Mr. Speaker:

The question enumerated by the Parliamentary Secretary has been answered. Shall the remaining questions stand?

Agreed.

Mr. Dave Nickerson (Western Arctic):

Mr. Speaker, it is always necessary to get the right balance when it comes to matters of government intervention in the housing market. If one looks back over the last 20 years one will find that two things have happened, one as a direct result of the other. First of all, we can see that those people at the lower end of the market are probably better served today than they were 20 or 30 years ago. Those people who would normally have found themselves living in very poor circumstances, in shacks and what have you, have now, by and large, a reasonable standard of housing. But we have paid for this, because whatever one does in the realm of public policy there is always a cause and effect relationship.

On the other side of the equation we have lost a certain amount of individuality. We have become more dependent upon the state at various levels of government, whether it be federal through CMHC, provincial or at the local level and, of course, we have paid for this in increased taxation. It is always a problem as to where we draw the right balance when the Government becomes involved in the affairs of Canadians.

My approach to Bill C-37 this afternoon will be non-partisan. I would like to address the three main points in the bill which is before us today. The first issue with which I would like to deal is the Mortgage Rate Protection Plan which was promised earlier this year in the Budget of the Minister of Finance (Mr. Lalonde). In my opinion, this is a reasonable approach to take on the question of fluctuating mortgage interest rates. The only problem with it, Sir, is that it is brought in now instead of when it was really needed a year or two years ago. That was the time when people were experiencing a very rapid increase in mortgage interest rates. That was the time, Sir, when householders were leaving the keys to their domicile on the kitchen table and abandoning what equity they had in their house, walking out the door and leaving their house to the tender mercies of the mortgagee. That was when this provision was really needed. However, knowing the Liberal Government and its interest rate policies, I suspect that if it is allowed to continue in office we might very well have a repetition of those extremely high interest rates. Therefore, it is wise of us to address this matter today.

There are a couple of principles which I believe should be built into the scheme. First, the scheme should be voluntary. People should not be forced to pay the premiums. It should be their choice whether or not they want to insure their mortgage. At a time when interest rates are already high and the likelihood is that they will decline rather than increase, I see no real advantage to the mortgagor assuming this extra premium payment in order to insure his mortgage. Also, in my opinion, the scheme should be self-financing. I do not feel that it should put a further burden on the public treasury. With any insurance scheme, unless you get into some kind of re-insurance deal, there is always some risk. However, as far as possible this insurance scheme should be actuarially sound, as should any good insurance scheme.

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When I read through Bill C-37, I find it a little hard to understand some of the details because, as is the case with so much of our financial legislation, it is couched in rather difficult terminology. There are a few items on which I would like further information and I will undoubtedly get this at the committee stage. My first question is how one computes the premium for face value of mortgages in excess of some $70,000? It is rather unclear how one goes about doing that. How is the premium to be paid? Is it to be paid as a lump sum when a mortgage is taken out? Or is it to be paid in monthly instalments?

The method of payment of the premium is something which gives me a little cause for concern. How will the payments be made out of the insurance fund if someone has paid the premium, the interest rates go up and he is eligible to collect back? Will a separate cheque be issued each month to the mortgagor? Is that the way it is going to operate? Will the payments be made to the mortagee rather than to the mortgagor so that the mortgagor pays the standard amount every month, apart from the deductible? Is that the way it is to operate? These are things which will have to be examined in further detail when we get to the committee stage. At the same time I would like to look at the various application forms and everything else which appears to be so necessary when we get into schemes of this nature.

Something else which is dealt with in Bill C-37 is the mortgage-backed securities. I have advocated this for some time as well as other Hon. Members on this side of the House. We believe it is an interesting concept. If one looks at the United States experience with its "Ginny Maes," I believe one will find that this has worked to the advantage of the housing market there. I am pleased that the Government is beginning to see the possibilities of fostering a greater availability of mortgage funds through this mechanism. I suspect that if the system is successful, it could attract substantial amounts of individual savings into the mortgage market. At the present time there are no vehicles in existence which allow the savings, especially in small amounts, of individual Canadians to be put into that mortgage market. By using as intermediary a financial institution, which is envisaged under Bill C-37, we could encourage that. It would be an attractive means of getting more money into this area of the economy.

I have some questions as well as to how the government guarantee might work. I had hoped that before I gave my presentation I could have heard from the Minister of State for Finance (Mr. MacLaren) who, we were given to understand, would speak on this issue and provide us with some of the details. Undoubtedly when he does speak, he will answer some of the questions which have arisen in my mind. How exactly will the guarantee system work? Is it contemplated that institutions issuing mortgage-backed securities will pay a fee into some kind of central fund which is used for insurance purposes? I suspect that that might be the most likely way of doing it.

If there is to be a central fund which can be used to defray expenses in respect of those institutions which do not make a

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go of it themselves, how is this fund to be administered? It is obvious that the Government will have to have a large say in the control of this fund. But surely the institutions who put up the money would want some say in the administration thereof so their premiums, for want of a better word, can be kept to a minimum. I would not want to see that fund, as it builds up, used for government purposes. Their government would pay 4 per cent interest the way it does with the Canada Pension Plan funds.

A question that arises, Mr. Speaker, is, if the issuer of the mortgage-backed securities goes bankrupt or finds itself in grave financial difficulties, how will the Government exercise its guarantee to the small investor in the securities? Will the monthly return of principal and interest be made in a continuing manner, or will the Government want to keep to itself the option to pay out on a lump sum basis? I can see where that might be of advantage to the Government or the administrators of what might be called the insurance fund, if that is indeed the way the Government wishes to go about this program. Again, it would be necessary to hear the advice of those who wish to appear before the committee.

The third issue dealt with in this Bill is that of enhancement of the Rural and Native Housing Program. If I might summarize the provisions, the first is an increase in the funds available for these purposes. I do not know if this is included in the Bill, but it is certainly referred to in the Minister's press releases that went out with the Bill. The second point is the removal of the provincial contribution requirement. That could have good and bad points about it. The third is an initiative to allow subsidization of utility and fuel costs in remote northern areas.

I now have some comments on the Rural and Native Housing Program changes contemplated by Bill C-37.1 do not pretend to know much about the situation as it exists in the provinces, so I will speak mainly of my practical experience in the Northwest Territories. It seems to me that the delivery of the services, whether they be health, education or, as in this case, housing, or any type of service, can better be done by the lowest level of government involved. They are the ones who are the most sensitive to local needs and conditions. When housing services are delivered to the public, my experience has generally been that the territorial government has done a better job of it than the federal Government. In the Territories this is done through the instrument of territorial government called the Northwest Territories Housing Corporation.

Despite difficulties it has had in the past, this corporation has on balance done a pretty good job. It is constantly looked at by members of the legislature, and I understand another study is going on of this corporation. But it is a sign of the interest the legislators take in matters of housing and in design of programs, which by and large are delivered in an effective manner.

If the federal Government is to get involved in housing programs of this nature, then it is probably better that it be

through block funding rather than the actual delivery of services. I know that is very difficult to accept, especially by Members on the Government side, because you do not get the political credit and they are always anxious to receive that credit. If you just transfer funds in block from the federal Government to a territory or provincial government, you do not get that credit, but they like to think that they do if they deal with individuals.

As to housing in remote rural areas, I think one of the things that we should focus on is not so much the individual housing itself but the provision of proper municipal services such as water, sewers and paved roads. In much of southern Canada things are taken for granted, but in my area of the country there are very many residences that do not have sewers or running water.

The Minister of Public Works (Mr. LeBlanc), in his presentation this morning when this Bill first came up for discussion, talked of the need to improve health standards through improving housing standards. One way you do that is to have proper running water and sewers. It does not matter how fancy a house you have, you still have problems unless you can hook up to a proper sewage network. So perhaps a better role for the Government in these circumstances would be to help in the financing of these municipal-type services which, in the north in particular, in permafrost areas, are extremely expensive. It can cost eight to ten times more to lay a mile or kilometre of sewer there than it would in southern Canada. Perhaps public funds are better spent in this area rather than trying to do something for every single individual.

In the Northwest Territories, again under the surveillance of the territorial government, the SSHAG, commonly referred to as SSHAG housing projects, have been fairly successful. My predecessor from the Territories, a gentleman by the name of Wally Firth, advocated this type of program for some time. One of the very few things he spoke on in this House was his advocacy of building houses out of local materials using local labour. As a result of his representations and those of many more people, this program came into being and has been reasonably successful. The idea is that you get a grant of maybe $15,000 to $20,000 and build a house out of local materials such as logs using your own labour. That is the theory. Sometimes in practice the amount of government funds which have gone into these things has been way in excess of the amount stipulated.

These are some of the things I wanted to talk about. There was a lot more, but there is not enough time, so I will give you the benefit of my other observations in the future, Mr. Speaker.

The Acting Speaker (Mr. Guilbault):

A ten-minute period is now provided for questions or comments related to the remarks of the hon. gentleman. Are there any questions? Debate.

Mr. Gordon Taylor (Bow River):

Mr. Speaker, I would like to thank the Hon. Minister for giving us this opportunity to discuss housing generally under this Bill. Housing is a very important part of our life. I would not say everyone, but most

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Canadians cherish the hope that they will some day own their own home. Because of the economic conditions which have existed over the past few years, many have come to the conclusion that they will never be able to own their own home, so they want to get security through the next best way, that of renting a home.

On the other hand, there are people who do not want the responsibility of owning a home, paying the taxes, cutting the grass and shovelling the snow. That is their privilege. A former colleague in the Alberta Cabinet said that he got to the point where he just did not want to be bothered with owning a home. He would much rather have someone else cutting the grass and shovelling the snow. He was quite happy, during the last part of his life, to live in rented accommodation. There is a place for both ownership and rentals.

I want to focus my remarks today on the various means by which the Government should make available the opportunity for Canadians to either own or rent homes with some security. 1 will do so from a broad point of view.

First, I would like to deal with one or two points raised by the Hon. Minister about the Mortgage Rate Protection Plan. When I read this Bill last night and heard the Minister speak this morning, I questioned why the Government is getting involved in this program. It is an insurance scheme. Did the Government contact the insurance industry in Canada to determine if it was prepared to develop an insurance policy that would provide some protection? If not, I suggest the Government has missed one of its responsibilities. We have a very viable insurance industry in this country which I believe would be quite capable of devising a plan that would give protection from interest rates if it thought there would be enough money for it to operate successfully.

Although the regulations have not yet been published, it appears that the premiums for this plan are very high. They may or may not be reasonable in contrast to the estimated cost or potential cost of the program. However, the fact that it may cost $1,050 as a maximum premium on a $70,000 mortgage will in itself prevent many people from buying this protection since they will have used all of their money to buy the home. Second, I do not see any indication in the Bill about whether this premium has a duration of six months, as many insurance policies are now, or for a year or, as the Minister stated this morning, if the coverage would be for ten years, at five years with a five-year renewal.

If this premium is to be semi-annual, I do not foresee anyone except the very rich buying this particular policy. A few more may be able to afford it if it is an annual premium, but certainly we should be trying to help those who are least able to help themselves. I question whether those families can afford $1,050 to buy the protection.

Let us use the example of hail insurance on a crop. A farmer depends on that crop for his income after a year of work. There are some farmers who have other income and do not insure the crop because they can absorb a loss for one or even

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two years. They will take a chance by not insuring against hail or frost in a particular year and consequently save that premium, which is a substantial amount of money, if there is no hail or frost. Others cannot afford to buy the insurance because their cash flow is almost nothing and they are therefore forced to take a chance. It will be the same situation with regard to this insurance scheme.

Those who are hardest hit with rate increases on their mortgages will be the ones who are unable to take the protection. That is one of my objections to this Bill.

I would also like to see the regulations since this is only the bones of the Bill. I want to see what the figure will be once all of the regulations are contained in the Bill. It will make a difference as to whether these regulations are sensible and designed to help the poor and middle class or will simply be a gesture that will not help people who really need it.

I want to see the rest of this proposal before it decide to support it or whether my constituents, whom I have the honour to represent, will be able to afford it or if it will help those who need it. With respect to the Mortgage Rate Protection Plan, the Minister said that this is protection against "unaffordable losses", in his words. Of course, the Bill does not protect against unaffordable losses when the interest rises because there is no protection whatsoever when it goes beyond ten points. Therefore, it is not really protecting against the unaffordable losses, only against some losses.

I would like to spend a few minutes speaking about the next item which is a very important part of the Bill. That is the section on the Rural and Native Housing program. It is called the RNHP. Certainly this program was designed to help those who need it the most. Apparently, it has not been working very well because a number of provinces withdrew from it and the Province of Quebec did not participate at all; that province could not see any advantage to the program. Prince Edward Island went into the program, but withdrew in 1979 because it did not find that the program worked satisfactorily. New Brunswick withdrew in 1983 and British Columbia withdrew in 1984. The Minister did not give us any reasons why these provinces withdrew, and I have not checked but we must assume that the provinces did not believe it was working to the advantage of their people. I think we generally agree that provincial governments should be working for the benefit of their people. Apparently, these three provinces did not like the plan and consequently withdrew. The Minister said that 21,000 people received help, but did not specify over what period. However, 21,000 is a reasonable number of people to have received help under this program.

I believe there is a need for this type of legislation. For example, there is a single parent in my riding who has three children. She is doing her best to raise her family properly. She asked me if there was a program that could help her because her house needs shingling and new doors. The winters are rather cold in Alberta. The temperatures sometimes go down to 40 and 50 degrees below zero with a wind chill of 70 below when the wind is blowing. That may not last for many days, but that temperature on one day could freeze someone if

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there is not the proper protection. This lady is worried about how she is going to meet the costs of renovating, rehabilitating her home. I hope this program will help this person and people like her. There are quite a few people in these circumstances.

RR.AP is of assistance. RNHP, according to the Minister this morning, should be another avenue of assistance for the very needy and single parents, particularly women, who have to work and keep their families. They have a tough job making ends meet. Day in and day out they worry whether their health can stand it. They do not make enough to rehabilitate their homes. When they have the advantage of owning a home, it is far better than having to pay rent. If they can get assistance to rehabilitate their houses so they can live in them for a few more years, it is an advantage. Perhaps a roof needs attention. Maybe shingling has to be done. Perhaps they need to put a furnace in the basement to distribute heat throughout their homes to keep warm. They may need proper windows or storm doors. Plastering may be needed. These are things I would like to see included in the Rural and Native Housing Program.

There are people in Canada, and we can find them in every constituency, who have a tough time. In some cases it may be partly their own fault, but largely it is through no fault of their own. People are left with children and burdens. They do their utmost to pay their own way, but some cannot make it. These are the people we all want to help. The single parent who I mentioned is an example. I hope this program can help to shingle her roof or to fix up her house so that she and her children will not be cold every time the wind blows or every time there is a storm.

As the Minister said this morning, this Bill is also for the native people. I cited a case two years ago concerning people on one of my reservations. I have three reservations in my riding of Bow River. In this case 22 people were forced to live in a house that was built for a family of five or six at the most. Imagine, Mr. Speaker, 22 people living in a house. It is not healthy, hygienic, or sound. In a country like Canada, it is neither sensible nor reasonable. Our Indian and native people should not be subjected to that type of thing.

I hope the Government will present a program that will help our native people to rehabilitate their homes. There should be other programs giving our native people and Indian people incentives to build homes in which they can raise their families. Indian women like a nice home just as much as white women do. Indian women like their children to be warm and properly looked after, just as any other mother does. Indian women cry when their children are cold and hungry. They bleed when a needle pricks them. They are human beings. Many people forget that our Indian people are human beings. I once told a chap that a son of a certain Indian had passed away. He shrugged his shoulders and said "so what". He was the son of a native person and that was the biggest loss he ever had. Anything we can do to provide our Indian people with an incentive for them to have homes and to help them rehabilitate their homes so they can have proper living conditions will

make this country greater. This is desperately needed and I agree with the Minister on that point.

We should try to help people to own their own homes. Some people have given up hope that they will ever be able to buy homes. With the prices today many people in their 20s, 30s, and 40s have given up hope of ever being able to buy a home. When you talk about $79,000 or $110,000, you might as well say a million dollars because the amount is meaningless to people who are working day by day and living on pay cheques from week to week. They have never been able to earn high salaries. They would like to have a home. They decide to do the next best thing, which is to rent a home. It gives them a little security.

There are programs available. I want to deal with only one. I am very interested in the co-operative program. I believe the co-op program is a free enterprise program. When the men of Rochdale started the first co-operative, they did not say "we will cut prices". They said that they would charge the regular prices and profits made would go to the people involved. That is free enterprise as far as those people are concerned. It may not be free enterprise for others outside the co-op, but people can secure rental housing, run their own affairs and have security. I want to commend the department for help it has given so far on co-operative housing.

I was very disappointed with the answer given by the Minister the other day when he said that he was cutting back on that program. That program is helping hundreds of people. It is hurting the free enterprise system. Houses are put up for tender. Every dollar given to that program creates homes. When the homes are built, there is no longer a worry to the Government. People run their own affairs. People have some security because their rents are set. If the utilities, the taxes or the interest rate on the mortgage goes up, they know what they have to do, and they run their affairs accordingly. They are all managers of the business. They increase their rents. There is no blame put on the Government. If the rent, the fuel costs, or the mortgage rate goes up, they realize they have to pay a little more. It gives people the freedom to run their own affairs. They do not come to the Government wanting a hand-out. They pay their rents and they run their own affairs.

There is a co-operative in my constituency. This co-operative has some very poor, some not-so-poor, some middle class and a few who are well off in it. As a matter of fact, 72 per cent of the people earn less than $10,000 a year. Eighty per cent earn less than $20,000 a year. The other 20 per cent earn over $20,000. These people have no social stigma at all. No matter what they earn, they all live in the same place. They are members of the same co-operative. They run their business. This is an avenue I would like to see the Minister look at again. It does a tremendous service. Every dollar put into that program goes into building another house. Many of the programs of subsidies and rentals build no new homes.

I see Mr. Speaker indicating that my time is almost up. Obviously I will not be able to deal with the other rental and

May 29, 1984

subsidy programs, all of which have their place. I like programs which enable people to help themselves and to run their own affairs. I think there are few other matters more important than housing; housing and food are the basic requirements of our people.

The Acting Speaker (Mr. Guilbault):

Are there any questions or comments relating to the Hon. Member's remarks? Resuming debate, the Hon. Member for Hamilton Mountain (Mr. Deans).

Mr. Ian Deans (Hamilton Mountain):

Mr. Speaker, I cannot believe the Government would act so foolishly by bringing forward legislation such as this. In the course of the last three years or four years the Government, with the assistance of Governor Bouey and following the lead of the United States, has allowed interest rates to rise to a point where the majority of Canadian families are afraid to purchase homes. As young people look out their apartment windows-and if they are looking out apartment windows in places like Ottawa, they are paying far too much for them- they think of a day when they might have been able to purchase a home of their own. Families always believed that homes were important and that some day they would not only put a down payment on a home, but Finally pay it off. They believed that would provide them not only with an investment for the future but with a place within which to live as long as they wanted. The actions of the Government since 1980 have resulted in that becoming much more of an unreality and much less of a reality than it had been previously.

The Hon. Member for Winnipeg-Birds Hill (Mr. Blaikie), in speaking to the Bill this morning, set out chronologically the way in which the Government has pursued its policy going back as far as 1967. I will not go over it verbatim, but starting in 1967 the Government made the first of a number of terrible errors in terms of mortgage interest rates. I know, Mr. Speaker, you are not quite old enough to have actually been involved in it, but I am sure you will remember the day when people could assume mortgages with fixed interest rates over a reasonable length of time. They were reasonably secure that they would be able to pay them off. It was not a fluctuating interest rate; it was a fixed-term mortgage. People paid a certain sum from the date of purchase until it was paid off. Starting in 1967, the Government eroded that system to the point, if we look back only two years, where young families and not so young families were faced with mortgage interest rates of 20 per cent and 21 per cent. I want to make it quite clear that the proposed solution does not address the fundamental problem.

The Bill guarantees that interest rates will rise. It makes it possible for financial institutions to allow interest rates for mortgage purposes to increase year over year, claiming that in fact the burden is not being carried by the families involved, that they could have purchased insurance and, therefore, if they did not, it is their own fault. The Bill requires that interest rates rise by 3.5 per cent from their present position, whatever it may be for individual mortgages of individual

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families all across the country. Interest rates have to rise by

3.5 per cent before any benefit accrues to individual families. In essence, this means that interest rates in the case of one-year mortgages, which are approximately 12 per cent, can rise to 15.5 per cent before a single benefit accrues to the individual paying the mortgage.

In the case of five-year mortgages, with interest rates at 14 per cent, the interest rate can rise to 17.5 per cent or nearly 18 per cent before any family would benefit one iota from the particular plan. In fact, interest rates can fluctuate substantially without a single person being able to take advantage of the program. People must put their money up front, 1.5 per cent of the outstanding mortgage. They may be able to pay it by attaching it to the mortgage, in which event they are paying not only the 1.5 per cent, but the interest on the 1.5 per cent over the amortization period. The facts are clear. Interest rates will not be held to an acceptable level for Canadian families as a result of this piece of legislation.

It is fraudulent to say to people that somehow or other this legislation will solve or go even part way to solving the terrible dilemma which confronted so many of them between the years 1980 and 1984. I cannot help but feel that somehow or other the Government has missed the point.

Who is responsible for interest rates going up? If we are to believe the Government, the fault lies with the United States Treasury Board. If we are to believe the Government, it was the fault of the U.S. administration that people in Canada were forced to abandon their homes as a result of mortgage interest rates rising to a point where they could not afford to make their payments. If that be the case, there is something terribly wrong with the relationship between our financial institutions and U.S. financial institutions. More important, there is something wrong with a government which allows the kind of relationship to develop in Canada vis-a-vis the United States that permits something as crucial as mortgages for housing to be determined in another country.

I see the Government House Leader and the Minister responsible for housing present in the Chamber. I put to them that we have to confront interest rates. We do not need fancy schemes. We have to find ways to hold down interest rates for the purpose of assuring that families in Canada will be able to purchase homes of their own at prices they can afford. If we are to encourage the maintenance and further development of what has always been not only the dream of Canadian families but the reality of Canadian families, that is the ability to buy their own homes, we must establish instruments to ensure that people who work in Canada can afford the cost of their homes and their mortgages. This legislation does not do that.

Mortgage interest rates can be set in Canada. Instruments can be found to provide the necessary capital from all investment capital currently made available through all financial institutions, to guarantee a sufficient pool of mortgage money so that Canadians will be able to purchase homes and pay for them.

That was the first commitment we required from the Government. The first commitment was that it would address the

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fundamental problem, and the fundamental problem was that we could not allow mortgage interest rates to fluctuate in the same way as interest rates for all manner of other less important things.

Mortgage interest rates must be treated differently from interest rates on loans for the purpose of purchasing luxury commodities. Mortgage interest rates must be considered an integral part of the Canadian lifestyle. They must be addressed by the Government and its agencies in such a way as to ensure that Canadian families of average income are able to continue to purchase homes and to pay for them. That is the commitment we asked of the Government. That is what we suggested to the Government ought to be done. That is what we have been arguing for all along. It is difficult, but everything is difficult.

It is essential, however, that we separate money to be made available for mortgages from money to be made available for all other kinds of investments. That is the crux of all of this. You would not have to sell insurance against Government incompetence if you set up a program to guarantee that there will be mortgage money available. You do not have to insure yourself against increases which are both unacceptable and undesirable if you have established the principle that out of all the available capital in the country which is currently being used for investment purposes, a significant proportion must be made available for the purpose of providing mortgages for the building of Canada's future. You start from there and make the determination that that is going to happen. Having done that, you begin to address the serious question of how to ensure that there will be decent and affordable housing in all parts of the country at prices which are within the capacity of Canadians to afford.

When I began my speech, I said that this is fraudulent. It really is. This is not only my opinion. You may expect me to rail against the Government for its incompetence and stupidity. The views which I express are views that are being expressed by others. Mr. Claude Roots, the Vice-President of the Canadian Real Estate Association, when referring to this piece of legislation said: "It almost concedes that we have to look forward to a period of higher interest rates." He is a man who deals in the business. He says that this legislation will, in itself, result in higher interest rates.

Andrew Cohen of the Consumers' Association of Canada said that he would not recommend the plan for everybody. The reason he would not recommend it for everyone is that the vast majority of people will never be able to take advantage of it. More importantly, they will find themselves continuing to pay ever-increasing rates of interest to those who loan the money.

Frank Clayton is well known for his expertise in housing. He is a housing economist. He studies the field and provides excellent background material which is used by almost anyone with any interest in the housing business. He says that the plan will be of little help to present home owners. It will be virtually

useless to someone taking out a one-year mortgage since the premium cost is the same regardless.

These are people who work in the field. It is not a matter of me speaking against it for political reasons. I recognize the political risks. People will be told by the Government in a variety of different ways during the course of an election campaign that we spoke against something called protection for mortgagees. We speak against it because it is wrong. It will do exactly the opposite of what is required to be done. By itself it will encourage interest rates to rise. Because of the cost and the fact that there is a 2 per cent allowable interest rate increase, chances are that interest rates can and will rise by 3.5 per cent with impunity. On a 12 per cent mortgage an increase of 3.5 per cent is in excess of a 25 per cent increase. Mortgage interest rates will be able to rise 3.5 per cent before any single home owner will be able to benefit one iota from this. This is happening in the time of six and five.

The reason we are opposed to this is because it creates a sense in the public that something is being done which will be beneficial when in fact it will be detrimental. How far do you go in selling insurance against government incompetence? Is the next step to sell insurance against the Government's mishandling of the financial affairs of the country so that there will be insurance against tax increases? It is ludicrous. Our opposition to this Bill goes right to the core of the question of housing. Affordable housing is a necessity. It cannot be treated in any other way. You may be able to get by without a number of other commodities, but in Canada you cannot get by without a place to live.

In Canada we must begin to debate how to provide that affordable housing. It is not done by conceding that already high interest rates can continue to rise. It is not done by conceding that insuring people against inevitable increases will solve the problem. I feel aggravated by the fact that the Government has done this. There can be no support for this kind of a program.

I could have seen marginal merit had the program kicked in immediately, if the insurance had been against any increases. Deficient in principle as this approach is, in order to make it marginally beneficial, there cannot be a 2 per cent allowable increase. The program must kick in right away or you will find yourself with increases of 3.5 per cent, or even higher. Every single person who has been sucked into buying this will find themselves receiving absolutely no benefit.

I see you are signalling that I do not have any more time, Mr. Speaker. I am sorry about that because there is so much to be said about this. I will close my remarks by saying, through you, to the Minister of Housing (Mr. LeBlanc) that this will not work. It will create false expectations. It will work to the detriment of the housing industry. Of itself it will encourage higher interest rates. It will place a penalty on people who can ill afford it. It will add to the mortgage to be carried by the majority of people when in fact the Minister knows that the level of mortgage indebtedness is now at a serious level. It will do nothing to solve the current problem of people who are locked into mortgages that they cannot afford.

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I am surprised that the Minister brought this forward. I thought he had more commitment than this. I want you to know, Sir, that we do not intend to support this Bill.

The Acting Speaker (Mr. Guilbault):

Are there any questions or comments? The Hon. Member for Burlington on a question.

Mr. Kempling:

No, Mr. Speaker, I have a comment.

Mr. Hovdebo:

I have a question, Mr. Speaker.

Mr. Kempling:

Go ahead.

The Acting Speaker (Mr. Guilbault):

The Hon. Member for Prince Albert (Mr. Hovdebo).

Mr. Hovdebo:

Mr. Speaker, I would like to ask the Hon. Member for Hamilton Mountain (Mr. Deans) if he could give us some insight into what effect this Bill will have on the securing of affordable housing for those people in the lower income groups who should be getting housing because they need it. Will this particular Bill make housing more widely available across the board?

Mr. Deans:

Mr. Speaker, my colleague, of course, has asked one of the most crucial questions. He has asked if this Bill will do anything to improve the housing stock for the lower-income groups and, of course, the answer is quite clearly no, it will not. It will not add to the number of houses being built nor will it make one single family eligible to purchase a home that was not eligible previously.

In order to qualify for the assumption of a mortgage today, one must commit approximately 30 per cent of one's income. The same will be equally true after this Bill has been passed. Those people who do not qualify for mortgages today because of the interest rates which are currently in effect will continue to be unable to qualify for mortgages. The Bill will do absolutely nothing to increase the number of housing units available in the country.

Ms. Mitchell:

Mr. Speaker, I would like to ask my colleague a question. In his remarks, he made it quite clear that this Bill will indeed encourage mortgage interest rates to rise rather than control interest rates, which is what most people who are purchasing a home would certainly want. Looking back at the history of the housing policy in the country, I would like to ask the Hon. Member if he feels that the Government should return to the policies that were in place quite a number of years ago.

Perhaps the Hon. Member remembers the years in which it was the practice to have long-term mortgages and set rates of interests which allowed people to plan for the future of their families, to pay off their mortgages and eventually own their own homes in the earlier part of their lifetimes. I wonder if the Hon. Member feels that it is possible to return to that kind of a policy and what suggestions he might have for the Government in that regard.

National Housing Act