The Standing Senate Committee on Social Affairs, Science and Technology

has the honour to present its


Thursday, June 10, 1999

Your Committee, to which was referred, Bill C-66, An Act to amend the National Housing Act and the Canada Mortgage and Housing Corporation Act and to make a consequential amendment to another Act, has, in obedience to the Order of Reference of Tuesday, May 11, 1999, examined the said Bill and now reports the same without amendment.

Attached as an appendix to this Report are the observations of your Committee on Bill C-66.


Respectfully submitted,




In the course of its deliberations on Bill C-66, An Act to amend the National Housing Act and the Canada Mortgage and Housing Corporation Act, the Standing Senate Committee on Social Affairs, Science and Technology heard broadly positive views concerning the objectives of the Bill, but also heard serious concerns expressed about potential, and likely unintended, impacts. The following observations are intended to assist the Government in responding to these concerns.

The concern expressed most frequently before your Committee was that the federal government is abandoning its traditional role in the provision of affordable housing to Canadians. The commercialization of the Canada Mortgage and Housing Corporation provided for in Bill C-66 (including the removal of definitions and restrictions in order to enhance the capacity of CMHC to respond to the market) has recently exacerbated this concern. More broadly, the concern has been prompted by the federal devolution of administrative responsibilities relating to social housing to provinces and territories. Together, these developments have resulted in apprehensions among co-operative housing organizations, and others, that existing statutory requirements may be altered retroactively, and that the federal capacity to deal with failures in the housing marketplace is being eroded.

Problems of homelessness and access to adequate housing by low income Canadians exist across the country and, as the comments of our witnesses illustrate, Canadians continue to look to the federal government for leadership in responding to these problems. The Committee observes that concerns about the federal government’s intentions in the area of affordable housing will not be dispelled until Canadians see a detailed action plan on this issue, followed by results.

The housing needs of aboriginal peoples, and concerns among their representatives about the potential impact of Bill C-66 on federal policies and programs in this area, are closely parallel to those just described. The needs, however, are more severe and the concerns expressed to us were urgent. Aboriginal peoples do not see, in Bill C-66, any compelling evidence that the government intends to live up to longstanding commitments to accessible housing and to build a new relationship with aboriginal peoples. Their concerns will not be dispelled until they see action, and results.

The Committee observes, however, that aboriginal peoples’ representatives did not portray the new arrangements taking shape in the area of social housing as necessarily contrary to their interests. The continuation by the Government of Nova Scotia, of arrangements under which aboriginal people manage social housing through a corporation whose development was fostered by CMHC, suggests principles that can be emulated elsewhere, and shows that the devolution of administrative responsibilities to provinces can be compatible with objectives of aboriginal people.

As well, the Committee has heard convincing testimony concerning the usefulness of discussions between the Government of Canada and aboriginal peoples’ representatives for the purpose of establishing a nomination process to apply to one of the eight seats on the Board of Directors of CMHC. The presence, on the Board, of a representative of the aboriginal peoples of Canada would be a tangible contribution to the responsiveness of the Corporation to their needs, and an important symbolic response to the broader concerns about abandonment prompted by Bill C-66.

Witnesses have advised your Committee, furthermore, that the Government needs to respond to concerns that the attempt to strengthen competition in the provision of mortgage insurance will be undermined by the inequality between the Government of Canada’s existing 90% guarantee for mortgage insurance provided by GE Capital Mortgage Insurance of Canada (GEMICO), and the 100% guarantee which will continue to be provided under the terms of Bill C-66 for mortgage insurance issued by the Canada Mortgage and Housing Corporation. This difference in guarantees enables lenders to refrain from keeping capital in reserve when a loan is insured by CMHC but requires them, under Bank of International Settlement rules, to keep $400 of capital in reserve for each $100,000 of mortgages insured by GEMICO. According to witnesses heard by your Committee, this competitive disadvantage is becoming more significant, as competitive pressures throughout the financial services industry increase, and has already resulted in indications from several clients that business may be lost, solely for this reason.

Your Committee heard evidence to the effect that the current disparity between the guarantees is a threat to the long-term viability of a competitive marketplace in mortgage insurance. Committee members have also been told, however, that the current agreement between the Government of Canada and GE is being renegotiated, and that consideration is being given by the Minister of Finance to making the government guarantee for mortgage-related products equal to that provided to CMHC -- 100 percent.

Your Committee was also told that private sector providers can not now obtain a government guarantee for a product unless it is also offered by CMHC. We assume that this is also the subject of negotiations between the Department of Finance and the private sector.

Your Committee notes that representatives of GEMICO expressed concerns not unlike those of other witnesses concerning the broad nature of some of the new or expanded powers given the CMHC in Bill C-66. In order to maximize the benefits to the public of the arrangements provided for in Bill C-66, the Minister responsible for CMHC needs to closely monitor its use of the powers conferred by this legislation and ensure its compatibility with the persistence of a genuinely competitive marketplace.

Finally, your Committee notes that the attempt, reflected in Bill C-66, to purge Canada’s housing legislation of needless detail has not resulted in the removal of provisions of the Canada Mortgage and Housing Corporation Act, not recently used according to our witnesses, that relate to three Vice Presidents whom the Board of Directors "shall" appoint. While your Committee has not delayed the progress of Bill C-66 by proposing an amendment on this point, it invites critical attention to this matter.

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