Werner Schmidt

[National Housing Act, May 4th, 1999]

moved:

Motion No. 33

That Bill C-66 be amended by deleting Clause 33.

[National Housing Act, May 4th, 1999]

moved:

Motion No. 30

That Bill C-66, in Clause 29, be amended by replacing line 25 on page 20 with the following:

“branches in any part of Canada and employ agents in any part of Canada.”

Motion No. 31

That Bill C-66 be amended by deleting Clause 30.

[National Housing Act, April 29th, 1999]

I must have hit some kind of chord. They all agree that they should be here listening to this point.

The government does not have a national housing policy. There is a little bit here and a little bit there. There is a little bit in CMHC and a little bit in some other kind of program. There is no consistent national housing policy.

The Canada Mortgage and Housing Corporation has been set up under the National Housing Act to implement the government's housing policy when in fact there is not one. There is a whole bunch of hodgepodge itsy-bitsy pieces coming together. Sometimes they work and sometimes they do not. It is essential that we have one.

I would like to ask whether the government believes that a hodgepodge is the best way to meet the housing problem in Canada today. I submit that it is not. The way to look after housing and to develop a solution to the housing problem in Canada would be to give the jurisdiction of this matter to those people who are closest to the situation and to the problem. That would be the provinces and the municipal governments.

There is no doubt that is precisely what was addressed by my hon. colleague who just spoke. It is also a question that has been raised by the other opposition parties. Huge sums of money are involved in the business of providing housing. There is also a huge social problem which needs to be addressed. We need to ask ourselves what is the best way to resolve this problem.

I commend the city of Toronto that commissioned a major study, the Golden report which was published in January of this year. It comes to grips with many of the issues we are dealing with today.

It is not only the city of Toronto that has done good work. The magazine put out by the Canadian Housing Corporation made some very interesting points. It indicated that the municipal governments throughout Canada that are closest to this problem have probably done a better job of coming to grips with it than any other level of government.

Surprise, surprise. Of course they have because the problem is before them virtually every day. It deals with Vancouver and Van City Place, a 50 unit development for street involved youth. There is a new development of 40 singles in Toronto in addition to the Golden report. The city of Montreal is an equal partner with the province of Quebec on a 50% cost sharing program designed to improve the quality of housing in central areas.

On a small scale, the city of Prince Albert, Saskatchewan, was a key player in establishing a new affordable home ownership initiative. The city of Kamloops provides another example. Working in partnership with the Canadian Legion and a local developer, the city has provided land on a lease basis for a seniors condominium.

The city of Edmonton is an active partner in the Edmonton coalition of the homeless initiative to establish a housing trust fund. The city of Saskatoon is similarly assisting the development of a trust fund. The city of Toronto just established an $11 million capital revolving fund, using money collected from private developers in return for density bonuses over the past dozen years.

A variety of cities large and small have shown not only that they can deal with the issue but that they actually are dealing with the issue. It is significant that we can demonstrate the housing issue can be dealt with at the local level and that these governments are competent, able and willing to deal with the issue.

The government through Canada Mortgage and Housing has vacated a large number of these areas. It is confusing. On the one hand it devolved the problems to the provinces but not with all provinces. There is another confusion and that is the federal co-op development that has been happening in Canada. In Ontario there is a real division. Roughly 50% of the housing co-operatives are owned by the provincial government, or under the jurisdiction of the provincial government, and about 50% are under the jurisdiction of the federal government.

On the one hand the government says it wants to divest itself and give it all to the provinces. Lo and behold a lobby group is formed and is successful in saying that the federal co-ops should stay with the federal government. That is exactly what happened.

The concept of housing co-operatives is a good one. I like it a lot because it comes to grips with one of the fundamental principles of housing, the pride of ownership that goes along with owning a home.

The National Housing Act has given many people the right, privilege and opportunity to own their own homes. It has been a benefit to all of them. They have expressed their own individualism through housing. People who are not as capable or not as able financially to do that have joined together with others and have formed a co-operative venture so that they can own their domicile co-operatively.

There are different kinds of co-operatives. We have mentioned federal and provincial co-operatives, but there is also those that are equity co-operatives and those that are non-equity sharing. People who do not have the resources can get into a co-op, develop their equity and actually feel they are part of a co-operative, have an ownership and a direct interest, an equity interest in the particular place where they live. It makes them accountable. It makes them responsible. It gives them a sense of pride as individuals to be able to express themselves in this way, which is highly desirable.

A better solution to the whole business of social housing might be to allow these people to own some of it themselves and be able to share in the management and operation of a particular unit on a co-operative basis, rather than on a handout basis where it is given to them virtually without any strings attached and without any responsibility connected to it.

My colleague was commenting on my speech. I am so happy that he was impressed with it. I just wish hon. members opposite would be as impressed as he was. It is good to hear that common sense is recognized by both sides of the House.

I want to come back to the Canada Mortgage and Housing Corporation. We need to have accountability. We need to recognize that accountability is best found if the decisions are transparent and if the powers of the corporation are somewhat restricted. The provisions of the bill give almost carte blanche to the management of Canada Mortgage and Housing to do whatever it wishes to do, whether it is to get involved as a intermediary in the financial marketplace or whether it is to have agents and branches in other countries.

One of the amendments concerns the ability of Canada Mortgage and Housing to establish branches and agents. It is not restricted to Canada. They could be established anywhere in the world. That is not what Canada Mortgage and Housing should be doing. If the purpose is to establish Canada's national housing policy, it should not be allowed to establish agents and branches in a foreign nation somewhere. The loophole is not closed in this legislation. It is important for the members opposite to recognize that this is Canada's mortgage and housing corporation, to implement Canada's national housing policy, and not some other national policy.

[National Housing Act, April 29th, 1999]

Mr. Speaker, it is a privilege to enter the debate on Group No. 2. These amendments from various members of the opposition parties all essentially deal with one subject: the governance, the administration and the devolution of powers with regard to the housing situation in Canada.

I want to address my remarks primarily to the efficiency, the accountability and the effectiveness of the Canada Mortgage and Housing Corporation and the operation of the Government of Canada with regard to housing.

I notice a number of members of the Liberal Party are here. It is to their advantage to listen carefully. It would be very good if all of them were here to listen to some of the comments that are about to be made.

[National Housing Act, April 29th, 1999]

moved:

Motion No. 24

That Bill C-66, in Clause 24, be amended by deleting lines 16 to 18 on page 19.

[National Housing Act, April 29th, 1999]

Mr. Speaker, I rise on a point of order. I asked a question yesterday as to whether all of Group No. 1 would be deferred until the end of all of the groups, and the Speaker at that point indicated that would be the case.

I am somewhat confused now that we are taking a vote on each one of these motions in turn. Yesterday they were grouped and the understanding given to the House by the Speaker was that they would all be deferred until after the last motion in Group No. 3.

[National Housing Act, April 29th, 1999]

Mr. Speaker, I rise on a point of order. Yesterday I asked a question about whether the votes would be deferred for each of these groups until the end and that the vote would be taken at the end of Group No. 3. Is that correct?

[National Housing Act, April 28th, 1999]

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.

[National Housing Act, April 28th, 1999]

moved:

Motion No. 1

That Bill C-66, in Clause 3, be amended by deleting lines 8 to 12 on page 4.

Motion No. 2

That Bill C-66, in Clause 3, be amended by replacing lines 1 and 2 on page 5 with the following:

“8. (1) The Corporation may insure housing loans.”

Motion No. 4

That Bill C-66, in Clause 3, be amended by replacing lines 8 and 9 on page 7 with the following:

“the obligation.”

Motion No. 5

That Bill C-66, in Clause 3, be amended by replacing line 10 on page 7 with the following:

“18. (1) The Corporation may, subject to regulations made under section 465 of the Insurance Companies Act which regulations shall apply to the Corporation with such modifications as are necessary, obtain reinsur-”

Motion No. 6

That Bill C-66, in Clause 3, be amended by replacing lines 21 to 23 on page 7 with the following:

“this Part by Her agent the Corporation. Any amount so paid constitutesa dividend paid by the Corporation to the Government of Canada.”

Mr. Speaker, it is a pleasure to rise to debate various amendments to Bill C-66 this afternoon. At the end of each of grouping will there be a vote, or will the votes be deferred until all the groups have been heard by the House?

[Petitions, April 14th, 1999]

Mr. Speaker, it is my privilege to present a petition from the constituents of Kelowna who ask that the Prime Minister and the Parliament of Canada declare and confirm immediately: first, that Canada is indivisible; and second, that the boundaries of Canada, its provinces, territories and territorial waters, may be modified only by a free vote of all Canadian citizens as guaranteed by the Canadian Charter of Rights and Freedoms or through the amending formula as stipulated in the Canadian Constitution.