Evidence of meeting #85 for Human Resources, Skills and Social Development and the Status of Persons with Disabilities in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cmhc.
A video is available from Parliament.
Noon
Liberal
Noon
Liberal
Wayne Long Liberal Saint John—Rothesay, NB
Thank you, Chair.
Good afternoon to my colleagues.
Ms. Bowers and everyone else, thank you for coming.
I have a comment first. I want to compliment you on the Reaching Home program. I think it's a wonderful program. I know that in my riding the Human Development Council administers the program in New Brunswick. Certainly they, and most of the non-profits, really appreciate how impactful that program is and how it's helping with respect to homelessness.
Also, I actually met with a developer this weekend, and he was saying two of his biggest line items are the GST and interest. Obviously, our government now has eliminated the GST on new builds for affordable housing. Are you able to comment on the uptake you're getting from provinces to match that?
Noon
Deputy Minister, Office of Infrastructure of Canada
Since that particular announcement was made, I have talked with stakeholders, including the Ontario Home Builders Association, whom I met with recently, and they have said it has changed the equation in making the math work. We do anticipate a number of developments that didn't pencil before to be able to now move forward. There has been quite a lot of enthusiasm on the way that this particular initiative is changing the math to make things work.
Noon
Liberal
Wayne Long Liberal Saint John—Rothesay, NB
I'm in New Brunswick. Obviously our premier, Premier Higgs, has decided not to pick up his side of it. Are you getting co-operation from other provinces? Are you able to comment on that?
12:05 p.m.
President and Chief Executive Officer, Canada Mortgage and Housing Corporation
B.C. has indicated support, and so has the Province of Newfoundland. There's been some indication of support from Ontario, but I have not seen any definitive decisions on that. We anticipate to hear back from the other provinces as time passes.
From CMHC's perspective, there have been a number of projects that were on the sidelines that have now penciled, to use the construction terminology, and I think lifting the GST has had a positive impact with respect to that.
12:05 p.m.
Liberal
Wayne Long Liberal Saint John—Rothesay, NB
Thank you.
With respect to the accelerator fund, I think that London, Hamilton, Brampton, Halifax, Kelowna.... My colleague to the right here is quite pleased with that, but I'm not. I'm in Saint John, New Brunswick, and I recently have been made aware that another city in our province, Moncton, would be in another tier of cities that have been selected. I'm just wondering if you can elaborate on how Moncton was chosen, and what criteria are being used for that second tier.
Thank you.
12:05 p.m.
President and Chief Executive Officer, Canada Mortgage and Housing Corporation
I'm not sure if there's a second tier. The same criteria are being used for all municipalities. I think for larger municipalities there is a higher standard that has to be met, given the complexity of the housing. I think they need seven reforms instead of five.
In terms of the selection process, we have almost like a drop-down menu of reforms we think will be most impactful in spurring housing construction. We work with each municipality to choose which of those reforms are most appropriate for them. Most importantly, CMHC has a historical database of housing starts for that municipality. We work with the municipality and really have a discussion as to an ambitious target with respect to exceeding historical housing starts and if these municipal changes and transformations can actually result in the increase in supply we want.
12:05 p.m.
Liberal
Wayne Long Liberal Saint John—Rothesay, NB
Thank you for that.
Also, with respect to the rapid housing initiative—which is a wonderful program that's been rolled right across the country—I'm wondering if there is an opportunity to see how projects have been evaluated versus other projects in each of our particular ridings.
12:05 p.m.
President and Chief Executive Officer, Canada Mortgage and Housing Corporation
Yes, absolutely.
12:05 p.m.
President and Chief Executive Officer, Canada Mortgage and Housing Corporation
If you require more detailed information about the assessment criteria, I would be very happy to provide it. I think it's available on our website at a very high level, but if you have any specific questions, I'm very happy to provide the information.
12:05 p.m.
Liberal
Wayne Long Liberal Saint John—Rothesay, NB
Okay, thank you.
When you were here last time, we talked about culture and how a lot of change has to come from within. We certainly recognize that you have a large mandate or a large responsibility to roll out money for affordable housing. I know it's a daunting task and I know the challenges are great, but we also talked about internal processes.
Are you able to tell the committee about any measures you've taken to streamline and refine processes to ensure affordable housing projects do move forward in a timely and efficient manner?
12:05 p.m.
President and Chief Executive Officer, Canada Mortgage and Housing Corporation
Yes. We have a continuous improvement process in terms of having better communication lines with the proponents, setting expectations in advance, reducing the number of documents that are required and being very clear about the other funders who need to be part of the equation.
Through better communication, we hope to provide better service. We're constantly surveying our clients to identify pain points and we try to resolve them on a priority basis.
12:05 p.m.
Liberal
12:05 p.m.
Conservative
Adam Chambers Conservative Simcoe North, ON
Thank you very much, Mr. Chair.
Ms. Bowers, congratulations on your new appointment. That's exciting. The IMF is a great organization. I'm sure you'll enjoy it.
In September of 2021, CMHC's net exposure was about $609 billion. Two years later, the taxpayer net exposure of CMHC is $623 billion. Can you explain the increase? Is that driven by the value of house prices going up, the number of clients, the market share increase...?
12:05 p.m.
President and Chief Executive Officer, Canada Mortgage and Housing Corporation
Unfortunately, our market share has not been increasing that rapidly, so that's not the source of the increase.
The biggest source of increase has been that CMHC has been making a concerted effort to provide more insurance for purpose-built rental housing. We've seen a pullback from some of the banks in conventional lending. CMHC's volume in multi-unit mortgage insurance has increased significantly. That's really the main driver for the increase.
12:10 p.m.
Conservative
Adam Chambers Conservative Simcoe North, ON
Thank you.
In 2021 the capital on hand was $13.2 billion. What capital on hand do you have today at CMHC?
12:10 p.m.
President and Chief Executive Officer, Canada Mortgage and Housing Corporation
Actually, I don't have that number on me. I can provide that to you after the fact, if that's okay.
12:10 p.m.
Conservative
Adam Chambers Conservative Simcoe North, ON
Okay.
I guess the question is that in a market where there's concern about overvaluation in the housing market, the overheated housing market, and taxpayer exposures going up, CMHC keeps capital on hand. In the early eighties, actually, taxpayers had to put money into CMHC.
You mentioned to my colleague that as long as unemployment remains low, you feel confident about people's ability to pay. Is there an unemployment level where you would begin to get concerned?
12:10 p.m.
President and Chief Executive Officer, Canada Mortgage and Housing Corporation
I'm a risk manager by profession, so this is something I think about every day at CMHC.
We're very aware of the fact that we have to run our business with due regard for loss. We conduct stress testing on a regular basis to make sure that there is no loss that has to be borne by Canadian taxpayers. Our stress testing, which assumes almost a doubling of the unemployment rate, would still ensure that we have enough capital to withstand those losses.
Again, I want to state that this is a stress test. It's a hypothetical scenario. We do stress testing on a regular basis. In this area, we feel that we need to be very conservative and actually assume the worst so that taxpayers are protected.
12:10 p.m.
Conservative
Adam Chambers Conservative Simcoe North, ON
Okay. Thank you.
What is CMHC's view on how much additional cost will be imposed by NRCan and the National Research Council's new building code?
12:10 p.m.
President and Chief Executive Officer, Canada Mortgage and Housing Corporation
We are actually doing a study on this, because it could have an impact on the costing for the projects that we finance. Unfortunately, this work is still in progress. We should have some results of our assessment by the end of the year.
12:10 p.m.
Conservative
Adam Chambers Conservative Simcoe North, ON
Could I ask that those results be tabled with the committee? Perhaps, since you may be transitioning, we can have that followed up.
That National Building Code proposal has been around for three or four years. You would think that the organization that's in charge of managing or at least looking at affordability would have a view on how much this cost would add per unit, which is ultimately borne by the developer up front, of course, and then eventually the purchaser. Some studies suggest that it's $30,000 to $50,000 a unit. It would be very helpful for the committee to have CMHC's view on that piece of information.
As well, there seems to be a bit of an execution issue. In my last 30 seconds, I'll leave you with an example. A regional government replied under the RHI, the rapid housing initiative, to increase the number of units by renovating existing units that they already owned, but they were adding doors. They were turned down, even though the doors cost only $150,000 a door. They were turned down because they didn't exactly fit the rigid scope of RHI.
I think we need to look better at our ability to execute and think outside the box. Other levels of government, by the way, count that in their funding programs. We missed out on an opportunity to very cheaply add new doors in some communities across our region.
Thank you.
