HUMA Committee Meeting
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Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities
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EVIDENCE
Tuesday, October 4, 2011
[Recorded by Electronic Apparatus]
[English]
Thank you for your attention. We are going to get started.
We have with us, from the Department of Human Resources and Skills Development, the assistant deputy minister who deals with labour program compliance, operations, and program development; and the assistant deputy minister of labour program policy, dispute resolution, and international affairs.
We will have opening remarks from them. I understand they will go through a deck. Then, as usual, we will start with five-minute rounds of questioning.
Without saying too much more, I'll invite the guests to make their presentations.
Thank you, Mr. Chair and committee, for the opportunity to be here today. My colleague Marie-Geneviève Mounier and I, Bayla Kolk, are the two ADMs of the labour program. Thank you for the opportunity to talk to you about our mandate, our activities, and the scope of our program.
We're going to take you through a short presentation. I believe you have all received it. We'll take the time to give you key facts, and then we will be prepared to answer your questions and have a good discussion with you.
The labour program is part of Human Resources and Skills Development Canada. We're one of three strategic business lines, along with HRSD and Service Canada, but uniquely, the labour program has its own minister, Minister Lisa Raitt, and its own deputy minister, Madame Hélène Gosselin.
On page three you have a picture of our annual budgets: in the main estimates for 2011-12, $179.8 million; a gross operating budget of $24.5 million, with approximately $58.5 million administered in statutory funding; and revenues credited to the vote amounting to $127.2 million.
That's a little complicated. Our revenues come from the government employment compensation act. Our transfer payments go to the wage earner protection program, with a small amount for grants and contributions. But we'd be happy to come back to that.
[Translation]
I would like to start by talking a little bit about the mandate of the Labour Program.
The Labour Program's mandate is to promote safe, fair and productive workplaces and cooperative workplace relations. The Labour Program delivers on its mandate through the administration and enforcement of the Canada Labour Code (CLC), which has three parts. The first part deals with labour relations.
[English]
Part I of the legislation governs industrial relations in federally regulated workplaces. It's also the part of the act that establishes the Canada Industrial Relations Board and establishes federal conciliation and mediations services, which are located within the labour program.
[Translation]
The second part deals with occupational health and safety, and the third part deals with labour standards.
[English]
As well as being rooted in the Canada Labour Code, the labour program administers and enforces the Government Employees Compensation act; the fair wages and hours of work act; the Employment Equity Act; fire protection services; and the wage earner protection act, which is part of the economic action plan.
[Translation]
The Labour Program operates on three levels: federal jurisdiction, national and international.
Federal jurisdiction includes many of Canada's national infrastructure industries or anything involving:
[English]
navigation, fishing, shipping, operation of ships, airports, airlines, telecommunications, banks, and most of the transport industry interprovincially.
Activities include employer-union relations where we provide mediation services, labour standards, occupational health and safety, workers' compensation, and employment equity, where the federal government has regulatory responsibility.
I would say that the federal jurisdiction, just for your information,
[Translation]
covers approximately 12,800 employers. Moreover, just under a million employees are covered by Part I.
[English]
Between 1997 and 2006 the average share of the GDP of firms under federal jurisdiction was 9.3%, and over the same period their contribution to GDP growth was approximately 11.6%.
I will turn to page 6,
[Translation]
which deals with the national level and our relationship with the provinces and territories.
[English]
We've said that we operate on three levels. On the national level, we are exercising leadership and coordination with provinces and territories.
In the domain of labour, this is a very collaborative mode. Our minister meets with her counterparts in provinces and territories. We have working groups related to occupational health and safety and
[Translation]
labour standards.
[English]
Basically, in regard to what the federal government does in our own federal jurisdiction, our provincial and territorial counterparts are doing similar activities in theirs. There's a lot to be gained from the collaboration on labour that exists throughout Canada.
I'll give you a couple of examples. During the H1N1 pandemic, we were able collectively to call in the expertise around occupational health and safety and to collectively help the Public Health Agency of Canada get the word out about the ways of operating in the workplace that were safe and healthy for employees across Canada. Another example is that we implemented legislation to protect employment of reservists, which was done in close collaboration with provinces and territories. Another example that you don't have on our page, but which I'll mention, is the anti-violence regulations that were developed with provinces and territories and are also cited as a best practice, because all of us included employers and unions in that activity to come up with excellent anti-violence regulations.
[Translation]
On the international stage, our objective is to protect Canadian businesses from unfair competition that could result from the laxness of existing labour standards. The Labour Program has two main thrusts: helping the International Labour Organization to develop international labour standards and developing labour cooperation agreements. Canada has signed 32 International Labour Organization conventions, including four in the past two years. We can come back to this later but, when free trade agreements are negotiated, a labour agreement is negotiated in parallel.
A little earlier, I mentioned that the Canada Labour Code
[English]
is divided into three parts. Part I is the labour relations part. It's really where we provide for dispute resolution services in support of collective bargaining for the federally regulated sector.
We do offer some professional mediation and conciliation services to assist the parties for the purposes of renewing or revising their collective agreements. Allow me to say that the interventions of the FMCS, the federal mediation and conciliation service, resulted in over 90% of all settled labour disputes being settled without a work stoppage.
[Translation]
The FMCS also provides preventive mediation workshops and training for businesses under federal jurisdiction.
[English]
I'm moving on to page 9, part II of the Canada Labour Code, which focuses on occupational health and safety.
The labour program takes both proactive and reactive approaches to occupational health and safety. We proactively deal with high-risk industries to make sure they have the education and information needed to address their safety and health concerns. And we are reactive: according to the Canada Labour Code, our health and safety officers go in to investigate accidents, fatalities, and refusals to work and we render decisions and we ensure compliance with the Canada Labour Code.
Under the Canada Labour Code the employee has three fundamental rights: the right to know about every known or foreseeable health or safety hazard in the area where they work; the right to participate in identifying and correcting job-related health and safety concerns through their representatives and committees; and the right to refuse dangerous work. And if an employee in a federally regulated workplace refuses work, that is when a health and safety officer from the labour program comes in and assesses whether there is danger and renders a decision.
It's important to note that the area of occupational health and safety is a shared responsibility. The government is the regulator, setting the norms, providing education, doing the health and safety inspections, and issuing direction, but as a shared responsibility of the employers and the employees to have their health and safety committees and to undertake to have the best they can in a healthy and safe workplace.
Our health and safety code has us covering 1.2 million workers, including the federal public service.
We recently put in place a new quality assurance framework that ensures more consistency in decision-making across the country and focuses on service delivery and service excellence. It's a very active area. For example, in 2010-11, 3,400 occupational health and safety proactive interventions were finalized and 93 hazardous occurrence investigations were initiated and 82 completed. It is a key component of our work under the Canada Labour Code.
On the next page, page 10, labour standards, we talk about healthy, fair, and productive workplaces. This is the area of fairness. What are the fair hours of work and wages? What are the fair conditions for severance and dismissal? We're very active in this area as well.
We also recover unpaid wages for employees, and approximately 1,000 unjust dismissal complaints were resolved, many of them through newer alternative dispute resolution, proactively to avoid formal lawsuits, formal complaints.
You'll notice on this page that there have been good developments in recent years on the labour standards front. We have the compassionate care leave, which is administered by HRSDC, as well as extended paternity, parental, and reservist leave.
We cover approximately 820,000 workers, accounting for 6% of all non-public-administration employees, including banks, first nations, governments, and enterprises.
On page 11 are some of the additional business lines that are related to the labour program.
The federal workers' compensation, which is our GECA, the Government Employees Compensation Act, is the area where we work very closely with provincial workers' compensation boards to make sure those who are injured in the workplace are compensated for their injury. Under this federal workers' compensation we're also very much engaged in helping people return to work appropriately. It's about prevention, support, and return to work. About 6,100 third-party claims were filed and about $1.8 million was recovered last year from workers' compensation claims.
The labour program also provides fire protection consultative services, through which we have engineers and inspectors helping across the country, those under federal jurisdiction, including first nations on reserve.
Lastly, there is the wage earner protection program. This is our new program, introduced in 2008 as part of the Government of Canada's economic action plan, which takes into account the economic fragility of the last few years by giving compensation to those who are affected by a bankruptcy. We have a cap of $3,400. It's a one-time payment, but it helps people to make that transition and adjustment to their next stage.
Since 2008, when the WEPP was implemented, 40,000 Canadians have received almost $90 million in WEPP payments.
On page 12, last but not least, there is the Employment Equity Act from 1986. The Minister of Labour has responsibility for the act, but of course it is something that every federal department and agency and those under their jurisdiction have responsibility to conform to. The Employment Equity Act is about four designated groups chosen because they have high unemployment rates and more barriers to labour market participation. The groups are women, aboriginal persons, persons with disabilities, and visible minorities.
We have three programs related to the Employment Equity Act. The first one is the legislated employment equity program requiring those under our jurisdiction to file an employment equity report and to show us they are making every effort to bring in, through an inclusive strategy, those four designated groups.
We also have the federal contractors program, whereby those who get a contract with the federal government also have to demonstrate that they are taking seriously their employment equity commitments.
Lastly, the racism-free workplace strategy helps us work in partnerships with groups such as the Aboriginal Human Resource Council, the National Film Board, and the Metropolis Secretariat run out of Citizenship and Immigration Canada to promote the benefits of inclusion in the workplace.
It's not only about doing the right thing; it's also to try to help workplaces see that there are benefits to productivity. As you probably know, the Canadian workforce before long is going to have its growth in two groups: new immigrants and aboriginal persons. We try to promote the benefits of inclusion and not just the barriers that are being faced.
Thank you.
Thank you very much for coming before the committee today. You have a complicated department.
I'm not actually sure this falls under your purview. I'm going to ask the question, and you can tell me if it's outside the scope of what you do. When you're talking about legislated employment equity, I think you're probably aware that back in 2009 a change was made to pay equity, so that the pay equity complaints are now heard by the Public Service Labour Relations Board. Are you involved in that?
We are not involved in that. As far as I know, that would be the Canadian Human Rights Commission and Treasury Board. We're not able to answer questions on pay equity today.
Okay. It's actually no longer the Canadian Human Rights Commission. The Public Service Labour Relations Board now hears pay equity complaints. That's okay. That's outside the scope of what you're presenting.
I have a question on the wage earner protection program. You indicated that for 40,000 workers, $90 million has been paid out to date. Are you aware of any applicants who were turned down, and if so, how many and for what reasons?
Some applicants are turned down. I don't have the number with me today. The approval rate is quite high. In fact, over 57% reach the cap of $3,400. There are a few reasons applicants are turned down. For one thing, they may have received payments, severance pay, or payments from trustees or from another source. If there is payment from another source, WEPP will not apply.
Even if it's not fully the severance pay and wages? If they receive a portion, would you cover a portion of it?
If the amount that they have received is $3,400, we would not pay. If they had received, let's say, $1,000 and they still qualified--and I'll get to how to qualify--then they are likely to get the difference.
Also, we are seeing that some apply too late, and it has to be that you're affected within six months of the bankruptcy of the company. If you lost your job before that, and it's really not related to the bankruptcy, that would be another reason for being rejected.
That I would have to get for you. We're responsible for the program development and guidance, and the service delivery is Service Canada, who you met with last week. But we can get the service standards and the rate of payment for you.
Are you involved in workforce adjustment for the public service? For example, we've heard of potential lay-offs within the employment insurance processing. Are you involved in the workforce adjustment piece of that?
You mentioned on page 6 of your deck--it was an addition, I believe--anti-violence regulations. Can you say a little bit more about that? Is that violence in the workplace? Is that setting standards?
Yes. A few years ago, in 2008, we developed anti-violence regulations. Now many organizations are taking these regulations—HRSD did this—and establishing anti-violence policies within their organization. What it is about really is identifying what violence is in the workplace. It is not only physical violence; it can be threats and harassment. And then what are the strategies for the employer to counter this?
In recent years there's been a lot of emphasis put on bullying and harassment. This is a contribution to that area, a statement by the government that there are ways to counter this. We also link it to mental health issues of how to create a healthy and productive workplace.
Do you work with fire protection services in first nations communities in terms of development of plans?
Yes, we do. We go in and we educate. If there's a problem, we work with the Department of Aboriginal Affairs--formerly INAC, now AAND.
Would you make recommendations to that department in terms of resources? Because I know many communities simply don't have the resources around fire protection. Penelakut comes to mind, on Penelakut Island in my riding.
Thank you, Mr. Chair.
Thank you, witnesses, for coming out this afternoon. It was interesting to hear the presentation, specifically when you were talking about the mandate.
You talked about labour cooperation agreements. I sit on the international trade committee as well, so it was interesting to hear that. All the time, though, these labour cooperation agreements are signed alongside free trade agreements, etc. I was curious--because this is also a learning phase for me in both committees--about what is the objective of these labour cooperation agreements, and what's the purpose of negotiating both agreements at the same time or alongside each other?
Thank you very much for the questions.
The objectives of the labour cooperation agreements I would say are threefold. What we're trying to do is have within them.... We use a standard framework in these LCAs. The first objective is comprehensive labour rights obligations, including the effective enforcement of national labour laws. So that would be one of the first components of these agreements. Then we include an independent, binding, and enforceable dispute resolution mechanism that would be fully enforced when the agreement comes into force. Also, where appropriate, we have some labour-related cooperation activities. The objective, obviously, is to ensure that when we enter into a free trade agreement with another country, their labour standards
[Translation]
are not such that our industries face unfair competition. The application of the labour standards and legislation of a country with which we are signing an agreement should not constitute an obstacle.
[English]
As we all know, this Conservative government has a very ambitious free trade plan. I'm talking about the penalties. How do you enforce the penalties? Is there any difference between the current agreements negotiated in recent days and agreements negotiated in the past?
The first agreement we negotiated was the agreement in the margin of the free trade agreement. We have the North American agreement on labour cooperation, which was a little bit different. The dispute resolution is a little different there. There is a system of tiering, which we don't have in the other agreements.
In terms of dispute resolution, so far we've never had to impose penalties. We do have cooperative activities in some countries, so it helps advance the work. For instance, I was talking about the North American agreement on labour cooperation. The previous agreements only permitted complaints related to legislative enforcement. The new model requires that the very content of the labour law must be met. That would be, I would say, the main difference.
Okay.
For the financial penalties, there's a possibility of imposing financial penalties in cases of non-compliance, and this has been reintroduced. The penalties would be put into a cooperation fund and used in the offending country to help it resolve the matter that is under dispute.
So what happened in the latest labour cooperation agreements with Colombia, Peru, Jordan, and Panama? They are described as the most comprehensive agreements ever negotiated by Canada. I'm sure the Government of Canada made sure that all the labour standards were met by these countries before we pursued all these free trade cooperation agreements with them. Do you say that by signing this kind of modern agreement, the government made sure that all the labour standards are met by these countries?
With these labour agreements, we're not only seeking a level labour agreement, but we also provide technical assistance, when appropriate. For example, if we have free trade partners, we help them build their capacity to meet their obligations contained in this LCA. So we have technical assistance projects focusing on a range of key issues, from migrant workers, occupational health and safety, labour inspection, administration. Also, all the sectors have mediation and conciliation implemented along with the LCAs.
In addition, I would say that any monetary assessment that's collected under the LCA itself would be paid to the complaining party who chooses to deposit into the cooperation fund. That in turn will be used to help resolve the non-compliance situation.
With that, we'll maybe bring it to a close. You're well over your time, but that's fine.
We'll move on to Mr. Patry, for five.
[Translation]
Thank you, Mr. Chair.
Good morning ladies.
The temporary foreign worker program allows eligible foreign workers to work in Canada for an authorized period of time only if employers can demonstrate that they are unable to find suitable Canadians/permanent residents to fill the jobs and that the entry of these workers will not have a negative impact on the Canadian labour market.
What negative impacts on the Canadian labour market are taken into account when assessing whether temporary foreign workers are allowed to enter Canada?
[English]
I'll interject here. The temporary foreign workers are probably not under your mandate or legislation, so I'm not sure you're able to answer that. If you are, you can; if not, we'll have to move on to a different question.
It's not an area they deal with, Mr. Patry. If you could you take a different line of questioning, that would be fine.
[Translation]
I have another question, Mr. Chair.
Canada currently has a high rate of unemployment and many workers are looking for a job to earn a living to support their families. Under the temporary foreign worker program, how do we ensure that there are no qualified Canadians/permanent residents available to do these jobs?
[English]
That truly is outside of our mandate. I did speak of our racism-free strategy, which is about inclusion. It is not a temporary foreign worker or an immigration program; it is about Canadians who are within those designated groups.
[Translation]
Okay.
You spoke earlier about health and safety as it pertains to the programs. Is this monitored by your organization?
[English]
[Translation]
[English]
This is an area they will be briefing us on, so you're certainly entitled to ask questions as you see fit.
[Translation]
Do you take care of the salaries of temporary foreign workers? Do you check to make sure their working conditions and salaries are equal, similar or inferior to those of Canadian workers?
[English]
No, I think this would be also outside of the scope of....
[Translation]
That is not part of our responsibilities.
[English]
I want to pick up on a couple of things. You talked about compassionate care leave and sick leave, and I was wondering about the very limited scope on the sick leave. I believe it's 12 weeks, is it not?
Again, we include these in our labour standards, under part III, but the actual rules and technicalities are split between HRSD and Service Canada in terms of benefits and policy guidance.
While we cover the conditions in the workplace and ensure that people are conforming to this, we are not the ones who set the policy direction or actually do the payments.
Oh, you're not sure. Okay. I was just wondering, because 12 weeks is not a long period of time to have their jobs safeguarded when people have significant illnesses.
Again, I want to interject on that and talk about the fact that 12 weeks isn't a long period of time when someone has a serious illness—for example, they are going through cancer treatments.
I'm not sure if you would have the answer, but I was wondering whether there has been any discussion about extending that, given the serious illnesses out there at this time.
I'm not aware of that right now because of it being a policy from HRSD, but I would say that the compassionate care was a response to understanding that a lot of people are faced with aging parents or sick children and how to bridge them with a new benefit.
Generally, having worked in HRSD, I know there is a constant evaluation of programs and a constant thinking about what would be appropriate to respond to current circumstances.
Your time is up.
We'll move on to the next questioner. Who is that going to be?
Brad Butt, go ahead.
Thank you very much for being here. I'm a new member of Parliament, so it's nice to get a briefing and get a better idea of what the department is doing.
You're probably most famous for your incredible role and the great work you've done, I guess more behind the scenes, with some of the labour disputes that even Parliament has had to deal with since we've been here. Maybe you could spend a bit of time, obviously without divulging confidentiality and secrets and all the other things you do.... What role does your department play in federally regulated industries like Canada Post, Air Canada, etc., when the parties are obviously trying to negotiate a collective agreement? We encourage the parties to do that and reach their own agreement, one they both can agree on. But we do know that from time to time they're not able to do that, or they need some help in moving them along.
Can you give the committee a better idea of the role you play in that, either when you are asked to come in or when you initiate contact with the parties to say you'd be prepared to come in and be helpful, through mediation or some other services that you're providing?
Thank you very much for the question.
Yes, indeed, we rely on a very professional team of mediators and conciliation officers in the program.
The first thing that happens in a collective bargaining process is that either the employer or the union gives a notice to bargain to the other party, and that would be direct bargaining. There is no time limit; they can take the time they wish to bargain. Then after a period, if they see that they are not going to be able to bargain by themselves, they can file a notice of dispute with the minister. The minister has 15 days to appoint a conciliator. Then for 60 days the conciliation officer will work with the parties, trying to facilitate, and have a process in place for both parties to address their issues. This period can be extended, but that needs the mutual agreement of both parties.
After 60 days, if the parties don't agree to extend, it's the determination of the conciliation, and then there's a 21-day cooling-off period. During that period we appoint a mediator to help the parties, because discussions continue to happen during the cooling-off period. After 21 days the parties acquire the right to strike or to a lock-out.
That is, in a nutshell, how the federal conciliation and mediation services are there to support the parties in their discussions and negotiations.
As a follow-up to that, it was unfortunate, but it had to be done--at least it was our view that it had to be done--and we legislated an end to one of the work stoppages back in June.
When Parliament does that, a bill is passed, and we still need a collective agreement; we need a resolution among the parties. What role does the department play after that has happened to make sure there is an agreement reached, a new contract reached between the employer and the union in that case? What role--post the legislated back-to-work concept--do you play then?
After that part is done, our role is over. For instance, the minister would appoint an arbitrator, and then the arbitrator would work with the parties to get to an agreement. And there are different types. There's the binding final offer, for instance, where the arbitrator has to choose between one or the other offer. There's another mechanism that allows the arbitrator to choose parts of one offer and parts of another offer and make up a new collective agreement.
The federal conciliation and mediation services in these circumstances are not involved. It's a totally independent process. It's in the hands of the arbitrator, who is appointed by the minister.
I have one last question on that. My time will probably be up, Mr. Chair.
How many times a year would you likely get involved in that kind of thing? Is it fairly frequent, or is it very seldom that you have to play that kind of role, year to year? Is it fairly intensive? Is it happening quite a bit? Or is it that most parties settle on their own and don't require your services and it's once in a blue moon that you folks need to play this role?
I'm just giving a rough figure, because I don't have the exact figure. I would say that approximately 300 collective agreements are being negotiated each year. I would say that of these, over 90% end without a work stoppage of any kind.
If you want some more key statistics, I have some numbers. For instance, last year the total caseload for 2010-11 was 302 collective bargaining disputes handled. That gives you an idea of the scope.
Thanks very much, and thank you, ladies, for being here today and for sharing your presentation with us.
I'll throw in two questions that sort of come off what Mr. Butt has asked.
In tough economic times, it's not unusual to have an increase in labour disputes. Is there a strategy in place to maybe address this with regard to access to conciliation and access to arbitration? Is there a strategy you people have in place to address this? Do you anticipate an increase?
Thank you for the question.
I think there are some cyclical effects. The collective agreements come to an end, and they need to be negotiated, so there's a cyclical effect there. One thing we are doing, and it was announced in budget 2011, is increasing preventive mediation services, which is another key activity of the federal conciliation and mediation services. They try to do workshops and training to help the parties develop their skills so that they are able to resolve issues and get better at negotiating together. Budget 2011 announced an increase of $500,000, which will allow us to do a lot more on that front within our federal jurisdiction.
Not necessarily, because there's a period during which the parties are bargaining by themselves, so it's very difficult to anticipate.
We've seen the axe fall on a couple of federal departments already, such as Environment, DFO, and HRSDC. We've seen that 600 people who process EI claims are going home, and this is pre-strategic review. You guys are a relatively smaller department, so I would think that any significant cuts in your department would be hard felt. Maybe you could give us some kind of indication as to what kind of impact this is going to have on the services you provide.
The labour program did a strategic review, which was announced in March 2010, indicating that there would be reductions in the order of $7.3 million over three years. The findings of the Treasury Board ministers were that the labour program is important and relevant but that we should look at three areas. Number one is to eliminate red tape and streamline service delivery. Second is to align our program funding with actual needs. Third is to focus our programs on the core mandate and high-priority areas.
We have implemented our strategic review. We have had a very effective workforce management committee and have helped the affected employees--there are not many, but relative to our size, it's a significant number--to find other jobs, either within the program or elsewhere in the federal government.
We've worked closely with HR and HRSDC, because we are part of the portfolio, and we found that we could streamline in a number of areas using more modern technology and alternate methods. That's how we brought into effect the implementation of the strategic review. That's from what we've known today. The next step is not yet known to us.
It has been in the public domain that we have closed our industrial hygiene lab. That was done because of very reduced demand for that service and because of our analysis that provinces were no longer running laboratories of that type; they can be found in the private sector.
We did need to work with the affected employees to see what their portable skills were and to move them along. That has been successful.
It's a lot of work to decommission a lab and to make sure we know where to look elsewhere in the private sector for those kinds of services.
That's one example.
No, actually. In my branch, I'm responsible for regional operations, for five regions across Canada. The bulk of them are actually in the regions: that's about 480 people. The total in the labour program is about 700.
Thank you very much for coming today. I greatly appreciate it.
I wanted to ask you about the wage earner protection program. Specifically, could you update the committee on the success of the program in terms of how many Canadians have accessed the program, what the maximum payments are that are associated with it, how many individuals have received that maximum payment, and if you anticipate any expansion of this program that has been in place since 2008?
Thank you for the question.
I will go over some of the successes of the wage earner protection program. Since its inception, the WEPP has issued $89.5 million in payments to just over 40,000 applicants. Of these applicants, an average of 57% is currently getting the maximum payment of $3,400. As I said earlier, for those who don't, it may be the because they've received money from other sources and that sort of thing.
There is a current plan to expand the program. Budget 2011 announced the Government of Canada's intention to expand WEPP to cover workers who lose their jobs as a result of the restructuring of a company rather than a bankruptcy.
May I ask you if you know the statistics surrounding the circumstances whereby an individual doesn't receive the maximum payment because we know they are receiving other funds, i.e., they're maximizing their opportunity in the program?
If they don't receive the maximum, it means they've received some severance or some other payment from another source. The calculation would be that if you have received a payment and it takes you over the amount allowable, then we don't.... It's not a top-up program. It's a defined program of $3,400 for that purpose: to compensate in the event of bankruptcy--and soon, in the event of a restructuring.
On a different subject, I have a question about part II of the Canada Labour Code with regard to occupational health and safety. Could you outline--a little more fulsomely, I guess--some of the initiatives that you've taken most recently to expand how you're dealing with mental health issues? I know that it has been very topical and that you have been moving forward with some new initiatives in that area. Could you expand on them for the committee?
Yes. In particular, Minister Lisa Raitt has a deep interest in defining occupational health and safety as encompassing mental health issues. The summer before last, she asked us to support her in round tables across the country with key stakeholders, some of them mental health practitioners and people from the Mental Heath Commission of Canada, but others who represented unions and employers of various types, to talk about the prevalence of mental health issues in the workplace, which sometimes amount to in the order of 40% of disability claims.
The minister was very interested in stakeholder views on the appropriate strategies and also in how the labour program could show some of our existing tools that make a contribution. I'll name the anti-violence regulations again, but there's also our role under the Government Employees Compensation Act in working with the Treasury Board on disability management, on how to reintegrate people successfully: so under the principles of prevention, support and accommodation, and return to work, how to have a dialogue with our stakeholders about appropriate strategies.
We are doing a lot of work. We're trying to validate the mental health issues within occupational health and safety. This will be an ongoing theme for us going forward.
Along that same theme, I know a national framework initiative was put forward recently. Maybe you could share with the committee the structure of that national voluntary framework that employers are being asked to participate in. I know it's something the Mental Health Commission moved forward with, and the minister was quite adamant that this be a focal point.
The framework draws on a number of best practice strategies that are both in the private sector and in the public sector. It also draws on participating with the Mental Health Commission in the development of national standards. For the labour program we have loaned our expertise of people who have worked on disability management, Government Employees Compensation Act, and occupational health and safety central to the development of the national standard. We also brought the Mental Health Commission to the federal-provincial-territorial table to promote this as a collaborative effort with other jurisdictions.
I have a couple of questions. One of them is with respect to the occupational health and safety portion and the right to know about every known or foreseeable health or safety hazard in the area where they work. I know this is in the Canada Labour Code. When the government negotiates agreements in the international area, do you have any input at all, with respect to when there comes time to do some trading with specific substances, as to what they should be looking at putting in that agreement?
I would say that probably if we do negotiate standards on that front it wouldn't be so much in the labour cooperation agreements but would be international labour organizations, because we have a number of conventions dealing with that.
Are you saying you do have input into some of the agreements that are being put in place to maybe look at some safety issues? For example, I'm thinking of asbestos. Regarding the way we handle asbestos here and the way they handle it in third world countries, do you have input when agreements are being drafted to allow it to be transported to a different country and suggestions made to them as to what should be in place?
Someone mentioned, I believe it was Mr. Butt, with respect to the intervention that was done, sticking our noses into collective bargaining when the collective bargaining isn't quite done. How could introducing multiple back-to-work legislation impact the federal private industries, considering what was found in the report “Work stoppages in the federal private sector: innovative solutions”?
To come to your second point, I would say that legislation would be the last resort, because there's this whole process that I needed to--
I understand it's a last resort, but the fact that the legislation gets inputted prior to the negotiations not failing, or should I say they're still at the bargaining table.... Is there something in the Canada Labour Code that allows that to happen, that the government could start putting back-to-work legislation in place without the collective bargaining having ended? Does that not favour a side?
This is the position to answer that, but legislation is what it is, and the government can act on it. I'm not sure if you want to make a general comment on that or not.
I would like to follow up on the asbestos question for a second, because I'm not clear.
On page 7 of your deck you talk about the fact that--this is in the context of unfair competition--you represent Canada at the international labour organizations and when there are labour cooperation agreements, LCAs, and in the context of free trade agreements your department clearly has a role in international affairs.
I just want to be clear, when DFAIT was providing advice on the Rotterdam convention on asbestos, you're saying your department was not consulted even though in Canada we have a fundamental right to know about every known or foreseeable health or safety hazard in the area where we work. What I'm understanding you to say is that in Canada we have that right, but you're not consulted by DFAIT when it's talking about workers' rights in other countries.
Thank you for that.
First, I should say that in the deck, instead of saying that we represent Canada, we should have added something along the lines of saying that we contribute to developing labour standards, because we're not the only ones involved in the ILO.
Canada does comply with the ILO convention on asbestos. DFAIT is the lead for positioning Canada on the asbestos file.
Is your department consulted, given that we have a standard in Canada on the right to know? We have a Canadian standard, and we're saying that Canada would support a different international standard on the right to know. Is your department consulted, because you are the Canadian expert?
I can say that participation in the ILO forum is done in consultation with the various departments that are involved, and yes, DFAIT does work in consultation with us.
Okay. Your time is up. Also, the time is up for this segment, so we will suspend for five minutes and introduce a new panel.
Thank you very much for appearing before us. We appreciate it.
We'll get back to order here.
We'll commence with the presentation with regard to Canada Mortgage and Housing Corporation. We have Karen Kinsley, the president; and Debra Darke, director of community development.
Before you commence, I have one order of business. On Thursday, we have HRSDC and CIC. We've also asked Health Canada to be included, because they have an issue to deal with, foreign credentialling, and we will want to question them about that. That is just so you know.
With that, we'll carry on. I understand you have a presentation that will include a deck we will go through. Commence when you're able to.
Thank you.
Thank you, Mr. Chair. It's a pleasure to be here with my colleague.
Canada Mortgage and Housing Corporation is celebrating its 65th anniversary this year, and I certainly appreciate the opportunity to discuss how we contribute to a strong and stable Canadian housing system.
[Translation]
CMHC is Canada's national housing agency and the Government of Canada's advisor on housing policy matters.
[English]
Looking at slide 2, as a federal crown corporation, CMHC's mandate is to improve housing quality, affordability, and choice for Canadians. With the exception of temporary shelter for the homeless, which falls under the mandate of Human Resources and Skills Development Canada, CMHC's activities touch on all parts of the housing continuum.
For the 20% of Canadians in housing need, CMHC uses a number of tools and programs to deliver more than $2 billion a year in federal housing assistance.
[Translation]
We also support the 80% of Canadians whose housing needs are met by the market. CMHC's commercial activities are cornerstones of Canada's stable and well-functioning housing finance system.
[English]
In short, CMHC is a single window for federal housing products and services off reserve.
Turning to slide three, the housing assistance programs delivered by CMHC are funded through appropriations voted by Parliament. As I noted a moment ago, our main and supplementary estimates A provide for slightly more than $2 billion in spending in fiscal year 2011-2012. These investments support some of the most vulnerable in society: low-income families, seniors, persons with disabilities, aboriginal people on and off reserve, and victims of family violence.
The commercial side of our business, mortgage loan insurance and securitization, operates at no cost to taxpayers. The premiums we collect pay for any claims incurred. CMHC's annual net income and our consolidated retained earnings are in fact reflected or consolidated with the Public Accounts of Canada.
At the end of 2010 CMHC had total assets of $293 billion and capital of $11.4 billion.
[Translation]
The corporation employs a total of about 2,100 people at our national office here in Ottawa, five regional offices and 19 points of service across Canada.
[English]
Turning to slide four, mortgage loan insurance is mandatory for federally regulated lenders when the homebuyer's down payment is less than 20% of the value of the property. The insurance is paid for by the borrower and allows them to access the housing market at interest rates comparable to those with larger down payments. Mortgage loan insurance can be purchased from CMHC or from private insurers.
However, unlike private insurers, CMHC has the public policy mandate to provide mortgage loan insurance to qualified borrowers in all parts of the country, including rural and smaller communities, and for all forms of housing. Close to 45% of CMHC's high-ratio insured business in the first half of this year was in areas of the country, or for housing options that are less well-served, or not served at all, by the private sector. For instance, CMHC is the only mortgage loan insurer for large rental housing projects, as well as retirement and nursing home accommodation.
[Translation]
CMHC's insurance business is strong. We consistently apply prudent underwriting standards to help ensure a stable housing finance system in Canada.
[English]
CMHC tracks the risks carefully, and it is well capitalized. We have more than twice the minimum capital required by the Office of the Superintendent of Financial Institutions.
Turning to slide 5, you can see that the other side of our commercial business is securitization. Securitization, simply put, is the process by which banks package up mortgages that have already been insured and sell them to investors, thereby gaining access to new funds that they can in turn loan to consumers.
CMHC's securitization programs support a well-functioning housing finance system by helping to ensure that financial institutions, both large and small, have access to funds for lending and are able to serve the needs of Canadians through competitive prices and products.
The value of our securitization programs was particularly evident during the recent economic downturn. These programs, together with the temporary measure called the insured mortgage purchase program, ensured that financial institutions continued to have access to a steady flow of low-cost funds for mortgage lending. As a result, during the downturn qualified Canadians were able to secure mortgage funds to buy homes, and financing continued to be available for the construction of rental housing.
For the 20% of Canadians who are not able to meet their housing needs independently, the federal investment in housing assistance takes a number of forms. For example, on behalf of the federal government, CMHC provides $1.7 billion each year in ongoing subsidies so that almost 615,000 families living in existing social housing can continue to afford their homes.
[Translation]
In addition, in September 2008, the Government of Canada committed to investing $1.9 billion over five years to renovate existing social housing, build new affordable housing, and help the homeless. In July 2011, a new affordable housing framework agreement was announced with all the provinces and territories, which will guide how these funds will be spent over the next three years.
[English]
The overall objective of the framework is to reduce the number of Canadians in housing need by improving access to affordable housing. The framework recognizes that provinces and territories are best positioned to design and deliver affordable housing programs to address housing needs and priorities in their jurisdictions. The framework agreement is being implemented through bilateral agreements signed with each province and territory, which will cost-match the federal investments.
Slide 7 notes that CMHC is also working in partnership with the Department of Aboriginal Affairs and Northern Development to address the housing needs of first nations people living on reserve. Of the total federal investment of approximately $400 million per year for housing on reserve, CMHC is responsible for delivering approximately half. This funding supports the construction of new homes each year and the renovation of existing homes, as well as providing ongoing subsidies for close to 30,000 existing rental housing units on reserve.
CMHC also played an important role in delivering stimulus funding to the economy under Canada's economic action plan. The economic action plan included more than $2 billion in new spending over two years to build new and to renovate existing social housing across Canada. As reported in March 2011, more than 14,000 social housing and first nations housing projects have been completed or are under way with the economic action plan funding.
[Translation]
As part of Canada's economic action plan, CMHC funded a further $2 billion in low-cost loans to municipalities for housing-related infrastructure projects. More than 270 loans were approved under the municipal infrastructure lending program.
[English]
Underpinning CMHC's housing finance and assisted housing programs are a number of other activities that support a well-functioning Canadian housing system. For example, CMHC is an important source of information on housing markets. Reliable market information helps industry, governments, and consumers make informed housing decisions and also helps ensure that housing-related issues are considered in the context of broader policy discussions.
[Translation]
CMHC also works with housing exporters to build markets abroad, which in turn boosts the Canadian economy by creating jobs.
[English]
I'll turn to slide 10. CMHC's annual report provides a description of the key initiatives and performance measures for 2011. Some of these initiatives include working with provinces and territories to deliver the next three years of federal investment in social housing; working with Aboriginal Affairs and Northern Development Canada and first nations to improve the delivery of housing programs on reserve; continuing to apply prudent underwriting standards to ensure that only qualified borrowers are approved for mortgage loan insurance and that homebuyers will be able to meet their mortgage obligations into the future; and focusing our research on understanding housing need and policy responses as well as the implications of an aging population on the existing housing stock.
As I hope the committee can see, Canada Mortgage and Housing plays a key role in providing leadership, coordination, and support to the Canadian housing system.
[Translation]
Thank you again for giving me the opportunity to speak to you.
[English]
I would be very pleased to accept any questions the committee may have.
[Translation]
First, I would like to thank you for your presentation. It was very interesting.
I have a quick technical question. In your presentation, you did not speak about the residential rehabilitation assistance program (RRAP). Could I ask you some questions about this program?
How are the maximum amounts granted under the RRAP determined and allocated among housing structures?
[English]
Thank you.
It actually varies across the country. Maybe I'll turn to Debra, who's responsible for the program delivery, to elaborate on the determination of the amounts.
In her presentation Karen mentioned that we have been talking to provinces and territories about new arrangements and a new framework for affordable housing. Provinces and territories going forward for renovation programs will have the flexibility to determine those maximum levels of assistance themselves. They will presumably be taking into account the specifics of the market, perhaps the nature of the repairs required--a variety of different circumstances that will be particular to their jurisdictions.
[Translation]
In short, the provinces are responsible for implementing this program and determining how the amounts will be allocated.
Under this same program, is there anything specific planned in terms of modified housing for seniors and people with disabilities?
[English]
Yes, in fact today there are two programs that are specifically targeted to renovations for people with disabilities, and there's a separate program for home adaptations for independent living for seniors.
Again going back to Debra's point, going forward under this new framework I talked about, which we have negotiated and was recently announced, provinces and territories again will determine not only the qualification criteria but also the nature of the services or the programs they want to deliver. Up until now we have had two streams of work that addressed those areas.
[Translation]
Do the provinces, which must manage all these funds from the federal government, and the recipients feel that these amounts are sufficient to meet the needs of all the provinces and territories?
[English]
Certainly all provinces and territories--so it was unanimous--signed on to the framework, which was announced in July of this year. That's indicative of provincial and territorial support for the terms and conditions of the funding, as well as the process, going forward.
[Translation]
[English]
Thank you.
The amount of funding that is currently the subject of this agreement was set in September 2008. It was for five years, and the total envelope was $1.9 billion.
[Translation]
Will the funding given to the provinces be adjusted in light of the current housing crisis and the ever-increasing need for affordable housing programs? This crisis is affecting all Canadian communities, but it is hitting first nations communities particularly hard. Can a modification be made?
[English]
Perhaps I would like to speak to, as you mentioned, this most recent economic downturn. I mentioned in my comments that part of Canada's economic action plan was in fact targeted to the very question of creating more affordable housing for those in need. In addition to the $1.9 billion I referred to for the regular, if I could call it, programming, the federal government gave us a further $2 billion over two years, targeted at building new affordable housing or renovating the existing social housing. In that two-year time period, a further 14,000 projects are being created. It was very much recognized that the need was there, and an opportunity through housing construction and the employment it creates, to stimulate the economy during that period.
With respect to housing on reserves, as I mentioned, we do this jointly with Aboriginal Affairs and Northern Development Canada. About $400 million a year is spent. We spend about half of that. That amount builds approximately 700 units a year, and renovates about 1,000 units a year on reserves.
We are also looking at other ways to try to deal with some of the backlog of housing on reserves. In fact, the First Nations Market Housing Fund was created a few years ago, which we manage. It is targeted to create market housing in those communities that can support it as a way to expand housing supply, not just affordable housing, but market housing as well.
Thank you, Chair.
Thank you for taking time to come and explain CMHC to us in today's version.
I do have to make a bit of a disclaimer. I was president of the Ontario Home Builders in the mid-1990s, and had occasion on the opposite side—the lobbying side—of small entrepreneurs and business people in the construction industry, to make many visits to the CMHC to discuss the issues that the business side of housing had in those days.
The one number I'm looking for, and I don't know whether you've mentioned it and I missed it, is on slide 6. It says that you deliver federal investment in housing, supporting 615,000 households in existing social housing. Is there a dollar amount that you said along with that?
It is $1.7 billion, okay.
One of the things I can recall that CMHC did in those days—in the mid-1990s—was it also had a group that worked on research looking at improving standards for building codes, and doing the technical research around improving housing and construction standards. Does that capacity still exist, and to what degree does it exist today?
Yes, it still exists.
To be clear, we don't do testing of materials. That is not our role. That would be the National Research Council, and it always has been. But what we do through our research is try to provide the industry—builders and developers—with state-of-the-art best practices when it comes to the built form of housing. We do technical research, primarily lately in the area of sustainable housing and energy efficiency. That is the current focus. But we have done work in areas of indoor air quality and some of the technical issues associated with construction.
Yes, we are still involved in that.
You may not know this, but maybe you could provide it. What would be the total appropriations for that part of your business?
I'm curious to know in a little more detail the breakdown, in terms of your commercial business, of the CMHC mortgage insurance business. You mentioned in your slide presentation that 45% of your business is high-ratio, insured business in underserved or not served areas of the country. What areas of the country would they be?
They're primarily rural and remote areas. Our competitors tend to target major urban centres. If you think of places like Fort McMurray, as an example, or some single industry towns, or even rural parts of provinces, they tend to be the areas that don't get attention from the private sector.
In terms of access to the CMHC offerings and the products you provide in your insurance portfolio, how are they generally accessed by consumers?
They would go through a financial institution. At the point in time that consumers are looking to purchase a home, they would go to a financial institution. They can either do that directly, or they could use a mortgage broker to facilitate that conversation. They would then make the application to the lender, saying that they want to purchase a particular home. If it needs mortgage insurance, it is then incumbent upon the lender to forward that either to us or to our competitors for adjudication.
I will move on to another subject matter, and that is the provision of social housing in this country.
As we know, there are various models. Provinces obviously have the jurisdiction to decide how they're going to do it. I know, certainly from having some experience in the industry, as I said, that there are various other models that seem to hold a lot of promise in some communities. I'd cite the Habitat for Humanity model of providing housing and ownership along with assistance to provide for those in need of housing.
Does CMHC ever do a review of our social housing model in this country to determine whether it's in the best interest to hold social housing long term, or could that be developed into an ownership model, as well, for those people who occupy social housing units?
Thank you. There was a fair amount in that question.
Yes, we absolutely do. We actually have a collection on our website of what we would call best practices or approaches that are being used by jurisdictions, be they provinces, municipalities, or communities across the country. Habitat for Humanity is one of those models. CMHC in fact is the founder and key sponsor of Habitat for Humanity in aboriginal communities. So we definitely see that these models in different circumstances work extremely well.
The broader issue about people in social housing being owners is that I think we have to be a bit careful, having learned from or seen from some of the experiences elsewhere that not all people are meant for home ownership. We want to make sure that we don't stretch people beyond the point where they're able to support that. In CMHC's case, we support a continuum of housing, be it rental housing or home ownership, and the tenure option is really based on the capability of the individual to support it. There are certainly elements of home ownership in the social housing portfolio today, but I would say to you that the largest share of it is rental housing.
Thank you. Your time is well up.
We're going to move to the next round.
Actually, Mr. Cuzner would like to switch positions with the New Democratic Party, which I'm inclined to say is fine. Unless somebody has any strong objections to it, go ahead.
Let me first thank Madame Hughes and the NDP for allowing the switch here. I've got something I have to get to, and I won't make it a practice or a habit, but thanks very much for doing this today.
Thank you for your presentation. You had mentioned Fort McMurray. I was back and forth from Fort McMurray for about nine years, and I know affordable housing in Fort McMurray is considerably different from affordable housing in Cape Breton. I wish I had invested in some affordable housing in Fort McMurray back in the day.
There are two programs I want to talk about: the affordable housing initiative and the RRAP program. If there's one program that really accomplishes a great deal in my community, it's the RRAP program that's administered through Cape Breton Island Housing Authority, the Nova Scotia housing authority in my community.
Over the course of the past summer, the funding for those two programs had lapsed, and the government has decided to continue to support those two initiatives. Whereas they ran separate programs before, I understand now that the money has been pooled. Could you give me an indication as to the pooling of the money? What's being attributed to each or what's being allocated to each of the programs, those two aspects?
Under this new framework I talked about, which was announced in July of this year, in fact the existing levels of funding for both the affordable housing program and the RRAP program for each jurisdiction have been rolled into one pool of money. So the amounts of funding have not changed from prior years, nor has the allocation of those funds by jurisdiction changed.
So in the case of Nova Scotia, they now have the ability to take the combined funding of RRAP and AHI and determine, based on their priorities, how they best wish to spend that locally.
I'll turn to your experience with those programs. Typically at the end of the year they are very well subscribed. I would think from province to province they are very well subscribed. Typically, what would be the percentage of the number of persons who make application who aren't able to be funded in a particular year? Would you track that?
Actually, where we deliver is in very few places, and of course we won't be going forward under the new framework. For instance, in Ontario where we deliver the RRAP program, we just do a continuous intake of applications. So it's not as if there's one time in the year and a proposal call and a cutoff at a certain point. We continue to take applications as long as we've got funding to spend.
No, each province will do something a little different. For instance, taking the case of Newfoundland perhaps as an example, they'll do a proposal call once a year. In other jurisdictions, they may do proposal calls two or three times a year. We just found it easier to do continuous intake. It just seemed for us to be a little bit more efficient.
Thank you very much, Mr. Chair.
Thank you very much for being here. Much like Mr. McColeman, I had a previous life before being elected to this fine place. I was the president and CEO of the Greater Toronto Apartment Association, a job I held for 12 years, and I had very regular interaction with your folks in Toronto and your Ontario office on Sheppard Avenue. I do have to say it was always a pleasure working with your fine people there on a number of initiatives that I very much enjoyed working on with them. Obviously, CMHC has played a major role in the mortgage insurance business, and the owners and operators of rental apartments—who were, of course, the members of my association—were most interested in the valuable support that CMHC provides in that area.
I do want to talk a little bit about the mortgage insurance program. Would you say that is pretty much the primary business role of CMHC, that mortgage insurance business?
I wouldn't say it's the primary role, but it certainly is the biggest commercial aspect of what we do. As I described, we touch all areas of the housing continuum. The two biggest areas are assisted housing and the many billions of dollars that are spent in that area. The second would be mortgage insurance.
On the mortgage insurance side, obviously it's a business designed to make you money. Is there any requirement in the money that CMHC is making off this that a portion or a minimum amount of it must be reinvested in other housing programs? That's the first question.
Second, is there a reserve ratio, for lack of a better term, or how much you have to hold back versus how much you can lend out? What are the rules around that?
Could you provide some clarification on those two items, please?
Thank you.
With respect to the first point, no, there's no ability to use funds from mortgage insurance for social housing programs. There are two very clear mandates. Those two areas don't get mixed. For assisted or social housing we receive appropriations from government and are accountable for the spending of that. For mortgage insurance, premiums are paid by borrowers and claims are paid from those premiums. There is no commingling, if I could call it that, between these two business lines.
With respect to the second question on how much in the mortgage insurance area we have to reserve or set aside, I mentioned in my comments that we follow the standards that the Office of the Superintendent of Financial Institutions sets for private mortgage insurers. There are very detailed calculations based on your business as to how much minimum capital you must hold to support that business. In CMHC's case, we hold twice the minimum level that OSFI recommends.
Did you find over this last couple of years of the worldwide economic recession that you were required to step in? I certainly remember that from the recession of the nineties, because I was actually in the property management business and CMHC was one of our clients. You were having to move in on properties, on apartment buildings, and take them back, because obviously the mortgage was in default, the insurance kicked in, and you were the temporary landlord, let's say, of the building.
Did you find over the last couple of years with the recession that you were moving in on properties to secure your investment or to take up on your insurance the mortgage on those properties? Or were they pretty much typical years, just like you would normally have in non-recession years?
No, they aren't typical years. Certainly not only was the economy going through difficult times, but obviously borrowers themselves were having some difficulty, so our claims did increase. Our arrears rates did increase. But I think it needs to be put into perspective.
First of all, mortgage insurance is expected to go through ups and downs in economic cycles. It's not that we're ever looking for a down cycle, to be clear, but that is built into the premiums we charge. We do expect to pay more out in bad times and less out in good times.
The arrears rate in our portfolio is less than half of 1%. Remembering the recession of the nineties or the eighties, this is still low by those standards. Again, I think it goes back to a lot of what you've seen and heard in the media. We have very strong financial institutions, but we've also kept a very close eye on our prudent underwriting standards.
While homeowners unfortunately do find themselves in difficulty from time to time, especially in difficult economic times, it hasn't been on the scale of what we've seen in the past.
Thank you.
I want to touch base again on the RRAP program. You said that there have been agreements signed with every province and territory on the RRAP program.
The framework was agreed to by all provinces and territories in July. We are now going through the process of signing bilateral agreements with each jurisdiction to implement that framework. At this point, five of those agreements have been announced, and we are concluding the agreements in the other jurisdictions.
When do you see them being concluded? I'm just wondering because for some of our areas we're running into winter.
The program ended in March, if I'm not mistaken?
Ms. Karen Kinsley: Correct.
Mrs. Carol Hughes: With that lack of time, people are now actually living with roofs that are leaking and stuff.
So they're not able to get their hands on that assistance?
We expect it will be probably no later than the end of November. A number of provincial elections are causing some delay, but provided those clear up fairly quickly.... We don't anticipate any difficulty. It's just a question of the environment we found ourselves in.
Again, that's up to provinces and territories. They're responsible for the design and the delivery of programs. We currently deliver RRAP in only five jurisdictions, and in fact two of those jurisdictions have decided to take on the delivery themselves.
So it will be up to them to decide how they want to conduct the program going forward, if in fact they want to continue with that stream at all.
Thank you.
We understand that CMHC bought $66 billion in risky mortgages from the banks during the economic downturn. We all know that the housing bubble collapse in the U.S. was the major contributing factor to the recession that followed in 2008 over there. So I'm just wondering, when you bought these, was there a risk to Canadian taxpayers as a whole?
The number actually is about $69 billion.
Just to go back a bit, these were mortgages that were already insured by CMHC or the private sector, that were sitting on the balance sheets of financial institutions. When the economic downturn hit, the banks needed a way to access new funds to continue to allow credit to flow. The government, through the insured mortgage purchase program to which you refer, said, “Listen, we've already insured these mortgages that the banks are holding, so why don't we in fact purchase them, as we're already comfortable with the risk, having underwritten them, and provide the lenders in return with that liquidity, that capital?”
So this program was not only run at no additional risk to government, but we actually charged lenders for that. The government made money as a result.
I'm going to give some time to my colleague Ms. Crowder. If we have more time, we'll come back, and if not, I'll try in the next round.
Can I clarify something on the RRAP? I'm sorry to keep coming back to this, but it's a major program in many of our ridings.
I understood you to say earlier that Ontario is one of the provinces where you continue to administer the RRAP program. Will that continue?
We're currently in the process of negotiating the announcement with Ontario. That is one of the jurisdictions where there has been no announcement made.
Again, there has been nothing committed at this point until that announcement between us and Ontario proceeds.
The fiscal year began April 1. So people who were in the loop, who had applied....
Am I understanding correctly that no money has flowed in the province of Ontario for RRAP since April 1?
That's for new applications, as of April 1.
So if that agreement is not signed until after, I presume, the provincial election, what happens to the money allocated in this current fiscal year if it can't be all expended because of the late time? As Ms. Hughes pointed out, in many communities winter is coming, and they will not be able to do the construction.
What will happen to the money allocated?
What we have done in anticipation of this delay is we have continued.... We have delivery agents who work with the program in Ontario. While we can't commit new funds until this agreement goes ahead, we are encouraging them to accept applications--they are doing this--and to do due diligence work with respect to being in as ready a position as possible the moment the agreements are announced.
So we're doing as much as we can do to ensure that the moment the go-ahead is received, we can act on those applications.
If we do not spend the money by March 31, it would lapse, or we would request a reprofiling from government.
Thank you, Mr. Chair.
I just have one question. I'm going to share my time with Mr. McColeman.
I did an announcement on behalf of the minister in one of the northern communities to do with the aboriginal community. One of the things the housing manager for the band brought to my attention was the challenges they are having with CMHC with regard to reserve housing and post-treaty mortgages on housing. What happened is that they had exhausted their ability to build houses on reserve land. They had settled their treaty and they had treaty lands, yet they couldn't access CMHC financing.
Could you comment on that? What is the problem in the act, and is there any effort to change that?
This would actually be better addressed to Aboriginal Affairs and Northern Development Canada. They deal with all of the treaty aspects with respect to first nations. We just deliver housing services on reserve.
The big issue on reserve with respect to the provision of market housing is the ownership and tenure of the land and the ability to pledge that as security. It's probably a little more complicated, but the Department of Aboriginal Affairs and Northern Development could give you a much more fulsome description of the treaty process and the consequential implications of that.
Yes, I can understand. Because normally the band thinks as a collective unit rather an individual unit, so the band is the one that's securing the—
Thank you.
This question relates to a specific type of housing, and it's student housing. I know CMHC gets involved in that. I don't know the specifics of the program—and again, if it's too specific and someone has to get back to us, that's fine.
We as a government, through the economic action plan, did some precedent-setting investments in post-secondary institutions that we've never done before, but part of what we funded did not include student housing.
A number of universities are experiencing growth, and they cannot provide enough housing for the students, particularly first-year students. The private sector is available to partner on some of this work—actually, this came to me through a senior manager at the Royal Bank—but the program that currently exists with CMHC limits the participation of CMHC to on-campus housing. It limits it to buildings that would be built, obviously, on campus.
That's a pretty severe limitation to that program, given today's desire by entrepreneurs in the private sector to be involved in providing that type of housing that universities need, particularly under 3P partnerships.
Are you aware that? Has CMHC ever contemplated any change to the guidelines as they currently exist to allow that to happen?
Thank you. Yes, I am aware of that.
The answer depends in part on the type of student housing we are talking about. We limit what you might consider typical student resident housing to housing on campus. Think of that as quads with a common kitchen.
Basically what we do, through mortgage loan insurance, is facilitate the financing of the construction of these facilities, again on a commercial basis. We find that accommodation is generally unique to students and unique to university communities. However, if you're gong off campus, student housing can take many forms. It can be rental housing generally; it can be secondary suites in an existing home. Provided it is not that quad and common kitchen structure, we provide financing for that. We consider it to be rental housing off campus.
The place where there's the issue is if you're trying to build off campus, purpose-built—by that, I mean designed—student housing. The problem we find with that is if there is an issue, heaven forbid, it can be very difficult off campus, in a general community, to actually realize on that for purposes of other use.
So we do student housing of different types off campus in the rental sector, and for very specific, purpose-built housing of a specific configuration, we do it only on campus.
So you're aware, of course, that many of those agreements are starting to expire. According to the Canadian Housing and Renewal Association, in 2009 more than $200 million was reduced from the federal and provincial governments as a result of the expiration of these agreements.
They also did a study in 2006, and they found that at least one-third of the total social housing stock, roughly 220,000 units, either needed serious repairs or generated insufficient revenues to be viable once the subsidies expired. They gave an example of the Métis Urban Housing Corporation, which actually had to sell units because they couldn't continue to operate them.
Is there any plan to reinvest the money being saved off the social housing operating agreements back into social housing?
Thank you for the question.
We're very aware, obviously, of when the specific terms of the agreements expire. We have struck a federal-provincial working committee, which has actually been under way for about a year now, to look at the viability of these projects when the agreements expire.
The whole notion, when the programs were designed, was that when the mortgage was fully paid off--i.e., at the end of the operating agreements--the projects, with the low rent they were collecting and not having to pay the mortgage any longer, would be able to be self-sufficient going forward. That was the theory of the program design.
What we're looking at, and this is the point that I think CHRA is making, is that some projects and some programs work better in that regard than others. They prepared a report called “Was Chicken Little Right? Is the Sky Falling?”, and they concluded that in fact non-profit housing and co-op housing are in pretty good shape at the end of their agreements, whereas public housing is less so with its 100% concentration in low-income housing.
The working group that's been put together, and that includes all jurisdictions, is looking jurisdictionally at the portfolio of housing that's out there. They're looking at the portion of the portfolio that will in fact be financially viable, as was hoped at the outset of the program design, and that can continue on post the agreement expiry, and looking at which projects may need some reinvestment, followed by how that reinvestment might occur.
Okay.
Just quickly, on the affordable housing framework agreement, I have two comments. First, were the provinces actually able to negotiate,or were they given a done deal and told to take it or leave it?
Second, in the framework agreement, does it include reporting measures back to the federal government about the numbers of housing units built and the amounts financed?
Yes, I can guarantee you, given that both of us were involved in the negotiations, they had a lot of input. Yes, it very much was a negotiated agreement among all jurisdictions. It was negotiated together. So yes, there was full input by all jurisdictions.
On the second point, absolutely there are accountability requirements to report to the federal government. We've gone one step further and said we're not just interested in the outputs, which are the number of units produced, but we'd also like to see a measure of outcome on how many people with core housing need have been served.
Thanks.
I don't think you answered the question earlier with respect to.... You said that $69 billion was the amount of risky mortgages you took on. Was there a risk to the taxpayers at all?
No. The risks, and I would say they're not risky mortgages, that underlie.... Those mortgages were already insured through our mortgage insurance programs or through the private sector. There was no additional risk that the Government of Canada incurred by purchasing those mortgages.
Of our overall mortgage portfolio?
Mrs. Carol Hughes: Yes.
Ms. Karen Kinsley: It's actually in our annual report. I can provide that to you.
The average loan?
Mrs. Carol Hughes: Yes.
Ms. Karen Kinsley: It's probably in the range of $120,00 to $130,000. Again, the average amounts are shown in our annual report.
The time is up, so we'll thank the witnesses for their very informative presentation in a variety of areas.
We thank you very much for coming.
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