Public Accounts Committee on Nov. 3rd, 2016

[The Chair, Conservative, Kevin Sorenson]

What page, sir?

[Chandra Arya, Liberal, Nepean, ON]

It is page 11.38 in volume I.

[The Chair, Conservative, Kevin Sorenson]

It's page 11.38 of volume I.

[Paul Rochon]

These are the insurance programs that are managed by CMHC, for which the Minister of Finance has the authority to set an overall limit.

[Chandra Arya, Liberal, Nepean, ON]

This includes CMHC?

[Paul Rochon]

Yes, it includes CMHC. It's essentially the Minister of Finance who authorizes limits for the mortgage insurance programs run by CMHC.

[Chandra Arya, Liberal, Nepean, ON]

But I thought CMHC insurance programs—

[Paul Rochon]

Sorry, I should be clear. It's actually CMHC, the Canada Guaranty, and Genworth, the three mortgage insurers that operate in Canada.

[Chandra Arya, Liberal, Nepean, ON]

But I thought the insurance programs were run by, say... For example, CMHC is around $520 billion. That is in table 9.7.

[Paul Rochon]

That's right. The $215 million, David was just telling me, relates to the two private insurers, Genworth and Canada Guaranty.

[Chandra Arya, Liberal, Nepean, ON]

Sorry?

[Paul Rochon]

There's $215 million in a limit that is established for the two private sector mortgage insurers, which are Genworth and Canada Guaranty.

[Chandra Arya, Liberal, Nepean, ON]

Okay.

[Paul Rochon]

The remainder is for CMHC.

[Chandra Arya, Liberal, Nepean, ON]

My second question is on volume 3 at page 2.17, regarding the Senate. It states that for “Loss following a review of claims for living allowance in the National Capital Region and/or travel and/or office expenses”, the “Amount expected to be recovered” is $664,000. Do you think this is completely recoverable?

[Bill Matthews]

This represents the best estimate of what's recoverable. We will update that in future years.

That represents our best estimate. With estimates, the only thing we know is that they're going to be wrong. We will come back and update based on what actually happens, but it was our best estimate at the time that these figures were prepared.

[Chandra Arya, Liberal, Nepean, ON]

Okay.

Mr. Rochon, I have one question. Did federal budget projections more often underestimate than overestimate the size of budgetary balances over the last 10 years? If you look at the last 10 years, were the projections underestimated more often than they were overestimated?

[Paul Rochon]

I can't tell you offhand, but I can easily get you that information.

[Chandra Arya, Liberal, Nepean, ON]

Thank you.

[Paul Rochon]

Just to be clear, going back to your last question, the limits for the mortgage insurers are $215 million for the two private sector mortgage insurers and $600 million for CMHC, of which CMHC has used $520 million.

[Chandra Arya, Liberal, Nepean, ON]

Okay. On a related question, why should you give guarantees to a private sector insurer?

[Paul Rochon]

The guarantee is provided to the private sector insurers because there's an implicit 100% guarantee on the CMHC as a crown corporation of the Government of Canada. Therefore, to allow for some form of level playing field, the government has said they will guarantee 90% of the losses of the private sector mortgage insurers.

[Chandra Arya, Liberal, Nepean, ON]

Why not stop giving guarantees to private sector insurance? Why shouldn't we just go back and do everything through CMHC?

[Paul Rochon]

The benefit of having the private sector insurers is that they are, at a minimum, responsible for the first 10% of their losses. The way that guarantee would operate is that effectively those insurers would need to go bankrupt before we would put in place a guarantee. Clearly there's an interest in the Government of Canada ensuring the stability of the housing market.

[Chandra Arya, Liberal, Nepean, ON]

Mr. Matthews, did any department or agency overspend?