Human Resources Committee on Feb. 17th, 2023

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

The clerk has advised me that we are ready to commence meeting 56 of the House of Commons Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities.

I just want to advise committee members that this is the last meeting for our clerk who's been with us for a while, Danielle. I want to introduce the new clerk, David Chandonnet.

[Voices]

Hear, hear!

[The Chair, Liberal, Bobby Morrissey]

Welcome, David.

Danielle, thank you so much for guiding a rookie chair through a process. Sometimes it was a little rocky, I'll admit. Thank you so much. I'm sure we'll see you again.

Today's meeting is taking place in a hybrid format, pursuant to House of Commons order of June 23, 2022. That means that there will be members appearing virtually and in the room.

For those members appearing virtually, please get my attention and wait until I recognize you before you speak. If there is an issue, use the “raise hand” icon on the bottom of your screen. Those in the room, simply raise your hand to get my attention.

You have the option of choosing the official language of your choice. If there is an issue with interpretation or translation, please get my attention and we'll suspend while it is being corrected.

As I indicated, please direct all comments through me, the chair.

In accordance with the routine motion, witnesses and those appearing virtually have been tested. My understanding is that the interpretation is good. If you are not using a House of Commons approved headset, I will not recognize you to participate verbally, although, if you are a member of the committee, you can still vote by giving me an indication.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Monday, November 21, 2022, the committee will resume its study of the national housing strategy.

I would like to welcome our guest, Paul Mason, senior vice-president, client solutions at CMHC.

We also have Simon Lahoud, director, financing solutions; and Benjamin Williams, director, indigenous and the north housing solutions.

I have waived the five-minute opening statements because this is our second two-hour meeting. The president was in for the first meeting and gave a general overview.

I'm going to use my prerogative as chair, Mr. Mason. I have an opening question.

You would see in the last two meetings the high degree of frustration being demonstrated by members on all sides of this committee. It focuses on CMHC's ability to, in a timely fashion, get program funding out, primarily to not-for-profit organizations and small municipalities.

The president was in at an earlier meeting. In her opening comments, she made a statement that was a surprise to me. She said that CMHC has had to change over the past number of years. CMHC for a long period of time was primarily focused on delivering long-term lending.

It was a “lender”, to use the term, and now CMHC has moved into the area of processing grants to various organizations on a wide spectrum of housing programs. Could you just briefly give the committee an overview of how CMHC is structured today versus how it was a number of years ago? Then we'll move into the questions round and you could follow up on any of your prepared comments as you respond to questions from committee members.

It struck me, because I assumed that CMHC was in the field of delivering these programs it now has for a long period of time, but it was my understanding when the president appeared that that's not the case.

[Paul Mason, Senior Vice-President, Client Solutions, Canada Mortgage and Housing Corporation]

Mr. Chair, thank you for having us here today. It's my pleasure to be here with two of my team members to answer your questions.

In reference to your question, it is true that when the national housing strategy was launched, CMHC had to ramp up our direct delivery capability, funding direct projects through an application-based process, which are the majority of the national housing strategy programs. That was not something that CMHC had been doing for a number of years. We had some legacy funding, and of course we have our commercial businesses, our mortgage insurance and our securitization, those commercial businesses.

At the beginning of the NHS, we actually had to ramp up that capability, and we definitely had some growing pains with that. I'll fully acknowledge that. As we started to implement these capabilities and the processes and so forth, we were, in some degree, learning as we went. Through that process, we consistently sought feedback from our clients, from proponents and from all sectors of the housing sector and we continuously tried to improve that.

It's something that we continue to do today. We consistently seek feedback—whether it's through our clients or through venues such as this committee to get feedback—and deal with issues as they arise. We have seen steady improvement in our processing times and have reduced them by over 50% over the last several years. We continually measure not just our clients' satisfaction but how difficult it is to work with us, as well as something that we call our “net promoter score”, which is, at its root, how likely someone is to recommend CMHC. We constantly look at those measures as well as the qualitative feedback we get from our clients, and we look to improve.

As Romy Bowers said when she was here, I think there's obviously still room for us to continue to improve, but we're quite happy with the progress to this point in terms of the number of commitments we've made and the funding we have committed. We've basically committed practically all the funding that's been allocated to us so far in the strategy, and that crosses the spectrum, including not-for-profits.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Mason. I'm sure that will be a theme followed throughout this meeting.

We'll now go to questions.

We'll open the floor to Mr. Aitchison for six minutes.

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

Thank you, Mr. Chair.

Gentlemen, thanks to all of you for being here.

The first thing I'd like to do—aside from thanking you for being here in person, which is very important, especially on a winter day—is ask if you would be able to table with the committee a list of every project funded, either with grants or loans, through the national housing strategy, broken down by the various different programs and by municipality generally. Is that a list you could give us?

[Paul Mason]

Yes, absolutely.

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

Okay. I'm looking forward to that.

I'm glad the chair started this out with a discussion of the frustration that a lot of Canadians have had in trying to deal with this program. I read what you were going to say before the plan changed. I'm pleased to read that you have simplified the processes, because I'm sure that, as you can imagine, there are a lot of examples of that, particularly of community organizations that have just given up.

I can give you a couple of examples in my riding. Community Living South Muskoka had the land ready to go. It was zoned, the municipalities were all ready and everything was ready to go. They went through a couple of years with that process and then, when they got to CMHC, they gave up. They sold the land. That was pretty tragic.

The minister was just in Sault Ste. Marie announcing funding for a really cool project that I think we should be doing literally across this country: the redevelopment of a Legion. Legions are facing their age as structures, and their organizations are changing, and these are great opportunities.

A former Liberal member of Parliament, Dennis Mills, has a project in Bala, Ontario, at the Legion property, a great huge chunk of land. The municipality has everything zoned and ready to go. He's not giving up, because he's like a dog with a bone. He will not give up, but he has given up on CMHC and this government for sure. He just doesn't get it. He doesn't understand why it's so difficult.

I recognize, of course, that you have to be careful with taxpayers' money. I started to look through just the national housing co-investment fund. I started to go through the checklists. Of course, there's the integrity declaration, the purpose of the funding, and if you're eligible, you have to go through that checklist. Then, of course, there's a lovely spreadsheet, where you see if it's feasible or not, and then there are the minimum environmental and accessibility instructions that seem to go above and beyond building codes.

I went to visit Covenant House in Vancouver. It's an amazing story and a fabulous facility that they have there. They built this new structure. I asked them, “Did you get any funding from CMHC?” They said, “Yes, we got $12 million.” Isn't that incredible? Now, it's a $100-million project, but that's great: They got $12 million. It cost them a million dollars in consulting fees to work through the quagmire that is the process known as “the CMHC”. Community Living South Muskoka didn't have that kind of money to work through the quagmire, so they gave up and sold the land.

I want to know if you can tell us what you've done to simplify the process so that organizations that don't have Ryan Reynolds sponsoring them and raising awareness about the importance of the organization, or the resources to spend that kind of money on consulting fees and lobbyists.... What have you done to make it easier for those community organizations that are literally on the front lines of this issue and want to make the change that every community in our country needs?

[Paul Mason]

In response to the question, over the last year we implemented a new process in the co-investment fund, which is a contribution-only stream, where we turned around applications in as little as four weeks. Those were targeted specifically at the smaller not-for-profits to make it simpler. There was not a loan component associated with those, and we were granting up to $125,000 a door for those particular ones. That was in recognition of the lessons learned around dealing with those organizations and dealing as well with the level of affordability. That's just one example.

I would say that another example is that we worked very closely to reduce the amount of paperwork and legal requirements to sign the final agreement, to improve it as a process.

Those are just two examples that we've looked at.

The third thing I would say is that we took the lessons learned from some programs and applied them to the rapid housing. That's an example of where we've taken our processes and really reduced them dramatically to enable ease of application.

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

Can I quickly jump in there, then, based on what you said about some of these projects being turned around in four weeks? That sounds almost too good to be true. I'll take you at your word. I believe you.

In your list that you'll provide to this committee of all the projects, can you identify the timelines on each of those projects as well, from application point to delivery point?

[Paul Mason]

I think we should be able to, because we do—

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

If you can, or at the very least, give me a list of the projects that you were able to turn around in four or five weeks.

[Paul Mason]

We do measure our turnaround times across all of our application processes, so we should be able to provide at least the overview of the turnaround times.

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

Okay. That will be fantastic.

I'm almost out of time here, so I'll leave it at that, because I want to come back to the actual headline number of $82 billion—or $89 billion, as we're never exactly sure where we are—and talk to you a bit more about that as well, but I think I'll have another round.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Aitchison.

Mr. Collins, you have six minutes, please.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

Thanks, Mr. Chair.

Welcome, guests.

Through you, Mr. Chair, my first question would be around the federal housing advocate's recent recommendation. She talked about how we're at the five-year point with the national housing strategy. Her recommendation is that the government look at the strategy and possibly make some changes. Do you agree with the recommendation?

Obviously, a lot has changed since this was first released. We've gone through the pandemic. We've witnessed a wholesale change in terms of what's happening in the affordable housing sector as it relates to need. There's more need today than ever before. Do you agree with that recommendation? What changes might you recommend? Or are you going through an official process at CMHC based on her recommendation?

[Paul Mason]

We actually do an evaluation of our programs every three years as part of the national housing strategy, in addition to other feedback, such as the feedback you referenced. In addition to that, we're constantly adding new programs to the national housing strategy. It has not been a static strategy. We've added the rapid housing initiative, as an example of that, as we've looked to speed up the delivery of deeper affordability, which the rapid housing program does deliver.

We're constantly looking at and assessing the performance of the existing programs in terms of their intent and in general whether the impact we're having is what was intended.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

If I could, Mr. Chair, speaking of deep affordability, I think that speaks to some of the issues that Scott raised earlier in terms of the grants and the application process.

Rapid housing, I think, is probably the most successful program of all of the national housing strategy programs that you've offered to date. As a former councillor and as someone who worked at CityHousing Hamilton, for us it was amazing, because there was deep affordability. The grant ratio, at least in our municipality, was about 75:25 or almost 80:20, if my memory serves me right. Through rounds one and two, you were providing $300,000 for a unit when modular units were costing about $350,000.

What I've witnessed now in round three is that the grant number has been reduced for most municipalities, at least in southern Ontario, and that's my only context in this regard. I'm not certain what you provided across the country.

In southern Ontario, for the grants on average, it looks like they've gone down to about $265,000 a door, which is far less than the $300,000 you provided through the first two rounds. The cost of the modular unit now is about $550,000, or almost $600,000. Tenders haven't come in yet, but it looks like the industry fee for modular units is in that range.

The dilemma that municipalities have, at least for those that are participating and have been granted the opportunity to apply, is that the grant portion has gone down substantially. We're now down to about 55% per door, and the cost of the units has almost doubled. Can you rationalize the decision-making process you made to determine that the grant numbers should be reduced in round three, when costs and expenses related to modular, and most are purchasing modular.... How did you arrive at that decision?

[Paul Mason]

As we design the program, we always look at the depth of affordability that we're trying to achieve. In the case of rapid housing, we're trying to achieve close to what we would call “core housing need”, which is 30% of income as an affordable unit. No more than 30% of income for that affordable unit is the deepest one that we offer. At the same time, we're also trying to create as many units as possible.

As we work with each of the municipalities, as well as through the projects that come in, we look to assess those projects that are most likely to achieve those outcomes and try to ensure that the money we spend goes as far as it can. I do acknowledge that over the last five years—going back to your first question around the overall NHS—we've seen a significant increase in the cost of construction across the board, as well as the cost of borrowing money due to inflation. It does put some strain on the number of units that can be delivered with the funding that is available.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

May I ask how you arrived at $265,000 a door? You were at $300,000 before. You obviously had an internal meeting with staff and your board about what kind of support you would provide. We see expenditures rising for everyone who is trying to get into the RHI round three, and you've decided, for whatever reason, to provide less support. Can I just understand the rationale?

I certainly understand the context in terms of how the program is created and what your intent is, but there are challenges for municipalities right now because they can barely afford to participate in the program when you're almost asking them to pay half the cost.

[Paul Mason]

When we design these programs, we work within our authorities in terms of what we're able to do. We do work internally but also with the government in terms of determining what the right level and authorities are within the program.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

How much time do I have left, Mr. Chair?

[The Chair, Liberal, Bobby Morrissey]

Ten seconds.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

I'll save my question then for the next round.

Thank you.

[The Chair, Liberal, Bobby Morrissey]

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