THE STANDING SENATE COMMITTEE ON SOCIAL AFFAIRS, SCIENCE AND TECHNOLOGY
OTTAWA, Wednesday, June 5, 2019
The Standing Senate Committee on Social Affairs, Science and Technology met this day at 3:15 p.m., to consider the subject matter of those elements contained in Divisions 15, 16, 18, 19 and 20 of Part 4, and in Subdivisions C, K and L of Division 9 of Part 4 of Bill C-97, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2019 and other measures (topic: Divisions 18 and 19 and Subdivision C of Division 9), and in camera to consider a draft report.
Senator Chantal Petitclerc (Chair) in the chair.
The Chair: Good afternoon all and welcome to the Standing Senate Committee on Social Affairs, Science and Technology. My name is Chantal Petitclerc, and I am a senator from Quebec. I am pleased to chair today’s meeting.
Before we give the floor to our witnesses, I would ask my colleagues to introduce themselves, starting with the deputy chair.
Senator Seidman: Judith Seidman, from Montreal, Quebec.
Senator Poirier: Good afternoon. My name is Rose-May Poirier, and I’m from New Brunswick.
Senator Griffin: Diane Griffin, Prince Edward Island.
Senator Ravalia: Good afternoon and welcome. Mohamed Ravalia, Newfoundland and Labrador.
Senator Munson: Senator Munson, Ontario.
The Chair: Today, we continue our study on the subject matter of elements contained in Bill C-97, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2019.
Today is our last meeting on the various divisions. We previously examined Divisions 15, 16 and 20. Today, our first two panels will be on Divisions 18 and 19, which deal with national housing, and our last panel is on Division 9(c), which amends the Food and Drugs Act. At the end of the third panel, I will ask my colleagues to please remain in the room for a brief in camera session.
I’m pleased to welcome our first panel. From the Canada Mortgage and Housing Corporation, we have Michel Tremblay, Senior Vice-President, Policy and Innovation, and Mark Young, Director, Legal Services. From the Department of Finance, we welcome Robert Sample, Senior Director, Market Policy, Capital Markets Division, and David LeDrew, Senior Adviser, Capital Markets Division. Welcome to the Social Affairs Committee.
I would ask you to begin your presentations, and then we will follow with questions.
David LeDrew, Senior Advisor, Capital Markets Division, Department of Finance Canada: Thank you to the committee for the opportunity to be here.
Division 18 of Part 4 amends the National Housing Act to allow CMHC the legislative authority to deliver the first-time home buyer incentive announced in Budget 2019.
The incentive will make home ownership more affordable for first-time buyers by allowing eligible buyers to receive between 5 per cent and 10 per cent of the purchase price of the home in financing. This would lower borrowing costs for eligible first-time buyers by sharing the purchase price with CMHC. The buyer would repay the amount of the incentive when selling the home, for instance.
The amendments allow CMHC to acquire an interest or a right in a housing project that is occupied or intended to be occupied by the owner of the project and to make an investment in order to acquire such an interest or right.
The amendments also clarify that the Minister of Finance will approve terms and conditions for the incentive program.
We’re available to take your questions.
The Chair: Would you like to make some opening remarks?
Michel Tremblay, Senior Vice President, Policy and Innovation, Canada Mortgage and Housing Corporation: We are pleased to be here to answer questions the committee may have on the proposed National Housing Strategy Act.
As you may know, the National Housing Strategy is now a 10-year $55-billion-plus plan to give more Canadians a place to call home. The plan responds to one of our country’s top concerns: housing affordability. This concern is all too real at a time when 1.7 million households in Canada are living in overcrowded or unsafe conditions, or are often forced to choose between paying rent or buying groceries.
CMHC led the design of the National Housing Strategy. Now, we are proud to be delivering on many of its initiatives. Many of them were launched last year, and we are already seeing an impact with new housing projects being announced in communities across Canada.
We are particularly proud of the strategy’s human rights-based approach, which prioritizes the needs of our most vulnerable populations. This means that its programs are meant to, first and foremost, meet the housing needs of seniors, veterans, women and children fleeing from family violence, Indigenous peoples and people living with disabilities. These groups are disproportionately affected by our country’s housing challenges, but they are just as deserving of a safe stable place to live where they can live in dignity and thrive.
In our extensive public consultations leading to the design of the strategy, it was clear that Canadians overwhelmingly believe that housing is essential to the inherent dignity and well-being of a person. They understand that housing is key to building sustainable and inclusive communities and a strong national economy in which the people of Canada can prosper and thrive. This was reiterated in our consultations on the human rights-based approach to housing that were held from March 18 to August 2018.
The proposed National Housing Strategy Act introduced through Budget 2019 recognizes that. The proposed legislation, including the proposed amendments, brings us closer to the progressive realization of the right to adequate housing, a commitment that Canada made when it signed the International Covenant on Economic, Social and Cultural Rights. Importantly, it does so while respecting the jurisdictional responsibility over housing that the federal government shares with the provincial and territorial governments. It would require that the government develop and maintain a national housing strategy with a focus on the most vulnerable. It would further build in accountability and participatory measures to ensure that future governments continue to prioritize the housing needs of the most vulnerable. Let me take a moment to describe two of the main mechanisms.
First is a federal housing advocate. The advocate would be appointed by the Governor-in-Council and supported by the Canadian Human Rights Commission. It would consult with individuals in civil society organizations and receive submissions to identify systemic housing issues facing vulnerable Canadians. The advocate would submit an annual report to the minister with recommendations for addressing these issues. These would, of course, respect matters over which Parliament has jurisdiction and would take into account housing policy. To further accountability, the minister would need to respond to the recommendations in Parliament.
Another important mechanism included in the proposed legislation is a national housing council. Members of the council would be appointed by the minister. It would be a diverse representation, including persons with lived experience of housing needs and homelessness. The main role of the council would be to advise the minister on questions related to the national housing strategy with the aim of improving housing outcomes. The council, upon the request of the federal housing advocate and based on its findings, could also set up a review panel to review systemic housing issues within the jurisdiction of Parliament.
The national housing council would be supported by our team at CMHC. If this legislation is approved, we will quickly turn our attention to supporting the government in the implementation of these important accountability and participatory mechanisms.
The proposed legislation would also protect the progress and significant federal investments being made under the national housing strategy. It would ensure more Canadians — especially the most vulnerable populations — have the dignity of a safe, stable home for generations to come.
That concludes my opening remarks. My colleague and I will be pleased to answer any questions you may have.
The Chair: Thank you for that opening statement.
We will proceed with questions from the senators. I would like to remind my colleagues that you have around five minutes for questions and answers, and we will try to add a second round if we have the time. We will begin with the deputy chair, Senator Seidman.
Senator Seidman: Thank you very much for your presentations.
I will begin with some questions to the Finance Department, if I might. I think you know this is a very aspirational piece of legislation included in a budget bill, so it makes it quite complex for us to study it fully. However, I will ask you about some details that I have not seen when reviewing this. If CMHC can deliver first-time home buyer incentives, what type of application process will there be? I have a list. I’m going to go through my list, so I’ll start with that one. What kind of application process will there be? I’ll go to the second one, which is how would first time buyers qualify for this incentive?
Robert Sample, Senior Director, Market Policy, Capital Markets Division, Department of Finance Canada: Thank you very much for your question, and my colleagues from CMHC might follow up with any specifics on your first question.
In general, some terms were announced in the budget with respect to qualification. In terms of how borrowers will apply, my colleagues are working through the details of that now and looking to finalize the details on how the system will be operationalized, and that should be announced in the coming weeks. The key qualification parameters that were announced in the budget were with respect to the borrower is required to be taking on an insured mortgage. So that’s one qualification. The borrower would need to comply with the standards around insured mortgages. In addition to that, there is a maximum household income threshold to target the program to those making $120,000 household income or less. In addition to that, there is what we call a loan to income threshold that was announced in the budget that is set up four to one, so the total mortgage amount plus the incentive cannot exceed four to one of the borrower’s income.
Senator Seidman: I might ask Mr. Tremblay to tell me, then, about the kind of application process that there would be.
Mr. Tremblay: As my colleague Robert mentioned, we are still working through the details, but we can imagine that there would be an education process both with Canadians but also with our lender clients and lenders in general, because they don’t have to be an insured product of CMHC. We can imagine a process where the borrower, as he or she is shopping for a home, obviously they normally go and get pre-approval at the bank. The likely timing is they would get preapproval whether they qualify for a first-time home buyer incentive at that time, so they can go shop with that in mind.
Senator Seidman: So what happens? Someone qualifies under whatever the detailed decision-making process might turn out to be, and they have their home, and within a year or two, they can no longer make their payments. What happens to the home? Who takes over the financial and legal burden?
Mr. Tremblay: As all of these qualifying borrowers will also have qualified for mortgage loan insurance, that will depend on the situation. What normally happens is the lender and the CMHC, and even our competitors, work with the lenders, first, to make sure there is every effort for the borrower to actually stay in their home. That’s the number one thing that we would want to ensure. After that, if the person, unfortunately, gets into a default situation, then it would be the normal process through a mortgage loan insurance that we currently have in the country.
Senator Seidman: So the insurance would cover the incentive portion as well? Is that what you’re saying?
Mr. Tremblay: No. Sorry, I didn’t mean to imply that. The other loans, so the loan with the financial institutions, will always be an insured mortgage, so they have to qualify for the mortgage loan insurance parameters as well. So there’s always that portion is insured either by CMHC or a private insurer. The other portion, the first-time home buyer incentive, is a loan from CMHC.
Senator Seidman: I understand that, and so I’m trying to understand who will be responsible for that, for the incentive piece of that mortgage, if the homeowner defaults.
Mr. Tremblay: That would be on the balance sheet of the federal government.
Senator Seidman: The balance sheet of the federal government.
Mr. Tremblay: Yes.
Senator Seidman: Okay. So that means ultimately taxpayers are responsible, because the balance sheet of the federal government comes from taxpayer money. So ultimately taxpayers will be responsible for that incentive portion.
Mr. Tremblay: That is correct. But one must keep in mind also, and depending, again, as you point out, when the person gets into difficulty, the proceeds of disposition of the house may well cover the first mortgage as well as the shared equity mortgage.
Senator Poirier: I want to continue along the same line that my colleague has just started to help us understand, and I probably will have to go on second round because I have more than my five minutes.
To my understanding, on top of insuring the mortgage, CMHC will also have an equity in the mortgage. Is it typical to have the insurer of the mortgage also have an equity in it?
Mr. Sample: Thank you for your question.
Just to clarify, there are three mortgage insurers in Canada currently. There’s the Canada Mortgage and Housing Corporation, a Crown entity, my colleagues here today. There are also two private mortgage insurers, Genworth and Canada Guaranty, and so they will be able to insure the first mortgage just like CMHC under the normal course of business that we have in the market today.
Senator Poirier: So walk me through it. I’m a new homeowner, and I am under the $120,000. I’m a first-time home buyer and I want to buy a home. The bank, or whoever I’m going to for my mortgage, is asking me for 5 per cent down, and then you will be matching my 5 per cent, if I’m understanding right, in an equity. Does that mean that you own 5 per cent of my home?
Mr. Sample: CMHC would be taking an equity position in the home. There’s terms and conditions that are still being finalized and should be announced in the coming weeks in terms of some of the details that I think you’re searching for.
Senator Poirier: So that 5 per cent, if it is a loan, does it need to be repaid at one point? Is it a grant? If I’m repaying it, is it with interest?
Mr. Sample: There are a number of shared equity models that exists in Canada currently. We have been reviewing those, and CMHC is having some discussions with industry stakeholders to provide final advice and to have final guidance out in the coming weeks on the full details to which you’re seeking questions on.
Senator Poirier: So it’s in the budget bill, but we really don’t have a lot of details from it, if I’m understanding at this point.
The other thing I wanted to bring forward is, depending on where you live in Canada, there are a lot of parts in Canada that this program will not help whatsoever. For example, for an income under $120,000, which you said the four for one, the maximum mortgage initiative that would be covered that you could get would be $480,000. For example, according to the Toronto Real Estate Board, the average home price in May climbed to $838,540. How will this initiative help in a market where prices are soaring like that? That means nobody in that area would be able to qualify under the program, and that could probably be many other major cities in Canada.
Mr. Sample: The government has targeted the program to first-time home buyers. Again, we do see a lot of first-time home buyers that apply and receive insured mortgages. The house prices and the numbers that you are quoting might be a little bit higher than what we see on average in the insured mortgage space. Typically these are first-time home buyers, younger Canadians or younger families that are getting into the market, not as a sort of the second property of their life but as the first starter home of their life, and generally speaking, condominiums and houses in the areas that you’re citing can be a little bit less.
Senator Poirier: But if there are no homes available for first-time home buyers under a certain amount of money, then this program will not come into place. If there are no homes available under a certain amount of money in the Toronto area, for an example, whether it be a condominium or a townhouse or whatever, if it’s not available, then there is no way, even if you’re a first-time home buyer under a salary of $120,000, that this program will help.
Mr. Sample: The program, as announced in the budget, is pan-Canadian. There would be eligible home buyers across all regions. The specific proportion might vary by region, but it is intended to be eligible across Canada.
Senator Poirier: I guess the other point I wanted to mention is again for CMHC on Division 18 and the initiative for the government to pick up part of the cost of the mortgage. The incentive would only be to the household with incomes, if I understood right, of $120,000. In my home province of New Brunswick, the lowest income level in that area in 2015 was about 59,347. How will this new initiative affect rural economies where there is lower income and fewer job opportunities?
Mr. Sample: That’s a maximum household income. It’s designed to target those that need it most, so those with $120,000 or less in income. So folks with — I believe you said $59,000, they would be eligible based on the income qualification criteria if they met the other criteria that are established for the program.
Senator Poirier: Can you clarify? I know I asked it, but I’m not sure I clearly understood your answer. That 5 per cent that you will be providing, does the homeowner have to repay it at one point, and is it at interest that they repay it? Does that mean that you own the equity, the 5 per cent, and you own that percentage of the mortgage?
Mr. Sample: Correct. CMHC is sharing the cost of either 5 or 10 per cent, and the borrower is not required to make any monthly payments, interest or principle, on that 5 or 10 per cent. The borrower would be required, as announced in the budget, to repay, for example, at resale. If they sell the property, they would be required to pay. There may be other examples that come out in the coming weeks. When the government announces the terms and conditions, it will provide a bit more detail of other scenarios where there would be repayment.
Senator Munson: I think my questions will be to Mr. Tremblay. I’m intrigued. Just a first brief question: You said we’re particularly proud of the strategy’s human-rights-based approach. Is this a first?
Mr. Tremblay: Is this what, sorry?
Senator Munson: Is this a first in dealing with housing strategy? You used the words “human rights approach”? Is this the first time a government has put this lens on the idea of housing?
Mr. Tremblay: Thank you very much for your question.
In fact, this is the first time in Canada that the federal government has a national housing strategy, and so by default obviously it is the first time there is a human-rights-based approach lens attached to the strategy.
Really, the two fundamental mechanisms, as I mentioned, are increased participation, and specifically with the most vulnerable population, the people that would have less of a chance normally to get their voice heard about what they’re going through, what the situations are, what are the barriers to housing that they’re facing; and the second is increased accountability at the Parliament. The government has to set a vision for housing, with outcomes, and report on it, and also the federal housing advocate providing a report on systemic issues on an annual basis increases the level of accountability for the government.
Senator Munson: How wide is the door open for those with disabilities? Are there initiatives there for a person with autism or a physical disability to get into the marketplace with different principles to be able to have affordable housing? I ask that in the holistic context of the proposed Accessible Canada Act, which is about to receive Royal Assent, and ministries working together, because housing and unemployment are major issues, as you well know. I would like an example that you could show hope to those people who would like to own a home and not be penalized by doing so.
Mr. Tremblay: Thank you very much. By the way, my stepson lives with autism, so the question is near and dear to me. The National Housing Strategy and some of the major initiatives, including the flagship program, which is the national co-investment fund, but all the initiatives in the National Housing Strategy prioritize vulnerable groups. Proponents that come forward with housing for seniors, veterans and people with physical or mental disabilities get prioritized in the allocation of funds and the approval of applications.
Senator Munson: Can you give me an example for a person who is watching this hearing about what would be changed in their lives? What would happen? I’m trying to figure out where and how they will live and how long they will be allowed to live where they are going to live. I would like a specific example.
Mr. Tremblay: I don’t have a specific example.
Senator Munson: We talked about big numbers — 10 years, $55 billion, and so on — and I would like to get to the street level where a person walks into a new home with a disability. What changes for that person under this?
Mr. Tremblay: All the initiatives prioritize groups of vulnerable populations. I do have examples. We have created, under the national co-investment fund, 2,400 units. There are targets of 7,000 units for seniors in the next 10 years. I believe the number is 2,400 for persons with mental disability. These are targets that the National Housing Strategy has and that we have to report progress against on an annual basis, and even on a quarterly basis, in the CMHC’s report. I apologize. I didn’t bring specific examples of projects that have benefitted or some of the groups you mentioned, but we can certainly look to providing that for the committee.
Senator Munson: I would appreciate that. If you are talking about a human rights’ approach, then you have to see the person whose human rights are being affected by it. It just follows.
Mark Young, Director, Legal Services, Canada Mortgage and Housing Corporation: The legislation is framework legislation. To circle back on your question, it represents a number of firsts for Canada. There are two references to the ICESCR right to adequate housing, both in the preamble and also the housing policy.
Senator Munson: What is ICESCR?
Mr. Young: The International Covenant on Economic, Social and Cultural Rights, which is the primary source for the right to adequate housing in international law. It does contain those two references, which is a first for Canada.
The other two things it marks an important step forward for are it also recognizes that the right to adequate housing is a fundamental human right, recognized and affirmed in international law. The final thing it does is mandate, as part of the National Housing Strategy, that we incorporate the key principles of a human-rights-based approach to housing. That’s how it comes around to your question. Persons with disabilities are specifically called out in this legislation. In fact, one of the mandatory elements is improving housing outcomes for populations in need, for those most vulnerable.
What would it do for someone who does live with a disability? Essentially, the legislation mandates a National Housing Strategy that will force decision-making through this filter. The filter will include those human-rights-based approach principles, which include participation and inclusion for everyone, including persons with disability, and principles of equality and nondiscrimination. That’s really how it comes around and becomes real for persons who are living with disabilities.
Senator Munson: Thank you very much.
Senator Oh: Thank you, witnesses.
My question is coming on the same thing that Senator Seidman was asking earlier. Can the buyer buy a project that is under construction by the builder when it’s not a completed project? Are they allowed to apply for loans through CMHC to buy the unit?
Mr. Tremblay: Are we talking about the first-time homebuyer incentive?
Senator Oh: Yes.
Mr. Tremblay: If it’s a new construction, typically a borrower would go forward to the bank and try to know if they are qualified, and the same thing would apply for the first-time homebuyer incentive, whether they qualify or not, and they would then put an offer on whatever house they want to build. Typically a financial institution will restrict the period of time that the qualifying mortgage is good for.
Senator Oh: Yes.
Mr. Sample: The design of the incentive, in a way, promotes new construction in that if you are a first-time homebuyer that meets the qualification criteria and are purchasing a house that already exists from another homebuyer, the incentive is 5 per cent, but there is more. It’s 10 per cent if it’s a newly constructed house. It’s tilted that way to favour new supply.
Senator Oh: Recently I had a meeting with the Royal Bank on evaluating our Canadian economic situation. They are very concerned about housing. What is your provision if the housing market turns upside down? Is there a bad loan provision?
Mr. Sample: Specifically with respect to the incentive?
Senator Oh: Yes.
Mr. Sample: The Government of Canada is closely monitoring the vulnerabilities in the housing sector — high household debt, escalated house prices. The Bank of Canada has published research on this in terms of the current state of play. The government has taken a number of measures in this regard to manage household indebtedness and this vulnerability over the past number of years.
With respect to the specific incentive, while it provides more affordability options to first-time homebuyers, it’s also done in a way that’s balanced. One particular metric that speaks to that risk management is the loan-to-income threshold of not above 4 to 1.
Also, CMHC has risk management practices at a very high level that with this program, along with its very large mortgage insurance and securitization programs, it is able to provide expert risk management with respect to the specific incentive as well.
Senator Oh: Vancouver is having some bad market correction. How does that affect CMHC?
Mr. Tremblay: Housing corrections by themselves don’t necessarily affect CMHC’s mortgage loan insurance practice. What does affect it is an actual default. Usually, the biggest predicator of defaults is a high unemployment rate. Typically, Canadians, for the most part, try to continue paying their mortgages as long as possible. The home is obviously an important asset to them. They typically do everything they can. The market correction helps a bit with affordability, which is good news. So far, we haven’t seen any significant impact on our mortgage loan insurance business.
Senator Oh: Because I remember, during the last two market corrections, that people simply went to the bank and, over the counter, “This is the key,” because their equity was wiped out. Are you worried about this?
Mr. Tremblay: That’s our job, to worry about it, so we are always worried about it. As my colleagues have said, the government has taken significant initiatives over the last several years to make sure that we do not encourage Canadians to get into homes that they can’t afford. There is a lot of call to maybe soften the restriction on stress testing for purchase of houses, but the reality is that is done to make sure there is stability in the market and that Canadians can get into homes they can afford and can withstand changes in interest rates and so forth. So we have our eye on it, and we will continue to do so, as will my colleagues at the Department of Finance and the Bank of Canada.
Senator Ravalia: My question is specifically related to that of a second home scenario. In Newfoundland and Labrador, in rural communities in particular, many of the elderly are living in homes that are ergonomically and otherwise quite unsuitable: upstairs, carpeted floors, dangerous bathroom, entry points, et cetera. Many of these individuals are attempting to move into new homes that are better designed for an assisted living situation. Will individuals like this qualify for this type of a program? And if so, are there any strategies to implement, promote and assist in this regard?
Mr. Sample: With respect to the first-time home buyer incentive, it is targeted at first-time home buyers. There are other conditions under review that I can’t speak to specifically today. They are anticipated to be announced soon.
Senator Ravalia: Individuals living in these situations often have homes that have low value or the resale is poor in rural communities. I feel this segment of the population is particularly vulnerable. I would urge you to give due consideration to some entry way for individuals like this.
Mr. Tremblay: This is not part of the first-time home buyer incentive, but under the National Housing Strategy, the federal government also allows transfers of $1.1 billion to provinces and territories, which the provinces can cost match. This is meant for money specific to situations and the realities in their provinces, so there is money available in the provinces from the federal government which, as I said, needs to cost match.
We are also co-developing the Canada housing benefit with provinces and territories. It is a $2 billion program, federal investment, and again, it is cost matched by the provinces. We are co-developing that with the 13 provinces and territories with a view to making it most effective for their jurisdiction.
Senator Ravalia: My next question was related to the typical scenario that we all face in Canada of homelessness. How does someone who is presently homeless but has a desire to become an independent homeowner access this particular strategy? Are there any special considerations given to these individuals who have been forced into homelessness?
Mr. Tremblay: Thank you for the question.
If I understand the question correctly, there is $2.2 billion in the National Housing Strategy, which is delivered by my colleagues at ESDC, that aims to reduce chronic homelessness by 50 per cent over the next 10 years. There is a significant amount of money. I believe that is doubling the money that used to be in this system in the past.
Senator Ravalia: Thank you.
Senator Kutcher: Thank you very much. This is indeed a historic and very important act. I wish we had more time to be able to study it and get a grasp of the complexities. We all know that housing is a foundation for better health and social outcomes.
I want to follow up with Senator Ravalia’s question a little more. In the recent World Economic Forum report, it was noted that Finland has made tremendous steps forward in reducing homelessness substantively compared to the large economies of the U.K., France and Germany, which have had homelessness increase over the same period of time. It was successful through a housing first strategy.
Keeping homelessness as an indicator of success, how comfortable are you that the current levels of oversight and reporting that are in the bill are enough to ensure that this important indicator won’t get lost? And a corollary of that is, do you think the bill would be strengthened if there was specific mention of homelessness as an outcome indicator and that a report to Parliament would be given on an annual basis on that specific indicator?
Mr. Tremblay: Thank you very much for the question.
The National Housing Strategy Act doesn’t make reference to all of the outcomes that the National Housing Strategy aims to achieve, but it does compel the federal government to have a national housing strategy, a vision, a set of outcomes, and report on those on a tri-annual basis, but that’s a report to Parliament after three years. Through CMHC and ESDC, we also report through Infrastructure Canada every quarter. Our annual report, quarterly report and our corporate plan summary are tabled. One of the indicators of ESDC is the reduction of homelessness, and part of the National Housing Strategy to reduce chronic homelessness by 50 per cent.
So the indicators are not all outlined in the legislation, but the government has to have a National Housing Strategy that has a set of indicators and outcomes they are trying to achieve and must report on it. In addition, the federal housing advocate will make recommendations and compel the government to respond to these recommendations, on a minimum, on an annual basis to Parliament.
Senator Seidman: I’m still trying to understand details here. I second what Senator Kutcher said. I said at the outset that it’s frustrating because we don’t have a lot of time to understand what is a major piece of legislation.
When are you going to officially launch the incentive? Is there a plan for that?
Mr. Sample: As announced in Budget 2019, the target is September of this year.
Senator Seidman: So by the time you launch in September, will you have figured some of these details out?
Mr. Sample: That’s right. The intent is to continue with program finalization, parameter finalization, and announce those soon so that the government and CMHC are in a position to launch the program in September of this year.
Senator Seidman: Okay. I’ll let my colleagues continue and, if there is a third round, I’ll come back.
Senator Poirier: Thank you again. Would people risk overreaching beyond their means with this 5 to 10 per cent top up?
Mr. Sample: Thank you for your question.
To give a bit of context, there is a leverage loan-to-income threshold that the consumer of the shared equity mortgage would need to be compliant with, and that’s four to one income.
The government has taken a series of measures, along with Superintendent of Financial Institutions, that have impacted the amount of debt that Canadians can take on in the mortgage space. The budget does show what some of those impacts are. For example, in the actual budget document, it shows the result of these recent measures has reduced the amount of very highly levered borrowers, so four and a half times income or more. That has come down in recent years principally as a result of these measures that have been introduced. So for this program, the first-time home buyer incentive, the government has chosen to set this loan-to-income ratio below that, so 4.0 to 1 income.
Senator Poirier: Would the stress test be done before the top up or after?
Mr. Sample: Thank you for the question.
There is a qualifying rate or a stress test for insured mortgages. One the conditions of the first-time home buyer incentive is that the borrower must be taking on an insured mortgage, and thus the borrower must be compliant with the parameters for insured mortgages, including the stress test.
Senator Poirier: I think my colleague Senator Seidman touched a bit on where I’m going with the first question. I understood when you said there was no monthly payment on this 5 per cent equity and that it would be dealt with at the point of resale. We don’t know yet if there would be interest charged or not, or if it would be just the capital amount, if I understood right, and that hasn’t been detailed out. But in case of flooding, in case of fire, in case of the value of the home being less for certain reasons in the community, in the case of bankruptcy, things like that, how will you deal with that part of the equity you own? Can you reconfirm?
Mr. Sample: Should the borrower not —
Senator Poirier: Down the road, the value of the home is reduced due to certain things in the community. Instead of going up, sometimes the value of the house goes down — in the case of the home being lost, in case of a fire or a person losing their home through bankruptcy, something like that.
Mr. Sample: Thank you for that question.
These are indeed the technical questions that we are looking to finalize in the coming weeks, and we’re making progress on that. CMHC is consulting with its lenders and other mortgage insurers with respect to those types of questions. Those are the details that will be further released in the coming weeks.
Senator Poirier: My last question is going back to the amounts that I talked about according to the Toronto Real Estate Board and the average home cost that was at $838,000 in May and was listed. If I understood correctly, you mentioned that for an income level of less than $120,000, there could be availability of homes. Can you tell me what would be the average insured mortgage in the GTA, Vancouver area, the cities? If it’s not that, what is it?
Mr. LeDrew: In the Toronto and Vancouver areas, I don’t have a specific number, but it should cover the maximum house price of around $565,000. It should cover a condo or townhome in Toronto or Vancouver in the insured space.
Senator Poirier: Okay. It goes back to people living without a home at a lower income of $120,000 or less, in the cities like the GTA, Vancouver, places like that, would not be able to benefit from this program because of the high cost of the homes in that area.
Mr. LeDrew: I apologize; I’m not sure I understood the question.
Senator Poirier: Okay. You have somebody who does not have a home. They’re applying to have their first home. But the conditions, if I’m understanding right, is that this program you’re putting in place that is implemented in the budget bill is for people who have an income of less than $120,000. There are definitely people, I would assume, living in Toronto and Vancouver and Montreal and the big cities that make less than $120,000. They don’t have a home now. This will not help them to get a home because the average cost of a home in those areas is above the limit of what you are allowing here.
Mr. LeDrew: That’s correct. It’s correct about the average price being higher. What we’re trying to emphasize is that for first-time buyers in the insured space, average prices tend to be lower than the global average. The global average in Toronto includes anything above $1 million, $2 million, $3 million. This space is purely under a million, so the average price tends to be lower than that.
Senator Poirier: So someone who is low income in the city of Toronto or any of these places would have a hard time benefiting from your program because the availability is not there, if I understand. Unless I’m really not understanding this.
Mr. Tremblay: If I can add, this is based on March data, but 23 per cent of real estate transactions in the Toronto area were under $500,000. The average price is certainly a number, and there are a lot of $2 million houses and $1.5 million condos that are sold. That’s not necessarily the borrowers or first-time home buyers, and typically they’re not first-time home buyers in that price range. That’s not what this program was aimed at.
Senator Poirier: But will be there something available for $200,000 or $300,000 for a first-time home buyer in the city? Would there be something within the $200,000 or $300,000 limit that they can buy?
Mr. Tremblay: I’m not sure. I don’t have the data in front of me, but 23 per cent of them are under $500,000 in Toronto in the most recent —
The Chair: Did you want to add something?
Mr. Sample: No.
Senator Oh: Mr. Sample, just to make it simple, what is the ceiling cap on the price in Toronto or Vancouver that you will finance?
Mr. LeDrew: It’s approximately $565,000.
Senator Oh: Maximum cap.
Mr. LeDrew: Maximum house price.
The Chair: If you have some information on that, Senator Poirier is trying to get some sort of sense of someone trying to buy. Correct me if I am wrong. Was there some research or data collected to make sure that someone in a big city wanting to buy a first home would have this option? I think that’s what we’re trying to get at.
Senator Poirier: What is scary is that it’s four to one. If I look at $120,000, the maximum they could pay, from my understanding, is about $480,000 for a home. But if there are no homes available in these big cities at less than $480,000, or they are very limited, it means that perhaps this is good for rural New Brunswick and rural Canada but not so good for people living in major cities who could benefit. That’s what I’m trying to get to.
Mr. Sample: Thank you for your question and insight.
You’re right; it will not be easy for first-time home buyers in Vancouver and Toronto and these higher priced regions to qualify for the program, but they do. There is anticipated to be pick-up in these regions and homes within the thresholds that will be suitable for first-time home buyers, and that is the design of the program, that it’s pan-Canadian. I just wanted to say that again.
Mr. Tremblay: As we’re designing this program, we are very mindful that we don’t want to necessarily stoke demand, because if demand is stoked in cities like Toronto and Vancouver and there is not the corresponding supply, then prices actually go up. It might be okay for the first borrower who goes in under this program, but then all prices then go up and it makes it even tougher for other people to get into housing. We have to consider all of that.
Senator Munson: I have a brief question, and this may be to the extreme, but if the federal government owns 10 per cent of my house, is the property subject to federal laws? In other words, accessibility to my home, the idea of official languages, street names, French-English, whatever. If you own 10 per cent of my house, am I responsible to live by those statutory laws?
Mr. Tremblay: We’ll turn to the lawyer.
Mr. Young: The equity program wouldn’t actually alter the application of federal law to matters that would fall within provincial jurisdiction. In the case that you’re describing, no, it would not have that effect.
Senator Munson: Maybe it’s an extreme question, but I’m sure it has crossed some people’s minds. It crossed mine.
Senator Ravalia: My question is for Mr. Tremblay. You reference in your presentation accountability and participatory measures, and you refer to the federal housing advocate and the national housing council. Would you be able to highlight that in a little more detail? Is this going to be a cost-effective way of following, monitoring, ensuring accountability and cost effectiveness, or is there a risk of creating a burgeoning bureaucracy on top of a strategy?
Mr. Tremblay: Thank you very much for the question.
The thinking is certainly not to add bureaucracy. I think the goal of both the federal housing advocate and the national housing council — again, it goes back to the international covenant that Canada signed as part of the United Nations — is to allow for participation, so that we don’t, in our towers, come up with policies without having actually obtained the views of people who are actually living though these housing situations and barriers, so not to pretend to understand but to actually get their views. There’s also the fact, which my colleague mentioned, of nondiscrimination, to make sure we are not discriminating — unwillingly, obviously.
There is also the sense that it holds the government accountable to having a national housing strategy, a vision, outcomes, and reporting against it. It gives another view to Parliament, as the advocate would table a report of the systemic issues that were brought forward, make recommendations to Parliament and have the minister accountable for housing respond to these recommendations. It’s another mechanism to allow for discussion at the political level as to what can be done to improve housing outcomes for Canadians.
It’s not adding bureaucracy; I think it’s a valid step in allowing participation and accountability.
Mr. Young: To add to that: As Michel was describing, it is intended to address a gap. When we stood back and looked at how do you implement a human-rights-based approach to housing, we had to consider the principles of equality, participation, inclusion, nondiscrimination and accountability. The two bodies that Michel has been describing are the two most important mechanisms for driving those principles forward. It’s not intended to be additive from a bureaucracy standpoint; it is actually intended to address a gap. The council is specifically intended to act as a bit of a Commons, bringing marginalized voices — voices that haven’t historically and traditionally been included as part of the social policy discussion — out of the corners and into the boardroom and to the tables where policy decision-making takes place. We’re trying to strike a calibrated approach in the legislation, and the two bodies that Michel has been describing are the key mechanisms for doing that in a non-bureaucratic way.
Senator Ravalia: To follow up on Senator Poirier’s line of thinking, will part of the accountability include the fact that when you look back on those who have purchased their first homes, there will be an equitable distribution between, say, someone making under $40,000 as opposed to someone making between $80,000 and $120,000, or is there a risk that the majority of this project may go to those in the higher-income bracket of the ceiling of $120,000?
Mr. Tremblay: Thank you for the question.
The one thing we know is that this is going to be a new program, and it’s another venue that Canadians who want to get into home ownership will have. What we don’t know is who will actually take it up. That is an educated choice that Canadians will make, because we will make sure the information is clear as to what the first-time home buyer incentive means to them. We intend to monitor the take-up and potentially adjust, if need be. If there are some inequities or things we haven’t thought about that we need to adjust, we will certainly think about doing that.
Senator Ravalia: And that may include a rural-urban divide as well, I expect.
Mr. Tremblay: It is too early to tell, obviously. It’s not launched. But time will tell.
Senator Kutcher: To follow up on Senator Poirier’s area of questioning, average home prices are useful, but they have limited utility in terms of telling us what’s happening in the housing market. Is there a place where our staff can go to find data? Is there a price distribution plot statistical analysis such that we can see how much of the housing stock sells, and at what particular price, in these major urban markets?
Mr. Tremblay: We can certainly look into providing that to the committee.
Senator Kutcher: Our staff would love that.
The Chair: Thank you. If you could send that information to our clerk, we would absolutely appreciate it.
I thank you very much for your assistance with the study of those divisions.
Now, without further ado, we continue with our study of certain elements of Bill C-97, specifically, Divisions 18 and 19, which pertain to national housing.
I’d like to thank our next panel of witnesses. Joining us from the Canadian Real Estate Association, we have Jason Stephen, President, and from the Maytree Foundation, we have Garima Talwar Kapoor, Director, Policy and Research.
Welcome. I would like to invite you to make your opening statements. It will be followed by questions. We will begin with you, Mr. Stephen, and we will follow with you, Ms. Talwar Kapoor.
Jason Stephen, President, Canadian Real Estate Association: It is truly an honour and privilege. I worked in the Senate 21 years ago as a legislative aide, so it is interesting to be back as a presenter. I was always on the side benches.
Thank you, Madam Chair. I am a proud realtor from Saint John, New Brunswick, and as you’ve stated, President of the Canadian Real Estate Association. I am pleased to speak here today on behalf of the 130,000 realtors who live and work in every community across Canada.
I would like to start by thanking the government for recognizing the importance of home ownership in Budget 2019. There are various measures that will help address housing affordability and provide meaningful support to Canadians.
Realtors work with homeowners, buyers and sellers on a daily basis. We continue to advocate on their behalf as well as others who aspire to home ownership but are struggling to reach the goal amid a changing environment. We see first-hand the challenges first-time homebuyers face when it comes to home ownership. We are strong supporters of policy efforts to secure the entire housing spectrum — from emergency shelters to rental housing to home ownership. All Canadians deserve a safe and secure place to live.
In 2016, the government launched the first National Housing Strategy to help Canadians find a place to call home. Budget 2019 recommends the enactment of a national housing strategy act, making the National Housing Strategy a permanent program that reports progress and outcomes to Parliament.
Long-term investments, such as rental construction and financing initiatives, will help move people along the housing spectrum, from social housing to rental apartments to their own home. These types of investments will offer proper support to the entire housing spectrum.
CREA would welcome the opportunity to work in collaboration with the proposed National Housing Council and the Federal Housing Advocate to ensure the right measures are considered to help homeowners, buyers and sellers in every province and community in Canada.
Now, turning to home ownership, it has become clear that it is more difficult for first-time homebuyers to accumulate enough capital for a down payment, as incomes have not kept pace with housing prices. Last fall, realtors met with many parliamentarians to highlight the concerns of millennials anxious to buy homes. Helping Canadians with down payments through the first-time home buyer incentive program is a positive. The initial $1.25 billion investment could, according to estimates, help close to 100,000 Canadians. The plan will encourage new home construction, which we consider critical, given housing supply is an issue in many parts of the country. Realtors look forward to getting more details about the shared equity program so we can share it with our clients and help their home ownership dreams.
The Home Buyers’ Plan has helped over 2.9 million Canadians purchase their home by allowing them to access their RRSPs for their down payment. Realtors advocated for the creation of this Home Buyers’ Plan in the early 1990s. We were pleased that Budget 2019 included an adjustment to the Home Buyers’ Plan by raising the withdrawal limit to $35,000. A higher limit will help people achieve home ownership with less debt.
We know Canadians work hard to get their first house, but significant life changes can compromise their ability to maintain a family home. The extension of the program to Canadians who have experienced a marital breakdown, by allowing them to use their RRSP again, is great news. This compassionate measure has the potential of helping 25,000 Canadians each and every year during a difficult time in their life.
Finally, we were very encouraged by a line in the budget document that states that the government continues to closely monitor the effects of the stress test and will adjust if warranted. This vigilance is critical. The stress test had a profound impact on an already struggling housing market. B-20 rules have sidelined many potential homeowners. For example, a buyer in Moncton needs to save about $28,000 more for a down payment on a single-family home after the implementation of the stress test. In Edmonton, with a benchmark price of $380,000 for a single-family home, a first-time home buyer would have to save an additional $60,000 for their down payment.
We understand Canadian regulators are focused on the measures to lower household debt and limit the risks to our financial system. At the same time, we believe and support financially responsible home ownership. We don’t think these two goals are incompatible.
We recognize that no single measure will address housing affordability. While Budget 2019 has positive initiatives, we will continue to advocate for additional policy innovation that is coordinated across all levels of government and executed in partnership with stakeholders in the housing sector.
Thank you for your time. I would be pleased to answer any of your questions.
Garima Talwar Kapoor, Director, Policy and Research, Maytree Foundation: Good afternoon. My name is Garima Talwar Kapoor, and I am the Director of Policy and Research at Maytree Foundation. Maytree is a charitable foundation that works to advance systemic solutions to poverty through a human rights approach.
Thank you for the opportunity to appear before this committee to provide comments on Bill C-97, Budget Implementation Act 2019. While my presentation will focus on Division 19 of Bill C-97, the national housing strategy act, my written submission also includes comments on Division 20, the poverty reduction act.
In 1976, Canada became a signatory to two incredibly important international covenants on human rights: the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights. At that time, the government recognized that just as Canadians had the right to be free from discrimination and the right to free speech, typically framed as civil and political rights, there are others to which people, indeed all Canadians, have a right to because they are integral to the inherent dignity of human beings.
Over the past 43 years, Canada has moved significantly on civil and political rights, as enshrined in the Canadian Charter of Rights and Freedoms. However, to date, we have had little success on progressively realizing economic and social rights. Today, about 13 per cent of Canadians, about 3.4 million people, are considered low income. Furthermore, over 235,000 Canadians are homeless and over 1.7 million households live in unsuitable, inadequate or unaffordable housing. Despite our many successes over the past four decades, I do not believe that Canadians find the levels of income and housing deprivation that we see today acceptable. We can do better.
The national housing strategy act provides us an opportunity to course-correct. After decades of advocacy, petitions, the development of the national housing strategy, the introduction of this legislation and the recent testimonies of civil society leaders before the House of Commons Standing Committee on Finance, we finally have before us a national housing strategy act that upholds and protects the right to housing.
While it has certainly been a long journey, the national housing strategy act is reflective of the years of work between governments, communities and civil-society organizations. It is demonstrative of democracy in motion.
Last week, the Honourable Maryam Monsef introduced amendments as part of the report stage of Bill C-97 that strengthened the national housing strategy act. The act, as amended, has the support of a wide coalition of civil-society organizations across Canada.
In particular, we are pleased to see the national housing strategy act now unequivocally recognizes that adequate housing is a fundamental human right. It mandates the housing advocate to study petitions identifying systemic housing rights and issues and establishes a process for a review panel to hear and make recommendations on these issues. It also strengthens the monitoring role of the Housing Council.
With these amendments, it is clear that Canada has started to recognize that human rights are indivisible and inalienable. Just as the rich and the poor have the right to be free from discrimination, so too should they have access to safe, secure and affordable housing.
The national housing strategy act proclaims that it is the housing policy of the Canadian government to progressively realize the fundamental right to adequate housing. While the “what” — that all Canadians should have access to adequate housing — is clear, progressive realization recognizes that this goal will be achieved over time. “How” governments move toward achieving this goal will depend upon the mandates upon which governments are elected.
Furthermore, the national housing strategy act outlines a strong mandate for the National Housing Council and ensures that the housing advocate is empowered to monitor and study systemic infringements to the right to housing. This innovative made-in-Canada accountability framework enables affected groups to access public hearings into systemic issues before an expert panel with at least one representative of affected communities. These accountability mechanisms are not only critical to a rights-based framework, they are also the foundations of good public policy. As a former public servant in Ontario myself, I know that all governments hold accountability to the electorate at the core of their work.
I’m sure it is not lost on anyone the critical moment we are in. The status quo will no longer do. That is why the national housing strategy act is so important. It provides the country with an opportunity to recognize one of the fundamental human rights that all Canadians should be afforded. It provides us an opportunity to reset the framework within which we conceptualize, develop and implement housing policy in Canada.
The Chair: Thank you very much for your opening statements.
We will now move into questions and answers.
We will begin with our deputy chair.
Senator Seidman: Thank you both very much for your presentations.
Ms. Kapoor, in your presentation, you did say that the strategy is reflective of the years of work between governments, communities and civil-society organizations. That’s a fairly general statement, which I understand, but what I would like to know from both witnesses here is this: Were you consulted directly in drafting this legislation? If so, is this legislation at all reflective of recommendations you might have put forward? I will start with you, Ms. Kapoor.
Ms. Talwar Kapoor: Thank you for your question.
We have been at this for years, and some of us for decades. A couple of years ago, after the National Housing Strategy was first introduced in 2017, a coalition of over 1,100 signatories, both organizations and individuals, across Canada came together and signed a petition on what we thought a national housing strategy act should look like or what a rights-based approach to housing should look like.
After some time, and in engagement with the federal government on what this could look like, upon seeing the introduction of the national housing strategy act as part of the budget implementation act, we initially had some concerns about the way in which the legislation was initially proposed. At that time, we wrote letters to various Members of Parliament. We also, again, worked with partner organizations across the country to come forward with a series of amendments we thought would be helpful in moving us forward. Through the House of Commons Standing Committee on Finance, a number of us were able to provide testimony on what we thought those amendments should look like. We were not sure which way things were going to go. Last Friday, when we saw the amendments being tabled in the House, we were thrilled.
What we have before us is something that not only meets Canada’s international obligations under the International Covenant on Economic, Social and Cultural Rights but is also something, importantly for folks in this room, that is workable, pragmatic and practical. There is no point in having a rights-based approach to housing if it’s not going to work. What we have before us in this legislation is something that enables people and communities to hold their governments accountable and also enables governments to show progress over time. We think that’s worth it.
Senator Seidman: Those amendments that were just introduced last week, are those amendments that you have been advocating for specifically? Yes?
Ms. Talwar Kapoor: For the most part, yes, they are all there.
Senator Seidman: You mentioned them in your presentation to us, so I won’t go through them again now, but that’s good to know. Thank you.
Mr. Stephen, was your organization consulted in the drafting of this legislation, and is your advice reflected in it?
Mr. Stephen: We were consulted throughout the process. I’m trying to think when it first became ongoing.
We believe there is a full spectrum to housing, right from homelessness to owning a house. Our biggest fear is that when governments typically go in and focus on one and don’t pay attention to the others and not treat it as a full spectrum, then you have needs on one side that really are out of the control — to be able to satisfy. Whether it’s market value — the way I explain it to people is this: You have a homeless shelter right through to owning a house. Then there’s subsidized housing and market-value rents. Everybody always wants to take that step up, and my hope would be that the government would look at a whole spectrum. Sometimes they just dial right into one area, whether it’s market-value rents with rent controls, or housing or homelessness. I would really hope that we look at it as an entire broad spectrum.
Senator Seidman: With regard to this particular piece of legislation, could you be a little more specific in what your criticism is here? I’m trying to understand, so if you could just help me a little bit more.
Mr. Stephen: Specific to what we are here to discuss are things like the stress test. When you take people who would otherwise be putting homes on the market, when you do anything to tinker with one side of the market, then it backlogs the entire chain. Sometimes it’s hard for people to see that, but I was here for your earlier presentation and you are right to say that people are driven out of the market. When people are driven out of the market to be able to buy, they hold on to their inventory, which reduces supply. It’s a whole chain. What we are trying to do is to get a government approach that looks at the entire spectrum. We are getting there and moving forward. Every time there are barriers to entry, to people being able to get out of market value rent so that people can take the step up, then it backlogs on one side.
Senator Seidman: Thank you.
Senator Griffin: I have two questions. The first one is for Mr. Stephen. My husband was once a realtor, so I’m going to pick on you first.
In the previous panel, we had heard they were being very cautious not to cause a problem with the market, to inflate with market with any new program that CMHC or the government might bring in. Obviously there is a huge difference in the Canadian market if you compare what’s going on in Vancouver with Travellers Rest, Prince Edward Island, or Newfoundland and Labrador, which also has a Travellers Rest, I believe. How do you see the proposed changes that are made within this bill affecting those housing markets, considering how diverse the housing market is in our country?
Mr. Stephen: Forever we fight that. Whenever you talk across Canadian lines, there is more than one real estate market in Canada. Now there is more than two or three, and it proves to be a problem because regulations can have different effects in areas where even the economics are on a downturn and then you layer on some more regulation. If you look at what’s going on in Alberta right now, the regulation on top of the fact their oil and gas sector has diminished their economic growth has had a greater impact than if you look at the market here in Ottawa or in Montreal. So it’s something we pay very close attention to. It’s important to understand regional differences in terms of regional markets.
I might just plug, if I may, statistically, we have all the data your staff could look for on CREA.ca. We have a whole statistical boutique that could give you a flavour of the pan-Canadian market in terms of where these averages are and to understand. That’s the thing that we fight with the most when we walk into government officials, is to say we are not all in Toronto and Vancouver selling with multiple bids. It’s a different landscape out there.
Senator Griffin: Thank you.
For the Maytree Foundation, I’m thinking of a millennial, perhaps with a 10-year student loan and a couple of children. I understand child care costs have gone up quite a lot since I was paying child care costs. So somebody is paying back a 10-year loan, maybe both parts of a couple are, and they are trying to raise a family. They are trying to get into the housing market as owners. Do you see this as being a big help to them? What else do you see them needing that perhaps the government could help with in the future? I guess that’s actually two questions. I’m cheating because I told you I was only going to ask two in total. Anyway, if you could answer those, I’d appreciate it.
Ms. Talwar Kapoor: Thank you for your question.
I would say that the purpose of this legislation, the right to housing in Canada, is to articulate what a vision looks like for all Canadians in terms of housing. The baseline for that vision is safe, secure and affordable housing. A rights-based framework prioritizes the needs of those with greatest need. In your example of a millennial household with large student debts and a lot of child care payments, the issue will depend on what their incomes are. The purpose of a rights-based approach is to say that the current housing market, the way in which it is currently structured, does not meet the needs of the average Canadian, let alone those with low and modest incomes. In your example, if that family is low or modest income, the point of the strategy is to ask where governments can take action to help support them. I would say it is not focused on home ownership. I agree that the wide spectrum of the housing market matters in Canada, but the point of this is to focus on Canadians that have been left behind.
Second, and more importantly, the role of the housing council and the national housing advocate are very important in bringing forward systemic infringements to the right to housing. In this example, if there is a systemic issue, an age-based issue, let’s say, that falls under federal jurisdiction, that can be raised with the housing advocate and further studied and petitioned.
I hope that answers your question. Please let me know if you require clarification.
Senator Griffin: I think it does answer the question. Particularly, every situation is different. It’s not as easy now to get a good entry-level job as it was when I graduated. It’s not as easy to buy a house as when I graduated. I really feel for today’s young people. Thank you both for answering my questions.
Senator Forest-Niesing: Along the same line of thought, I would ask you, Mr. Stephen, if you can enlighten us. As you stated, it’s more and more difficult to accumulate the necessary capital to put a down payment on, and it’s incredibly difficult for several groups to become homeowners. The topic of millennials was brought up, but young entrepreneurs and people who have just arrived in Canada — there are some more challenged categories of individuals. What in the changes proposed in section 18 in your view can bring some relief to those specific groups, the millennials, those who have just arrived and Canada and owners of small enterprise?
Mr. Stephen: We know one statistic. We know that 67 per cent of millennials wish to buy a house. That’s their aspiration. Where we think, to the last group in, we are waiting for the details in terms of how they are going to roll out the shared equity program, because that could be a vehicle, although I would dare say that it’s a harder vehicle in higher-priced markets to achieve that. What we are trying to do is to balance the needs of — there are really two issues at play. There is housing affordability, and then there is affordable housing. I think one witness is talking about affordable housing. We are talking about housing affordability.
If we can take a look at the housing affordability piece, it will allow people those steps to move on. We are happy with the ability to use more RRSPs. I think the ability to reuse them in a marital breakdown is a very compassionate and fair thing. When somebody is going through that crisis, they have the job and they have the income. They have every component to buy a house, typically, except the down payment once the assets get divided. Those are key components that will help people, but we also need to be wary and monitor the effects of a regulation such as B20 because they can certainly play God with some of those markets.
Senator Forest-Niesing: Thank you.
On the topic of affordable housing, I applaud as you do, these measures in the national housing strategy act that recognize affordable housing is a fundamental right and then go on to attribute the necessary weight to the study and the monitoring in that respect. I understand, as you have stated, that you and your organization have been at this for many years, and you have, undoubtedly, some recommendations about where we go from here. Monitoring and studying are the first steps. What are the next steps, in your opinion?
Ms. Talwar Kapoor: Thank you for your question.
The immediate next steps are understanding how the national housing council will be developed and who will be part of that council. We know the role of the housing advocate will be very important in making sure we have people who are strong in terms of moving the accountability of this legislation forward.
In terms of the policy pieces, what makes this, in my view, a great piece of legislation is that the underpinning policy pieces are also attached to it. As part of the national housing strategy act, governments now and in the future are going to be required to adopt a national housing strategy act. That keeps the federal government at the table in important housing policy discussions across the country. For decades, until about 2017, we saw a real retreat of the federal government in this space, and a lot of pressure was applied on provinces, territories and municipalities to figure out the affordable housing space. The introduction of the National Housing Strategy has been instrumental in developing collaborative relationships between various levels of government across the country to address core housing needs issues.
For us, the medium term is, then, in saying the next iteration of the National Housing Strategy is in another two to three years, or the next phase. What have we learned from the first phase, and how can we embed some more rights-based learnings into future bilateral agreements, for example, with provinces and territories?
Ten years from now, when the current investment in the National Housing Strategy has expired or has ended, it really will depend on the mandate of the government at that time to decide how it wants to proceed, but it will also be informed by a rights-based spirit, and that is incredibly helpful.
Senator Forest-Niesing: Thank you.
Senator Oh: Thank you, witnesses.
First of all, Mr. Stephen, you have a large membership across the country. You pull in up-to-date information on sales. What do you project on the housing market with this piece of legislation? Are they coming at the right time?
Mr. Stephen: We are not advocating for 100 per cent home ownership, because we will never get there. Canada is seen from the outside as one of the most affordable international markets, which is why you see some of these other areas growing at a rapid pace. Any time you can remain competitive on the international front, but also within your own nation, some of the items I talked about will keep us competitive at the right time.
However, we obviously need to look at some of the more competitive markets for ways to open up supply in high-density areas, to provide opportunities to build along transit lines, because there often isn’t the level of construction along those lines. Whatever we can do at a provincial and local level to create more supply will help ease the price shock that tends to go up time after time.
Senator Oh: Canada is so big. The two major housing areas are Toronto and Vancouver. In the rest, you can still buy low-cost housing. You can still find low prices. The prices are pretty low and affordable for lots of Canadians. It’s a very diverse market. Do you agree?
Mr. Stephen: I would agree with that statement, yes.
Senator Oh: For population groups that are vulnerable to housing needs and the homeless in Canada, does this proposed legislation address those at all?
Ms. Talwar Kapoor: Thank you for your question.
There are a number of vulnerable groups across Canada, as you know, and their access to safe, secure and affordable housing varies depends on who they are and where they are in the country. Of course, the housing needs of our Indigenous peoples, for example, are of primary concern for a lot of people across the country. This legislation aims to prioritize the needs of those most in need. It could be people who are low income. It could be women fleeing domestic abuse. It could be children. This question varies depending on where you are in the country, but generally those are the groups that I think would be most affected or most impacted by legislation like this.
Senator Oh: Thank you.
Senator Poirier: Thank you both for being here.
My first question is for you, Mr. Stephen. With the government’s incentive to help the down payment for the new home buyers, is there a possibility for the price to rise in proportion to the percentage put in by the government?
Mr. Stephen: Yes, there is a possibility. This is one of the details we are trying to get some answers on because, again, if you just create a whole bunch of buyers in the marketplace and there isn’t a supply, that can have an effect and raise prices. It’s really important that the government take a look at both spectrums. If they do create more buyers in the marketplace, it could boost pricing no matter what market you’re talking about, such as my local market of Saint John or the larger markets that are in heat right now.
Senator Poirier: If that happens, then we are not actually helping these people because it’s just going to cost them that much more than if they didn’t have the incentive.
Mr. Stephen: In an affordable market, it would raise pricing. I don’t think it would keep anyone out, but it could keep people out in some of the heated markets.
Senator Poirier: Do you think the stress test will be made before the incentive is calculated, or after?
Mr. Stephen: I’m not aware of those details. We have been working with CMHC to try to find those out. Our hope is to take a look at the stress test in terms of different ways to look at it rather than just a straight 2 per cent across the board for everyone from coast to coast and in between. I think it reduces your ability to purchase when incomes haven’t gone up to that stage.
Senator Poirier: In your presentation, you mentioned marriage break-up and that this would maybe allow or find a way to help one of the partners buy a new home. In your opinion, what is a new home or first home buyer? This person obviously had a home before, but then you said they are able to qualify if there is a marriage breakup, but what if they’ve already had a mortgage and they’re breaking up? Are there other groups who may be in the same situation? Does this fall under the category of being new homeowners even though they were in a home mortgage before?
Mr. Stephen: We find this first-time Home Buyers’ Plan to be a great tool that doesn’t cost a great amount of money because it’s your retirement savings plan, although there is payback time during which the person doesn’t earn interest along the way. We appreciate that. There could be tax lost if someone had to recapture those and they pay the tax. We have been long advocating to the government to use that in other circumstances as well, such as bringing in a parent that could no longer live on their own if they had to refit the house, or if you had to refit the house if you were in an accident, or if you enjoyed where you lived but you had to refit your house to accommodate for accessibility issues. We have long been advocating to be able to use that Home Buyers’ Plan in many different scenarios. It was this government in the last budget that brought it out with one of our components, which was in the event of a marital breakdown to be able to reuse it. The way it’s set up now is you’re only able to use it for the first time as a first-time home buyer.
Senator Poirier: Are you telling me that Divisions 18 and 19 will address that in the bill?
Mr. Stephen: Yes.
Senator Poirier: Ms. Kapoor, in your presentation, you told us about the 13 per cent of Canadians and the 3.4 million people who are considered to be low income. Then you went further. Over 235,000 Canadians are homeless. Can you explain to me how Divisions 18 and 19 will address that the homeless will be able to have a home?
Ms. Talwar Kapoor: Thank you for that very good question. I think it will help to demystify some of the questions around a rights-based approach.
The right to housing proclaims that it is the Canadian government’s housing policy that it is the fundamental right of all Canadians to have access to safe, secure and affordable housing. At the same time, this goal will be achieved progressively over time. The idea is not that tomorrow we will wake up and all 235,000 homeless Canadians will have a home. Unfortunately, that is not the case. We recognize that the resources available to governments will change over time. What we are asking through this legislation, and as recognized in international human rights frameworks, is that the government progressively move with the maximum available resources it has to address deep housing need — for example, people who are homeless.
I will provide an example. In preparation for today, I was doing research on how many homeless people there were in 1976 in Canada. Unfortunately, there is not much information available. But fortunately, the reason that’s the case is it wasn’t a pervasive idea in Canada at that time. There were certainly people who were in transient housing need, but the idea of people being homeless or homelessness as a permanent fixture in Canadian society did not exist 43 years ago. Progressively, over time, as we all know, that situation has gotten worse. When I think about what the next 43 years will bring us if we are able to receive Royal Assent on this piece of legislation, it is that we progressively bring that number down and that smart, strategic, evidence-based investments are made that will help to bring that number down.
Senator Poirier: As we all know, a good part of the homeless problems — and I’m just talking about my home province that I know and, specifically, issues we’ve been hearing in the news in the Moncton area about homeless people — is they’re having a hard time getting any type of home or apartment because they have no address. If you have no address, you can’t apply for funding assistance, and they have no job. Basically, they remain homeless because there is no avenue for them to even get social assistance at this point. I’m curious as to how you perceive that Division 18 or 19 will affect that going forward so that 43 years from now we’re not triple what we are today.
Ms. Talwar Kapoor: Under the national housing strategy act, the federal government invested $40 billion over ten years in housing across Canada. Some of that is new investment in things like a co-investment fund, where housing providers are encouraged to partner with local organizations to develop new shelters or deeply affordable rental housing units. The national housing strategy act also includes a rental supply initiative in which the federal government is working with developers invested in developing rental supply across the country.
The creation of the Canada housing benefit, as long as a province cost matches this, would provide people waiting to receive affordable housing in a province with an opportunity to receive a benefit in lieu of a home, which would then enable them — there’s a calculation for this based on one’s income — to get into the rental market space in the community that they’re living in.
I’m going through some of the key planks of the national housing strategy to illustrate why this legislation, in my view, works. It is because it has the accountability framework, it has the strong policy statement of why, but it also requires the federal government to have a national housing strategy. Over the course of the next eight years now, backdating to 2017, the federal government has made significant investment in this area that we think will help, and it’s not just the federal government that is at the table, but they are compelling different orders of government and non-profit developers and civil society organizations to come to the table.
Senator Ravalia: Just to lead on from Senator Poirier, while I applaud this legislation, a part of me feels concern that perhaps the most vulnerable in our society will still not get access to independent housing. Is there any way that you feel this legislation could have been strengthened or could be looked at in the future to ensure that the most vulnerable in our society also get a fair shake at owning a home one day?
Ms. Talwar Kapoor: Thank you for that question.
As a former public servant, I appreciate the importance that home ownership has in building one’s equity and one’s own net worth and assets. Increasingly, in today’s day and age, it’s not just income poverty but also about asset poverty that matters and enabling resilience for people who are at the margins of the labour market or broader society.
That being said, and while I take your point and your question, the point of this legislation is to raise an urgency about those who right now have absolutely no place to go. Ideally you would want people to be able to ultimately own a home. I think that pragmatically and practically, what we are saying is for somebody to be safely, securely and affordably housed, thinking of how we develop deeply affordable rental units, for example, people actually having an address so that they can receive social assistance or other forms of government tax credits, for example is important. It’s not to negate that home ownership, of course, is incredibly important for Canadians — we know this — but there is, unfortunately, a growing segment of the Canadian population for whom that is not going to be a reality, and not just because the market has heated up in the way which we have seen it over the past couple of years, but because a vision from government and from Canadian society about what it means to be Canadian and what you fundamentally need to be Canadian has been lost, and this introduces that idea into the Canadian imagination.
Senator Ravalia: Thank you.
The Chair: Did you want to add something to that, Mr. Stephen? Okay.
Senator Kutcher: This is a question for both of you, preferably one at a time. Given the intent, the purpose and the components of the act, how comfortable are you that this act will actually improve access to safe, secure and affordable housing for many Canadians? On a scale of 1 to 10, 1 being poor and 10 being great.
Mr. Stephen: I would defer to you.
Ms. Talwar Kapoor: Again, to channel my inner former bureaucrat, I will cautiously go with a 9.5, and that is bold for a former bureaucrat.
I will provide an example from here at home. In Edmonton, I think about nine years ago, they started to take a rights-based approach to homelessness. In the past nine years, homelessness has dropped by 43 per cent.
I think that what we have seen to date, at least in my time, has not been adequate to reach the needs of a majority of Canadians. I am not just hopeful, but I think that this legislation has the right ingredients to make a difference. It’s got a clear policy statement. It requires the federal government to have underpinning policy strategies to support this. Importantly, it has an accountability framework in which the federal government can learn and re-learn what is working and what is not.
Does that require the ability of the federal government and its partners to pivot quickly if it learns that things aren’t working or things can work better? Yes. But I also think that the housing issues that pervade our country now compel that type of quick response, and I think that governments are ready to respond.
Mr. Stephen: I would give it a good grade. I’m not sure I’m going to throw out a number. I always say to my kids, “How was the meal?” and they’d say “good,” and I say “good” was “decent” in school. I’m always looking for a “great,” by the way.
I think for us, where there are portions of this that are yet to be determined, it’s hard for me to throw a number out when we’re not subject to all the details, certainly on the home ownership piece of it.
The one thing that I think we both agree on is you’ve got two spectrums at the table, but there are so many other spectrums out there. It’s my frustration that whenever we go with stakeholders, we don’t just double down on what realtors, or homeowners, or buyers or sellers want but we try to take a look at the whole spectrum, because the minute you pay attention to one over the other, then you don’t create the necessary flow.
I would say it’s good. I guess if I had to commit to a number, it would be seven, maybe.
The Chair: Thank you for those answers.
To the witnesses, thank you for your help in studying those divisions of the bill.
We are now wrapping up our study of certain elements of Bill C-97, with a look at Subdivision C of Division 9. Our next panel of witnesses is from Health Canada. Joining us are David K. Lee, Chief Regulatory Officer, Health Products and Food Branch, and Greg Loyst, Director General, Policy and Regulatory Strategies Directorate.
I don’t know who wanted to speak first, but maybe begin with your opening remarks, and we will follow with questions.
David K. Lee, Chief Regulatory Officer, Health Products and Food Branch, Health Canada: Thank you, Madam Chair.
Subdivision C would introduce amendments to the Food and Drugs Act to increase patient safety but to enable innovation. The key pieces of the proposals are for classification of products under the Food and Drugs Act, clinical trials and advanced therapeutic products.
Clause 164 will introduce a new way, a very organized way, to handle classification. Right now, products can meet more than one definition under the act, so a drug, device or food. This would offer a much more transparent new mechanism to cause us to consult on classifying, because we don’t want products to be subject to more than one set of rules. This would reduce business uncertainty when developing because you really want to know which pathway you’re going to file under with us.
Clause 166 would introduce measures to modernize our clinical trial structure. This is very important. There are many new advanced way to conduct clinical trials. This would be very enabling. For the first time, it would also allow for studies in special foods for infant formulas or if you’re intubated in a hospital. It will allow studies here in Canada. Right now, companies have to go elsewhere to do those studies. So a very important set of measures.
Clause 169 would introduce a new pathway for advanced therapeutic products. This is a proposal that takes into account that there are many advanced products now. We’re seeing, for example, manufacturing in hospitals on 3D printers of tissue that is embedded with cells that are genetically manipulated. How we regulate these with our drug and device regulations has really come into question. We are seeing advanced pathways for diagnostics in artificial intelligence, for example. Again, same thing. It’s very disruptive. As a regulator, we need a very flexible approach. This would allow for the minister to identify advanced technologies and be able to tailor the regulations. It’s not lowering the standards, but keeping the evidence up high for safety and allowing us to tailor the requirements for these profoundly new products.
That, Madam Chair, is the summary. If I may have my colleague describe the inspection piece.
Greg Loyst, Director General, Policy and Regulatory Strategies Directorate, Health Canada: Thank you very much for the opportunity to provide a brief overview of clauses 170 and 171, which seek to amend the Food and Drugs Act, and in particular, the powers of inspectors.
We operate in an increasingly complex environment, with technology advancing at record speed, but our inspection powers have not kept pace with that advancement. The proposed amendments would provide clarity around certain statutory powers and give inspectors modern enforcement powers, allowing them to proceed on a more flexible and responsive basis.
The objective of the proposed amendments is to allow us to better protect the safety and security of Canadians. It is important to note that they are in keeping with authorities that are found in other pieces of modern federal legislation, including many of those that are administered by Health Canada. Perhaps what I can do is just give a brief overview of some of the highlights of some of the powers that we’re seeking, and then we would be happy to then answer any questions that you have related to the text of the bill.
The proposed amendments would allow inspectors to order a person to provide an inspector with any document, information or sample specified by the inspector. They would add electronic data to the list of records that can be examined by an inspector. They would give an inspector an ability to reproduce this electronic data or to use a computer system or a system of telecommunications in a place being inspected. They would allow our inspectors to take photographs, make recordings or sketches during an inspection, so all things to aid them with the collection of information relative to the inspection.
Inspectors would be allowed to enter a place remotely, so they would be able to access documents while they’re not on site. This would be done, obviously, with the permission and knowledge of the owner of those documents but creating efficiency both for us and for the regulated party in terms of accessing those documents. Inspectors would be able to cause a person within a place to identify themselves to the satisfaction of the inspector. They would be able to order a person to move or stop a conveyance, and they would be able to enter that conveyance then for the purpose of the inspection. Inspectors would have the authority to enter a pass-through private property. This would not include, of course, a dwelling house, which the sanctity of home would remain. We would only enter those places with a warrant or the consent of the owner. This gives you a bit of a sense of some of the powers that we’re seeking to improve our inspectors’ capacity to execute their functions.
I would also like to note that there are some amendments proposed in clauses 173 to 175, and these are in relation to any of the penalties that would arise from a duty to comply with these new orders. When we looked at the current penalty structure within the Food and Drugs Act, we really just fit up these powers within that existing architecture. There are no new penalties or levels of fines or anything like that. We really just found a home for these authorities in accordance with the penalties that would exist for infractions under different sections of the current act.
The Chair: Thank you. We do have questions for you.
Senator Seidman: Thank you both for your presentations. It is nice to you see you again, Mr. Lee.
I do have questions, but first of all, it’s kind of tough to have amendments to the Food and Drugs Act in a budget bill, but we’re going to have to deal with it.
I’m going to ask you specifically about section 3.3 of subdivision (c) of Part 4. It’s kind of close to my heart because it is closely tied to Vanessa’s Law. I was the sponsor of Vanessa’s Law in the Senate way back in 2014.
If you look at section 3.3, it says:
The holder of an authorization referred to in section 3.1 shall ensure that prescribed information concerning the clinical trial is made public within the prescribed time and in the prescribed manner
Section 21.71 of Subdivision C of Part 4 also specifies the duty to publicize trial information. It states:
The holder of a therapeutic product authorization referred to in paragraph 30(1.2)(c) shall ensure that prescribed information concerning the clinical trial is made public within the prescribed time and in the prescribed manner.
So now I get to the point. Vanessa’s Law, which received Royal Assent on November 6, 2014, already amended section 21.71. So why were these changes necessary?
Mr. Lee: Thank you, senator. I do remember the days on Vanessa’s Law. Very important provision.
The intent is to make sure there is a visibility of clinical trial information. The intent of both sections is the same. The reason we needed to include this is that for the first time, the words “clinical trial” are appearing in the act in a main provision, so it’s that enabling structure, because we will be able to now look at the conduct of a trial, which really unlocks some very important aspects of clinical research. A lot of this will be for physician-driven research and so on. Everybody will follow the same rules, but this really speaks to the fact that if you’re going to do a trial, “prescribed” means in regulation we will say which information has to go out to the public, and it’s going to be most of it — protocols, et cetera, and the timing of it. Really it’s the same provision, but we just had to duplicate it under the same structure because we’re creating a new set of rules for clinical trials.
Senator Seidman: The term “investigational test” has been removed from section 21.71. Why what would that be?
Mr. Lee: The reason for that is that “investigational studies” describe trials for devices, as you may know. Down in the regulations, we are trying to heal those differences and call it all “clinical trials.” That is done to serve the research sector. More and more, we are getting combination products. We are getting study designs now where people can have a whole cohort of patients in the same disease group. You can have a master protocol where you can introduce a drug study as an annex and then a device on the same platform. It is really quite marvellous. It will unlock a lot of great science. Having said that, we need to have a fairly uniform frame for that. That’s why we have pulled it all up into the wording of “clinical trial.”
Senator Seidman: Okay. Why is it necessary to move to an authorization model?
Mr. Lee: Authorizations will now be able to carry things like terms and conditions. Again, from Vanessa’s Law, that is a very important aspect so we can tailor some of the safety oversight, such as how often do you have to report on serious incidents? There are ground rules for that, but if you want to tailor rules, you use terms and conditions to govern. That can only be put in an authorization. It won’t lift away the default period we put in in 2001 if that’s a concern because the timing in which we approve a clinical trial is very important for everyone doing studies. That will be maintained but, for legal reasons, we had to reframe that.
Senator Seidman: That was a concern, whether there would be a backlog.
Mr. Lee: The policy intent is to maintain the default mechanism as we rewrite the regulations.
Senator Ravalia: Thank you, witnesses.
My question is with respect to medical devices and all the media issues that have come up. I was a practising physician until I joined the Senate. I’ve seen the negative sequelae of medical devices, particularly joint replacements, mesh, things like that. In 2018, Health Canada’s action plan on medical devices had a number of recommendations. Some of those did not find their way into this legislation. Would you care to comment? Is it time for us to have a national registry and an easy tracking mechanism to follow up on potential hazards from devices, given the huge explosion now in devices across the board?
Mr. Lee: Thank you for that question, senator.
I am aware of the plan. In terms of being able to explain what was chosen for inclusion in this particular vehicle, in this bill, it was really framed on innovation. It’s a modernization piece. That’s why you will see inclusion as very relevant for devices so we get more robust testing on the clinical trial side. That was certainly included here. Classification issues, making sure we are regulating it in the right spot — that was also an instrument. We did have a focused and limited number of inclusions for this bill. That is not to say that those are not important discussions. The department will keep reviewing those.
Senator Ravalia: On a go-forward basis, in an ideal world, would you have liked to have seen some additional amendments that incorporated some of the concerns that have come out from the public?
Mr. Lee: My understanding is that we are reviewing policies constantly, especially on the safety side, but the inclusions here went through a process. Really, these were the ones that appeared now. I know there are intentions to look at more sequenced modernization more often.
Senator Ravalia: Thank you.
Senator Oh: Thank you, witnesses.
How will this affect Chinese herbal medicine? We know the Indigenous people have a long history of healing using food or whatever. How will it be affected?
Mr. Lee: Unlike food, senator, this bill is more focused on research for some of our biologics, our pharmaceuticals, our more advanced devices. Only in respect of classification will food and some of the natural health products be affected. That lifts it out as a transparent discussion to ask which should it be. We have had discussions on things like caffeinated drinks that were under natural health products; they moved over to foods. This will be a more organized way to do it. Other than that, it has no implications for those products whatsoever. Those products are all regulated now under the current regulations. Here we are just focusing on creating better research. It could be that some of it would fit in with special dietary. We can look at it case by case, just for enabling research, but this is really focused on, again, the more sort of advanced therapeutics and devices.
Senator Oh: In the majority, it wouldn’t affect Chinese medicine practice?
Mr. Lee: Correct.
Senator Oh: Good. Thank you.
Senator Forest-Niesing: Did Health Canada carry out consultations on the proposed amendment to add the new category of therapeutic products? If so, can you tell us about them? If not, can you tell us why?
Mr. Lee: I’m happy to say, senator, we had very extensive consultations. In fact, prior to the bill discussions, we launched a foresight exercise in our branch to see what was coming into our window as regulators. We feel it’s our responsibility to be ready, scientifically and otherwise, for these many new products coming in. We also surveyed not only industry sectors but we went across the country and went to the teaching hospitals and the incubator hubs, where government is looking at a lot of innovation. We went to very small companies, went into their labs and really talked to them about what they needed in classification.
This new advanced therapeutic product pathway was also something of great interest to the bulk of those with whom we spoke. The common problem was that we would take a long time to make regulations for each new product line or to make changes within our vaccine regulations or others. People were looking for a way to very flexibly tailor the oversight. We did consult extensively. We posted a “what we heard” report on that. We will continue discussions because this is a new policy environment where we’ll need to learn about the technologies in the sector as we create expectations for safety and efficacy.
Senator Forest-Niesing: I take it the “what we heard” report is available on the website?
Mr. Lee: It is posted on our website.
Senator Kutcher: Hello, again. On the clinical trial side, if I understand correctly, this will allow for facilitation of clinical trials in areas where traditionally Canada has not been strong and not able to conduct. In your estimation, what is the economic value of this research that this bill will now facilitate in the next five to ten years?
Mr. Lee: I don’t know that we can project a full economic statement, but I can give you an idea of the data points that we would examine. Certainly in enabling trials that are company-driven, there are some savings there. The main points we are examining are making sure we can conduct some of the new platform trials, umbrella trials, new designs to allow the companies to innovate where they have more general protocol so there is one study they can include themselves.
The other thing is unique to Canada. We are very bricks-and-mortar in the way we do clinical trials right now. Families have to drive 200 or 300 kilometres to get an infusion for their child, if they have a rare disease or something, and then go again to get tests. We are trying to look at whether in the future we can go to things like virtual trials. That would be great for our remote regions. If you are not in one of the main cities with teaching hospitals, that would really help.
Also, when we did the regulations in 2001, they were very focused on the industry doing the research. We are trying to change to include physician-led trials which go to a lot of off-label indications. That is very important for the child cancers area. We are doing a lot with the physicians in those areas to really make us far more efficient and to join in on international studies as well. There is a lot of support in that community for these changes as well.
Senator Kutcher: As someone who spent years doing these —
Mr. Lee: I can’t state a number for you, but those will drive efficiencies in the system.
Senator Kutcher: Thank you for that.
I have one other short question. This is to the advanced therapeutic products part as a bit of a follow-up to my colleague Senator Ravalia. We are only too aware of challenges in this area, the artificial hip failures, and Smith & Nephew come to mind. What impact will this have on those negative outcomes we see all too commonly?
Mr. Lee: We think the advantage of this new pathway is once a product line is scheduled, the way the mechanism would work is for the minister to frame the form and manner in which information is received, and also the content. Really what you are looking for is to see where the control points are, where are the points that something can happen and go wrong and map that out. With the old regulations, they worked very well, but they are not looking for specific things or not tailored to find certain things. There is also the terms and conditions, as we recently discussed, that you are creating ongoing monitoring, so you are thinking about how to surveil for problems. You are planning that out ahead of time. At least notionally, the model is really at all in with all participants trying to frame up more planning, and that’s the way we would use it.
Senator Kutcher: So this addition should both improve the quality of the protocols but also what I hear you saying is the quality of the oversight monitoring?
Mr. Lee: That’s correct, because then we are not using regulations that were written in the 1960s to face artificial intelligence, which again right now we are seeing some disparities between what was anticipated back then and what we are seeing now.
Senator Griffin: I’m not sure who can answer this. You can decide among yourselves. I’m following up to Senator Ravalia’s question. It’s in regard to the budget.
Budget Bill C-97 includes significant amendments that were not in the budget plan announced by the minister, but here they are, so I guess you are ready for them now. It does not include the creation of a Canadian drug agency, which was announced by the minister in his budget plan. I found that to be a very exciting announcement, so I’m disappointed we are not seeing that. Why is that?
Mr. Lee: I’m not sure that either of us would be able to address that point, senator. We can certainly say what the Food and Drugs Act amendments are because that’s our point of focus, but we would have to take back anything on another potential instrument. Sorry.
Senator Griffin: That gets you off the hook. I’m still disappointed it’s not in there, though.
The Chair: Thank you very much for helping the committee with its study on this division of Bill C-97.
I need the members to proceed with an in camera discussion for the draft report. Please don’t stray too far. We will suspend for only two minutes.