Mr. Speaker, the $45 million in efficiency savings will come from the assisted housing programs line in Canada Mortgage and Housing Corporation's, CMHC’s, 2006-07 main estimates and the equivalent line in CMHC's 2007-08 main estimates, when approved. The assisted housing programs budget line primarily supports funding for some 633,000 existing social housing units and the affordable housing initiative.
Efficiency savings apply to social housing that is funded and administered by CMHC through a number of existing agreements. The efficiency savings result from lower than forecast mortgage interest rates and inflation.
Social housing is funded through long term federal subsidies. Social housing expenses usually include a mortgage cost component which may vary as mortgage interest rates increase or decrease over time. Non-mortgage expenses increase or decrease over time due to inflation. At the social housing project level, the cost of CMHC’s assistance can also increase or decrease accordingly.
Assumptions regarding increases or decreases in expenses are factored into CMHC annual program budget costs and the corporation's main estimates. If mortgage interest rates and inflation were to go up, the cost of CMHC housing subsidies would go up. If mortgage rates or inflation were to decrease, CMHC subsidy costs would go down.
Final social housing costs for 2006-07 and 2007-08 are expected to be lower due to lower than assumed interest rates on social housing renewals and inflation. The efficiency savings devoted to expenditure review will be $30 million in 2006-07 and $15 million in 2007-08. The timeline for the realization of the savings is relatively constant over the two fiscal periods.
Existing funding contracts with provinces, territories and third-sector housing providers, e.g., non-profits and housing co-operatives, continue to be fully honoured as federal funding will be sufficient based on the terms of these contracts. There is no impact on low income tenants of the social housing in question since they will continue to pay the same level of subsidized rent.