Mr. Speaker, it is a privilege to enter into the debate on Bill C-66. The bill amends the National Housing Act and the Canada Mortgage and Housing Corporation Act. There a consequential amendment to another act.
I couch my remarks with regard to the bill in terms of some questions I would like to ask. Does the legislation bring the Canada Mortgage and Housing Corporation closer to the purpose and intent as stated in the National Housing Act? Are the proposed changes in the specific legislation consistent with efficiency in terms of administration? Are they consistent with effectiveness, in other words reaching the goal or the purpose more effectively? What are the financial costs? What are the economic costs? What about the quality of life?
These are the questions I wish to address. Within that context I would like to refer to some discussions we have had with the officials of Canada Mortgage and Housing Corporation. They have indicated rather clearly that the policy of the government is the object of what Canada Mortgage and Housing Corporation does. Its purpose is to implement the government's policy on housing. The details of that policy are in fact contained in the corporate plan.
I will refer to the corporate plan for 1998 to 2002, in which the mandate for CMHC is stated as follows:
Canada Mortgage and Housing Corporation (CMHC) is Canada's national housing agency. Founded in 1946, CMHC's general authorities are derived from the Canada Mortgage and Housing Corporation Act. CMHC is a crown corporation within the meaning of part 1 of schedule 3 of the Financial Administration Act (FAA) and is subject to the various conditions and requirements set out in this legislation. CMHC's specific authorities in housing are embodied in the National Housing Act (NHA). The NHA provides CMHC with a range of authorities and tools to address the housing and related needs of Canadians. These tools can be grouped under four main headings: housing finance, assisted housing, research and information transfer, and international activities.
In early 1995, CMHC's mandate in the area of housing research and information transfer was reaffirmed by the Treasury Board of Canada. Later that year, the government determined that CMHC should be given the authority to sell products and services in support of housing exports. In the 1996 federal budget, the government announced its intention to operate the mortgage insurance fund (IMF) and the mortgage backed securities guarantee fund (MBSGF) on a more commercial basis. At that same time, the government also announced that it was prepared to offer the provinces and territories the opportunity to take over the management of the existing federal social housing resources.
Is that not an interesting way of saying we are getting out of the business? In other words, we do not want it any more and will download it to the provinces. The government did not consult with the provinces. It simply said that it would not do it any more and in fact cut their funding. I will have more to say on that later. The plan continued:
Amendments to the NHA and CMHC Act are required to implement aspects of CMHC's new mandate.
The changes to CMHC's mandate have significant implications for the way the corporation will conduct its business in the future, necessitating changes to current products, structures and processes. The mission, vision and core value statements on the following page were developed by CMHC to reflect the new mandate.
We will stop there for the moment and indicate that the legislation before us today, March 11, 1999, follows the introduction of the corporate plan which clearly indicates what the direction will be.
Where is CMHC right now? I would like to go into some details as well. They too come from the corporate plan. With regard to mortgage loan insurance it stated:
Under the mortgage loan insurance program, CMHC provides insurance against borrower default on residential mortgages in consideration of a premium. Through default insurance, borrowers with down payments as low as 5% have access to mortgage financing at terms and conditions comparable to those with much greater equity. Financial transactions and mortgage loan insurance are recorded in the Mortgage Insurance Fund (IMF).
This is very useful for many young people or people with lower incomes that have not been able to accumulate a down payment of sufficient size. They are helped tremendously. It is a boon to families and to couples that wish to by either a condominium, a townhouse or a single dwelling house. It is a wonderful program. That is what it is doing. It continued:
For 1997, mortgage insurance volumes were on track with more than 442,000 units.... Insurance-in-force was expected to reach $152 billion by the end of the year. Under the NHA, the aggregate outstanding amount of all loans for which insurance policies are issued had previously been limited to $150 billion.
It could not go beyond the $150 billion.
The Corporation received a $50 billion increase to the ceiling in the fall of 1997.
In other words it was increased to $200 billion. It is very interesting that the bill does not change that. This is an interesting development. The corporation is running the show. It is fascinating and I will say more about it as we move along.
At the end of 1996, the MIF was in a surplus position of $18.1 million. A loss before taxes of $23.8 million was forecast at mid-year 1997, compared to a $76.1 million before tax income projected in the original 1997 plan. This decline in 1997 is attributed to an increase in claim expenses. By the end of 1997, the Fund was expected to have a small surplus.
In mid-1997, Treasury Board approved a policy whereby CMHC will make annual payments to the government for its backing of the Mortgage Insurance Fund.
This is interesting. In 1996 it had a profit. In 1997 it looked like it was barely going to have a profit, but in 1997 Treasury Board said that it now had to pay it because it had access to the consolidated revenue fund.
As well, CMHC will begin to fund the additional policy reserves required by private mortgage insurance by the Office of the Superintendent of Financial Institutions (OSFI) imposed on the private sector. This applies to new commercial mortgage insurance business initiated after 1996.
What is beginning to develop with CMHC is very interesting. It is no longer simply a crown corporation. Legally it is, but it is entering into direct competition with the financial institutions. I will explain that a little later. It goes so far as to put itself under the same kind of guidelines and provisions that OSFI imposes upon other financial institutions, particularly federally registered trust companies, banks and so on. That is one area.
CMHC is also involved in mortgage backed securities.
Through the Mortgage-backed Securities (MBS) program, CMHC provides a guarantee of timely payment on securities based on qualifying pools of NHA-insured mortgages. Financial transactions for the MBS program are recorded in the Mortgage-backed Securities Guarantee Fund (MBSGF).
Projected MBS insurance for 1997 has been revised to $3.9 billion, up from the original plan of $2.1 billion and reflecting renewed interest from lenders. In 1997, the MBSGF was projected to generate $13.0 million in revenues, compared to the original plan of $10.7 million.... Higher cash flows and resulting investments of $52.7 million were also expected. The year-end surplus was expected to increase to $36.6 million.
The mortgage backed securities business expands beyond NHA mortgages or guaranteed mortgages. There is an MBS guaranteed fund but there are also other mortgage backed securities. As we go along, we will find that CMHC now wants to get into mortgage backed securities that are not NHA guaranteed mortgages. It is getting into direct competition with the private enterprise sector; a crown corporation is getting into competition.
Let us go into other areas. Canada Mortgage and Housing gets into assisted housing.
Unilaterally or in partnership with the provinces and territories, CMHC subsidizes, on behalf of the federal government, more than 656,000 units of social housing. The portfolio is operated through long-term administrative and funding arrangements between CMHC and the provinces and territories, and between CMHC and locally-based housing organizations.
The federal government announced a new On-Reserve housing policy in 1996. Throughout 1997, CMHC has been phasing in the policy. This involves the conversion of the existing NHA Section 95 non-profit Housing Program into a full-subsidy program, and First Nations' capacity development to help them take on responsibility for the housing in their communities.
To reduce overlap and streamline existing administrative arrangements in social housing, CMHC began negotiations in 1996 to transfer to the provinces and territories the management of existing federal resources, with the exception of housing programs for Aboriginal people living on-reserves. The Government of Canada will continue to honour its long-term funding commitments to social housing (currently $1.9 billion per year).
In fact it is just under $2 billion. In 1997, agreements were signed with Newfoundland, New Brunswick, Saskatchewan, Nova Scotia and the Northwest Territories to get out of social housing. This is very interesting. This theme will develop as we go along here. What is happening here is significant.
CMHC today is also involved internationally. The hon. parliamentary secretary referred to that in some detail. I want to commend the people who went on the Chile trip. I was one of the participants in that trade venture. It was a good one. It was well organized. The industries involved paid their way. There was no government subsidy at all. I commend the way in which it was conducted. Some good things are happening in that area.
The question however is whether this is a function that CMHC should be undertaking in the first place. That is a different issue altogether. What has been done in this area is very good and I compliment it. But the real question is, is this a proper function of a crown corporation?
There are other initiatives.
From time to time, CMHC is called upon to administer short-term housing initiatives linked to federal policy priorities. The 1997 Federal Budget included funding of $51.9 million for 1997 short-term initiatives linked to job creation, including $50 million for the continuation of the Residential Rehabilitation Assistance Program (RRAP), the Emergency Repair Program (ER), Home Adaptations for Seniors Independence (HASI), and the Shelter Enhancement Initiative (SEI) for victims of family violence. An additional $1.9 million was included in ongoing annual funding for the SEI. In total, assistance for an estimated 12,868 units was delivered under these initiatives in 1997.
The corporate account is another area.
CMHC is a large mortgage and loan administrator as a result of activities in support of various housing programs. Including its land holdings, CMHC's asset portfolio is currently $15 billion.
The Corporation's profits are the result of the margin on its financing operations and gains on the disposal of land. In addition, CMHC offers services to government departments and agencies on a cost-plus basis in areas such as land development, inspections and appraisals, and mortgage administration.
We begin to see the intricate web that is being woven as to the involvement and then the extrication and involvement again in all kinds of affairs. That is what it is now.
There is a history with CMHC as well. I want to address that for a couple of minutes.
Although the federal government built some housing for World War I veterans, the groundwork for a federal housing agency was not laid until 1935, with the creation of the Dominion Housing Act. By 1938 the act had helped finance almost 5,000 housing units.
During World War II the Wartime Housing Corporation built 46,000 units, mostly for war workers, and helped prepare and modernize thousands of existing units. When the war ended, more than a million Canadians in the armed forces were ready to return to peacetime life which created a housing demand the private sector could not meet. The federal government responded in 1946 by creating Canada Mortgage and Housing Corporation, CMHC. That was the beginning. That is why it was created.
CMHC built thousands of housing units for veterans, but from the beginning the corporation's mandate was to improve housing for all Canadians. In 1954 the corporation began insuring mortgage loans made by private investors. The Bank Act was amended to allow Canada's chartered banks to lend money for mortgages, and the amount of mortgage funds available to consumers quickly increased.
Small surprise. There is no risk left for the lending institution if it is guaranteed by a crown corporation. Why would the financial institution not increase the amount of money available?
In the 1950s CMHC focused on improving the quality as well as the quantity of Canadian housing. The 1960s brought an emphasis on redeveloping inner cities, while new CMHC programs in the 1970s worked to maintain and improve existing communities. Since the 1980s the corporation has given priority to environmental concerns, sustainable communities and the housing needs of native peoples, the elderly and disabled.
There are other dimensions but before going into them I want to focus attention on the purpose and intent of the National Housing Act. It is very short. The housing act states very simply that it is “an act to promote the construction of new houses, the repair and modernization of existing houses, and the improvement of housing and living conditions”. That is it.
We all know that adequate shelter for all households has long been a social goal of federal, provincial and municipal governments in Canada.
Although housing is within provincial jurisdiction as a matter of property and civil rights, or matters of a merely local or private nature, since the 1937 passage of the National Housing Act, the federal government has played a major role in its provision, mainly through the federal spending power.
In 1946 the federal government established the Canadian Mortgage and Housing Corporation. Since then, CMHC has carried out the federal government's commitment to provide Canadians with equal access and opportunity to suitable, adequate and affordable shelter in safe, healthy environments. This commitment means providing assistance to the most disadvantaged of Canadians, a fundamental value that underlies Canada's social safety net. It also means encouraging self-sufficiency in the private housing market through support to financial markets and to the housing industry.
Social housing ranges from single detached family homes to townhouses, walkups and apartments. It includes rental units owned and managed by the government, non-profit units owned and operated by community and charitable organizations, co-op housing units, units provided for aboriginal peoples on and off reserve, and privately owned units subsidized by governments and rented to low income people.
Of the social housing portfolio which had CMHC assistance in 1990, over 34% was public housing, 24% was non-profit housing and close to 21% was low rental housing. The balance entailed co-op housing, 8%; rental supplements, 7%; and aboriginal housing, 6%.
I am reading from paper No. 8 by R. E. Jenness, published on March 23, 1994.
There is also a historic federal and provincial partnership here. Until the mid 1960s, government housing projects entailed relatively minor expenditures. There was a small public housing program under which capital costs and operating costs were shared on a 75/25 federal-provincial basis, and a small limited dividend program creating privately owned housing units to rent at slightly less than market rates.
As the 1970s progressed, CMHC expanded and diversified its programs. The upshot was a de-emphasis on high density public housing projects and increased reliance upon the following.
One, a non-profit and co-operative housing program, fully federally funded, that provided an ongoing subsidy to sponsoring organizations, including urban native sponsors, and added new units to the stock of social housing.
I raise these points because this is the area the federal government is getting out of.
Two, a federal-provincial rent supplement program, cost shared equally with the provinces that subsidized units in private buildings for rent geared to income clients.
Three, a residential rehabilitation assistance program, fully federally funded, that made loans, partly forgivable, to homeowners, landlords or non-profit groups to undertake repairs and alterations. The minister announced that the program was to come to an end. He recently announced there would be an infusion of money into that program again so it will continue.
Four, a rural and native housing program, mostly cost shared, 75% federal and 25% provincial, to provide new housing and renovation assistance for low income native and non-native people in rural areas.
Indeed, during the 1970s and early 1980s the federal government along with the provinces, municipalities and community groups steadily increased their collective commitment to social housing. According to the Canadian housing coalition, construction of new social housing units rose from 110,213 in 1971-75 to 185,000 in 1981-85.
In 1986 after a task force report and consultations with the provinces, new directions were taken on social housing. Changes were made with respect to program targeting, the nature of subsidy assistance, caps on special purpose housing, program planning and financial contributions from the concept of where need was accepted, and a housing needs allocation model was used to distribute federal resources among provinces under three federal main budget housing projects, non-profit, rent supplement, rural and native housing.
The lead responsibility for delivering the programs was in most cases given to the provinces. That is really the issue here. They were given the lead. Also, they are extremely capable of doing that.
I want to look at one of the most recent developments that I was very cognizant of shortly after I took over the lead critic role in this area. It has to do with co-op housing.
The government said for sure that it wanted to get out of social housing. It wanted to download it to the provinces. There are many different kinds of co-op housing but two basic ones, those that are federally operated and those that are provincial.
The federal government said the provincial ones are not its concern but the federal ones are. It wanted to download this. Then the association of federal co-op housing got a load of this and thought if this is to be downloaded, it is afraid it will lose its co-operative status. Lo and behold, enough pressure was created that the minister changed his mind. He said that federal co-op housing would stay where it is.
The philosophy co-op housing I support 100%. It provides pride of ownership. There are two kinds of co-op housing. One I really like is equity co-op housing. The individual buys a unit and begins to build up an equity they can use. They have the pride of ownership, the involvement and this is a good thing. It would be great if all social housing had some kind of pride of co-operative ownership. We all want this.
It is very interesting that as the government moved out of this the provinces recognized that if this would happen, they had better do something. They have been aware of this for quite some time.
I am not sure in Ontario where the numbers go, whether 16,000 co-op units are federal and 18,000 are provincial, but it does not matter very much. It is about a 50:50 split.
The province of Ontario has downloaded much of this to the municipalities. It is very interesting that I came across a study that I am sure members are aware of or have seen. It is the report of the mayor's homelessness action task force entitled “Taking Responsibility for Homelessness: An Action Plan for Toronto”.
I would like to read what these people are dealing with and compare it with what we talked about in terms of the CMHC. This report deals with simplifying and co-ordinating the service system. What would be simpler than to have one level of government involved instead of three?
Exactly what these people are talking about are what services are available at present, why the current approach does not work, changing the role of urgency hostels and shelters and making drop-ins and outreach more effective. We are getting rather specific but it gets more specific. They talk about specific strategies for high risk subgroups, families with children.
There has been a dramatic increase. Some of these shelters are being populated to a large degree now by families. I do not think I have time to get into some of the statistics but they are very revealing.
They mention youth, abused women, aboriginal people, immigrants and refugees and go as far as to talk about prevention strategies and how we can prevent the problem, shelter allowances, rent banks, housing help, legal assistance, anti-discriminations measures, additional strategies for social assistance recipients, individual support, discharge policies and practices and community economic development, the whole area.
What about the health component in all this?
We are talking about homeless people but we are dealing with more than simply not having a house: an overview of existing services, removing barriers to health care, mental illness and homelessness, addictions and concurrent disorders, and the whole area of supportive housing. The report goes into affordable housing and the case for public investment, lessons from our past, producing new low income housing, preserving existing affordable housing and finally implementation. There are some 110 recommendations that follow this report.
It is an excellent piece of work but I do not think it is the end. When I talked to the councillor in charge of social housing for Toronto he said they were just beginning.
We have to come to grips with this. One government can do this. As we go into this corporate plan it is interesting to note what CMHC says. In the 1998-2002 plan CMHC says it:
—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 on homelessness and to recognize and promote best practices in the area. This will provide the basis for potential partners to work together to develop future strategies to alleviate homelessness.
How many different ways do we have to look at the same problem? One would almost think the city of Toronto was doing this in isolation. This task force received assistance from all kinds of experts. Did it get it only from Toronto? No. Let me read into the record where they went to obtain some assistance. They received assistance from Canadian cities like Calgary, Montreal, Ottawa, Vancouver and Winnipeg. They also went to American cities like Boston, New York, San Francisco and Washington.
This task force is not made up of amateurs. These are not people who do not care about policy. These are not people who are unaware of what is to be done. Now CMHC says it will conduct a forum. We have the information we need. We say it is only Ontario. It has a 50:50 split on co-op housing. It knows all about this.
I refer to what is happening in British Columbia. This task force reported in January 1999. A 1992 amendment to the municipal act required municipalities to include housing policies in their official community plan. Additional amendments have provided municipalities with a greater range of powers to address community housing needs.
In summary, municipalities have reviewed or are in the process of reviewing their OCP. Nearly all have adopted or are in the process of adopting housing policies within their plan.
Definitions of affordable housing have been or are in the process of being written in several communities. In a number of cases housing strategy documents outlining definitions, policies, procedures and specific methods to address housing issues have also been produced.
A variety of housing related techniques such as density bonusing and housing agreements is currently being utilized by municipalities to increase the diversity of the housing stock or to produce affordable housing units.
To increase residential density, many municipalities are permitting housing above shops, manufactured home parks, secondary suites and small lots for single family housing.
A definition of special needs housing has been developed or is nearing completion in many municipalities. Although the definitions vary, they speak to the importance of creating both market and non-market housing for individuals with special needs.
Municipalities are taking up the challenge and finding innovative ways to meet the need for special needs housing. Committees or task forces are dealing with special needs populations or addressing disability issues at the community level in a large number of municipalities. Reports or surveys identifying the special needs population have been produced or are underway in several areas of the province.
Municipalities are developing guidelines for adaptable housing and several are promoting this type of housing to provide access to suitable housing for individuals with special needs.
The provinces are able and competent to deal with this issue and constitutionally they have been given that responsibility. That is their job and now we have an intrusion into much of that through the National Housing Act and the central mortgage and housing act. There was a time when this was significant, in 1935. We have gone through this and we know what it is but it has changed into something quite different.
The involvement of multiple levels of government creates basic inefficiency. It creates mutual recriminations. If one level of government is not doing it, then the other level says it is your job, you go do it. As a result the very people who were intended to be helped by this act are the ones who lose. Most important in all this is the confusion, the chaos, the conflict, the confrontation and the contradiction that develops because of these different levels of government getting involved in each other's way. We do not need that. It could be simplified so easily. Then comes the worst of all, the lack of consistency in housing policy.
I suggest there is no consistent social housing policy as far as the federal government is concerned. There are immediate expedient types of solutions presented. The time has come for us to bring rationality to bear on this situation. The provinces have recognized this responsibility, have contributed to meeting that responsibility and have demonstrated they can do the job. As a federal government we need to create an environment that makes it possible for them to carry out the job they have ably demonstrated they can do.
We now know the CMHC has achieved many worthwhile things and is continuing to do that. This is not inconsistent with what the minister of housing has said. I quote directly from the statement he made on August 26, 1998 in Ottawa when he found agreement with Yukon:
Having only one level of government involved in the administration of social housing will maximize the impact of taxpayers' dollars. The territorial government will have the flexibility to meet the needs of its residents while adhering to national principles and an accountability framework.
Let us do that. This act does not come to grips with those kinds of things. It simply moves along and makes what is into law. Some of the things that are not yet approved are already happening and we just have not had the legislative provisions to do that.
I believe the CMHC has lost its way in another area. Not only has it not dealt specifically with some of the people who are in need, but listen to this strategy which comes from the corporate plan of 1998-2002. The strategy in one sentence is level the playing field for private-public competition. Interesting. The CMHC will now get into competition with the private sector.
It goes on to say:
This strategy involves behaviours consistent with the corporate value of entrepreneurship, as well as the creative and effective use of housing finance tools to achieve fair competition for the CMHC and the private sector, and otherwise support competition in housing markets. Collectively these measures will place CMHC on a more competitive footing with private competition by reducing costs through operational efficiencies, effective asset management and product improvements.
These are the key tactics:
In 1998, CMHC will fund additional policy reserves and commence payment to government, based on the capital and additional policy reserves that the office of the superintendent of financial institutions (OSFI) requires of private insurers.
That is the very point I made earlier and that is what is to be done here.
Based on current projections, total fee payments to the federal government are forecast to be $197.9 million over the 1997 to 2002 period.
CMHC plan improvements to its mortgage insurance product line. In 1998, CMHC will complete implementation of a plan for restoration of rental insurance viability through changes to existing products and the introduction of new products.
Also in 1998, CMHC will review revisions made to the First Home Loan Insurance (FHLI) program in 1997 to determine the impacts on the commercial viability of the product, and make more improvements if required.
In this whole area we have a private company that does essentially the same thing, G.E. Capital.
I mentioned earlier that CMHC was going to get into another aspect of mortgage backed securities.
To improve MBS program competitiveness, and in conjunction with improved program processes, the MBS fee structure is being reviewed to make MBS more competitive under a wider variety of interest-rate and liquidity conditions. In 1998, CMHC will introduce a new few structure for the MBS program that is more responsive to current market conditions. The Corporation will pursue CMHC-led multi-lender MBS pools in 1998. In the latter part of the planning period, CMHC plans to develop MBS pools for non-NHA mortgages and non-mortgage loans subject to legislative changes. An annual payment to the government is currently being developed.
That is exactly what this law does. It allows CMHC to get into another area of non-NHA mortgages, to put these into mortgage backed securities. There is a market that exists now. CMHC does not have to get into that mortgage backed security market. It is already there. It is simply getting into direct competition.
Here we have a crown corporation with total assets of the consolidated revenue fund of the country of Canada competing with private enterprise. I think that is wrong in principle. I do not think it is fair at all.
It goes on:
For seniors, CMHC plans to introduce a Reverse Equity Mortgage (REM) insurance product through at least one Approved Lender by 1999. The objective is to ensure REMs are available through two or more Approved Lenders by the end of the planning period. The Corporation also plans to consider MBS for REMs in 1999 or thereafter if there is evidence that Approved Lenders are unable to use their own resources to issue REMs.
What does a reverse equity mortgage mean? This is for seniors who own a house or who have very high equity in a house. They take a reverse equity mortgage, draw down more money and the interest rate goes up.
Here it is with a reverse equity mortgage insurance program, or at least that is what it is thinking of putting together.
Last night I had the opportunity to meet with a representative of the Bank of Nova Scotia. I asked this gentleman how he would insure a reverse equity mortgage. He looked at me with a blank look on his face and asked me what I was talking about. I told him that I had just read that the corporate plans for CMHC state that it is going to introduce a new product called reverse equity mortgage insurance. He said that he did not know how it would work and he did not understand how it could actually work. He went on to tell me that it was actually a very small market to begin with.
Maybe that market will grow. I am not here to debate whether one should or should not get into a reverse equity mortgage. That is another issue. However, one of the major financial institutions in Canada does not understand how this product could work. There is something fundamentally wrong in what is going on here.
We need to come to grips with a much bigger issue, which is the whole housing issue and how best it should be handled.
