Debates of Nov. 7th, 1995

National Housing Act

[Bill Gilmour, Reform, Comox—Alberni, BC]

Mr. Speaker, the member is absolutely correct. However the bill increases the numbers. We are saying the $100 billion already in the pot created the numbers the member just stated. They are absolutely correct.

We are opposed to increasing that amount by another $50 billion. We are not opposed to having the $100 billion or CMHC doing business as it is presently doing. We are opposed to increasing the liability limit.

[Dennis Mills, Liberal, Parliamentary Secretary to Minister of Industry]

Mr. Speaker, coming from downtown Toronto I have to stand to defend the Canada Mortgage and Housing Corporation vigorously. It represents in the greater Toronto area not just support for those in the home building industry. It also sends a signal of confidence to all other sectors of the economy, from the carpet makers to the makers of stoves, refrigerators and the various accoutrements that go into putting a home or an apartment together. Quite frankly those spinoffs have an effect on every region of the country.

When we calculate the contribution of Canada Mortgage and Housing we must not forget its contribution to all spinoffs in the economy.

[Bill Gilmour, Reform, Comox—Alberni, BC]

Mr. Speaker, I thank the member for his comment. It is agreed that CMHC is a benefit to the economy, absolutely. We do not dispute that. The difficulty we have is upping the ante.

We recognize where CMHC has been and will continue to be. To this point in time it is fine. The country is broke. Right now we cannot see increasing the ante by $50 billion. We think it inappropriate at this point in time.

[Geoff Regan, Liberal, Halifax West, NS]

Mr. Speaker, as my colleagues know, the purpose of the bill is to increase the ceiling for mortgage loan insurance under the National Housing Act. This will enable Canada Mortgage and Housing Corporation to continue underwriting home mortgage loan insurance within the legislative limit.

The bill is an administrative bill. Bill C-108 will increase the existing limit on outstanding loan insurance from the current $100 billion to $150 billion. The bill also includes a provision to increase the ceiling further through appropriation in the future.

Members of the House should know that CMHC loan insurance is self-financing and self-sustaining and does not cost the government anything. Moreover, it has great benefits for the country.

The mortgage insurance fund is regularly evaluated according to rigorous insurance principles. It is fully adequate to cover all insured losses as well as all overhead.

The amendments in this bill deal with administrative matters, but they must be adopted to allow the CMHC to continue to provide mortgage insurance. Allow me to explain briefly how important this bill is for Canadians.

The desire to own a home remains strong among Canadians. Yet many people who can afford the monthly mortgage payments are still unable to access home ownership because they are finding it difficult to save for a down payment for conventional loans.

Because the CMHC assumes the risks if borrowers fail to meet their obligations, approved mortgage lenders can loan money to more Canadians. By reducing the down payment required to buy a house, the loan insurance program allows more middle income households to have access to home ownership. This is an essential element of the system to ensure that all Canadians, wherever they live, can have the same access to the mortgage loans they need to buy adequate and affordable housing.

Let me give an idea of the extent to which Canadians depend on mortgage loan insurance to fulfil their dream of owning a home. My colleagues may be interested to learn that this means approximately 40 per cent of the residential mortgage stock in Canada involved financing by CMHC mortgage insurance last year.

Without mortgage loan insurance Canadians who do not have a 25 per cent down payment would generally never have access to home ownership.

The CMHC mortgage loan insurance has already proven flexible enough to allow for innovative housing financing. This is an essential feature given the constant evolution of borrowers' needs and of the markets meeting these needs.

In 1987, the program was modified to insure junior mortgage loans, an innovation especially helpful to those needing additional funds for renovations.

In the following year the chattel loan insurance program was introduced as a five-year experiment to cover loans made on mobile homes and to help people who choose this kind of affordable home ownership. The coverage for mobile homes has now been made a regular part of the mortgage insurance program as per the announcement made by the minister responsible for the Canada Mortgage and Housing Corporation at the beginning of this year.

In 1992 the mortgage insurance program was expanded to accommodate a reduced down payment for first time homebuyers, making home ownership even more accessible to moderate income households. This program, called the first home loan insurance program, has provided Canadians with their entry point to home ownership. Again I reiterate to my hon. colleagues that the success of the initiative has been achieved without cost to the government.

We want to ensure that the CMHC can continue to provide this assistance to the housing market. This is the intent of the bill before us today. The CMHC is constantly reviewing and making regular changes to the mortgage loan program in order to make it more effective and convenient for both approved lenders and home buyers.

By exploring new housing finance options for Canadians, we are looking to promote greater choices, lower the cost, increase accessibility of housing finance and assist borrowers to meet their financing needs within their own resources.

The CMHC will continue to encourage innovation and creativity in residential financing through the mortgage insurance fund, in order to improve access to home ownership for all Canadians.

The private housing market is now in a position to meet the needs of the vast majority of Canadian households. There is no question that the CMHC mortgage loan insurance played a crucial role in this achievement. The CMHC mortgage loan insurance program had a record year in 1994 in terms of volume. Several unexpected factors led to a significant increase in activity last year. Mortgage interest rates fell to their lowest level in 30 years, a level that was much lower than expected. The low inflation rate kept house prices stable and affordable. In addition, the rapid, consistent success of incentive policies, including the loan insurance program for home buyers and the home buyers' plan, helped generate a record level of insurance activity last year.

When the Mortgage Insurance Company of Canada stopped underwriting new mortgage insurance business in April 1993, CMHC had to assume 100 per cent of residential mortgage insurance activity. Furthermore a greater proportion of all mortgages has been insured by CMHC in recent years. In 1994, CMHC insured 40 per cent of all residential mortgages initiated, up from 22 per cent in 1991.

Because there is some lag time between insuring loans and receiving the reports from approved lenders, it was only in 1995 that the figures for 1994 were all compiled. At that time it was realized that the $100 billion maximum aggregate loan insurance

currently stipulated in the NHA had been exceeded. For this reason, provisions of the bill are effective starting in 1994.

I hope members will see fit to give swift passage to Bill C-108 so that CMHC can continue to promote access to home ownership through mortgage loan insurance.

Through its mortgage loan insurance program, CMHC continues to make housing more accessible for Canadians. The Corporation is also working to improve housing affordability. Through CMHC, the federal government is committed to a stable supply of affordable and accessible housing that increases economic opportunities for all Canadians.

CMHC's market housing programs promote affordable housing and equal access to financing through financial instruments such as mortgage loan insurance.

Moreover, CMHC provides mortgage insurance to all Canadians, regardless of where they live, at the smallest feasible down payment and the lowest cost.

To improve access to an affordable form of housing, CMHC also provides mortgage insurance for manufactured houses and mobile homes. In January of this year the hon. David Dingwall announced an expanded chattel loan insurance program, CLIP, that includes a resale of manufactured housing units.

CMHC is also contributing to making housing more affordable through better housing regulations. The affordability and choice today program funded by CMHC encourages regulatory innovation in municipalities across Canada. The ACT program encourages the housing industry and municipalities to work in partnership to improve housing affordability and choice.

More than 80 ACT projects are developing a wide range of practical approaches to streamlining approval processes, developing new forms of affordable housing, facilitating in-fill and conversion and adopting alternative development and building standards.

As I have said, Bill C-108 is an administrative bill. As my colleagues know, the bill is important in ensuring CMHC can continue to offer mortgage loan insurance to Canadians.

I would like to take a few minutes to talk about a complementary initiative, first home loan insurance, introduced by CMHC in February 1992, to make home ownership even more accessible.

Earlier this year, the hon. David Dingwall announced that the maximum eligible house prices-

[The Acting Speaker (Mr. Kilger)]

When referring to another member in the Chamber we basically have two options, either by riding or by portfolio. I know sometimes there can be omissions but the same name has come up more than once already. Therefore I simply remind the hon. member for Halifax West.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you, Mr. Speaker, for that reminder. I apologize for the error.

Earlier this year, the Minister of Public Works announced that the maximum eligible house prices for first home loan insurance were increased in 30 communities across the country. This initiative allows more first time homebuyers to purchase a home with a down payment of as little as five per cent. Anyone who buys or builds a home in Canada as their principal residence is eligible for the lower down payment, as long as they have not owned a home at any time during the last five years.

First home loan insurance was initially in effect for a two-year period but was extended for an additional five years until 1999. The 5 per cent down initiative has been a major success in helping to increase home ownership in Canada. That speaks for itself as to the importance of the bill.

The statistics also speak for themselves. Since November 1993 over 210,000 Canadian households have taken advantage of the lower down payment to become the proud owners of either a new or existing home. In April 1994 a survey of Canadians who bought a home with less than 10 per cent down showed that 72 per cent of them would not have been able to purchase their home when they did without the reduced down payment. That says a lot.

The first home loan insurance initiative is constantly being monitored to ensure it continues to meet the needs of Canadians. CMHC is committed to helping Canadians who desire to own a home and who have the proven financial management capability to do so. First home loan insurance is an excellent example of CMHC's ability to adapt its mortgage loan insurance activity to ensure Canadians can enjoy the benefits of home ownership.

As I have stated, Bill C-108 is an administrative bill to facilitate the continuation of mortgage loan insurance under the National Housing Act. CMHC's mortgage loan insurance, which provides relatively equal access to Canadians throughout the country, is important to achieving that goal. This is one of the major factors

which distinguishes CMHC's operation from private mortgage loan insurance operations.

Without CMHC's commitment to providing mortgage loan insurance in the small communities of the country, places that private insurers have not traditionally wanted to serve, many Canadians might not be able to buy a home.

Our government knows just how much Canadians value home ownership. It represents a major portion of the wealth accumulated by households. For some, it is a source of retirement income. It is also an important component of quality of life. We believe that every Canadian should have access to home ownership. CMHC mortgage loan insurance can turn the dream of owning a home into a reality. It is therefore critical that CMHC be able to continue to provide mortgage loan insurance to Canadians now and in the future.

That is why I support Bill C-108 and why I hope my colleagues will see fit to give swift passage to this administrative bill so that CMHC can continue to help Canadians realize their dreams of owning a home.

The concept of home speaks to our basic human needs. Home is a place where people feel secure. Owning a home gives people a stake in their communities and a sense of belonging. Home ownership is a concept the people of Canada support. It is therefore essential that CMHC be able to continue to provide mortgage loan insurance to Canadians today and in the future.

The corporation's mortgage loan insurance has traditionally demonstrated the flexibility to respond to varying needs and must be maintained as a public policy instrument capable of evolving to meet the future housing needs of Canadians.

With an eye on these future needs, CMHC is currently working to develop a variety of new housing finance instruments made possible by innovative uses of mortgage loan insurance. In developing new products CMHC is looking to challenge the creativity of the financial community to ensure the largest possible number of borrowers can find a product in their marketplace to meet their precise needs. A variety of choices will encourage lenders to compete on the basis of services and product differentiation.

The financial environment in which CMHC's mortgage loan insurance business operates has undergone significant change in recent years. The introduction of one stop financial services, the increased use of technological systems to support business operations, and the need to manage expenditures and facilitate better risk management are all factors which have had an impact on the way CMHC runs its mortgage insurance operations.

CMHC is now focusing on introducing new processing mechanisms which will utilize the capabilities of electronic communications between CMHC and approved lender clients. These enhancements will allow the corporation to better serve the needs of Canadian housing consumers. In light of all these good arguments, I urge passage of the bill.

[Bill Gilmour, Reform, Comox—Alberni, BC]

Mr. Speaker, the member said if the bill is turned down, CMHC will not be able to continue to operate. That is simply not true.

CMHC will still have the hundred billion dollars it has had for years to operate. This bill is about increasing that limit. It is not about whether CMHC operates or not. I believe there is an attempt by members on the other side to make it appear that if this bill fails, all mortgages across Canada will collapse. That is not true.

In the event of a collapse in the market, as in the early eighties, and if CMHC will not cost Canadians any money, in the event of a downturn, who picks up the tab on these defaulted mortgages?

[Geoff Regan, Liberal, Halifax West, NS]

Mr. Speaker, the first question is what will it mean to Canadians if the mortgage insurance fund is capped at $100 billion. That is the point. We have a delay in the time between when mortgages are approved by local lenders and when we get the full figures for a year. We need to have it retroactive to 1994 to cover the fact that in that year there were more than $100 million worth of loans insured. That would be a huge problem for CMHC.

The other important point is what it would mean to Canadians if it were capped at that level. CMHC's ability to assist Canadians to access home ownership would be curtailed dramatically. It would mean that the 3,944 Canadians in the riding of the member for Comox-Alberni would be the last to achieve home ownership through these means. It also would mean that rural Canadians would be faced with even more obstacles when planning to purchase a home.

We can look at all the negatives and talk about the collapse of the economy. We would be in all kinds of problems if we had a huge collapse of the economy in any event. We have to look at the important role CMHC plays in building our country, in building home ownership, in building our housing stock and in helping the economy. If we can expand the amount of home ownership insurance CMHC can provide, we can expand the amount of housing activity.

I do not know about the member's riding but in my riding and in my region of Atlantic Canada, and I think across most of Canada, there is a need for increased activity in the housing sector. There

are real problems in that sector. People need to have a shot in the arm. This will help not only that whole sector, which will boost the economy, but it will help people who want to own their own homes.

[Ronald J. Duhamel, Liberal, Parliamentary Secretary to President of the Treasury Board]

Mr. Speaker, the Parliamentary Secretary to the Prime Minister indicated that not only would this legislation not cost the government any money, that is, increasing the ceiling on the mortgage insurance, but that there is a return to the government. That is important.

The Parliamentary Secretary to the Prime Minister also indicated that this kind of initiative permits the enhancement to the quality of life for Canadians because it ensures that additional housing is available, thereby creating jobs. We all know that appropriate lodging is a basic fundamental plank in the quality of life for not only Canadians but people throughout the world.

I find that rather interesting and it is important that we look at that very carefully and embrace that kind of concept, an initiative which will ensure that the quality of life for Canadians is enhanced through pieces of legislation such as this one.

[Geoff Regan, Liberal, Halifax West, NS]

Mr. Speaker, I certainly agree with the hon. parliamentary secretary that this program permits us to enhance the quality of life of Canadians.

If we want to recognize what the quality of life means in terms of housing all we have to do is leave our country and go to many other countries in the world. In June I had the opportunity to visit Haiti as an election observer with the OAS. I certainly got a real appreciation of how fortunate we are to have the kind of housing we have and what it really means to quality of life when I saw the kind of housing that exists in Haiti.

Haiti is the poorest country in this hemisphere. It is not by any means the only country in the world with a lower standard of housing than we have. In fact, the vast majority of the world's inhabitants do not have the quality of life and quality of housing that we enjoy. Some do not even come close.

It is very important to recognize that this measure of expanding the loan insurance of CMHC is critical to the quality of life of Canadians. It is important for the housing industry in terms of job creation.

When I was in Haiti I saw houses that had dirt floors. Imagine the problems with disease and insects. There were houses that did not have facilities which we consider proper in Canada such as indoor plumbing. We are very fortunate to the ability to expand a program like CMHC which will add benefits to Canadians and to an important resource such as our housing stock.

When I visited Haiti I was struck by the many problems of extended families living in a house which would be the size of a small room in a normal Canadian house and how that affected their quality of life. It was really a shock. We often hear about people facing cultural shock when they visit foreign countries. Well, I certainly experienced it. When I came back to Canada it made me much more aware of how fortunate we are to live in this great country and to have the opportunity to live in good quality homes.

[Garry Breitkreuz, Reform, Yorkton—Melville, SK]

Mr. Speaker, I am amazed at how the member can avoid the question we are asking. The member went through all this rhetoric, made all these comparisons between Canada and Haiti as if the Liberals somehow can take credit for the standard of living that we enjoy.

We have posed a question, which I will pose again to the member. Who is left with the tab? Who is going to be on the hook for $150 billion if the economy turns down? If we go into hard times, who is going to be responsible for the billions of dollars in defaulted payments if this goes on?

The member has avoided that question. He has to answer the question before the debate can conclude.

[Geoff Regan, Liberal, Halifax West, NS]

Mr. Speaker, it concerns me that members opposite have so little confidence in the economy of Canada. However, they should be aware that the mortgage fund insurance is actuarially sound. It returns money each year to the government which helps provide for any problems which may occur in the process. There are funds provided each year for non-repayment of loans.

If the situation arose where Canadians defaulted on $150 billion in mortgages, imagine what would happen to the banks across the country. It is somewhat like saying, why should we have banks because they may fail if people do not repay their loans. How can we trust putting our money in the banks because if people do not repay their mortgages, they will all fail? That is true also. We have to operate on certain assumptions that we will have good growth and an economy that works.

I am sure the hon. member will listen to my answer. We cannot assume the whole economy of the country is going to collapse tomorrow. We have to operate on cautious and reasonable assumptions. We have to take precautions. We are taking precautions with this bill. It is actuarially sound. It provides funds for failures and it is in good shape.

More important, it is interesting to me that the members opposite want to look at all the possible problems while ignoring the benefits of this very important program.

[Hedy Fry, Liberal, Parliamentary Secretary to Minister of Health]

Mr. Speaker, I am really pleased to have the opportunity to speak in support of Bill C-108, an act to amend the National Housing Act. I am pleased for two reasons, one because it is timely.

Yesterday in my riding, I went to a conference of the BCNPHA which is a group of diverse peoples. They are people who are disabled, who have low incomes, who have moderate incomes. They have come together to talk about ways in which they could afford housing in Vancouver which is a city in which housing has gone off the map. Some of these people can never hope of owning a home. Because of this legislation there is hope for those people.

The second reason is that as a physician, I know that housing is a key component of the social structure that enables Canadians to have a positive health status, not only for the physical reason that housing is important to the health status of people but also because of the psychological and sociological reasons. It enables people to have hope, to have a stake in the future and to be able to say that they are contributing to the economy.

As everyone has said before, this is an administrative bill, the purpose of which is to increase the ceiling on CMHC mortgage loan insurance from the current $100 billion to $150 billion.

Members of the House should know that CMHC loan insurance is self-financing and self-sustaining. I speak those words slowly and to stress them so that they can actually be heard. It does not cost the government anything.

Not only is it a sound and healthy fund, but CMHC's mortgage loan insurance has played and continues to play a role in helping Canadians to access home ownership. Home ownership, members have heard said here this morning, is a cherished dream held not only by Canadians but by all peoples. There are good reasons for this.

Home equity is a major portion of the wealth that is accumulated by households as well as being a source of retirement savings. The concept of home speaks to our basic human needs. Home speaks to security. Home speaks to health. Owning a home gives people a stake in the community and a sense of belonging. Home ownership is a concept the people of Canada support. It is therefore critical that CMHC be able to continue to provide mortgage loan insurance to Canadians today and in the future.

It sounds as if there is a certain amount of repetition in some of these speeches. The repetition is so that the message can be put clearly both to the people of Canada and maybe to some of the members of the third party across the way. Since November 1993, 210,000 low income Canadians who did not have the down payment were able to own their own homes because of this program.

One of the most important aspects of CMHC's mortgage loan insurance is that it provides relatively equal access to mortgage financing at the lowest possible cost for all Canadians. This is what we heard from those 210,000 people who since November 1993, regardless of where in Canada they live, bought homes. It speaks to the national context of this bill.

Surpluses that are generated from lower risk businesses are used to fund shortfalls on the higher risk businesses. That is a basic economic equation that I am sure most people who know business, who have taken risk on business and who have had businesses in the past, and I am sure many members of the third party across the floor know that, that lower risk businesses are used to fund shortfalls of higher risk businesses.

That is a principle of any insurance program. Without access to CMHC's mortgage loan insurance, Canadians in some parts of the country would have to provide the conventional 25 per cent of the value of a house as the down payment that the private sector charges. Needless to say, many Canadians would find it difficult to purchase a home if this were the case.

CMHC's mortgage insurance is therefore critical to helping Canadians access home ownership. It has long been recognized that the housing needs of Canadians have been financed and supported by CMHC over the years, not only for one group of people, but for various income sectors and for diverse groups of people.

The corporation's mortgage loan insurance has traditionally demonstrated the flexibility to respond to varying needs. In other words, there is a performance level we can mark here. I would like to take this opportunity to inform the House about one such example that has helped hundreds of Canadians realize an affordable home ownership dream and that is the manufactured housing or mobile home industry. It has contributed greatly to giving Canadians access to good quality affordable housing, not to mention the fact that it helps jump start the economy in terms of the manufacture of mobile homes.

CMHC has been working in partnership with the manufactured housing industry for many years because of its importance to the housing sector and to the economy of Canada as a whole.

Canada Mortgage and Housing Corporation introduced its chattel loan insurance program which some members have mentioned. Known as CLIP, it was a five-year experiment that began in 1988. The two objectives of the CLIP program were first, to improve access to alternative forms of affordable housing without involving government expenditure and second, to help place manufactured homes in a more competitive position with conventionally built homes.

CMHC completed an evaluation of the CLIP program last year. This is another component when we talk about whether something is working or whether we are taking a risk. We not only look at performance but we also go back and evaluate the performance in a quantitative way. The evaluation confirmed that the program is an important instrument in increasing access to good quality affordable housing without involving government expenditure.

The evaluation also confirmed that CLIP has a positive impact on the manufactured housing industry. There is another issue. Jobs are being created not only in the manufactured housing industry but in mobile home park development, so economic development results as well.

Following the results of the evaluation, the minister responsible for CMHC was pleased to announce an expansion of the CLIP program. As a result, it now includes both new and resale mobile manufactured homes.

CLIP is an affordable alternative for many of the approximately 335,000 moderate income rental households that could not previously afford to purchase a mobile home. CMHC and the manufactured housing industry have enjoyed a productive partnership for many years. They have been working together to help Canadians gain access to good quality affordable housing and to enhance the viability of the whole industry.

The enhancements to the CLIP program are leading to greater access to mobile homes and an affordable option for Canadians. I want to stress again, and it may sound repetitive, but this not only gives moderate income and low income Canadians access to homes, but it jump starts the economy. It continues the economy and jobs, the flow of capital. All of that goes on, which is what makes this country move ahead.

This is only one example of how NHA mortgage insurance has met a specific need. It explains why NHA mortgage insurance must be maintained as a public policy instrument that is capable of being flexible and evolving. We have seen how the CLIP program has evolved to meet the future needs of Canadians.

With an eye on these future needs, CMHC is currently working to develop a variety of new housing finance instruments made possible by innovative uses of mortgage loan insurance. I want to talk about that flexibility, creativity and innovation, where CMHC not only sets up policy but it sets a policy after it has talked to the consumer, after it has talked and worked with the private sector to bring about innovative ways of creating housing.

In developing new products, CMHC is looking to challenge the creativity of the financial community and to ensure that the largest possible number of borrowers can find a product in the marketplace to meet their precise needs. That is flexibility and that is innovation. A variety of choices will encourage lenders to compete on the basis of service and product differentiation.

The financial environment in which CMHC's mortgage loan insurance business operates has undergone significant changes in recent years. For instance, the introduction of one stop financial services, the need to manage expenditures and the need for better risk management are all factors which have an impact on the way in which CMHC runs its mortgage insurance operations. It also speaks of the ability to be accountable. Change and making sure factors like managing and assessing risk are important components in any business venture.

CMHC has responded to the changing environment by continually reviewing its processes for delivering mortgage insurance and introducing efficiencies. Ensuring CMHC's loan insurance is viable is extremely important.

CMHC is now focusing on the use of electronic communications between itself and approved lender clients. These enhancements will allow the corporation to serve the needs of Canadian housing consumers even more effectively. Mortgage loan insurance has played a significant public policy role in the past and with CMHC stewardship, it will continue to evolve to meet the changing needs of Canadians and the financial community.

I underline at this time for members of the House that not only is the CMHC mortgage loan insurance a self-financing operation that involves no federal subsidies, CMHC has also returned to the Government of Canada over $1 billion since its incorporation. In addition, in the year 1992, CMHC returned $55 million to the Canadian taxpayer directly from the mortgage insurance fund. CMHC does not only provide access for various and diverse groups of housing. It also provides jobs, stimulates the economy and puts money into the treasury.

I will address some of the questions that surfaced with my hon. colleagues in debate last Friday respecting CMHC, namely questions concerning the federal government's role in public housing. I remind hon. members that notwithstanding severe financial constraints, the government is continuing its expenditures to help society's most vulnerable citizens.

The federal government is very much concerned with the shelter needs of low income Canadians. The federal government is making considerable ongoing social housing expenditures of about $2 billion a year to support more than 661,000 needy households, notwithstanding the need for considerable fiscal restraint and the need for deficit reduction.

The commitment of resources by the federal government is indicative of the government's concern for the plight of society's most vulnerable members: seniors on fixed income, aboriginal people, persons with disabilities, single parent families, social assistance recipients and the working poor. These people also need to have some investment in Canada, some piece of equity, some dignity.

The 1995 federal budget struck a balance of the dual objectives of reducing the size of the federal deficit, thereby contributing to economic growth, and at the same time making social housing programs more fiscally sustainable over the long term.

In its first budget in 1994 the government announced that it would reinstate RRAP, the residential rehabilitation assistance program, for two years. The program assists in the upgrading of substandard housing. We are taking existing housing stock which is recyclable and using a $100 million commitment which also fulfils a red book promise. We are taking housing stock and putting money into fixing it and making it reusable.

The government has also provided for new rental and rooming house components of RRAP, $16 million for 1994-95 to repair approximately 2,500 rental and rooming house units. These programs are being delivered in 1995. I must say that in my riding there are rooming houses for some of the very poor that I would not want a dog or a rat to live in, although many rats already live there.

New commitments under the on reserve housing programs have continued. As well the federal action on family violence has been extended to March 31, 1996. Some $4 million is being provided to help address the shelter needs of women and children who are victims of family violence. This again is what we talk about when we talk about health and justice. Women and children who are the victims of family violence and various forms of abuse need a safe place to live.

Therefore CMHC is not only engaged in access to housing, jobs and the economy. It is also responding to a social need.

We will continue to work with all levels of government, the private sector and community groups in a co-operative partnership. Partnership is one of the things the government said it would embark on, and we are doing it.

One way we are accomplishing it is through the CMHC's Canadian Centre for Public-Private Partnerships in Housing. The partnership centre was established in 1991. Its objective is to bridge the public and private sectors to facilitate the production of cost effective and accessible housing for low to moderate income households, including those with special needs.

We say that government cannot do everything for everyone so we are asking how the government can work with and help the private sector to move along and do the things we want done. Also there are essential ventures into new areas through such means as innovative financing and tenure arrangements. Much of the centre's activities are accomplished at the grassroots level with a view to encouraging a wide variety of people active in their community to become involved in newly created housing partnerships.

The partnership centre identifies opportunities and brings together potential partners to develop and implement the partnerships. It acts as a source of advice by offering an advisory service to potential partners to identify the key legal, financial and regulatory issues that need to be considered in structuring a private-public deal. Since its inception the centre has ventured into innovative tenure arrangements such as occupancy rights, life leases, equity co-ops and home ownership equity partnership programs. At the end of June this year, the centre had facilitated the realization of 79 projects totalling in excess of 4,200 housing units.

I will take a minute to outline a few innovative projects that have been made possible by the new public-private partnership. In my riding of Vancouver the Kitsilano Equity Housing Co-operative offers affordable housing for families. Equity co-operatives are ongoing housing co-ops financed partly from the investment of its own members. Traditionally aimed at seniors it is now branching out to help many other Canadians.

The project demonstrates that it is possible to provide families with affordable housing options in a market where starter homes are very expensive. This type of project is being made possible thanks to this partnership. Clearly the partnership centre is working. It was an experiment and we have seen that it is working very well.

Some may ask, especially members of the third party, why the government is involved with mortgage insurance when the private industry is offering the same product. The straightforward answer is choice. CMHC gives Canadians a choice of mortgage loan insurance. Without CMHC, Canadians would only be served by a private sector monopoly that can do what it wants with rates and down payments. The risks of the monopoly are higher prices and fewer choices, making housing less affordable particularly for first time buyers. The federal government has a constitutional responsibility for banking and for finance. CMHC's mortgage insurance guarantees and demonstrates that the federal government is fulfilling its role.

I have heard members talk about the risk involved. When looking at the risk in any business we look at marketplace needs. Some 74 per cent of Canadians have said they would like to use the program. We then look at past performances and we see that $1 billion was given back since its inception and $55 million last year. This tells us that it is a good business risk.

I am pleased with CMHC's efforts in my community. I have spoken of the Kitsilano project. There are some senior Kitsilano projects. There are projects for single senior women who live alone. There are projects in British Columbia that are helping

Canadians to be able to get a foothold and become contributing members of society.

In 1994, CMHC's loan insurance helped to house over 300,000 Canadian families at no cost to the federal government. This is because mortgage insurance is self-financing. Most lenders cannot provide a mortgage above 75 per cent. The program helps people to own homes. The approved lender is able to charge the borrower the lowest possible rate of interest. With these insurance provisions Canadians will have access to home ownership, to major renovations and to rental units.

It not only does that. It creates an opportunity. In the red book we talked about creating opportunity. This is creating opportunity for Canadians. It levels the playing field. It gives them a piece of the Canadian dream. It gives them an economic stake in the country and an opportunity to become contributing citizens. It is not just a simple act; it is a broad, social and economic move.

[Randy White, Reform, Fraser Valley West, BC]

Mr. Speaker, it is interesting that the government brings a bill before the House to increase loan liability not by $50,000 or $50 million but by $50 billion. Yet it gets insulted and attacks the opposition party for questioning what is in the bill.

The government is suggesting that Reformers do not like affordable housing. That is a shallow argument. Our job is to ask why the government is increasing the liability by $50 billion. The government had better get used to it, because we will continue to ask these kinds of questions. It is about time somebody did. The government has been in place for two years and has overspent by $80 billion. It is about time somebody asked questions.

Every speaker talked about the minister of public works as though he came up with an innovative bill to help the country. Part of that was a PR exercise for a minister who has been in trouble for the last two years. Now that a cabinet shuffle is on the way, they are trying to make him look good. That is what this is about.

The previous speaker said that it would not cost the government anything. In the recession of 1980 when the Liberal government was in power, were any liabilities charged against the loss on defaulted loans? How much contingent liability is recorded on the books of the country for the current $100 billion and the next $150 billion when the $50 billion is added?

[Hedy Fry, Liberal, Vancouver Centre, BC]

Mr. Speaker, I am delighted to answer that question. The very asking of the question, which seems to be the one repetitive question the Reform Party asks in spite of the answers being given, tells me that members of the third party are really not in touch with the people of Canada. They do not understand a single thing about the needs of the people.

[Randy White, Reform, Fraser Valley West, BC]

Answer the question.

[Hedy Fry, Liberal, Vancouver Centre, BC]

If the hon. member will allow me to do so, I will. I would like to answer the question.

Reform members are not in touch with the people of Canada. Seventy-four per cent of Canadians say that the program is important because it assists them in buying homes. We are not talking about an elite group which thinks that only people with a lot of money should be able to own houses.

To return to the issue, I mentioned in my speech, and I will repeat it, that any insurance program and any insurance company base whatever they do on an actuarial risk basis. This has been shown on a routine, standard, normal actuarial risk basis to be sound. This is not only because of the need in the community for it, but over the years since its inception the program has returned $1 billion to the coffers of the treasury. Just last year alone it returned $55 million to the coffers.

I do not know if I have to speak loudly or clearly or what I have to do to get those facts on the table. Maybe repetition is the only way to go.

[Herb Grubel, Reform, Capilano—Howe Sound, BC]

Mr. Speaker, I have another question for the member.

Insurance exists in the private sector. Insurance is there whenever there is the need to protect against some sort of hazard. One of the hazards is that occasionally mortgages will be defaulted.

It is the belief of Liberal governments that in fact the private sector will provide inadequate coverage for such risks, so the government has to step in. If in fact the insurance that is being provided is profitable then there is no need for the government to step in, because the private sector would do it.

It is not reasonable at the same time to say it will not cost anything, that it is only something we are facilitating in the economy and it does not cost anything. If it does not cost anything, why is the government doing it? Everyone knows that whenever such activities get privatized efficiency goes up and consumers are more satisfied. So why is the government in there? It is because it is subsidizing an activity.

The question then becomes: Why subsidize housing? Why not subsidize food, cars? Why not subsidize clothing? There are all kinds of things that are essential for human life. We are running out of finances in this country. We are going bankrupt.

What do we do as we are going bankrupt? We take over a function the private sector could provide, but of course it is not doing it adequately. It is not giving enough subsidy. So here we are creating a program that gives more subsidy to an activity that some believe is no more worthy and no less worthy than any other of the kinds of things we consume in Canada.

Is there a prima facie case for the fact that this activity of the organization that is having its liabilities raised by $50 billion is one that requires a subsidy in the form of contingent liability? Could the member please explain to us, since she has studied the subject, how big the contingent liability is that Canadians see when they look at the annual budget?

[Hedy Fry, Liberal, Vancouver Centre, BC]

Mr. Speaker, I thought I answered that question before. Perhaps I will have to try a different way of getting my message across.

I want to quickly say that in the riding of the member who asked me the first question, 5,580 constituents have in fact purchased homes using CMHC funds. Since 1992, 1,663 constituents have purchased houses. In the riding of the member who asked me the last question, since 1992 some 1,525 constituents have purchased homes. Since 1992, 254 have purchased homes by taking advantage of the first home loan insurance program. We have here a party that professes to represent its constituents. I hope the party is representing its constituents here.

I want to deal with the issue of default on mortgages. The premiums and the fees are actually what allow CMHC in this program to continue to subsidize to get this program to work on a basis where it brings money back into the system. There is a low risk component to this insurance program. The low risk component, as is always done in insurance programs, subsidizes the high risks so that they balance out. That is the basis on which most insurance programs work.

[Réginald Bélair, Liberal, Cochrane—Superior, ON]

Mr. Speaker, on a point of order, I see that the hon. member has already asked a question of the parliamentary secretary and this is not allowable.

[Randy White, Reform, Fraser Valley West, BC]

So what?

[Réginald Bélair, Liberal, Cochrane—Superior, ON]

There are rules. Just in case you do not know it, there are rules here.

[Randy White, Reform, Fraser Valley West, BC]

So your person should ask the question? This is the opposition asking the question.

[Myron Thompson, Reform, Wild Rose, AB]

We do not need any more of your guff.

[The Acting Speaker (Mr. Kilger)]

While this other discussion is taking place, the clock is running.