Mr. Deputy Speaker:

Adopted, on division.

Motion agreed to and bill read the first time.

Mr. Deputy Speaker:

When shall the said bill be read a second time? Next sitting of the house?

Mr. Starr:

Never.

Agreed.

Mr. Deputy Speaker:

Agreed.

Mr. MacEachen:

Mr. Speaker, I should like to call item 64, resuming consideration of the motion for the second reading of an act to amend the National Housing Act.

[The Chairman.]

Mr. Starr:

Mr. Speaker, we welcome this order of business. Our party would like to expedite this matter today in all its stages, and I hope that the private members hour will be waived in order that we may complete this bill today.

Hear, hear.

Mr. McCleave:

Tell that to Benson, too, so that he understands.

Mr. Langlois (Meganlic):

Mr. Speaker, I agree with this procedure as long as it is specified that if we waive private members hour it will be in order to go through with this legislation and no other, unless specified at the present time.

Mr. Starr:

Agreed.

Mr. Deputy Speaker:

The President of the Treasury Board.

Mr. Starr:

I hope the minister does not take too much time.

Hon. E. J. Benson (President of the Treasury Board):

Mr. Speaker, this is really a very simple bill. I realize that hon. members opposite wish to say some words about housing. They have indicated that they would like to proceed with this bill through all its stages before six o'clock, so I will simply explain that the bill allows for a reduction of the down payment on homes by increasing the 95 per cent limit upon which C.M.H.C. may make loans or guarantee loans from $13,000 to $18,000. Under the maximum loan provision the down payment will be reduced from $2,150 to $900.

The only question that may arise in the minds of some hon. members is why in part (ii) of each of the three subsections we include 70 per cent of the amount by which the lending value exceeds $18,000. The maximum amount to which C.M.H.C. may go is set by order in council. The inclusion of part (ii) in each of the subsections is simply in order that the governor in council may, after consultation with C.M.H.C., decide to increase

March 8, 1968

the total mortgage which is available under C.M.H.C. Central Mortgage can then do so, and lend or guarantee a loan to the extent of 70 per cent beyond the $18,000 to a new level which could be established in the future.

I hope that members on all sides of the house will support this bill in order that we may at least take this step toward helping to provide more homes for Canadians.

Mr. G. L. Chatterton (Esquimalt-Saanich):

Mr. Speaker, we are naturally very pleased that the government has finally acceded to our request to bring this matter before the house. Yesterday I had telephone calls from contractors in various parts of the country asking why the opposition was holding up this bill. I would point out that the Prime Minister (Mr. Pearson) announced at the federal-provincial conference on December 10 or 11, I believe, that this was a proposal of the government, yet it was not until February 14 that the resolution appeared on the order paper. I therefore want to say categorically that not only do we not accept any blame for the delay, but we have urged the government to bring this matter forward; and as our house leader has said, we intend to co-operate by putting the bill through all its stages this day.

Although this is a relatively uncomplicated amendment it does give us an opportunity to deal with a question with regard to which we feel the government is very vulnerable. The minister responsible for housing is not here at the moment, but I hope he will take sufficient interest later to read what we have to say about this matter. Clearly, even on the admission of some hon. members on the other side of the house, the housing policy of this government is in a mess. I quote from the Montreal Gazette of February 17. This article bears the headline, "Hellyer Lashes Housing Policy As 'All Wrong' ", and is as follows:

[DOT] (4:20 p.m.)

When it comes to housing, the federal government is doing "all the wrong things," transport minister Paul Hellyer said yesterday.

Mr. Hellyer:

Mr. Speaker, may I rise on a question of privilege to say that this quotation was slightly out of context. What I said was that governments do all the wrong things and that there was room for improvement in the co-operation between government and industry at all levels. The federal government was not singled out in any way, and I am sure my hon. friend would want to make that correction.

National Housing Act

Mr. Chatterton:

I am sure that if the minister were honest with himself, he would admit he would have liked to say what the newspaper quoted him as saying. I believe the Secretary of State for External Affairs admitted as much when he made a speech in London a few weeks ago.

As I said, I think the government is vulnerable with respect to its housing policy, but in view of our anxiety to co-operate and to put this legislation through in a hurry, I will reserve the comments I intended to make until the supplementary estimates come before the house.

The one point I want to make is that the resources of this government are so bankrupt that the only thing they can do to improve the housing situation is to reduce down payments. We are completely in favour of this proposal, but I should like to point out that it does not help those Canadians who really need help. I have worked out figures which show that for a person to obtain a loan of $18,000, which is about what is required today to build a house and to pay for the land, he would have to earn at least $8,000 a year.

The fact of the matter is that the provisions of the National Housing Act today are of no value to two thirds of the Canadian wage earners. They are excluded because of the high cost of financing, which is largely a result of the policies of this government. Just to reinforce my argument, may I point out that in 1965, of all N.H.A. loans that were made, only 9 per cent were made to people who earned less than $5,000. In 1966, of all N.H.A. loans made, only 4.8 per cent were made to those with a family income of less than $5,000. Last year, in 1967, only 1.4 per cent of all N.H.A. loans were made to people with a family income of less than $5,000.

Truly, there is a great gap today in the legislation in Canada to provide housing for the average Canadian of average income. I admit that legislation dealing with low rental housing is reasonably good. However, improvements can be made to it, and the time will come when we will improve it.

I think the main fault here lies with the provinces and municipalities. In this respect I give credit to the province of Ontario which has done more than any other province in Canada. But it is the people between that group and those earning more than $8,000 who today cannot be helped by the national housing legislation. I submit this is a problem

March 8. 1968

National Housing Act

to which the government of Canada will have to put its mind. We cannot go on indefinitely providing houses only for those earning an income above $8,000. The time is not far distant when that particular housing market will become saturated. Yet, those people earning less than $8,000 a year cannot qualify for N.H.A. loans simply because under the N.H.A. regulations the gross debt and service charges shall not exceed 7 per cent of their gross income. For a man earning $20,000, the 27 per cent of his income is not too much for housing, but for a man earning $4,000 or $5,000 that 27 per cent of his income is too much for housing.

I should like to quote from the publication called "Municipal Affairs" of February, 1968, published by the Canadian Federation of Mayors and Municipalities, where the following is said:

The government recently announced a substantial Increase in the amount of government funds to be allocated in 1968 to public housing. The public was advised that this larger subsidized rental housing program was being achieved through a reduction in the amount to be available for direct lending to the speculative builder market.

What becomes very apparent as a consequence of these two recent government moves, is that subsidized rental housing or substandard housing will now be the only housing alternatives for many thousands of low and middle-income Canadian families. There can be no doubt about this, for how can a family with an annual income of less than $8,000 hope to finance a twenty-five year mortgage at eight and five eighths per cent, taking into account the current costs of home construction, the cost of land, and the effect of the 11 per cent federal sales tax plus the appropriate provincial sales tax rate on building materials.

On two counts, these alternatives are unsatisfactory. Firstly, the number of public housing units currently available or shortly to become available falls far, far short of even current needs for low-income families, let alone middle-income families. Secondly, the rental rates that apply in public housing schemes are geared to income, and current income/rent schedules disqualify middle-income families from this kind of housing. Simply put, this means that the only solution to the housing problem of many Canadian famiiles is an inordinate level of personal debt.

That comes from a publication of one of the most responsible and well informed organizations in Canada.

As I said before, I will reserve for a later date some of the remarks that I intended to make. I will conclude by saying that we support this measure, and I submit to the fiovern-ment that the time has come when the maximum amount of loan should also be increased. The recommendation of the Canadian Home Builders Association is that it be increased to $24,000, and it can be done by order in

council. I would urge on the minister that he give serious consideration to this.

Although it will not help the group of people whom I have described, earning less than $8,000, it will help a great number of other people. We also have to keep in mind of course that all this money comes from the private sector and none of it comes from the government, therefore I do not think there should be any objection to increasing the amount.

[DOT] (4:30 p.m.)

Mr. John Gilbert (Broadview):

Mr. Speaker, the members of the New Democratic party give a reluctant support to Bill No. C-202, which merely increases the ratio of loans from $13,000 to $18,000. It is striking example of Mohammed going to the mountain and bringing forth a mouse. The government's assistance is merely a band-aid assistance and does nothing to solve the vital and most critical social problem which we are facing in Canada today. It does nothing to solve the problem of the high cost of housing, the high interest rates and the critical shortage of homes. These are matters which should have first attention from the governments.

We have realized for a long time now that there was a need for a new minister of housing. Since I have been here, the standing committee on housing and urban development has not met once. In view of the serious shortage in housing, one would have thought that this standing committee would have met and come to grips with the problem, and would have invited representatives of the housing industry to express their views with regard to this problem. The former minister in charge of housing travelled across the country on a housing symposium, getting ideas from the housing industry, but he failed to table any of the facts he found or to refer them to the housing committee.

Then we had a federal-provincial conference in December at which little or nothing was accomplished as a result of bringing forth representation from the provinces and the federal government. Housing starts in 1965 numbered 165,000; in 1966, the figure was 134,000 and it appears that in 1967 we will be back to about 160,000. In the light of that record, the government has changed ministers. We in this party were looking forward to some great steps being taken by the new minister because we appreciated his accounting background. We thought he could solve some of the financial problems that are

March 8. 1968

attendant upon housing. In addition, we thought he had a concern for people.

What has been the record of the new minister thus far? Well, first he introduced this minor change which is contained in Bill No. C-202 to increase the loan ratios on government insured loans. Second, he has given an indication that he will remove the interest ceiling on N.H.A. loans which now stands at 81 per cent. This is his second approach to the problem. Certainly he must appreciate that, at the moment, conventional loans are 1 per cent above N.H.A. rates. What he is really doing by removing the ceiling is adding to housing costs.

Third, he made a change in the regulations with regard to the locked in provision of mortgages to developers of rental projects in connection with the prepayment of mortgages for as long as 25 years. He also expressed the intention of the government to participate chiefly in public housing, thereby leaving other fields of mortgage financing to conventional lenders. His last endeavour thus far has been a target of 175,000 homes, when in fact the Economic Council of Canada calls for a minimum of 200,000 homes made up of 190,000 new homes and 10,000 to replace older homes.

This is what he has done thus far. None of these measures strikes at the heart of the housing crisis in Canada. These moves indicate a lack of leadership in working with the provinces to assess housing needs and in giving financial assistance to fulfil those needs. There is an indication the government is abandoning the idea to set up an advisory committee on housing and urban development composed of representatives of federal and provincial governments. This idea was not well acccepted by the federal-provincial conference. The premiers of the different provinces, however, indicated the necessity for the heads of housing authorities to meet on a regular basis with the minister responsible for housing.

These measures indicate the government's dependence on institutional lenders to finance home building in Canada, in spite of their performance in the last four years. Incidentally these lenders, after having restricted their investments in housing, after having directed their moneys into shopping centres, luxury hotels and apartments, and in some cases after having transferred some of their moneys to the United States to be invested in United States equities, have now succeeded in telling the government this: If you give us a

National Housing Act

higher interest rate and restrict yourself to public housing we will invest the savings of the Canadian people in housing. This is the price we have to pay. This is the accepted approach by the government to solve the problems of housing.

I should like now to direct my attention to the changes brought about by the legislation proposed by the government. What does this legislation do? It will probably benefit the would-be home owner in the small urban centre where the cost of a new house would likely be between $13,000 and $19,000. The change in the loan ratio would make a difference I suggest of $1,500 in the value of the loan. This is just like giving a peanut to a starving elephant.

These are the only people the proposed changes will help. However, these people need help and the government has placed us in the position of having to approve this legislation. Second, the government has given a clear indication of its approach to housing. It has said it will participate only in public housing and will leave to the lending institutions the problem of financing housing in Canada. These are the only two things this legislation accomplishes.

What it does not do, Mr. Speaker, is that it does not help the people who live in the large urban centres where values sometimes range over $25,000. At this price, the gap between the mortgage loan of $18,000 and $25,000 or more is too great. The buyer with a small down payment is forced into secondary financing at interest rates of 12 per cent or 15 per cent. For example, Mr. Speaker, the average price of a single dwelling house in metro Toronto as of January 31, 1968, was $34,869. This represents an increase of $5,200 in one year. Three years ago, the average price was $21,914. We are faced with inflation in astronomical proportions. Any decision to lower the ratios here does not help the buyer in large urban centres.

Second, this legislation does not help to reduce land costs. In Toronto a 50 foot lot costs at least $10,000. Land costs there are the highest in North America and have increased by 500 per cent in the last ten years. I might say, Mr. Speaker, that this condition prevails right across Canada. The Ontario government collected land for Bramalea at a cost of $6,800 per lot and then marked those lots to $9,000 plus. This indicates that even the Ontario government is taking little or no action to limit increases in the cost of land.

March 8, 1968

National Housing Act

This legislation does nothing to increase the supply of houses. In 1965 we had 165,000 starts; in 1966, the figure was 134,000; in 1967 it was 160,000 and in 1968 the projected figure is 175,000. As I pointed out, the Economic Council of Canada states that 200,000 homes should be the minimum target for housing,

190.000 new homes and 10,000 for the replacement of older homes. If we accept the target of the new minister, we will still fall far short of the requirement for new houses in Canada. When you think of the shortage created by the difference between 134,000 and

190.000 in 1961 and a shortage of 30,000 in 1967, you realize that we would have to build between 250,000 and 300,000 homes to begin to catch up with the housing shortage in Canada.

This legislation does nothing to bring down the high interest rates under the National Housing Act, rates that have ranged in the last ten years from 5J per cent to 8f per cent. The rates on conventional mortgages have ranged from 6 per cent to 9.5 per cent. As was pointed out by the previous speaker, to qualify for the maximum loan of $18,000 an applicant must have an income of at least $8,400 per year. On other occasions I have pointed out that $18,000 at 8| per cent will give a total of $45,000 before the mortgage is paid up. Is it any wonder, Mr. Speaker, that the average family writes off the possibility of owning a home under these circumstances? [DOT] (4:40 p.m.)

This legislation does nothing to bring down the cost of a home. No mention is made by the minister of any steps that he might take to do away with the federal sales tax of 11 per cent. The minister probably attended the federal-provincial conference and heard the recommendations of the different provinces to the effect that elimination of the 11 per cent federal sales tax would probably be followed by the elimination of the 5 per cent provincial sales tax. The money saved thereby could go toward the down payment on a home. However, the minister has done nothing to bring this about.

The legislation does nothing to assist persons to build homes under a co-operative scheme. The maritimes and Newfoundland delegates to the federal-provincial conference were practically scoffed at when they suggested that people should be helped to build homes under a co-operative scheme. This appears to be the approach of people in the maritimes and in Newfoundland to solving

the critical housing problem in that area of Canada and they should be assisted by their government.

The legislation also does nothing to assist the construction of shell housing, another recommendation made by provincial representatives at the conference. Many people would like assistance to enable them to build the foundations and walls of a shell home by means of a government mortgage, using their own savings to complete the home. But nothing has been said by the minister about shell housing, which would also help solve the critical housing shortage.

The legislation does nothing to assist people who have to pay high rentals and are given no protection. This is why we in the New Democratic party are bitterly disappointed at the approach of the new minister of housing to the serious housing problem today. We give only reluctant support to this small measure that has been brought forward.

The minister might well say that the New Democratic party should put forward some corrective measures. We would do so, Mr. Speaker. The first thing we would do would be to make available at least $1.5 billion to finance new housing in Canada. When one realizes that we have spent $2 billion-which is $2,000 million-on defence and it looks as though this year the amount for housing will be considerably below that spent last year, one is bitterly disappointed at the approach of the minister toward this problem.

Second, Mr. Speaker, we would limit N.H.A. interest rates to 5 per cent. We would subsidize the difference between this and the current chargeable rate on homes up to at least $25,000 in value. This is an approach which would cut the cost of the home. The cost to the government would be minimal and the savings to the average home owner would be of great help.

Third, Mr. Speaker, we would enact a tenants bill of rights which would give them some protection against the treatment now being accorded them by landlords in large centres. The minister might argue that this is a matter for the provinces. If he does I think he should be reminded that he should work with the provinces to develop this code, and that he should accept the advice given at the federal-provincial conference constantly to work together with representatives of the housing authorities to bring this about.

Fourth, we would set a minimum target of at least 200,000 homes a year. This would be

March 8, 1968

an attempt to solve the critical housing crisis we are facing today. We would also encourage limited dividend housing for senior citizens by increasing the mortgage available to 95 per cent of the value of the home. This area has been neglected during the past few years and it is about time that the government took some initiative to encourage this sort of housing.