Madam Speaker, it is a real honour to be back in Ottawa and to have the opportunity to respond to the budget. Today I will be speaking on housing.
I want to begin by sharing a personal story. In 2016, I distinctly remember reading in the Abbotsford News that house prices had increased over 30% during the spring season. I was filled with anxiety and the fear of missing out, the fear of being unable to provide a safe and affordable place to raise my kids, and the fear of losing hope of ever owning a home.
When I recently hosted a telephone town hall in the tri-cities region, it was reiterated that the concerns I personally held are now the norm and they are growing. During the course of that discussion, the message received again and again was that young professionals do not see a pathway to home ownership. Hope is being lost.
As the Conservative Party's shadow minister for housing, I scoured the budget for a plan to meaningfully address the ongoing housing affordability crisis plaguing this country. However, the budget includes nothing for young Canadians or first-time homebuyers trying to get into the market. The document barely mentions Canada's housing supply crisis. Urban indigenous people seeking long-promised support for, and autonomy over, their housing requirements were snubbed as well.
Even though the Liberals admit that our real estate market is better for foreign investors than for Canadians trying to find a home, their proposed solution is to further consult and maybe implement a foreign buyers' tax in 2022. When it comes to addressing money laundering, the Liberals, again, turn a blind eye to this insidious problem.
All in all, there was an opportunity before us not to be reactive, but to respond to the needs of those trying to secure new homes, those looking for stable places to live and those seeking more security in their lives. We are not there as a nation, and the anger and frustration is growing.
These are serious issues with significant impacts on Canadians' futures, and they deserve far more time than I have in my 10 minutes today.
Housing prices exploded during the pandemic. According to the Canadian Real Estate Association, the national average rose 31.6% compared with March of last year, to a record price of over $716,000. The reasons for these skyrocketing prices are many, and if there were an easy fix we would not be having this discussion. Indeed, even in my critiques, I will acknowledge there is no easy solution to the housing problem.
Among the new factors are the Bank of Canada's quantitative easing practices. Its manipulation of interest rates is increasing real estate and asset inflation, encouraging high debt levels and punishing savers.
The Bank of Canada cut its key interest rate three times in the early days of the pandemic, when Mr. Poloz was governor. The current governor indicates that the bank will keep rates low until at least 2023. Mr. Poloz has stated that, “If the side effect is a hot housing market, that's one I'll take every day.”
I am sorry, but what about the 30-year-old renter in Coquitlam with two university degrees and a good job who is on the brink of giving up on ever owning a home? She followed all the rules and we are failing her.
We must not forget just how wrong CMHC's predictions about the housing market were in the early days of the pandemic. From spring 2020 all the way through winter 2021, CMHC claimed we would see a decline in average home prices of between 9% and 18%. This was despite the Canadian Real Estate Association's statistics showing a vastly different story. Members have likely caught on that the difference between CMHC's predicted 18% decline and the actual 31% increase is almost 50%. This is the Crown corporation we are entrusting with Canada's housing future.
As an opposition MP, I am often asked what I would do differently, and what my party would do differently. Here are some ideas today. First, the Liberals should address our housing supply gap by unlocking private capital and incentivizing municipalities to take action. We need a tax policy that encourages housing development in Canada. Increasing the ability of entrepreneurs and developers to construct purpose-built rentals is both a more elegant and more responsive approach than the tired tax-and-spend standby of the Liberals.
The Library of Parliament found that the tax provisions of the 1970s and 1980s, under the multiple unit residential building program, or MURB, led to the creation of 195,000 units at the lowest estimate, but potentially as many as 344,000 units.
This cost $1.8 billion in today’s dollars, about $9,000 per unit in forgone government revenue, as opposed to the Liberals' rapid housing initiative, which spends 23 times that per unit.
Too often I hear from entrepreneurs, developers and city councillors that municipal bylaws and NIMBYist zoning practices are keeping homes from being built. Look at the many Vancouver neighbourhoods still zoned for single-family homes that no local family can afford. Federal infrastructure dollars should be directed to municipalities that increase zoning densities and amend restrictive bylaws around transportation corridors to get more housing built. Federal support should be directed to communities that remove backlogs on development permits so builders are not waiting years for approval.
The second point is that the Liberals should do what was promised and give indigenous people more autonomy. The Aboriginal Housing Management Association, or AHMA, has stated in no uncertain terms that it is outraged. Its CEO, Margaret Pfoh, said she has “never been as shocked or as disappointed” as she was when reading the budget. She went on to relay that there has been virtually no progress on the creation of an urban indigenous housing program and that this budget does not even make mention of it, despite the fact that the Prime Minister included it in the mandate letters of both the minister and the parliamentary secretary.
The Conservative Party of Canada wants to increase autonomy for indigenous people and support them as they strive to meet their housing needs. It is puzzling that the government does not.
The third point is to have a robust plan to address the role of foreign buyers in Canada. Budget 2021 proposes consultations on the implementation of a foreign buyers' tax, which is actually an old Liberal campaign promise. The parliamentary secretary for housing has admitted that Canada is “a very safe market for foreign investment, but not a great market for Canadians looking for choices around housing”, so I am a bit shocked the Liberal budget response is so weak. Does the government not understand just how much it dismayed Canadians to hear it finally acknowledge that the system is rigged for foreign buyers?
I remember, in the summer of 2019, a homeowner on Grewall Crescent, in Mission, B.C., talked about the busloads of foreign buyers coming to neighbourhoods and dropping asking offers on homes without conditions. How is this good for a Canadian family trying to get into the market?
Dr. Kershaw of Generation Squeeze appeared before the finance committee last week. He said that such a tax would only be a minor tool and is ultimately insufficient. SFU’s Dr. Josh Gordon has written about the need for continuous and comprehensive tax measures.
We need to signal to foreign buyers that Canadian housing is for Canadians first. What about a higher capital gains rate for foreign investors? What about penalizing quick flips to avoid rampant speculation? The government needs to address this from multiple angles.
The fourth point is tackling money laundering. It is not only foreign buyer activity that artificially inflates the price of home ownership and puts it out of reach for Canadians. Criminals who clean illicit funds through residential property are yet another factor. There is a reason terms like the “Vancouver model” and “snow-washing” are used by global law enforcement. These problems arose in Canada and are embedded here. Yesterday on the way to the airport I heard on The Roy Green Show that $100 billion is laundered in Canada every year. Despite mounting evidence and recommendations from experts, we continue to see minimal action from the government. For instance, the Expert Panel on Money Laundering with a focus on B.C. real estate found a significant disconnect between FINTRAC and reality.
What did we get from the Liberal budget? Only $4.6 million over four years for minor FINTRAC projects when, according to experts, the organization itself is ineffective and the legislation guiding it needs to be updated. Canadians are losing trust in the institutions that are meant to protect them. We need to bring them into the 21st century.
The fifth point is having mortgage policies that work for Canadians. Current rules allow for the removal of $35,000 from one's RRSP for a down payment. This is not anywhere close to covering a down payment in most of Toronto and Vancouver. The Liberals' first-time home buyer's shared equity program has failed for many reasons. This becomes especially evident when we realize that increasing amortization periods to 30 years on uninsured mortgages would achieve the same goals but would cut out all the administrative costs of the shared equity program. Mortgage stress tests play an important role in protecting lenders from defaults, but when they are as divorced from reality as they currently are from interest rates, they only serve to cut out those who are struggling the most to enter the housing market. As well—