That, in the opinion of this House, the government should take all necessary steps to ensure the continued viability of housing co-operatives administered by the Canada Mortgage and Housing Corporation.
Mr. Speaker, in 1884 Abraham Lincoln said: “Let not him who is houseless pull down the house of another, but let him work diligently and build one for himself, thus by example assuring that his own shall be safe from violence when built”.
It was in that spirit of citizens supporting one another and by extension the community that the co-operative housing movement in Canada was born in the 1930s. Sixty years later, the viability of co-op housing is being seriously threatened through government neglect.
I want to take a few minutes to explain how this has come about and what can be done to repair the situation. I will start by outlining a brief history of co-op housing in Canada and show why it has been such a success story compared to other forms of social housing. I will then proceed to talk about the current move to devolve social housing to the provinces and the negative effects this will have on co-ops. Finally, I will outline an alternative solution that has the potential to not only save the federal government money but also save the co-ops.
The co-op housing movement began in the 1930s when Canadians in the maritimes, Quebec and Ontario built houses collectively for private ownership. It expanded with the construction of student co-operatives in the 1940s and family co-ops in the 1960s. The federal government got involved by supporting co-operative housing financially in Canada in 1970 through the Canada Mortgage and Housing Corporation. CMHC has called co-ops one of the great success stories in Canadian housing. Its record is especially enviable when we compare it to the federal government's track record on other forms of social housing.
Let me explain how co-ops work. Co-operative housing is affordable, not for profit housing owned and operated by its members. Residents pay housing charges and have the right to permanent residency as long as they respect the obligations of membership which they have a say in setting.
Joint ownership eliminates the insecurity of the rental market by putting control of the housing in the hands of the members. Each member has one vote in making decisions on important matters such as housing charges, the election of directors and the rules and regulations members will be expected to follow.
Members share common goals in the management of their co-operatives and a sense of community arises from working together. Members of housing co-ops often assist each other in ways beyond their housing needs. Housing co-ops have helped maintain or rebuild communities threatened by decay or urban renewal.
Within budget limits co-ops seek to provide high quality housing both in initial construction and through continuing maintenance. Co-ops are required to maintain capital reserves for the replacement of worn out buildings and equipment.
As I have mentioned, co-ops are radically different from other types of assisted housing providers. Only co-ops are committed to hiring and empowering ordinary Canadians to manage their own housing. Members learn skills that help them break the poverty cycle, enabling them to reduce dependence on government support.
Co-op members do not live in low income ghettos but in mixed income communities. Just over half the nearly 90,000 households receive rent geared to income assistance from the federal or the provincial government. In federally sponsored co-operatives assistance is provided to more than twice as many households as required by their operating agreements with CMHC at no extra cost to taxpayers.
Members manage subsidies economically on the government's behalf. CMHC says: “Co-operatives have been highly successful at achieving income mixing without polarization of income groups. Income was basically a non-issue for members”.
Not only have co-ops been successful in social integration, they are also the most inexpensive to operate of all forms of social housing. Operating costs are 19% less than municipal or private not for profit housing and 71% less than government owned and operated public housing. These cost saving benefits are shared with taxpayers since lower operating costs reduce the government's rent geared to income subsidy bill. Because they spend less than other housing providers and reinvest their operating surpluses, housing charges stay low. As time passes co-ops need smaller and smaller government subsidies.
However, despite all their success housing co-operatives in Canada now face a serious threat to their continued existence: devolution to the provinces. In March 1996, with very little public discussion, the government announced that it would make an effort to turn over the management of existing federal social housing resources to the 12 provinces and territories. In the two years since, agreements have been signed with Saskatchewan, Newfoundland, New Brunswick, Nova Scotia and the Northwest Territories which would see these governments assume responsibility for public housing, private non-profit housing as well as co-ops.
In general I support the devolution of social housing administration to the provinces. I have always believed that the level of government that can best serve the needs of its clients should be the one to manage that program. But the inclusion of co-op housing in this devolution creates some serious problems for co-operatives and their members.
The two main issues for co-op members are loss of control and loss of financial security. At present members manage their own affairs, which helps to foster community pride and a sense of ownership. The new agreements threaten that control in five ways.
First, existing contracts between CMHC and the co-operatives are not protected under the new social housing agreements. According to law professor Patrick Monahan of Osgoode Hall Law School, while the agreements address the issues and concerns of the provinces and CMHC, they fail to offer legally binding protection for the co-ops that actually own and manage the housing facilities. This effectively gives the provinces complete control over the programs.
Second, the provinces can unilaterally alter the operating agreements between the co-ops and the governments. Professor Monahan found that if any of the provincial legislators were to enact legislation overriding or amending the terms of such project operating agreements, the provincial governments would not be in breach of their obligations under the new social housing government agreements.
Third, co-op residents were neither permitted to sit at the negotiating table as these deals were made nor were they even consulted in the discussions. Agreements that have been signed to date and those currently under negotiation have been worked out behind closed doors. This excludes a significant group of stakeholders: the women and men who live in, own and manage this housing. These groups are the primary partners in the successful delivery of these programs but they have not been consulted.
The new agreements could also affect the character and quality of federally funded co-ops. There are real concerns among co-operatives that the new agreements will lead to the erosion of their autonomy as property owners, especially when it comes to day to day management decisions.
The failure to protect the existing contractual rights of co-operatives makes these concerns very real. What the provinces view as flexibility in the agreements, co-op members see as an invitation to intrude. Any careful reading of the history of co-op housing will show that the greater the degree of government intrusion the less efficiently co-ops operate.
Finally, lumping co-ops in with other forms of social housing which are being downloaded to the provinces will increase costs. Consolidating the control of shared cost programs such as public housing with one level of government will reduce program administration costs.
However very few co-operative housing units receiving federal support were initiated under these shared cost programs. The remainder are unilaterally federally funded. The transfer of management of these programs to 12 provinces and territories will increase wasteful duplication and government involvement, not lessen them.
Provinces taking over these co-op programs will have to add to their bureaucracies and invest time in learning to administer programs that CMHC will continue to oversee. In Ontario the province intends to download those programs to yet a third level of government, the municipalities. In that province three levels of government would be involved.
As if that were not enough, co-ops face another threat from these new agreements, the loss of financial security. CMHC only guarantees funding to co-operatives to the end of their current agreements. The $1.9 billion the federal government currently spends on social housing are not guaranteed because the dollars are not tied to existing programs and projects.
The provincial agreements promise a steadily shrinking federal contribution. As existing programs and projects reach the end of their funding cycle, federal funding will cease and there are no assurances that anyone else will step in. The agreements reveal a slow but definitive withdrawal of federal financial support for Canadians with housing needs.
The new social housing agreements also do not require the provinces to replace the funding. There is nothing in the agreements that directs the provinces to assume that responsibility or, for that matter, that obliges them to continue spending the money they contribute now under the shared cost housing programs. In fact the agreements give the provinces and territories an incentive to reduce the number of social housing units in their jurisdiction.
Clause 7(e) of the Saskatchewan agreement states:
—for greater certainty the removal of Housing from the Portfolio of programs covered by the agreement (whether by disposition, destruction, no longer being within a program in the Portfolio or otherwise) will not entail any reduction of the total amounts of CMHC funding—
There is however another solution. Next week, the Co-operative Housing Federation of Canada, CHF Canada, will meet with the minister responsible for CMHC and propose that a new non-profit, non-governmental organization be set up to administer co-op housing agreements.
If implemented, this new agency would save governments a minimum of $2 million a year plus $50 million over the next 20 years by reducing program administration costs and would lead to a more efficient use of federal subsidies. It would also meet the federal government's goal of devolution of administration while preserving the keys to the co-op housing success story: member control and decentralized management.
The proposed agency will adhere to the goals and principles of current programs and will operate within a strict accountability framework. As important, the CHF Canada proposal will ensure the continuing success of a housing system that many thousands of people have worked very hard to build, an effective unifying system working in every province and territory.
Recently an independent study commission jointly funded by CMHC and CHF Canada examined a new draft of the co-operative sectors proposal and compared it to CMHC's current operation with improvements suggested by CMHC.
The consultant found that compared to CMHC's approach the CHF Canada proposal would generate savings for government in program administration costs and would assist co-operatives in increasing the effectiveness of their operations. When a co-op saves money in this operation it means more money to house people in need either in that co-op or through other housing programs.
In closing, let me restate that I agree with most of what the government has done in the area of social housing. Lumping housing co-operatives with all other social housing and downloading them to the provinces threaten to destroy what has become a unique Canadian success story.
This debate is about optimizing the structure of government so that it can best serve the needs of Canadians. There is a ready alternative to the current round of provincial and territorial grievances. I suggest the government take a good, long, hard look at it before going any further.