Human Resources Committee on Oct. 30th, 2023

[Romy Bowers]

I appreciate that feedback from Mr. Chambers. That's the kind of feedback that's very valuable for us, so we'll take that.... I don't know about the specific project he's referring to, but it's very valuable to have this information so that we can continue to improve our programs going forward, so thank you, Mr. Chambers.

[The Chair, Liberal, Bobby Morrissey]

Could you provide a written response to the committee when you have had a chance to analyze the information?

[Romy Bowers]

I can, with respect to the building code, yes.

[The Chair, Liberal, Bobby Morrissey]

Thank you.

Mr. Fragiskatos, you have the floor for five minutes.

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

Thank you, Chair.

Thank you to all of you for being here today.

Ms. Bowers, at the beginning of your presentation, you talked about supply and how supply is really underpinning the housing crisis before us. Regarding the waiving of GST on the construction of apartments, what is that expected to do in terms of adding to the number of units across the country? Do you have figures on that?

[Romy Bowers]

These are early days, so we don't have estimates.

I live in Toronto, and some of the developers I talk to on a regular basis have said that it's reduced per-unit costs by up to $50,000, so we think there's going to be a significant impact.

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

I did see that Dream Unlimited, a very large builder based in Toronto, said that the measure alone would help them add 5,000 units, just that company alone. That speaks volumes.

You also mentioned the importance of adding rental units to supply. Why do you emphasize that?

[Romy Bowers]

I mentioned the fact that we have four million rental units. Two million are old units built in the 1960s and 1970s. Two million are new condos that are owned by private individuals and rented out. I really believe that purpose-built rentals provide security of tenure and are the most appropriate form of housing for the 30% of Canadians who are renters.

I really appreciate the condos as rental stock, but given that we're a growing population and that we welcome newcomers who are initially renters, I feel that there is a need to expand the stock. There hasn't been a significant expansion since the 1970s. There's been some uptick in recent years, but I think we need to continue with investments in this area.

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

Shifting focus now to the accelerator funds, for the everyday person watching at home, you talk about impediments to building on the local level and how the accelerator fund is meant to incent changes at the municipal level.

What sort of impediments are you talking about? Could you get into some of the specifics of exclusionary zoning and how that impacts supply or the lack thereof?

[Romy Bowers]

Yes, and maybe I can tell a story.

I live in the west end of Toronto. For many years, it was not legal to build laneway houses in Toronto. It was very difficult, because of very restrictive municipal regulations. It's possible, by changing these rules, to create rental units very quickly by using existing infrastructure. That's one example of changes that could be incented by the accelerator fund.

Some municipalities have embraced laneway housing and other forms of housing, but other municipalities have not. I think there's a huge opportunity for all municipalities in Canada to adopt progressive practices like this.

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

I want to ask you about the recent CMHC report on housing starts. Where are we overall in the country in terms of the numbers?

[Romy Bowers]

Housing starts tend to be, as I mentioned, between 200,000 and 250,000 units. I don't have the most recent number off the top of my head, but it's still above 200,000 units. We feel that housing starts are still holding up, despite the very challenging environment. They have come down, but we feel that there is some optimism in that they haven't decreased as much as we had thought. We feel that some of the changes that have been made recently with respect to the GST should provide further support to the sector.

As I mentioned earlier, much more needs to be done. We need to basically double our housing starts, so we need to work as a country to figure out what the impediments are and act together to really break them down.

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

I have less than a minute left, and I didn't want to let the opportunity pass on homelessness.

With the national housing strategy, how many individuals have been taken off the street? How many individuals who were homeless are now housed as a result of programs that are available through the national housing strategy?

[Kelly Gillis]

When we look at the first three years of Reaching Home, we see that over 70,000 people were placed in more stable homes. When we look at a year out, we see that three-quarters of them are still in stable homes, so it's working.

We have 122,000 people who were prevented from being homeless. We have 30,000 people who were given income assistance. We have 7,400 people who were given job training to give them a more sustainable lifestyle going forward. We have 11,500 people who were given new paid employment; 7,100 people who were given education programs, again, to change their forward trajectories; and 27,000 people who were given temporary accommodations during the COVID period of time. We created 222,000 temporary spaces during the COVID period of time to keep people safe from the health effects of the pandemic.

That was just in the first three years of the program. We're in the fourth year now, and we've created a new online system so that our shelter capacity can report that information much more efficiently. We'll be reporting and making that information transparent once this fiscal year completes.

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

Thank you.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Fragiskatos.

Ms. Chabot for two and a half minutes.

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

Ms. Bowers, with all due respect to the minister and to you as the CMHC program administrator, I feel like we're rolling along and that nothing will really change the current housing crisis. I fear that, in six months, we'll be back here and nothing will have changed.

As you indicated, the national housing strategy is an $82 billion plan, funded by taxpayers. Its goal should be to reduce the pressure on individuals seeking affordable or social housing.

I won't ask you to comment on the government's decision regarding the goods and services tax (GST). The GST exemption can incentivize housing construction, but there's no guarantee for renters that rents will drop. A lot of housing will need to be built before rents go down.

I'll ask the question I asked earlier again. There are existing measures that could be implemented now. CMHC boast about the benefits of the national housing co‑investment fund. However, in Quebec, thousands of low-income housing units, which are subject to a bilateral agreement between Quebec and Ottawa, are boarded up because CMHC is refusing to emit payment, because the amount exceeds the initial renovation costs.

Is that correct?

[Romy Bowers]

Mr. Chair, I can't speak to individual projects or individual applications, but if Madame Chabot would give me an indication of the applications that are stuck in the CMHC pipeline, I would be very happy to look into those.

All of our programs are oversubscribed, and we are well past the 50% point in committing the funding that's been allocated to us. We have a substantial amount of repair funding that could be allocated for repairs in Quebec, and I'd be very happy to discuss any projects that she may be concerned about.

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

We'll give you more details and we'll expect an answer. It makes no sense. Measures could be taken now.

Ms. Gillis, Reaching Home: Canada's homelessness strategy must be continued. It seems that there are ongoing negotiations with Quebec on that subject.

Could you update us on the status of those talks?

[Kelly Gillis]

Thank you for the question.

We're in serious discussions with Quebec on that subject. I think that we've made a lot of progress in terms of granting funds under the program for the next two years. I am certain that we'll reach an agreement with Quebec shortly.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Madame Chabot.

We now have Ms. Zarrillo for two and a half minutes.

[Bonita Zarrillo, NDP, Port Moody—Coquitlam, BC]

Mr. Chair, is that me?

[The Chair, Liberal, Bobby Morrissey]

That is you, Ms. Zarrillo.

[Bonita Zarrillo, NDP, Port Moody—Coquitlam, BC]

Thank you so much. My comments are for Ms. Bowers.

Ms. Bowers, the last time you were here, I did take issue with REITs being funded through CMHC. I just wanted to read something from RioCan, an article:

“The cheapest debt in town is CMHC-guaranteed debt, which you can put on rental residential buildings, so we're quite hopeful that our first CMHC transaction will take place before the end of the summer,”

said the CEO from RioCan.

Over the next few years, the company may boost financing with CMHC-guaranteed loans by as much as $800 million,

said the CEO.

The financing can be about 80 basis points less than a traditional commercial mortgage, he added.

“Hopefully we'll do a lot of them,” he said. “We intend to replace a lot our commercial debt because it's just a lot cheaper: 80 basis points on $1 billion is $8 million a year.”

That may be a boon for unit holders. “When we're saving $8 million a year, there's $8 million more to distribute, to invest.”

This is the CEO of RioCan boasting about how the Canadian government's CMHC is making the company's unitholders rich through increasing their dividends. At the same time, rents are rising in many of these REITs. It's clear from the comments of the CEO of RioCan that they don't need CMHC incentives, that they're fully willing to go to traditional commercial lending and that none of the sweetheart rates that they receive are actually flowing down to renters in the market.

Was the goal of CMHC when underwriting with such low interest rates to these REITs that they would redistribute it to their shareholders?

[Romy Bowers]

I can't comment specifically on the RioCan situation, but I can tell you that CMHC provides mortgage insurance for purpose-built rental developers, which include REITs, and we feel that it's important to do this because we have a deficit of purpose-built rentals in Canada, and the CMHC insurance that's provided provides a little bit of financial incentive for commercial developers to engage in this space.

It's much more lucrative for these developers to develop condos versus purpose-built rentals, and its for this reason that we provide mortgage insurance to make the financial equation work for those who are willing to provide purpose-built rentals. Its very clear that there has to be a level of profitability that is attractive for the sector for the large amount of capital that we need to grow it.

Having said all this, I am also very sympathetic to the need to have very strong protections so that tenants' rights are protected. This is usually provincial, territorial or municipal jurisdiction, but from the CMHC's perspective, our goal is to provide cheaper financing in order to provide growth in the sector. We're willing to provide premium discounts for affordability and other social targets, but we feel that the companies that we work with are responsible corporate actors and that they're contributing to the housing supply that our country desperately needs.