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I call this meeting to order.

Welcome back to meeting number 23 of the House of Commons Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities.

Pursuant to the orders of reference of April 11 and May 26, 2020, the committee is resuming its study on the government's response to the COVID-19 pandemic.

Today's meeting is taking place via video conference, and the proceedings will be made available on the House of Commons website. The webcast will always show the person speaking, rather than the entirety of the committee.

Before speaking, please wait until I recognize you by name. When you are ready to speak, please click on the microphone icon to activate your mike. I remind everyone to please use the language channel of the language they are speaking.

I want to begin by thanking our witnesses for their patience with our aborted attempt at this meeting last week and for their co-operation in agreeing to reappear this week. I also want to let members of Parliament know that with regard to our second panel, we received a cancellation from MKO less than two hours ago, so we have only one witness for the second panel. The witnesses on the first panel have graciously agreed to remain.

For the first hour we're going to have representatives from Homeward Trust Edmonton and from Mortgage Professionals Canada. For the second hour we'll have Front d'action populaire en réaménagement urbain as well as the witnesses from the first hour.

Without further ado, I want to welcome Susan McGee and Giri Puligandla from Homeward Trust Edmonton, as well as Elaine Taylor and Paul Taylor from Mortgage Professionals Canada.

I understand Ms. McGee is going to be giving the presentation for Homeward Trust Edmonton. You have the floor, Ms. McGee. Please go ahead.

Thank you very much, and thanks for the introduction.

I am the chief executive officer for Homeward Trust. We are a community-based organization utilizing a system-planning approach to ending homelessness in our community of Edmonton. We are the local entity supporting the implementation of Reaching Home, and we have actively supported the evolution of Canada's national housing and homelessness strategies. I was very privileged and fortunate to sit on the advisory committee on homelessness, chaired at the time by Parliamentary Secretary Adam Vaughan, and I currently sit on a number of national committees.

I'm joined today by Giri, our chief strategic officer. I expect there will be some questions that he would be better at answering than I would be. We want to allow time for that.

We and our partner agencies have been recognized nationally and internationally for our collective efforts to end homelessness, housing nearly 11,000 people since the beginning of our Housing First program in 2009. Our organization brings together funding from all orders of government to support service providers, indigenous communities and government partners in Edmonton to collectively plan, act on and monitor our solutions to end homelessness in our community.

We're grateful for the opportunity to speak today about the Government of Canada's response to COVID-19 and what is needed to ensure that vulnerable and homeless Canadians are supported and protected on the long road ahead.

It has been just six months since COVID-19, and the risks it presents to our community members have required a complete rethinking of our priorities and programs. This has been an intense and exhausting effort, but one that we can be proud of and that wouldn't have been possible without the quick mobilization of resources from municipalities and provinces and, indeed, the federal government.

For Edmonton's homeless response, Reaching Home funding played a critical role. Funding was committed early, processes were accelerated, and both local organizations and federal program staff were empowered to make necessary decisions, building on existing accountable relationships. For many of us involved, the lasting reflection is that we can and should continue to respond that way by treating homelessness as the national emergency it is in any situation.

Homeward Trust is a strong supporter of Recovery for All and the six-point plan already presented to government by the Canadian Alliance to End Homelessness, and we support other national organizations such as the CHRA and its advocacy of greater investments in affordable housing, specifically indigenous-led housing investments.

Rather than reiterate those well-considered positions, we will focus on what we consider to be critical and immediate steps to support their successful implementation.

First is that our country requires a sustained investment to make sure that communities' Herculean achievements over the last six months, which has been a sprint, have the endurance for the marathon that lies ahead. With no commitment on the horizon, planning has ceased and programs are being wound down, while individuals are exposed to the same health and safety risks that we experienced in March from the beginning.

Second is that all orders of government focus efforts not only on protecting vulnerable Canadians from the pandemic but also on addressing the many systemic issues that have made people vulnerable to homelessness in the first place. The pandemic has laid bare these system failures, and we can't unsee what we have seen.

Last is that the government reinforce communities in leading this response in a coordinated system-planning approach, bringing together the various cross-systems and interjurisdictional roles that, operating independently, risk recreating the system failures we are working so hard to address.

On the first point of sustained investment, there is no question that all orders of government recognize that we are many months away, if not years away, from this pandemic's being completely behind us. There are more waves on the horizon and, perhaps most critically, large numbers of people losing their jobs and families in crisis. They are losing their homes and their mental health is being significantly affected. We've never experienced anything like the initial pandemic response before, and there is no precedent, certainly in our lifetime, for the economic and fiscal fissures that are already forming.

Initial investments were made quickly, and we were fortunate to have strong program infrastructure and partners to work with to activate those resources.

In Edmonton, our response prioritized mobilizing critical services in an alternate location, as agencies, public spaces, and other locations that often provided respite for homeless individuals closed. We brought in our coordinated access and Housing First program with additional rapid rehousing and diversion efforts, and included new partners and prevention initiatives by providing immediate funding to address short-term needs. We were able to secure and headlease a hotel to provide bridge housing, which has played an important role in our community's response in housing over 700 people to date since April.

In the absence of sustained funding, we are faced with having to contract all of those efforts at a time when we are seeing significant increases in homelessness and encampments on a scale not seen in Edmonton since 2007. We know that housing is a solution to homelessness, and we have seen the direct health risks to those without a home. We cannot build our way out of the situation fast enough, but we can ensure that our pandemic response results in long-term permanent solutions if program funding is sustained and targeted. There is a role for all governments and charitable funders in supporting our efforts, but it is important to recognize that community-based providers are reeling from lost fundraising revenue and staff capacity and will have difficulty dealing with the onslaught of needs, let alone the existing demands. It is imperative that the federal government lead with a commitment now.

Reaching Home has incorporated many important changes in community planning approaches, emphasizing evidence-based models, clear accountabilities and system-wide engagement. This means having the infrastructure to enable a culture of knowledge-driven decision-making so that our interventions can be targeted, evaluated and corrected continually, and taxpayers can be confident that public dollars are achieving the results they'd expect. As such, I have great confidence that continued investments through Reaching Home will have the greatest immediate impact.

This brings me to my second point: that the pandemic response has to address the foundational issues that contribute to poverty and homelessness, especially those that are institutional in nature. The homeless population is dynamic. There are no clean boundaries between people who use shelters, people who sleep rough or in encampments, and people who are unstably housed and people who are living with friends and family.

With rising unemployment, bankruptcies and evictions, people who faced housing insecurity before the pandemic will become homeless. Addiction and mental health issues are increasing rapidly and threatening the ability of families and individuals to stay resilient, yet for homeless and vulnerable populations, various systems and government departments get involved in a way that creates a patchwork of responses, with huge gaps and blind spots and far too many unmet needs. Their roles are often defined by narrow mandates and cost containment, without a holistic sense of how all their parts interact—and they don't.

An effective pandemic response for the homeless population has to incorporate commitments to fix the underlying systemic problems that create and sustain homelessness. There may not seem to be an obvious first step to address this issue. Indeed, governments have spent years in system-planning meetings trying to turn the Titanic in an inch of water. However, during the pandemic we have seen health authorities actively participating in local efforts, and they have been required to address the specific risks that homeless community members are exposed to. The pandemic has highlighted how quickly we can adjust how we work together when the urgency and the will are there.

This leads to my final point, which is about the importance of community-based leadership in the pandemic response.

In March, community organizations were navigating shifting and sometimes conflicting authorities in the federal government, provincial ministries, health authorities and local governments. Siloed internal command structures and interjurisdictional confusion can threaten an active, effective and comprehensive pandemic response. One of our key roles as community entities and system-planner organizations is to transcend and bridge across these chasms so that we can enable communities to do what needs to be done. In many ways, governments and systems need to take a back seat to let communities lead the way. They have the knowledge, experience and relationships to ensure that we are doing what is best for vulnerable people. This means empowering and resourcing communities to enable community-level leadership and governance. It also means building the necessary infrastructure so that community partners can implement actions collectively and leverage resources and strengths across the board without having to manoeuvre between funding and institutional roles.

Reaching Home clearly embraces the role of local leadership, and as such has been able to deploy resources quickly during this time, with demonstrated impacts. While other investments are considered, whether to support housing developments or mitigate housing loss, we strongly recommend reinforcing community-level leadership in coordinating that deployment of those resources.

In summary, for an effective pandemic response, the federal government needs to commit to supporting community-based leadership with funding and policies that can address two public health emergencies: the recent and ongoing impacts of COVID-19 and the long-standing institutional causes of homelessness. Continuing investments by the federal government are the only way to ensure that community efforts and achievements over the past six months are sustained and that we don't regress in our ability to protect vulnerable people from the impacts of the pandemic in the long run.

A critical component of this is to accelerate efforts to realize an end to homelessness, including the six-point recovery plan put forward by the Canadian Alliance to End Homelessness, and intentional engagement with provincial and municipal governments to support communities in making this happen by transforming systems so that they facilitate their work instead of hindering it.

I appreciate the opportunity to speak to the committee today, and we are certainly happy to answer any questions.

Thank you very much, Ms. McGee.

Next we'll hear from Mortgage Professionals Canada.

Ms. Taylor, you have the floor.

Thank you, Mr. Chair, and members of the committee. On behalf of the over 12,000 members of Mortgage Professionals Canada, thank you for providing the opportunity to take part in the discussions today.

My name is Elaine Taylor. I am vice-president of sales for MCAP Corporation and chair of the board of directors of Mortgage Professionals. Also with me today is Paul Taylor—no relation—the president and CEO of MPC.

For additional context for our remarks today, I'd like to remind the committee of MPC's membership composition. We are a professional association promoting mortgage broker-originated mortgages.

By head count, mortgage brokers and agents across Canada make up the largest component of our membership. However, almost all Canadian banks and mortgage lenders that originate mortgages through independent agents and brokers also belong to our association.

Additionally, all three mortgage insurers in Canada are also members. Because of the diverse nature of our members' businesses and their respective role in facilitating broker-originated mortgages, MPC has a thorough understanding of the marketplace impacts of any changes to mortgage financing and funding costs, securitization and liquidity, underwriting criteria and lending guidelines, and changing consumer behaviours.

In our remarks today, we would like to thank the government for many of the measures taken to ensure economic and liquidity support for Canadians and businesses alike. Specifically for our industry, the reintroduction of the insured mortgage purchase program, with its newly increased stated limit of $150 billion, provided much-needed access to capital for banks and other lenders. Additionally, the reduction of the domestic stability buffer added $300 billion in liquidity to banks for them to be able to support struggling businesses through additional extensions of credit. The reductions in the Bank of Canada benchmark rate also occurred during this time.

We are supportive of all of these changes and the speed with which these mechanisms were brought to bear. As an industry, we were reassured by the timely and coordinated macroeconomic support brought forward.

One suggestion that we may offer for OSFI to consider, following the same thought process as the already implemented reduction in the domestic stability buffer, is to reduce the capital requirements for mortgage insurers. This would allow them to reduce their required premiums, making access to the IMPP and other programs easier for lenders and borrowers.

The Canada emergency response benefit and the innumerable suite of cash flow and credit support programs were tremendously supportive of many of our independent and smaller mortgage brokerages. Making CERB accessible to non-EI eligible income earners was greatly appreciated.

Thanks, Elaine.

Switching gears somewhat, the industry, with government support, has been providing mortgage payment deferrals to many mortgage holders. Current Canadian Bankers Association statistics suggest that 16% of all mortgage holders have at some point since March deferred at least one payment. In testimony to FINA, CMHC president Evan Siddall warned that this number could reach 20%, or one in five, and that these deferrals may all become mortgages in arrears when these programs expire in September-October.

I'm happy to report that the experience of our member mortgage lenders is much more optimistic. Many borrowers who took advantage of the deferral program have since voluntarily resumed their payments and opted out. Participation numbers are falling, not increasing. Public records of these results are available in recent releases by Equitable Bank and Home Trust to their shareholders.

While this is encouraging news, we do, however, anticipate that there will be some mortgage holders who will find themselves unable to meet their mortgage obligations when the deferral period expires. The general expectation is that these families will be forced to sell their homes and that this influx of housing inventory to the market will create price softening as more housing options are available to buyers. It's with this expectation that we make two requests.

First, consider extending the deferral period for those who are truly unable to meet their obligations but expect to return to work in the near term. If OSFI were to implement a portfolio percentage maximum permissible to continue to not be considered a non-performing loan, lenders would ensure appropriate means testing and targeting of this continued support. Permitting lenders this capital relief of 5% of loans within their portfolio will assist those Canadians most affected by the pandemic to stay in their homes. We would recommend extending this provision for at least another six months.

Second, given the possible price softening expected in some markets, and with the recent and unambiguous assurance from new Bank of Canada Governor Tiff Macklem that interest rates will stay low for a very long time, we ask for the immediate implementation of the previously announced, but postponed, adjustments to the insured and uninsured mortgage trust tests. Today's uninsured mortgage qualification requires borrowers to show that they're able to manage their mortgage payments at a fictionally higher interest rate, either two percentage points above the negotiated contract rate or the Bank of Canada's posted five-year rate, whichever is higher.

In the past year as interest rates have fallen, and recently as the Bank of Canada has significantly reduced its overnight rates, the posted five-year rate has not moved in lockstep. In fact, it's only moved incrementally, as is evidenced by the very small 15 basis-point reduction last week. Today many borrowers are having to prove mathematically that they can manage a mortgage payment at an interest rate of almost 3% higher than their contract rate. If the proposed changes were enacted, really simply, the stress test would effectively be reduced from what is currently almost 300 basis points to 200 basis points, or from 3% to contract plus 2%. Remembering that this test is in addition to existing debt service ratio maximums, this implementation will permit would-be owner-occupiers to purchase their first home while still ensuring that stringent underwriting and qualification mechanisms are in place.

If real estate prices do come down in the upcoming months, that's exactly the time we should be encouraging young and aspiring middle-class Canadians to purchase a home. Excluding them from the marketplace will only serve to widen the wealth gap, leaving more homes for investor purchases rather than would-be owner-occupiers.

Lastly, Mortgage Professionals Canada has additional recommendations related to housing finance, insurable 30-year amortization options specifically to support first-time buyers, increasing the maximum insurable value of a property, and creating an exemption to the aforementioned stress test for renewing borrowers who wish to change lenders.

We'll continue this discussion, and we'd be happy to elaborate further on some of those during the question period, but for the sake of brevity today, in our opening statements we'll stick strictly to the implementation of the previously announced test adjustment and the extension of the deferral program, if possible.

Thank you very much indeed to everybody for your attention and for the opportunity to present today. We look forward to your questions.

Thank you, Mr. Taylor and Ms. Taylor.

We will begin our questions with Ms. Kusie for the Conservatives.

You have six minutes.

Before I move to my questions, I want to bring a notice of motion to the committee, please.

Go ahead.

Thank you.

The motion reads, “That the committee call upon the Canada Mortgage and Housing Corporation to appear before the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities before September 30, 2020, as part of our study on the government's response to COVID-19, and that they appear for no less than two hours.”

Very well.

Mr. Clerk, I believe that this does touch on the business of the committee.

Mrs. Kusie, is it your wish that this serve as notice of motion; or do you want the motion debated now?

Well, as I understand, I can only provide a notice of motion today, given that it is not under committee business. However, if you deem it relevant under COVID-19 business, then certainly we can move to a discussion at this point.

Alternatively, as I did mention, this is the notice of motion. Given that we have witnesses here today, we can perhaps take half an hour aside or put some time aside for our next meeting, at which time we can discuss it.

Thank you, Mrs. Kusie. I'm happy to set aside time at a future meeting. I would, however, say that CMHC seems to me to be a relevant witness. It would simply be a matter of adding them to the witness list. I think the only thing that's particularly unique about the motion is the request that they be there for two hours. We may or may not need to debate this, but thank you for providing notice.

Go ahead with your six minutes.

Thank you very much.

Mr. Taylor, thank you very much for being here today. I'm sure you saw in the news recently that media had reported that CMHC will study the prospect of a federal home equity tax that would see residences taxed as capital gains. How would a home equity tax impact the housing market?

I think a tax on equity would alter an awful lot of things, actually, and would probably be really detrimental in a number of different ways, but to be fair, I think that the study that's being conducted by CMHC is actually really more through an academic grant that's been provided to a think tank in B.C. I don't know if it's specifically a policy that is being investigated directly by CMHC. That said, I think it would not be a very good policy to be implementing in Canada at this point.

An awful lot of folks within, I would say, the aspiring middle class—as well as the established middle class, frankly—have been considering that their home is their largest asset. Having that tax haven on a primary residence for an awfully long time has made it, I think, for most, the nest egg or the centre point of their retirement funding. In doing what would likely feel like changing the rules on their investment strategy mid-term, you likely would end up eroding the value of the retirement portfolios of a significant number of Canadians today, which would have additional knock-on effects to the grander economy through very traditional wealth effect issues that any economist would tell you about. It would certainly not be a good day for the grander economy in terms of a continuation of fund and fluidity, I would say.

You talked in your opening statement about first-time homebuyers. Do you think a home equity tax would make it more difficult for first-time homebuyers wanting to enter and invest in the real estate market?

As I understand the structure of what has been proposed, because the tax is due at the time that you sell your home, I don't think it would make much difference to folks who are considering entering into the space, but it definitely does alter the value proposition for folks who previously would have been considering it as potentially something to pursue, and not only for the security of having a place that's your own where a landlord cannot sell the property out from under you or move a family in. There's an awful lot of security in housing that is available to folks who own their own home, but if the investment advantage, the tax haven, for a primary residence is removed, I think it would certainly affect people's decision to potentially enter the market.

We talked a little bit about what you think the impact on the housing market would be. We often think of how the current Reaching Home plan does not consider moving people further along the housing continuum. How do you think the home equity tax would impact the housing continuum as a whole, in an effort to move people away from homelessness and along the housing continuum? Do you think an equity tax would have any impact on that, and how? Where do you see the pinch marks in that?

It's difficult to comment on that without having a really good understanding of what the proposed structure of that tax would look like. I think it would be disastrous to simply implement, as a switch, a 50% capital gains tax on the equity for everybody all at the same time. I envision that, if such a thing were ever actually to be contemplated to be implemented, it would have to be tiered over time. If that were the case, the impact would be really difficult to understand without seeing exactly how the tiering is actually going to occur through that period.

I can tell you today, though, that because home equity without the tax tends to be the largest driver of net wealth creation for individuals, it's also the thing that has permitted people to graduate through the housing continuum as you've described there. A young couple might start in a condominium with one bedroom, and as the family starts to grow, they'll move into a two- or three-bedroom home. It's quite specifically because they're not only able to retain the equity increase, if there is a potential increase in the property itself, but the forced savings of the mortgage itself actually help to create wealth so that they're able to make the next step into the larger property.

If they were to have to sacrifice some of the equity to a tax, it would make the process of moving through that continuum a slower process and it would potentially constrain people to smaller residences at the onset of the tax, but it's really difficult to comment on that without fully understanding what the structure of such a tax would actually look like when it would purportedly be implemented.

Thank you.

Next on my list is Ms. Young, but I have a note that she is having some technical difficulties and is trying to get back on, so the next slot is for the Liberals.

Mr. Vaughan, would you like to proceed, or is there someone else on the Liberal side ready to go?

I'm good to go.

As a very quick reassurance, Mr. Taylor, the minister and the head of CMHC have both rejected the idea and communicated that to your organization. The line of questioning we just heard, while interesting, is not applicable to any policy decision the government is going to make.

Mr. Taylor, we've communicated that we're not pursuing that idea under any circumstance. That's been communicated to you.

It has to me. You will know yourself that, once the news actually broke that CMHC was studying such a thing, we reached out to your office directly. I think you're one of the first to assure us that.... I think CMHC, probably quite rightly, has certain funding arms to pursue academic research to examine all areas of the housing continuum, so the topic of such an equity tax is probably not off limits for anybody who's being funded through that, but I don't think it's an indication, and I certainly don't receive it as an indication, that there's a particular policy examination for such a thing at this time.

Thanks very much.

Ms. McGee, I have a couple of questions on Reaching Home.

We have been asked by some of the opposition parties to end Reaching Home and to send the dollars straight to provincial capitals and not to front-line services, particularly in B.C., by the member for Vancouver East, Ms. Kwan. What would the impact of that be on some of the prairie provinces—Manitoba, Saskatchewan, Alberta—where support for homeless services, in particular harm reduction, has been very slow to meet the front-line needs of a COVID response?

For our effort, I think it would have a very negative impact. I would say that Reaching Home needs to be understood, and our local efforts generally, because we certainly administer investments in homelessness by other orders of government. The important underlying focus is that it is a coordinated approach and a community commitment to work in a coordinated way and in alignment with any homelessness.... Harm reduction is definitely a principle of the Housing First program. The Housing First program, which is also strongly reinforced by Reaching Home, is client-centred and client-focused, focused on the potential of individuals. Agencies are really empowered, as well as front-line staff.

I think one of the things that don't necessarily get generalized or understood around Housing First is that it really empowers the decision-making at the front line to support individuals in ending their homelessness in a way that has the most sustainable outcome in the long term, and that happening in a coordinated way has been critical to communities being able to really move the bar—not just for a person, not just for a program, but as a community.

In the absence of that, we run the risk of just cycling people through other programs, and having a very programmatic structure ensures that people just don't get the traction that we're working so hard to provide them.

In terms of the $19-billion restart fund that we just delivered to the provinces and territories, how much of that have you received so far?

Through Reaching Home, Homeward Trust received about $6.4 million through our entity commitment, as well as indigenous funding of $1.1 million. Those are rounded numbers.

That's out of the restart program that we just recently shipped to.... It's federal money that's being distributed by the province to your organization.

No, sorry; that was out of the initial announcement of the $157-million Reaching Home. The other funding for Homeward Trust directly has not as yet been cascaded through the programs that are focused on homelessness in our community.

That's the risk of funding the provinces and asking them to do federal work. Sometimes the provinces have different priorities, and therefore the money wouldn't get to the front lines. And it hasn't.

Yes. It certainly has some risk. Good plans and good scenario planning can't happen in a bubble. That's the risk.

In terms of the acquisition of assets to support distancing people, quarantining people and providing health services, how many sites has your organization helped secure during COVID to provide more stable housing for individuals who are in precarious situations?