May 29, 1984 (32nd Parliament, 2nd Session)


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


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.

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