Mr. Speaker, I rise today on third and final reading of Bill C-66 with many concerns.
The government made claim to a bill that was to level the playing field between CMHC and the private sector and to make the mortgage insurance industry more competitive. The government promoted this bill as legislation which would strengthen Canada's housing agency, CMHC, and thereby strengthen its ability to carry out its mandate of administering to Canadians' housing needs. I feel it has done neither and that this exercise has been all the more regrettable because the government had ample input and opportunity to make a better piece of legislation.
The Reform Party opposes Bill C-66 for the following reasons. The bill does not accomplish what it sets out to do, namely, create a more level playing field with the private sector. Reform policy states that where the private sector demonstrates an ability, the government should not compete with the private sector.
The testimony of private sector witnesses before the standing committee was not acted upon and thereby rendered the legislative process ineffective. Further, the private sector's valid suggestions and proposed amendments on ways to improve the bill were systematically ignored by the minister and therefore the government which rendered the democratic process itself ineffective.
Finally, while the bill partially recognizes that housing policy would be carried out more effectively by the provinces, it does not go far enough. As a result of being vague about responsibility, a clear and concise national housing policy continues to be lacking and therefore puts Canada's housing policy, particularly on social housing, in jeopardy.
I will now turn to private sector competition or the lack of it. The purpose of Bill C-66 as put forward by the government is to modernize CMHC by enabling it to respond in a more flexible manner to changes in the workplace. The government also claims that Bill C-66 will put CMHC and its private sector competitors on a more equal footing thereby levelling the playing field in the market of mortgage insurance.
The business of mortgage insurance has been in the hands of government for so long that it currently is responsible for 88% of the market share. At this time many consumers rely on the stability of the CMHC mortgage insurance fund. Without question Canadians have benefited from this program. Many who would not otherwise be able to own their own homes now do as a result of CMHC's mortgage insurance activity.
To say at this time that CMHC should get out of the mortgage insurance business would be premature. However Reform believes that we are witnessing a demonstration by the private sector of its capability in the area of mortgage insurance. This is an indication to Reform that its policy that governments should not compete with the private sector where the private sector can do the job is on track.
However given CMHC's long history in this area of activity and the necessity to protect the stability of the mortgage insurance market, Reform would argue in favour of levelling the playing field so that the private sector can continue to demonstrate its ability to handle mortgage insurance activities effectively and competitively. In this way Canada will begin to create a stable mortgage insurance environment within the private sector.
We believe the private sector must be given an equal opportunity to capture more of the market share in the mortgage insurance business. This will create true competition, better prices and service to consumers and will encourage other private sector companies or competitors to enter the market. Is that not what it is about, better prices, better service to the consumer?
Bill C-66 does not accomplish the goal of levelling the playing field and continues to promote advantages in favour of CMHC over the private sector. It does so in several ways.
CMHC holds a 100% guarantee by the government on its mortgage insurance holdings. GE Capital, CMHC's private sector competitor, has only a 90% guarantee. Bill C-66 does not change this important inequity. Clearly the banks favour the 100% guarantee and therefore, despite good service from GE Capital, they favour mortgage insurance through CMHC. This is not a level playing field. This does not promote a competitive environment as the bill stated as a goal.
GE Capital cannot successfully introduce any new products into the marketplace because it does not have a 90% guarantee on such products, as is the case with CMHC. This means that the introduction of innovative products and services is prevented from entering the marketplace unless they are established by CMHC. This again does not create a level playing field for the private sector, nor a competitive environment for consumers.
Under Bill C-66 CMHC will now fund additional policy reserves and commence payment to the government based on capital and additional policy reserves. CMHC claims that it will do so because the private sector must do so under OSFI regulations. While the intent seems to be correct, the fee will not be calculated using the same formula that is used for private insurers and is therefore less than the fee private insurers must pay. This also does not level the playing field.
CMHC and GE Capital are governed by different legislation. GE Capital is regulated by OSFI, the Office of the Superintendent of Financial Institutions, as a private insurance company whereas CMHC is not.
CMHC's corporate summary states that it wants to level the playing field where it says “CMHC needs to ensure that the basis for public private competition is fair, i.e., that CMHC has no unfair advantages”.
Clearly, Bill C-66 fails to accomplish that level playing field and therefore continues to promote an inequity to the advantage of CMHC. The failure of Bill C-66 to level the playing field between the public and private sector is a clear indication that a crown corporation cannot compete fairly with the private sector, a private sector that has clearly demonstrated it can carry out this kind of activity.
Although the government initially filled a void through CMHC's mortgage insurance fund, it is clear that there is room now for the private sector to assume more of this activity. It is both ready and willing.
What is the value of gradually devolving the government's involvement in such activity? It is that the private sector can grow, that the risk to government and the taxpayer is reduced, that the costs of government are reduced and that the marketplace is thriving on true competition. This does not mean that suddenly the marketplace is free to do as it pleases and that consumers are at risk. There are bodies such as OSFI in place to regulate such activity and to protect consumers.
The natural progression must be that government gets out of the business of the private sector where the private sector can show that it is capable. How can Canadians realize these benefits if the private sector is never given a truly fair opportunity to compete on the same level playing field and the government continues to prevent it from doing so?
I would suggest to the House that clearly the logical path toward the objective of levelling the playing field is not to continue to broaden the powers of CMHC and to make it more commercial. The logical path is to change our tack, to look at the private sector's abilities and in the long term to make the market more secure by allowing the private sector to be as strong as it can be.
In the interim we must ensure the market's stability by looking at CMHC and the private sector as partners rather than competitors. In this way through the pursuit of public-private partnership, governments can benefit from the knowledge of the private sector and the private sector can benefit from the work that the government has put in place. Government should not be competing with its own private sector. The government's ultimate objective should be to improve the economy by strengthening the private sector. Canadians can only benefit from this kind of approach.
I reiterate two reasons why Reform opposes this bill. The testimony of private sector witnesses before the standing committee was not acted upon and thereby rendered the legislative process ineffective. The private sector's valid suggestions and proposed amendments on ways to improve the bill were systematically ignored by the minister and therefore the government, which rendered the democratic process ineffective.
The government is very good at commenting on CMHC's willingness to work in partnership with the private sector, with non-profit organizations and non-government organizations but this was not demonstrated in the passage of this bill through the House.
Partnership relies on a willingness to co-operate. The actions of this government regarding Bill C-66 do not indicate a willingness to co-operate. The standing committee and members of the House outside of committee met with the private sector and non-governmental agencies that have a vested interest in ensuring that CMHC's mandate is sound and works to the benefit of all Canadians.
These groups came forward with many concrete ways in which to improve this bill and they were systematically ignored by the government. This was clearly demonstrated in committee when the suggestions for improvement by GE Capital, the Appraisal Institute of Canada and the Co-operative Housing Federation of Canada were ignored. Amendments put forward by opposition members were also ignored. When opposition members requested more time to deal with the bill, they too were ignored.
For the record, I wish to summarize some of the important suggestions and concerns put forward by these organizations.
The Co-operative Housing Federation asked the committee to consider the following questions: Will Bill C-66 impede the federal government from acting now or in the future to alleviate Canada's housing needs?
I would also like to point out that some of the considerations recently by the Standing Committee on Indian Affairs and Northern Development concerned the shortage of housing in Nunavik and in the territory of Nunavut which are areas we have so far visited and about which we have heard many representations concerning the shortage there. I would add my concern to that concern.
Second, is it intended to allow the provincial governments to alter existing statutory requirements retroactively? If not, why does the bill empower CMHC to waive existing National Housing Act provisions for existing programs and to allow provinces in turn to waive them? These are serious questions which did not receive serious consideration. Yet, today we find ourselves at third reading and none of these concerns were acknowledged.
From the GE Capital Mortgage Insurance Company we heard requests made to provide the same level of guarantee to both public and private insurance; to extend the guarantee to new private insurance products, allowing private insurers to introduce products not offered by CMHC; to require CMHC to calculate payments to the government using a model comparable to that employed by other Canadian financial institutions; and to work to ensure that CMHC is answerable to the same restrictions and regulations as the private sector. These were legitimate concerns and workable requests that would have improved the bill but they were ignored.
From the Appraisal Institute of Canada we heard the following concern, that CMHC's growing emphasis on speedy approval for its lender clients to reflect a more commercial orientation has the potential to undermine public policy responsibilities by putting the high ratio mortgage insurance at risk. In particular, the Appraisal Institute had concerns about the lack of appraisals done by CMHC; their reliance on a computer system that does not incorporate actual appraisals by appraisers; and the fact that CMHC will now have the ability to vary the price of premiums according to the risk, thereby abandoning the policy that all Canadians should pay the same price and should not be discriminated against depending on where they choose to live. Again, these were valid concerns affecting us all that were not addressed.
These groups, every single one of them, had constructive ideas as to how we might improve the bill, but none of them were acted upon. What it shows us is that while the government is willing to promote partnership, it does not always act accordingly. If it did, it would have worked with these groups to make Bill C-66 a better bill. Instead, it has been intent only on the bill's passage so as to broaden the powers of an already powerful agency.
I would also like to state what our final main objection is to this bill. While the bill partially recognizes that housing policy would be carried out more effectively by the provinces, it does not go far enough. As a result of being vague about responsibility, a clear and concise national housing policy continues to be lacking and therefore puts Canada's housing policy, particularly social housing, in jeopardy.
First, let us be clear that CMHC plays a dual role and has dual functions. As well as its commercial activities, such as mortgage insurance, CMHC has the responsibility of carrying out the government's national housing policy by ensuring that all Canadians have access to affordable housing. Due to the latter, CMHC is heavily involved in aspects of social public housing, low income housing, residential rehabilitation, aboriginal housing, co-op housing and non-profit housing vehicles.
Here, too, the workings of CMHC would find a balance in a public-private partnership arrangement as there are many worthwhile organizations in Canada who work within and understand the social housing needs of Canadians. In order to facilitate this, however, in the most optimal, effective and cost-efficient manner, we must first be clear about which level of government is best suited to be responsible for housing in Canada. Where social housing is concerned we have seen the Liberal government pulling away from supporting social housing.
Since 1993, no new funding has been put aside for social housing needs and, as we have seen, the decline in Canada's housing stock through aging and other factors is causing a social housing shortage and challenging CMHC's mandate to provide not only affordable but quality housing to Canadians.
Despite evidence to the contrary, the government will not relinquish control of social housing to the levels of government that are most directly involved and active in meeting Canadians' housing needs. By way of example of the capability of the provinces and their municipal partners, I point to the recent reports that have been produced to address the growing housing concerns across the country, particularly the issue of homelessness.
I bring members' attention to Toronto's task force on the homeless and the British Columbia government's response to housing needs. In both cases these reports demonstrate an ability to recognize what is required and the ability to take action. In British Columbia, for instance, a 1992 amendment to its municipal act required that all municipalities include housing policies in their official community plan.
At those levels of government we see action on housing issues, not more talk. Despite the work that has been done, the federal government responded in its usual fashion according to the CMHC's five-year corporate plan:
CMHC plans to conduct a forum on best practices for addressing homelessness. This forum will bring together experts on the homeless, representatives of service providers and various levels of government to share information.
It is a cumbersome and long term approach to a problem that requires immediate action. Surely Toronto's task force does not need more time to talk. It has made its recommendations but it is a fact of life with government at the federal level. The federal government does not have the flexibility or the agility to act in a timely fashion and respond as well as levels of government that are closer to the people.
Canadians recognize this as well. That is why Reform's policy, supported by the grassroots of this country, states that housing should be the full responsibility of the provinces. The federal government is surely making a move in this direction by transferring the management of its social programs to the provinces but it is doing so very slowly.
Bill C-66 could have made great strides in this regard. However, it did not go far enough in moving housing responsibilities to the provinces and in fact confuses the issue by downloading some of its social housing responsibilities to the provinces while keeping others. The effect is a gap in social housing policy responsibility and a void where a solid national housing strategy should be.
Ultimately, the issues and requirements of social housing are not being met and Canada's social housing stock is in decline at a time when rejuvenation is needed. Reform would argue that it is time the federal government was clear about its role in administering a national housing policy and that ultimately one level of government should be responsible for it to ensure the needs of Canadians are being met.
The provinces, with support from their municipalities, have demonstrated a better understanding of the social housing needs of Canadians and are in the best position to ensure that Canadian needs are being met. It is time they were given the ability to move forward in this regard. Clearly they have demonstrated their ability.
The Reform Party regrets that the bill is not all it could be and that the government, intent on pushing it through, did so at the expense of input from many organizations in which support a better national housing policy for Canadians and a more vibrant marketplace for homebuyers. Like them, the Reform Party believes that housing is an extremely important and urgent issue, that more and more it calls for partnerships and the benefits of collective thinking between the public and private sectors. Bill C-66 did not promote this.
Canadians believe strongly in this country's ability to provide affordable and decent housing to everyone and it is a shame this government missed an ideal opportunity to create avenues that would strengthen housing policy in the country. It is time that a housing strategy, both clear and concise in its intent and its objectives, existed in Canada, that responsibilities are defined, accepted and acted upon, and that both public and private sectors are given the means to work together to ensure we reach our objectives.
The belief that making CMHC more commercial is the answer to the housing challenges we face in Canada is shortsighted and ultimately inadequate. Pinning all our hopes on one agency will not suffice. We need to recognize the abilities of Canada's private sector. We need to recognize there is a private sector out there willing to participate in the housing market. Its very involvement strengthens the economy. However, by competing with a crown corporation its chances of growing stronger are impeded, and so too then is the economy. Is it this government's intention to impede the growth of the economy?
We also need to recognize the value of partnership. We need to recognize that our national housing policy under the federal government has not been effective for some time. We need to recognize that there are other levels of government and organizations within the private sector willing to strengthen our national housing policy. We need to see that a national housing policy will thrive under the benefits of partnership and clear the roadblocks preventing those partnerships from working effectively.
Surely, if we have learned any one thing from debt and deficit woes it is that the federal government can no longer resolve our most important issues simply by opening the federal purse. The housing challenges that face us need much more than money. Solutions will require the participation of organizations and other levels of government which have the knowledge and capabilities of addressing Canadian housing needs. Yes, the needs of Canadians will be better served if those closest to the problems are in the driver's seat.
If we are to ensure that the housing needs of Canadians, particularly our social housing needs, are met then it is time to let Canadians build a better national housing policy. To do so will require much more courageous vision and much greater action than Bill C-66 provides.
The government made the claim that Bill C-66 would level the playing field between CMHC and the private sector and make the mortgage insurance industry more competitive, that it would strengthen Canada's housing agency CMHC and thereby strengthen its ability to carry out its mandate of administering to Canadians' housing needs. It has done neither.
Most regrettable of all, by failing to work with the organizations that came to the committee during the review of the bill and failing to recognize their knowledge, capabilities and expertise, the federal government has missed an ideal opportunity to improve housing policy in Canada.