Human Resources Committee on Dec. 5th, 2022

[Romy Bowers]

That's a rough estimate, yes.

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

Okay, so it's a rough estimate of $30 million for 2022.

[Romy Bowers]

That's correct.

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

What I'm struggling with is that when we think about bonuses, we think about a really exceptional job being done, and the Parliamentary Budget Officer's reported that over the first three years of the national housing strategy the CMHC spent less than half of the funding allocated for two key initiatives, one of which, of course, is the national housing coinvestment fund, which spent only about 50% of its allocated dollars over those three years. We know too that the Auditor General has reported that many of those units weren't in fact affordable. We know that inflation actually means now that a lot of the funds that are being invested don't go as far, because of course inflation is a bit out of control.

We know that in general, the housing situation is getting worse. And it's not just the homeless situation, although it's bad; 216 people died in Toronto last year, which is over four people per week, or double what it was in 2017. Home prices are more than double in the last seven years. The National Bank of Canada said in the second quarter of 2022 that the mortgage in a home now takes about 63.9% of income to service. That's the highest it's been since 1982. The PBO has reported that an average of $118 million a year was spent on homelessness programs. It's been bumped up to $357 million a year, yet homelessness continues to be on the rise. Of course, we don't really know exactly where this money's being spent and if it's actually having the impact we want it to have.

What I struggle with and I think what a lot of Canadians struggle with is how we can come up with a bonus pool of $30 million, or whatever it might be. We've made some progress; we've done some good things here, and I have no doubt that everybody at the CMHC means well, but bonuses should be based on results, and the results just aren't really there. I'm wondering if you could speak to that.

[Romy Bowers]

Mr. Chair, I provided a number of indicators that we measure success by in terms of number of housing units created and repaired, and number of households aided, and we're on track to meet those targets.

In terms of the allocated budget being used within a calendar year, I have to note that the construction cycle is difficult to determine, so sometimes we commit money for a certain fiscal year but the fiscal year doesn't align perfectly with the construction cycle. Sometimes we have to change the allocation of money from one year to the next, and that's what results in money not being used within a specific calendar year.

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

I'm going to give you a couple of examples in Parry Sound—Muskoka, where well-meaning community organizations like Community Living South Muskoka had the land, had everything lined up and got all the approvals in place to build units for folks that were desperately needed, and by the time it got to the CMHC process, they gave up and sold the land—they just stopped. I can give you example after example after example like that. Canadians see the results, and they're not good enough.

Is the CMHC the right vehicle to be delivering on housing affordability for this country?

[Romy Bowers]

There's no doubt that especially in the early years of the coinvestment fund there were many pain points in our processes. We've made significant improvements in the processing times and we're working really hard to serve the needs of the amazing non-profit groups that are working in ridings like those that were just mentioned. I'm very happy to get feedback about specific pain points that MPs are experiencing and action them.

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

I appreciate that, and I would like to talk to you more about it, because as much as it may feel like we're just attacking you here, this is a really very serious issue. It's probably one of the most important reasons for my deciding to run here, because as a mayor we were doing all kinds of things in my community to support the development of affordable housing and to support housing in general. What was missing in our community was a reliable federal partner, and that was the CMHC. It was impossible for different groups to get money out of the CMHC.

I appreciate that everyone cares, and I think that when the national housing strategy was launched, it was launched with great fanfare. Everybody cares, but if we're not delivering the results that Canadians deserve, then we need to regroup and talk about who's accountable. You talked about housing being a team sport, and I agree with you 1,000%. It's not just all levels of government and the private sector, but even within this government it feels like no one's the captain of the team. I think that's what Canadians are struggling with the most right now.

I definitely want to continue the conversation with you to see what we can all be doing to work better to deliver results for Canadians, because there have been a lot of promises made and there are more people homeless today than there were before we started this.

I appreciate your time here.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Aitchison.

Give a quick response, Ms. Bowers, and then we'll go to Mr. Coteau.

[Romy Bowers]

Mr. Chair, I appreciate comments like this. CMHC has made significant improvements in the delivery of the national housing strategy. We are meeting the targets we have committed to. The rapid housing initiative is an example of CMHC's getting money out the door very quickly to help those in need. The turnaround time has been quite remarkable.

We feel that the rapid housing initiative's success has been made possible only because of the lessons we've learned from our other programs. We're a learning organization, and I welcome feedback like this so we can continue to improve and deliver for Canadians.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Ms. Bowers and Mr. Aitchison.

Mr. Van Bynen, you have five minutes.

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

Thank you, Mr. Chair. This has been very informative for me. Having spent 30 years in banking institutions, I understand how difficult it is to manage portfolios.

As Mr. Aitchison said earlier, I've also had some experiences when individuals have approached, taken on or wanted to develop projects, and have simply become frustrated and walked away from the project. In fact, there is one group that had to engage a consultant to take them into the application process to manage the funding application and work through that. We can talk about that in detail.

The frustrating thing is that smaller community groups simply don't have those resources. I'd like to hear a bit more about the support that you're talking about in terms of the resources you're supplying to smaller community groups.

[Romy Bowers]

I'd like to turn this over to Yannick Monaghan, who is our director of client services. He's probably in the best position to provide more detail about how we're working to better support smaller communities and community organizations.

[Yannick Monaghan, Director, Client Solutions, Canada Mortgage and Housing Corporation]

Thank you, Romy.

Mr. Chair, we work directly with housing providers across the country to help them from cradle to grave. We support them from the development of an application to the financing of that project. We see it all the way through the construction, if the proponent's successful.

We've put things in place in order to determine their readiness and help them develop a plan on how to address any gaps they may have in their project, whether it's a lack of property management experience or a lack of construction experience. This is to make sure they associate with partners in the community that can support them in order to deliver and see their project through to serve the community they intend to serve.

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

Is there a summary of that project that could be shared with the committee, so that could be part of our record as well?

There's another measure I'd like to know about and see if you measure this. Do you have any data on the number of applications that were started but not completed?

[Romy Bowers]

Yes, we have that information.

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

Could you share that with us?

I'm going back to the process. How many end-to-end process reviews have you undertaken for the borrowing cycle and application cycle? If you have taken them, what's the average timeline?

What are the process improvement goals that you ask of your management team?

[Romy Bowers]

We have a process improvement group at CMHC that works with the business. I don't have that specific information at hand right now.

Maybe I can ask Yannick to comment on it on a very general level. We can provide the specific details later, if that's okay with you.

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

Yes.

[Yannick Monaghan]

Absolutely, Romy.

Mr. Chair, the timelines vary by program. I'll take an example of the two programs that were talked about the most today, which were the coinvestment fund and the rental construction initiative, as well as the rapid housing initiative.

We try to connect with proponents and give them clarity relative to the likely outcomes of their program within two weeks of their initial submission. We work with them toward developing a successful application and see it through to funding. That can take—as you know, having been in the banking sector for some time—around six to seven months. That's in order to completely understand the risks we're facing and to put a plan in place to mitigate them and make sure they can deliver a successful project.

We've made a number of changes in order to take in the feedback that we've received from proponents. In the coinvestment program, we received some feedback that for smaller proponents, the loan and contribution streams were difficult to navigate. We made sure to develop a program that was the right size for those organizations. That's when we launched and made a contribution-only program that allowed them to access funding within four weeks.

We've put things in place like this across our various programs to make sure we adjust to the feedback of the proponents we deal with.

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

With those average figures and numbers, I'm going to assume that's part of the improvement in those processes. It's part of the criteria for the management bonuses that provide some performance incentives.

Did I hear you right when you said your arrears are only 0.5 of 1%?

[Romy Bowers]

They are, for the mortgage insurance book, yes.

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

Wow. Did it occur to CMHC that you might be a bit too stingy?

[Voices]

Oh, oh!

[Romy Bowers]

I don't think this is unique to CMHC. When you look at the whole mortgage market in Canada, there's been a very low level of arrears. The biggest factor that drives arrears is unemployment. To date, the employment situation in Canada is very strong.

I also want to highlight that arrears is a lagging indicator. What we often look at is arrears in the credit card book and other non-secured lending. Oftentimes, the arrears rates for those get higher before the mortgages do. We look at those on a regular basis. To date, Canadians are paying their bills.

We are vigilant. We don't have any immediate concerns about our mortgage book.