moved:
That, given that,
(i) the cost of housing continues to rise out of reach of Canadians,
(ii) current government policy has failed to provide sufficient housing supply,
the House call on the government to:
(a) examine a temporary freeze on home purchases by non-resident foreign buyers who are squeezing Canadians out of the housing market;
(b) replace the government's failed First-Time Home Buyer Incentive with meaningful action to help first-time homebuyers;
(c) strengthen law enforcement tools to halt money laundering;
(d) implement tax incentives focused on increasing the supply of purpose-built market rental housing units; and
(e) overhaul its housing policy to substantively increase housing supply.
Madam Speaker, I will be sharing my time today with the member for Mégantic—L'Érable.
In the Building the Future Together report, Canadians told the government that the most important outcome from the national housing strategy would be “an increase in the supply of housing that they can afford and that meets their needs.”
At a time when many expected the cost of real estate to drop, prices skyrocketed to stratospheric levels, leaving young Canadians, new immigrants and those seeking to enter the housing market with a general feeling of hopelessness as their dream of home ownership slipped away.
I table this motion today because housing is farther out of reach than ever before, and we find ourselves in an affordability crisis across the housing continuum. I will be using my time to speak to each aspect of the motion and to address the integrity measures, demand policies and supply deficit in our housing system. This crisis is multi-faceted and there are no easy solutions, but the status quo is not okay.
My first point addresses Canada's foreign buyer issue. We need to calmly, openly and comprehensively talk about the very real and at times negative role foreign buyers play in Canada's residential real estate markets. We know the actions of foreign speculators and investors are increasing home prices for regular Canadians.
Dr. Josh Gordon's report, “Reconnecting the Housing Market to the Labour Market: Foreign Ownership and Housing Affordability in Urban Canada”, has found that the decoupling of housing prices from local incomes can occur, and arguably is occurring in Vancouver and Toronto especially, when there is substantial foreign ownership in the market. This is defined as “the use of untaxed foreign income and wealth for housing purchases”.
While he makes good use of the data at hand, in my conversations with Dr. Gordon it became clear that the available data is insufficient. CMHC, StatsCan, and provinces and territories need to be collecting better data for this reason. For instance, a CMHC study found that in 2016-17, one in five new Vancouver condos was owned by non-residents, but we need more current and more comprehensive data. Housing in Canada must be for Canadians, first and foremost.
If we do not have the data, we cannot achieve this objective. The government's own parliamentary secretary for housing publicly admits that our system works better for foreign investors than for Canadians trying to find homes. However, the government's solution is a proposed 1% annual tax. It has not even begun consultations on this yet, and the exemptions are already longer than my arm.
Will the government commit to a meaningful disincentive to foreign buying of Canadian real estate? Why not a 10% tax? Better yet, the government should do what this motion calls for and freeze the flow of foreign money into our residential real estate sector until the supply deficit has been met and Canadians can afford homes in their own country.
People are losing faith in the institutions that are supposed to protect their interests. When the pandemic ends, and before foreign investors come back to our markets in force, we need to know who is purchasing homes and the sources of the funds they are using. UBC Professor Paul Kershaw of Generation Squeeze has suggested harnessing foreign investment for the types of housing Canada needs, such as co-operatives and affordable purpose-built rentals.
Point number two addresses first-time home buyers. We must ensure that there is a pathway for hard-working Canadians to achieve home ownership, but this dream is quickly moving out of reach for the middle class. Home ownership should not be based on being born to wealthy parents. It should be based on hard work and a fair system.
Habitat for Humanity recently shared that “home ownership matters for every social determinant of health”. Home ownership lifts families and helps them build bright futures for themselves.
The Liberal government, unfortunately, is absent on this issue. Its first-time homebuyer incentive program is a failure. Its original objective was to help 200,000 Canadians over three years. We are now in year two, and it has helped approximately 10,600 families. How on Earth can the government consider this program successful?
Why does it not look at extending amortization periods and mortgage terms to reduce monthly payments and provide more security for both lenders and borrowers, or help young families save for down payments through tax incentives?
What about adjusting mortgage qualification criteria in favour of first-time home buyers rather than investors, or expanding some of the initiatives from the private sector, including new shared equity programs?
The third point is money laundering in Canada. Yet another failure of Canada is our inability to address money laundering. The reason terms like the “Vancouver model” and “snow-washing” exist is because our nation is a global case study in how not to stop money laundering. Not only are our laws and regulations ineffective, but we poorly enforce the ones we have. Report after report shows that Canada largely fails to successfully convict money launderers. Almost three-quarters of people accused go free, a 2019 Global News investigation found. The Toronto Star found that 86% of charges laid for laundering the proceeds of crime were withdrawn or stayed. B.C.'s Attorney General shockingly found years ago that Ottawa had assigned precisely zero RCMP officers to fight money laundering in B.C. That only changed after January of this year.
At the finance committee, Transparency International highlighted that the 2016 release of the Panama papers showcased Canada's global reputation as a desirable place for dirty cash. Five years later it found that nothing had changed.
The government needs to implement recommendations from the numerous experts who have explored this issue. These include Peter German's “Dirty Money” reports parts 1 and 2, the Expert Panel on Combatting Money Laundering in B.C. Real Estate and the ongoing Cullen commission of inquiry into money laundering in B.C.
The fourth point is purpose-built rentals. Purpose-built rental construction has not kept pace with demand. Quite simply, there are no incentives for developers to build rental units in Canada and this needs to change. Much of Canada's current rental housing stock was built in the 1970s and 1980s through the multiple unit residential building program, or MURB. It was not a grant or a loan program, but a tax incentive program that unlocked the private capital of Canadians and directed it to rental housing. According to the Library of Parliament, MURB is estimated to have led to the construction of 195,000 units of rental housing at the lowest estimate. Studies have indicated that number could be as high as 344,000 units. It did all of this for the comparably low cost of $1.8 billion in forgone revenue, and that is in today's dollars.
The government is spending $70 billion on the national housing strategy, including provincial money, for 125,000 units. At some level, the federal Liberals know this is the way to go, hence the rental construction financing initiative, but this still ties developers to the federal bureaucratic process, which is slow. The Rental Construction Financing Initiative, RCFI, has quietly become the largest single funding envelope of the national housing strategy. Now at $25.75 billion, it promises to deliver 71,000 units of housing in approximately 10 years. This is not a great comparison with MURB's 195,000 units for $2 billion.
CMHC's new CEO, Romy Bowers, shared with the HUMA committee that the private sector is the only way we will meet Canada's housing needs. I agree. There are additional tools that could unshackle contractors as well. For instance, why not waive the GST for the construction of purpose-built market rental housing, or allow those with aging rental stock to defer the capital gain when selling provided the money is reinvested in rental housing? Increasing the nationwide stock of purpose-built market rental units serves to better everyone along the housing continuum. Canadians have never had more disposable income. Why not direct that to a social policy that could do some good?
The fifth point is increasing supply. We know Canada has a housing supply shortage. According to a recent Scotiabank report, Canada has the lowest number of housing units per 1,000 residents of any G7 country. Experts have been saying this for years, and COVID illustrated it better than anything else. Now many but not all of the policy levers to increase housing supply rest with provincial and municipal governments. Yes, red tape at these levels is a problem, but the federal government should incent the removal of restrictive zoning and NIMBYist bylaws by making any infrastructure investment conditional on their removal. Of course, any infrastructure funds must be accounted for transparently, unlike the current government's haphazard approach condemned by the Auditor General in report 9—