THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Wednesday, May 8, 2024
The Standing Senate Committee on National Finance met with videoconference this day at 6:45 p.m. [ET] for the consideration of the Main Estimates for the fiscal year ending March 31, 2025, with the exception of Library of Parliament Vote 1.
Senator Claude Carignan (Chair) in the chair.
[Translation]
The Chair: Honourable senators, before we begin, I would like to remind all senators and others in the room of the following important preventative measures.
To prevent disruptive — and potentially harmful — audio feedback incidents, we remind all participants to keep their earpieces away from all microphones at all times.
As indicated in the communiqué from the Speaker to all senators on Monday, April 29, the following measures have been taken to help prevent audio feedback incidents: All earpieces have been replaced by a model that greatly reduces the probability of audio feedback.
The new earpieces are black, whereas the former earpieces were grey. Please only use a black approved earpiece. By default, all unused earpieces will be unplugged at the start of a meeting. When you are not using your earpiece, please place it face down, in the middle of the round sticker on the table where indicated.
Please consult the card on the table to prevent audio feedback incidents. Please ensure that you are seated in a manner that increases the distance between microphones. Participants must only plug their earpieces into the microphone console located directly in front of them.
These measures are in place so that we can conduct our business without interruption and protect the health and safety of all participants, including the interpreters.
Thank you all for your cooperation.
I wish to welcome all of the senators, witnesses and Canadians watching us on sencanada.ca.
My name is Claude Carignan, senator from Quebec, and chair of the Standing Senate Committee on National Finance. Now, I would like to ask my colleagues to introduce themselves starting on my left, please.
Senator Forest: Éric Forest, Gulf senatorial division, Quebec.
Senator Gignac: Clément Gignac from Quebec.
Senator Loffreda: Hello and welcome. Tony Loffreda from Quebec.
[English]
Senator Galvez: Me too, I’m from Quebec, Senator Rosa Galvez.
Senator Pate: Senator Kim Pate, welcome. I live here in the unceded unsurrendered territory of the Algonquin Anishinaabe.
Senator Kingston: Joan Kingston, New Brunswick.
Senator MacAdam: Jane MacAdam, Prince Edward Island.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
Senator Smith: Larry Smith, Quebec.
[Translation]
The Chair: Thank you, honourable senators. Today we are continuing our consideration of the Main Estimates for the fiscal year ending March 31, 2025, which was referred to this committee by the Senate of Canada on March 19, 2024.
We welcome today some senior officials from Public Services and Procurement Canada, Infrastructure Canada and the Canada Mortgage and Housing Corporation. I understand that one official from each department will give a brief statement of five to six minutes, and that the others will help answer questions.
I am pleased to introduce Wojciech Zielonka, Assistant Deputy Minister and Chief Financial Officer, Public Services and Procurement Canada; Janet Goulding, Senior Assistant Deputy Minister, Community Policy and Programs, Infrastructure Canada; and Nadine Leblanc, Interim Chief Financial Officer and Senior Vice-President, Policy, Canada Mortgage and Housing Corporation.
Welcome and thank you for accepting our invitation. Wojciech Zielonka will speak first, followed by Janet Goulding and Nadine Leblanc.
[English]
Wojciech (Wojo) Zielonka, Assistant Deputy Minister and Chief Financial Officer, Public Services and Procurement Canada: Thank you. Good evening. I would like to acknowledge that we are meeting today on the traditional, unceded territories of the Algonquin Anishinaabe people, honouring their deep connection to this land.
I greatly appreciate the opportunity to appear before you to discuss Public Services and Procurement Canada’s Main Estimates for fiscal year 2024 to 2025. I am joined today by Mark Quinlan, Assistant Deputy Minister for Real Property Services; and behind me, Alain Lagacé, Director General and Deputy Chief Financial Officer.
Mr. Chair, as this committee knows, PSPC has a wide‑ranging mandate steering government procurements, managing government buildings, administering pay and pensions for the public service, and more.
In order to support these activities, PSPC is requesting a net amount of $4.8 billion through the Main Estimates. This is a net increase of $449 million from the previous year’s Main Estimates. Of the amount the department is seeking, more than $3.3 billion will be spent on property and infrastructure activities, including major rehabilitation projects across Canada. Almost half of this sum is comprised of capital expenditures to maintain federal infrastructure, such as buildings and engineering assets, including bridges, dams and highways.
PSPC is also seeking $767.9 million for payments and accounting initiatives, including supporting the Government of Canada’s pay administration program, including eliminating the backlog of pay issues and developing the next-generation human resources and pay system. PSPC manages approximately $25 billion in procurement annually providing goods and services to departments across the Government of Canada.
As part of Main Estimates 2024 to 2025, PSPC is seeking $181.7 million on goods and services. Part of this requested funding will allow PSPC to continue to work with key partners to implement the Canadian Dental Care Plan. The National Shipbuilding Strategy remains a key focus for PSPC.
[Translation]
In addition, modernizing procurement including simplifying processes and improving access to public contracts for SMEs and suppliers from historically under-represented groups will continue to be on PSPC’s agenda.
As part of the Main Estimates, PSPC is seeking $159.9 million for government-wide support programs including the Translation Bureau, the Procurement Ombudsman and internal services.
The Main Estimates also include a request for $174 million in statutory authority for contributions to employee benefit plans. In addition to the above and other ongoing priorities at PSPC, Budget 2024 contains a number of key implications for the department.
PSPC will continue supporting the government’s response to the housing crisis by accelerating the conversion of underused federal properties into affordable and accessible housing. Budget 2024 contains funds so that PSPC can reduce the office portfolio and convert underused federal offices into homes.
As committed to in the budget, PSPC is leading and already working on the new Public Lands for Homes Plan. The plan includes identifying and even acquiring underutilized public lands and leasing them out to ensure they are set aside for the building of affordable homes.
Additional Budget 2024 measures include predictable capital funding for federal assets, as well as support for the Next Generation Human Resources and Pay Initiative and expansion of the Translation Bureau’s capacity.
We are pleased to answer any questions you may have. Thank you.
Michelle Baron, Assistant Deputy Minister and Chief Financial Officer, Corporate Services, Infrastructure Canada: Good evening. I am Michelle Baron, Assistant Deputy Minister and Chief Financial Officer, Corporate Services, Infrastructure Canada. I’m pleased to join you today to discuss Infrastructure Canada’s Main Estimates for 2024–2025.
I am joined today by my colleagues Alison O’Leary, Senior Assistant Deputy Minister, Communities and Infrastructure Programs Branch; Gerard Peets, Assistant Deputy Minister, Policy and Results Branch; and Marco Presutti, Assistant Deputy Minister, Investment, Partnerships and Innovation Branch. Janet Goulding, Senior Assistant Deputy Minister, Community Policy and Programs Branch, is seated to my right.
Infrastructure Canada supports housing and healthy and sustainable communities. It does so by working with partners to develop and update building codes, standards and guidance, by collaborating with other levels of government to share and find solutions for housing and homelessness issues.
The department engages with key stakeholders to plan the future of public transit. It also provides funding for better public transit, effective and reliable water and waste water facilities, as well as infrastructure that is resilient in the face of climate change.
The department invests in initiatives that spur home construction and measures that aim to prevent and ultimately eliminate chronic homelessness. Infrastructure Canada is proud to enable and support the creation of inclusive and safe communities across Canada. To achieve these outcomes, we collaborate with all levels of government as well as Indigenous communities, industry, finance and other stakeholders.
In the 2024-25 Main Estimates, Infrastructure Canada is seeking $8.2 billion in funding, which includes the department’s implementation of Budget 2023 commitments to refocusing government spending. This represents a decrease of $1.4 billion compared to last year’s Main Estimates.
Infrastructure Canada remains committed to delivering an unprecedented level of programming to support projects delivered through 25 programs, including the Investing in Canada Infrastructure Program, the Public Transit Program, the Reaching Home Program and the Canada Community-Building Fund.
[English]
While our program envelope continues to ramp up, we are seeing a decrease of $1.4 billion in our Main Estimates compared to last year. This is because we shifted funding into future years under the Investing in Canada Infrastructure Program to ensure that the availability of federal funds aligns with the provinces’ and territories’ forecasted project spending. In other words, to ensure that the money is there for our partners when they need it.
The continued ramp-up we are seeing in other programs is offsetting the shift in the Investing in Canada Infrastructure Program funding profile. For example, the public transit program is increasing by $367.03 as implementation progresses and more projects are approved.
As outlined in Budget 2023, the government set out to reduce spending, and Infrastructure Canada remains committed to doing its part. To that end, the department has reallocated $165 million over five years and $11.3 million ongoing starting in fiscal year 2027-28. We are accomplishing this by reducing expenditures under the public transit program, the Smart Cities Challenge and operating budgets.
Infrastructure Canada is achieving operating savings of $7.8 million in 2024-25 by implementing targeted services level reduction, by re-prioritizing and rationalizing services, all with a focus on protecting activities directly related to program delivery. Program reductions in 2024-25 for the public transit program and the Smart Cities Challenge represent $15.5 million and $2.9 million respectively. We will continue to work closely with our partners to help them meet the demands associated with those reductions while delivering programs that meet our priorities for housing, sustainable infrastructure, homelessness and public transit.
I would note that while not included in these Main Estimates, in the coming year our department will forge ahead and lead the implementation of Canada’s Housing Plan and continue to build on investments announced in Budget 2024 for a number of important initiatives, including the new Canada Housing Infrastructure Fund, the Green and Inclusive Community Buildings top-up, and new funding to stabilize Reaching Home and support community-led solutions to encampments.
I appreciate this opportunity to discuss the important work Infrastructure Canada is doing to support Canadians and the communities we live in. We look forward to answering any questions you may have. Thank you.
Nadine Leblanc, Interim Chief Financial Officer and Senior Vice-President, Policy, Canada Mortgage and Housing Corporation: Good evening and thank you. It is an honour to be here tonight on the traditional unceded territory of the Algonquin Anishinaabe people.
[Translation]
Thank you for this opportunity to discuss CMHC’s work in administering federally funded housing initiatives, work that will be supported by the 2024-25 Main Estimates referred to this committee. With me this evening is Lisa Williams, Senior Vice‑President, Housing Programs.
Canadians are struggling with rising rents and rising house prices. It is a housing crisis that hits our most vulnerable friends and neighbours, and middle-income households as well. That’s why the programs you will see outlined in these main estimates are designed to intervene across the housing continuum.
Programs such as the Canada Housing Benefit and Affordable Housing Fund — major programs included in this year’s estimates — were designed to support people in housing need.
Meanwhile, programs like the Housing Accelerator Fund and the Apartment Construction Loan Program are meant to influence municipalities and the market to build more supply.
[English]
Senators have already been asking us about the childcare expansion loan program outlined in Budget 2024 which would invest $1 billion in low-cost loans to build or renovate childcare centres. It’s not mentioned in these Main Estimates, but the Canada Mortgage and Housing Corporation’s expertise in financing capital projects will result in a fast roll-out of the program and enable synergies between childcare infrastructure and housing development. The launch of the program is expected to be during the fiscal year 2024-2025, with a ramp-up in funding in 2025-26. We do not have details yet on the roll-out and the number of spaces. As soon as we detail that, that will be made available.
The Main Estimates we’re discussing today are broken into three broad categories: assistance for housing needs, financing for housing and housing expertise and capacity development.
I won’t go into a full list of the changes outlined in the Main Estimates. Instead, I’d like to offer an overview of what the activities are achieving.
I mentioned the Apartment Construction Loan Program earlier. Since its launch in 2017, it has supported the creation of more than 48,000 new rental homes — the kinds of homes we need more of.
The Affordable Housing Fund has created or committed to creating more than 32,000 new, affordable homes across the country and repaired 160,000 more. These are homes for people like Melanie, in Whitehorse. Her health and personal challenges drove her to the brink of homelessness until she found a home in Cornerstone community, which was built with support from the Affordable Housing Fund. The programs we’re talking about today have helped hundreds of thousands of people like Melanie from coast to coast to coast.
The work outlined in the Main Estimates is built on the idea of partnerships. We work directly with other orders of government, with Indigenous government and organizations, and with the private and not-for-profit sectors, to get housing built. We work with all of them to ensure that our solutions are comprehensive, efficient and coordinated.
The broader picture painted by these estimates is this: The Canada Mortgage and Housing Corporation, or CMHC, continues to play an important and agile role in addressing Canada’s housing challenges. We rely on support from across the country and across sectors so that we can build a better housing system together.
I thank you again for your attention today, and I’m happy to answer any questions you may have.
[Translation]
The Chair: Thank you, Ms. Leblanc. I get the sense that we will be talking about housing this evening. Senator Marshall, you have the floor for the first round of questions.
[English]
Senator Marshall: Thank you to all the witnesses for being here. My first question is on housing, and I’m not sure if it is for Infrastructure Canada or CMHC.
I read the housing plan that was released recently. First, I want to know if the numbers are still current. My understanding is that we’re going to need 3.87 million homes by 2031. Those are the numbers that I’m working with. There is an assumption that 1.87 million will be built anyway, 1.2 million will be built by the federal government and 800,000 will be built by the provincial and the municipal governments. This is not actually in the plan but it came from a re-release of a press release or a speech by the Prime Minister.
Are those numbers still current? I read in your housing market outlook that maybe things weren’t going to be so positive. That’s my first question. Are those numbers still current?
Janet Goulding, Senior Assistant Deputy Minister, Community Policy and Programs, Infrastructure Canada: Thank you for the question. Those numbers represent what we think we’re going to need to meet the housing needs of the country. The first number, 1.87 million, is the number that we feel we are on track to build in the current environment. The other two numbers — 1.2 million and 800,000 — are aspirational goals that we want to work toward with the new housing plan.
The important thing to remember — and my colleague referred to it already — is that when we talk about housing, this must be a collaborative effort. It takes all levels of government, the community and the private sector working together to reach those kinds of goals.
Senator Marshall: I went through the housing plan and extracted all the various types of programs that are going to result in new homes. Then I looked at what the objective was, the number of homes that were going to be built. All the numbers are focused on 2031. I actually came up with the number 1.3 million. I don’t know if that’s a good number or not.
Why are all the numbers right at the end, 2031? I thought for each year you would expect so many homes would be built so you could track whether you will meet your objective. You will not wait until year seven or eight to see if all those homes have been built. Is there a plan that has it broken out by the year?
Ms. Goulding: Thank you for the question. There isn’t a plan that has it broken out by year because, as you know, in Canada, over 90% of the housing is built by the private sector. The plan intends to put in place the conditions that will enable the private sector, working with the non-profit sector and all levels of government, to build what we hope are hundreds of thousands of homes and meet that target. It is very hard to assign a solid number to any one initiative.
Senator Marshall: Billions of dollars are going into housing, and the target number to be constructed is by 2031. For all the years in between, will there not be an update as to how government is progressing?
Ms. Goulding: Thank you very much for the question.
Senator Marshall: I think I know.
Ms. Goulding: I think I can answer that. The government intends to put in place measures to track the number of houses that are started over the coming years. Updates will be provided. We’re working through the methodology to do that, but maybe my colleagues at CMHC want to add —
Senator Marshall: I have a list because I extracted it from the report, the housing plan. Do you have a list that’s also going to add up to the 1.2 million houses that are going to be built by the government? I want to compare your list with my list because I don’t think my list is accurate.
Ms. Goulding: Thank you very much for the question. The challenge in trying to add together the numbers in the plan is that they are targeted at many of the same supports. You imagine that a builder who could take advantage of the GST exemption could also potentially be taking advantage of the Apartment Construction Loan Program and may also be benefiting from the accelerated capital cost allowance. It is hard to kind of take measures and add things together, but in terms of concrete measures and tracking housing starts, that is something that we intend to do.
Senator Marshall: You have got a number for housing starts, or CMHC comes up with a number. It is not like 5,000, it is 247,122 housing units. It would seem that you need a more precise number. Thank you.
[Translation]
Senator Forest: Thank you for being here. My first question is for Mr. Zielonka.
Mr. Zielonka, in 2018, the Government of Canada launched the Federal Lands Initiative to build 4,000 housing units. A few months ago, Radio-Canada provided an update halfway through the ten-year span: five years had passed, with 204 units built and occupied. That is a long way from 4,000. Is that figure up to date? Have we reached a higher number now?
Mr. Zielonka: I assume your question pertains to the Federal Lands Initiative?
Senator Forest: Yes.
Mr. Zielonka: We are not responsible for that initiative.
Ms. Leblanc: Thank you for the question. Canada Mortgage and Housing (CMHC) is responsible for the Federal Lands Initiative. Right now, we are halfway through delivery and have spent $120 million on more than 3,900 units. They are in construction right now. In general, construction takes from three to seven years, so it certainly takes some time for units to be completed. Nonetheless, we do expect to exceed the program’s commitments.
Senator Forest: That is good news: You are responsible and we have a number. Why does construction take three to seven years?
Ms. Leblanc: CMHC has done various research into construction, multiple dwelling units in particular. It is the planning stage that takes the most time. That includes zoning, permits, obtaining funding, partnership with builders and developers. Community services also have to be considered. The entire planning period actually takes from one to three years, and then construction can begin. Of course it depends on who is involved in construction, but major projects with more than 1,000 units take more than seven years, including the whole planning period.
Senator Forest: Does your program include…. There has been a lot of home construction, especially with municipal housing offices a few years ago. Various housing stock was degraded. Do municipalities have access to funding to upgrade existing housing stock?
Ms. Leblanc: Last year, the Canada Mortgage and Housing Corporation created the Housing Accelerator Fund. We work closely with municipalities to develop, redevelop or accelerate the planning we’ve just been talking about. As of today, we have 179 agreements signed with the municipalities to try to accelerate access to home ownership or the redevelopment of properties, which we see mainly in big cities.
Senator Forest: There are big cities, medium-sized cities and small cities; the needs are just as great, proportionately speaking. Are there budgets available for upgrading existing housing stock?
Ms. Leblanc: Absolutely. Under the Housing Accelerator Fund, the majority of agreements were reached with medium‑sized cities, rural areas and smaller municipalities.
Senator Forest: Ms. Baron, the 2024 budget proposes to provide $6 billion over 10 years, starting in 2024-25, to Infrastructure Canada to launch the new Canada Housing Infrastructure Fund. In order to access these funds, the provinces will be required to pre-approve the construction of housing that meets the designs in the government’s famous housing design catalogue, which will eventually be published.
Since I worked in municipal government for 27 years, my big question is that, since each municipality has its own bylaws and geomorphological reality, how can the federal government expect the provinces to be able to give prior approval for all the municipalities in their area? The committee chair needs to understand what I’m talking about. Each city has its own urban plan and its own geographic reality, with wetlands, coastal areas and many other factors that have a major impact on the urban plan. How do we blend all these realities?
Ms. Leblanc: Thank you for your question. The Canada Mortgage and Housing Corporation is working closely with Infrastructure Canada to review all the techniques, meaning the differences between the provinces and territories. It is anticipated that the catalogue will include structures that can be adapted primarily to provincial building codes. It won’t be just one model, but a number of models that will adapt to the specific codes and parameters of the provinces, as you mentioned. We recognize these differences, especially in the North, and we know that it’s important to adapt these models so that the provinces can approve them.
Senator Forest: In the north, south or east —
The Chair: Your time is up. I’m tempted to ask some questions, but I’ll save my turn for last.
Senator Gignac: I’d like to welcome the witnesses.
I think I’ll continue with Ms. Leblanc, in the same spirit as my colleague Senator Forest. You said that 179 agreements have been signed under the Canada Housing Infrastructure Fund. How many agreements have been signed in Quebec? Quebec is always a little sensitive and asymmetrical on many issues. Quebec doesn’t usually authorize signing agreements directly with municipalities or cities without giving its approval. Can you give us a geographical breakdown? If you don’t have it with you, could you send it to us in writing?
Lisa Williams, Senior Vice-President, Housing Programs, Canada Mortgage and Housing Corporation: You’re right. There is an agreement between CMHC and the Société d’habitation du Québec because of chapter M-30. The Province of Quebec will manage the entire distribution of funds to the municipalities.
Ms. Leblanc: I can add that 29% of our funds are allocated to Quebec, for a total of $902 million, and other units are committed as well.
Senator Gignac: I know you don’t work in the policy area, but you represent your department. We thank you for your fine work, but I see that the tone is rising between Ottawa and Ontario regarding affordable housing. Two days ago, Minister Fraser threatened to suspend…. He suspended a transfer of $357 million to Ontario because the Doug Ford government hasn’t provided him with a plan for affordable housing. The federal government seems dissatisfied with what’s happening in Ontario. Prime Minister Trudeau mentioned that he wouldn’t hesitate to go over the provinces’ heads and give the money directly to the municipalities. Did I interpret correctly what I read in the newspaper two days ago?
Ms. Leblanc: On the CMHC side, we have bilateral agreements with Ontario, and it’s very important to respect the parameters of the agreement. Why are we still negotiating? Because we’re looking for a plan that will respect the approved parameters when the agreement was signed. Obviously, we don’t want to withhold funding, because we’re in the midst of a housing crisis. It’s important that we continue to work with our partners in the provinces, and we also work closely with municipalities and partners who deliver services. These are things we’re reviewing because the needs are so great. How can we continue to get money to the people who need it? That’s the question.
Senator Gignac: I’ll continue in the second round, Mr. Chair.
[English]
Senator Smith: Mr. Zielonka, nice to see you again and the rest of the crew with you.
In response to the growing concerns over federal procurement practices, the government announced the creation of the Office of Supplier Integrity and Compliance. This new office is mandated to assist PSPC to identify and respond to misconduct in the procurement process.
Could you elaborate on how this new office will specifically help your department make the procurement process more transparent? Do you have any information on how much it will cost to run this new office and how many employees will staff it?
Mr. Zielonka: Thank you for the question. The plans are being developed right now, but there are a few different elements that this couples with. One, there have been a number of changes in procurement rules that we have announced over the last few months that will essentially tighten some elements of — essentially to try to make federal procurement more robust and make sure that rules are being followed. That’s one side. In essence, that’s the prevention side.
Senator Smith: Where will your focus on prevention be? If you could just give a couple of examples.
Mr. Zielonka: For example, making sure that the documentation, as we’re looking to enter into procurement, that the documentation is a lot more robust, and that there is more of a challenge function to make sure that there is evidence and questions being asked in terms of why the procurement is happening, what alternatives are being considered, and making sure that that kind of back and forth is well documented and well understood. That has not always been the case. I think that one of the findings in a couple of the reviews was that there are questions. There is missing documentation, sometimes, so it’s very difficult to look back and try to figure out what exactly happened. Making sure that documentation and hopefully making sure it’s in place will also lead to a more robust process, as an example.
Senator Smith: Where are you exactly with the process? It sort of sounds like there is a plan in place but it’s not ready to be executed at this point.
Mr. Zielonka: Absolutely. Certain changes have already been implemented and are already in full swing. For example, the changes around some of the requirements. We’ve also cancelled some of the existing tools we have, and we are changing those tools to put more robust tools in place. That’s already in full swing.
Senator Smith: Could you give us an example of a couple or send us a little —
Mr. Zielonka: We can absolutely do that. We can probably provide something to the committee around those detailed rules. If you give me a minute, I can probably find some specific examples around that.
I think the other question you had was around the office of the — I’m trying to remember the acronym. The Office of Supplier Integrity and Compliance. That one is actually what we would call more of a detective control. In essence there, the idea is that historically we’ve been quite limited in terms of the responses when we did find wrongdoing or questionable practices. In most cases — and I’m simplifying here — but unless there were criminal charges, we were fairly limited in what we could do.
Senator Smith: Do you have a draft budget you’re working on right now?
Mr. Zielonka: We do have a budget. We’re recommitting funds within the department. There is approximately, if I recall, about $4 million within the department that we’re reallocating. We’re also working with central agencies to access another couple million dollars on top of that. Those numbers are still being worked on, but we’re already in the process of hiring people and putting them in place.
Senator Smith: [Technical difficulties] staff up to?
Mr. Zielonka: Off the top of my head, we’re looking to add about 30 people, if I recall. It’s an additional 30 people. We already had a base group. This is an additional 30 people on top of that. I think it brings the total budget we’re expecting, once it’s in full operation — it’s going to take a couple of years to ramp up, but I think it’s going to be about $6.4 million, if I recall correctly, in terms of the total operating budget for that area.
Senator Smith: One specific concern relating to the federal procurement are employees of the federal government who have ties, directly or indirectly, to recipients of federal contracts.
What sort of work is being done to ensure that employees are actively disclosing conflicts of interest?
Mr. Zielonka: Great question. We recently went out to our department and we have asked all employees within the department to, (a), confirm whether they have outside employment. And second, telling them, if that’s the case, if they haven’t done so, to put in a conflict of interest declaration so we can review those.
To give you an idea we have quite a few as a result of that process. We’ve gotten quite a few conflict of interest declarations in. We’re essentially reallocating resources within our HR organization to focus on those conflict of interest declarations to make sure that they are not problematic in any circumstances. It’s really a sober second thought to make sure there aren’t problems where —
Senator Smith: Where do you figure you’re at in terms of understanding the depth or complexity of these issues?
Mr. Zielonka: To give you an idea, a couple of weeks ago, we got the survey done. Last week, I was personally involved because the regions are reporting to me right now, and I had to ask for resources to help out. I moved five resources from the regions last week, the beginning of last week, who were reallocated full time to help look at these conflicts of interest. It’s full swing.
Senator Smith: I’m going to come back if I have time. Second round.
Senator Loffreda: Thank you for being here. My question is for the Canada Mortgage and Housing Corporation.
I have a figure in front of me that shows me the evolution of CMHC’s Main Estimates authorities over the past five years. If I look at 2020-21, it’s just below $3 billion. When we arrive at 2024-25, it’s close to $6 billion and most are in voted expenditures. Can you provide reasons for this trend and why the voted expenditures have doubled since 2020-21? I think there is an item that you requested last year that you are requesting once again this year, close to $5 billion.
Ms. Leblanc: Thank you for the question. Since 2021, CMHC has onboarded some very significant new programs and also received some top-ups to some current National Housing Strategy flagship programs. I’ll name a few. The Housing Accelerator Fund is quite significant, $4 billion. It started two years ago in terms of us getting funding. We have to remember that we had three rounds of the Rapid Housing Initiative. Each time was approximately 1 point something billion. We have had some slightly lower but newer programs, like the one-time top‑up to the Canada Housing Benefit, as well as the Canada Greener Homes Loan programs that are more in the $400 million. Those are the newest programs that have generated that difference between 2021 and what we see today in our Main Estimates.
In terms of the $5 billion, let me just get back to you on this one. I want to make sure that I have the right number in front of me to answer that question.
Senator Loffreda: You’re requesting $5.62 billion this year for reimbursement under the provisions of the National Housing Act and the Canada Mortgage and Housing Corporation Act. That’s your request this year. CMHC requested $5.06 billion for the same voted item in last year’s Main Estimates. There is a lack of information on that item, so maybe you could get back to us in writing. Why is it not a statutory authority rather than a voted expenditure since you are requesting it again and the purpose is to fulfill the provisions of the National Housing Act and the Canada Mortgage and Housing Corporation Act? Why would it not be statutory?
Ms. Leblanc: Most of our funding comes from vote 1 just by the nature of how we’re set up as a Crown corporation and we get our funding through the Consolidated Revenue Fund and funding goes back. We have just the vote 1 where all the funding comes through. Statutory doesn’t come often to CMHC. That’s just the way that we are.
Senator Loffreda: I have seen that. You have very little statutory, maybe 1% or not even that.
Ms. Leblanc: Exactly.
Senator Loffreda: You would agree it is a substantial increase, over $5 billion. If I start counting, it would take me years to get there.
How are you measuring success in these programs? What are you doing? Where are you at? Are you obtaining your objectives? How can you tell the Canadian taxpayers this evening that it is a great investment that has been made?
Ms. Leblanc: Mr. Chair, thank you for the question.
Each program has targets and commitments beside them, especially the biggest ones. They all have some. We report quarterly on the Place to Call Home website on all of them. Canadians can monitor our progress accordingly.
At this moment, I have to say that the National Housing Strategy and its program are on track in meeting all of its commitments. At the moment, we have built over 400,000 units for the amounts you are quoting since 2017 as part of the National Housing Strategy. As well, we have repaired over 160,000 units and, through the Canada Housing Benefit, supported over 517,000 households in core housing need.
Those numbers, with respect to the commitments of the National Housing Strategy, as well as each program that are part of the Main Estimates that we are reviewing tonight, are part of the Place to Call Home website. They are updated quarterly. We monitor them on an ongoing basis.
Senator Loffreda: Then there is a dynamic process to adjusting the programs if required? Thank you.
Senator MacAdam: The first question is for PSPC. I will follow up on the discussion that Senator Smith started regarding the integrity office discussion. Does your department have an internal audit and evaluation function?
Mr. Zielonka: We do.
Senator MacAdam: How will that fit in relation to the integrity office? Was consideration given to expanding that division as opposed to going the integrity route?
Mr. Zielonka: We have an audit and evaluation function that is independent. What that function does, it is not an operational function; it is an oversight function of the normal activities of the department.
We have a branch that is called the Departmental Oversight Branch that is responsible and has a number of functions, which includes security. It also has a role in investigations of fraud and wrongdoing, including the whistleblower line, oversight of conflict of interest and so on. That unit is an operational unit.
Our audit and evaluation function are separate, and it provides an independent oversight of all the functions. In essence, it is a second line of defence essentially to ensure that, if something is going wrong or they are asked to review a function, they are able to do that independently without having an operational role in looking at themselves from that perspective.
That’s how we are organizationally set up.
Senator MacAdam: You are saying one is more independent than the other?
Mr. Zielonka: Yes. The audit and evaluation function are very independent.
Senator MacAdam: For Infrastructure Canada, the Green and Inclusive Community Buildings program, could you give me more information on that program? I noticed it has gone up in the Main Estimates for 2024-25 from the previous year. I want to know more about that program.
Alison O’Leary, Senior Assistant Deputy Minister, Communities and Infrastructure Programs, Infrastructure Canada: Good evening. I am Alison O’Leary, Senior Assistant Deputy Minister, Communities and Infrastructure Programs, Infrastructure Canada.
The Green and Inclusive Community Buildings program, this was announced in 2020 in the Fall Economic Statement at $1.5 billion. We have run two competitive intakes under that program, as well as a continuous application intake for small and medium retrofits.
At this time, we are pleased to say that all of that funding has gone to approved projects across the country.
We are happy to have learned in Budget 2024 that we have a top-up of $500 million that has been recently announced. We’re currently looking at how to implement that going forward.
Senator MacAdam: Are funds allocated to provinces in this program?
Ms. O’Leary: Thank you for the question.
This is one of our direct-delivery programs, which means that it is an open call for applications. Provinces and territories can apply, some do. Municipalities, Indigenous communities and not-for-profit organizations are also welcome to apply.
Senator MacAdam: Are their infrastructure programs specific to rural communities; if so, which ones are they?
Ms. O’Leary: Thank you for the question.
We do have a Rural Transit Solutions Fund program which is specifically eligible and open to rural communities. That was announced in February 2021 for $250 million. It is a new type of program for us that is, as I say, targeted only toward rural communities, looking for unique ways for people to get around in their communities in places where your typical public transit solutions aren’t really appropriate.
We also have the rural and northern stream of our Investing in Canada Infrastructure Program; that program was delivered through provinces and territories. Within that, there was a specific stream only eligible for projects from rural and remote communities.
That being said, all of our programs certainly are open to rural communities. We do our best to ensure that we have good support for applicants for smaller communities.
To answer your question, those are the two I would point to specifically for rural places.
The Chair: Thank you.
Senator Kingston: Welcome, everyone.
My questions will be for Nadine Leblanc and possibly Lisa Williams as well. I’m going to concentrate on the co-op aspect.
I don’t see a whole lot that says “co-op” in the budget itself. I know that in Budget 2022 there was $1.5 billion committed to launch a federal co-op supply program that was expected to build 6,000 new co-op homes. My understanding is that hasn’t really gotten off the ground yet or, if it has, there is not much information about it. Could you expand on that, please?
Ms. Leblanc: Yes. Thank you for the question.
You are correct. The co-op program was announced in last year’s budget. Over $1.5 billion has been committed to this program. CMHC has been working with the co-op federation, as well as a committee that was made up of co-op representatives across the country, to develop a program that will be focused on the needs of co-ops. We all know there are important needs across the country.
We are in our final steps of development. We hope that we could launch this program before the summer. As soon as we’re ready, all the information will be posted on CMHC’s website and more information will be provided.
Senator Kingston: Thank you.
I have a second question. Urban, rural and northern Indigenous households face disproportionate housing needs and homelessness. Prior federal budgets committed $4 billion to start closing this gap. An RFP administered by your department was issued recently to start this work, but the outcome seems to be delayed. Minister Fraser recently remarked at the National Housing Conference that an outcome would be announced imminently. What is going on with that particular file?
Ms. Leblanc: Thank you for the question.
I agree with you that needs are dire in the urban and rural communities for Indigenous populations. We have been working across Indigenous communities and governments to set up this strategy and the priorities within the strategy.
You are correct that CMHC has gone out with an RFP through a fair and transparent procurement process. At the moment, we are still validating the results of this procurement process. We hope, again, that these results will be made public very soon. As we are doing procurement, the negotiation aspect of procurement is always kept secret until we come up with an agreement. That’s where we’re at with that process.
Senator Kingston: You’ll have two launches near the same time.
Budget 2024 spoke about flexibility for the Federal Community Housing Initiative. This program protects housing security and prevents homelessness for some of the most vulnerable in our communities. This program is set to expire in a couple of years putting hundreds of thousands of households at risk of housing loss.
Do you expect this program to be renewed? What is the anticipated impact of any cancellation of that particular program?
Ms. Leblanc: Can you just repeat the name of the program, please?
Senator Kingston: Yes. It is under the Federal Community Housing Initiative.
Ms. Leblanc: Thank you. Yes. The Federal Community Housing Initiative was launched to support funding that was coming to some end with the provinces and territories as well as some of the units that CMHC still administers to this day. As some of the funds were ending, we developed this initiative to complement those agreements and some of the public housing that we still carry on our books.
We’re very grateful that some flexibility was announced through Budget 2024. You are correct. Some of that funding is decreasing over the next few years. We are committing to continue working with the communities in the industry to see how we can further support that best past the years in which this program will end.
Senator Kingston: Canada is losing deeply affordable housing faster than we can build the supply. Budget 2024 promised $1.5 billion for the Canada rental protection program to protect affordable homes and vulnerable renters, but only $5 million is budgeted for this year, 2024-25.
What results can vulnerable renters expect, as a result of the announcement of this amount?
Ms. Goulding: Thank you for the question. The Canada rental protection fund is a new initiative that we hope to launch in the very near future.
The intention of the fund is to create a sustainable source of investment to support the non-market sector in acquiring and preserving affordable housing. An important thing to remember is that right now there is just not enough public funds to support the amount of non-market housing that we need. What we are trying to create is a new fund that will draw in investment from the philanthropic community, social impact funds as well as leverage the important investment that the federal government is making, the $1.5 billion, to create sustainable funds that will provide ongoing access to capital or another source of ongoing access to capital, for our not-for-profit housing sector.
Senator Kingston: So it is beginning.
Ms. Goulding: We are in the process of getting our policy authorities and funding authorities. It is a very new program. It is a bit like the Social Finance Fund. As a new program, we’ll have to take time to do important policy work and get the right authorities in place. We expect to be able to do that in a timely way.
Senator Kingston: Thank you.
Senator Pate: Thank you, again, to our witnesses.
I am not sure if my question is for Ms. Goulding, or Ms. Baron, or somebody else. During your appearance at committee in September, the department shared some data regarding outcomes of the Reaching Home program indicating that between 2019 and 2023, about 69,000 people were placed in more stable housing and about 30,000 people began accessing income supports including social assistance and disability benefits. I am curious about the numbers.
Could you please confirm how many of these individuals were experiencing chronic homelessness at the time they were housed? The department indicated in September that data relating to Indigenous identity, gender and ability is currently being analyzed and findings were to be available later this year. Do you have any updates regarding these findings? If so, could you share them? If necessary, you can do it in writing if it is too long to provide here.
I am also curious about how the department is tracking long‑term impacts for those placed in more stable housing and whether you have data about how many people were actually moved above the poverty line as a result of the intersection of these initiatives.
Ms. Goulding: Those are a number of questions so I will try my best to respond to them.
In terms of the data that we shared last September, we keep an updated version of that data. I do have more recent results that I could share, but the numbers are still very close. We’re now at about 71,500 individuals who have been placed in more stable housing, and almost 32,000 individuals who have received income assistance. We track that on a regular basis with our community entities who manage the program, so we have results available.
In terms of your question related to how many of those were chronically homeless, that is not data that I have currently available. It is not something that we ask directly to our community entities in terms of identifying those who are chronically homeless and those who are not. Our estimates of chronic homelessness come from two sources of information. One is the shelter study that the department puts out on a fairly annual basis. The most recent version of the annual shelter study was in 2022. According to that shelter study, we have seen a change in the number of individuals in shelters who are chronically homeless. That number is growing. In 2022, it was about 17.2%. Overall, we have seen a drop in the use of shelters on a unique, individual basis, but we are seeing people stay longer, which is an indicator of chronic homelessness. We have also seen, as you know, an increasing number of people living in unsheltered homelessness. That is a tricky thing for me to unpack in terms of people we have actually helped but we can look at what the data does show.
In terms of the snapshot analysis with gender and Indigenous, that work is ongoing and we would be happy to share the most recent reports with the committee.
Senator Pate: Great. So there are reports available that you can send?
Ms. Goulding: We can share what we have with you, yes.
Senator Pate: Then the long-term impacts of —
Ms. Goulding: Yes. We ask our community entities to track individuals in stable housing up to 12 months after the fact. We can also share the most recent data that we have on that as well, the success rates.
Senator Pate: Thank you very much.
[Translation]
Senator Galvez: My question is for Infrastructure Canada.
[English]
I see there is a long list of new authorities funds that you are requesting with respect to making it a cleaner, sustainable community. We have the Green and Inclusive Community Buildings Program, the Natural Infrastructure Fund, the Supporting Climate Resilience Infrastructure initiative, contributions under the Green Infrastructure Fund, et cetera.
Are these for new infrastructure projects or does this cover infrastructure that has been destroyed by, let’s say, extreme weather events?
Ms. O’Leary: Thank you for the question. It depends on the program and what is eligible. On our website, we have what we call an applicant guide which lays out what is and isn’t eligible under each of those programs. For things like the Green and Inclusive Community Buildings Program you mentioned, that can fund retrofits of existing community buildings — that is, public spaces — in order to make them more energy efficient and more resilient. It can also fund new construction, new buildings that are publicly accessible and are built to net-zero standards. For natural infrastructure, typically that would be rehabilitating or working with the natural environment in order to provide things like increased resilience and those sorts of things.
Senator Galvez: For these programs, the contribution of the federal government is 100%, or do they require a contribution from the provinces or municipalities?
Ms. O’Leary: Thank you very much for the question. Each program is different. What we call the terms and conditions are of each of those individual programs. I’ll just give you an illustrative example. Again, the specifics can change depending on the nature of the program. Typically, if you have a municipality that is applying, we would typically fund approximately 40% and then the municipality and potentially other levels of government would need to look for other sources of funding for provinces and territories. Our cost share can go up to 50%. Again, it very much depends on the nature and specific rules of an individual program. Often for Indigenous communities, we do have the ability to go to a higher cost share. Again, it depends on the program, but sometimes 75% to 100%.
Senator Galvez: These are for helping environment for stronger communities and economic growth according to the plan. What are your performance indicators and how are these projects distributed geographically?
Ms. O’Leary: Thank you very much for the question. Like all federal grants and contributions programs, each individual program has its own set of indicators in terms of what we are looking to achieve. For example, if you are talking about the Green and Inclusive Buildings program, we would look at things like what is the contribution to inclusivity in a particular community, looking at accessibility for underserved people across the country as well as for the green aspect of that program, so energy efficiency and net-zero buildings.
In terms of geographical distribution, our website has a map that shows all of the projects that have been announced that are funded under all of our programs. It’s been recently updated, and so you can certainly click through that and look and see. We do try, to the extent possible, to achieve a geographical representation across the country, but often it does depend on what level of applications do come in to us.
Senator Galvez: Thank you.
Senator Osler: My question is for Infrastructure Canada. Almost 50% of Canada’s health care facilities were built over 50 years ago and are amongst the oldest public infrastructure still in use today. Infrastructure Canada has identified investing in infrastructure by delivering programs that enable the construction and rehabilitation of core resilient public infrastructure that moves Canada toward a net zero carbon/climate-resilient future as a key priority. The health care sector is estimated to be responsible for 4.6% of Canada’s total greenhouse gas emissions and has the second highest per capita from the health sector in the world.
My question is: Can you tell us how Infrastructure Canada supports health care facilities like public hospitals to approach net-zero emissions?
Ms. O’Leary: Thank you very much for the question. Typically, our programs are not targeted at health care infrastructure. I think our colleagues at Health Canada would probably be well positioned to answer that question and speak to you about the Health Canada transfer.
What we have typically done in our programming is focus more on public community infrastructure, which typically does exclude health infrastructure, except in the case of Indigenous communities where sometimes we have taken a more holistic look. Again, it depends on the rules of a particular program. But in some of our programs we have broadened the eligibility to allow for funding supports for Indigenous-focused health facilities.
Senator Osler: Given the importance of public health care facilities, given the age of the public infrastructure in use in health care, have there been discussions with Health Canada to invest in public health infrastructure?
Ms. O’Leary: Thank you for the question. I haven’t participated in discussions of that nature with Health Canada. In the aftermath of the pandemic, like many government departments, we were really trying to look at how we could incorporate some flexibility into our programming to really ensure that we were being responsive to some of those needs. Under the Investing in Canada Infrastructure Program, there was some time-limited flexibility that was introduced under what we called the COVID stream to look at how we might adjust some of our programming to have broader applicability. We did have some adjustments that would support health-related infrastructure in a time-limited and targeted way coming out of the pandemic. Typically, our department would focus more on public, community-focused infrastructure and Health Canada would typically have the mandate more for health-related investments.
[Translation]
The Chair: Ms. Leblanc, as far as real estate projects are concerned, when real estate developers complete a project, what we call post-construction mortgages are issued to CMHC. You’re asking that 90% of a project be leased and that there be a certain stabilized product rate before getting a CMHC loan. CMHC loans are very attractive to developers.
Have you considered reducing the stabilization rate from 90% to 80%, or setting an intermediate rate, so that this period between the end of the construction loan and the start of the stabilized loan can fill that intermediate portion and the missing cost?
Ms. Leblanc: Thank you for the question, Mr. Chair. I appreciate your feedback on our programs. We’re constantly reviewing our risk appetite programs. You’re right: At the moment, for post-construction mortgages, we’re trying to ensure a 90% rate. It’s related to the stability of the program, and therefore to the repayment we’ll get for the loans.
Of course, we’re constantly reviewing our risk appetite with respect to our programs, especially with the authorities we have. I’ll take this question as feedback, and we’ll see how we can evolve our programs. I understand that risk is something that you want to change and that you want it to be part of CMHC programs, but we’re not looking at doing that right now.
The Chair: However, you’re part of the other side of the risk. You say we don’t have a big appetite for risk, but you announced $15 billion for construction loans. For the riskiest part, you’re putting in $15 billion, while there are banks, family offices and pension funds that are willing to take on the risk. You could guarantee a certain amount of risk or interest rate for construction loans rather than take it on yourself. The banks are extremely nervous and have cut back a lot. They’ve changed their valuations and capitalization rates because of interest rates. They’re undervaluing. It’s very difficult to get a project off the ground.
I understand why CMHC wants to “take the place” of lenders to get projects off the ground, but instead of putting $15 billion there, perhaps a loan guarantee in this situation would ensure that banks with a lot of capital decide to open the tap a little more, rather than investment funds, which like that risk return, because it’s a little higher than with a stabilized product. There’s an appetite for those funds as well. You could give a little help that wouldn’t cost you $15 billion.
Ms. Leblanc: In the case of the $15 billion, we’re talking about the apartment construction program. It’s a subsidized housing program and we receive loans from the government. The risk threshold is very different from what we were talking about at the beginning for post-construction mortgages, which are reserved for our commercial programs.
So when it comes to post-construction mortgages for commercial programs, our risk appetite is very similar to that of financial institutions, because we have to follow the same capital framework. However, the Apartment Construction Loan Program is subsidized by the government. The risk is subsidized by the government, so the risk appetite is very different.
I agree with you that right now, given the state of the Canadian economy, interest rates and construction costs, I would say that over 90% of the activity in new construction activity will go to the Canada Mortgage and Housing Corporation; there are very few financial institutions currently supporting these activities.
The Chair: They’ve turned off the tap completely. This is huge.
My other question is for Ms. Baron and concerns pre-authorized plans, to follow up on what Senator Forest was saying.
You have two former mayors in front of you. You said you were considering adopting construction standards at the federal level, reaching agreements with the provinces and developing model structures. I’m having a little trouble seeing how that would work. I don’t want to be pessimistic, but I was mayor of a city where there was a rural, urban, cultural and historical area, and we had Site Planning and Architectural Implementation Programs (SPAI) for just about every street because, in some places, it was one storey and in others, two storeys, and we had to make sure that everything was balanced.
So even if you come up with common building standards between the federal government and the provinces, don’t you think that, even within a municipality, there are different building and architectural standards from one neighbourhood to another, and from one street to another? Don’t you think that’s utopian? Have you experienced this problematic situation with municipalities?
Ms. Goulding: Thank you for the question. If I understand correctly, we’re talking about Canada’s Housing Action Plan?
The Chair: Yes, we’re talking about the catalogue of pre‑approved plans, which I call the “Sears catalogue.”
Ms. Leblanc: Thank you for your clarification. I’d like to clarify my answer. It’s not that the catalogue will standardize construction codes. In fact, it will recognize that there are differences in the building code, and it will contain several models to recognize those differences. So we’re not standardizing anything.
Basically, we start with construction standards, then look at models that will identify these differences. We’ll work with the provinces and territories to come up with models that work for everyone.
Naturally, this won’t meet all the different needs and parameters of each municipality.
We currently have a fine example that’s making good progress, and it’s the British Columbia government, which is also preparing a catalogue. We’re working with them, since they’re the first, in order to fully understand how we’re going to go about it. We’re working with industry professionals to try to recognize these differences.
Again, it’s not a question of standardizing building codes, but of recognizing differences and having multiple models adapted to these differences.
The Chair: That’s interesting. Thank you.
[English]
Senator Marshall: My next question is for Mr. Zielonka, and it’s an issue that’s in the budget. Regarding the converting underused federal offices into homes, where do the numbers come from? I was looking at the numbers, and what it’s saying is that you’re going to take 6 million square metres of office space, and you’re going to convert 50% of it into housing, and over a 10-year period, it’s going to cost the government $1.1 billion, but the savings are going to be $3.9 billion, and the government is going to make $2.8 billion on this initiative.
Where do those numbers come from? Government doesn’t make money; government spends money. Can you just talk about those numbers and where they come from?
Mark Quinlan, Assistant Deputy Minister, Real Property Service, Public Services and Procurement Canada: I’m the senior assistant deputy minister for real property services within PSPC.
I’ll take a step back. The government has 28 million square metres of real property. At PSPC, we’re responsible for 7 million, so roughly a quarter of that. Out of those 7 million square metres, we have 6 million square metres of office space and a million square metres of warehouses and special-purpose space.
Out of the 6 million square metres of office space, the cost to the government on an annual basis is about a billion dollars. The plan is to take that office space and right size it to hybrid work over 10 years. That was 6 million square metres of space. The rough split is about 50% Crown-owned and 50% leased. As we get out of leases and consolidate some Crown buildings, we’re going to be freeing up space in the leasing market, but we’re also going to be freeing up some Crown-owned buildings that we’re going to sell off, and we’re going to prioritize those Crown‑owned buildings that have a high potential for conversion into housing. Some of our buildings are heritage buildings; they don’t have a high potential for housing. Those that we want to retain, we’re going to consolidate and densify. The others, we’re going to free up to be able to accelerate the conversion and help the housing crisis.
Senator Marshall: Is that detailed plan available for public consumption? It’s just that the numbers are unbelievable — that government over 10 years is going to make $2.8 billion. I think I wouldn’t be the only one who would look at that and say it’s not realistic.
Mr. Zielonka: Let me jump in to clarify. We’re spending about $2.2 billion a year in terms of maintaining our properties. It’s about 50/50 — as my colleague mentioned — between owned and leased. We’re spending $2.2 billion on that over a year. We’re looking to reduce that by 50%. Once you get down to that 50% reduction, you can anticipate not to be spending $2.2 billion a year; you will be spending approximately half of that per year. There is a cost to reduce that space. There is what we call “an invest to divest.” We’re going to be investing in terms of moving people around. So there are moving costs. There are going to be costs in terms of the disposals of property. It’s not a quick and easy thing. It’s going to take us 10 years to do. There is going to be some investment that the government must do. That’s approximately $1.1 billion over the next 10 years, which was part of the budget announcement.
The net number — once you put all of that in — reflects the fact that there will be a net saving to the government over that period.
Senator Marshall: Is that space going to be converted into housing units? Is that the intent? Or some of it?
Mr. Quinlan: Thank you. Certainly, a lot of it is. Again, the government leases some space, and as we free up some leased space, some of those buildings will be converted into housing. There are some buildings in Ottawa that now house apartment buildings that used to have offices.
As I was indicating, not every office building is appropriate. You would think things like elevators, window access and plumbing, et cetera, but there are tools we have to determine the level or how easy it is to convert. We’re prioritizing freeing up some of those buildings to get them into the hands of developers to help the housing crisis.
Senator Marshall: My next question would be that since there are costs for converting them into apartments, is that the only option that the government looked at? Or did it look at just seeing if they could sell the buildings?
Mr. Quinlan: Traditionally, when the government determines that it no longer needs an asset, it is because it doesn’t need that asset to deliver the program.
Public Services and Procurement Canada, as I indicated, we have about 25% of the real property, and there are 26 other departments that own buildings and property.
When we — or they, those other departments — declare a property to be surplus, then it goes through a process to be able to dispose of it. We are putting housing at the centre of that priority now, but we also, through that process, will traditionally circulate that property to First Nations and to other levels of government like the provinces and municipalities. We have obligations when it comes to official language communities and minority communities, et cetera.
Again, we’re prioritizing those that have a conversion to housing, but there are other properties that we are disposing of because we no longer need them for program purposes, and they will serve community needs but not housing.
The last thing I would add, Mr. Chair, in conclusion, is that we have underutilized properties as well, and we’re looking at ways to free up some of that free land and underutilized space to help the housing crisis.
Senator Marshall: Thank you for the explanation. I remain unconvinced, but thank you.
[Translation]
Senator Forest: My first question is for Ms. Baron. The New Building Canada Fund, where we’re talking about a total of $14 billion, or $4 billion for national infrastructure projects and $9 billion for national and regional projects. I would like to understand the difference between the $4 billion for national projects, the $9 billion for national projects — again — and regional projects, and another $1 billion for small communities.
I have two questions. I’d like to understand what the difference is; is the responsibility for this program split like most infrastructure programs, that is, one-third by Infrastructure Canada, one-third by the province or territory and one-third by the municipality?
Ms. O’Leary: Thank you for the question. It’s one of our programs that’s quite old. It would be better to send a written answer, because I’m not very familiar with it. It’s been years since it was approved.
Senator Forest: But it’s called the New Building Canada Fund.
Ms. O’Leary: I know.
Senator Forest: It’s an old new fund.
The Chair: You know there’s the New Testament too.
Senator Forest: I think I should go back to church.
Ms. O’Leary: So yes, the year of the launch, but that was a while ago.
Senator Forest: Since this is an old new program, are municipalities responsible for a third of the costs? Generally speaking, they’re the ones who carry out the projects. Are the municipalities taken into account, or is it still a top-down approach, meaning that the major priorities are still determined in Ottawa or in the provinces, and the municipalities have to deal with it?
Ms. O’Leary: Thank you very much for the question. As I said, this is an old new program. There were different processes for it. I’m not familiar with this program, but I’ll be able to find the details to answer your questions.
Senator Forest: Thank you. So you will send us the answer in writing, right? Thank you.
Ms. Leblanc, generally, social housing projects are carried out by municipal housing offices or non-profit organizations. They usually have no financial resources, so they use your programs. The CMHC has made some key interventions in the past. I think your absence for a period of time created a major vacuum in social housing.
Right now, these projects generally have a funding structure that includes your participation, that of the province and that of the municipality. Are you still aiming for funding at a rate of one-third, one-third, one-third? For a municipality where more than 75% of revenue comes from property tax, which was not earmarked for this type of investment, is municipal participation still at around 30% to 33%?
Ms. Leblanc: Thank you for the question. I don’t think we could say it’s still one-third, one-third, one-third at the moment. It depends on the programs we create and our funding threshold. The Rapid Housing Initiative provided a 100% contribution. We were looking to establish a partnership mainly with the provinces for the operation and maintenance budgets. As for the Affordable Housing Fund, once again we are looking for a partnership. It’s often with the municipalities, but there are also provincial partnerships. It depends on affordability and social outcomes; the type of partnership can vary. It’s not always one-third, one-third, one-third.
Senator Forest: On average, what may the municipal contribution be?
Ms. Leblanc: I think it really depends on the municipality’s involvement. If a plot of land is provided, for example, we know that in big cities like Toronto and Vancouver, the economic equation means that the land is worth around 15% to 20%, but the municipality’s contribution is not always the same, depending on the programs and the social outcomes sought. That said, this is a good example of how the partnership with municipalities and provinces is established.
Senator Forest: Thank you.
Senator Gignac: I hope my voice will be up to the task. I don’t know if the question was asked, as I had to leave for a few minutes. My question is for Infrastructure Canada. We’ll shift gears and talk about public transit.
Last summer, your minister released a report titled Permanent, Integrated, and Locally Responsive: New Foundations for Public Transit Funding in Canada. In the Main Estimates, we have before us a request for $842 million in permanent funding for public transit.
Can you talk a little bit about that? It has received a lot of attention, especially in Quebec, with municipalities facing major operating deficits. The pandemic has led to changes in people’s behaviour, with more people staying at home to work instead of commuting. Tell me about the program. Are we talking about subsidies for operating expenses or for the purchase of equipment? Can you tell us more? Thank you.
Ms. O’Leary: Thank you very much for the question. Absolutely, investment in public transit projects is very important so that people can get to work, to their activities, and so on. Our programs are for capital investments, not operating expenses. We have various programs for investing in public transit. I mentioned earlier the Rural Transit Solutions Fund. We also had a public transit component in a program that has been delivered to the provinces and territories, the Investing in Canada Infrastructure Program.
As you mentioned, the government decided to announce new programs for investments in public transit. We are in the process of developing this program and expect that fund to be launched shortly.
Senator Gignac: My second question is about Quebec, which has always been a bit sensitive when it comes to negotiations. You know how things work in cities. Can we think of an asymmetrical approach in the negotiations with Quebec for public transit when cities and municipalities are involved?
Ms. O’Leary: Thank you for the question. There is a component in the new public transit program for planning in the regions, which involves the provinces and various municipalities.
We would have an opportunity to work with different levels of government. Of course, we respect the Quebec government’s jurisdiction and we have an excellent collaborative relationship with our colleagues in that province.
Senator Gignac: I hope my question was not asked when I was absent. If so, I apologize. My question is for Public Services and Procurement Canada.
What percentage of the federal government’s real estate portfolio could be converted into housing? We know that not all buildings are suitable for that. The government has said publicly that it wants to reduce the percentage of vacant buildings and convert them. In your opinion, what percentage of the federal government’s real estate portfolio do those buildings account for?
Mr. Quinlan: Briefly, the Government of Canada owns 28 million square metres of buildings. If we look at the real estate portfolio in terms of office space, it’s 6 million square metres. Of those 6 million square metres, 50% are rental leases and 50% are Crown buildings.
As for Crown buildings, we’re talking about 3 million square metres across the country, about half of which are in the Ottawa‑Gatineau region. A number of federal properties located in Quebec City are considered to be heritage buildings and do not have a high potential for conversion into housing.
That said, many federal properties have excellent potential for conversion. With the office space reduction plan aimed at properly adjusting the real estate portfolio to the hybrid model, our priority over the next 10 years will be to free up federal buildings that have high potential for conversion to housing.
We’re developing the 10-year plan, but we already have a good idea of which buildings we’ll keep and which we’ll declare surplus and ultimately dispose of. We can imagine that a significant proportion of the 3 million square metres that we currently own will be surplus. If we reduce this space by around 50%, approximately over 1 million square metres of buildings would be converted.
We currently have small, medium and large buildings.
Senator Gignac: Thank you very much.
Mr. Zielonka: I would like to add an important comment.
The Chair: Yes, quickly please.
[English]
Mr. Zielonka: Office buildings that may be put out may displace other office buildings in the market that are better to convert. The impact will be at least that, but it may be bigger.
Senator Smith: Coming back to Mr. Zielonka, recently the federal government updated its directive on office work with a new three-day minimum requirement for federal employees to be on site. There has been lots of concern from employees who are mandated to return to the office about the lack of desks as well as general office space to do their work.
Could you provide details on how the three days on site requirements will be factored into your job of disposing of federal properties? How are you working to balance the two competing requirements?
Mr. Quinlan: Thank you very much. When it comes to office space, at pre-pandemic levels, we were, by some estimates, as high as 40% in terms of a non-occupancy rate. The reason for that is when we plan for space, we generally plan for 10 years — leases are generally 10 years — and when we’re investing into fitting up office space, we want to have a significant period of time to justify that investment.
Traditionally, pre-pandemic, when you needed an office, we would assign an office for each individual. In fact, what we would often do is to over plan because the federal government has a tendency to grow over time. If you’re going to be in that space for 10 years, if you have 100 employees, we might have planned for 110 or 120 workstations at that time.
Senator Smith: What’s the new plan in place? I ask because that was the old way. What’s the new way going to be?
Mr. Quinlan: That’s right. There are two elements. One of the fundamental ways we’re making office space more efficient is by going to unassigned seating for all by default, except if there is a specific program requirement. On any given day, if employees are coming in for three days, they’re going to be using a workstation, and on the two days when they’re not coming in, another employee will be using those workstations. Federal buildings that used to be 50% or 60% occupied, once we’re done, they will be over 80% occupied.
Senator Smith: Where are you with the planning of that now? It’s a major shift.
Mr. Quinlan: That’s quite correct, it is a major shift. Some departments have already adopted the model. As the provider of office space, PSPC has gone to unassigned seating quite a while ago. Right now, we’re working with every department to develop their 10-year plans. As we can’t look at things independently, most of the time there is a domino effect across the government. Integrating those plans will —
Senator Smith: What’s the time frame for those? Sorry to come at you, but I’d like to get as much information from you as possible.
Mr. Quinlan: Absolutely. We are doing that planning now. We’re already executing some decisions, but over the next year, we will have finalized our 10-year rolling plans that will point to where departments will be exiting some leases or consolidating into some of the Crown-owned buildings.
Senator Smith: Within the year, you should have that plan pretty well completed?
Mr. Quinlan: That is the plan.
Senator Smith: Your performance indicator on the number of employees facing potential pay inaccuracies at the Pay Centre was well above the target in 2022-23. More than 135,000 employees had pay issues during the time that your target was no more than 88,000.
What are some of the reasons why you’ve been unable to bring the number down to the target? Could you provide a breakdown of these transactions? I’d like to get a sense of how old some of these issues are versus how many are more recent, as well as the type of issue.
Mr. Zielonka: Sure. Thank you for the question. There are a couple of factors that have continued the challenges in the Pay Centre, and one of those factors include the growth in the public service. That has created an increase in transactions.
There has been a challenge in reducing some of the older backlog transactions. With those transactions, we saw staff diverted to deal with the incoming, so we haven’t been able to work on the backlog. We received more money from last year’s budget, so those people have been brought on board. They’ve been training, and we are now seeing the impacts of that.
Senator Smith: [Technical difficulties] consultants in the implementation of this?
Mr. Zielonka: No. These are actually employees we’ve hired. In total, I believe we’re over 4,000 employees. We’ve added approximately — I think I want to say about 800 employees were —
Senator Smith: Have you been able to set up new targets so that you can get down to your target?
Mr. Zielonka: Yes. There has been a lot of work done, including on Next Gen HR and Pay. Very much so. We’re now seeing the trend. In the last couple of months, we’re seeing positive aspects in the trend in terms of starting to push the backlog down and hopefully get this resolved once and for all.
Senator Smith: If you can give us a one-pager, that would be great, just to tell us what you’re planning.
Mr. Zielonka: We will take that away and provide something.
Senator Smith: Thank you, sir.
Senator Loffreda: I have a few questions. I’d like to get back to the Apartment Construction Loan Program with CMHC. If I look at some statistics, it’s much needed. I do understand why the banks are not there, not to get into that.
If we look at the housing starts in Montréal in 2023 compared to 2022, there was 44% less. Ottawa also had 44% less. That’s single detached. If we look at semi-detached, that number is 60% lower.
I understand the risk side — I’ve lent for a lifetime. Maybe this is a question for the finance department if you can’t respond to it, but do you feel you’ll get results? Have you questioned some of the builders? We all know where the interest rates are at right now. You are going to supply low-interest rates to these builders. Are you confident with the stakeholders that construction will increase? When it comes to a permanent takeout, do you intend on keeping these loans on your books, or do you foresee a take-up by the banks once the rentals are completed and you have the numbers to justify the repayment?
Ms. Leblanc: Thank you for the question. The Apartment Construction Loan Program, at the moment, there is a very important pipeline. I do not worry in terms of builders wanting to come to the table and negotiate loans with the CMHC. At the moment, we are, as I mentioned, the only lender in town, and I will say that where this program is actually supporting the level of risk that we’re taking on, on behalf of the government, is not something that the financial institution would —
Senator Loffreda: Could take. I worked in financial institutions for 35 years.
Ms. Leblanc: I would say that given our expertise in adjudication, we adjudicate files like a lender, and we’re very comfortable with the risk that we’re taking, especially during the new construction phase.
If it is a question of are we taking on more risk, I would say that we are very comfortable as to where we stand. If it is a question of builders coming to the table, that program is oversubscribed, so we are quite excited that the government is topping up this program.
Senator Loffreda: Is it oversubscribed because of the lower interest rate that you are charging the builders? I assume that there is a huge demand for rentals, right? We have a housing shortage in Canada. But do you have control over the rents being charged? If it is not affordable, we’re not going to get anywhere.
Ms. Leblanc: Thank you, Mr. Chair, for the question. It is a function of a few things with this program. Certainly, we’re lending at low rates. That is a strong factor given the current context. There is also the term at which we lend out. It is a program that’s quite generous on the loan-to-value aspect as well as, I’ll say, other parameters of adjudication.
This program does require a level of affordability that is more than what you would see in a typical market, multi-unit purpose‑built programs. At this moment, we are surpassing our target that is committed.
You asked the question around if we keep them on our books. The answer is that the design of this program makes it that we do want financial institutions to eventually take on this loan. It is designed so that after 10 years, the financial institution would take that loan, but we have the ability to also keep it on our books should we need to. But it has been designed that it will facilitate that over 10 years because it is an insured product, so we actually insure it for that reason.
Senator Loffreda: So there is hope that housing affordability will improve?
Ms. Williams: If I may, the pipeline is strong, and there are a lot of people coming to our table. The numbers are very tight for these projects to be viable. What I mean by that is that there is a certain level of revenue minus expenses for the programs to be able to support themselves over time. We do require a level of affordability. What we are noticing lately, though, is that some of the builders — we negotiate and we get to a point where we’re ready to sign, but they are anticipating interest rate changes. They will sit for a little bit to wait to see if those changes happen. While the pipeline is strong, we don’t always control getting them over the line, as much as we try. We are witnessing a little bit of that right now in anticipation of the rates to drop. Overall, when you look at the program, there is significant interest.
Senator Loffreda: I think it is a well-needed program. Thank you very much.
Senator MacAdam: Thank you. My question is for Public Services and Procurement Canada, or PSPC. I wonder if you can explain the nature of the $20.8 million budgeted in these Main Estimates for the Real Property Services Revolving Fund. What’s the nature of that fund?
Mr. Zielonka: Yes. That is just the technical adjustments. $20.7 million, I think, is the number you are looking at. On an annual basis, we have a true up of — based on our space. The $2.2 billion we talked about that we get annually for our real property, so the leased and owned space, that number fluctuates a bit every year, depending on how much space we have and how many public servants we are housing. That’s a technical adjustment to that number that happens on an annual basis.
Senator Kingston: I am wanting to go back again to talk about what Senator Loffreda started with, and that is the Apartment Construction Loan Program. I’m mostly interested in the affordability piece. This whole housing strategy was meant to support that.
You have talked about tight margins, and you have talked about an aspect of affordability, but what are we talking here? How much will the rents be? How much would you have to make as a household income, for instance, for it to be below 30% of what you bring in?
Ms. Leblanc: The Apartment Construction Loan Program does target medium-income populations, so think about the $60,000 to $80,000 income level. The project itself has to render approximately 30% of units to be affordable. But we do lock it up for the period of the loan and monitor that over time. The period of the loan can vary, up to 50 years.
Ms. Williams: Thank you. If I may, that’s our requirement. We are seeing affordability coming in even beyond that. There are some non-profit groups that come in and offer deeper levels of affordability, and through the Apartment Construction Loan Program, it is not necessarily as easy, but often we see them coming through our Affordable Housing Fund, which has contribution elements to it as well. The Affordable Housing Fund is really targeting that lower end but also the non-profit groups who are really driven to provide that.
Senator Kingston: Are you saying the two programs work together?
Ms. Williams: No. They are separate programs, but one has a contribution element to it. The Apartment Construction Loan Program does not. It is a pure loan program. We only provide loans to builders, but the Affordable Housing Fund has a contribution component as well as a loan component. Often we will take some of the contributions to support a deeper level of affordability in those properties.
Senator Kingston: Do you have any kind of written description of what you just said?
Ms. Williams: I am sure we do. I know the programs are outlined on the website and some of the requirements on that.
Senator Kingston: If you could provide something that describes what you just did in terms of having more affordability, that would be great.
Ms. Williams: Sure.
The Chair: Thank you.
Senator Pate: My question is also for CMHC. The Canadian Centre for Policy Alternatives has raised concerns about the $1.5 billion Canada rental protection fund. Although an important measure, it is likely underfunded given the interest of not‑for‑profit housing providers in taking part. To contrast that, the Apartment Construction Loan Program, which is targeted for for‑profit developers, received much more significant funding in the form of a $15 billion top-up but seems to be receiving less take‑up. Of the $40 billion initially allocated for this program, it still had $22 billion in loans to give away at the time the new top-up was added.
How are these levels of funding determined, and what concrete steps will you be taking to ensure that these programs contribute as effectively as possible to the creation of affordable housing?
Ms. Leblanc: Maybe I can start and then pass it over to my colleague. Thank you for the question.
In terms of the $15 billion program that is the Apartment Construction Loan Program, these are loans that get repaid to the government over time. It is not contributions. It works very different. The magnitude of it reflects the structure of the financing.
We do have various programs and — just going back to the earlier question — depending on the level of affordability, we will see the deeper contributions. We talk about the Rapid Housing Initiative as an example. It was 100% contribution; that’s targeting very deep affordability. Then we go up the housing continuum in trying to have a financing structure that meets the needs of the population.
The $15 billion that we’re referring to is purely for loans targeting middle-income earners. That money is coming back to the government and being repurposed.
With respect to the Canada rental protection fund, I’ll pass it to my colleague, but it does work with the level of contribution, which is different.
Ms. Goulding: Thank you for the question. When you think about the Canada rental protection fund, it’s a new initiative with a slightly different approach in terms of how it supports the non‑market sector. You need to put it into context.
The Apartment Construction Loan Program is as my colleague described. We have the Affordable Housing Fund that Ms. Williams mentioned. We have the Rapid Housing Initiative. All of these initiatives work together to support different parts of the sector. The Canada rental protection fund will put in place a new fund that will support the non-market sector to have a new source of capital to support their acquisition of affordable apartments. It is meant to be another source of capital that would complement what CMHC is doing and draw in that private sector and the philanthropic investments to bolster that part of their work.
It is like pieces of a puzzle. This new fund will tackle the housing crisis from another angle, providing another source of capital for the non-market sector to be able to do what it’s doing.
Senator Pate: Who will be administering? Both of you are responding to this question. Are there criteria available that you can provide or point to?
Ms. Goulding: Because the Canada rental protection fund is brand new, we are in the process right now of getting policy authorities and funding authorities. We will be working closely with CMHC to determine how to deliver that program best.
In the budget, the government indicated that the design of the program should be co-led with the sector. We’re going to launch an engagement process to work with the non-market sector to think about how we can implement that fund in a way that makes the most sense to be able to give them a new tool to work in this space.
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The Chair: I have a question for Mr. Quinlan. You mentioned 28 million square metres. I understand that there’s a lot of land in there. Do you have a plan for disposing of the surplus land, as well? If so, how?
Will it be by tender or by call for projects? Do we sell a plot of land to the best project that will meet our objective, which is to build housing, so that an investor won’t buy this land without building anything on it?
Mr. Quinlan: In the 28 million square metres, absolutely, there’s a lot of real estate and a lot of land. One of the things we’re doing at the moment is not just identifying government buildings or surplus properties, but also identifying underused properties.
In the smaller municipalities — for example Jonquière, Shawinigan and other places — where we have large plots of land with facilities, we are in the process of seeing whether we can’t just subdivide some of these properties.
Then, depending on the location, we will explore different models to accelerate housing construction. The government wants to prioritize long-term leases in certain cases to be able to retain ownership for 99 years.
The Chair: Some people don’t like long-term leases.
Mr. Quinlan: In some municipalities in large urban centres, there is an appetite; in others, there is much less.
We are exploring certain models for working with municipalities and non-profit organizations to encourage housing construction, so that the projects would then be managed on an ongoing basis by non-profit organizations.
When we dispose of properties.... When we dispose of a property, generally speaking, once we’ve met the legal obligations I was talking about earlier.... Again, in some places we don’t have constitutional obligations to consult — for example, with First Nations — but elsewhere there are legal obligations that prevent us from moving forward. Certain legal obligations have to be met first.
Once that is done, we will be able to accelerate the disposal to favour projects that will lead to the construction of housing.
The Chair: Do you have a table with the various surplus land or buildings, in square feet or square metres, depending on where they are located?
Mr. Quinlan: We have received funding through the budget to work with our colleagues at Infrastructure Canada on a mapping tool using geomatics. This will ultimately make it possible to see all federal properties on an interactive map and use different filters to identify whether they are close to public transit or municipal infrastructure to which we can connect, but also whether they are surplus properties identified by the federal government.
The Chair: I would be happy with an Excel file. Having geolocation changes the whole perspective.
Senator Forest: When will the timeline be established?
Mr. Quinlan: We will be able to provide you with a table of surplus properties soon. For potentially surplus properties where there is potential for underdevelopment, I can commit to provide that information within a few months, but we are still in the process of doing that work.
If the question is specifically about the geolocation tool, that was presented in the budget and we are working with our colleagues to be able to move forward as quickly as possible.
The Chair: The clerk has whispered in my ear that this is our 102nd meeting of the Standing Senate Committee on National Finance since the beginning of the session. I thank everyone and the support team. Congratulations to the members of the committee.
I have participated in 5 or 6 of the 102 meetings. When Senator Mockler gave me the keys to the car, he said that I would see the quality of witnesses from our public service and their preparation. I’m really impressed by the knowledge you have of your issues and by the way you answer our questions so frankly. It’s a credit to you. I want to thank you and congratulate you on your work. This concludes the meeting.
Don’t forget that, if you have committed to send written responses, with some exceptions, as Ms. Goulding said, you have until Wednesday, May 22, 2024. I would like to remind you that the next meeting will take place on May 21, at 9 a.m., to resume consideration of the Main Estimates for 2024-25. The schedule will vary depending on the various mandates the committee will receive from the other chamber. Thank you very much and see you next time.
(Meeting adjourned)