Public Accounts Committee on Oct. 31st, 2018

[Chandra Arya, Liberal, Nepean, ON]

Where does that go to?

[Paul Rochon]

Where does the Global Affairs amount go to?

[Bradley Recker]

I'm not certain.

[Chandra Arya, Liberal, Nepean, ON]

Okay. You can always come back to us on that. Thank you.

The next is table 11.6, page 354 of volume 1. Under Finance, it says,“Mortgage or Hypothecary Insurance Protection” of $350 billion. I understand the two approved mortgage insurance companies are the Genworth Financial Mortgage Insurance Company and the Canada Guaranty Mortgage Insurance Company. On the approximately $350 billion, is the government making any revenue out of the guaranty provided?

[Paul Rochon]

Yes, we charge a guaranty fee.

[Chandra Arya, Liberal, Nepean, ON]

How much is it?

[Paul Rochon]

I don't have that in front of me, but I could easily get that for you.

[Chandra Arya, Liberal, Nepean, ON]

Okay.

[Paul Rochon]

Actually I do have it. We raised $22 million in the current fiscal year from that guaranty fee.

[Chandra Arya, Liberal, Nepean, ON]

That's $22 million for the outstanding guaranty of around $250 to $300 billion?

[Paul Rochon]

It's equivalent to 2.2% of the premiums. This is a situation where the two private sector entities are insuring mortgage loans in exchange for the government guaranty, which is a 90% guaranty in the case of default. We charge a fee equivalent to 2.25% of the premiums they raise.

[Chandra Arya, Liberal, Nepean, ON]

Okay. Do we need to do this? I know you do this justice and say that there's no problem of loss under this guaranty, but do we actually need to do this? Maybe there was a time when these sorts of guaranties were required to make it attractive for the companies to lend the money for a mortgage, but do we still need this?

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Arya.

Mr. Rochon.

[Paul Rochon]

The guaranty fee is principally in place to provide a level playing field between the private sector insurers and the Canada Mortgage and Housing Corporation, which is also active in the area and insures about a half of the market. Of course, CMHC has an implicit 100% Government of Canada guaranty. So the 90% guaranty to the private insurers was to provide a level playing field between private sector entities and the government's Crown corporation, CMHC.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Rochon.

Thank you, Mr. Arya.

We'll now come back to Mr. McCauley.

[Kelly McCauley, Conservative, Edmonton West, AB]

I'd like to take a couple of seconds of my time to recognize that this might be Mr. Christopherson's final public accounts meeting.

[David Christopherson, NDP, Hamilton Centre, ON]

It's not only for public accounts; it might be the last one.

[Kelly McCauley, Conservative, Edmonton West, AB]

Oh, I see. You're like Iron Man.

Mr. Ferguson, am I correct there was about $9 billion of lapsed funding from the last fiscal year?

[Michael Ferguson]

I don't know the exact amount, but that sounds about right.

[Kelly McCauley, Conservative, Edmonton West, AB]

Could we assume, then, that there was a billion-dollar adjustment for the discount rates, but that, adding this in, if that money had been spent, we would have been looking at a $28-billion deficit for last year?

[Michael Ferguson]

I guess you could say that if the government had spent any additional amount without getting any additional revenue it would go right onto the bottom line.

[Kelly McCauley, Conservative, Edmonton West, AB]

Do you know how much of that lapsed funding is identified in next year's budget? I'm curious.

[Michael Ferguson]

That's not information I would have.

[Kelly McCauley, Conservative, Edmonton West, AB]

I want to go back to the discount rate. You mentioned that public accounts added a billion-dollar deficit and, I think, several billion dollars going forward. Are you satisfied with the partial change in how we're setting the discount rate for the public service pensions?

[Michael Ferguson]

I think they have done a very good job on that analysis. Yes, the amount they've come up with is a sound amount for valuing the obligations for pension promises in the unfunded portion of the pension plan. Yes, I think it's a very good change.