Human Resources Committee on Oct. 29th, 2024

[Sabrina Fiorellino]

Thank you for your question.

It was through the FedDev scale-up program for scaling the business. Before we received the grant, our company was only seven people. After receiving the grant, today we're at over 80 people. The grant was for increasing our workforce, buying equipment and training the workforce. It was very, very important and impactful for us to scale our business.

Just to clarify, it was actually an interest-free loan and not a grant.

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

If I understand correctly, your company does modular construction. There are lots of companies doing that in Quebec. I recently learned that 180 student housing units are going to be built in Montreal on land transferred by the city. So, yes, modular construction can make things better.

That said, aside from municipal permits, which are not under our jurisdiction, do federal programs create any barriers to the kind of innovation you're doing in this area, Ms. Fiorellino?

[Sabrina Fiorellino]

I think I'll refer back to my opening remarks. It's very, very expensive to build and maintain very large modular manufacturing plants. Without a pipeline of work from all levels of government, it becomes a challenge to operate these types of businesses long-term. I talked about the single biggest challenge for our colleagues in volumetric modular building companies, or at least the ones who I talk to regularly. That's the lack of backlog or the lack of procurement in modular.

It's not just housing. It's across all sectors—industrial; commercial; military procurement; the Department of Fisheries, for example; health care; remote communities; and anything you can think of. I think any type of procurement that can help build the industry and give them a pipeline of work would be extremely helpful to the industry as a whole.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Madame Chabot.

Madam Zarrillo, you have six minutes.

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

Thank you, Mr. Chair.

I have some questions for Witness Arthur.

Before that, I want to put this on notice:

That, given that:

(a) Flight attendants in Canada, the majority of whom are women, work for an average of 35 hours for free every month because airlines don't pay attendants for duties like assisting passengers with boarding, pre-flight safety checks, deplaning, and other delays. Resulting in flight attendants spending nearly a full workweek every month working for free, even though they are in uniform and taking responsibility for the safety and well-being of their passengers.

(b) Canada's biggest airlines make millions of dollars each year on the backs of unpaid labour. Air Canada made $21.8 billion in profits last year, and its CEO's compensation was $12.4 million.

(c) Every hour worked should be an hour paid, and if a flight attendant is at work, in uniform, performing work duties—they should be getting paid.

In the opinion of the Committee, the government [should] support flight attendants by amending the Canadian Labour Code to ensure that all time spent carrying out pre-flight and post-flight duties, completing mandatory training, and otherwise spent at the workplace at the disposal of the employer, including during a flight delay regardless of if the delay was in the employer's control, is paid at a rate not less than the employee's regular rate of wages for their work and that the committee report this to the House.

That's been sent out in both official languages, and it's on notice, Mr. Chair.

I'll note there is a typo in the last paragraph, which my office will correct.

[The Chair, Liberal, Bobby Morrissey]

Madam Zarrillo, that is for notice. It's non-debatable at the moment.

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

That's right.

[The Chair, Liberal, Bobby Morrissey]

You still have four minutes and 20 seconds.

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

Thank you so much.

Mr. Arthur, I am so interested in this idea of research and development.

I know that Canada, as one of the OECD countries that gets measured, is number one in tertiary education. We have a lot of post-secondary-educated people—those who are educated past high school—in this country, but we are ranked number 26 out of 37 in business expenditures on R and D, and number 30 out of 36 in public funding investment in post-secondary. I think about some of the businesses in my riding, and the research and development done by private companies around robotics and quantum computing—all Canadian brain trust and Canadian IP. However, what I'm hearing over and over again is that Canada has an immature infrastructure to scale innovation.

I'm interested to hear how we can fix that.

[Ian Arthur]

I think that's absolutely true. There's a lot of data showing the exodus of mid-sized companies to larger markets, where there's a better opportunity to grow. We're looking at U.S. markets. There's a reason we're down in Florida. It's not just because it's cold up here in the winter and hard to build, and quite nice down there. It's because there is such huge demand and opportunity down there.

I think, partially, that we try to be a bit good at everything. I don't know if that's the right solution for a country of our size. I think we need to find the areas where we have expertise and competitive advantage, then fundamentally support the growth of companies operating inside those sectors.

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

How does the federal government do that?

[Ian Arthur]

That's your job. Oh, oh!

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

I know. It's a very hard question.

Do we need more R and D funding?

[Ian Arthur]

I don't know if we necessarily need more R and D funding coming from the public pocket.

I think what we need to do is create an ecosystem where companies are rewarded for feeding profits back into R and D, whether that's through tax incentives, regulation or however it is done. I think there is enough action and growth inside a lot of these companies, and they want to put their money back into R and D. You need to make sure that allowing them to do this is a priority for the federal government.

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

Share what your challenges are in scaling up, since you mentioned it's been difficult to scale up.

[Ian Arthur]

We have a ton of people who want us to build a one-off home, and then we have a whole lot of other people who would like us to take on a 1,000-home development. It's been very difficult for us to find developers to work with the 20-home and 40-home scales, which are not development sizes that are particularly common in Canada. We have a lot of mass developers. Some of them have small, new tech wings that will occasionally support stuff, but it's been very difficult to find that.

If we're looking to potential government support.... It's about working with developers to do that kind of scale-up, where small start-ups like the ones I'm involved with can come in and get over the hump of that one-off project and on their way to doing those 500- and 1,000-home developments.

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

This is my last question, because I don't have a lot of time. You talked about the concrete and the decarbonization of these kinds of building products.

I'm thinking about remote and rural communities in the north that are not able to take advantage of some of this stuff.

What are your thoughts on how we fight climate change and make sure that we have adequate housing for people in the north and rural communities?

[Ian Arthur]

The technology I use is decentralized by its very nature. We can pack materials into shipping containers and bring those almost anywhere. For remote and northern communities, there's huge potential in this. Stable, storable building materials can be there all year long and produced during the short building seasons that we have in those remote communities. There's incredible potential for this technology there.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Ms. Zarrillo.

Mrs. Gray, you have five minutes.

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

Thank you, Mr. Chair.

Thank you to all of the witnesses for being here.

Just before I begin, I want to say that based on the motion that the NDP member, Ms. Zarrillo, put forward, I'm really glad to hear that she's supporting a Conservative bill from last June called the fairness for flight attendants act by MP Lianne Rood. Conservatives take action, so I was really glad to hear that the NDP member is supporting our Conservative legislation.

I'll now move on to questioning. My first questions are for Hans Jain. You wrote an op-ed for Toronto Star last year entitled “Creating of affordable rental properties requires better financing”. In it, you wrote that “Developers...are challenged by the low predictability of outcomes when applying under CMHC's funding initiatives”, and that the CMHC policies are “inconsistent with the norms of real estate financing.”

At a time when building starts are actually down, and innovation in home building is required, do you believe red tape and bureaucracy from the federal housing agency are making it harder for builders like you to build affordable homes?

[Hans Jain]

First of all, I would say that without CMHC financing, it would be very difficult in this market to build anything. On three of our projects, we have just under $300 million of CMHC financing in place.

It is challenging, because of the time it takes. I feel that recently the time for getting approval has improved. I think the staffing issues that were maybe challenges have improved.

I would say to you that building purpose-built rental...and meeting the accessibility, affordability and environmental point scores, you need to have a partner that is agile, that can be quick. It's challenging.

Sometimes you're not sure what the assessment of the loan amount that you are seeking.... That uncertainty has problems in your development timelines and horizons.

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

Thank you.

Actually, we had heard from other witnesses at this committee as well saying something very similar where, for example, there are requirements above the standard building codes, as you've just mentioned. Also, with the timeline delays from CMHC, it's adding to their costs.

Would you agree that those two factors do add to your costs as well?

[Hans Jain]

They do.

I would just say that on the “above the building code" specifications, we are committed to that. We feel, on a personal note, that that is a good thing, but it does add significant costs.

By doing affordable...and other things, you're having to figure out the financial model that is not market... The advantage of CMHC is the lower interest rate and maybe the slightly higher loan-to-value amount on the mortgage. I'm in agreement with what you've said.

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

Thank you.

We heard other testimony from witnesses who had come up with a dollar figure.

Do you have any idea per unit how much some of those extra costs might add per project?

[Hans Jain]

I'm sorry; I don't. It's millions of dollars. I mean, we're doing a geothermal field right now that would be $7 million or $8 million, and then there's our VRF system. Our mechanical is more.... We're doing, you know, accessibility. There are costs everywhere involved. Through the design process, it's more complicated, but timing is definitely the biggest issue, as well as the uncertainty of the loan amount. Those are things that affect....