Mr. Speaker, I would like to address the amendments in Group No. 1 and put a title upon the five amendments that have been accepted by the House. These motions come to grips with the role of the Canada Mortgage and Housing Corporation as a financial institution. What the bill does in many ways is create a new crown corporation.
We all know that the Canada Mortgage and Housing Corporation is actually a crown enterprise corporation, which makes it a little different from other crown corporations. One of its mandates is to be sure it makes money. In other words, it is not designed to take money from the consolidated revenue of the Government of Canada.
The Canada Mortgage and Housing Corporation, through the provisions made by Bill C-66, becomes actually a financial intermediary in the financial marketplace. I ask why a crown corporation should become a financial intermediary in the financial marketplace. We have such institutions as the banks. We have trust companies. We have credit unions. We have insurance companies. We have various kinds of mortgage companies. And here we have a crown corporation which is given the powers under this legislation to borrow money, to lend money, to insure mortgages and things of this sort.
This principle of whether the Canada Mortgage and Housing Corporation should in fact become an institution that intervenes or that it become an intermediary in the financial marketplace is a very real question. I submit that the Canada Mortgage and Housing Corporation was set up to perform a function, and that was to make housing possible for Canadians.
Over the years the purpose of the Canada Mortgage and Housing Corporation, which is there to bring into practice and to implement the provisions of the National Housing Act, was to make housing available to ordinary Canadians who would otherwise not be able to afford to do so. Many, many people, and that includes myself, were able to purchase their first house because of the provisions of the National Housing Act. Millions of Canadians have benefited from this.
The recent amendments that have come into place allowing people to mortgage a house with only a 5% down payment has opened the market tremendously to a large number of people. This is a very commendable thing. Canada Mortgage and Housing Corporation insures the mortgages for the financial institutions.
We can debate for a long time whether in fact the financial institution should be protected to the point where it does not have to worry about the prudence of a particular mortgage. After all, if the mortgage goes down, the bank will never suffer, Canada Mortgage and Housing Corporation will simply pay it off. In one way it is actually a subsidy to the banks and allows them to give money away without incurring any risk on their own.
While I have some difficulty with that, I also know that there are some people who would never ever be able to buy a house unless the mortgages they sign were supported and insured by Canada Mortgage and Housing Corporation. I think that is a wonderful move.
There are some provisions in this bill though that cause me severe difficulty. One of these is the provision that dividends are considered for the purposes of this act to be expenses for the corporation. Any other corporation that pays dividends to its shareholders is not allowed to consider them as expenses. They are indeed a draw on the cash reserves of the company, but they are not expenses. There are other expenses like the payment of rent, utilities, salaries and things of this sort, but this bill allows the Canada Mortgage and Housing Corporation to somehow consider dividends as an expense. I think that is fundamentally wrong.
One of the amendments we are proposing is that these payments, in this case the dividends, would be paid to none other than the consolidated revenue fund, which is really the Government of Canada. Since the Government of Canada is the sole shareholder of Canada Mortgage and Housing Corporation, it in fact is paid these dividends. Those are not expenses. Those are clear outright payments to the Government of Canada.
There are other provisions in this legislation that we have to look at in some detail as well.
The Canada Mortgage and Housing Corporation is able to perform its functions of a financial nature, insurance, reinsurance, borrowing and issuing securities, outside the provisions of the Office of the Superintendent of Financial Institutions.
One of the purposes behind this legislation, we were told, was to make Canada Mortgage and Housing Corporation a more commercial enterprise. The suggestion was that it should compete on a more or less fair and level playing field with other competitors in that particular field.
There are three things that are complicated by the way in which OSFI does not govern or does not in any way have any say about what Canada Mortgage and Housing Corporation does.
The major competitor to Canada Mortgage and Housing Corporation is GE Capital which also insures mortgages. This company with which CMHC competes must abide by the rules of the Office of the Superintendent of Financial Institutions.
Here we have two companies, one a crown corporation and one a private corporation, both performing a function and a service for the people of Canada. The people of Canada can choose one or the other. To that degree it is okay and everything is level, except that the operation of the private company is under a different set of regulations from those of Canada Mortgage and Housing Corporation. It must have certain requirements in terms of reserves and certain ways and places where it can invest money that the Canada Mortgage and Housing does not have.
I ask is it fair and reasonable to expect an honest competitive field to exist between the crown corporation on the one hand and the private enterprise on the other? Both serve the public and the public can choose which one they would work with in terms of insuring their mortgage, but in fact one is at a clear disadvantage to the other one. That is only one area.
The other area is the requirement by the financial institutions, and I have to go back a little bit here. Canada Mortgage and Housing Corporation has 100% backing of its full mortgage. If it issues an insurance policy for a particular mortgage, it is totally 100% guaranteed by the Government of Canada or by Canada Mortgage and Housing Corporation. A financial institution runs absolutely no risk. It will always be able to look to the public treasury. If for some reason Canada Mortgage and Housing Corporation should have difficulty, the consolidated revenue fund is there to back up completely, 100 cents on the dollar, whatever shortfall there might be by Canada Mortgage and Housing Corporation.
Such is not the case with a private insurance company that also insures mortgages. The government as well has an agreement here, which is commendable, where it underwrites up to 90% of the mortgages that are insured by an organization such as GE Capital or any other company that would come on the scene.
That difference of 10% is a pretty significant factor in terms of the particular financial institution that wishes to do business with a company like GE Capital, for example. It now puts GE Capital in the position of having to deposit additional moneys with the financial institution, or the financial institution has on its own right to commit a reserve against this exposure.
I submit that one of the major purposes behind the amendments of the bill is defeated by creating Canada Mortgage and Housing Corporation into a new creature, a financial institution that competes directly in the marketplace and as an intermediary in the financial marketplace.
The amendments that have been proposed by myself in the name of the Reform Party in fact come to grips with rectifying that situation and making it a better piece of legislation. I humbly submit that all members of the House support the amendments that have been proposed.