Industry Committee on May 17th, 2022

[Kevin Lee]

Yes, it applies to western Canada. A certain manufacturer, the main manufacturer in all of western Canada, accused Americans of dumping drywall into Canada five years ago at the time when we were trying to rebuild Fort McMurray and other places. It was a big issue.

At that time, we were at least able to get the tariff reduced quite a bit by looking at the impact not only on the manufacturer but also on the end-users, principally homebuyers and homeowners. That duty lasted for five years. It has just in the past few days been determined by the CBSA that there is a likelihood of continued dumping, so it's going back to the trade tribunal to again assess what the duty should be.

Again, we would say that it seems like a questionable duty, because there's one company that basically has a monopoly in western Canada—speaking of oligopolies and trade competition and all the rest—and it's also at a time when we really can't afford to have even more impacts increasing costs of construction material. We'll be engaged heavily in that.

[Michael Kram, Conservative, Regina—Wascana, SK]

Thank you very much.

I would like to shift gears now and go to Ms. Kothawala from the Convenience Industry Council.

You've mentioned quite a few times now the problem of credit card fees. I haven't quite got my head around where you're coming from. I've heard that other countries, such as Australia and the EU, have capped their fees and that there needs to be a cap on fees, but I also believe I heard you say that it's not enough to just cap the credit card fees because hidden fees and costs will creep up another way.

Are you in favour of the government putting a cap on the credit card fees? What should the government do when it comes to the credit cards?

[Anne Kothawala]

We're definitely in favour of cap on fees. We're just saying that now what we have seen as a result of COVID and a number of changes in the system is that simply capping the fees is not sufficient. We actually need to take a look at making sure that we close any loopholes so that other parts of the ecosystem don't then turn around and make up for that cap and charge a fee in some other way.

[Michael Kram, Conservative, Regina—Wascana, SK]

Can you give us a heads-up as to what some of those loopholes may be? Are there any obvious culprits that we should be aware of?

[Anne Kothawala]

Again, I'm not the expert, but this information came out of talking to our members and surveying our members to better understand it.

Did the voluntary code of conduct work? They basically said that the voluntary code of conduct somewhat worked, in a sense that the fees were kept at the rate that they were supposed to be at voluntarily; however, the credit card companies and processors found other ways to charge for transactions.

Again, I'm happy to share with the committee afterwards a few of the tangible examples of where we're seeing that creep in terms of hidden fees.

[Michael Kram, Conservative, Regina—Wascana, SK]

If you could provide a written submission of some of those tangible examples, that would be very helpful.

Mr. Chair, I believe I'm out of time, so we'll leave it at that. Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Finally, for our last round of questions, we'll have Mr. Fillmore for five minutes.

[Andy Fillmore, Liberal, Halifax, NS]

Thanks, Chair.

I'm going to direct my questions to you, Mr. Lee. I see you're an architect and an engineer. I'm a planner and an architect, so I'm sure we'll have a very enjoyable conversation—outside of the committee as well.

There's a housing crisis, so a healthy home-building association and ecosystem is really important right now. You've talked about a number of challenges that you're facing. I wonder if you could tell us the things that are in the purview of the federal government, like the building code and the GST. I'm interested in the GST/HST cost effect that gets passed on to homebuyers.

Are you able to quantify that impact? Let's pause on that one for a minute. Is it a percentage of an average house in Canada? For a new build, what is the GST/HST?

[Kevin Lee]

When you look at just the GST/HST component, one of the big issues that we've had for a long time, since its inception, is that there is a new housing rebate, but it gets capped out. Up to $350,000, you don't have to pay and it goes down from there. Since it was introduced in the 1990s, it was supposed to be indexed as house prices went up. It's never been indexed. Unfortunately, it's sometimes hard to find a house in many cities at $350,000 or even $450,000, where you're even going to be eligible for that GST rebate. We've been saying forever that it needs to be indexed.

When you talk about the overall taxation rate on housing, a lot of it comes in at the municipal level. In some cases, especially in the GTA.... Our GTA association did a study and the worst one was Markham, where about 25% of the sale price of a home is government-imposed charges and taxes. If you buy a million-dollar home, $250,000 of that is tax.

[Andy Fillmore, Liberal, Halifax, NS]

Okay, so this is something we can work on.

It has been explained to me by the not-for-profit housing sector, and it's for the profit sector as well, that building fees, permit fees and taxes can, in some jurisdictions, be as much as 25% of the cost of the product, which is remarkable. It seems like that's one way the federal government could have an impact.

Is there anything in the building code that would be related to housing affordability? What do you need there?

[Kevin Lee]

I think one challenge with the building code right now is that there are a lot of good-intentioned things that are trying to be put into the building code, but every single one of them increases the price of a house.

Right now, we're saying we have this housing affordability crisis, but we also have a climate change crisis, so there's an accelerated push to get to net-zero really fast. That is good, except it's really expensive. We have our net-zero council, and we have the best leaders in the industry working on this solution all across the country.

Our point in all of this is that we really need innovation and we need to do it in such a way.... We need R and D. We can't regulate based on having to get to this point no matter what the cost, especially in new housing where we build 200,000 or ideally 400,000 houses a year, but there are 14 million existing housing units in Canada, many of which are very inefficient. They're very beautiful but very old.

We really need to focus on the existing housing stock and make sure that when we're doing something to the national building code, we do it in a step-fashion. If we say that we want to get to here, but it's going to be really expensive to get there for new homebuyers, let's figure out how we can do it. Put the money into R and D to find the solutions before we regulate something that's going to dramatically increase the cost of home ownership for people.

We're working very hard on that at the association. We're working with the Department of Natural Resources on innovation, but the regulatory marches on.

How do we avoid making home ownership even harder to attain? Let's make sure we don't do things in the code before their time.

[Andy Fillmore, Liberal, Halifax, NS]

Okay.

Many jurisdictions are now finding that provincial governments are interfering in municipal business to try to accelerate the production of housing. In Nova Scotia, the premier created a special housing commission that is, in effect, discarding municipal plans that have been heavily consulted on with community. This is causing Nimbyism. That's one of the challenges we have faced.

Are the responses to the housing crisis, the appropriateness of where things get built and whether they observe planning rules things your board and your membership discuss?

[Kevin Lee]

Yes, all the time. A lot of the time municipal plans are actually in place and fine, and a development is going to start, and then the Nimbyism starts. The development actually complies with the plan, but local politics enter, and as I was saying earlier, for municipal officials it can be hard. You're caught as an elected official. The plan says to build something. Let's say it's supposed to be a 10-storey building. The community finds out, and then they start fighting it. You're in a tough position.

For the leadership from the federal government to say we need 3.5 million homes built over the next decade, that's a really important number. We need to double housing starts. It can't all just be new greenfield developments. Some of it has to be infill, so then you get provincial governments weighing in.

I'll take the opposite view. I think municipalities need help because the local politics are tough, so when the provincial government comes in and says, “We need to do something, and this includes infill,” that's an important message as well. At the local level, we need things like as-of-right zoning, where you don't get to go back to city hall to fight it, because once it's zoned for six storeys, the fact that a six-storey building is going in can't be fought. There's no discussion anymore on a main thoroughfare. If a six-storey is supposed to go in, it's going to go in. As much as we're saying that it's a challenge for us at the municipal level, there's no question that municipal politicians are in a tricky spot too.

I would say that higher levels of government can lend a hand by saying, “These are the targets we need. It involves intensification. I think we all need to work on this together,” and help explain to Canadians what new vibrant communities can look like too. There are some wonderful intensification projects that bring new people into a community, new shops, new stores, things that never would have been able to be there if we didn't have more people living there, and of course they bring in the transportation and the public transit at the same time.

[Andy Fillmore, Liberal, Halifax, NS]

Your response to the housing crisis is infill and intensification in existing communities, not the greenfield stuff. That's the mistake my province is making.

[Kevin Lee]

Build smartly, upwards, inwards and outwards. Just get the right balance, and we'll have great communities.

[Andy Fillmore, Liberal, Halifax, NS]

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you, honourable members.

Thank you to all the witnesses for sharing their insights with us today.

The meeting was very enlightening for the members of the committee.

I am very happy to say that we are ending on time and on budget, which is always a good thing in Ottawa.

Thank you to the witnesses, the honourable members, the analysts, the clerk and the technical support staff.

The meeting is adjourned.