May 29, 1984

GOVERNMENT ORDERS

NATIONAL HOUSING ACT

LIB

Roméo LeBlanc (Minister of Public Works; Minister responsible for Canada Mortgage and Housing Corporation)

Liberal

Hon. Romeo LeBlanc (Minister of Public Works) moved

that Bill C-37, an Act to amend the National Housing Act, be read the second time and referrred to the Standing Committee on National Resources and Public Works.

He said: Mr. Speaker, as Hon. Members are aware, the Government's housing policies serve all Canadians, whether they are home owners, tenants, members of housing co-operatives, et cetera, or whether they live in urban or rural areas. Federal programs are aimed at providing for the needs of people in all circumstances, be they women raising families on their own, the elderly, the handicapped, or people who cannot provide for themselves within the market system and need help. All these housing needs are of continuing concern. Before too long there will be opportunities to discuss some measures to deal with these problems.

The legislation before us today, Bill C-37, would give effect to the Mortgage Rate Protection Plan which was announced by my colleague the Minister of Finance (Mr. Lalonde) in his Budget address. Since the program was put forward on Budget night, there has been a fair amount of discussion about it in the news media. Hon. Members, as well as the general public, are somewhat familiar with its contents. They are essentially the same as those announced by the Minister of Finance.

The premium would be in the order of 1.5 per cent for the first $70,000 of the mortgage debt or the face value of the mortgage if it is less than $70,000. Claims will be paid to compensate for some of the additional costs related to an increase in mortgage interest rates at the time of renewal. There is no payment for the first two percentage points of increase. That is what I would call the deductible. After that, the program will pick up 75 per cent of the increase up to an additional ten percentage points.

The protection period corresponds to the basic term of the mortgage. A five-year mortgage can be insured against increases occurring during the five years following renewal.

Since interest rates can be changed during the first five years of such a mortgage and the protection covers the next five, the borrower is, in effect, protected for ten years. There will be opportunities, of course, at committee stage of the Bill to discuss detailed provisions. We will be happy to provide Hon. Members with explanations they may require.

I would like to speak for a few minutes today about some of the principles involved in this legislation. I would like to make clear at the outset that this is not a subsidy program. The Mortgage Rate Protection Plan operates on the principle of user-pay. In other words, the premium charged is intended to cover any claims which are likely to be made against the program and the cost of operating the business. The Government stands behind the program's obligations, but it is not expected to put any drain on public funds.

In that regard it is different from the Canada Mortgage Renewal Plan which was introduced for quite a different purpose some years ago. The Mortgage Renewal Plan was designed to give temporary help to Canadian households that found, when they came to renew their mortgage, that they would have to make monthly payments amounting to more than 30 per cent of their incomes. In those circumstances home owners received a straight federal contribution of up to $3,000 to bring their payments down to a manageable level. Although the vast majority of Canadian home owners coped with rising interest rates without any help from the Government, some 21,000 households did receive help under the Canada Mortgage Renewal Plan and for them it was a timely and effective assistance.

The new program, the Mortgage Rate Protection Plan, is a new and unique kind of assistance. It helps home owners to help themselves by making provision ahead of time to reduce the impact on the family budget if interest rates should rise more than two percentage points above the original rate of the mortgage. Another principle which should be recognized, Mr. Speaker, is that the program is not intended to compensate home owners for the full amount of every increase in their mortgage interest rate. That is why the home owner is expected to absorb the first two percentage points of increase and one-quarter of the remaining additional cost up to 10 per cent.

There is one other important feature which I would like to draw to the attention of Hon. Members. I want to emphasize that the provisions of this plan will be retroactive to March 1, 1984, as indicated by the Minister of Finance in his Budget Speech. This means, in effect, that regardless when the Bill is enacted into law, anyone who entered into a mortgage or renewed a mortgage after March 1 is eligible to take part in the program. If, for example, a home owner took out or renewed a mortgage on April 15, he or she may apply for

May 29, 1984

National Housing Act

coverage under the program as soon as it becomes law. Any claim will be based on the market mortgage rate prevailing on the day of that application, in this case April 15, the day the mortgage was entered into.

The Mortgage Rate Protection Plan is a protection against unaffordable losses. Some of the experiences which home owners have undergone in recent years with high and volatile interest rates have created a good deal of anxiety and shaken confidence in home ownership as a secure investment. The plan is designed to relieve that anxiety and to restore confidence in the housing market.

In that connection, Mr. Speaker, I would like to mention one other feature of the Bill which relates to mortgage and home owners' security. As the Minister of Finance mentioned on Budget night, there is widespread feeling that longer-term mortgages, mortgages to be renewed, say, every ten years instead of every five years or less, would contribute to the stability and growth of the building industry and alleviate people's worries about sudden disastrous changes in interest rates. One way of encouraging longer-term mortgages, the Minister of Finance suggested, would be a system of mortgage-backed securities. The Bill now before us facilitates the introduction of such a system by private enterprise. My colleague, the Minister of State for Finance (Mr. MacLaren), will speak on this aspect of the legislation before us. [Translation]

Mr. Speaker, I think the vast majority of Canadians share my view that if the economy is given careful direction, we can be optimistic about our chances in the long term. However, it is no use pretending we live in a vacuum. Canadians cannot be insulated from the economic developments and realities in other countries and in the rest of the world. Since it is impossible to guarantee interest rates, we are offering a system that, if it performs as we expect it to do, will help us to survive or at least to keep our losses to a minimum.

One other purpose of this Bill, Mr. Speaker, is to serve people who find themselves in a very different position, people in the rural and outlying parts of the country who are in urgent need of safe and healthy shelter. For these people, the amendments which this Bill contains will strengthen the helping hand of the federal Government and allow us to act more quickly and effectively to help rural and native people achieve the cherished goal of so many Canadians, a home of their own. Furthermore, it will allow us for the first time to bring this urgently needed help to all qualified Canadians regardless of the province in which they happen to live.

Mr. Speaker, despite the fact that Canadians have some of the best housing in the world, there are still more than 600,000 homes in this country which are substandard. People are living in overcrowded conditions. Some are living in homes that are

in a poor state of repair and for which they pay too much money. I am sure most Members of this House will agree this is unacceptable.

The Rural and Native Housing Program was implemented in 1974 and is intended for communities of less than 2,500 people. Forgivable loans are awarded for the purpose of rehabilitating homes and making them adequate from a health and safety point of view, and special loans are arranged for urgent repairs, especially before the onset of winter.

But the main emphasis has been on helping people to acquire their own homes by subsidizing mortgage payments and taxes and making a small allowance for utility costs.

The rehabilitation and repair services are funded solely by the federal Government. The Home ownership assistance and the small amount of rental assistance provided must, by the present law, be cost-shared with the provinces according to the terms of the National Housing Act.

While the program is intended to help all low-income people living in the designated areas, people of native ancestry- Metis, non-status Indians and Indians who live off the reserve-are unquestionably the most in need. They are among the worst housed people in Canada. Lack of decent housing is spoiling their health, shortening their lives and hampering their efforts to educate themselves. I can say, however, that the situation is not without hope. Approximately 150,000 homes have been acquired or rehabilitated under the Rural and Native Housing Program since it began ten years ago. I expect an additional 22,000 homes will be provided under that program during the current year.

Some improvements can be introduced within the terms of the legislation already approved by Parliament, but some very important changes can be effected only by the passage of the amendments to the Bill now before the House.

Perhaps the most important change is the amendment dealing with provincial participation. The Act now requires that assistance for home ownership under the program can be provided only on a federal-provincial cost-shared basis. This requirement has proven to be a serious drawback. I am inviting Hon. Members now to rectify the situation. Provincial participation in home owner assistance has been, I am sorry to say, somewhat haphazard. Prince Edward Island has not participated in this aspect of the program since 1977; New Brunswick withdrew from the program in 1983; British Columbia withdrew in 1984; and Quebec has never participated, although, to be fair, I recognize that the Government of the Province of Quebec has done a fair amount of work in the area addressed by this part of the Bill.

According to the 1981 census, more than 40 per cent of the rural households in need are in the four non-participating provinces. Even those provinces which are participating have specified terms and conditions under which they would not provide certain kinds of assistance to certain groups of clients.

May 29, 1984

In some cases, even with the best will in the world some provinces could ill afford their share of the cost.

Whatever reasons the provinces may have had for declining to participate, or for participating in a limited way, their decisions have made it impossible to achieve the original objectives of the Rural and Native Housing Program. I have given some importance to that part of the Bill because, although less dramatic than the Mortgage Rate Protection Plan, for a population which suffers the most from its present housing conditions, that part of the legislation is important.

Most of the provisions of the Bill before us regarding the Mortgage Rate Protection Plan and the mortgage-backed securities have been known for some time. They have been evaluated and publicly approved by organizations representing builders, investors, et cetera. The provisions of the Rural and Native Housing Program are also well known and I think respected by all Hon. Members who have an interest in social housing legislation.

The most significant aspect of the Bill is to make its provisions, for the first time in history, available to all Canadians. In the circumstances, I have no hesitation, in commending this Bill to the House for consideration. Hopefully, there will be a disposition to send it to committee where it can be fully discussed and given reasonably rapid passage.

Topic:   GOVERNMENT ORDERS
Subtopic:   NATIONAL HOUSING ACT
Sub-subtopic:   MEASURE TO AMEND
Permalink
PC

Roch La Salle

Progressive Conservative

Hon. Roch La Salle (Joliette):

Mr. Speaker, I must say I have a special interest in the legislation presented in the House this morning by the responsible Minister.

First of all, I should emphasize that on this side of the House, my Party, which formed the Government in 1979, made a very specific proposal at the time to cope with the problems and dangers we were expecting even then. It is with regret that I must say in the House today that this Government prevented us from offering a guarantee, a homeowner-ship plan, when we introduced a bill that would provide a tax credit to help homeowners, who as a result of the present Government's refusal to co-operate, experienced far more serious difficulties in subsequent months and years.

Mr. Speaker, I might add that the Progressive Conservative Party has also been concerned about improving the situation in the construction industry and giving thousands of Canadians a chance to own their own homes, and we expressed that concern in the proposal we made at the time. We have maintained our interest in these problems today, Mr. Speaker, and quite properly so, because we all know how much Canadians have suffered and the problems experienced by the construction industry, and the House is also aware that for millions of Canadians, the accompanying insecurity became almost unbearable at a given point.

I think the Minister will understand from our questions and our attitude in the House that we are very much interested in

National Housing Act

this Bill and that with him, we are very anxious to find ways to help more Canadians become homeowners. Home ownership is a concept that we value highly. Security in this vital sector of our economy is also very important, as well as stability, something I think we all want in order to create and maintain employment, for the sake of all Canadians.

I listened carefully to the proposals made by the Minister in this legislation, which is referred to as Bill C-37. I realize that the Government probably has very little room to manoeuvre regarding the amount of assistance it can offer homeowners, and the reason is quite simple: this Government, especially in the last ten years, has put this country deep into debt through its unbridled spending, so it is not surprising it cannot do more, as I believe the Minister remarked earlier. I know he would like to do more for all Canadians with his legislation on housing. However, we too are aware of the state of the Government's finances, and considering the doubts expressed by many sectors of our economy and the Government's uncontrolled spending and rising deficits, clearly the Government does not have much room left. The Minister said himself the government was not offering a subsidy. Thus, new homeowners or homeowners whose mortgage is coming up for renewal will, and the Minister made this quite clear, have to pay the cost of the program. The Mortgage Rate Protection Program tabled by the Government in the House this morning for the benefit of Canadians who are about to buy a home or who will have to renew their mortgage, is a form of insurance that will have to be paid for by the homeowners themselves.

I must add that the fact this Government waited so long before introducing its program ... I wonder why it did not do so a year ago or two years ago, when it would have been far more beneficial, and the Minister realizes this, I am sure, for all homeowners in Canada. We would now be able to say that home ownership is available to all Canadians.

You know, Mr. Speaker, others often tell us: the right of ownership, the right of ownership! Of course, Canadians have the right of ownership, but can they afford to buy a house? That is why I would rather use the word "accessibility", meaning access to home ownership. However, access to home ownership means something only to the extent that Canadians can have affordable interest rates. It must be said as well-and I think the Government is aware of this, even though its Bill is long overdue-that it is important, necessary and even essential to have housing legislation. That possibility might have interesting effects depending on mortgage rates, and it is clear that home ownership can be achieved if interest rates are affordable, for housing is a key issue in Canada, particularly because of our winters. It is just as important as a policy for the survival of agriculture. Any Government which is accountable to the society it represents must bring forward what I would call very special measures in those two sectors. Since we are on the subject of housing, it has become quite clear that

May 29, 1984

National Housing Act

the Government can no longer evade the issue, and I regret that we had to wait so long for this piece of legislation.

Mr. Speaker, I deplore this situation particularly because I think that, hardly six months ago, this Bill would have cushioned the impact of interest rates which are now climbing. The Minister did remind us that anyone who has renewed a mortgage since March 1 will be covered under this act. That is a good thing in itself, but the fact remains that anyone contemplating the possibility of buying a house in the next few months will be penalized to a certain extent because interest rates have been going up in the past two months and chances are this trend will continue. This Bill does offer some protection, but we are talking today in terms of 14 per cent, plus the 2 per cent operating margin set by the Government. So right now we are looking at minimum rates of 16 or 16.5 per cent, plus the contribution to the insurance program, since any such program obviously calls for premiums. But what the Government is doing is forcing Canadians to pay their insurance premiums without actually guaranteeing that interest rates will not be much higher than they are now, and that must be kept in mind if we are really intent on avoiding using the word "accessibility" as a mere catchword.

Still, Mr. Speaker, we on this side of the House will give serious consideration to the Minister's Bill because, as I said, we know it is important and timely to offer Canadians as much protection as we can. The Government could have done just that a year ago, but it did not. Did the Minister of Finance (Mr. Lalonde) or the Minister responsible then expect rising interest rates? I do not think so, but the truth of the matter is that this legislation is being introduced much too late and that Canadians will not get all the protection and assistance they need because the Government should have made its move a year ago. As I have already said, Mr. Speaker, four years ago, my party made a very interesting suggestion to help homeowners. Our proposal was rejected and nothing has been done ever since, except for the Bill introduced today. The Government is finally introducing a program to provide special assistance for homeowners; as a matter of principle, the Bill cannot be condemned because it provides special assistance to a certain group of people. Once again, Mr. Speaker, what worries me is that this assistance will not be enough to bring about a recovery in the building industry and to provide not just access to homeownership, but also the security which is essential for homeowners and stability in what we call the building or housing sector, which is vitally important to the Canadian economy.

Mr. Speaker, the Minister said earlier that, if the economy is managed carefully, interesting results will be obtained. The Minister himself is confirming that, if the Government had managed the economy carefully these last few years, it would now have more to offer homeowners. Because this same Government is to blame for not having managed the economy carefully, the Minister now has to introduce a Bill which will not have the results we would have wished or would have had,

had the economy been carefully managed by the Government or, at the very least, had the same legislation been introduced 12 months ago. Access to home ownership would have been actually provided to Canadians at the same time as the security which Canadians need and the stability of the vitally important building industry.

The Minister said that this Bill also provides for the issue of mortgage-backed securities, for which subscriptions would increase the supply of long-term mortgage capital. Financial institutions with a mortgage fund could use this system to guarantee the subscribed securities. Of course, all opportunities must be explored to find money to finance those who need mortgages to buy a house.

The Minister also referred to the provisions of the Bill which deal with the Rural and Native Housing Program. Naturally, I have some reservations as concerns the provision which seems to exclude any financial participation of the Provinces, except wherever there is an agreement. The Minister has obviously deemed it appropriate simply to exclude the Provinces and let the Federal Government alone decide to help certain people. As for the principle involved-principles are always well and good, Mr. Speaker. In principle, the Minister is saying that all Canadians, wherever they live, are entitled to Federal Government assistance and subsidies. There is no doubt about that and we do not question this entitlement. However, we believe that, in a federal system, the National Housing Act should reflect the position and the needs of the Provinces and that the latter should have some input in what the Act provides. Of course, the Minister may be right in saying that certain Provinces are more or less interested in the type of grant that the Government is willing to provide. However, I take this opportunity to say that I would still like, and that my party will probably need, to know the real reasons why the Provinces have refused to participate. Perhaps they do not intend to participate financially and have no objection to the Federal Government implementing this legislation. We would still like to know the reaction of the Provinces. Are the non-participating Provinces not objecting to the Federal Government using this legislation to subsidize non-profit organizations directly or to provide them with assistance for home renovations? If the Provinces do not object, fine! However, I believe that it is important for the Provinces to tell us their views on the matter. Otherwise, Mr. Speaker, we would be most eager on this side of the House to see the Provinces participate in the national major decision-making process in view of the relevancy of this very significant piece of legislation. We should ask the Provinces for their view on what they need, and to what extent they are willing, in co-operation with the Federal Government, to help rural centres and categories of people which, according to the Minister, are faced with housing and housing quality problems. This is quite commendable. The Minister has

May 29, 1984

indicated to the House that there are in Canada some 600,000 houses in bad repair. I do not question his figures, Mr. Speaker, but I think we should encourage housing up-grading policies. It is all very nice to talk about new housing, but Hon. Members are aware that rehabilitating and repairing some of these houses which are really worth it could often cost a lot less. There is no doubt that we are clearly in favour of a very special type of assistance for these particular areas. However, Mr. Speaker, we insist that we should ask the Provinces what they think and find out whether they could come to a consensus, which would be in keeping with our current political system. As a National Housing Act most directly affects the social climate, we have no other choice but to urge all provincial administrations to go along with this legislation which at any rate should bring about interesting results for the Canadian people.

Over the past few years, Mr. Speaker, the housing situation has been seriously impeded by two serious factors, namely, high costs and shortages. They have been the results of high interest rates and unemployment, as well as economic uncertainties. It is a known fact that when new housing units fall short of the demand, shortages occur.

Current population figures in Canada indicate that 210,000 housing units per year with be needed during the first part of this decade. However, residential building has been clearly below requirements in recent years-159,000 units were built in 1980; 178,000 in 1981; 126,000 in 1982; probably 163,000 in 1983 and almost the same number is forecast for 1984. This leaves us with a shortage 200,000 units.

Due to cost increases, it is no longer profitable to build new apartment buildings. In Ontario, to pay for a new building financed at current rates, the landlord would have to ask $800 per month.

The Canadian Association of Housing and Renewal fears that in spite of increased assistance for the construction of rental accommodation provided in the last budget, the rent which the builder would have to charge to meet expenditures would be too high to remain a viable concern.

Economists generally believe that the desirable vacancy rate for rental housing is 3 per cent. Data on housing requirements were given in a 1981 review made by the Canada Mortgage and Housing Corporation. The term "a housing unit" applies to every kind of housing whether they are apartment buildings, detached or semi-detached houses, etc.

Data on vacancy rates deal with apartment buildings with 6 units or more in the private sector. The survey on vacancy rates by CMHC is made in April and October. The figures for April 1983 will be available at the end of May 1984.

High interest rates on mortages had an impact on the price of housing in Canada. During the fourth quarter of 1983, the average sale price of a house in Canada was $76,800. If we look at a 10 per cent down payment plus property taxes of

National Housing Act

$1,200-while bearing in mind that total payments for principal, interest and taxes should not exceed 30 per cent of gross income-Canadians now need a family income of $36,200 to pay the average price for a home in Canada. In Toronto, Mr. Speaker, people need a family income of $46,000 to be able to afford the average price of $100,300, a home that in Vancouver would cost $114,000 and thus require a family income of $52,000.

Mortgage rates have dropped considerably since the fall of 1981, but this is cold comfort for people who were forced to sell their homes or are paying mortgage rates as high as 22 per cent. In fact, since the beginning of March, mortgage rates have increased 0.75 per cent.

The information on prices was provided by the Canadian Real Estate Association. The income figures are based on a twenty-year mortgage at 13.75 per cent. Figures for other locations are available on request.

Mr. Speaker, I have been trying to describe the kind of situation we are in at the present time and the hardship this represents for the Canadian people.

Once again, Mr. Speaker, the Government's proposal can certainly not be rejected out of hand. I have the impression, however, that the sooner this Bill is referred to the Standing Committee, the better, so that the Committee can make a thorough study of this legislation. In considering the Government's proposal, in committee, we shall be in a position to hear relevant comments from the construction industry, the homeowners association, and probably, I hope, from the provinces. During discussion of the Bill in committee, we shall perhaps be able to produce amendments to improve the legislation and increase the likelihood that the Government's objectives, which in this case are ours as well, will be achieved. In fact, they must be achieved, and this has been obvious for some time.

Mr. Speaker, in the circumstances, I can assure the Government that we do not intend to waste Parliament's time irresponsibly, in considering the Bill now before the House. On the other hand, we shall probably expect a great deal more relevance from comments we shall hear in committee, Mr. Speaker, we shall insist that the parties concerned in the construction industry and in the business world ... We shall try, very objectively, together with the Minister and the Government, to examine the possibility of improving the proposals before the House today, in order to increase availability, security and stability in this area, for the benefit of all Canadians.

In the circumstances, the Minister will realize that many of my colleagues would like to comment as well and express the views and needs of their constituents. We must allow my colleagues a minimum of time to comment on this proposal. Generally speaking, I realize that the Government is trying to provide mortgage rate protection for all Canadians. However, Mr. Speaker, once again, it does not provide a response to the vital needs of Canadians.

May 29, 1984

National Housing Act

I also realize that this Government, having put this country deep into debt, in a totally irresponsible fashion, has hardly any room to manoeuvre. This is really too bad, because if the country had had better government, we would now be able to do more to give Canadians a chance to own their own homes. As a result of its mismanagement, the Government has sunk the country so deep into debt that it simply has no room left to operate constructively when it has to deal with such basic and vital issues as home ownership. Members on this side of the House can certainly not be held responsible for that. But given the current context, Mr. Speaker, my colleagues and I will try in committee to call in credible witnesses who might be able to make to the Minister and ourselves more relevant and more challenging suggestions likely to make it easier for us to reach our objective, Mr. Speaker, which is to offer more assistance to Canadians whose ambition is to become homeowners. As a corollary, we know how important it is to enable more Canadians to own their home, because a Canadian homeowner usually has a more positive approach. In fact, he becomes a better citizen since he has a direct interest in his home, his municipality and his province simply because he owns something. There is a very significant social connotation with respect to the family, of course and a Canadian who owns his home has a different outlook on life. For all those reasons, including our Canadian climate and the economic impact, we will indeed be receptive to any housing legislation that provides assistance and implements a policy designed to meet the needs of Canadians.

Unfortunately, it is a little bit late to come up with the solution sought by Canadians. The Government has introduced a Bill which will offer some kind of protection but, as I said, it is not what Canadians have been asking for. I doubt that this Bill will have any impact on the recovery of the house construction sector. This legislation will probably only protract a problem which is already too serious, Mr. Speaker, but it will not succeed in rectifying the situation that we wanted to rectify as recently as four or Five years ago; if people had listened to us then, they would at least have had a solution to meet the needs of the time and this solution could have been amended and improved. This would have helped avoid the problems thousands of Canadians have had to face and the difficulties they are still having.

The Minister introduced this Bill today. I can assure you, Mr. Speaker, that we shall examine it with all the objectivity we arecapable of and must have to promote home ownership for Canadians. As for consideration in committee within a relatively short time and then in Committee of the Whole, I am quite prepared to have a very interesting and serious debate. I think that consideration at the committee level will probably have to take longer than expected in view of the importance of the issue and of our desire to listen to those who could help the Government do more to meet our objectives, which are to help Canadians and make homeownership more

readily accessible, as well as provide the stability and security needed in the housing industry.

In closing, Mr. Speaker, I say once again to the Minister that we view this Bill positively. We shall ask for further amendments at the committee stage. We shall insist on knowing the position of the Provinces as concerns the financial assistance the Minister wants to provide for native and rural housing and we sincerely hope, Mr. Speaker, that we shall succeed, in a very positive climate, in developing and approving amendments which would make this legislation even more helpful and encouraging for all Canadians who are trying not only to buy homes, but also to keep the one they have already bought. With this, Mr. Speaker, I leave the floor to other Members who will certainly show as much interest in this matter as I did myself and as the Minister did this morning, and we hope that, thanks to our work at the committee level, the Canadian public will hear proposals that are even more interesting and encouraging than the one we heard this morning.

Topic:   GOVERNMENT ORDERS
Subtopic:   NATIONAL HOUSING ACT
Sub-subtopic:   MEASURE TO AMEND
Permalink
NDP

William Alexander (Bill) Blaikie (N.D.P. Caucus Chair)

New Democratic Party

Mr. Bill Blaikie (Winnipeg-Birds Hill):

Mr. Speaker, we in the New Democratic Party will be opposing this Bill for a number of reasons. We oppose it mainly because we believe that fundamentally it provides a rationalization for higher interest rates by giving borrowers the illusion that they have some kind of protection when in fact their best protection- long term, stable mortgage rates-has been taken away. It has been taken away over a period of time as a result of the Government's actions. I will review what the Government has done in that respect later.

This Bill also provides the context within which public criticism of the banks for its high interest rates might be muted through the illusion of providing protection.

This Bill represents an admission by the Government of helplessness. It is an admission that it does not have the political or moral will, the economic knowledge or a combination of those factors, to have an independent interest rate policy and a lower interest rate policy in this country. Instead of getting to the heart of the matter, the Government has chosen through this Bill to get into the protection racket as far as mortgages are concerned. It is not challenging Canadians to work with their Government to develop a low-interest rate policy and an independent interest rate policy.

What is provided in this mortgage rate protection plan, or MRPP as it will be known by acronym? For a fee a home buyer will be able to purchase mortgage insurance to cover some of the increase in monthly payments if interest rates rise very quickly. On the surface this sounds as though the Government has finally come around to recognizing the problem faced by mortgage holders some three years ago. Thousands were losing their homes or giving them up voluntarily at that time because mortgage payments were increasing from $200 to $400 monthly.

May 29, 1984

If we look more closely at the Bill, Mr. Speaker, it is apparent that this will be very expensive insurance. Premiums will be 1.5 per cent of the mortgage value to be paid when the mortgage is taken out or amortized over the term of the mortgage. We are looking at $1,050 on a $70,000 mortgage, or $11 a month. The insurance will be 2 per cent deductible. This means that if mortgage rates go up 6 per cent between the time the mortgage is taken out and the date of renewal, the insurance will not cover the increases resulting from the first 2 per cent increase. The insurance will cover only three-quarters of the increase in monthly payments over 2 per cent. Therefore, if the rate went up by 6 per cent, the coverage you would receive would be only 3 per cent of the increase, or 50 per cent of your costs. You really only get a significant benefit from this plan, and even then a questionable one, if mortgage rates rise dramatically.

It is appropriate to ask the Minister, how far does the Government expect interest rates to rise? Do we have in this Bill an admission that the Government accepts forecasts by some economists that interest rates will continue to rise and that we are going to go through another period like the one we went through a couple of years ago? Is that the implicit assumption buried between the lines of this Bill? If that is the assumption of this Bill, Mr. Speaker, then Canadians ought to be very worried indeed because they have here an admission of defeat on the part of the Government. This insurance will cover only 25 per cent of increased costs if interest rates rise by 3 per cent, 45 per cent of increased costs if mortgage rates rise by 5 per cent, and 60 per cent of increased costs if mortgage rates rise by 10 per cent. This calculation does not include the cost of the premium. With a conventional five-year mortgage at 12.5 per cent, which would be hard to get now, the total MRPP benefit over five years is calculated at $2,280 assuming, say, a $70,000 mortgage. If you subtract the $1,050 premium, the saving has actually been only $1,230. Over the second five years of your mortgage, you will have paid an additional $6,780 in interest payments. This is the case if interest rates rise a mere 3 per cent.

If the Government were to require banks and other lenders to offer long-term mortgages for certain social needs such as housing, the home buyer would have real stability in his or her mortgage costs and would save over $10,000 over that same five-year period, rather than the $1,230 which he would save under the context of the plan which the Minister is introducing today. Governments could offer home buyers ten times the saving on mortgage payments if it were willing to put some conditions on the lenders.

An indication of the way the Government has tip-toed carefully around the concerns and privileges of the bankers and other mortgage lenders is the Government's assumption that the net cost of the program will be zero. Thus, neither the Government which sets interest rates in the first place, or allows somebody else to set them but is nevertheless involved in the setting of interest rates, nor the banks which make huge profits from high interest rates while pushing thousands of

National Housing Act

Canadians out of their homes, as they did just a few years ago, will be asked to contribute to providing better security in the future. The plan is expected to be self-financing, as the Minister mentioned a few minutes ago. Who will pay the cost? The consumer will pay the full cost.

We are talking about home ownership, Mr. Speaker, and the value Canadians place on the ability to buy their own homes and live in them in security and with a reliable future. This is important to people in my riding, as I am sure it is important to people in the ridings of all Members of Parliament. I come from a suburdan riding located at the northeast corner of Winnipeg, an area which is still growing. New houses are being built. Many families are taking on home ownership for the first time. They are vitally concerned about this issue. In areas of my riding such as Lakeside Meadows, All Seasons Estates, the east end of Transcona and all through North Kildonan, we see people building homes and becoming concerned about interest rates. They are concerned more than ever before because they know, thanks to the experience of a few years ago, that things can get as bad as some people in the past have said they can get. Up until 1982 people did not believe that you could actually have interest rates that were as criminally high as they eventually got in Canada. Having been through that experience, people once bitten are twice shy. They now believe interest rates can go through the roof. Even as we get all this talk about rising interest rates, I am sure that is having an effect on housing construction in the area I represent. Up until now it has seen a bit of revival in certain areas of the riding.

What we want in the final analysis is an affordable mix of housing options, home options, for Canadians. This will mean more attention being paid to co-op housing, for instance. This is opposite to the direction in which the Minister is moving. There are cutbacks in social housing and cutbacks in unit allocations for co-op housing. Regrettably, we do not see the Minister moving on the co-op front. Other members of my caucus, the Hon. Member for Vancouver-Kingsway (Mr. Waddell), the Hon. Member for Prince Albert (Mr. Hovdebo) and others who have concerned themselves about co-op housing will have more to say about that later on.

We need affordable rental accommodation. We have not seen any measures by this Government which went to the heart of that matter. We have seen lots of fancy programs like MURBs and things like that which even the financial community itself admits were not programs that reached the goals for which they were designed.

Finally, we need programs to encourage home ownership. I would say this is the option preferred by most people in my riding, and for this reason I shall pay more attention to this than I will to other areas, such as co-op housing. Home ownership is the preferable option for the people in the riding of Winnipeg-Birds Hill, as indeed it is for me and members of my family who live in the riding.

A home is usually the only major investment a family makes over the course of a lifetime. Most of the families in Winnipeg-Birds Hill are not worrying about the stock market or other

May 29, 1984

National Housing Act

various forms of investment. Their first worry is home ownership. I sometimes feel that I am in a strange world here when I listen to other Members of Parliament talking about various forms of investment, this tax law and that tax law. Most of the people I know are people whose only major investment is their home. They are not familiar with, nor do they have any desire to be familiar with, nor can they afford to be familiar with, the intricacies of investments on the stock market, or anywhere else for that matter. The investment they make over the course of a lifetime is in their home. It is certainly the most important investment they will ever make, even if it is not the only one. That investment should be a reliable and secure one. It should not be a gamble. Yet that is exactly what home ownership has been reduced to as a result of the policies followed by the Government since the mid-sixties when it began to change the structure of mortgage financing and mortgage policy in the country.

I have heard many older constituents, say those of my parents' generation, remark upon a strange irony which is working itself out in the riding of Winnipeg-Birds Hill as well as in other areas of the country. Many of the people who reached maturity in the early to late forties had a deprived or difficult childhood economically because of the dirty thirties. After the Second World War they moved into a world in which, unlike their childhood, they found relatively full employment, long-term, stable mortgage interest rates, and an economic security of which they and their parents could only have dreamed prior to that time. This is the generation which understandably often reminded their children of what it was like in the dirty thirties.

The irony about which I speak is that the children of that generation had the benefit of post-war economic security in their childhood. Their parents knew what their mortgage payments would be until doomsday. Their fathers had secure jobs. There was predictability and reliability. There may not have been affluence or luxury, but there was economic security. These children who grew up in an atmosphere of economic security are now being subjected to economic insecurity in adulthood as a result of the policies of the Government and the changes which have occurred with respect to mortgage financing.

I often hear parents remark, in a way that strikes me as ironic, about the difficulty faced by their children in terms of home ownership, when they have long since paid off their homes because they had 25-year mortgages at 6 per cent. Many of them are now retired and in perspective, compared with the circumstances of their children, they are in pretty good shape. Their children cannot ever expect to pay off their homes. Their children do not know what the interest rate will be from one year to the next. And they have a government which is committed to allowing unpredictability and confusion to continue.

What is the history of mortgage policy in Canada? In 1967 the Liberals freed the bank rate for mortgages which had been

set at 6 per cent. In 1969, on the advice of Liberal Cabinet Minister Paul Hellyer, who since then has been a Tory, something else and is now reported to be seeking a Liberal nomination once again, the 6.5 per cent ceiling on National Housing Act mortgages was released and permitted to be established by market forces. I am sure the Conservatives liked it, as they like anything having to do with market forces. Again in 1969, on Mr. Hellyer's advice, the five-year rollover was introduced, allowing renegotiation of the interest rate on the mortgage every five years. Prior to this the interest rate on a mortgage was fixed for the entire amortization period, generally 25 years.

In 1973 Bill C-135, the Residential Mortgage Financing Act, was passed by the Liberal Government with Conservative support. The guiding principle of the Bill was to enhance the attractiveness of mortgage investment. Its effect was that by generating an increase in mortgage funds at the unrestricted interest rates, builders and land speculators were encouraged to concentrate on high-priced houses where profit margins were greater and to destroy the moderate and low-income housing market.

In 1974 the Liberals introduced AHOP, another wonderfully successful Liberal program! It was designed to give moderate and low-income people with high earning potential a chance to become involved in home ownership by providing moderately-priced dwellings at a subsidized interest rate. This was an attempt to help make housing affordable, but it was a horrible failure. It is now referred to as "AFLOP" due to the number of defaults on AHOP units. Half the units in some AHOP areas have been vacated due to quit claims or defaults. This is happening right in my own riding. Many people have come to me with this experience. The Government is currently undercutting the remaining AHOP home owners by selling units which it has recovered for up to $10,000 less than the original selling price. The assumptions on which the program was based were incorrect and some types of houses were overbuilt because of this scheme. Interest rates were allowed to climb. AHOP mortgages were not protected from huge increases when the five-year term was up, and incomes did not rise substantially in relation to other costs. AHOP home owners were given no protection against the vagaries of the marketplace.

In 1978 the Liberal Government introduced the concept of a graduated payment mortgage, insured but not offered by CMHC. The GPM has all the worst features of the AHOP scheme in that initial payments do not cover the cost of borrowing, so that by year six of the loan the borrower owes more on the principal than he did when he first took the mortgage out. There is no equity gained until year 11. In effect, people are renting for 10 years. Now they are having great difficulty with mortgage renewals at rates about 5 per cent higher than what they have been paying. When that occurred the Minister responsible for housing, the Hon. Member for York-Scarborough (Mr. Cosgrove), talked about expanding the use of the GPM rather than providing assistance for people in need of help.

May 29, 1984

In 1979 the Liberals continued to disentangle CMHC from the housing market by withdrawing altogether their direct lending as well as cutting back substantially on assistance to middle-class and low-income housing. From that point on the role of the Government in the financing of housing was to be restricted to that of a mortgage insurer.

By 1979 we had housing firmly in the hands of the private sector and housing costs had risen dramatically. The Economic Council of Canada estimates that over the seventies as a whole dwelling prices increased about 130 per cent, outpacing the Consumer Price Index which increased by 86 per cent. The whole area of financing has become confused, cluttered and almost unintelligible for the layman.

What was the result of placing this kind of trust in the marketplace back in the early and mid-sixties? Since 1967 mortgage rates have steadily increased, with only minor drops of short duration. In 1969 the Minister responsible for housing said: "I think the Canadian taxpayers would get cheaper money if there were not a fixed ceiling at the present time". When the Minister said that, interest rates were 9 per cent. We have not seen 9 per cent interest rates since.

The AHOP Program which was designed to get lower-income families into home ownership turned out to be a failure, particularly in certain areas due to government economic policy. The graduated payment mortgage, which is basically the same as AHOP in that you can postpone payments, has been difficult for people to afford and has not been too popular because lenders consider it a risky venture.

Lengthening the amortization period has not been much of an advantage to the borrower either. It vastly increases the take of the lender. In many renewals this is becoming almost standard practice. The selling point is that monthly payments will be slightly lower. Let us look at the results. If a borrower took out a $50,000 mortgage at 11.5 per cent amortized over 25 years in 1976, the payments would have been $508.24 per month. Five years later the mortgage must be renewed. The balance remaining on the mortgage is $47,660. The mortgage is reduced by less than $3,000 after making $30,500 in payments. That is what I call criminal. I have never been able to understand how that can be legal, but that seems to be the way the world is. That is why I want to change it.

To renew the mortgage the home owner takes out a new mortgage of $47,660 at 21 per cent. He would now normally have a 20-year amortization period. To make the payment more affordable, he may be offered a longer term which would reduce his monthly payments by about $10. In this case the extra five years will cost the home owner another $48,000 net and will keep him on the hook for further renewals and unpredictable rates.

It is quite clear that bankers are doing the public no favours at all by making these options available to home owners. The Government is doing the public no favours by allowing those kinds of practices to continue. The Government is co-operating with the Official Opposition as it did when we were reviewing

National Housing Act

the Bank Act. The NDP moved amendment after amendment attempting to bring the banks into line to make them act in the interest of home owners, farmers, small businesses and others in Canada who are affected by interest rates and other policies of the banks. Time after time the Conservatives and Liberals voted together against the amendments suggested by the New Democratic Party with regard to the Bank Act.

We see this kind of cosiness again in the softness of the criticism levelled against this Bill by the Progressive Conservative Opposition. This Bill does not challenge the domination of the housing sector by banking decisions. It does not challenge the power and influence of the banks in Canada. That is why the Conservatives are not that disturbed by it. They prefer their own mortgage deductibility plan which they introduced in 1979. They will have occasion to say why they think that plan was better. Actually, that plan probably is preferable to what we are being offered by the Government here. At least with that plan consumers would have some direct benefit instead of paying the entire amount themselves. In fairness, I can understand why they may prefer their own plan to the Government's plan. Our criticisms of the Conservative plan still stand.

However, speaking objectively, what the Government has brought in cannot be construed as a benefit to the consumer in any way except, by analogy, the benefit which accrues to someone who is asked to pay protection money so that his business will not go under. If that is a benefit, the Minister is to be complimented for being the A1 Capone of the housing market with regard to this Bill. The Government is not only trying to keep its hand in the lottery business; it has now entered into another form of illicit trade, the protection racket. What will the Government find its way into next? We leave that to the Liberals' imagination.

The current interest rate debate is really a debate about social and economic values. It is about who is going to carry the burden for what in the country. It is no secret that the Progressive Conservative Party would be doing exactly the same thing with regard to the relationship between the Canadian and American interest rates. The Progressive Conservative Party supports even more integration of the Canadian economy with the American economy. I hope members of the Conservative Party will not get up and pretend that they would do anything different with regard to interest rates in the country. They do not have the political or ideological capacity to do anything about it. The Hon. Member for St. John's West (Mr. Crosbie) has as much as admitted that on a number of occasions. I am sure his frankness gets him into trouble with some of his colleagues. At least he had the decency to admit on a number of occasions that the Conservatives would likely not be doing anything fundamentally different. We saw that when they were in government in 1979.

We need to return to the concept of usury. Usury was regarded as a sin according to pre-capitalist social and economic ethics. We must consider whether we should continue to admire the people who exercise this kind of power over our economy and our lives by owning the money and selling it to us

4144

May 29, 1984

National Housing Act

at these exorbitant rates. That is our value system presently. We admire the banks. We admire that kind of power and wealth. Should we continue to admire that kind of wealth? Should we continue to allow that kind of power and influence, wielded in a way which is not accountable to the common good and the public interest, nor for the effects that the decisions made in these so-called high places have on the lives of ordinary Canadians? The New Democratic Party feels that it is time we did something about that kind of power. We should find a way-and it is there-to subordinate the economy to the human ideal of fairness and to the well-being of humanity. After all, Mr. Speaker, the economy was made for man, not man for the economy.

I just learned this morning that the word "mortgage" means "pledge unto death" in Latin. I took Latin only in grade nine so I cannot remember whether that is correct or not; but that is what I am told. However, at current interest rates and under current circumstances, that is exactly what a mortgage in Canada is: it is a pledge unto death. A person's life will be at the mercy of the banks until the day he dies. He will never really own his home. It need not be so, Mr. Speaker.

The usurers should not be able to have their way in the world. All we need is the political and moral will to stand up to what I regard as organized theft by which people's very lives are owned by the banks. This kind of thing cannot be right, Mr. Speaker. I do not care what kind of moral gymnastics one goes through, Mr. Speaker; this kind of thing cannot be right.

We must rediscover the outrage that people once felt about this kind of thing. I think we have become too complacent about it. We have come to accept it as being like bad weather that goes on and on. It is not like the weather. It is a result of human decisions and it can be changed as a result of human decisions. It can be changed as a result of collective human and political decisions to do something about the way in which interest rates are set in the country and the way in which money is organized. In the final analysis, Mr. Speaker, it is not simply a technical question; it is a debate about values and about who will bear what burdens in our society.

The issue is too important to be left to the economists. In fact, almost any issue I can think of is too important to be left to the economists because economists are a dime a dozen. One can find an economist who will advance almost any particular view that one would like to have advanced because economists do not practise the kind of science that people think they do, Mr. Speaker. The art of thinking about the economy is, in the final analysis, a moral exercise and not a technical exercise because one must begin with certain assumptions about what constitutes the good of society and about what kind of goals we are moving toward when asking how to organize the economy.

In my view, we in this corner of the House are trying to get people to think about how the economy is not the result of neutral or mechanical market forces but the result of decisions made by human beings, decisions that could be made otherwise and decisions that are based on certain philosophical

premises and assumptions about the nature of things. The sooner we can start thinking about the economy in that way, the sooner we will be able to devise an economy both nationally and internationally that meets the needs of the human race instead of meeting the needs of the bottom lines of the international corporate elite. If today's debate regarding a subject which affects so many Canadians so very directly can be an occasion for asking those wider kinds of questions, then I think it will be very useful. I hope that I have made some contribution to that this morning.

Topic:   GOVERNMENT ORDERS
Subtopic:   NATIONAL HOUSING ACT
Sub-subtopic:   MEASURE TO AMEND
Permalink
PC

Douglas Grinslade Lewis

Progressive Conservative

Mr. Doug Lewis (Simcoe North):

Mr. Speaker, I join in this debate with a great deal of interest because after four and a half years of inaction on the part of the Liberal Party, I must say that it is refreshing to see some action being taken by the Government.

The House will know that during the early 1980s the Government instituted a deliberate policy to keep bank interest rates as high as possible. This naturally caused mortgage interest rates to climb to the intolerable level of 14 per cent, 16 per cent, 18 per cent, 20 per cent and even 22 per cent. As a result, families lost their homes through foreclosures or power of sale proceedings, and in a period of rising unemployment and wage and salary cutbacks people found that mortgage payments ate up an increasing proportion of their take-home pay. Real estate values fell as home owners were forced to sell and mortgage terms were reduced from the standard five-year to three-year, two-year, one-year and even six-month terms.

The Liberal Party's high interest rate policy created chaos in the housing sector and fear and panic in the minds of Canadian home owners. We in the Progressive Conservative Party continually called for measures which would create stability in the housing sector for the industry and for the home owner. The Liberal Party turned its back on the Canadian home owner and the industry.

Finally, faced with the harsh reality of public opinion and demand, the Government relented and in the February Budget the Minister of Finance (Mr. Lalonde) promised certain measures to assist the Canadian home owner. We in the Progressive Conservative Party take pride in finally having forced the Liberal Party to listen to the ordinary people rather than to the banks and other financial institutions.

I would like to express my shock in learning that the New Democratic Party does not care about the Canadian home owner. Members of the NDP are rejecting this legislation out of hand. We cannot understand why members of the NDP have abandoned the Canadian home owner. This legislation is far from perfect but as we are Members of Parliament, I would suggest to my colleague in the New Democratic Party that we owe the people of Canada an effort to improve the legislation rather than rejecting it out of hand and railing against the banks.

In the Budget to which I referred, the Government promised three things for which we had been calling. First, it promised protection for the Canadian home owner against rampaging interest rates. We called for measures to allow Canadians to

May 29, 1984

discharge their mortgage prior to the expiration date at a charge which was fair to both the mortgagor and the mortgagee. We referred in various speeches to the concern about short-term mortgages. In the Budget such measures were announced. However, we continued to call for the legislation.

I point out to the Government, the people of Canada and my friend from the New Democratic Party that during the course of the debate over bringing the legislation in, we pointed out to the Government a very serious error in its legislation and that was that the original provisions stated very clearly that the interest to be protected would be the market interest rate prevailing for the relevant mortgage term at the time the mortgage protection was taken out. That is the provision as it was originally stated in the Budget Papers. However, since March 1 mortgage interest rates have risen 1.5 per cent because of the Liberal Party's failure to control the rates and, as a result, Canadian home owners would have been prejudiced by the Government's delay in bringing in the legislation.

After we questioned the Minister of Finance in this regard, the Government backed down and announced that it would protect home owners at the interest rate at which they renewed or took out their mortgage after March 1 rather than the interest rate at the time their applications were finally approved. That is what I am talking about when I suggest to my colleague from the NDP that it is our job to improve legislation rather than simply reject it out of hand. The Government has now produced Bill C-36 which amends the Interest Act and Bill C-37 which appears to contain amendments to the native housing provisions of the National Housing Act, legislation which begins to put in place a plan to have mortgage-backed securities and legislation for interest rate protection.

In the time available to me, Mr. Speaker, I would like to deal strictly with the mortgage interest rate protection part of Bill C-37, and when I close I would like to make some reference to the amendments to the Interest Act as they relate to an over-all safety net which will protect the Canadian home owner. In preparing my remarks, I was fortunate enough to have the input and co-operation of real estate lawyers in Orillia and Midland and of the Orillia Real Estate Board. I went to the people who would be handling the legislation at the street level. At the present time I am trying to meet with the real estate board in Midland and Penetanguishene to get their input.

I understand from documents which have come to my attention that the Government has gone to the financial institutions for their input and advice. I would suggest that the Progressive Conservative Party is interested in the people who will be dealing with the Bill, and the people who should be protected, not the banks and the financial institutions. I would like to pay tribute in my remarks to the input which I have received from the people in the riding which I represent.

I think that the Government is proceeding with uncharacteristic haste in this matter. This Bill received first reading on

National Housing Act

Friday and we are now engaged in second reading debate on Tuesday. If we allow for the weekend and printing time, it is unfortunate that the Government has rushed into second reading debate without giving other interested parties an opportunity to review the Bill. I would like to review what the Government said it would do in February and compare that with the concerns of my constituents and Bill C-37.

First, we feel it is necessary that the Government clearly and unequivocally establish the difference between a base rate and a mortgage reference rate. I would suggest that CMHC should set the rates because there is a difference between the rate in Toronto and the rate in Vancouver as opposed to the rate in Orillia and the rate in Midland. In my area there is a difference between the rate in town and out of town. I think it is important that the Government think about how these rates will be set on a monthly basis so that everyone will know exactly what they are dealing with. My colleagues in the legal profession were concerned. They felt that CMHC should establish this rate with objectivity and have the interests of the Canadian home owner at heart rather than the interests of the Canadian banking institutions.

I would like to bring Section 34.81 to the attention of the Government. The wording makes reference to the rate at which a home owner obtains a mortgage if it is higher than the rate at which a home owner originally borrowed the money. I think this provision is open to loose interpretation and abuse. If a mortgagor were to renew a mortgage with a third party who wished to abuse the system, it is possible under that wording that the mortgage could be renewed at an inflated rate. The question would then become whether the mortgagor was taking undue advantage of the renewal provisions in the Bill because the Government failed to tighten it up. If the Government would consider that, it might better relate what the pay-out will be to the CMHC rate. In other words, if the rate at which a person originally borrowed was 12 per cent and they renew at a CMHC rate of 16 per cent, I would peg it to the 16 per cent, not a mortgage to a third party at 20 per cent. I think there should be some protection provided, or some tightening up, so that the Government is protected against unfair abuse.

The next matter which I would like to bring to the attention of the Government is the concern expressed by my colleagues that the original proposal and the present Bill seem to state that the premium for the insurance is the same whether it is a one-year, two-year, three-year, four-year or five-year renewal, rather than being prorated. It was suggested to me that there should be some difference between the premium paid for a one-year term and that of a three-year or five-year term. In other words, the premium should be prorated. It may be intentional to encourage long-term mortgage renewals, or it may be an oversight which penalizes the person who, for one reason or another, renews his mortgage for a shorter term. I would ask the Government to take a look at that.

I would now like to turn to the section which deals with eligible properties. In the original proposal only the principal residence of a home owner would be covered. That included

May 29, 1984

National Housing Act

single and semi-detached homes, condominium units and mobile homes. In the case of duplexes and other jointly-held buildings, the qualifying mortgage would be apportioned to the unit being occupied by the owner. In Simcoe North there are a great many properties which qualify as duplexes-and I would suspect this is common across Canada-in which the owners occupy one half and rent the other half.

In addition, in Orillia and in my constituency of Simcoe North there are a great many properties which fluctuate between being a principal residence and a recreational residence. Many of my constituents retire from metropolitan areas, move to a recreational residence and make that their permanent residence. I would like to put a question to the Government: What happens to the owner of the duplex-if it is mortgaged as a duplex in which he is residing-when he moves out and sells it to a person who rents out both sides? Does the mortgage interest protection lapse because there is no owner occupancy, or does it extend for the term of the renewal? It might not be something which should be put into the Bill, but it should be dealt with by a regulation.

The next question I have is this. What happens when a person in a principal residence in a recreational area such as mine renews his mortgage, buys insurance protection and then sells to a person from out of town who uses it as a recreational property? Does the mortgage insurance lapse because the property has gone from being a principal rsidence to a recreational property? I am pointing these matters out because it is a question which real estate agents, lawyers, vendors and purchasers will be asking when they exchange properties.

I would like to refer to this matter directly. For practical and administrative purposes, the majority of the people I talked to felt that the payments under the plan should be between CMHC and the mortgagee. I realize that the person who is being protected is the mortgagor who owns the property, but from an administrative standpoint it would be easier for CMHC to deal with the institutions or the mortgages rather than having a third party involved-the owner. That would make it much easier, when a transfer of the property is made, to pin down where the payments are going and to have them immediately benefit the right people. I would suggest to the Government as well that that is a matter which should be dealt with, whether it be by regulation or by way of law.

I would like to pose a question about vendor take-back mortgages which were excluded from the Bill. I have been asked why they have been ignored in this legislation. My colleague from the NDP made reference to the fact that a home is often the major asset of a person. In a lot of ways it is the asset which is sold upon retirement. As a feature of that, the owners take back a mortgage. They take back that mortgage because they will receive regular payments on it and, as well, they can charge interest. Thus the question arises: Why are vendor take-back mortgages excluded? The purchaser of a vendor take-back mortgage will often find that they have a problem when they attempt to renew. In other words, if we are to protect them when they mortgage with an institution, why not protect them when they deal with the vendor on a vendor

take-back mortgage? There may be a very legitimate reason for excluding that situation, but I would ask the Government to consider it.

The next question which arose from my discussions with real estate agents and lawyers was this. The Government does not seem to address itself to default. What would happen when the owner of a property which is mortgage protected under this plan defaults on his or her mortgage payments? If it is a technical default, which perhaps everyone has been guilty of at one time or another, of not paying taxes on time, would that eliminate the protection or would the protection survive that default?

Secondly, does the protection expire upon power of sale proceedings or mortgage foreclosures taking place? The question I have been asked is, where does the protection stand in case of default by an owner, either a technical default or an actual default where there is a power of sale or foreclosure proceeding? I cannot determine from my reading of this Bill last evening exactly how the measure stands on that.

The next concern which was expressed by real estate agents was that lending institutions would require the purchasers to take out this protection on a mandatory basis in order to protect the lending institutions rather than individuals. This would be an additional hardship which would discourage people from buying homes and the protection, because of the front-end mortgage premium. The real estate agents I have discussed this with feel that a mandatory provision-I do not suggest it is in this Bill and perhaps we should make sure it does not get in there anywhere-would decrease competition in the financial marketplace.

I suggested earlier, Mr. Speaker, that I would like to deal with the Interest Act, although it is another Bill, because when I talked to the real estate agents in Orillia they told me that as far as they were concerned those Interest Act provisions are of better benefit to the Canadian home owner than this insurance plan. Quite frankly, they feel that in times of rising interest rates this insurance will not be attractive. In times of low-interest rates, it will be attractive. However, where they felt the abuses were taking place were in the pay-out of the mortgages which, during the Liberal high interest rate period, were offered at 18 per cent, 20 per cent and 22 per cent. The Government's intent, as I read the Budget-and I have not had a chance to review Bill C-36-was that there should be a fair and equitable pay-out of mortgages, fair to the mortgagor and also fair to the mortgagee, on the basis that there are matched funds. But it was suggested to me that the Interest Act legislation will provide a better protection for the Canadian home owner than the Mortgage Rate Protection Plan.

In closing, Mr. Speaker, I would say that it has to be obvious to the Government that our Party has not had an opportunity to discuss the Bill fully and to take a position as to whether or not we support it. However, I can assure the House and the Canadian people that the Progressive Conservative Party has been in the forefront in calling for stability in

May 29, 1984

mortgage interest rates and a fair deal for the Canadian home owner. I suggest, Mr. Speaker, that our discussions in caucus and our debate in this House will be based upon that principle.

Topic:   GOVERNMENT ORDERS
Subtopic:   NATIONAL HOUSING ACT
Sub-subtopic:   MEASURE TO AMEND
Permalink
LIB

Jacques Guilbault (Assistant Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Guilbault):

Our rules now provide for a ten-minute period for questions or comments on the Hon. Member's speech.

Are there any questions?

Topic:   GOVERNMENT ORDERS
Subtopic:   NATIONAL HOUSING ACT
Sub-subtopic:   MEASURE TO AMEND
Permalink
NDP

William Alexander (Bill) Blaikie (N.D.P. Caucus Chair)

New Democratic Party

Mr. Blaikie:

Mr. Speaker, I have just a comment on what the previous speaker had to say very early on in his remarks. I believe it really goes without saying, but I would like to say it anyway, that it is completely unfair for anyone to suggest that the New Democratic Party, or for that matter anyone here in the House, does not care about the Canadian home owner. We may have disagreements with our Progressive Conservative colleagues and with the Government about how best that care ought to be exercised and what the real effect of certain policies will be. However, I believe it is certainly unfair and unwarranted to rise and suggest that we in this corner do not care about the Canadian home owner, although we have some very serious policy disagreements with the Hon. Member and his Party about how home ownership in this country ought to be fostered and increased and with respect to what other housing policies ought to be followed by the Government. We also share some of that Party's criticisms of the Government. I feel it is completely unfair to suggest-and I just want to put him on the record-that we in the New Democratic Party do not care about Canadian home owners. We obviously do, we always have, and we always will.

Topic:   GOVERNMENT ORDERS
Subtopic:   NATIONAL HOUSING ACT
Sub-subtopic:   MEASURE TO AMEND
Permalink
PC

Douglas Grinslade Lewis

Progressive Conservative

Mr. Lewis:

Mr. Speaker, I listened intently to my colleague's remarks and I could discern from them no real effort to improve the Bill or to come to the defence of the Canadian home owner. I heard a lot about co-op housing, that kind of thing, but I did not hear any real effort to improve the Bill and that is why I was called upon to make that comment. It was from the heart.

Topic:   GOVERNMENT ORDERS
Subtopic:   NATIONAL HOUSING ACT
Sub-subtopic:   MEASURE TO AMEND
Permalink
NDP

William Alexander (Bill) Blaikie (N.D.P. Caucus Chair)

New Democratic Party

Mr. Blaikie:

Mr. Speaker, it goes without saying that when a Bill gets into committee, members of the committee from all Parties will make an attempt to improve the Bill. We are debating the principle of the Bill and I spoke about what principles our Party upholds when it comes to a housing policy. I feel the suggestion that the approach of the Progressive Conservative Party is somehow to be exalted is unwarranted. It is trying to give the impression that its approach to this Bill will be non-political, and that it has only the interests of the Canadian home owner at heart when those Hon. Members go into committee.

I know the Hon. Member is going to rise and say that I have summarized his Party's position exactly. However, I do not believe that to be the case, Mr. Speaker. As is often the case in this House, one can reject a Bill, indicating that one is going to oppose it and then in committee try in every way to make the Bill-if it is going to be passed by an arrogant Government

National Housing Act

over opposition to it-as good as it possibly can be. Some Bills, quite frankly, are beyond redemption. We will have to see when we get into the study of this Bill whether or not it belongs in that category and just what kind of amendments we may or may not move. That remains to be seen once we get into committee.

Topic:   GOVERNMENT ORDERS
Subtopic:   NATIONAL HOUSING ACT
Sub-subtopic:   MEASURE TO AMEND
Permalink
LIB

Jacques Guilbault (Assistant Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Guilbault):

Are there any other questions? Debate.

Topic:   GOVERNMENT ORDERS
Subtopic:   NATIONAL HOUSING ACT
Sub-subtopic:   MEASURE TO AMEND
Permalink
PC

Dave Nickerson

Progressive Conservative

Mr. Dave Nickerson (Western Arctic):

Mr. Speaker, I see that the greater part of my presentation will have to be given this afternoon.

However, in preface I want to bring to the attention of the House something which impressed me with respect to the whole housing question and public policy in the housing field. One of the first times I had anything to do with housing policy was when I attended a meeting in Yellowknife around 1965 or 1966. In attendance was the Hon. Jack Pickersgill, who is not a member of the Party which I support. Sometimes we on this side of the House have some rather nasty things to say about him. However, he was there at the head of this meeting listening to presentations on the subject of housing from many of the people who have now become my constituents. The people were coming forward and saying: "I live in a two-room house; I would like a four-room house". Or: "I would like to live in much better circumstances than I do at present".

To all of these inquiries and suggestions, most of which would entail the expenditure of public funds, Jack Pickersgill invariably said: "But you cannot afford it; your income is only so much. You cannot afford the type of housing which you would like. Is it proper that the rest of Canadians should make it possible for you to have the type of housing that you want? Because we all want the best kind of housing".

Therefore, in my presentation this afternoon I will keep in the back of my mind that housing, like everything else, has to be paid for; and to what extent should the individual be responsible for paying for his own housing, and where does the Government fit in? I look forward to debating this issue shortly after three o'clock, Sir.

Topic:   GOVERNMENT ORDERS
Subtopic:   NATIONAL HOUSING ACT
Sub-subtopic:   MEASURE TO AMEND
Permalink
LIB

Jacques Guilbault (Assistant Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Guilbault):

It being one o'clock, I do now leave the chair until two o'clock this afternoon.

At 1 p.m. the House took recess.

Topic:   GOVERNMENT ORDERS
Subtopic:   NATIONAL HOUSING ACT
Sub-subtopic:   MEASURE TO AMEND
Permalink

AFTER RECESS The House resumed at 2 p.m.



May 29, 1984


STATEMENTS PURSUANT TO S.O. 21

HUMAN RIGHTS

PC

David Kilgour

Progressive Conservative

Mr. David Kilgour (Edmonton-Strathcona):

Mr. Speaker, will Members of this House and, through them, the Canadian people, apply their minds today to one of history's tragedies and remember the suffering inflicted on the Armenian people between 1915 and 1918? Over one million men, women, and children were slaughtered in an act of genocide which must take its place with events like the Jewish holocaust and the Ukrainian famine. Some people wish this problem would just go away so that mankind's collective guilt may be lessened, but the Armenian slaughter is an act of history and we cannot wipe the slate clean for the Armenian descendants by pretending it never happened.

Just as we in Canada have on our conscience our treatment of our fellow Japanese Canadians, so the Turkish authorities of the day and their successors, along with the major powers by their sin of omission after World War I, and mankind generally, have the Armenian massacre on their consciences. Justice demands an admission of guilt and then an expression of regret, contrition, and penitence by all concerned. Active steps are then needed to give effect to the resolution passed unanimously by this House on February 25, 1982, that the outstanding differences in problems between the Turkish government and the Armenian communities in Canada and throughout the world be resolved in a peaceful manner. I might also add, in a just manner.

Topic:   STATEMENTS PURSUANT TO S.O. 21
Subtopic:   HUMAN RIGHTS
Sub-subtopic:   RESOLUTION OF DIFFERENCES BETWEEN TURKISH GOVERNMENT AND ARMENIAN COMMUNITIES
Permalink

HUMAN RIGHTS

ARMENIAN GENOCIDE-HOUSE OF COMMONS RESOLUTION

May 29, 1984