May 29, 1984

PC

William James Kempling

Progressive Conservative

Mr. Kempling:

I believe it was a finance Bill. But at any rate, Mr. Speaker, I will give the Hon. Member a copy of it if he wishes. I have not looked at it for probably a couple of years now, but it was a good Bill. It was one of the best Bills ever introduced in this House.

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

John Leslie Evans (Parliamentary Secretary to the President of the Privy Council)

Liberal

Mr. Evans:

What did it deal with specifically?

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

William James Kempling

Progressive Conservative

Mr. Kempling:

Well, first it dealt with truth in lending and it dealt with the establishment of the mortgage investment corporations and a mortgage bank. I will be very pleased to supply the Hon. Member with a copy. It should be introduced and brought through instead of this Bill. It is not in the Library of Parliament, I know that, but I will get you a copy.

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):

No more questions or comments?

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

PROCEEDINGS ON ADJOURNMENT MOTION

SUBJECT MATTER OF QUESTIONS TO BE DEBATED

LIB

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

Liberal

The Acting Speaker (Mr. Guilbault):

It is my duty, pursuant to Standing Order 45, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the Hon. Member for Broadview-Greenwood (Ms. McDonald)-Criminal Code-Presentation of obscenity amendment; the Hon. Member for Medicine Hat (Mr. Hargrave)-Trade-Beef imports from common market countries (b) Government policy; the Hon. Member for Richmond-South Delta (Mr. Siddon)-Science and Technology-Macdonald Commission's approach to challenge of technology (b) Government investment in research and development.

Topic:   PROCEEDINGS ON ADJOURNMENT MOTION
Subtopic:   SUBJECT MATTER OF QUESTIONS TO BE DEBATED
Permalink

GOVERNMENT ORDERS

NATIONAL HOUSING ACT


The House resumed consideration of the motion of Mr. LeBlanc that Bill C-37, an Act to amend the National Housing Act, be read the second time and referred to the Standing Committee on National Resources and Public Works. National Housing Act


PC

John Raymond Ellis

Progressive Conservative

Mr. J. R. Ellis (Prince Edward-Hastings):

Mr. Speaker, like my colleague from Burlington, I intend to put a few comments on the record regarding this legislation. We have been looking forward to this Bill since last February when it was first announced. I had the privilege of taking part in a seminar on housing sponsored by the Guaranty Trust Company in Belleville some six or seven weeks ago. The item most frequently discussed was interest rates. I should digress briefly, Mr. Speaker, to tell you that at that seminar there were municipal, provincial and federal politicians. There were civil servants from the Ontario and federal housing bodies. There were lenders, in this particular case Guaranty Trust, and there were contractors involved. It was a very interesting seminar and the morning passed very quickly.

Those people who were there, to a man, were interested in knowing what the impact of this particular piece of legislation would be. It had been promised in February and here we were in late April and we had not seen the Bill yet. Now we have it before us and I am sorry to say that it raises probably more questions than it answers. There are some very real problems with this legislation. I think it is fair to say, as my colleague has said, that while we will express our concerns to the Minister, nonetheless he best look to his laurels when it comes to committee because there is going to be some very careful questioning at that time.

Some of the questions which come to mind have to do with potential costs of this program. We are given to believe that the program should be self financing, but it seems to me that assumes home owners will always buy mortgage insurance. I have to think that that is a fallacy. I would think that anyone who did not take out mortgage insurance today would be very foolish. All of us have watched in the past two or three weeks as interest rates have gone up and the value of the Canadian dollar has gone down. I would think any modestly careful person today would take out some form of coverage or any form of coverage available to protect them from the possibility of having to renew at a higher rate.

However, if, as we suspect may happen, interest rates and therefore mortgage rates peak either over this summer or into next year and start coming down again as they did recently, I would doubt that person would take the chance of buying that coverage. After all, if I were in the position of buying a new home and I were faced with a 15 per cent, 16 per cent or 17 per cent mortgage rate, and I had to buy then in order to get the location and the kind of home I wanted, I would gamble on a very short mortgage on the assumption that rates would come down and I could renew at a lower rate.

I have not had a chance to study the Bill as carefully as I would like. I looked particularly at the Minister's remarks in his press release dated May 25, which is only a few days ago. The second page says home owners who took out mortgages or renewed mortgages after the date-now, Mr. Speaker, I fully understand that someone renewing a mortgage would be able to obtain the benefit and, indeed, if I understand the legislation properly, those who renew. In other words, if I have a mortgage today at 12 per cent and I am forced to renew at 17

May 29, 1984

National Housing Act

per cent, then I do gain some considerable advantage. But I am a little curious as to how someone entering the market for the first time today benefits today by the coverage. He or she benefits when it come up for renewal, but obviously they do not benefit as a first-time buyer. I have some difficulty with that statement in the press release put out by the Minister's office. I am not entirely sure where it is going to go.

In any event, back to where I was, the cost of the program could escalate rather severely because if people, as I have said, were to take out the insurance on the way up, they would surely not take out the insurance on the way down. They would gamble on the short term. When they renew at the lower level, they would then take out the insurance. Surely there is a potential for the escalation of the cost of this program. That is not to say that I or my Party will oppose the program, but there is a potential for an escalation in costs that does concern us.

Furthermore, there is the question of the premium rate being the same regardless of the term of renewal. There has been some suggestion that this will help the lenders provide more long term money and would encourage the mortgage holders to go for a longer term. It is not always a good idea.

Let us suppose I was renewing a mortgage today and the mortgage interest rate was 15 per cent, which it almost is today. I would have to look at the cost of insuring and take into consideration that it must go to 17 per cent before I qualify at all. If it goes beyond 17 per cent, I will be compensated for three-quarters of the extra. If it goes to 18 per cent, I am compensated for three-quarters of one per cent. If it goes to 19 per cent I am compensated to 1 Vi per cent or three-quarters of 2 per cent. Given those considerations, perhaps I should take out a short term mortgage and gamble that the rate will come down a year from now. That is not an unreasonable gamble, considering the recent cyclical mood of mortgages. Therefore, I must ask why the rate is the same for a one-year mortgage as it is for a five-year mortgage. That is the problem that I see.

I am also concerned about the regulations. This Bill, more than most that we have seen recently, leaves everything to the regulations. I believe that we should have some of those regulations before we go to committee. I appreciate that this is a cry that is heard from the Opposition on a regular basis, but we should have some of those regulations before committee and certainly when we get to committee. Since there is a question about the cost of the insurance and whether it will be worth the gamble, we could determine that ahead of time if we could see all of the regulations. I handed my colleague my mortgage interest book so he could do some calculations on this, but he has been unable to tell me if a savings could be appreciated by the mortgagor. It is very difficult to know whether there is a savings without having the regulations available.

Some industry analysts have suggested that it might be better to reduce the size of the mortgage. Has a program been

devised to study the regulations? The Minister can correct me if I am wrong, but I believe it is still possible to get a one-year mortgage at approximately 13 Vi per cent. Can such a program be used in such a case to determine where it becomes worth the gamble for someone to put the cost of a mortgage insurance out of his pocket for a year in the gamble that the interest rates will come down? At what level does it become worth someone's while to put the money out for insurance coverage? Where does it become worth while for the Government in this insurance program, when someone whose mortgage is at 12 per cent must renew his mortgage at 17 per cent or 18 per cent, to say to the lender that if it has to subsidize this mortgage for the next three or five years, it will pay so much in subsidization? While the home owner must pay some, the Government will pay a substantial amount of money and obviously more than it took in as insurance. What is the level at which the Government can pay off a portion of the capital to bring the payment down to the level at which the borrower is paying the same, but the lender is not reaping a horrendous profit as a result of those high interest rates?

We must be careful in this instance because it became very obvious in the seminar of which I spoke a moment ago that the mortgage companies will say that they would much prefer a market with constant rates over a long period of time because when rates fall dramatically, those companies and their depositors run risks and tend to not make much money in that instance.

It is difficult to do these calculations on short notice and, indeed, it may take a computer program to properly determine whether there is a point when the federal Government should reduce the principle of a mortgage rather than make payments to a lender over a number of years. However, I suspect that there may well be a point when it will be worth while.

Finally, I want to spend a moment outlining some issues this Bill does not address. The Minister will recall that not long ago the federal Government backed out of support to municipalities for the installation of sewers and other programs. It was his department that was involved at that time. I believe this is an area where the federal Government might well have stayed involved and continued its contribution to municipalities. Normally, I would rather see these functions carried out by the provinces but this is an area of which I, as the Mayor of Belleville, took advantage.

The second most serious complaint that the builders at this seminar spoke of was the cost of servicing. In Belleville it costs approximately $5,000 more per lot, partially because of rock and partly due to stringent imposition by the local bureaucracy, to service than in other similar communities. When those federal Government programs were in place, it kept the cost of those lots down and we were much better off. I see, Mr. Speaker, you are rising. And that the clock has reached five o'clock. Please be careful, Mr. Minister, when this bill comes to committee because there will be a lot of people looking to ask many questions.

May 29, 1984

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

Harold Thomas Herbert (Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Herbert):

I regret having to interrupt the Hon. Member. He has two minutes more remaining at the next sitting of the House.

Order, please! It being five o'clock, the House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.

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

PRIVATE MEMBERS' BUSINESS-MOTIONS

LIB

Harold Thomas Herbert (Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Herbert):

Shall all orders and items preceding item 106 stand by unanimous consent?

Topic:   PRIVATE MEMBERS' BUSINESS-MOTIONS
Permalink
?

Some Hon. Members:

Stand.

Topic:   PRIVATE MEMBERS' BUSINESS-MOTIONS
Permalink
LIB

Harold Thomas Herbert (Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Herbert):

Stand.

Topic:   PRIVATE MEMBERS' BUSINESS-MOTIONS
Permalink

NUCLEAR DISARMAMENT

?

Walter David Baker

Mr. Baker:

Mr. Speaker, I rise on a point of order. In listening to motion No. 106 on the Order Paper, "that, in the opinion of this House, the Government should consider the advisability of declaring Canada a nuclear arms free zone", to my recollection a similar motion was dealt with last week in the House by general agreement of Members. The motion as I read it is similar in substance and intent to that dealt with last week. Perhaps the Speaker cannot rule on this immediately, but I am pretty sure, Sir, that you were in the chair at the time. Does it meet with the rules of the Chamber that we can deal with the motion again?

Topic:   PRIVATE MEMBERS' BUSINESS-MOTIONS
Subtopic:   NUCLEAR DISARMAMENT
Sub-subtopic:   ADVISABILITY OF DECLARING CANADA A NUCLEAR ARMS FREE
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NDP

Neil Young (Whip of the N.D.P.)

New Democratic Party

Mr. Young:

Mr. Speaker, I rise on the same point of order. I think if the Hon. Member reads Hansard for the day in question last week, he will find the question debated was a private member's bill and not a private member's motion.

Topic:   PRIVATE MEMBERS' BUSINESS-MOTIONS
Subtopic:   NUCLEAR DISARMAMENT
Sub-subtopic:   ADVISABILITY OF DECLARING CANADA A NUCLEAR ARMS FREE
Permalink

May 29, 1984