November 22, 1979

NDP

Simon Leendert de Jong

New Democratic Party

Mr. de Jong:

Mr. Speaker, I apologize for that remark.

Topic:   GOVERNMENT ORDERS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   AMENDMENT TO PROVIDE TAX CREDIT IN RESPECT OF MORTGAGE INTEREST AND PROPERTY TAX
Permalink
?

Some hon. Members:

Hear, hear!

Topic:   GOVERNMENT ORDERS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   AMENDMENT TO PROVIDE TAX CREDIT IN RESPECT OF MORTGAGE INTEREST AND PROPERTY TAX
Permalink
NDP

Simon Leendert de Jong

New Democratic Party

Mr. de Jong:

1 was carried away by the injustice of the situation. Still, the major point is that as the cost of an average house increased by $10,000 to $25,000, the $1,000 which home owners might ultimately be able to get back is just insignificant. Let us make housing accessible to the Canadian people.

Topic:   GOVERNMENT ORDERS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   AMENDMENT TO PROVIDE TAX CREDIT IN RESPECT OF MORTGAGE INTEREST AND PROPERTY TAX
Permalink
PC

David Kilgour (Parliamentary Secretary to the President of the Privy Council)

Progressive Conservative

Mr. Kilgour:

Mr. Speaker, 1 rise on a point of order. I believe the hon. member for Regina East (Mr. de Jong) apologized for his remark. I wonder if it is implied by that that he has also withdrawn the offending term or whether that must be requested explicitly of the hon. member.

Topic:   GOVERNMENT ORDERS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   AMENDMENT TO PROVIDE TAX CREDIT IN RESPECT OF MORTGAGE INTEREST AND PROPERTY TAX
Permalink
NDP

Simon Leendert de Jong

New Democratic Party

Mr. de Jong:

Mr. Speaker, if it is required that I withdraw the remark, 1 certainly will, and instead of saying what [ said previously let me substitute "whistling in the wind". Is that acceptable? However, it should be understood that I am still making the same point.

I believe there is another point of order.

Topic:   GOVERNMENT ORDERS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   AMENDMENT TO PROVIDE TAX CREDIT IN RESPECT OF MORTGAGE INTEREST AND PROPERTY TAX
Permalink
PC

Blaine Allen Thacker

Progressive Conservative

Mr. Thacker:

Mr. Speaker, I rise on a point of order. I wonder if the hon. member opposite would accept a question for clarification.

Topic:   GOVERNMENT ORDERS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   AMENDMENT TO PROVIDE TAX CREDIT IN RESPECT OF MORTGAGE INTEREST AND PROPERTY TAX
Permalink
NDP

Simon Leendert de Jong

New Democratic Party

Mr. de Jong:

Certainly, Mr. Speaker, but I wonder if I might answer the question at the end of my remarks. Would that be acceptable?

Topic:   GOVERNMENT ORDERS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   AMENDMENT TO PROVIDE TAX CREDIT IN RESPECT OF MORTGAGE INTEREST AND PROPERTY TAX
Permalink
PC

Blaine Allen Thacker

Progressive Conservative

Mr. Thacker:

Certainly.

Topic:   GOVERNMENT ORDERS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   AMENDMENT TO PROVIDE TAX CREDIT IN RESPECT OF MORTGAGE INTEREST AND PROPERTY TAX
Permalink
NDP

Simon Leendert de Jong

New Democratic Party

Mr. de Jong:

Mr. Speaker, the basic point I was trying to make is that the scheme before us will not really help the new home owner and that the benefits derived from this program will eventually be capitalized into the cost of housing and increase the cost of housing. Economists have predicted that as much as 95 per cent of the benefit of this program will end up in the hands of land developers and lending institutions.

My second point is that if we are going to make housing more accessible to Canadian people, we should really examine and tackle the reasons why it is not accessible today.

Those are the two major points I wanted to make with regard to accessibility of housing. During the last campaign the New Democratic Party recognized that the average Canadian is having difficulty acquiring his own private home. Yesterday, hon. members opposite suggested that the NDP is against individuals owning their own homes, to which I said that that was total nonsense. In fact, I pointed out that the Saskatchewan government has also acted in that area to make housing more accessible to the people of Saskatchewan. But, as I pointed out, that was done on the basis of the ability of people to pay, whereas the present program does not recognize that and therefore does not recognize a basic principle in the progressive taxation scheme.

During the campaign the NDP suggested the program of reducing the mortgage interest rate to 8 per cent for a family earning $25,000 or less a year or to 9 per cent for a family earning $30,000 a year. We still feel that this is the sanest way of tackling the problem of high interest rates and of accessibility of housing to the Canadian people. We should reduce the interest rate especially for those families which find it extremely difficult to purchase their own homes. In this way we can stabilize the market much more, because when we stabilize the interest rates people will know from one year to the next how much they will be expected to pay and thus can plan ahead. I know planning ahead is a foreign notion to hon. members opposite. They do not like planning ahead. In fact, they are anarchists in a way; they enjoy living from day to day and they do not like to plan, because that is supposed to be socialism and they have an ideological hang-up about it.

We also suggested a cost of living tax credit to help tenants. We suggested also increased expenditures on co-ops and nonprofit housing, to implement more rehabilitation programs, to help fix up older homes in downtown areas, to expand land banks and to stop profiteering. Our criticism of the present proposal is that in the end all it does is subsidize the existing system where windfall profits are being made by a few, and those profits are hardly being used in the country but are being shipped out of the country, thus exacerbating our balance of payments problem.

There is a need for a real housing program, a need to make housing more accessible to many Canadians, especially those in the average and lower income group brackets. The market at present has failed miserably to provide housing for these people. We have been in need of a government agency like CMHC to intervene so as to make certain that these people also have adequate housing. Many other good programs that CMHC was carrying out have already been cut by the former government. I have no illusions that the present government will reverse that trend. In fact, if anything, I am afraid that trend will be continued.

I hope that the government opposite will look at the reason why the cost of housing in this country is higher than it is in the United States; that it will realize that the cost of land is the major reason, and that it will be able to tackle that problem. Because there is no reason why urban land should be

November 22, 1979

more costly in Canada than it is in the United States. I hope that the government will have the guts to say, despite all the various ideologies and differences, "Look, you fellows, housing is essential to the Canadian people. We are going to take housing and urban land out of a system where a few monopolies control the resources, for the maximum benefit. I am sorry, fellows, but this is essential to the welfare of this country."

1 hope the government will have the courage to say, "We are going to require that CMHC ensure that land and housing are available to the Canadian people at the cheapest possible price. We are in a deficit situation and we cannot afford to pour billions of dollars"-it is going to be $6 billion in four years under the present government-"into the hands eventually of the banks and the developing companies. I am sorry, fellows, but nowadays we cannot afford that any longer."

I hope this government will have the gumption to be able, to use their phrase, to bite the bullet and make those hard decisions, not based on their ideology, in fact not even based on the advice of their political and financial contributors, but based on the interests of the Canadian people. 1 hope this government will say, "Look, fellows, this type of exploitation of urban land has to stop because we have to make housing accessible to the Canadian people; this has gone a little too far so we will bring in measures to stop the exorbitant price increase on urban land." If the government were to take such a heroic step, it would win the applause and support of every reasonable Canadian across this country. That is why it is very hard for us, members of the opposition, to support this government in many of its measures.

I do not want an election and I know the people back home do not want one either; but, on the other hand, we cannot afford to vote for programs that are going to make the situation worse because we would then be derelict in our duties to the Canadian people. If the government were to bring forward a program that would effectively reduce the cost of housing and make it accessible to the Canadian people, if they would give us something we could support, then we would vote for their motions. But as it stands now, all we see this to be is not a $6 billion program to help the average Canadian home owner but a $6 billion program to help half a dozen land developing companies and the banks of this country. Therefore, in no way can I support this bill as it stands.

Topic:   GOVERNMENT ORDERS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   AMENDMENT TO PROVIDE TAX CREDIT IN RESPECT OF MORTGAGE INTEREST AND PROPERTY TAX
Permalink
PC

Blaine Allen Thacker

Progressive Conservative

Mr. Thacker:

Mr. Speaker, I rise on a point of order to put a question to the hon. member opposite who just finished speaking. When he was stating his figures he inadvertently used the figure of ninety-eight thousand million dollars, meaning $98 billion, when referring to the companies' assets. I wonder if he could get back to his figures and correct them because it is quite important to those companies. I am sure they wish they had $98 billion worth of assets, but I think the hon. member meant, in fact, $98 million.

Topic:   GOVERNMENT ORDERS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   AMENDMENT TO PROVIDE TAX CREDIT IN RESPECT OF MORTGAGE INTEREST AND PROPERTY TAX
Permalink
NDP

Simon Leendert de Jong

New Democratic Party

Mr. de Jong:

Mr. Speaker, the hon. member is quite correct. In 1973 it was $89 million and in 1977 it was $482 million.

Topic:   GOVERNMENT ORDERS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   AMENDMENT TO PROVIDE TAX CREDIT IN RESPECT OF MORTGAGE INTEREST AND PROPERTY TAX
Permalink
?

Some hon. Members:

Oh, oh!

Mortgage Tax Credit

Topic:   GOVERNMENT ORDERS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   AMENDMENT TO PROVIDE TAX CREDIT IN RESPECT OF MORTGAGE INTEREST AND PROPERTY TAX
Permalink
PC

A. Daniel McKenzie (Parliamentary Secretary to the Minister of National Defence; Parliamentary Secretary to the Minister of Veterans Affairs)

Progressive Conservative

Mr. Dan McKenzie (Parliamentary Secretary to Minister of National Defence):

Mr. Speaker, I welcome the opportunity to participate in the debate this afternoon on this important piece of legislation to amend the Income Tax Act to provide credit in respect of mortgage interest on home owners' property.

Let me touch on the background of this bill. The Progressive Conservative Party was elected on the promise to provide a major tax relief to home owners. This legislation will keep that promise. Actually, we first proposed it back in 1965. Over the years the Liberals have had the opportunity to implement such a plan and they could have got the credit for it. They also had the opportunity to implement a mortgage deductibility plan even before they called the election on May 22. But now that they are in the opposition they are coming up with all kinds of ideas having to do with housing. They have had 17 years in which to come up with these ideas but, as usual, they have other priorities, and helping people with housing is certainly not a priority with the Liberal party. I will talk about that in more detail in a few minutes.

Also effective in the 1979 taxation year, home owners will qualify for two tax credits. The mortgage interest credit will reduce federal taxes payable through a tax credit of 25 per cent of interest payments on a mortgage used to purchase a home or to make major alterations in excess of $5,000. There is a limit of $5,000 on such interest payments for a maximum tax savings of $1,250. The home owner property tax credit will reduce federal taxes payable by a flat $250. That is a commendable start. The program will be phased in over four years. There will be 25 per cent of the benefits available this year and 100 per cent in 1982. The maximum benefit this year will be $375, rising to $1,500 in 1982. The legislation will permit the transfer of credits between spouses.

Over the years the Liberal party has spent large sums of money on housing studies. One of the most comprehensive housing studies ever done was completed in January of 1969. It was the report of the Federal Task Force on Housing and Urban Development. This task force was chaired by the Hon. Paul Hellyer. If the Liberal party had implemented all the recommendations of this task force, we would not be presenting any bill like this today; it would not be necessary. Unfortunately the Liberal party only implemented some minor recommendations of this task force.

The major recommendation dealing with land costs and utilization was not dealt with at all by them. Because this section was not implemented, the Hon. Paul Hellyer left the Liberal party, as he happens to be a man of principle. This recommendation dealt with land speculators, but the Liberal party, being the party of big business, would not want to attack their friends, the land speculators. If they had brought in this second recommendation, land costs would be half what they are today. That would have been a major step toward helping people get into their homes. It was not a priority of the

1598

November 22, 1979

Mortgage Tax Credit

Liberal party because it wanted to look after its friends, the land speculators.

The second recommendation of the task force was ignored completely by the Liberals. In part it read:

The right to own and dispose of property and to take a reasonable gain from one's labours are an integral part of the Canadian tradition. But the task force seriously questions whether such rights can be stretched to encompass situations where the owners of land reap gigantic financial benefit not from improving or working it, but merely by allowing it to lie fallow or in admitted under-use while the efforts of the community around it make such land an ever-increasingly valuable asset.

They pointed out that there is a growing trend to treat these gains as taxable income and so forth. As members of the New Democratic Party mentioned, there was concern over land speculators. If the second recommendation had been implemented the cost of a lot today, and over the last ten years, would have been cut by half.

When I was on the city of Winnipeg council in 1971, I attempted to have a similar motion passed which dealt with agricultural land being held for speculation. Unfortunately I could not convince my colleagues on that point. I guess there were too many Liberals and NDP on the council. Over the years the Liberal party has made it perfectly clear that assisting people to get into houses is not its priority. That is why they are filibustering this bill. Certainly they are making their point. It is very, very clear. They are opposed to assistance to home owners. But I must give them credit. When they want to make a point, they really get it across.

I understand there are approximately 47 more speakers from the Liberal party who want to get up and say that they are against this assistance to home owners. On energy costs they said that we must push Canadian oil prices toward international levels. In their speeches in the past, in page after page they told us that oil must rise to world prices. Certainly they made their point there. They want oil to go to world prices.

I should like to answer some of the concerns of renters about the government's mortgage interest and property tax credit program. For many Canadians, renting is viewed as a temporary condition until they can afford to purchase. A recent survey found that 90 per cent of young Canadians want to own their own homes. This Progressive Conservative initiative will make that dream easier to achieve. Because mortgage interest and property taxes are deductible as business expenses for landlords, already renters are receiving similar benefits. While rents in some provinces have been kept down by rent controls, very little has been done to make home ownership more affordable. The plan has some spin-off benefits for renters. As more Canadians encouraged by the Conservative tax credits move into their own homes, more rental accommodations will become available, thus taking pressure off those people who choose to continue to rent.

It is impossible to meet the needs of all Canadians with one government program. For example, the old age pension does nothing for the young; the child tax credit does nothing for people who do not have children. There is no such thing as a piece of legislation which deals with the entire nation at once.

If it becomes necessary to provide subsidies to renters, it will be done through other means, such as a shelter allowance. The federal government already is involved with provincial governments in the delivery of subsidized housing for low income families, senior citizens and others through the non-profit housing assistance program, the co-operative housing program, the graduated payment mortgages for landlords, and other CMHC programs. The charge that we are discriminating against others is completely false, because there are programs which help people with low incomes and senior citizens.

This program is being financed by passing the benefits of the government's restraint program on to Canadians. Renters are not being asked to pay higher taxes to assist home owners. I listened very carefully to the previous NDP member who spoke on this bill. He mentioned all the good things the NDP wanted to do and have done in the past. But I want to point out to him that the Conservative government was elected in October of 1977 in Manitoba. They had to scramble to put a housing program together with the federal funds that were available, so the NDP were not using federal funds to assist home owners. The Conservative government had to scramble to get a program together toward the end of 1977 to use the funds which the NDP would not use to assist home owners in Manitoba.

Topic:   GOVERNMENT ORDERS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   AMENDMENT TO PROVIDE TAX CREDIT IN RESPECT OF MORTGAGE INTEREST AND PROPERTY TAX
Permalink
?

An hon. Member:

Don't bother talking about the NDP. They have left.

Topic:   GOVERNMENT ORDERS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   AMENDMENT TO PROVIDE TAX CREDIT IN RESPECT OF MORTGAGE INTEREST AND PROPERTY TAX
Permalink
PC

A. Daniel McKenzie (Parliamentary Secretary to the Minister of National Defence; Parliamentary Secretary to the Minister of Veterans Affairs)

Progressive Conservative

Mr. McKenzie:

There are no NDP members in the House at all. There are a couple of Liberal members. Perhaps some of them are watching these proceedings on television in the lobby. I hope they get my message. In 1978 there were funds available in Manitoba. The Conservative government of Manitoba used all the funds in 1978 to assist its home owners. I have a sheaf of various programs of the Conservative government in Manitoba to assist^senior citizens, home owners and people with low incomes. They have programs to help rebuild the run-down downtown areas. There is lots of assistance in other areas. We are not discriminating against anyone with this particular piece of legislation, Bill C-20. To say otherwise is nothing but a lot of silly nonsense.

There are programs to assist other people. That is further evidence of the fact that we do not discriminate against other people. There are rural and native housing programs, public housing assistance, private non-profit housing corporation assistance and the National Housing Act which offers various forms of assistance to privately owned, non-profit, low income rental housing. People on low incomes and senior citizens are not being neglected, as members of the New Democratic and Liberal parties are trying to make out. They indicate that it is a discriminatory piece of legislation. It is not discriminatory at all. It is just another lever to give further assistance to home owners and potential home buyers. In the past the Liberals have agreed with these programs to assist home owners but now they want to filibuster this bill.

November 22, 1979

There are also rehabilitation programs, and assistance for non-profit corporations which are eligible under the Residential Rehabilitation Assistance Program. There is assistance for non-profit co-operatives, and there is the Community Services Program with which we are dealing. The federal-provincial governments will sign an agreement covering the operation of the Neighbourhood Improvement Program, the Municipal Infrastructure Program and the Municipal Incentive Grant Program, now consolidated into the Community Services Program for 1979-1980. The program will start in 1979 with a funding level of $150 million. As of January 1, 1980, it will increase to $250 million.

The hon. member for Winnipeg-Fort Garry (Mr. Axworthy), who is the official spokesman for housing in the opposition party, has stated that the bill discriminates against others in terms of assistance. That is completely false. I have read into the record programs where other groups are getting assistance, and Bill C-20 will merely assist another group of people. His negative attack on this bill is ridiculous. There has also been a new program announced for Manitoba. Under this program 350 family units will be built and 600 units for senior citizens. They have allotted $14 million for the work to be done this year. This is another step forward to assist home owners, and it is rather ridiculous for anybody to speak against it. It is merely another program, along with many others, to assist home owners.

Coming back to the renters again, recognizing that rising rents coupled with fixed incomes put terror into the hearts of Manitoba's senior citizens, the Conservative government in Manitoba has wisely designed a new rent subsidy program which will help 9,000 elderly for the relatively low price of $3.5 million. That is another indication that renters as well as home owners are receiving assistance.

It has also been mentioned recently that mortgage rates are being reduced. This will certainly assist the firms which have recently announced that they will drop their mortgage rates one or two points. We are making progress. There have been a lot of other ridiculous charges made by the Liberals and the NDP, one of which is that the program benefits only the rich. Last weekend I met with a constituent of mine whose income is about $20,000 a year. Both he and his wife work, and they are managing to keep the bungalow going and to pay the mortgage. He said that he had to laugh at the Liberals for calling him rich because he made $20,000 a year. He said that the government is trying to give people like him a little tax relief, but the Liberal party is calling people like him rich.

The tax proposals are not intended to act as an income redistribution of welfare programs. Their primary purpose is to provide tax refief to existing home owners and to provide incentives that will make home ownership more attractive to potential home buyers. The program is not geared to the rich but, rather, at the average working Canadian.

I have covered how the senior citizens and low income people are getting assistance. This program is for the average working Canadian. The largest single category of home

Mortgage Tax Credit

owners, almost 35 per cent, are skilled or unskilled labourers. The top income category, owners and managers, account for little more than 6 per cent of all Canadian home owners. Clearly, this indicates that it is not a program for the rich.

Another question which has been raised is the question about regional differences in that the program does little for Quebec, which has fewer home owners, and little for Atlantic Canada where most homes are already paid for. The answer is that the tax proposals are not intended as a federal-provincial transfer program. High levels of home ownership in Atlantic Canada mean that larger numbers of people will qualify for the property tax credit. One of the hon. members from eastern Canada stated yesterday that eastern Canada would not benefit, but it will benefit. Quebec home owners face the highest property taxes in Canada and taxes of $1,500 for an average home are often the case. Thus, there is a great need for property tax relief. There are more potential home owners in Quebec, where the construction unemployment rate was 22 per cent in 1978. A significant portion of the Canadian furniture industry is located in Quebec, which is an industry that will benefit significantly from increased home ownership.

There have also been charges that this bill will have an impact on provincial revenues. It has been stated that the expected cost of $2.3 billion by the fourth year does not take into account the additional cost to the provinces, which base their revenues on the percentage of the federal tax, and that this is intruding into provincial jurisdiction. The answer is no. The credit is against the federal share of income taxes payable. This program does not affect provincial revenues. Some provinces, such as Saskatchewan, may wish to offer similar relief. This is entirely at the option of the province concerned, but most of the provinces have excellent programs now. This program is merely an additional one which will give more assistance to home owners. I find it strange that the parties opposite would oppose this program, but we are used to this, particularly from the Liberals.

There have also been comments to the effect that this program will have an impact on inflation by increasing the demand on both housing and mortgage funds, thereby increasing the cost of inflation and causing further inflation. The answer once again is no. With regard to increasing the demand for housing and raising prices, it should be noted that at present there is a very substantial inventory of unsold housing units in Canada. Furthermore, it is expected that because of unused capacity in the housing industry, it would be able quickly to respond to increased demand by increasing the supply. The construction industry can build 275,000 units annually, yet housing starts are only expected to average 196,000 units this year and 205,000 in 1980. Those figures are based on forecasts by the Conference Board in Canada.

In terms of excess demand for mortgage funds, the recent low level of housing starts has created a situation where lenders are faced with a surplus of funds. That surplus would have to be exhausted before market factors cause interest rates to rise. 1 mentioned earlier that in some instances mortgage

November 22, 1979

Mortgage Tax Credit

rates are being reduced. I think that we can look forward to further reductions in the near future.

Another question which has been raised with regard to interest rates is that by raising the prime lending rate, we have wiped out any potential benefits. That is not correct. Higher interest rates are necessary in the short term to stop investment from leaving Canada for the United States, where interest rates are continuing to rise. If large sums of capital leave the country, then the dollar will fall resulting in increased inflation. As to the statements by members of the official opposition that the policy of the government is to raise interest rates for no apparent reason, those statements are totally false. It is because of the Liberal policies of uncontrolled spending and government growth that we have the largest debt of any country in the western world, and this has caused interest rates to rise.

The debt has to be paid off, and there is no escape. It would be very nice if, when a new government is formed, all past debts were wiped out, but that is not the way it works. The Canadian people have been trapped by the Liberals into paying off this ridiculous debt which is costing the taxpayer in carrying charges alone $23 million a day. As mortgages are usually issued on a longer-term basis, such as five years, mortgage rates are only affected by fluctuations in the bank rate.

There has also been a question raised with regard to refinancing. It is said that for people who already own their own homes, what is to stop them from taking out a $50,000 mortgage and enjoying the tax deduction while reinvesting the funds? There have been safeguards built into the plan to prevent it from being abused. Taxpayers will not be able to obtain increased benefits by taking out larger loans on their existing homes. The only exception to this will be loans of $5,000 or more acquired for the purpose of major alterations or renovations to a home.

A number of surveys have been conducted by members of the House regarding this plan. The results show that between 80 per cent and 90 per cent of the people are in favour of the plan. Mr. Speaker, we are elected to work for and assist the people of Canada, so if 90 per cent want a particular program or some help and we can give it to them, I do not know why we should argue with them. The Liberals want to argue with them, but they have strange ways.

The latest Gallup poll shows that on the average across Canada, 76 per cent approved of our programs. I appreciate being on the side of 76 per cent of the Canadian people. Apparently the Liberals want to be on the side of the 13 per cent that disapprove, so they are speaking for that 13 per cent. The Liberals, as the official opposition, speak for the 13 per cent which is opposed to some tax relief. That is very interesting.

I want to give credit to the Minister of Finance (Mr. Crosbie), Mr. Speaker, for the excellent speech he made on November 19 when he introduced the bill and explained it in complete detail. I was interested in a lot of the false charges

made by members of the opposition, particularly that made by the hon. member for Ottawa Centre (Mr. Evans) who said that in the United States they want to get out of a similar plan. I have discussed this with politicians and friends in the United States and have discerned no movement to get out of their plan. Indeed, as the Minister of Finance indicated, the program in the United States has recently been expanded.

The American politicians that I have come in contact with and other people I have met on my travels have been absolutely amazed that we do not have such a plan here. They could hardly believe it when I told them that we do not. We know that the Liberals are slow, of course, but now that we have introduced this plan Canadians will enjoy the same benefits that Americans have enjoyed for well over 100 years.

As the Minister of Finance pointed out at page 1464 of Hansard:

The main purpose of this plan is to ease the burden of purchasing and meeting the costs of a home, to stimulate the Canadian construction industry which badly needs stimulus after the shape it was left in by hon. members opposite-persons opposite. It will create jobs for those who work in construction and related industries. That is the purpose of the plan.

During the last election campaign the Liberals charged that this plan would drive the price of housing up. That is absolutely ridiculous, Mr. Speaker. Builders are having problems disposing of homes now. If they start playing tricks by adding another $5,000 or $10,000 on to the price of a home, they will be stuck with that home and eventually go bankrupt. I have met with them and told them that the Liberals said they were going to increase the price of homes. They said, "That is absolutely ridiculous. We are looking forward to your plan. We are not raising the price of our homes as it would just defeat the purpose of the whole plan." They would be the big losers, Mr. Speaker. Some of them are going bankrupt now because they cannot sell their homes. Many young Canadians have reached the point where they have the money, they can arrange the mortgage, but then something happens and they cannot afford to go into their homes. This plan will now assist many of them. They will not always be plagued by some other change in the economy.

During the debate on November 19, the hon. member for Winnipeg-Fort Garry said, as reported at page 1470 of Hansard:

When you cut through Bill C-20 and look at what it actually has to say to the Canadian public, you find it says that we are going to discriminate against close to three-fifths of the Canadian public and that we are going to use money badly, unwisely, and inefficiently in dealing with our economic problems.

We are not going to use money badly, Mr. Speaker. This program means that home owners will pay less money to us. I do not think they are going to use that money badly, Mr. Speaker. Obviously, the hon. member does not understand the bill or the intent of the bill. To say that it discriminates against three-fifths of the people is totally false. We are working for the other two-fifths now. If one wants to use his figures, then this program is going to assist the two-fifths who are not receiving assistance now. Three-fifths and two-fifths make 100 per cent. By the time the program is fully implemented, we will have covered 100 per cent of home owners with some form

November 22, 1979

of assistance, according to the official spokesman for the Liberal party on housing.

I do not want to take my full time on this bill, Mr. Speaker, but I should like to make one small observation. Referring to the government, the hon. member for Winnipeg-Fort Garry wound up his remarks by saying, as reported at page 1477 of Hansard:

It is obviously still in need of a great deal of assistance and, Mr. Speaker, we are pleased to provide it.

We will welcome any assistance, especially if it is constructive, but I think it should be offered in committee. The sooner we pass this bill and give some tax relief to the two-fifths of Canadians that the Liberals are concerned about, the sooner we will be doing a great service to the Canadian public.

[ Translation]

Topic:   GOVERNMENT ORDERS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   AMENDMENT TO PROVIDE TAX CREDIT IN RESPECT OF MORTGAGE INTEREST AND PROPERTY TAX
Permalink
LIB

Céline Hervieux-Payette

Liberal

Mrs. Celine Hervieux-Payette (Mercier):

Mr. Speaker, allow me to make a few comments on Bill C-20 which, in my opinion, is of utmost importance in view of our present economic hardships. During the election campaign our colleagues were decrying the amount of our deficit, yet today they are ready to add to that deficit another $2 or $3 billion. In view of this reversal, I think we must seriously examine the objectives of this piece of legislation rather than passing it expeditiously, as our colleagues would certainly wish.

First of all I would like to make a few comments on the type of people who live in the riding of Mercier. These people, who like the rest of Canadians will have to foot the bill, are for the most part tenants and will therefore not be enjoying the benefits provided by this piece of legislation. Given that fact, Mr. Speaker, it is my duty to consider carefully this legislation and see what we can do to help those who will have to bear the costs of Bill C-20, which will indeed require large investments.

I really must refer briefly to the housing situation in Canada at the time when the new government came to power on May 22, since this bill is designed to remedy the housing situation very efficiently. I am not saying that housing must not lend itself to some measure of government assistance, but I do believe the House should realize that, according to figures supplied by the widely recognized organization, the OECD, Canada then ranked first in terms of number of persons per room; that according to recognized international standards. Austria, Belgium, Denmark, Finland, Germany, Luxembourg and other countries were included in that study. We must also note that Canada ranked first among those nations, again according to the OECD, in terms of the number of housing units available to its citizens. It ranked second in number of bathroom pieces and fourth in number of owners. 1 believe those figures prove beyond doubt that the former Liberal government had a coherent housing policy and had taken into account the evolution of the situation in that field.

Allow me, Mr. Speaker, to remind the House that it was a Liberal government which passed, in 1946, the first housing act in Canada. That act provided $25 million and about 300

Mortgage Tax Credit

jobs for the implementation of our first national housing policy. Later on, in 1954, the government implemented other measures providing social housing, mortgage insurance and other benefits to help Canadians in all parts of the country and not just one sector of the population. In 1964, this act also provided for increased aid to municipalities and provinces and enabled Canada to reach the position it now holds in the field of housing.

Despite Canada's privileged housing situation compared to other countries, the Liberal party does not deny the fact that there are problems in that field. At this stage I think we must look for the figures which are indicative of where the government should intervene to help people with regard to housing.

First, suffice it to know that right now and especially since 1978 the number of families living in single family units has been increasing at a rate of 4.5 per cent while apartment type housing, the one which makes up most of my constituency, has declined by 25 per cent. My colleague said earlier that with $155 million the government intends to improve the situation in the field of housing. Recently the minister himself recognized there were serious problems in housing and that he would have to intervene. In a speech dated October 22 the minister in charge of housing, the Minister of Regional Economic Expansion (Mr. MacKay), stated before the Canadian Real Estate Association, 1 quote:

The shifting balance between the rehabilitation and conversion of the existing housing stock and the production of new housing could mean an improvement rather than a reduction in the contribution of the industry to our over-all economic performance if we remain alert to these opportunities.

The minister recognizes therefore that the funds which the government must spend now in housing must be directed as a priority to the rehabilitation and renewal of existing houses which are aging and need these improvements, and to apartment construction. I need only remind hon. members that because of a demographic phenomenon we have witnessed a significant increase in the number of single-family dwellings, where an average of some 235,000 units were built every year over the past ten years. But because of a decrease in this area resulting from the same demographic phenomenon, we can expect a reduction in the demand for new starts in forthcoming years. Bill C-20 has therefore not been introduced to meet new requirements in the future, but to meet needs which may have existed only in surveys conducted by the Progressive Conservative Party during the last election.

I should like also to remind the government which introduced this legislation that this bill should benefit the objectives and interests of all Canadians, and not only those Canadians who, according to our colleague, fall into higher income brackets. But I do not think that it is directed exclusively to the people in higher income brackets. There are other Canadians

November 22, 1979

Mortgage Tax Credit

who are paying taxes but who will be excluded from this housing assistance scheme. We, on this side of the House, suggest therefore that all Canadian taxpayers should be entitled to some sort of financial assistance in housing, and not only such and such a category of Canadians. In this connection 1 should like to quote a recommendation which appeared on page 38 of a report published by the Toronto Real Estate Board:

Since it has been established that any subsidy to one group is always at the expense of another, government, in the administration of any housing program, should assure the equitable distribution of assistance to all Canadians, not just those who are organized and established to take advantage of any program that comes along.

The Toronto Real Estate Board is probably made up of people known to members across the House. Part II of this document, at page 38, reads as follows:

Canadians are, by and large, well-housed.

I think I have proved that by statistics I have provided to you. This section continues:

There is an over-all reduction in total requirements for new housing.

The recommendation by the Toronto Real Estate Board reads as follows:

Governments should abandon the idea that they must stimulate new residential construction to fuel the economy.

Mr. Speaker, those comments are coming not only from the Liberal party but also from a responsible group which entitled its study "How to Build Canada Better". I think they are experts making recommendations to us and, as a citizen and a representative of a riding, I must take into consideration the advice of experts and not rely only on election promises before making a decision that will involve rather substantial amounts of money.

I would like to emphasize the absolutely iniquitous nature of this legislation, in that it will favour only one group to the detriment of a poorly organized minority. This minority is not supposed to voice its opinion and yet its concerns are expressed in the Toronto Real Estate Board report.

I do not have to remind you, Mr. Speaker, that government members were the first ones to scream that we had a huge deficit, and now those same people would want to add to the deficit another $2 billion or $3 billion of spending. I think Canadians are responsible enough and have enough maturity, Mr. Speaker, not to believe that when additional spendings of some $3 billion take place, they will not be footing the bill. However, I would point out that the bill will be paid by everyone, but only a small group will benefit from it.

Topic:   GOVERNMENT ORDERS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   AMENDMENT TO PROVIDE TAX CREDIT IN RESPECT OF MORTGAGE INTEREST AND PROPERTY TAX
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?

An hon. Member:

Quite true.

Topic:   GOVERNMENT ORDERS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   AMENDMENT TO PROVIDE TAX CREDIT IN RESPECT OF MORTGAGE INTEREST AND PROPERTY TAX
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LIB

Céline Hervieux-Payette

Liberal

Mrs. Hervieux-Payette:

The right hon. Prime Minister (Mr. Clark), in answer to a question I put to him in the House earlier this week, said:

Mr. Speaker, as I just stated, we are prepared to consider serious amendments to our bill. However, we hope there will be a determination on the part of opposition parties to support speedy passage of this bill so that Canadians can benefit from our tax credit program next year.

Mr. Speaker, statistics show that a property costing $50,000 in May now has an additional $1,800 in carrying costs. The occupant will now receive a $375 benefit from the program, while he or she will have to pay some $1,500 extra rent, and in this I rely on the Minister of Finance (Mr. Crosbie) to compute the precise extra cost from the higher interest rate. I therefore submit there is no emergency to pass such legislation without seriously considering, as the Prime Minister suggested, all its implications, to ensure that all Canadians get housing benefits.

Let me refer to some statistics concerning the benefits and the people who would get them. I would remind the House that 46 per cent of Canadian home owners have no mortgage and will therefore receive a modest $65 or so. Of the 4,800,000 other Canadian owners, 2.2 million have no mortgage. If to those 2.2 million we add the 3.2 million Canadians who pay rent, we get a total 5.4 million Canadian families, of the total 7.9 million, who will receive no reduction and no housing benefit at all. If the Prime Minister seriously asks us to be serious, certainly he will consider the forthcoming Liberal amendments destined to help all Canadian citizens and families in housing, because those citizens will not be content with the $150 million or $155 million referred to earlier by my colleague, when $3 billion are involved.

Besides, the Minister of Finance did say that 3.8 million households would benefit from this legislation whereas the figures gathered by Statistics Canada show that only 2.6 million will. I think the minister would be well advised to review his calculations because there is a difference of 1.2 million households in that study. If those studies are made on the basis of 3.8 million, I think that for now the benefits everybody is expecting will go to an even smaller number of households than the one predicted by the minister.

And again 1 would like to remind the minister that tenants represent 40 per cent of the population. Therefore those are 40 per cent of people who will not have access to the program while paying income tax to Ottawa without getting any benefit. Of course some measures were taken in the past to help construction of rental housing. However, it should be realized that there has been a decline in construction since 1977 and that the private sector, which is supposed to settle all problems in Canada, according to our colleagues opposite, has not taken the necessary steps to take care of those problems. So if the government wants to tackle the problem, I think it should seriously consider this matter before giving some advantages to only some of the people.

Secondly, that program will not be effective for individuals in the low income brackets. You will be told, of course, that

November 22, 1979

those people do not contribute much to the Canadian economy, but 1 think that even if they do not pay income tax, they are consumers who contribute to the operation of an economy such as ours. We must be aware of the fact that the amount they must earmark for their rent is excessive in comparison with the average person. They will not derive any benefit from the $3 billion because we find few owners among the lower income brackets. As my colleague said a while ago, those who have access to property are those who are fairly well off. Then, as a result of the new interest rates, they will of course be unable to acquire property in the months or years to come, if conditions remain unchanged. In any case, I would like to note, Mr. Speaker, that 200,000 families will not benefit from the plan proposed by the government.

Senior citizens are another group against whom the bill discriminates. Only 38 per cent of senior citizens or older households are tenants. Therefore, most of them are home owners. What are they offered in return for their contribution to the development of Canada? This program offers only a few crumbs to people who have built our country. Because most of them have low incomes, these people will not be eligible for this program since they will have been wise enough to finish paying for their homes and will no longer have a mortgage. I believe that there is an enormous inequity in this respect and that the government will have to provide subsidies for these people in its budget if it wants us to pass Bill C-20. I believe that these people have contributed enough to the economy of Canada for them not to be forgotten. By increasing energy costs and forgetting to cover this aspect of the housing problem, the government will only worsen the difficulties faced by older people if they want to keep their homes. They will have to sell their house because of the increasing heating costs and the persistently high cost of owning their own home.

Mr. Speaker, women home owners, even though they form a very small minority, are another category which will not benefit from this plan. In 1977, 8.5 per cent of them had a mortgage with the Canada Mortgage and Housing Corporation or another institution. It should be noted that in view of the income levels of these people and in view of the fact that few women are home owners and that most are tenants, they will, through their work, contribute to finance this program and suffer discrimination. They will not be able to benefit from the housing credit even though they have more financial problems than any other group in our society.

Mr. Speaker, I wish to draw your attention to one of the most serious inequities of this legislation, the distribution of funds allotted to that program. While the province of Quebec accounts for 27.2 per cent of the Canadian people, it should be noted that it will benefit from only 18.7 per cent of this program. Speaking of co-operation with the provinces and openness on the constitutional issue, the Prime Minister should ask his Minister of Finance to review this legislation in order to correct this obvious inequity in the allocation of funds. Of

Mortgage Tax Credit

course, I note that Ontario, for electoral purposes, will get 45.4 per cent while it contributes only 36 per cent. That province is then the big winner of this program. The purpose of my remarks is not to emphasize the fact that this program favours one group or another or a province in particular but to correct the inequities of legislation that should try to help people who most need it. I think that the province of Quebec needs help in the housing field, and even if Quebeckers have chosen to be tenants rather than home owners as a way of life and on a cultural level, and if this is not the first and most essential value for Quebec families, they should not be forgotten in a program as important as this one.

Farmers make up another group of people who will be terribly disadvantaged by this program. I refer you to a report of Statistics Canada entitled "Home Ownership and Mortgage Debt in Canada in 1977" published in July, 1979, which mentions that in rural areas only 15 per cent of home owners have a mortgage. Then, those people who contribute to the public treasury through their work, their taxes, to help our economy will get only a 15 per cent share from that program. Yet we note that this legislation benefits urban centres mostly and particularly a certain province that will get nearly half of the program. I think that such a distribution prevents us from approving this legislation under its present form.

Indians represent another group which is a small minority but which is also entitled to its share of taxes in Canada. They have a special home ownership program that was established by the previous government. This measure cannot be of much benefit to them since they were just starting to buy houses. They will have to pay the high interest rates now in force and in the end it will be even more difficult for them to become home owners.

Mr. Speaker, I come back to the cost of this measure. We are told that it will cost $575 million for the first year. I cannot help thinking about the cost of the Canada Works program. The two programs bear a strange resemblance. Their figures are almost the same. Mr. Speaker, I am against programs that the party in power wants to implement at the expense of others which are essential for job creation. I want to point out that in order to buy a house and pay a mortgage, one must have a job. Referring to last year's statistics, we can see that due to the job-creation strategy implemented by the Liberal government, the rate of unemployment declined steadily during 12 consecutive months. As we are about to pass this bill but have not done so yet we notice according to the latest statistics that the unemployment rate has begun to increase again. As the Toronto Real Estate Board indicated, this measure is very unlikely to reduce the unemployment rate since needs do not exist in this area at the present time.

If any money is to be spent on this housing program-an approach which the official opposition would favour-it should be aimed at improving this program and to that end we should introduce important changes to this bill. According to the

Topic:   GOVERNMENT ORDERS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   AMENDMENT TO PROVIDE TAX CREDIT IN RESPECT OF MORTGAGE INTEREST AND PROPERTY TAX
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PC

William Gordon Ritchie

Progressive Conservative

Mr. Gordon Ritchie (Dauphin):

Mr. Speaker, I rise to speak on Bill C-20 with some interest. I believe it is a far-reaching bill and points the way to a new era in our thinking. Essentially it is a bill that will cut the enormous power of the central government here in Ottawa and return it to the local level it never should have left.

If we survey what has happened to our country in the last 25 years, one of the things that stands out is the obvious expansion of power of the federal government. In defiance of the BNA Act, they took over the essential direction of this country in a financial way from the provincial and municipal authorities, using the tax system, though specifically exempted under the BNA Act, and assigned to the provinces responsibility for health, welfare and, in large measure, education.

This accrual to the federal government of vast amounts of money through the tax system, namely the income tax, the gathering into Ottawa of these vast sums of money, their redirection through the provincial authority and their expenditure is, in part, responsible for the fiscal disaster that we are now facing in this country. Indeed, anyone who cares to listen would describe this rich country, which has not experienced severe internal or external turmoil, as broke.

November 22, 1979

Twenty-five years ago the financing of health, welfare and general education was very much under the control of local authorities. The money was raised and spent at their discretion. What is ahead of us in the budget? It must cope with the so-called nine envelopes: fiscal transfers to the provinces, $3.6 billion; public debt charges, $9.8 billion; economic development and support programs, $8.4 billion; social affairs, general welfare development-

Topic:   GOVERNMENT ORDERS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   AMENDMENT TO PROVIDE TAX CREDIT IN RESPECT OF MORTGAGE INTEREST AND PROPERTY TAX
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PC

Geoffrey Douglas Scott

Progressive Conservative

The Acting Speaker (Mr. Scott, Victoria-EIaliburton):

Order, please.

Topic:   GOVERNMENT ORDERS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   AMENDMENT TO PROVIDE TAX CREDIT IN RESPECT OF MORTGAGE INTEREST AND PROPERTY TAX
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November 22, 1979