity. Parents can go back to school to retrain and get better jobs. Their kids have a safe and secure place to study and grow. The mental health and physical health of the family improves, and we see them invest more in their communities.

However, doing what we do is not easy. It is a complex assembly of inputs, the same as those for any homebuilder. Many of the challenges that were raised by my colleague Mr. Lee in the broader homebuilding sector are the same ones that we face; however, we face them with some budget realities that come together a little more gradually than we may see in other sectors and that require a lot of creativity to get to the point where we can provide a family with a home.

With that said, our leaders are incredibly creative, innovative and solutions-oriented. For us, that has meant digging into how emerging homebuilding technologies can reduce the cost to build, which allows us to put more families in homes and helps smooth out the challenges of the homebuilding process in an extremely high-cost and variable homebuilding environment.

This is why, across our federation at Habitat for Humanity, we're embracing newer approaches, from 3-D printing in Windsor and Peterborough to modular construction in P.E.I. and New Brunswick, and even starting to explore the potential of mass timber.

We're building to higher standards that create more sustainable homes with reduced cost for our families over the long term, including net-zero and passive houses. We stay on top of evolving and innovative building materials through partnerships with building materials suppliers. We're very fortunate to have a build gift in-kind program in which we work directly with companies that are willing to work with us to try some new windows or new plumbing fixtures or technologies.

However, embracing these new ways of building doesn't come without challenges, and we are certainly looking to governments to help us have a more systematic approach to providing opportunities for Habitat and other non-profits to build housing and be on the cutting edge of using some of these technologies.

The capital investments that are required for modular builds and 3-D prints, and the things we haven't yet discovered, tend to require capital flows that are different from traditional stick builds. Many governments and financial institutions are offering funding and financing options for homebuilding that are structured around traditional construction milestones that can create challenges, particularly for non-profits and charities that are trying to enter into using these technologies.

We can have a somewhat less flexible financing situation in some cases than other kinds of builders. The disbursements of funding and loan payments follow very specific milestones, such as that when your building permits are secured and when your drywall is completed, your occupancy permits are secured. It's helpful if you have drywall, but you might not in a 3-D print. Who knows? In most cases, the disbursements can generally line up with when we need to pay and when we have the money going out.

However, with a lot of these emerging technologies, most of our experience to date has been with modular housing, both in Canada and around the world. There's a more significant outlay of cash required up front, and federal—

[The Chair, Liberal, Bobby Morrissey]

Ms. Lavoie, thank you.

We'll now begin the first round. It's six minutes for Mr. Aitchison.

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

Thank you, Mr. Chair.

I want to thank all the witnesses for being here.

I'd like to start with you, Mr. Lee.

You spoke in your presentation about factory-built homes and modular construction. That in itself is not new technology. Probably the most success we've ever had in this country, in terms of getting homes built fast, was right after the Second World War. Factory-built homes were a big part of that.

Aside from the technology used in factories today versus back then, what is the biggest difference between then and now when it comes to getting homes built faster and cheaper?

[Kevin Lee]

Is that specifically with respect to modular construction?

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

Yes.

[Kevin Lee]

In modular construction, there's more machinery used. There are not a lot of robotics yet. There are some emerging...but you're able to do things in a systematized, industrialized way, so it makes things happen a lot faster. You're also able to work on the structure itself while the site is being prepared. You could be excavating and pouring a foundation at the exact same time as you're building the roof.

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

Maybe I'm not being very clear.

Aside from the technology utilized today in the factory versus after the Second World War, is the technique the same—getting the sites ready and all of that kind of stuff? What's the biggest difference today versus back then, in terms of trying to get homes built faster and delivered?

[Kevin Lee]

Oh, I see.

It's municipal interference in the process of getting everything done. Honestly, it is so hard to get through all the red tape, frankly, that needs to be dealt with. We can build the houses very fast. Using my last example, we can build that house faster in the factory than we can get a building permit in most cities.

The biggest difference is what's going on at the municipal level, for a variety of reasons. It's definitely time to get that cleaned up.

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

It's safe to say that in a factory, you can build the homes a lot faster than you can have the sites for the homes ready to go because of municipal delays in the approval process.

There's probably a difference in terms of the cost at the municipal level today versus back then.

[Kevin Lee]

Yes. Development charges are up 700% over the past 25 years, and they continue to climb. It's an unbelievable number.

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

You also mentioned building code issues.

When a home is built in the factory, it's to CSA standards. Of course, it then gets to the site, where sometimes the local building officials get involved.

Could you speak about that? Obviously, there's a lack of understanding about who the authority is there.

[Kevin Lee]

Yes, that's it exactly.

There's a great CSA A277 standard for factory-built housing that is the equivalent of the building code, and there are all kinds of inspections that occur within the plant. Unfortunately, most municipalities aren't familiar with all of that, so there ends up being a lot of duplication and a lack of acceptance of things that have already been tested and inspected.

There's a huge opportunity to very much streamline the process by using the CSA standard properly and eliminating a lot that needs to be done municipally. That would alleviate the burden, frankly, on municipal officials too. There's a lot of benefit to the municipalities when they move this along.

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

Okay. Thanks very much.

I'll move over to Ms. Lavoie now, if I may.

In relation to Mr. Lee's comments about municipal charges, fees and expenses in the often long, painful and expensive process to get a home approved, is it safe to assume that Habitat for Humanity—an amazing charitable organization—faces the same challenges with municipal governments?