Public Accounts Committee on May 19th, 2016

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Excellent. Thank you.

[The Chair, Conservative, Kevin Sorenson]

We will now go to Mr. Poilievre, please, for five minutes.

[Pierre Poilievre, Conservative, Carleton, ON]

One of you was talking about CMHC and the increase in the size of its book over the last decade.

I think it was you, Mr. Matthews.

Are you concerned about that increase?

[Bill Matthews]

If you look at our crown corporations, Mr. Chair, they operate under very strict parameters. The expansion I referred to under CMHC was deliberate growth, if you will, by way of additional programs implemented by the government of the day to increase liquidity in the Canadian financial markets. It is not as though it was done without notice; it was deliberately done, and they were the vehicle of choice.

If you ask me whether I am concerned about their size from a financial risk perspective, there are lots of articles these days about the mortgage industry in Canada, etc. I would be concerned if I had a crown corporation that was operating outside of its legal mandates, taking on programs we weren't aware of, but this was very much, I would call it, deliberate growth.

Mr. Leswick may want to join in.

[Pierre Poilievre, Conservative, Carleton, ON]

When you talk about policy decisions to expand liquidity, are you talking about the mortgage purchase program that happened during the height of the recession?

[Bill Matthews]

That would be one example, yes.

[Pierre Poilievre, Conservative, Carleton, ON]

That was approximately $75 billion?

[Bill Matthews]

If I recall correctly, I think you're in the ballpark, but I can't say I'm certain.

[Pierre Poilievre, Conservative, Carleton, ON]

The book of CMHC right now is just over half a trillion dollars, I think?

[Bill Matthews]

It's in that neighbourhood, yes. Their financial statements are disclosed.

One thing I did not mention, Mr. Chair, is that the Auditor General does individual audit opinions on all of the crown corporations, so there is specific information out there on CMHC.

[Pierre Poilievre, Conservative, Carleton, ON]

What portion of the growth in the book is accounted for by the liquidity program that you mentioned earlier?

[Bill Matthews]

I'd have to undertake to get back to you. I suspect Mr. Leswick doesn't know off the top of his head; we'd have to get back to you to isolate the impact of those programs on CMHC overall.

Some of those programs, to be fair, have been unwound. That was a really good example of an event that was deliberate growth. Then there is also the growth of the mortgage industry in general.

[Pierre Poilievre, Conservative, Carleton, ON]

Do you have anything to add to that?

[Nicholas Leswick]

I don't have the ratio at the tip of my fingers, but I think the direction in which the member is going is correct. The size in that balance sheet is being driven by the size of the long book, in terms of CMHC's underwriting of mortgages with high loan-to-value ratios.

[Bill Matthews]

I'm sorry, Mr. Chair, my colleague may have some information.

[Diane Peressini, Executive Director, Government Accounting Policy and Reporting, Treasury Board Secretariat]

According to CMHC's published annual reports, the economic action plan in 2009 added about one billion dollars in both 2010 and 2011 related to social housing and those types of initiatives. They also provided $2 billion in direct low-cost loans to municipalities.

[Pierre Poilievre, Conservative, Carleton, ON]

Those are very small [Inaudible--Editor]

[Diane Peressini]

Then, through economic action plan 2014, the CMHC's guarantees under the MBS—the mortgage-backed securities program—went up to $80 billion, and new issuances for the Canadian mortgage bond program were $40 billion. In economic action plan 2013 there was an investment of more than $1.25 billion over five years, starting in 2014, to extend investments in affordable housing.

So there have been some sizeable investments.

[Pierre Poilievre, Conservative, Carleton, ON]

Okay, but those individual $1-billion or $2-billion investments in affordable housing would not be a large share of the half-trillion-dollar book of the CMHC.

[Bill Matthews]

No, Mr. Chair. For the member's question about the actual size of the loan book, we'll have to get back with a little bit of analysis for you, if that's acceptable.

[Pierre Poilievre, Conservative, Carleton, ON]

Have you examined CMHC's securitization program at all?

[Bill Matthews]

I have not and I can't speak to whether the Auditor General has looked at that as part of their audit.

[Michael Ferguson]

We have not looked at the program specifically. The audit we would do at CMHC would be on the financial statements and expressing an opinion as to the fairness of the presentation of those financial statements, making sure that all these programs have been properly accounted for.

[Pierre Poilievre, Conservative, Carleton, ON]

The interest ratio of the Government of Canada right now is just over nine cents; for every dollar in revenue we have about nine cents in interest expense on Canada's national debt.

How does that compare historically?

[Bill Matthews]

I'll start, and Mr. Leswick may wish to add.

If you look right now, on revenue of roughly $280 billion, the interest expense....

I lost my number. Let me get Diane to grab that for me.