Human Resources Committee on June 2nd, 2022

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

I call this meeting to order.

Welcome to meeting number 29 of the House of Commons Standing Committee on Human Resources, Skills, Social Development and the Status of Persons with Disabilities. Today's meeting is again taking place in the hybrid format. I would expect all those participating in person to follow the protocols in place during the pandemic.

To ensure an orderly meeting, I would like to take a few minutes for the benefit of witnesses and committee members. Before speaking, please wait until I recognize you by name. For those participating by video conference, please click on the microphone icon at the bottom of your screen to get my attention. Witnesses and members participating have the option of choosing to speak in the official language of their choice. If interpretation is interrupted, please get my attention, and we'll suspend while it is being corrected. I would also remind you that all comments should be directed through me, the chair.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, February 3, 2022, the committee will resume its study of the housing accelerator fund. I would like to welcome our witnesses to begin our discussions with five minutes of opening remarks followed by questions.

Attending is the minister, Honourable Ahmed Hussen, the Minister of Housing and Diversity and Inclusion. From Canada Mortgage and Housing Corporation, we have Romy Bowers, president and chief executive officer; Paul Mason, senior vice-president, client operations; and Bob Dugan, chief economist.

We will start with Minister Hussen for five minutes, please.

Mr. Minister, you have the floor, following which we will open to questions.

[Ahmed Hussen, Liberal, Minister of Housing and Diversity and Inclusion]

Thank you very much, Mr. Chair.

I'm pleased to participate in the committee's study on the housing accelerator fund.

Housing affordability is the top concern of us all. We know that boosting housing supply is one of the main tools to address the housing affordability challenges facing Canadians. That means increasing the supply of both market housing in addition to and in combination with affordable housing, which requires, quite frankly, different actions.

To fill the gap that already exists, and to keep up with our growing population over the next decade, Canada will need to build at least 3.5 million new homes by 2031, according to budget estimates.

Our government's newest budget contains multiple items to bring new supply more quickly—measures that address the breaks and delays in the housing system that are preventing new units from being built.

The biggest single measure in this category is the housing accelerator fund. Budget 2022 proposes $4 billion over five years starting in 2022-23 to launch the housing accelerator fund. The target is to create at least 100,000 net new housing units over this period, with a focus on affordable housing with greater energy efficiency and on densification.

The fund will do so by incentivizing communities to get more housing built. It will, for example, ensure that local governments get the support they need to streamline and modernize their housing approval and delivery systems. Local governments are key partners for us in the housing system. This fund will strengthen partnerships and be flexible enough for the different needs and realities of cities and communities across the country, including in rural Canada.

When you talk to mayors across the country, they will tell you that they're facing barriers. A lot of them don't have the fiscal capacity to overcome some of these needs, whether they are infrastructure or the investments necessary to modernize permitting systems, introduce inclusionary zoning and incentivize transit-oriented development. The barriers they're facing are real, and this fund will certainly help with that.

The housing accelerator fund has already received support from right across the housing system, including from the Federation of Canadian Municipalities, the Canadian Home Builders' Association and the Canadian Housing and Renewal Association, among others. We also heard widespread support for it at our recent national housing supply summit.

The housing accelerator fund will join a suite of programs the Canada Mortgage and Housing Corporation, CMHC, has in place to increase market and affordable housing supply in Canada—all part of the national housing strategy.

One such program already in place is the federal lands initiative, which this committee is also looking at. This $200-million initiative, launched in 2018, is intended to create 4,000 homes by transferring surplus federal lands and buildings to housing providers at low or no cost. Once transferred, the property is developed or renovated into affordable, sustainable, accessible and socially inclusive housing.

My mandate letter requests enhancements to the federal lands initiative to ensure that the federal government is more effectively deploying its inventory of lands to advance the objectives of the national housing strategy. Once again, I want to thank this committee for looking at the federal lands initiative and helping us get there.

Just last week, for example, we announced that our government was providing nearly $3 million for the purchase and development of land at the former Canadian Forces base Edmonton Griesbach barracks site. This fund will assist in the development of more housing in the Village at Griesbach in north Edmonton. This will include support for a proposed project of approximately 127 homes for Métis and other indigenous members of the community and families, including 50 units dedicated to women and children fleeing gender-based violence. Residents will also have access to full on-time wraparound supports, cultural programming, counselling, child care and a community garden. Stories like this really show the success of the federal lands initiative and the potential to do even more.

I want to thank you, Mr. Chair, for allowing me to be here today to talk about these programs.

Once again, I want to thank the committee for their study of both the housing accelerator fund and the federal lands initiative.

We look forward to the results of your study, and to working together to continue supporting housing supply and affordability in this country.

At this time, Mr. Chair, I'd be more than happy to take questions from members of the committee.

Thank you.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Minister.

Madam Kusie, you have the floor for six minutes.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you, Minister, for being here today.

We've had many witnesses testify that it's very important to differentiate between affordable housing and housing affordability. It would seem, based upon your campaign promises for in fact the last couple of elections, that this program was to address housing affordability rather than affordable housing by creating middle-class homes.

Would you agree, then, that one of the main reasons housing prices are skyrocketing across the country is due to a lack of market housing supply?

[Ahmed Hussen, Liberal, York South—Weston, ON]

Thank you very much for the question. It's actually a very important question, which allows me to elaborate on the housing accelerator fund.

The fund is meant to do both. It is meant to unlock more housing supply of all types—period—in Canada. How is it going to do that? It is going to do that by recognizing, as we all do, that municipalities have a big role to play in permitting and development projects, in zoning and urban planning, and so on. It is investing directly in eliminating the barriers that prevent the building of more housing supply, including more housing supply of middle-class housing.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

How would you define middle-class housing, Minister?

[Ahmed Hussen, Liberal, York South—Weston, ON]

It is housing that is purchased by Canadians in the market. It's market housing, but the fund is not limited to just that. The fund will unlock all types of housing, of course with a bit of a preference and extra incentives for affordable housing.

Having said that, when you make permitting easier and more efficient, when you make zoning more reasonable and when you encourage intensification and transit-oriented development, it will inevitably unlock more housing supply across the spectrum, including market housing.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

According to your definition of middle-class housing, how many middle-class homes has your government's programs under the national housing strategy built to date, would you estimate?

[Ahmed Hussen, Liberal, York South—Weston, ON]

Before I turn to Romy Bowers on that, I would highlight the fact that the national housing strategy programs are geared toward affordable housing. With the rental construction financing initiative, we build more rental stock—period—with a percentage of affordable rental units but also just putting more rentals on the market, because not a lot of developers prefer to build rentals.

The housing accelerator fund is different. This is about systems change. This is about investing in the capacity of communities to build more. We know that those barriers are real. We know that it takes too long to approve, deploy and deliver housing projects. We want to help by incentivizing that faster building of more supply.

I'll turn to the president, Romy Bowers, for more details.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Actually, that's fine, Minister, I'll move on to my next question.

Your budget claims that CMHC projects the need for 3.5 million homes in the next nine years, yet according to a Scotiabank report, Canada needs 1.8 million new homes a year to keep up with the population growth. That's a vastly different number from what you and the CMHC are projecting. Why is that so?

[Ahmed Hussen, Liberal, York South—Weston, ON]

In the number you reference you're referring to our ambition for the supply of new homes. As the Prime Minister has indicated, our target is to double the number of homes built in Canada. We have the fastest growing population in the G7, but our housing supply hasn't kept up with that demand, so what we're saying is that we will use the housing accelerator fund and other incentives through, for example, our infrastructure investments, to encourage more housing supply.

But that's not the end of the story. There's a role for provincial governments to also increase housing supply, and you've seen reports and expert panels from different provinces indicating that they are focused on this issue. Municipalities are also engaged in this, the private sector is part of the mix and so are affordable housing proponents. This is a whole-of-country approach, but what we're saying is that we will have national leadership and investments to encourage more supply.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you, Minister.

To the CMHC, I note here that you're using population statistics from 2016 to create housing supply projections, so I am uncertain as to where the 3.5 million homes in nine years comes from.

For my last minute, I'm going to turn to the question about the need for funds to flow immediately and how it has been stated in the past that perhaps CMHC could be better in terms of allowing funds to get out the door. Since I have very little time left, I'll ask the CMHC if you agree that funds need to be able to flow immediately, and what is your plan to do that?

[Romy Bowers, President and Chief Executive Officer, Canada Mortgage and Housing Corporation]

I agree, absolutely, that CMHC needs to do everything we can to ensure that funds get out very quickly to the Canadians who need the funding to create additional housing supply. CMHC is committed to always improving our processes. Since the start of the national housing strategy, we have improved our processing times very quickly, and we intend to take the learnings from some of the more recent programs that we've implemented, like the rapid housing initiative, to ensure that the learnings from those programs are applied to the accelerator fund.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Madam Kusie.

Next is Mr. Long for six minutes.

[Wayne Long, Liberal, Saint John—Rothesay, NB]

Thank you, Mr. Chair.

Good afternoon to my colleagues.

Minister, thank you again for coming to HUMA. I want to say I very much appreciate your grasp of the file, your knowledge of the file and certainly your passion, which comes through in spades. We need somebody like you to address one of the major challenges our country is facing, so thank you for that.

I want to talk to you, Minister, about the historic $4-billion investment in housing through the accelerator fund. Over the course of the pandemic, we've seen thousands of Canadians move from bigger cities to smaller centre cities like my beautiful riding in Saint John—Rothesay, and they're coming there in search of affordable housing. As a result, I think all of us have seen rents increase, which leaves renters, particularly seniors and families, without access to housing they can afford. Home prices have risen rapidly and become unaffordable for many first-time homebuyers.

We know the root of the problem is a lack of adequate supply of affordable housing to meet this unprecedented, rapidly increasing demand. We know that the municipalities will play a vital role in addressing this supply shortage, but smaller cities—like my city of Saint John—lack the administrative capacity to take action on housing that larger cities have. We have heard about the importance of this fund being flexible and take into account that the needs of cities like Saint John will be different from larger cities. I know when witnesses testified, our mayor, Donna Noade Reardon, talked about the challenges that cities the size of Saint John will face.

Can you speak to how the accelerator fund will address the distinct needs of smaller centres like Saint John and take full advantage of the funding we can offer? Thanks, Minister.

[Ahmed Hussen, Liberal, York South—Weston, ON]

I want to thank the honourable member for the important question with respect to the housing accelerator fund. He points to a really important perspective that we hope to bring to the housing accelerator fund, which is that it has to be deployed differently in different communities.

All communities, even larger cities, have challenges with respect to barriers around faster processing of development applications, permitting and so on. I think the capacity issues are even more pronounced in smaller communities, in mid-size cities and in rural Canada. My commitment is to make sure that, as we deploy the housing accelerator fund, we make sure that we bring a rural lens, a smaller community lens, a mid-city size lens and a regional lens to its execution, so that we have enough flexibility in the fund to address both the needs of large urban centres and smaller cities and communities.

My belief is that there are some common barriers between the two sizes of communities, but there are also some barriers that are unique to smaller communities. For example, one community of a large urban centre may have a barrier of moving towards digitization of its permitting system. A smaller community might not even have enough permitting officials, period, or they may lack the capacity to put together a plan. We have to make sure that the housing accelerator fund is used in all parts of Canada because housing is now a national challenge. It's not just a big-city challenge facing Canadians. The housing accelerator fund has to reflect that.

I want to emphasize once again that it's about investing in systems change, so that at the end of the life cycle of the funding, the changes will be sustainable and they will continue to unlock new housing supply, including affordable housing.

[Wayne Long, Liberal, Saint John—Rothesay, NB]

Minister, while affordable housing organizations in my riding also lack the capacity of those in larger cities, I'd say they punch above their weight. Together we have had success in delivering significant federal funding for affordable housing projects in Saint John—Rothesay, thanks to our government's national housing strategy.

One challenge affordable housing proponents in my riding often face is the administrative burden and delays associated with applying for funds through CMHC.

Can you speak to how this fund will build on the success of the rapid housing initiative in this regard to ensure that the application process is quick, flexible and as accessible as possible? Thank you.

[Ahmed Hussen, Liberal, York South—Weston, ON]

Thank you very much.

We have learned a lot through the success of the rapid housing initiative. It landed really well. There are many folks who believed that we couldn't deliver housing in less than 12 months and the rapid housing initiative has put to bed those concerns.

I think we have learned a lot through that process. We'll obviously make sure that those lessons are embedded in the housing accelerator fund and that we are flexible enough to ensure that smaller communities benefit as much as larger communities. One way to address that is to make sure that the application process is more flexible and reasonable.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Minister.

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

Thank you, Mr. Chair.

Minister, thank you for being here today.

Since the beginning of our study, we have heard from witnesses who have provided valuable input on the new program.

We want to better understand the issue of affordable housing. In one recommendation we received, the witness indicated that simply increasing the supply of housing did not automatically translate into more housing that was affordable, let alone rental housing that was affordable.

It is therefore paramount that all levels of government work primarily towards the construction and renovation of affordable rental housing. Demand for affordable rental housing is greater than demand for regular housing, a market that tends to sort itself out. Tenant households are three times more likely than owner households to be in core housing need. The housing issues in Quebec and Canada have a much greater impact on the rental market than the housing market.

Another witness even told the committee that the housing accelerator fund was not the right program to address the issue of affordable housing, because the program does more to deal with supply than demand. The demand is for affordable rental housing units, so 30% of the funding is not enough.

We are studying the options. We are talking about a $4‑billion program over five years, after all. Taking steps solely to address supply will do little, if anything, to change demand for affordable housing. What can we do, then, to really address demand?

[Ahmed Hussen, Liberal, York South—Weston, ON]

Thank you for that important question.

First of all, this is not the only program that will result in more affordable rental housing. We actually have a much bigger program, called the rental construction financing initiative, which has grown over the years. It is now projected to invest $25 billion over a number of years to ensure that we are incentivizing the building of more rental units across the country.

In budget 2022, that program will double the requirement for the number of affordable units, from 20% to 40%. That means that more affordable rental units will be in the market, on top of more rental units—period.

Why is the Government of Canada incentivizing the building of more rental units? It's because developers mostly don't tend to build for the rental market. They tend to build for ownership. There's a shortage of rental units across Canada. Our government has recognized that the federal government has a role in encouraging more rental units being built.

If I could come back to the housing accelerator fund, one way it will lead to more rental units is the encouragement and incentivizing of densification and inclusionary zoning. When you allow more units to be built within the same amount of land, you unlock more rental housing supply.

There are municipalities, for example, some mayors I met recently, who are moving toward allowing more units within a single family home. The idea behind that is to allow the owner of a large single-family unit with a huge backyard to be able to build up to five units and allow some of those units to be rented, therefore tripling or quadrupling the rental—

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

Sorry to cut you off, Minister, but I have a limited amount of time.

Affordable rental housing is desperately needed everywhere. Both Quebec's and Ontario's municipality associations have said that that is where the need is.

You are saying the newly created housing accelerator fund is not designed for that type of housing. That means it won't meet the demand.

How do we ensure that the new program addresses the demand for affordable rental housing instead of the demand for just housing?

[Ahmed Hussen, Liberal, York South—Weston, ON]

Actually, it will. In fact, the housing accelerator fund will, among other things, unlock more affordable housing supply.

When I talk about affordable housing, it is about deeply subsidized rental rates in communities that now don't have enough affordable housing. This will allow renters to be given deeply affordable housing by unlocking more supply, also of affordable housing. Yes, it's part of the housing accelerator fund.

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

Can you tell us what percentage of the funding it represents? Are we talking about 30%, 50% or 60% for the affordable rental housing sector?

[Ahmed Hussen, Liberal, York South—Weston, ON]

It is encouraging the building of that. It is part of the plan. What we are seeking from municipalities is to bring forth a plan to tackle the systemic barriers, but to also show a road map to build more affordable housing, more affordable rental housing and more intensification around transit.