Human Resources Committee on Dec. 10th, 2024

[Coleen Volk]

It is early, I think, to see housing units result from that.

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

You can appreciate, though.... You say it is early to see the results. Your language is.... I struggle with it because the crisis is now.

[Coleen Volk]

I hear what you're saying. I think there are other programs that are targeted to sooner, but for that program, I think the results will.... It's early to see housing units as a result. It's early to already be seeing housing starts increase.

I apologize, but we don't have the reporting from the cities yet to have the attribution of the results. However, that's because the program is relatively new in its implementation. That's why we don't have those results yet.

It is intended to speed it up, but it would be early to actually see that turn into construction starts.

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

Can you tell me roughly how much money the CMHC made on its insurance products last year?

[Coleen Volk]

Yes.

[Nadine Leblanc]

It's roughly $1 billion per year that we make from our commercial products.

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

I used to be in real estate, so I had a residential closing costs worksheet that I would always work out.

On the purchase price of a home in Ontario at $750,000, I calculate that the CMHC fee for a first-time homebuyer who could only put 5% down—which is $37,500—would be about $8,371, which would go onto their mortgage, generally speaking.

Do you think it makes sense for the CMHC to be generating that much profit in the middle of a housing crisis from first-time homebuyers?

[Coleen Volk]

We are an insurance company, and we have a legislated mandate to operate as a commercial mortgage insurance company. We have two private sector competitors, and the intention is to operate on a level playing field with them.

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

Okay, I appreciate that you don't really want to answer that question. Quickly, I'll go to the MLI Select program.

This is one of those great programs that have actually worked really well in your organization, yet your organization recently made a minor change to the MLI Select program. You've effectively increased the penalty for when multi-unit builders pay out their CMHC mortgage. It's an increase of about 300%, which means it actually discourages people from paying out their CMHC mortgage and reduces liquidity in the market.

Why would you make such a change, especially without consultation?

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Aitchison. We'll have to catch that.... Your time has gone by.

Mr. Fragiskatos, you have six minutes.

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

Thank you very much, Mr. Chair.

Thank you to both of you for being here today.

Ms. Volk, on the point that you just raised, you talked about zoning specifically. Restrictive zoning has been pointed to by economists, housing experts and advocates as being arguably the single biggest impediment to getting more homes built. If we don't add to supply, prices will stay where they are or maybe even go higher.

Could you talk about that? Could you talk about zoning in particular and how it stands in the way of getting more types of homes built—homes that would add to affordability in the market—and what the federal government, through the accelerator fund, is doing to address that?

[Coleen Volk]

Certainly.

Since my appointment, I've been across the country talking to developers and I have heard from almost all of them that the time it takes to get zoning revised and their applications approved is too long at the municipal level, and it's not consistent across the country. Different municipalities have different zoning restrictions, different requirements and different speeds at which they are able to address the issues, so it's not universal across the country, but the nature of the issue is constant.

It causes developers significant delays in getting their projects off the ground because it takes a while until they can start construction, which includes two problems.

One is that in itself, it increases the cost of construction, because they have to carry costs, because if they can't get to construction, they ultimately can't get to sales. The other is that it also delays the construction of housing that is desperately needed across the country.

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

Would you say the accelerator fund is helping to address that significantly?

[Coleen Volk]

That is the intent, yes.

As I say, it's early for us to report results, because we have an agreement with the cities that they're required to report within a year of the date at which their agreement was signed, and very few of them are actually at those dates.

We're just getting to the point now when we're going to start seeing the cities' results on that, but we are optimistic that we will see some good results.

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

That's encouraging.

Could you talk about other sources of red tape that stand as impediments? What about parking minimums? We hear about those a great deal. I am an urban-based member of Parliament, and most of us on this committee—at least on this side—represent cities.

Talk about parking minimums for a moment. I know this is a huge source of frustration for many.

[Coleen Volk]

Yes, and I have spoken to developers who said they would love to do such-and-such a project at such-and-such a location, but they can't deal with it because of the parking minimum. It just adds to the costs and makes it unaffordable.

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

Does the accelerator fund address this?

[Coleen Volk]

Yes, I believe that's one of the things the cities could address in their commitments.

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

Okay.

Where are we with rental construction in Canada?

The GST has been lifted on construction costs, as you know. Where are we in terms of permits for multi-unit residential construction, which would obviously be for apartments? Where are things on that front?

[Coleen Volk]

I have some.... Do you have those handy?

[Nadine Leblanc]

Canada builds approximately 200,000 to 250,000 units a year. We have not seen an increase to the average this year. However, you will see the transformational nature of the changes—because you've been asking about the accelerator fund—in the coming years.

It takes up to three to four years to get the shovels in the ground and be ready to build housing, so the accelerator fund is meant to transform that planning stage, whether it's in zoning, parking requirements, densification or Nimbyism. By removing those obstacles and barriers at the local level, we anticipate a growth in permitting and the acceleration of permitting, because those are the targets that were provided by municipalities in the agreements for the next few years to come.

As the president mentioned, we should have results momentarily, because the requirement is to report back after 12 months of the signing of the agreement, which is this time.

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

You talked about permitting. I wanted to ask about permitting as well.

We know lengthy wait times for permits are yet another impediment to building. As I understand it, the accelerator fund has placed a special focus on this by helping communities put in place new digital permitting systems. Some communities—like Kelowna, for example—have gone one step further and, with the assistance of the fund, have put in place AI-powered permitting systems, which the community's own mayor told me personally has reduced permitting times that were taking close to two years to 10 days now.

Could you talk about how transformational that could be for getting homes built in Canada? Obviously, it's going to be transformational, but in the wider context of things, this sounds like not just a change, but a revolutionary change. What do you think about that?

[Coleen Volk]

I think it is a revolutionary change and I think it's so important.

As we said, the purpose of the HAF is to make sustainable changes. These will be changes that improve things for generations to come, we hope, and will certainly improve things throughout the term of the housing crisis.

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

Thank you very much.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Fragiskatos.

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