Madam Speaker, I am pleased to address the House today on Bill C-66 which proposes amendments to the National Housing Act and the Canada Mortgage and Housing Act.
I have divided my speech into two portions. I would first like to speak about the bill as proposed. There are a few things in the bill that are good and I would like to talk about some of those areas. However, our party also has some serious concerns with some of the provisions in the bill. I would like to walk members through some of the proposed changes and explain exactly our concerns.
Specifically I would like to deal with the proposal to commercialize mortgage insurance and the effects this would have on the risk aversion of corporations and the $200 million payment to the federal government from CMHC for the crown backing of its insurance and loan guarantee operations. I would also like to discuss the changes to the structure of CMHC's board.
In the second part of my speech I want to talk about the social housing sections of the bill or, more specifically, what has been left out of the bill and how the government has missed a prime opportunity to address some of the problems involving affordable housing and homelessness.
CMHC is mandated to deliver federal housing programs in four general areas. First, under housing finances, CMHC promotes the availability, accessibility and choice of housing funding. For many home buyers this takes the form of mortgage insurance.
Second, CMHC strives to encourage competitiveness in and the health of the housing market by conducting research, by improving housing, by supporting the housing market and by the dissemination of information.
Third, CMHC has an ongoing responsibility for federal assisted housing initiatives, including support for aboriginal communities in their efforts to become self-sufficient in developing and maintaining their housing.
The federal government provides the corporation with $1.9 billion of funding each year. The lion's share of these funds goes to meet the long term financial obligations arising from subsidies for 656,000 social housing units such as non-profit housing, public housing and housing co-operatives.
Early in its first mandate the government announced that it would withdraw from funding further social housing units. Since then the government has signed agreements with seven provinces and territories to offload social housing on to them. Finally, CMHC supports the export of Canadian housing products and expertise.
Bill C-66 contains the most extensive changes to the National Housing Act and the CMHC Act since 1985. Among other things, the government is proposing changes to CMHC's mortgage insurance activities.
In essence, the government wants to commercialize the corporation's mortgage insurance functions. Any losses as a result of mortgage insurance underwriting must come out of CMHC rather than general government revenues. This removes any competitive edge the government agency has in the marketplace and puts CMHC's mortgage insurance on a level playing field with private insurance.
CMHC would be able to introduce new mortgage products such as reverse equity mortgages. These mortgages enable older residents to use the equity in their homes to obtain funds to supplement their income while allowing them to continue to live there.
The changes will also allow CMHC to accelerate the growth of the secondary market by providing a wider range of secondary mortgage market products through mortgage backed securities guaranteed funds.
The pooling of individual mortgages provides lenders with a lower cost source of funding and ensures an adequate supply of mortgage funds. These commercialization measures are a response to potential challenges under the North American Free Trade Agreement. While these changes would give Canada Mortgage and Housing Corporation the flexibility to offer new products, they also eliminate the advantages of government underwriting.
For example, forcing CMHC to cover any losses will decrease its willingness to finance high risk borrowers such as low income people. If it also makes it more difficult for borrowers in rural Canada to qualify for mortgage loan insurance, speaking as someone who grew up and lives in rural New Brunswick it would not go too well in my riding.
The second problem we have with the proposed change to CMHC's mortgage insurance activities involves the payment to the federal government in compensation for the crown's backing of its insurance products retroactive to January 1, 1997.
I understand the objective of the new section 18 in that the government wants to create a level playing field with the private sector sellers of mortgage insurance. It has to pay compensation for the backing of its insurance operations. To be fair, CMHC should have the same obligations. I agree with that.
The problem arises when it is realized that over the next few years the government will pull $200 million out of the corporation. According to CMHC's summary of the corporate plan for 1998 to 2002, by the year 2002 the government will have starved Canada's social housing programs by $197.9 million to pay this fee.
How can the government possibly justify taking $200 million out of CMHC that is charged with helping house Canadians while thousands of Canadians are forced to sleep in shelters each night?
The government needs to find a way to reinvest this money into social housing programs so that no Canadian who is in need of housing suffers because of this measure. It seems the government has not completely thought this issue through.
Another problem that concerns my party and should concern all Canadians involves one proposed change to the CMHC Act with respect to the composition of CMHC's board of directors. Presently the board consists of the chairman of the corporation, the president, a vice-president, two public servants and five political appointees, for a total of 10. All in all this is not a bad balance. We would have a board of five highly qualified housing professionals and five people appointed by the Liberal cabinet.
I would not want to speak against the Liberals, but the government has developed a reputation, deservedly so, of appointing Liberals to government boards, qualified or otherwise. The minister is proposing in the bill that we should reduce the number of qualified professionals on the board by three and replace them with Liberal appointees.
Under the legislation the requirement to have a vice-president and two public servants sit on the board would be removed. Only the chairman and the president would remain and the Liberal patronage appointees would have a healthy majority of eight of the ten director positions.
Aside from the distasteful nature of this change that could put three more Liberals on the CMHC board, it would also threaten the independence that CMHC enjoys as a crown corporation. Just think, right now CMHC management has to answer to a board that at least has some balance between five highly qualified professionals and five Liberals. However, under the new board CMHC management will be under the direction of a board comprised of a majority of Liberal appointees.
Just as important as what is proposed by the government in this bill is what was conveniently left out of it. I will take a few minutes to talk about social housing policy in general and how it relates to this bill.
In the past month the government missed two prime opportunities to deal with the problem of the lack of affordable housing in Canada and its impact on homelessness in particular. The first opportunity occurred on February 11 of this year when the bill was introduced and the second was when the budget was brought down on February 16.
It is ironic that the person who introduced the budget, the finance minister, the member for LaSalle—Émard, was once the champion of social housing. In 1990 he and his colleague, the MP for London North Centre, published the report of the national Liberal caucus task force on housing. In that document the current finance minister set out a manifesto on how a Liberal government would provide affordable housing for all Canadians and eradicate homelessness.
Alas, like so many other broken Liberal promises, like the GST and free trade, the finance minister's promises on social housing were relegated to the dustbin just as fast as the Liberals took power in 1993. That may suit the finance minister just fine, but he and his government have done nothing to provide affordable housing for Canadians and to eliminate homelessness. It is exactly the opposite.
If the government is looking for some good ideas on what should be included in Bill C-66 to deal with these problems, I will quote liberally from both its party's task force document as well as a report that was released in January of this year by the Toronto task force on homelessness, chaired by Dr. Anne Golden, entitled “Taking Responsibility for Homelessness.”
In his report, the finance minister promised that a Liberal government would recognize in the Constitution the right to adequate shelter. It never happened. He said that housing is a fundamental human right and that a Liberal prime minister would discuss housing rights at a first ministers' conference. We are still waiting.
He told Canadians that he would provide more money for housing in provincial transfers, but instead he cut provincial cash transfers by 40%.
He promised a new federal-provincial social program to assist the working poor with housing costs, but none ever materialized. He told anyone who would listen that his government would increase funding for housing co-operatives and look for new ways to use housing co-ops to provide affordable housing. Instead it froze and then decreased funding for co-ops. Now it is trying to offload housing co-ops to the provinces and cut off funding entirely.
This is my favourite. The finance minister promised that he would eliminate all substandard aboriginal housing by the year 2000. I guess he has missed that target.
According to the Assembly of First Nations, almost 50,000 or 60% of the 83,000 housing units on reserves are inadequate. More than 10,000 of those units have deficient or non-existent water and sewer services and 16,000 units are overcrowded. So much for the word of the finance minister.
With respect to this bill, there are some concrete steps the government could take to deal effectively with the problems of inadequate housing. As I have already mentioned, many of these proposals were outlined by Dr. Anne Golden in her report released in January. In her report she refers to four causes of homelessness: increased poverty, lack of affordable housing, deinstitutionalization and a lack of discharge planning, and social factors such as domestic violence and physical or sexual abuse.
Because the scope of Bill C-66 deals only with housing issues I will limit my discussion to how the government could increase the supply of low cost rental units and rooming houses, and the need for increased support for social housing.
The federal government has been a key player in social housing development for over 50 years, since the founding of the Central Mortgage and Housing Corporation after the second world war. The decision by the Liberal government to offload social housing on to the provinces has contributed to the growing shortage of affordable housing.
Indeed, the Golden report notes that among major western industrialized countries only Canada has no policy on homelessness. It recommends that the federal government provide capital assistance for the construction of new affordable housing and the rehabilitation of existing affordable housing. Because the federal government is largely responsible for aboriginal people, immigrants and refugees, it also suggests that Canada should fund projects to prevent and reduce homelessness among these groups at risk.
The report also recommends that the federal government should change the mortgage and valuation rules so that in addition to commercial transactions through the CMHC mortgage insurance fund the government could introduce policies that encourage not for profit rental construction. Right now CMHC permits lower debt coverage ratios for certain special purpose projects and it could do the same for non-profit rental projects, including innovative housing forms that may have uncertain market values such as single room occupancy units.
The Golden report suggests that CMHC get into direct mortgage lending. Direct lending is the cheapest source of financing and could generate revenues for the corporation. Additional mortgage funding could be piggybacked on to the mortgage backed securities that now fund social housing mortgage renewals. It also recommends that the federal government provide land at less than market value from its holdings of surplus land and buildings through Public Works, CMHC and the Canada Land Corporation.
The report also calls for an investment of up to $300 million in capital support for new low income housing and for CMHC to reinvest the savings realized each year for the devolution of social housing to the provinces. Unfortunately, as I noted previously, the Liberals have instead decided to take $200 million out of social housing, which is disgraceful by any measure. Perhaps we can persuade the government to change its mind.
Another recommendation of the report calls on the government to channel federal capital to new affordable housing by way of an infrastructure program for housing or set up local foundations for affordable housing and/or a tax incentive for contributions to eligible foundations or projects. The residential rehabilitation assistance program should also be expanded to include rental apartment buildings, rooming houses and second suites.
Finally, it is very difficult for the operators of rooming houses to obtain mortgage financing or insurance. When they are successful it almost always at a premium rate, reflecting the higher perceived risk by lenders. Since CMHC has expertise in mediating lending rates, the report suggests that CMHC assist rooming house owners in accessing mortgage financing.
These are all simple steps the government could take in part through Bill C-66 to alleviate homelessness and to increase the supply of affordable housing for all Canadians. The Liberals, through the finance minister, promised they would deal with this problem. They have recently had two opportunities, through this bill and in the budget, but they have not.
There could be no more potent reminder of the need to find solutions to the housing problems in Canada than we saw a week after this bill was tabled and a few days after the budget. A few blocks from Parliament Hill, Lynn Maureen Bluecloud, a 33 year old homeless, five-month pregnant aboriginal women was found dead in a park at the corner of Nicholas Street and Laurier. She died from hypothermia.
We need action on homelessness now. The government must live up to its promises and use the means available to it to increase the supply of affordable housing for all Canadians.
There is much room for improvement in the bill. I look forward to dealing with this bill in committee so that we can propose ways of doing just that.