THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Tuesday, May 28, 2024
The Standing Senate Committee on National Finance met with videoconference this day at 9 a.m. [ET] to examine the subject matter of all of Bill C-69, An Act to implement certain provisions of the budget tabled in Parliament on April 16, 2024.
Senator Éric Forest (Deputy Chair) in the chair.
The Deputy Chair: Honourable senators, before we begin, I would like to ask all senators and other in-person participants to consult the cards on the table for guidelines to prevent audio feedback incidents.
[Translation]
Please take note of the following preventative measures in place to protect the health and safety of all participants, including the interpreters.
If possible, ensure that you are seated in a manner that increases the distance between microphones. Only use a black approved earpiece. The former grey earpieces must no longer be used. Keep your earpiece away from all microphones at all times. When you are not using your earpiece, place it face down, on the sticker placed on the table for this purpose.
[English]
Thank you all for your cooperation.
[Translation]
I wish to welcome all of the senators as well as the viewers across the country who are watching us on sencanada.ca. My name is Éric Forest. I am a senator from the Gulf division in Quebec, and Deputy Chair of the Senate Committee on National Finance.
I would now like to ask my colleagues to introduce themselves starting from my left please.
Senator Loffreda: Good morning and welcome to all our witnesses. Tony Loffreda from Montreal, Quebec.
[English]
Senator Pate: I’m Kim Pate. I live here in the unceded, unsurrendered territory of the Algonquin Anishinaabeg.
Senator Kingston: Good morning, Joan Kingston, New Brunswick.
Senator Ross: Good morning, Krista Ross, New Brunswick.
Senator MacAdam: Jane MacAdam, Prince Edward Island.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
Senator Smith: Larry Smith, Quebec.
[Translation]
The Deputy Chair: Thank you very much. One side of the table is popular, but the sponsor of the bill is on the other side, which balances things out.
Honourable senators, today we continue our study of the subject matter of all of Bill C-69, An Act to implement certain provisions of the budget tabled in Parliament on April 16, 2024, which was referred to this committee on May 9, 2024 by the Senate.
We are pleased to welcome today senior officials from Innovation, Science and Economic Development Canada, Transport Canada, the Canada Mortgage and Housing Corporation and the Financial Consumer Agency of Canada. I understand that one official from each department will make statements and the others will help answer questions.
It is my pleasure to introduce Mr. Andre Arbour, Director General, Telecommunications and Internet Policy Branch, Innovation, Science and Economic Development Canada; Ms. Natalie Dolan, Executive Director, Policy, High Frequency Rail, Transport Canada; Ms. Nadine Leblanc, Acting Chief Financial Officer and Senior Vice-President, Policy, Canada Mortgage and Housing Corporation; and Mr. Werner Liedtke, Acting Commissioner, Chief Financial Officer and Assistant Commissioner, Internal Services, Financial Consumer Agency of Canada.
Welcome. Thank you for accepting our invitation to appear in front of the Senate National Finance Committee. On that note, I give the floor to Mr. Andre Arbour followed by Ms. Natalie Dolan, Ms. Patricia Roset-Zuppa and Mr. Werner Liedtke.
[English]
Andre Arbour, Director General, Telecommunications and Internet Policy Branch, Innovation, Science and Economic Development Canada: Thank you, Mr. Chair, for the opportunity to speak to the committee today. I’m joined by my colleague Marc-André Rochon from the department’s Spectrum and Telecommunications group.
I would first like to acknowledge that we are coming to you from the unceded territory of the Algonquin Anishinaabe people. I would also like to thank them for being stewards of the land and waters in this area since time immemorial.
Budget 2024 announced proposed amendments to the Radiocommunication Act and the Telecommunications Act.
[Translation]
The amendments to the Radiocommunication Act aim to curb auto theft in Canada as part of a suite of changes the government is bringing forward. The amendments will limit access to wireless devices used in auto theft and allow their removal from the Canadian marketplace. ISED will pursue all avenues to regulate wireless devices that intercept radio signals for unlawful activities, and will continue to collaborate with law enforcement agencies to protect consumer interests.
[English]
To advance work on the proposed changes to the Radiocommunication Act, Innovation, Science and Economic Development Canada, or ISED, recently launched a public consultation to gather further information on legitimate and illegitimate use of these devices prior to making regulatory changes. The nature and importance of these legitimate uses must be considered to support consumer safety and reflect the needs of the technology industry.
Another way the government is working to support Canadians is through amendments to the Telecommunications Act. These are intended to support consumers in the telecommunications marketplace and are complementary to other initiatives under the government’s telecommunications agenda, including issuing a renewed policy direction to the Canadian Radio-television and Telecommunications Commission, or CRTC, and setting out pro‑competition rules in the form of reserving frequencies in recent spectrum auctions for alternative competitors. These amendments are intended to help consumers take advantage better of the increased competition and improved pricing we are seeing in the market.
[Translation]
First, these provisions would mandate that service providers offer a self-serve option for customers wanting to change or cancel their services. Next, service providers would be required to send customers a notification when their contract is ending, along with information on current plans in the market. This will make it easier for consumers to navigate what options are available when their contracts are up.
Finally, these provisions would prohibit fees that discourage consumers from switching providers or adjusting services. The intent here is to remove arbitrary fees that create friction in consumer decision-making, but not to prohibit legitimate charges for equipment or complex work that is sometimes needed for physically installing network facilities.
[English]
To ensure these provisions will meet the needs of Canadians, the CRTC, through stakeholder consultations, will be responsible for determining the specific details and parameters for each of these proposed measures before they come into force.
We hope these opening remarks were helpful in contextualizing the proposed amendments, and we would be pleased to answer any questions the committee may have.
Thank you.
The Deputy Chair: Thank you. Ms. Dolan, the floor is yours.
Natalie Dolan, Executive Director, Policy, High Frequency Rail, Transport Canada: Thank you, Mr. Chair. As you said, I’m appearing here today on behalf of Transport Canada. I’d like to thank my colleague Mr. Arbour for a very generous land acknowledgement.
My name is Natalie Dolan, Executive Director of High Frequency Rail, or HFR. It’s a pleasure to be here to speak about the HFR provisions in Bill C-69 that would provide agency status to Via HFR, the subsidiary of VIA Rail. These measures can be found in Part 4, Division 27, pages 551 and 552.
[Translation]
The HFR project is the largest transportation infrastructure project that Canada has seen in generations. The objective of HFR is to offer faster, more reliable, and more frequent rail service. HFR is more than a rail project.
[English]
Fifteen million people currently live in this corridor. The populations and economies of Ontario and Quebec will only continue to increase as will the demand for all modes of transportation, including passenger rail. This project provides an opportunity to meet future demands while transforming rail travel to a more sustainable and accessible way of travelling for future generations.
At this moment, VIA Rail cannot make improvements to its passenger services. Rail congestion on the current tracks limits the frequency of departures, the reliability of arrivals and the speed of reaching destinations. To put it simply, without a transformative investment, 10 million trips per year would be taken using higher emitting modes.
High Frequency Rail consists of building a new intercity passenger rail system over 1,000 km in length to serve Toronto, Peterborough, Ottawa, Montreal, Laval, Trois-Rivières and Quebec City. High Frequency Rail will provide fast, reliable and frequent service. It will triple the number of rail passenger trips in the corridor to at least 17 million by 2059. It will double the number of train departures, with at least 12 departures per day between major cities. It will dramatically improve reliability to ensure trains leave and arrive on time. It will continue to serve communities currently served by VIA Rail such as Kingston, Cornwall and Drummondville, with expected improvements to scheduling and convenience. It will create thousands of well‑paying jobs during the design, construction and operation phases.
As an electrified service, it will deliver significant reductions in greenhouse gas, or GHG, emissions and it will contribute positively to the Government of Canada’s commitment to reconciliation with Indigenous Peoples.
The HFR project is in the procurement phase where it is continuing to gather momentum. In October 2023, the government launched the request for proposals, or RFP. This RFP is a critical step that will lead to the selection of a private developer partner for the project. Proposals are scheduled to be received in summer 2024 for evaluation to be completed in late 2024.
To maximize benefits and innovation, the RFP requires bidders to develop two solutions that meet project outcomes: One with speeds up to 200 kilometres per hour and one that includes higher speed segments to achieve even shorter journey times. This will allow for a rigorous assessment of the costs and benefits of incorporating high-speed rail in each segment of the corridor. With this approach, the government will be able to determine the best solution for the HFR project based on a fierce competitive process between many of the world’s most accomplished Canadian and international companies. We are convinced that such competition will maximize innovation and result in the best project for Canadians.
The HFR project is progressing well, with innovative ideas being shared by bidders. It is on schedule and on track.
The purpose of the proposed measure in Bill C-69 is to declare the subsidiary of VIA Rail Canada Inc., VIA HFR, an agent of His Majesty in right of Canada. This is essential at this time to advance the high-frequency rail project.
The declaration of agent status will provide certainty to the procurement process. It is critical to provide the necessary assurances sought by all three bidders, creating confidence in the financial backing of the project by the government. Agency status would allow VIA HFR to benefit from the immunities, privileges and prerogatives that are enjoyed by the Crown. It will also assist VIA HFR in its land acquisition strategy. As an agent of the Crown, the properties that VIA HFR aquires become federal lands.
If there is no agency declaration through this act, Transport Canada would not be in a position to provide the necessary assurances sought by bidders prior to the signing of the pre‑development agreement for the project as expected this fall. Without these assurances, VIA HFR would not have the confidence of the market due to uncertain financial backing from the government. It is, therefore, crucial.
This concludes my remarks. It will be a pleasure to entertain any questions from the committee.
[Translation]
The Deputy Chair: Thank you very much. Ms. Leblanc now has the floor.
[English]
Nadine Leblanc, Interim Chief Financial Officer and Senior Vice-President, Policy, Canada Mortgage and Housing Corporation: Thank you. It’s a pleasure to speak to you on behalf of the Canada Mortgage and Housing Corporation, or CHMC, this morning.
Canada Mortgage and Housing Corporation play a critical role as a national convenor to promote stability and sustainability in Canada’s housing finance system. We do this by providing commercial solutions that make it possible for Canadians to get mortgage funding. We also provide essential, impartial research data and expertise and we help the federal government deliver housing programs.
[Translation]
Right now, the single biggest threat to Canada’s housing system is its severe housing shortage.
By now, you will have heard our estimates that to restore affordability by 2030, Canada needs to create 3.5 million more homes than it is currently on pace to build.
The federal government has launched a new plan to help solve this housing crisis. It’s a whole-of-government approach, supported by measures proposed in Budget 2024.
The budget includes investments to build more homes and bring down the barriers that keep them from being built. It includes supports to renters and measures to help would-be home buyers to get those first keys of their own.
[English]
One of these measures is to extend the current restriction on foreign investment in Canadian housing another two years, until 2027. These restrictions were established under the Prohibition on the Purchase of Residential Property by Non‑Canadians Act.
The act recognizes that foreign investors drive up demand for housing in Canada, adding to the housing shortage, especially in our major cities. It works to curb speculation in the housing market. It helps ensure that houses in Canada are used as homes for Canadians and not as financial assets for foreign investors. The act’s regulations were informed by many consultations with Canadians.
In the broadest of terms, it restricts foreign companies and people who are not Canadian citizens or permanent residents from buying non-recreational and residential properties in Canada. It includes exceptions and clarifications that recognize the legitimate property needs of non-Canadians. For example, it doesn’t affect those who have been studying in Canada for an extended period of time or work permit holders who are authorized to work in Canada.
The goal of the act is not to stand in the way of someone who wants to transition to Canada and buy a home and settle in one of our communities. Rather, the goal is to restrict those foreign buyers wanting to buy up homes as investments. It only applies to larger cities and towns with a total population of at least 100,000, with 50,000 or more living in the core because that’s where the housing shortage is greatest. For the purposes of the act, a residential property is a building of up to three dwelling units and parts of buildings, like semi-detached houses or condominiums.
This legislation came into force on January 1, 2023, and was initially planned to sunset in two years. But now, as the housing crisis continues to worsen, the government needs to use every lever at hand to ensure there’s more housing stock available to Canadians. At the same time, CMHC will continue to monitor housing market conditions and share this knowledge with the Government of Canada.
Thanks again for the opportunity to present more information about Bill C-69. I’m happy to answer all of your questions.
The Deputy Chair: Thank you, Ms. Leblanc. Now Mr. Werner Liedtke.
[Translation]
Werner Liedtke, Interim Commissioner, CFO and Assistant Commissioner, Corporate Services, Financial Consumer Agency of Canada: Thank you, Mr. Chair, for the introduction, and to the committee for inviting us to appear before you today.
My name is Werner Liedtke. I am the Interim Commissioner of the Financial Consumer Agency of Canada, or FCAC. I will start with a brief overview of my agency’s mandate.
FCAC is an independent federal agency that protects the rights and interests of consumers of financial products and services. We deliver on our mandate in two principal ways.
First, as a regulator, we supervise the compliance of federally regulated financial entities, such as banks, with consumer protection measures set out in legislation, public commitments and codes of conduct.
Second, we work to strengthen the financial literacy of Canadians through collaboration with stakeholders, and through research and education. We also monitor trends and issues that affect financial consumers.
We, at FCAC, were delighted that our organization featured so prominently in Budget 2024.
There were several important initiatives in the budget relevant to our agency, including a new role with an expanded mandate.
[English]
As a leader and innovator in financial consumer protection, the Financial Consumer Agency of Canada, or FCAC, is well positioned to take on this new responsibility. We are working closely with the Department of Finance Canada to advance the Consumer-Driven Banking Framework, which prioritizes innovation and includes strong and consistent protections for Canadians who will use consumer-driven banking.
This new framework is guided by three objectives: safety and soundness, protecting the financial well-being of Canadians and advancing economic growth and international competitiveness.
Consumer-driven banking will enable consumers to securely use data-driven financial services that can help them better manage their finances and improve their financial outcomes.
Over the coming months, we will be engaging with the financial sector and other stakeholders on common rules for consumer-driven banking as we move toward the implementation of the framework.
I would like to turn next to the low-cost/no-cost bank account commitment that was referenced in the budget.
In fall 2023, the Minister of Finance directed FCAC to work with banks to update the 2014 original low-cost and no-cost commitment. We were tasked with expanding the features of low-cost accounts to reflect modern banking, expanding the accessibility of no-cost accounts to more Canadians and expanding the list of financial institutions that sign on to the updated commitment.
The Financial Consumer Agency of Canada has been meeting with financial institutions, experts in the field of financial consumers, and other stakeholders. We have also been inviting public views and conducting research into consumer awareness and needs. Our research shows that vulnerable consumers, in particular, would benefit from access to no-cost accounts. We are committed to moving forward and optimistic that, with industry collaboration, an improved commitment can be implemented voluntarily.
Speaking of those in vulnerable situations, Budget 2024 also included a commitment to strengthen the Canadian Mortgage Charter to provide additional support to Canadians facing mortgage hardship. While the mortgage charter is a Department of Finance initiative, it complements FCAC’s Guideline on Existing Consumer Mortgage Loans in Exceptional Circumstances, which we introduced in July 2023. The mortgage charter reinforces the Department of Finance’s and FCAC’s expectation that banks should support mortgage holders facing financial difficulty.
Another budget commitment that is of great interest to us is the additional measures proposed to enhance enforcement of the criminal rate of interest through amendments to the Criminal Code and to strengthen the government’s crackdown on predatory lending. While payday loans fall under provincial and territorial jurisdiction, we do conduct research to better understand the issues and trends affecting Canadian financial consumers. The Financial Consumer Agency of Canada’s research shows that payday loan users are often unaware of the high costs of these loans versus other sources of credit. The proposed amendments to the Criminal Code and plans to further crack down on predatory lending are important steps to protect financial consumers further, especially those in vulnerable situations.
In the same vein, the budget also references work to cap non‑sufficient fund, or NSF, fees and other similar charges. The Financial Consumer Agency of Canada welcomes this move and will work with the Department of Finance to better understand how the updates included in the budget align with FCAC’s own work, including the Financial Consumer Protection Framework.
Finally, I would like to mention the budget proposal to provide Prosper Canada with $60 million in funding over five years. FCAC has long been advocating for the need to fund community organizations, such as Prosper Canada, which work directly with Canadians to help them improve their financial well-being. Prosper Canada is an important partner in advancing the FCAC’s National Financial Literacy Strategy. This proposed initiative aligns with the national strategy’s ecosystem approach and will help provide Canadians access to the tools and information they need to build financial resilience.
To close, Budget 2024 included many timely and important initiatives related to FCAC on both the regulatory and financial literacy sides of our mandate.
I look forward to your questions. Thank you.
The Deputy Chair: Thank you very much for your statements.
[Translation]
Now we will proceed to questions. I would like to tell senators that you will have a maximum of five minutes each for the first round and a maximum of three minutes each for the second round. The time allotted will be adjusted as the discussion unfolds. Therefore, please ask your questions directly. To the witnesses, please respond concisely. The clerk will inform me when the time is over.
[English]
Senator Marshall: I’m going to start with CMHC. In our briefing notes, it talks about the government, the maximum borrowing limit and how they’re going to remove the Canada Mortgage Bonds purchased by the Government of Canada.
Are you able to explain that? I couldn’t understand the double counting. Is it going to affect the limit or is it going to affect how close the government is to getting its limit? I couldn’t understand that part. Are you able to speak to that?
Ms. Leblanc: Thank you for the question. This is certainly not part of what we’re studying today, but the limit in question that we have on our Canada Mortgage Bond is set by the Department of Finance on an annual basis and reviewed to ensure that we have sufficient liquidity in the market for access to mortgages.
With respect to the Bank of Canada and the purchase, I can provide more detail.
Senator Marshall: There was an item in the budget that I was expecting to see something in the budget bill about, and that’s the $1-billion in low-cost loans for child care spaces. It’s quite an issue with regard to the inadequacy of child care spaces across Canada. There’s nothing in the bill, but are you able to speak to that this morning?
Ms. Leblanc: Not in particular detail because the design of the program is still ongoing. We are working with ESDC to define the parameters of this loan program.
Senator Marshall: Do you have any idea as to when the loans would commence? Some of the daycare operators are going out of business, so it’s a big issue for them.
Ms. Leblanc: The profile of the funds is set to come out at the beginning of 2025-26.
Senator Marshall: So they’ll have to survive another year without those loans?
Ms. Leblanc: This is a brand-new program being delivered by CMHC, so it will take a period of time to design it.
Senator Marshall: Will the program be defined by policy or in regulations?
Ms. Leblanc: At the moment, CMHC’s act is quite enabling, so it doesn’t prevent us from delivering this program. Legislation would not be an issue, or required. It’s essentially just the design that we’re working on right now.
Senator Marshall: Thank you. For VIA Rail and the subsidiary, I couldn’t understand what the amendment in the legislation was doing. I had thought that the High Frequency Rail was already a subsidiary of VIA Rail. Doesn’t VIA Rail have its own legislation?
Ms. Dolan: I’ll start at the end and go backwards. VIA Rail doesn’t actually have enabling legislation. It was enabled through another mechanism. VIA HFR, the subsidiary of VIA Rail, was created as a subsidiary approximately a year ago and became operational about a year ago, so it exists as an entity. What this legislation does is to make it an agent of the Crown. The parent corporation in this instance is independent and not an agent of the Crown. This basically gives the subsidiary different rights and privileges regarding, for example, its financial backing from the Crown.
Senator Marshall: But is it still a subsidiary of VIA Rail?
Ms. Dolan: Yes.
Senator Marshall: But you’re saying VIA Rail doesn’t have its own enabling legislation. Then the High Frequency Rail subsidiary doesn’t have its own legislation?
Ms. Dolan: That’s correct.
Senator Marshall: The amendment is so short. Reading the background material, it seems that people who were interested in the request for proposals, or RFP, wanted some assurance that the government would back certain financial transactions. Is that going to be satisfactory to them? Is it going to solve their concern with regard to the subsidiary?
Ms. Dolan: Yes, it will. Basically, if this is made into law, the Crown will be the financial backer of the subsidiary. That gives the assurances that the bidders are seeking. It does other things as well. As I said in my remarks, it makes any land that the corporation would purchase federal lands. But the main thing that is very time sensitive is this financial backing element.
Senator Marshall: Why wouldn’t the government just have enabling legislation for the subsidiary? It’s a very short amendment. Seeing that VIA Rail doesn’t have its own enabling legislation and neither does the subsidiary, was any consideration given to more robust legislation for either VIA Rail or its subsidiary?
Ms. Dolan: As you know, VIA Rail has been operating for more than 45 years without enabling legislation, so they have their own ability to operate as Canada’s national railway provider. Similarly, the subsidiary was created; there was an order-in-council approximately two years ago that gave it its mandate, and that enabled the parent corporation to create the subsidiary. So it wasn’t necessary.
Senator Marshall: The RFP has been issued. What’s the deadline for the RFP?
Ms. Dolan: It’s coming in this July. It started on October 12, and it’s scheduled to close on July 24 of this year.
Senator Marshall: If this legislation is not passed by then, there could be bidders who might walk away from it?
Ms. Dolan: That’s right.
Senator Marshall: Thank you.
Senator Smith: I have a broad question that I wanted all of you to comment on.
We know that the federal government has committed to reducing the size of the federal public service. From the most recent budget, there’s a commitment to reducing the number of Full-time Equivalents, or FTEs, in the public service by 5,000 — mostly by attrition — over the next few years. Based on what was announced in the recent budget and what is included in the bill before us, do you anticipate that you may need to hire additional employees to implement the policies of the government? What is the planning process like for each of your departments?
If you could each have a quick comment on that, that would be very helpful to understanding the balance the government is trying to portray in front of all of us.
Mr. Arbour: Thank you, Mr. Chair, for the question. The amendments proposed in Budget 2024 are targeted and intended to be implemented as part of the ongoing operations of either Innovation, Science and Economic Development Canada, or ISED, or the Canadian Radio-television and Telecommunications Commission, or CRTC. Therefore, I do not foresee a linkage to the broader fiscal rules on hiring that were put in place.
Senator Smith: Do you see any implication on your responsibility area? Are you going to contribute to any form of reduction to assist the government to move forward?
Mr. Arbour: We are participating broadly. The main set of considerations on my team has been the limits on travel and professional services rather than on hiring specifically. Certainly, when it comes to staffing, we will be taking into consideration the broader context. But in the context of the measures proposed in the budget, I don’t foresee any material considerations for limitations.
Senator Smith: Ms. Dolan, do you have any comments in terms of your department?
Ms. Dolan: I will start very narrowly with the measure we have. This is not expected to increase or change any element of the staff complement because it’s really a financial backing mechanism. More broadly, Transport Canada has gone through — as have many other departments — an internal process to identify how to contribute to this broader measure. There are measures in place within the department regarding how we staff and hire, and our focus is on staffing and moving people within the department before, for example, going outside.
With respect to the actual High Frequency Rail, or HFR, team at Transport Canada, we are staffed to our full complement. We are not in growth mode right now and don’t anticipate being in growth mode for any time coming.
Senator Smith: Ms. Leblanc?
Ms. Leblanc: Thank you, Mr. Chair, for the question. The Canada Mortgage and Housing Corporation, or CMHC, has been contributing to the strategic review and the returning of budget through many means over the past year. With respect to what we are studying today, which is the foreign ban, it is an extension of the foreign ban, so we don’t require additional FTEs to deliver on this particular measure. However, I think some senators have referenced additional budget measures that CMHC is receiving, such as delivering on the daycare loan. There is also additional volume on our flagship programs and lending programs. That will require additional FTEs to deliver new programs assigned to CMHC. However, we will continue to contribute at the same time, especially through travelling as well as through the professional and technical budget, to play our part for the government.
Senator Smith: And Mr. Liedtke? It is a new department so —
Mr. Liedtke: Actually, we’ve been around for over 20 years, senator, but this is a very significant addition to our mandate. Therefore, there will be a requirement for additional FTEs. As part of the funding that is earmarked in Budget 2024, we have $1 million to allow us to prepare for this. We will be undergoing a structural study about what this new consumer-driven banking organization will look like. However, it is important to note that in the short term, there will be a requirement for public funds, but in the long term, we will be on a cost-recovery basis and won’t be using public funds. It will be recovered through the financial entities that we’ll regulate.
Senator Smith: To go back to the Canada Mortgage and Housing Corporation and Ms. Leblanc. Division M of Part 1 increases the homebuyer’s withdrawal limit from $35,000 to $60,000, and it also defers the repayment period by three years. Is there a concern that this move could increase further demand for homes and increase the price of homes? Is this something that your organization has looked into, and, if, so, could you give us some feedback?
Ms. Leblanc: Thank you, Mr. Chair, for the question.
To my recollection, I do not believe we’ve done specific research with respect to this particular question, but we can certainly take that away and come back.
In terms of impacting demand, this seems to be a very targeted measure. There are broader macroeconomic factors that contribute to demands aside from this particular one that is quite narrow in measure.
Senator Smith: Staying with CMHC, Division 1 of Part 4 delays the repeal of the Prohibition on the Purchase of Residential Property by Non-Canadians Act for an additional two years, as you mentioned earlier. This will effectively continue the ban on foreign nationals purchasing homes in Canada. Has CMHC studied the impact of the ban on the housing market in Canada? If so, has the policy made a positive impact on supply as well as on prices of homes in Canada?
Ms. Leblanc: Thank you, Mr. Chair, for the question.
As the act was put forward, certainly CMHC and the Bank of Canada did research around the activities of foreign investors, especially in very large census metropolitan area, or CMA, and census agglomerations, or CAs. We found that they were contributing to high prices and an overheated market. They are a portion of what we see in terms of demand in those sectors. Looking at trends, we actually saw that they were increasing, especially during the pandemic times.
Now that the ban has been implemented, it is still too early to tell the impact of this ban. However, CMHC will continue to monitor the impact and gather the data. I have to say that most of the activities are local, and the data is quite decentralized and very hard to monitor. However, through the research that we do, we will definitely monitor the policy impact of this lever.
Senator Loffreda: Thank you to the witnesses for being here this morning. My question is for Ms. Nadine Leblanc from CMHC. It is about the measure prohibiting the purchase of residential property by non-Canadians. My question is on how effective this measure has been thus far. In the briefing material we received, the government explained that the purpose of the ban is to curb foreign demand for Canadian housing. It expects it to prevent certain transactions from occurring without disclosing any numbers.
What early data do you have to make that claim? That is my first question. Additionally, I know the prohibition is only one of the measures to address the overheated housing market. How can you determine that this measure is actually improving housing affordability for Canadians?
Ms. Leblanc: Thank you, Mr. Chair, for the question. As I indicated earlier, it is a bit too early to tell the effectiveness of this policy lever. We are still monitoring. It has only been in effect since January 2023. It takes a while for these levers to work their way through the micro-economy of local markets. We know from past research — for example, in B.C., they had introduced foreign investor taxes. You can see through our research that this contributed to reducing demand, especially in large markets like Vancouver. However, that was a specific measure in B.C. We will continue to monitor the effectiveness of these policy levers with respect to the activities we see in these markets.
Senator Loffreda: You do mention you have to monitor it in the short term, and you don’t have the results. But the impact of the prohibition in 2025 and 2026 is not a long-term policy. You put a date on when you will revisit the policy in the short term, right? Why is it not a long-term policy if we don’t have short-term results?
Ms. Leblanc: By extending it by two years, it will have been four years in effect. That will give us enough line of sight, in terms of the larger markets, to see if we see a cooling of demand. At that time, we will revisit the need to extend it. It works by cycle and studying the supply and demand is ongoing. It’s important that we continue to monitor that.
Senator Loffreda: Do you have past results regarding the number of purchases by non-residents? What about the objective so that you can say, “Here are the number of units purchased by non-residents and here are our goals to reduce those purchases and increase housing affordability for Canadians”?
Ms. Leblanc: Thank you for the question. We do not have a specific target. However, we know that in large markets, it is different. For example, in Vancouver, it forms approximately 3% of activities. When we move into Ontario, in large cities like Toronto it represents approximately 2% of the demand. As I mentioned in the Bank of Canada study during the pandemic, we have seen these activities increasing. We do not want to see increases. We want to see decreases. That’s the reason for the ban and for trying to stabilize those activities and safeguard housing for Canadians.
Senator Loffreda: Historically, you are looking at 2% or 3% of the market? That should be your target?
Ms. Leblanc: That’s been the trend.
Senator Loffreda: Thank you. My next question is for the Financial Consumer Agency of Canada with respect to open banking.
We are the last country in the G7 to adopt open banking — well, when we do adopt it. You mention it is driven by safety and soundness. My question is on cybersecurity threats. How much of a threat is cybersecurity once that data will be shared by numerous institutions? We’ve seen that it is a major threat. We have seen it in Quebec with Desjardins and with other major institutions. Will this increase the threat of cybersecurity or privacy for Canadians?
Mr. Liedtke: That’s an excellent question at the crux of why Canada needs an open banking framework. Right now, financial consumers are sharing their passwords and data with the fintech companies. Under the Consumer-Driven Banking Framework, there will be technical standards to protect how data is shared so that consumers will be protected. They will no longer be giving their passwords out and companies will have an obligation to meet the cyber requirements and the protections.
With respect to your question about whether it will improve cybersecurity, the standards are still being developed so I can’t give you an assessment. However, the expectation is that having a regulated framework for data sharing would minimize that risk.
Senator Loffreda: As other major institutions beside the major banks start to share that data, you are satisfied that you will have enough regulations and measures in place to protect the consumer?
Mr. Liedtke: I don’t know if any of us can be entirely comfortable with cybersecurity but certainly the standards and the framework will mitigate that risk as much as possible.
Senator Loffreda: Why has it taken so long? Why only a framework? You said that you are commencing to engage with the major institutions and with the stakeholders. Why has that not been done already?
Mr. Liedtke: Senator, I can’t speak to why we are where we are. When the budget implementation act is passed, our mandate will change and we will now have a role in overseeing, administering and enforcing the framework.
Senator Loffreda: You think the consumer will benefit the most?
Mr. Liedtke: I think it will be more than the consumer. The financial industry will also benefit. Right now, a fintech company is also limited in what they can produce because the only way to get data is through screen scraping. By having a formalized approach to sharing the data, industry will now be able to become more innovative in how they will provide services to financial consumers. I think it is a win from both an industry and an innovation perspective as well as a win for the financial consumer.
Senator Loffreda: Thank you.
Senator MacAdam: This question is connected to VIA Rail. Budget 2024 seeks to allocate $63.1 million over three years to renew the Remote Passenger Rail Program in support of Indigenous-owned rail operators.
Can you describe the scope and targeted areas for this support and the expected impacts?
Ms. Dolan: I am going to disappoint you, I’m sorry to say, because I work on the corridor project more specifically. I am not well placed to speak to the rural and remote passenger service. I do apologize for that.
Senator MacAdam: Okay.
Ms. Dolan: We can double back to the committee and provide a response.
Senator MacAdam: If you could provide something in writing to the committee, that would be great.
You mentioned the RFP in your opening comments. I’m wondering about the criteria for the evaluation of that RFP. Do those criteria relate to the reduction of greenhouse gas emissions? Is that something that you are considering when you are deciding who will be the successful bidder on the project?
Ms. Dolan: I would say yes. The government has set out a series of project outcomes that we require the bidder to meet. As the bidders will come in with a wide range of proposals such as the alignment that they are proposing within certain parameters, what type of service they propose and how much revenue and ridership. Greenhouse gas emissions reductions are directly related to the ridership targets.
We are asking them, at a minimum for the 200 kilometres or lower option, to come in with 17 million passengers per year. The system will be electrified, so that’s a source of reductions, but they will be moving from higher-emitting modes into rail. So, yes, it is one of the things we are measuring.
Senator MacAdam: Okay. What are some of the other program outcomes?
Ms. Dolan: For example, the number of passengers, the degree to which they’re helping to minimize the impact on taxpayers and the degree to which they are contributing to goals regarding reconciliation with Indigenous people. There’s also the environmental element — that is, how they are contributing to environmental goals. As well, we are putting in a requirement to help the project serve as a catalyst for housing. As train stations are developed for the new VIA-HFR line, we will have VIA HFR and the partner see how the positioning of stations, for example, could help stimulate transit-oriented development or affordable housing in those areas.
Senator MacAdam: Can you describe the interaction with Public Services and Procurement Canada, or PSPC, in terms of awarding those bids? I’m trying to understand that process.
Ms. Dolan: Yes. Transport Canada is the client and PSPC are leading the procurement, with Transport Canada. They have a significant role. This procurement is going very well and should end this autumn. When it is completed, we will have selected the private developer partner and that entity will then be signing into — once all the approvals are done, et cetera — a relationship with the subsidiary, VIA HFR, and VIA HFR will serve as the public sector counterparty to that entity for the next several years to jointly develop the project.
Senator MacAdam: Thank you.
Senator Kingston: I have a quick question for Ms. Dolan in the follow-up to some of the other questions regarding high-frequency rail.
I’m thinking that you are going to be developing something like they have in France between Avignon and Paris, which is awesome, actually. You are talking about giving the subsidiary powers, for example, the government becomes the land owner when the bidders decide to purchase whatever they have to purchase. Does it also give them some power around expropriation? It is 1,000 kilometres of rail. I assume you need more space. You talked a bit about land. Is expropriation part of it? Does this creation of a subsidiary allow that to happen?
Ms. Dolan: Yes. VIA HFR and the Government of Canada will be the owners of the assets of this project, including the land that will be purchased. It is actually VIA HFR, as an agent of the Crown, that becomes the owners of the land. The starting point for land acquisition is commercial agreements with landowners. There will be many parcels of land identified for the project, so we anticipate that a percentage will require government expropriation. However, that will be done neither by the subsidiary nor the private partner. That would still remain a government entity.
Historically, for example, when VIA Rail has needed to expropriate land — it is not very common in its history — VIA Rail would work with Transport Canada, which would work with what is now PSPC, through the Expropriation Act to do the expropriation. That expropriation power currently lies with government and we anticipate that it would remain with government and not the subsidiary. I hope we are half as nice as your experience in France.
Senator Kingston: It is nice and very fast. You can’t see what is going by. It’s kind of scary but in a nice way.
I would like to turn my questions to Mr. Liedtke. I come from New Brunswick, where the caisse populaire movement is a thing. It is quite a big thing in New Brunswick itself and, of course, as has been noted, it is a provincial entity.
You talk about how the Consumer-Driven Banking Framework will permit credit unions regulated by provincial governments to opt into participation, establishing a separate position solely dedicated to consumer banking.
To opt in, what is their incentive? Why would they want to opt in to this program?
Mr. Liedtke: Thank you for the question, senator. I believe the advantage of opting in is that you would have access to the network of data sharing between the financial institution and the company. The great thing about the proposed framework is that it recognizes provincial jurisdiction. By opting in, there will be no obligation of the provincially regulated entity to be subject to our normal market conduct operation. That’s why they have created the separate position of the senior deputy commissioner, so that it is stovepiped for consumer-driven banking. The provinces can still regulate those credit unions; however, there will be a requirement for those credit unions to still be subject to the technical standards and security requirements of open banking. By being able to share their data with fintech companies and protect their customers, I think that’s the advantage they would have.
Senator Kingston: There was an issue with the caisse populaire in New Brunswick not too long ago where people were not able to access their money because something new was put in in terms of IT requirements. This went on for a number of weeks, where people were having trouble making transactions that they needed to pay their mortgages and so on with the credit union, the caisse populaire.
Will opting in to this particular program avoid some of those things that happened in the past? Are there more protections for the public in terms of that kind of glitch happening? It was a little more than a glitch because of the time that it lasted.
Mr. Liedtke: Thank you for the question. I’m not sure of the background of the technical requirements. The framework will establish the technical requirements of being able to transfer the data from the caisse populaire to a fintech company to support a customer’s desire. The framework will protect that, how to transmit. Whether an individual entity has their own internal technical problems, I don’t think that would necessarily be regulated by the framework. I would have to understand more about what the technical problem with the bank was.
Senator Kingston: I was thinking about the caisse populaire deciding or planning this. Would some of the regulations help to guide them to a better outcome than when they went live?
Mr. Liedtke: I’m not sure of that question. The framework is designed to identify technical requirements to transfer customer data from the institution to the fintech that the customer has chosen, as opposed to it being transactional information. Hopefully, it would encourage them, but I’m not sure if it is part of the scope of open banking.
Senator Ross: My question relates to telecommunications, Mr. Arbour. In the changes to the act, I understand that the CRTC will be responsible for determining which fees are considered barriers in terms of activation, modification, cancellation, et cetera. Is there any indication of the guidelines for those fees? It seems to be undefined at this point. How and when will they be identified and shared with consumers?
Mr. Arbour: Thank you for the question. The legislation is drafted in a way to allow for flexibility, to take into consideration changes in the market. It is a deliberate choice to be at a high level. Should the bill receive Royal Assent, shortly thereafter, the CRTC will launch a public consultation to identify the specifics of each of the three requirements, including the fees.
The CRTC already has public guidelines in place, and they would either expand upon these or add a separate set. For instance, they have a wireless code of conduct that has certain rules governing wireless services. There are already certain limits on fees for devices, for instance. If you leave, you only pay off the cost of the device; they can’t charge for any more than that.
In terms of the fees that were contemplated here, occasionally you encounter a situation where, if you want to switch your plan or switch providers, in certain contexts, there can be a $10 or $15 fee associated with that. It is generally limited to when you have to talk to a person as opposed to online, which can be more automatic. That can be a barrier to switching.
There can be other activation fees that are similar in that it is not the cost for a piece of hardware, like a thing, but just a pure cost to turn on the service. That’s the type of thing that’s envisioned by the measure. The specifics would be worked out in the consultation, and then the CRTC would update its public rules outlining the final determination.
Senator Ross: In addition to that, would there be any consideration given to the ease of these transactions? In addition to the costs, what I hear from consumers and small businesses is that the complication, confusion and complexity of switching providers are issues as well. I’ve had a recent experience where I couldn’t take my telephone number with me. What about those types of issues?
Mr. Arbour: Indeed, the first two provisions address that type of situation. The first provision is a requirement to provide a self-service mechanism. This exists in some contexts. Some service providers have an online portal where you can log in and change or sign up that way, but there can be limitations to the portal. Sometimes you can opt for a more expensive plan, but if you choose a cheaper plan, you are asked to call their customer service line and you are on hold, and that can be a further frustration. This would include the obligation to provide a self‑service option that is geared toward consumers.
The second provision deals with information complexity and is about notifying consumers with clear information about the plans that are in the market.
We’ve seen substantial improvement in pricing in the market over the last year. When I tell people this, they say, “Well, my plan hasn’t gone down,” which, of course, is understandable. The issue here is that if you signed up to a plan a couple of years ago, that’s the price you agreed to then, and you just need to switch to one of the newer plans in the market.
I, myself, was on an older 10-gigabyte plan, paying $50 a month. Last year, I signed up for a 20-gigabyte plan for $29 a month — so 40% cheaper, twice the data. That gives an indication of the improvements that are there, but oftentimes consumers don’t know this. They’re not logging on to Bell’s website every day to see what plans are there. By receiving these notifications that outline the options in the marketplace, it’s a further step.
There are other tools to assist consumers, either on ISED’s or the CRTC’s websites. There are portals that help consumers compare offers that are in the marketplace that pull together all the different plans available.
The measures announced in the budget are intended to help complement, supplement and support consumers in the marketplace.
Senator Ross: I understand that CRTC also has the power to exempt providers from these changes. Can you give me a sense of who would be exempted and why that might be the case?
Mr. Arbour: Certainly. Thank you.
The telecommunications market is very broad and varied. In addition to the common consumer services, there are a whole range of business-to-business services, for example. There can be a company that provides connectivity just for parking metres. If you have an automated set of parking metres, they help connect those for automatic monitoring or something like that. That’s a very specialized service, and you’re dealing with sophisticated clients and not the basic consumers in the marketplace who are contemplated here.
Because the telecommunications marketplace is changing all the time with new technologies, the provisions are geared toward high-level objectives to ensure the CRTC has the authority to tailor appropriately to target where it’s needed and avoid where it’s not.
Senator Ross: Thank you very much.
Senator Pate: My first question is for you, Mr. Arbour.
As you know, this division would multiply criminal offences related to auto theft and add certain maximum harsher penalties of 14 years. All available data indicate that these provisions will have very little effect. We know that more punitive sentences do not deter crime; that has been well established by the Department of Justice as well as by the Supreme Court of Canada.
How will you be measuring the effectiveness of the various measures being proposed? Mr. Rochon, you have joined us. I’m very interested in what steps, if any, the government has taken to evaluate options that would put the onus on car companies to use radio apparatus systems within cars to lock cars that have been subject to auto theft, as well as some of the mechanisms that are electronically available to prevent these auto thefts in the first place. Why has the government not chosen to explore these measures further or consider penalties for car companies rather than the measure that’s in place, which we know will probably only result in the most marginalized and the lowest rungs of any kind of criminal organization being addressed?
Marc-André Rochon, Senior Director, Spectrum and Telecommunications Sector, Innovation, Science and Economic Development Canada: Thank you for the question.
I’ll speak to the Radiocommunication Act first and then discuss the broader question.
We launched public consultation in mid-May to ask some of these questions: Which devices are used for auto theft — the wireless devices under the purview of the Radiocommunication Act — and what are their legitimate uses, because they have legitimate uses? Those are the first steps to gather insights and information on these devices. For legitimate uses, what are the classes of people who can make use of these devices, like people who own garages and things like that?
Regarding the impacts or the effectiveness of the measure, it’s hard to say right now. We’ll need to get the outcome of the consultation. Then, we issue a ministerial order that would allow us to stop the distribution of these devices in Canada and also work with law enforcement agencies when they do interventions related to auto theft, if there are such devices that would be contributing to that. The administrative monetary penalties could be up to $10 million if somebody is caught with one of these devices. It is substantial, financially, so we would work with them to do that.
Senator Pate: What was the policy reason for not going after car companies? It’s far more effective if you actually address this at the level of the car and the manufacturing of the cars than it is to go piecemeal after the fact.
Mr. Rochon: There are some conversations on that topic. It’s not part of the Radiocommunication Act, of course; it’s a separate sector within Innovation, Science and Economic Development. Those discussions are happening right now, though. I can’t share anything else. I’m not aware of the outcomes or the objectives of those conversations right now.
Senator Pate: But it’s clearly been a policy decision of this government to go this route as opposed to what has been identified as a more effective route by going through car companies.
Mr. Rochon: When it comes to how we deal with the wireless devices used for auto theft, yes, at this point that’s the main measure.
Senator Pate: So it’s not addressing the auto theft up front; it’s addressing it after the fact.
Mr. Rochon: There are other measures linked to the Criminal Code that I think somebody else at this table can speak to, if they haven’t already, but I can’t speak to those measures.
Senator Pate: Thank you very much.
My other question is for the Financial Consumer Agency of Canada. Canada has long grappled with serious financial exclusion issues where approximately 3% of all Canadians, close to 1 million, are unbanked and have no relationship at all with mainstream financial institutions. Additionally, 15% of the population, close to 5 million Canadians, are underbanked, meaning that they might have a bank account but their engagement with financial institutions is severely limited. Those issues primarily affect individuals from low- and moderate-income backgrounds, particularly those from minority and Indigenous groups.
The closure of 700 bank branches across the country, the majority of which are located in low-income communities, have added to this burden. The situation is even more pronounced in Indigenous communities, where, for instance, in 123 Indigenous reserves in Ontario, only 5 have access to financial services, resulting in 15% of folks in these communities having no bank account.
What measures has the Financial Consumer Agency of Canada put in place to help low-income groups and Indigenous communities avoid being further disadvantaged by the implementation of Canada’s Consumer-Driven Banking Framework?
In terms of access to banking, including the ability to receive direct deposits or even to cash cheques, this has also been a traditional barrier for income supports. How is the work to implement Bill C-69’s open banking measure being coordinated with other government departments to increase the ability of government programs to reach people in need?
Mr. Liedtke: Thank you for the question. If I may just read back to you, I just want to make sure I understand your question because there was a lot there.
You asked this: How is the Financial Consumer Agency of Canada going to work with other agencies to implement consumer-driven banking?
Senator Pate: That, and how will you ensure people have access to benefits that they would not have currently through direct deposit because folks in larger urban centres wouldn’t, especially in Indigenous communities?
Mr. Liedtke: Okay. I’ll start with the consumer-driven banking issue first, because consumer-driven banking is how a consumer can give the authority to a financial institution to share their data with another company or a fintech company to provide them with services.
Certainly, all communities would be entitled to have those services. But you are correct: During our public opinion research, we’ve shown there are certain segments of the population that are unaware of open banking and what it would entail. As we develop our consumer awareness program, we’ll target the messaging to each of the different types of communities. For example, seniors will receive different messaging than for youth from 24 to 34, because they’re more tech savvy.
I believe the consumer awareness program will address how each of those communities can access the services.
The other part of your question, I believe, was how we give them access to basic banking services. Again, that would be through our consumer awareness but not necessarily related to consumer-driven banking.
How do we work with the banks to provide the services? The work we’re doing on the low-cost/no-cost is a good example. We want to target those vulnerable groups that can’t afford banking services or are unaware of them to let them know what banking services are available to them and what they can get to encourage them of the bank accounts.
I hope that answers your questions.
Senator Pate: Thank you.
[Translation]
The Deputy Chair: Before we move on to the second round, I’ll take the liberty of asking a question or two myself.
Ms. Dolan, we’re talking about high-frequency trains, but you indicated in your opening remarks that there might be some high-speed segments in the proposals we receive.
Do you have a sense of the ratio between high-frequency segments and high-speed segments? What would determine whether a segment is high-speed or high-frequency?
Ms. Dolan: The RFP asked bidders to submit two proposals. We’ll see the proposals for the high-speed segments in July. I’m not sure I understood the last part of your question.
The Deputy Chair: I wanted to know if, in your opinion, the proposals received for the high-speed and high-frequency segments are for the entire line or if it could be for certain segments.
Ms. Dolan: We don’t know yet. When all the bids are received in the fall, the government will have a better idea of which proposals will be the best for Canadians. It’s not clear whether this will be a small or large segment. However, following private confidential meetings with bidders, we’re aiming for large segments rather than small ones for now.
The Deputy Chair: Are there currently several bidders, or will there only be one or two? Will there be a diversity of proposals?
Ms. Dolan: At the moment, three consortia have submitted proposals. Each includes several companies. Each bidding team has between 100 and 250 team members. There will therefore be three proposals, and each one will include two solutions: one for speeds up to 200 kilometres per hour, and the second for speeds above 200 kilometres per hour.
The Deputy Chair: Can there be some guarantee that competition will provide us with the most optimal solutions?
Ms. Dolan: Yes; the purpose of this procurement process is to find a private sector partner, but the Government of Canada will own all intellectual property. For example, if one bidder gives us a good idea, but another is chosen, the government has the opportunity to tell the first bidder that a second bidder has some interesting ideas. We’ll take those ideas and develop the project.
The Deputy Chair: During this process, the government will acquire knowledge. In that case, will bidders be compensated?
Ms. Dolan: Yes, bid fees can be up to $25 million. That doesn’t include all the costs, but it does offset a portion of the costs for the proposal.
The Deputy Chair: For acquiring knowledge and intellectual property?
Ms. Dolan: Yes.
The Deputy Chair: Thank you. Mr. Liedtke, you mentioned Prosperity Canada earlier. I am quite troubled by something. We know that between 7% and 10% of Canadians don’t file an income tax return and therefore aren’t identified for assistance programs. These are the most vulnerable people in our society. Could Prosperity Canada be a partner in identifying and helping Canadians who don’t file a tax return, and encouraging them to file, so they can access our social programs?
Mr. Liedtke: Thank you for the question.
[English]
That is exactly our understanding of what Prosper Canada would like to do, namely, they would reach out to those Canadians who have not accessed all of their benefits. Part of the programming would be to make them aware of that and encourage them to apply for them and, in many cases, as you have mentioned, to file your income taxes which would automatically generate a benefit. That’s our understanding of one of the programs that Prosper Canada has with their funding.
[Translation]
The Deputy Chair: This is a very important social issue. Ms. Leblanc, as far as CMHC is concerned, you work with municipalities, which are essential partners. That’s where projects come to life. Is there a way to improve the fit between the projects we develop and the requests we receive? We know that, generally speaking, there’s a strong demand for people living alone, particularly the elderly. When you start a project, it’s harder to make it viable than when there are smaller units, like one-bedroom units. The other huge demand is from families, who need two and three-bedroom apartments. Is any research being done with the municipalities to properly target areas with the greatest demand?
Secondly, are there also incentives to focus on downtown densification and stop expanding our cities, which has the effect of increasing travel and greenhouse gas emissions?
Ms. Leblanc: Thank you for the question. First of all, it’s important for municipalities to properly plan their housing needs over the long term. The $4-billion Housing Accelerator Fund, which is in its infancy, requires municipalities to provide us with long-term plans that detail their housing needs. These will be broken down by housing type, income level and population, which includes requests for seniors. There are also requests for students.
This information will be reviewed by the program and then used for the infrastructure funds that will flow from it. Infrastructure Canada will handle it, but there will be a cycle that follows and uses the information, which will form part of the incentives built into the infrastructure funds. I think these needs must first be understood in order to build adequate housing. It’s not just about building a supply, but building an adequate supply.
Secondly, you mentioned densification. One of the Accelerator Fund program incentives is precisely to have more one-bedroom and two-bedroom units for families. The more units we see, the more incentives we offer. This program maximizes densification. There will be others to follow with Infrastructure Canada, but this is part of the cycle of incentives in place.
The Deputy Chair: Thank you very much; that’s encouraging.
[English]
Senator Marshall: I have a question now for Mr. Arbour. It’s on Division 37 because it lists three specific actions that are going to be carried out by the CRTC.
Is there a timeline? Are you able to tell us when those three will be implemented or will it be staggered implementation? Also, will there be a further announcement with regard to the implementation so that the general public know this has now gone live?
Mr. Arbour: Thank you for the questions. Should the BIA receive Royal Assent, the next step is for the CRTC to launch a consultation. They will post a notice of consultation that will lay out the steps. At a minimum, it’s written phases of comment where either stakeholders or individual Canadians can contribute and participate in the consultation.
Senator Marshall: Consultations haven’t taken place yet?
Mr. Arbour: No. They will inform the specific rules to translate the provisions into actual legal commitments.
The CRTC has noted that the fee aspect and the notification aspect are relatively straightforward. The self-service aspect is more complicated because it involves back office, back end —
Senator Marshall: IT. Right.
Mr. Arbour: — IT complexities.
Ultimately, it will be up to them in terms of how they sequence those provisions. They appreciate that these are issues that consumers are very much keen on, and we have been talking to them in parallel so that they’ll be ready to go, should Royal Assent be received in June. From there, it will depend on the shape of the consultations and what comes forward from stakeholders.
Senator Marshall: Okay. There’s no target date. It’s just that it’s going to be left— once the bill receives Royal Assent, it will be handed over to the CRTC and they’re supposed to take it and run with it, basically?
Mr. Arbour: That is correct. It will come into force via an order-in-council once the CRTC has been able to do its work.
Senator Marshall: Okay. Are there going to be extra costs borne by the CRTC as a result of this? Or is this part of their regular budget?
Mr. Arbour: In 2022-23, the government issued a broad new policy direction to the CRTC, a renewed approach to telecommunications policy. In that context, we talked to the CRTC about revisiting its overall resource complement, and the CRTC’s resources were increased in the telecommunications portion by about 25%. Those resources came from fees on the industry. They don’t come out of government revenues.
Senator Marshall: So it’s not the public purse?
Mr. Arbour: Correct. That increase was designed to handle different measures over the medium term. Should they have a change in circumstances, we can revisit that in terms of the fees on industry.
Senator Marshall: I would expect that once it’s implemented, there will be complaints. Will there be a separate complaints mechanism set up, or is there already a complaints mechanism that will also be used for these three issues?
Mr. Arbour: Thank you for the question. There is an existing complaints organization. The Commission for Complaints for Telecom-Television Services. It already administers a set of codes on television, the internet, phone and wireless. I would imagine most likely they will handle complaints in this regard.
Senator Marshall: Thank you.
I have a quick question to Mr. Liedtke. You mentioned Prosper Canada in one of your responses. I think I saw it in the budget book. How were they selected? They’re an independent organization, aren’t they? Or are they a non-profit organization?
Mr. Liedtke: Thank you for the question, senator. They’re an independent, non-profit organization. They’re one of our stakeholders, and they made an application directly to the Minister of Finance.
Senator Marshall: Okay. There was no RFP. They made a proposal and the proposal was accepted. That’s how they were selected?
Mr. Liedtke: Correct. It did not come through the Financial Consumer Agency of Canada, or FCAC.
Senator Marshall: Okay.
Mr. Liedtke: They did it separately.
Senator Marshall: Thank you.
Back to VIA Rail. Has any land been bought? You were speaking earlier about the land. Who is going to buy the land? The government has a Crown corporation that acquires land. Is that who is going to acquire the land? Has any land been bought? I’m just wondering about the funding for the land. Is there any money provided? I would think it’s going to be quite expensive.
Ms. Dolan: Yes, it will be costly once we get to that point in the project. Currently, as discussed, we’re in the request for proposals phase. One of the elements of that is to identify a series of promising alignments within government parameters. The next few years of the project will be to further develop and design the project, which will help government — or VIA HFR and the private developer partner identify the actual plots of land that would be required for the project. So it’s at that point in time — I think we’re probably three or four years at least from identifying and purchasing the land.
To date, no funds have been allocated for land purchase. At the same time, the acquisition of land for such a large project is a priority. We’ve heard from other big projects in other jurisdictions how important that is. Taking that to heart, the VIA HFR subsidiary does have a land acquisition strategy. They’re working on developing their plan on how to approach this.
Senator Marshall: No money?
Mr. Arbour: No money for the actual acquisition at this time.
Senator Marshall: Thank you.
Senator Smith: Mr. Liedtke, the proposed consumer-driven banking act includes an exclusion for “derived data.” This act would not apply in respect of derived data. Can you explain what “derived data” means, why it is excluded from this act and what are some of the implications?
Mr. Liedtke: Thank you, senator, for the question. I don’t have the specific answer to the question. I would assume derived data is data that is created by a financial institution rather than just the records, but we’ll have to get back to you just to confirm that.
Senator Smith: As a supplementary, along with consumers, this act will allow for small businesses to direct that their data be shared with participants in the open banking framework. However, the legislation does not include a clear definition of what would constitute a small business.
What sort of guidelines will be used to determine whether a business will be eligible to use open banking?
Mr. Liedtke: Thank you for the question, senator. The actual framework itself would define the eligibility criteria and the technical specifications. As long as any entity meets those technical specifications, then they would be eligible to partake in the open banking framework. I believe the actual technical requirements are still being developed.
Senator Smith: When do you anticipate them being completed so the process could move forward?
Mr. Liedtke: I would have to defer that question to the Department of Finance, because they actually are defining and creating the elements of the technical standards and the framework, and then we would be responsible for overseeing the implementation of it.
Senator Smith: As of now, it’s sort of cloudy as to when the actual process will move forward?
Mr. Liedtke: No, I’m saying I don’t have the answer. The Department of Finance would likely have that answer.
Senator Smith: Thank you.
Senator Loffreda: My question is on Part 4 of Division 36. The briefing material explains that the proposed amendments to the Radiocommunication Act could be used to address harmful criminal activities beyond auto theft. I understand the immediate policy intent of this measure, which we understand auto thefts in Canada are a major concern, but how much flexibility are we giving the minister here to address other instances of harmful interceptions in the future? Do we have any specific examples?
Mr. Rochon: Thank you for the question, senator. We don’t have any specific examples right now. However, what we do know is that wireless devices are everywhere. They’re in your laptop and in your car. It’s evolving over time. There will be more and more risks of various threats, whether it’s via criminal organizations or others, to harm Canadians. These new capabilities and new devices are useful to Canadians, but also introduces risk.
As and when there’s a determination that wireless devices are used to intercept communications to cause harm for Canadians, the minister would have the ability to do a public consultation, follow the regulatory framework, of course, to make sure that whatever measures he’s proposing would benefit Canadians and limit any type of negative side effect in order to help protect Canadians against whatever future nefarious actor could do to Canadians going forward.
Senator Loffreda: It’s targeting the manufacturers, which at this point in time are not exclusively criminal organizations?
Mr. Rochon: It targets manufacturers if they are purposely producing devices that are used for nefarious purposes. It could also target distributors that are selling these things in the Canadian market. It could target organizations that possess these devices for nefarious uses as well.
Senator Loffreda: Thank you. I’ll ask another question on open banking. Open banking requires data sharing, as we know. I’m comforted knowing that it will be secure and cybersecurity will be less of a threat.
With respect to consumer consent, will consumer consent be required for each data type? Or would consent from the consumer to share data include all in-scope data — more specifically, bank accounts, credit card balances — when it comes to approving loans and authorizing loans by financial institutions? Does the consumer have to be advised that his data will be shared, and consent to it, or all data could be shared?
Mr. Liedtke: Thank you for the question, senator. The intent of the framework is that the consumer will authorize the release of information. They will be able to pick and choose what information they want released and that could be shared between the bank and the fintech. The consumer will drive what data is shared.
Senator Loffreda: So the consumer drives it at all times. No data could be shared by financial institutions asking for specific data that the consumer has not consented to sharing?
Mr. Liedtke: Correct.
Senator Loffreda: Thank you.
Senator Pate: My question is for CMHC. In the 2024 Housing Market Outlook, you predicted that rental markets will remain tight, especially in the pricier areas of Canada — which I presume includes cities with high homelessness rates, such as Toronto and Vancouver. Purpose-built housing measures are included in Budget 2024 but are not in Bill C-69.
I am curious how CMHC plans to address the fact that the anticipated increase in housing units will not meet the growing demand. What barriers brought you to estimate that Canada will not meet its demand for rental housing?
Given that the average rent for a one-bedroom apartment in Canada is now $1,920 per month, while a two-bedroom apartment is $2,193 per month, how are you looking to address the housing affordability crisis? What concrete measures are you taking to meet this goal? What is your timeline? In particular, in order to ensure that you meet the timeline, how are you dealing with folks who rely on social assistance or earn minimum wage and can’t even afford what’s currently being provided? What are the long-term, concrete measures? How do you account for the fact that even though it’s in the budget, we’re not seeing in the BIA any real commitment to this?
Ms. Leblanc: Thank you for the question. I definitely agree that the biggest pressure we are seeing across markets is for renters. We are seeing an increased need for core housing and the need to do more.
With respect to what CMHC is doing, we are accountable to deliver on the National Housing Strategy and its programs, which includes programs that target additional supply and deep affordability. I’ve spoken before about the Rapid Housing Initiative, the Affordable Housing Fund, the Apartment Construction Loan Program, as well as some of the biggest programs that are contributing to supply. For those programs, the pipelines are significant. The deepest programs that we have are oversubscribed. We will continue to offer this funding to developers and not-for-profits until 2028 and, for some of them, until 2032.
We’re speaking specifically to the foreign ban today, but in Budget 2024, significant measures have been announced that CMHC will be delivering, such as $1 billion for the Affordable Housing Fund. We are opening a new stream that will resemble the Rapid Housing Initiative — very deep, 100% contributions, targeting the most vulnerable populations in Canada.
There is also an increase to our Apartment Construction Loan Program by $15 billion. This will help the low- to middle-income population and accelerate supply.
We have a few more programs that have been announced in Budget 2024. We are excited to continue to offer that support.
You spoke about barriers. CMHC, on its own, will not be able to build the number of houses that are required in Canada. We need the help of all levels of government. We need developers, the private sector and financial institutions to contribute.
You’ve seen some commitments to innovative ideas through the budget. We talk about manufacturing for housing — mobile, panelization and 3-D printing. We need innovative and creative ideas to change how we build housing. That is one of the barriers. Through our research, we’ve seen that another barrier is the labour force.
There are some process opportunities at the local municipality level. We are working with municipalities to incentivize them to change the way they think about planning, zoning and densification. We need to look at the whole life cycle in terms of how we are building in Canada in order to get to the numbers we are talking about.
Senator Ross: My question is for Mr. Liedtke, following up on Senator Marshall’s question.
A great deal of your presentation related to protection of consumers. Of course, that is positive and it is a continuing need. She asked how and why Prosper Canada was chosen for the $60‑million, five-year project creating a strategy.
Is it only the creation or is it also implementation of a strategy? Second, although you mentioned that it did not come through FCAC, do you know whether other charities were considered? Do you have a sense of the criteria? Given the past challenges that the government has had in selecting charities to implement programs, do you know what due diligence was in place? Do you think FCAC should have been tasked with the responsibility of selecting the service provider, rather than the process that was implemented?
Mr. Liedtke: Thank you for the question. I will answer the first part. We were not involved in the process, so I’m not sure whether other entities put in a submission to be approved.
To answer the second part of your question, one of the things we are reflecting on is the utility of having our own kind of grants and contributions program through which we could service the entire financial ecosystem and all of our stakeholders by their putting in submissions that would enable our National Financial Literacy Strategy, and then we would allocate funding from that perspective. We are reflecting on that as we speak.
Senator Ross: Is there a way you could find out about the criteria that were in place or any due diligence that was in place through the department, and provide us that information?
Mr. Liedtke: We would have to go to the Department of Finance. We can try that, or we can talk to the clerk about whether it would be easier for the committee to go directly to Finance.
Senator Ross: Thank you.
Senator Kingston: I have a couple of quick questions. The first is for Transport Canada.
I’m thinking about the Radiocommunication Act. No matter how you approach it, at this point, it will take time to take effect. Meanwhile, it seems to me — and this is from things I’ve heard at the community level — police departments at the local level are telling consumers in small groups how they might avoid their property being stolen, in particular, their cars.
Is there any thought on the part of your department in terms of public information that’s more widely spread? What types of cars are being stolen, for instance? Can you protect your fobs so that they can’t be read? I’m probably being very simplistic, but consumers need to know how to protect themselves, if they can, in the short term.
Mr. Rochon: Thank you for the question, senator. There are some things that Canadians can do to help protect themselves, but there are some limits to that. The criminal organizations find ways around that.
When it comes to public communications, I’d have to take that back and discuss it with the sector which is responsible for the automotive industry to see if there’s anything that is being done. A few weeks ago, the National Action Plan on Combatting Auto Theft was announced. There were some measures there, but that’s the extent of my knowledge on that topic, unfortunately.
Senator Kingston: There are public service types of announcements. People need to know how to protect themselves if there are ways.
My second question, a quick one again, is for you, Mr. Liedtke. Again, you mentioned measures will be taken to have certain segments, like seniors, for instance, understand their financial literacy better. Could you give me some examples of how you might prepare seniors to better take advantage of open banking?
Mr. Liedtke: Yes. Thank you for the question, senator. We expect the entire consumer awareness program will be multi‑phased and multi-year. The first phase will start with basic information on what open banking is. In the example of seniors, we would want them to understand that, for example, there are fintech companies that will help them get financial information from their banks. Maybe they have a separate credit card. Maybe they have investments in a different company. This app will allow them to look at everything at once, and it will simplify how they manage their finances. That could be a message for them.
In the next phase of the awareness campaign, as we get closer to full implementation, we will let seniors know that we will maintain a registry of accredited fintech companies to which they can go. We will target the messaging as we go through.
Then, of course, the third phase of our consumer awareness campaign would be to evaluate the effectiveness of the messages in the first two phases so we can tailor them and adjust accordingly. We will do consultations with a seniors group. We have a very good stakeholder network with respect to our financial literacy strategy. Some of them are targeted to seniors. We will involve all our partners and stakeholders in making sure that we have the right messages for our target audiences.
Senator Kingston: Thank you.
[Translation]
The Deputy Chair: Thank you.
Before we begin, I’d just like to remind you that representatives from the Department of Finance will be with us next Tuesday to study Bill C-69. In fact, we had many questions for them.
[English]
Senator Marshall: Ms. Dolan, I have a few more questions. You mentioned the $25 million bid fee. Can you elaborate on how that works? How did you determine the amount? Give us a little bit of general background about it.
Ms. Dolan: It is not unusual to have a bid fee in a large procurement. This one is a little bit different in its nature and its scope and what we are requiring of the bidders through, basically, a nine-month process. We are really asking them to develop, in essence, a business case for the project.
An assessment was done of the level of effort we thought that would require. A process is being led — not by me particularly but by my colleagues in the procurement and commercial team at PSPC — to be able to go through the procurement. I believe the threshold is bid compliance; then they would receive their bid fee. If I am wrong on the bid compliance requirement, I will come back to the committee and correct myself, but I believe that’s the requirement.
Senator Marshall: My time is limited so I will ask one more question. Is it $25 million per bidder? Where did the money come from?
Ms. Dolan: Yes. Budget 2022 allocated funds for the procurement and that included the bid fee.
Senator Marshall: Okay, so I will go back. And how many bidders availed of it?
Ms. Dolan: There are three bid teams. The request for qualifications went out last year.
Senator Marshall: My time is up. Thank you.
Senator Loffreda: My question is once again on Part 4, Division 36, with respect to car theft. While you do come and address my question — thank you once again for your availability — have we consulted with other jurisdictions that have similar challenges with auto theft to ensure that our proposed measures will effectively deter such criminal activity? We’re putting together measures, I think rightfully so, to deter the criminal activity; that is a concern in Canada. But why has Canada been such a target? Have we consulted with other jurisdictions, other countries worldwide, that have similar problems with auto theft to see what measures they have in place? Will our measures be just as effective or more effective?
Mr. Rochon: Thank you for the question, senator. I will answer in two parts. The overall responsibility for auto theft lies with Public Safety Canada. That may be a question for them, to ask why Canada may have been targeted more than other countries. I wouldn’t be able to answer that question.
When it comes to the specific measures in Division 36, we have not yet compared with other jurisdictions. That will be part of the process as we move along with our public consultation and going through the regulatory process in order to move forward with this.
Senator Loffreda: Why wouldn’t we do that at this stage when we put together policies and measures? Where is auto theft occurring across the world? Which countries are targeted the most and what measures do they have in place? I’m sure they don’t go unaddressed when other countries are targeted like we’ve been targeted. You have to address that concern. You have to put policies and measures in place. Why’s not that been done yet? Will that be done in the next step?
Mr. Rochon: Thank you, senator. For the wireless devices, we will take care of doing that in the next step. For the overall auto theft question, that would be a question for Public Safety Canada. I’m not in a position to answer that, unfortunately.
Senator Loffreda: But also for the punitive measures of 10 years, 14 years — why 10, why 14? Has it been used elsewhere around the world? That’s my question. Are they arbitrary numbers just to deter theft? We’ve heard that sometimes it is effective; sometimes it’s not effective. I assume you need measures in place to deter crime. What you allow you empower. Right? So it’s important not to allow it.
Mr. Rochon: By 10 and 14 years, are you referring to measures in the Criminal Code?
Senator Loffreda: Yes.
Mr. Rochon: So that would be a question for the Department of Justice Canada. They own that piece of legislation. I wouldn’t be able to answer that question, unfortunately.
Senator Loffreda: Thank you for the questions you did answer.
[Translation]
The Deputy Chair: Thank you
I have a question for Ms. Dolan.
With regard to declaring VIA HFR an agent of His Majesty, it is said that expropriations will be required to deploy the HSR or HFR while granting Crown immunity to the subsidiary. Will this status exempt the project from the environmental assessment process, particularly in Quebec with the BAPE?
Ms. Dolan: No. Agent status has several impacts, including liability, financial obligations, property, taxes, municipal zoning, but the project will be subject to environmental assessment criteria. It’s a federal project, so federal law applies. I can’t really discuss the BAPE process at the moment.
The Deputy Chair: Thank you.
[English]
Senator Pate: Just following up on Senator Loffreda’s last intervention, if there is information about consultations that have been had with car manufacturing companies around their ability to actually intervene in this area, it would be very interesting to have that information. If there’s something quick that you can provide, happy to have that, but my question was actually going to be for VIA Rail.
As part of the missing and murdered Indigenous women and girls inquiry, as you know, one of the challenges around everything from the Highway of Tears to the many thousands of kilometres of highway is the fact that there isn’t reliable transportation for many folks in the country. We know that transportation should be sufficient and readily available to Indigenous communities and in towns and cities located in all provinces and territories in Canada. They are urgently in need of convenient and safe transportation to achieve transportation equity.
I am curious as to what concrete steps are being taken to implement the calls to justice from the national inquiry relating to these issues. In particular, given the role that railroads have played in Canada’s colonial history, are there any specific steps that VIA Rail and Transport Canada have taken to consult and work in partnership with Indigenous governments and communities in the context of this High Frequency Rail project?
Ms. Dolan: Maybe I’ll start at the end and try to work my way back.
Specifically, for the HFR project, the Crown corporation VIA HFR is actively engaged in conversations with over 40 Indigenous groups through the corridor. That has included reaching out to seek their input on a variety of things, including that the project has taken innovative steps to try and include them in the procurement process. For example, last summer, they ran a consultative process seeking their input on some of the elements of the requests for proposals. Similarly, they are looking to engage and identify representatives from Indigenous communities to help look at particular portions of the bids that come in that relate to Indigenous participation plans.
The Crown corporation is actively involved in both upholding the Crown’s obligations with respect to the duty to consult, as well as just generally trying to engage on a range of areas, including socio-economic opportunities for Indigenous people. More generally within the department, we have active engagement of Indigenous communities. In partnership, we have an Indigenous relations unit, which is actively supporting a number of program areas.
Finally, I would say there is a rural and remote passenger program that offers funding to specific Indigenous-owned, -led or -operated railway companies that primarily serve Indigenous communities. Thank you.
Senator Loffreda: I don’t want to take any of the senators’ time with an additional question, but given that we do have time, why not? It is an important concept that we will probably be visiting for the last time, which is the open banking concept. The Senate Committee on Banking put together a thorough report on open banking — we are favourable to open banking.
But given that you are here, I would like you to maybe summarize or conclude on what work needs to be completed to put it in place. You are putting together the framework. Do other elements need to be in place? Are there any obstacles you see going forward? As you mentioned the consumers and industry will benefit, so when do you see this happening?
Mr. Liedtke: Thank you, senator, for the question. I will put it into the perspective of FCAC and what we need to do to conduct our oversight, administration and enforcement of the framework. The Department of Finance will create the framework itself. What we will do now with the funds that have been set aside in the budget is to look at the structure we need to supervise consumer-driven banking. The other element will be to create a consumer awareness campaign, as we talked about, to make sure Canadians understand what open banking is. What are the advantages? What are the risks?
We will also promote the fact that we will create a registry so that Canadians can go to an authoritative source knowing this company is accredited, I want to share my data with them. That’s what we will be doing in the next year or so. It was just announced on April 16. We are developing the plan to create the structure and to hire the senior deputy commissioner.
With respect to obstacles, it’s too early to say. Our greatest challenge, of course, will be to staff and get the people in place with the skill sets required. Then I expect at that time we will be able to work with Finance, if there are any obstacles, to address them from a policy perspective.
Senator Loffreda: Why were we the last country in the G7 to adopt the concept of open banking? Was it because cybersecurity was more of a threat in Canada or because our banking system is one of the strongest in the world? Or did we feel there wasn’t a need?
Mr. Liedtke: Thank you for the question, senator. Unfortunately, I can’t answer that question. If the Department of Finance is coming next week, that would be a great question for them.
Senator Loffreda: Thank you. We are preparing them in advance, I guess.
The Deputy Chair: Thank you. Now we will conclude the meeting. Thank you for appearing today. It is much appreciated.
[Translation]
I would like to remind witnesses to please submit written responses to the clerk by the end of the day on Tuesday, June 11, 2024. Before adjourning, I would like to remind senators that our next meeting will take place tomorrow, May 29 at 2:30 p.m. to resume our study of the subject matter of all of Bill C-69. We will have the pleasure of welcoming the minister for 90 minutes.
I would like to thank the entire support team for this committee, those in the forefront of the room as well as those behind the scenes who are not visible. Thank you all for your work, which contributes enormously to the success of the Standing Senate Committee on National Finance. Thank you.
(The meeting is adjourned.)