Human Resources Committee on Sept. 27th, 2023

[Jenny Kwan, NDP, Vancouver East, BC]

Budget 2023 has come and gone, and we're still talking about rolling out the budget 2022 initiatives the government promised, so, actually, the slowdown is happening on the government side. Let's get on with it.

On the co-investment fund, the minister said about the value of that program that the bureaucracy the non-profits are saddled with in trying to get through it is onerous. Now, as it stands, the funding for the co-investment fund has primarily been depleted to the point where the department has actually reduced the amount of funding non-profits can apply for to $25,000 per unit. This is not going to work.

My question to the minister is this: Will the minister do what the NDP is calling for, which is to actually provide lift by eliminating the $25,000-per-unit limit and providing new funds to the co-investment fund so that more non-profits can access the funding to develop the housing that Canadians desperately need?

[Sean Fraser, Liberal, Central Nova, NS]

I anticipate that I'll have an opportunity to look at increasing the contribution amount through the co-investment fund in the short term. One decision point that I will need to take on and the government will need to take on is what the next generation of investments in affordable housing will look like. I believe I owe it to myself and, frankly, to communities across the country, to do a proper exercise to understand the best way to increase the supply of non-market housing.

The co-investment fund has had some success. As you've pointed out, there are areas in which it can improve. I want to make sure I have an opportunity to compare continued investment in the co-investment fund with other potential avenues to grow the supply of non-market housing in Canada, which I understand is a major priority for you as well.

[Jenny Kwan, NDP, Vancouver East, BC]

Yes, for sure. The area that could be improved would be the red tape that CMHC is saddling people with—

[The Chair, Liberal, Bobby Morrissey]

Ms. Kwan, your time is up.

[Jenny Kwan, NDP, Vancouver East, BC]

—and the bureaucracy they have to go through to try to get that fund through.

[The Chair, Liberal, Bobby Morrissey]

Mr. Chambers, you have three minutes.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you, Mr. Chair.

Minister, thanks for coming. I'll note that some of your colleagues don't even accept invitations to come to committee, so thank you for coming of your own volition.

Bloomberg and many others have talked about the risk in the Canadian marketplace with respect to an overheated housing market or a bubble. Are you concerned about the risk to taxpayers if rates continue to stay high or higher for longer, as we're actually seeing?

[Sean Fraser, Liberal, Central Nova, NS]

Look, I have many concerns. The risk, given the rate of interest that exists in the market, is one of them. I'm more concerned about the risk to Canadians who don't have a place to live that they can afford than I am about the risk to taxpayers, given the very present and serious challenge that families are facing. It's one of many concerns that I think on daily.

[Adam Chambers, Conservative, Simcoe North, ON]

I don't have time to get into it, Ms. Bowers, but could you provide later to the committee the total net and gross exposure that Canadian taxpayers have through CMHC? You did provide that a couple of years ago, but I'd like an updated number, if that's okay.

[Romy Bowers]

Yes, we'd be very happy to.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you.

Minister, David Dodge, John Manley and the current Governor of the Bank of Canada have all said that government spending—all levels—is driving inflation, which is making the Bank of Canada hold rates higher for longer or maybe even increase them further.

Have you expressed concern to your colleagues or the Minister of Finance that they need to rein in spending so that Canadians don't face the pressure of continued interest rate hikes or its staying higher longer?

[Sean Fraser, Liberal, Central Nova, NS]

I've had many conversations with colleagues about the need to make sure we're spending responsibly. We are not, by the way, in a position where we will not have access to the ability to borrow. There is the potential to impact the interest rate, but my perspective when you look at the equation is that a huge portion of the inflation we've seen is driven by supply-side factors.

Whether that's the impact that climate change has had on the price of food, or whether that is the impact of the war in Ukraine on the price of energy or the price of wheat that's exported, there are a number of different factors that have interrupted supply chains and have driven up the cost of labour and materials. I think those are more responsible, but this is an issue that we need to be careful about and we need to make sure that we're spending responsibly.

[Adam Chambers, Conservative, Simcoe North, ON]

I'm on my last 30 seconds. We've talked a lot about supply side, but no one is really admitting the fact that it's going to be hard. Douglas Porter at BMO says it's almost impossible to build the number of homes. We haven't really talked about demand. I don't want to talk about immigration, but I want to talk about short-term rental housing.

Do you even understand or know, or does the government know or has it asked, how many units have actually been taken off the market and used for short-term rentals? Some studies suggest that in some cities up to 10,000 units could be released if somebody actually started asking the right questions. I don't know why this committee hasn't asked for this yet, frankly, from some of the short-term rental units. Why are we not looking there?

[Sean Fraser, Liberal, Central Nova, NS]

We have made a policy change with respect to the taxation of short-term rentals that will make it less appealing for people who own a property to take it off the market so that they can profit from short-term rentals. This is an area where I will ask for everyone's help. Given the nature of your question, I think we likely agree that this is an opportunity to free up, for families, housing that is not being used currently for anything beyond short-term stays.

I would welcome the recommendations of this committee should you choose to study measures the federal government can impose to actually reduce the number of homes that are being used for short-term rentals, particularly where they exist in communities where families need homes, and these days that's just about everywhere.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you, Minister.

[The Chair, Liberal, Bobby Morrissey]

Next is Mr. Fragiskatos.

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

Thank you, Chair.

Thank you, Minister and officials, for being here.

Minister, you've mentioned London already. Without surprise, I'm going to ask you about London.

To what extent do you think the approach that was taken with respect to the housing accelerator fund can serve as a model for other communities in terms of how you and the federal government approach the entire issue of building and of building more through the HAF program?

In terms of the collaboration and the very healthy back-and-forth that happened there, among other ways to engage communities, can London be that model?

[Sean Fraser, Liberal, Central Nova, NS]

Before I answer your question, I knew you were going to ask about London, because I sat on the finance committee with you during the pandemic and you asked about London every single day. I knew you would be true to character.

It's exactly the model that should be replicated across the country. London submitted, I should say, an ambitious application to grow its housing stock. They had e-permitting they wanted to adopt. They had upzoning. They had plans to focus particularly on affordable housing and supportive housing and recognizing that affordable housing is a health care issue. They were demonstrating leadership, but we didn't want to leave homes on the table that we could squeeze out of their housing accelerator fund application. We pushed them to do more to have four units, as of right, citywide, for example. We had conversations about what more they could do to continue to build homes, as they have plans to, around post-secondary institutions and around transit lines, and a handful of other measures.

They responded in the most encouraging way possible. They said, “Yes, yes, yes, we want to do it all, and if you support our application we'll be able to do it.” The result is that thousands of additional homes are going to be built in London over the next few years, but better than that, permanently changing the way that London permits homes to be built and the homes that they allow to be built is going to carry on forever.

This is the kind of thing that's going to have a lasting impact, not just over the next few years under the period of the housing accelerator fund's conflated timelines but permanently. It's this kind of change in cities like London across the country and in communities big and small that's going to help us escape the housing crisis and make sure ordinary people have homes they can afford.

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

Thank you for that. For my remaining time, Mr. Chair, I'm going to put him on the spot, but I know he'll appreciate it anyway. I'll give my time to Mr. Morrice for a quick question.

[Mike Morrice, Green, Kitchener Centre, ON]

I appreciate that. Thank you.

I want to start by saying that I really appreciate the candour you've brought to this conversation, Minister. I appreciate the genuine sense of collaboration that you're bringing to this role. I think it's really important that, if we're going to share in the fact that we're in a housing crisis, we have someone in your position open to working together to try to solve it.

I also think it's important to make clear that, as you've said, this is a crisis that's been decades in the making. It's not going to be solved within weeks. I think what is reasonable to expect is to see seeds planted for a solution both in terms of sustained investments and addressing the way that homes have been treated as commodities, instead of as places for people to live.

You and I have spoken about one way to do that, which is to remove exemptions for large corporate investors who have been commodifying the housing market, real estate investment trusts being one example of that. In my view, that is a clear litmus test for being serious about this.

Can you share whether you're going to give this idea some consideration over the coming weeks and months?

[Sean Fraser, Liberal, Central Nova, NS]

I'm open to all suggestions. I think we have to make sure that any special measure we have in place is actually a productive use of public money. Before I commit to any particular policy proposal and the exact measure that you've identified, I want to be very careful not to interrupt the potential addition of supply to the market with policy changes that have not been fully studied and understood.

I believe this is another area that the finance committee is going to cover in their report on the financialization of housing. More broadly, making sure we're treating homes like places for people and families to live, as opposed to commodities that people can hold onto and the value of which will appreciate, is going to be an essential part of the path forward. I just want to make sure that, to the extent we consider policy changes, it doesn't interfere with the supply. That is of paramount concern to me right now.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Morrice.

Thank you, Minister, for appearing with your officials.

[Sean Fraser, Liberal, Central Nova, NS]

Thank you for accommodating my request. I appreciate it.

[The Chair, Liberal, Bobby Morrissey]

Certainly you can see from the exchange that there's a lot of interest from this committee. Everybody is approaching it with the same level of concern.

Committee members, I will remind you about the witness lists for the study on Canada summer jobs.

Madam Chabot, put your earpiece back in.

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

What do you want, Mr. Chair?