THE STANDING SENATE COMMITTEE ON BANKING, COMMERCE AND THE ECONOMY
EVIDENCE
OTTAWA, Wednesday, October 1, 2025
The Standing Senate Committee on Banking, Commerce and the Economy met this day at 4:15 p.m. [ET] to examine and report on matters relating to banking, commerce and the economy generally, and in camera to consider a draft agenda (future business).
Senator Clément Gignac (Chair) in the chair.
[Translation]
The Chair: Honourable senators, my name is Clément Gignac. I am a senator from Quebec and chair of the Standing Senate Committee on Banking, Commerce and the Economy. I would like to welcome everyone with us today, as well as those listening to us online on sencanada.ca.
[English]
Yesterday was September 30, the National Day for Truth and Reconciliation. I hope all members of this committee took the time to stop and reflect and commemorate the painful history of residential schools in Canada and the ongoing impact on future generations of survivors, their communities and families alike.
[Translation]
I begin this meeting by acknowledging that the land on which we gather is on the traditional, ancestral and unceded territory of the Anishinaabe Algonquin nation.
Before proceeding, I would kindly ask my fellow committee members to introduce themselves.
[English]
Senator Varone: Senator Toni Varone, Ontario.
[Translation]
Senator Henkel: Danièle Henkel from Quebec.
[English]
Senator Loffreda: Welcome to our committee. Senator Tony Loffreda, Montreal, Quebec.
[Translation]
Senator Ringuette: Good afternoon. Senator Pierrette Ringuette from New Brunswick.
[English]
Senator McBean: Senator Marnie McBean, Ontario.
Senator C. Deacon: Colin Deacon, Nova Scotia.
Senator Wallin: Pamela Wallin, province of Saskatchewan.
[Translation]
The Chair: Thank you, colleagues. I would like to welcome our guests, who made themselves available for our meeting on such short notice. I would like to welcome, from Housing, Infrastructure and Communities Canada, Paul Halucha, Deputy Minister, and Janet Goulding, Senior Assistant Deputy Minister. I welcome you both and thank you for accepting our invitation. I invite you to make your opening remarks, after which we will ask you some questions.
[English]
Paul Halucha, Deputy Minister, Housing, Infrastructure and Communities Canada: Thank you, chair. I’m joined today by Janet Goulding, our Senior Assistant Deputy Minister of the Housing and Homelessness Branch in the department.
[Translation]
Thank you for giving us the opportunity to participate in the committee’s study on the housing crisis in Canada and the challenges faced by homebuilders, with a particular focus on government taxes, fees and levies.
[English]
As a deputy minister, I have a wide range of responsibilities, from leading the development of housing and infrastructure policy to overseeing significant federal investments in communities, to helping launch new national initiatives like Build Canada Homes. Let me highlight a couple of examples of our programs in which members may be interested within the context of this appearance today on both infrastructure and homelessness.
We have the Canada Housing Infrastructure Fund, the Canada Community-Building Fund, the Canada Public Transit Fund and the program called Vers un chez-soi, known in English as Reaching Home.
[Translation]
There is the veteran homelessness program and the unsheltered homelessness and encampments initiative.
[English]
Focusing on housing specifically, let me speak to a few initiatives. As your members know, Canada’s response to the housing crisis is guided by the National Housing Strategy, a 10-year, $115-billion plan. I should also note that the federal response to the housing situation is shared across a number of departments with distinct roles, such as the Department of Finance Canada for tax policy and Canada Mortgage and Housing Corporation which is responsible for administering many housing programs.
On September 14, the Prime Minister and Minister Robertson launched Build Canada Homes, known as BCH. It operates as a special operating agency within the department of Housing, Infrastructure and Communities Canada. It will evolve into a stand-alone federal agency in the new year, also reporting to Minister Robertson.
With an initial capitalization of $13 billion, BCH will serve as a single-window agency to building affordable housing at scale, providing financing to affordable home builders and modernizing Canada’s homebuilding industry.
[Translation]
Build Canada homes will be starting with six public lands in Dartmouth, Longueuil, Ottawa, Toronto, Winnipeg and Edmonton. Although we are starting with these six sites, existing public lands from the Canada Lands Company could make it possible to build up to 45,000 housing units across the country.
[English]
Build Canada Homes will also deploy $1 billion to build transitional and supportive housing for people who are homeless or at risk of homelessness and will deliver 700 new units in partnership with Nunavut Housing Corporation and oversee the $1.5 billion Canada Rental Protection Fund to keep at-risk rental buildings affordable.
Let me also touch on a topic that has received a great deal of public interest, the Prohibition on the Purchase of Residential Property by Non-Canadians Act, also known as the “foreign buyers ban.” This legislation was introduced as a response to growing concern that speculative international investment was contributing to price escalation, particularly in high-demand urban markets. The intent of the legislation is to help reduce pressure on the housing supply for Canadians.
Now, two and a half years since its introduction, is an opportune time to assess the impact of the foreign buyers ban to ensure it’s achieving its intended goals. As you know, the legislation was extended until 2027. We remain engaged with industry and stakeholders to assess whether this approach continues to support housing affordability, given development charges.
[Translation]
The other key issue is the cost of building housing. One thing we regularly hear about from the private sector and our housing partners is municipal development charges.
To be clear, those charges are not set by the federal government. They are not applied consistently across the country.
As you know, in the most recent Speech from the Throne, the government committed to cutting municipal development charges in half for all multi-unit housing.
We are working closely with certain provinces and municipalities to address and better understand the main barriers to housing construction, including the impact of development charges.
[English]
Through the $6 billion Canada Housing Infrastructure Fund mentioned previously, we are tying in federal investments in wastewater, storm water and solid waste infrastructure to meaningful actions on housing, such as working with provinces, territories and municipalities to increase the housing supply by granting increases in development charges and improving densification. These funds are a critical tool in aligning our efforts across all orders of government as housing is not a federal responsibility alone.
Given the time, I will stop here.
[Translation]
Thank you for the opportunity to speak to you today. I would be happy to take your questions.
The Chair: Thank you for your testimony. Before I give the floor to our deputy chair for Question Period, I would ask the senators to indicate who would like to speak.
[English]
Senator Varone: Thank you, deputy, for appearing on such short notice. Congratulations on a wonderful roll-out of BCH. I think it’s timely, I think it’s prudent and I think it’s necessary to truly activate the public sector side of affordable housing.
The committee here is studying the private sector, more particularly the homebuilding market, which is in crisis. The notion has been long held that we had a supply-side issue, but the market is telling us that supply side is not an issue today. There’s plenty of supply in multiple urban centres across Canada. There is a demand. Home builders report on the walk-in traffic coming through sales office, but the supply and the potential demand are not making the market.
When queried, the potential purchasers are stating quite emphatically that the costs are too high. When you delve down into it, the sales aren’t resulting because they just can’t afford the product.
Part of section 2 of Bill C-4, which was before us in the Forty-fifth Parliament, dealt with an HST rebate on first-time buyers sales. The estimated cost was some $400 million per year. The industry has said, “It should be extended to the whole of the market because we’re on the verge of collapse.” They costed that out at $1.6 billion.
My question to you is, what is the cost to government of a collapsed housing market which has an abundance of inventory that it needs to deal with? To reactivate a marketplace, you’re looking at catastrophic layoffs, somewhere between 200,000 and 300,000 employees, direct and indirect, through the factories and through direct labour on sites. Has anybody contemplated what that cost would be to the government?
Mr. Halucha: Thank you so much, senator, for the question.
To start back with your premise, there’s not been a day over the summer where we have not had a developer or a builder or a union or a municipality reach out to talk about how serious is the building crisis, in particular in the two major urban markets of Vancouver and Toronto. It’s been quite unparalleled, the amount of outreach we’ve had. We see the commentaries, and we have microeconomic information being shared with us very often by builders. It does validate your premise that the consequences are quite significant.
We saw something like 30,000 layoffs in the construction sector in the early part of the summer, so it’s very significant. They’re worried about their labour forces. I have received many reach outs from different companies talking about layoffs that they’ve had to do over the course of the summer.
Everything I’ve heard from a microeconomic perspective over the summer validates exactly what you have said, which is that we are in a very significant building crisis right now. The phrase, as you know, is that, “The financing doesn’t pencil,” or “The deals don’t pencil.” They can’t make the math work as costs have gone down on the market side.
It’s very hard to move from those microeconomics to what the overall macroeconomic consequences will be. Certainly, as a department, we don’t have the ability to translate all of that into a measure or a single number that would show how all these costs add up and the effect in terms of a restart.
That would be undertaken more properly by the Department of Finance. To my knowledge, they have not undertaken that kind of analysis at this point.
The microeconomic research that we have seen and from which we benefited, given our close association with the sector, validates it, but we do not have the kind of remit in the department to add it up into a single macroeconomic trend. That would be the role of the Department of Finance.
The Chair: I remind you that each senator has five minutes, including the answers from the witnesses, just like that interaction, so you have only seconds.
Senator Varone: Chair, my second question is simple.
You talked about development charges. They are quite catastrophic, but it is not a federal jurisdiction in terms of oversight. But, like other items in the federal government where there is provincial oversight, the federal government has developed best practices. Is there room to develop best practices for municipalities, for provinces, as they relate to development charges?
Mr. Halucha: I think the answer is yes. We’ll have opportunity to expand, but I’ll say, absolutely, yes.
Senator Wallin: I’m sure you’re aware this committee did a report in 2023 on this, so a couple of checkmarks on whether anything was done specifically on our recommendations to encourage densification such as attaching conditions to municipal funding for things like public transit that would require densification; was there anything specific done on that?
The federal government take a leadership role in establishing a permanent round table for stakeholders; was anything done on that?
I’ll pick two or three of them.
The federal government should work toward the harmonization of building codes on an urgent basis to allow for innovation; the federal government should focus on implementing and improving programs that increase productivity in the construction sector, and should work with stakeholders and Canadians to change current notions of social infrastructure and homes to normalize structures that are compatible with high density. I know that’s not always clear-cut. Can you give us an update on any of those?
Mr. Halucha: We’re pretty positive on all of these. I’ll run through.
In terms of the points you raise around densification, I would point to three programmatic areas: the Housing Accelerator Fund, which is run by my colleagues at CMHC, has that as its objective. Effectively, this is a grant program which encourages provinces to do things like allow four units as a right, and improve densification measures by making it easier for developers to build.
We do the same thing through the Canada Housing Infrastructure Fund. We have built housing conditions into all of those agreements for infrastructure.
On transit, we are working hard to do it. You need a province to agree in all of these cases, or a municipality.
Senator Wallin: That’s what I was asking, because we asked the federal government to attach conditions to funding.
Mr. Halucha: We have.
Senator Wallin: So are any conditions attached?
Mr. Halucha: We have. In some cases, we’ve been successful in getting those funding agreements done; in others, we have not, including on transit.
On the round table idea, we have a housing round table that supports the minister, the National Housing Council. It is not called a round table, but it serves in that regard.
On productivity, Build Canada Homes has a strong focus on increasing the level of productivity in our housing sector. I absolutely agree with the committee. A critical way to things going is to increase supply.
I missed your last one.
Senator Wallin: That was socializing the public to say that not everybody is going to own a home with a white picket fence.
Mr. Halucha: Yes.
Senator Wallin: There needs to be some discussion about what housing might look like in the future.
Mr. Halucha: Perhaps that is one we haven’t tackled explicitly. I’ll turn to Ms. Goulding.
Senator Wallin: There was a further one I wished to ask about: The federal government should streamline through CMHC the application process through CMHC; have there been any changes there?
Janet Goulding, Senior Assistant Deputy Minister, Housing, Infrastructure and Communities Canada: On the concept of the culture of living in a house with a white picket fence, this has been a topic of conversation with the community housing sector in terms of transforming their business models to move toward that complete community concept so you have mixed-market and mixed-use approaches together, so you start to see mixed incomes, mixed rents and that complete community concept in that not everyone is going to own their own home. It’s an important conversation, one we have tried to engender and something that has had a real response from our community housing sector.
On the changes CMHC has implemented, they have implemented some streamlining of their programming. For example, in the Apartment Construction Loan Program and in the Affordable Housing Fund, they’ve implemented a new Frequent Builder framework. That Frequent Builder framework is focused on a portfolio approach around streamlining processes and allowing applications to proceed in a much quicker way.
They’ve also refined some of the requirements in that programming to make accessibility and climate measures a priority in the building of those units, but the focus is on affordability in the programming. The idea there is to make it easier for builders to make the math work and make it pencil.
Senator Wallin: The flipside of that is many of us believe people should be allowed to own a home. We need to engender that as well, right?
Ms. Goulding: Exactly.
Senator Wallin: We have to do both sides.
Senator Loffreda: Last year, the Government of Canada launched Solving the Housing Crisis: Canada’s Housing Plan, which as noted in your departmental plan, builds on existing federal housing initiatives by leveraging past successes, addressing gaps and responding to current needs.
Can you elaborate further on some of the key gaps your department has identified in the housing system? How do you see addressing these gaps, accelerating the construction of new homes and tackling the critical issues like affordability, availability and accessibility for all Canadians?
Mr. Halucha: I would go to our newest initiative as the principal and most important response the government has undertaken, which is Build Canada Homes announced three weeks ago by the Prime Minister and our minister, Gregor Robertson. It responds in three key ways: One, it tackles affordability head on. That was a strong focus of the national housing plan as well. It tends to increase and have a greater focus on increasing affordability, with a view to increasing the number of affordable units in Canada and narrowing our gap with much of the rest of the world. We’re at about 4%. Most of our OECD counterparts are at about 7%. That’s a key part of that.
It gets us back into building for the first time in a generation. Build Canada Homes will build homes. It’s not waiting on the sideline for market financing to line up for construction to take place. That was an important part of it.
Second, it tackles the productivity issue. That’s really at the core of the supply challenges we have right now. We have a set labour pool. The labour pool is aging. There’s going to be many people leaving it. Hopefully, it will increase over the next number of years.
If we do not have investments in industrial processes which increase the productivity over all of the sector, we will not achieve the housing supply targets the government has set and Canadians need. I think back to Senator Wallin’s question. People do want to live in homes they own.
Those are a couple of the key focuses.
In addition, outside of that, the housing plan did a major intervention in terms of the new housing infrastructure program the department has been managing for the last year. This was $6 billion. It focuses on water, wastewater. There are other assets we should be investing in. Those are important ones to create housing enabling infrastructure.
We have agreements in place with most of the provinces now.
We have completed a large direct-delivery intake. These are projects that are going to have a major impact in terms of creating spaces for homes to get built on. Often, that’s one of the biggest barriers; things are never shovel-ready if you don’t have your zoning or infrastructure in place.
The other one I wish to mention is the Housing Accelerator Fund, which tackles that question. It is a hard one for the federal government to get to, because it is municipalities that control the zoning.
Effectively, it is us working with municipalities in order to have them make some of the reforms needed to speed up the approval and permitting processes. Talking to builders, that’s one of their main concerns. Many of the larger ones have big regulatory interaction units. They spend a lot of time at city hall working to get permits in place so they can build.
Through those kinds of investments, we are tackling all of the elements of what the National Housing Strategy was intended to get to.
Senator Loffreda: You are seeing progress with respect to obtaining approvals, cutting the red tape.
You talk about productivity. Developers and builders often lament that they can’t be productive because of the red tape and approval that are required. Are there any best practices you can share? Is there any municipality that’s doing something that the others are not? Then we can share for Canadians across Canada because that’s key to getting there.
Mr. Halucha: Absolutely. I completely agree with you, senator. If it’s okay, we can provide the Senate committee with a list of best practices. It would be very long to go through right now, but there are many of them. AI is being adopted. More resources are being put on, and service standards are being streamlined. I think it has been a very effective program in terms of getting those kinds of outcomes.
I would note, though, that a lot of this does come down to how much building a local community want? In some cases, these people work for politicians. The politicians are elected by the people, and in some cases, there’s a bias against development. That’s awfully hard to overcome. Some municipalities do not participate in the Housing Accelerator Fund. I think you probably had a lot of the ones that were ready, that wanted to do better and opted in on it. We have to find a way to get to those other communities as well. But I would agree, it remains a challenge. We haven’t solved it, but I think we’ve yielded a lot of best practices and we’d be pleased to pass them on.
Senator Loffreda: Thank you.
[Translation]
Senator Henkel: Welcome again.
We know that the government has allocated $13 billion for housing, but it is estimated that more than $40 billion is required to make up the deficit when it comes to affordable housing.
My first question is this: Since the department has been mandated to increase the number of completed housing units to 500,000 per year in Canada, how many housing units will be allocated to people with low incomes? Who will be allocated that money by province? Is there a plan? Are you going by province? Are you going to divide that equitably? Do you have any priorities?
Mr. Halucha: Thank you very much for the question.
[English]
You’re asking really around the whole business model for the Build Canada Homes. I’ll try to be brief on this one. It can be fairly involved. I’ll make a couple of points.
First, this is not intended to be an allocation model. The capitalization was $13 billion and it’s not allocated based on a formula where a certain amount will be guaranteed for each province of the country. The design of Build Canada Homes is more modelled on the Canada Infrastructure Bank, which has an investment board, which has an investment policy and which has key performance indicators, or KPIs, it needs to achieve. I think the ones you mentioned are exactly the three we’re looking at having in the investment policy. The policy is not yet printed. It would be maximizing supply, maximizing affordability and maximizing use of industrial product. Those are the three the Prime Minister talked about when he made the announcement with Minister Robertson.
We want to make the best investments in the best markets. The previous senator talked about markets where there are potential difficulties getting permits. We don’t want to allocate capital to jurisdictions and then find out that, because of municipal practices, the money sat there on the sidelines. We want the money to be deployed. Therefore, we want the investment board to have an ability to make the best investments, including things like considering is the market ready to cooperate and ready to receive the homes that we’re going to build?
The other question you asked was around I think the number of units. This is always one of the trickiest parts of doing any kind of policy is we tend to nail ourselves down with targets, and then we often make bad decisions because you’re not driven anymore by the best investment decisions; you’re trying to achieve a target.
There’s a lot on KiwiBuild, which was a New Zealand organization. When we were working on Build Canada Homes over the summer, people kept saying you need to look at KiwiBuild. We did. The two things they told us were, one, don’t set targets, because once you get a target, it’s wrapped around your neck as a management team and then effectively that becomes what drives a lot of your decision making.
You need to know kind of where you’re going, but you need to be able to assess what the best investments are. That’s how we have tried to do this.
I will say that there has been a lot of press about I think it was the 4,000 direct-build homes. Some people have done the math of $13 billion by 4,000 and said, “You’re paying $3.2 million per home.” Absolutely not the case. These 4,000 homes are a very small segment of the overall $13 billion. We also announced homes for Nunavut. We also announced the Canada Rental Protection Fund because we believe we have to protect what’s already in the social housing area, so there will be a billion and a half dollars that will go to protect homes that are already for social housing but are at risk of leaving the social housing sector. There are a lot of elements to it.
Overall, I would go back to those three things. We need to maximize supply, maximize affordability and do this smartly in a way that reinforces the productivity advantage of a more mechanized and industrialized process in the country.
The Chair: I invite our guests to be short in their answers.
[Translation]
Senator Henkel: If I understand correctly, since this is an investment, and some provinces have significant barriers to getting skilled labour, permits and an exchange of goods and services, the provinces that do not comply will be penalized?
Mr. Halucha: I hope not.
[English]
We have had conversations with all provinces and territories. The minister had a meeting with all of them about two weeks ago in Vancouver. What we are working with them on is on portfolio approaches by each of these jurisdictions. They were all engaged. I don’t think there will be barriers to doing business with the provinces, but again, we want to assess what they bring forward, make sure it lines up with the criteria. The intention is for this to be a national program. We’re not intending to have any parts of the country — partly that was why we thought Nunavut was such a great first investment to happen with Build Canada Homes. It has the highest core housing need in the entire country. It’s a hard place to build in as it is very remote and rural. A lot of the barriers that often programs have —
The Chair: I have to interrupt. We have to manage time and that’s including your answer. Sorry about that.
Senator McBean: I appreciate long answers because it means you have a lot of passion for what you want to share.
Like my colleague said, supply and demand haven’t really been working for our market right now. Market-driven solutions alone seem to be insufficient. What role does your department see for non-market housing providers, co-ops and Indigenous-led housing initiatives in addressing the crisis? How will funding be sustained? How will growth in these areas be encouraged?
Ms. Goulding: Thank you very much for the question. I think Build Canada Homes is very much focused exactly on the non-market sector and trying to grow that community. The government has very much recognized that this is where we see market failure. The private sector builds 95% of all of our housing, and what we’re really focused on doing here is trying to bolster that community housing sector to deal with the inequities that currently exist.
I think, too, when you think about deeply affordable and supportive and transitional housing, this is also part of what we expect Build Canada Homes will be able to do in the short term. In fact, $1 billion of that $13 billion has been allocated toward supportive and transitional housing. We will be working closely with provinces and territories in that regard as well because, as I’m sure senators know, this kind of housing requires ongoing operational and wraparound supports to make it effective. These are services that are typically provided by provinces, territories and municipalities. We will continue to work closely with them on that part of this initiative.
Senator McBean: I think my idea of transitional is probably not exactly the way that you’re thinking of it. One of the things I wonder, if a family starts in a starter-sized home but they can’t afford to move up, their space in the starter-sized home never frees up.
What’s the government doing to make the idea of moving up and over more affordable, sort of making affordable housing accessible as people can move up? Instead of just making the entry-level homes affordable, how do we get families who are growing to have affordable spaces to grow into?
Ms. Goulding: Thank you for the question. I think this is the million-dollar question: How do we manage the market? I think market forces are what manages our housing sector in Canada.
Beyond that initial purchase, which the government has acted in a number of ways in terms of tax measures to try and make that more affordable, it’s really hard to manage the price of the house that you want to sell.
If it’s your house, and you’re selling it, the market will determine what the market will bear for the price of that home. I do think that’s where the conversation around supply makes a difference, and I think it’s where we do hope that in supporting the supply of non-market and community housing that this starts to open up more options for all areas of that conversation.
Senator McBean: I recently heard a woman say that she moved into co-op housing when she was 29, and she had been there for 24 years. That sort of flagged to me — and she was so grateful for this place when she was a young single mom, but her place never became available to someone else.
Ms. Goulding: Thank you for the question. Part of that transformation to the community housing sector to mixed income and mixed rent is part of that conversation.
What the non-profit sector is hoping to be able to accomplish is to be able to allow folks to move through that range of housing without necessarily changing the supports that they receive if they still need them.
For sure it is a work in progress. It’s something that Build Canada Homes will encourage and try to support, the transformation in that sector, but I think we have to acknowledge that the market is what governs the housing sector in Canada, and it’s very hard to control.
Senator Yussuff: Thank you for being here.
I guess this challenge we’re trying to remedy is quite complex, because it’s not the same thing in every jurisdiction. If you live in Toronto — I always say this as a way to get people to realize — there is no new land in Toronto. Given we have no new land, we’re going to have to figure out how we try to get a lot of people who want to live in the city when we can’t find the space to build on. There is some space, but it’s very limited in context. Outside of Toronto is a whole other matter, but we have tons of people coming to the country. They all want to live in the city, and we don’t have enough space.
What is also a challenge is that we have disparity from one end to the other in terms of income. If you’re very wealthy, things are good. If you’re very poor, there is a question if you can have a shelter over your head. To pick up on Senator McBean’s last point, co-op housing was one of the ways we were able to bridge that, because we had mixed income living in these incredible spaces that we built in the heart of the city that allowed wealthy people and those not so well off to live in the same space. But then we stopped co-op housing to a large extent.
Is the approach in trying to look at how we deal with income disparity in this country and dealing with the whole question of accommodation, is co-op housing going to become an integral part of how we try to find this mixed dwelling that is so fundamental to bring social cohesion to our cities? Because if we don’t do that, there are only certain people who are going to live in our cities going forward.
Ms. Goulding: Thank you for the question. Absolutely, co-op housing is a vital part of the community housing sector. In fact, the Canada Mortgage and Housing Corporation, or CMHC, does have a program that targets support for new co-op housing. It is absolutely something that we expect Build Canada Homes will continue to support.
Senator Yussuff: In terms of the new allocation of funding is there a specific amount of money that will be allocated to help that, because that sector needs the most help. They don’t start off with a large capital. They’re trying to figure out how they can do it best. I know from my own history that a lot of union funds went in to build co-op housing in the city of Toronto, and when it was discouraged, they just stopped doing it altogether.
Mr. Halucha: I would say two things on that: As I mentioned earlier, other than the announcements that were made, there are no specific allocations within the capitalization that occurred with Build Canada Homes. However, as Ms. Goulding mentioned, co-op housing is something that we view as positive social housing, and that’s what Build Canada Homes is about. It will be on a project-by-project basis, but it will be eligible, and I think it will do very well.
Also on the Canada Rental Protection Fund, a lot of that housing, as you mentioned, can be quite old and aged and need repair, so that funding will be available to, hopefully, keep more of that housing available for the people who need it.
Senator Yussuff: One of the things we don’t get to see unless you travel this country is on Indigenous communities that are outside of the mainstream. The recognition has been that we haven’t done a good job in dealing with their needs in the country. Nunavut is a good example. A bigger challenge in the city of Nunavut is it is a tough terrain to build on because of permafrost. Of course, it takes a much larger investment to build in Nunavut than it would be anywhere else.
Again, given our commitment to reconciliation, where are we in regard to the housing stock that needs to be rebuilt on most Indigenous communities that are outside of the mainstream? Also where are we in regard to accelerating, because this is one of the most fundamental things, if we want to keep kids out of prisons and give them a place to have a roof over their heads?
Mr. Halucha: They are critical questions, and it’s why we were so proud to have the Nunavut Housing Corporation as one of the flagship partners for Build Canada Homes in terms of the announcement. They’ve been running a tremendous program to build homes in Nunavut. Nunavut 3000 and the government at the inception date for Build Canada Homes announced we would be partnering to build more than 700 homes with the Nunavut Housing Corporation. It’s for exactly the reasons that you outlined.
The responsibility centre in the Government of Canada — and I hate looking like I’m passing the buck — but it is with Indigenous Services Canada, or ISC, and Crown-Indigenous Relations and Northern Affairs Canada, or CIRNAC, the two Indigenous departments that have responsibility for Aboriginal housing, especially on reserve, so they would be better positioned to give you the overall picture.
But what we have done is not put barriers in place inside of Build Canada Homes in terms of our ability to work and support Indigenous partners and Indigenous communities in building more homes.
Senator Yussuff: Thank you.
Senator Martin: Deputy minister, you mentioned that Minister Robertson had a meeting in Vancouver. In looking at the first six federal sites, I can’t help but note that Vancouver is missing.
I wanted to just ask about that, given that the minister was the former mayor of Vancouver. Is that why he chose to —
Senator Varone: He can afford it.
Senator Martin: Yes, exactly.
I’m just curious about the six that will be part of the first group. I’m from British Columbia, so I can’t help but ask about Vancouver and its absence.
Mr. Halucha: The minister didn’t pick the sites. The sites are based on an assessment of what can be most readily built on and that’s with Canada Lands Company, or CLC.
Also in the announcement, the Canada Lands Company moved into the portfolio of Minister Robertson. We had been working with them over the summer to identify which properties were the most ready to go, to build on the most quickly.
Those six sites — and, obviously, there was an allocation of dollars that we were willing to do for these six sites, because we’re trying a new model. This is the first time that the Canada Lands Company will move from, “Do you need a developer,” to actually being the developer and the builder and, potentially, the owner of those units.
It’s a good example of a set of investment criteria driving the decisions versus a minister saying, “I want one in Vancouver,” which he did not do.
Senator Martin: I assume there was a selection process. If these are ready to go, and you’re hoping that it would be concluded quickly, so to speak, what is the timeline, and when is the second group potentially going to be looked at?
Mr. Halucha: I’ll say two things on that. They are ready to go. The intention is that these would be under construction within — some beginning next spring is what the goal is, during the spring and summer of next year.
Obviously, the budget needs to pass. The money needs to be appropriated to Build Canada Homes in order to proceed with things like calls for proposals and the work that they need to do.
Again, Build Canada Homes will make investment decisions if there are additional properties from Canada Lands Company that it wants to bring to the market for home building once the six are going.
There will be lessons to be learned, there will be work to be undertaken. But Canada Lands Company is not intended to be the only developer or builder with whom Build Canada Homes works with. So I think it will be a question of how does it fit in with the portfolio of requests that are coming forward?
There may be other properties where the answer is that it’s a private builder who builds not CLC.
Senator Martin: You’re saying starting as soon as next spring, but I’m definitely curious about the end date, approximately how quickly this will be done, because it could be quite a process.
Mr. Halucha: I believe it’s around 24 months is the time.
Senator Martin: We’ll be watching. On behalf of taxpayers, I’m also compelled to ask about the per-project cost breakdown, approximately how that looks? Land contributions, procurement deficiencies and financing terms? What are the per-unit costs for those first sites? How will that show up to Canadians in lower rents and prices rather than higher margins? I’d like to have you break that down a little bit.
Mr. Halucha: A lot of questions in that one. So the unit cost, I think, would be around $350,000 per unit. That’s still to be determined because they haven’t gone to market right now. That’s sort of rapid math based on the amount of capitalization.
It might be higher in certain markets, it might be lower in others. They have not done a lot of their planning based on modular. And obviously this is a big change, the fact that we want this to be a showcase for modular housing up to 9 to 12 storeys, after that it’s very hard to do modular but mass timber becomes possible.
So it’s really hard to give you a number until they’ve gone to market and they’ve got their vendors and they’ve moved forward. That’s their rough math. Our hope is to get that number lower. That’s what we want. And certainly talking to a lot of the modular, prefab companies, they’re priced competitively or potentially lower.
Senator Ringuette: Most of us have been here and have been listening budget after budget with a lot of billion dollars for housing issues that were, for the most part, transferred to provinces and municipalities.
When I look at the May 2025 CMHC report they say that the municipal cost is roughly 20%, and can be higher in some communities like Toronto. And municipal costs, or development charges are for infrastructure, sewer and so forth, which usually is paid when a new homeowner buys the house and starts to pay homeowner’s tax for these municipal services.
Now, when I look at the Ottawa region and the development that is being done within the city of Ottawa, the developer buys the land, builds the house, builds the infrastructure, the road, the sidewalks, the water, the sewer. What exactly are municipal fees for these developments? In this situation I find that two and two don’t equal four.
Please explain to me, the money that is being sent from federal coffers to these municipalities to lower the housing costs, mostly, they’re still being able to charge these phenomenal municipal costs at the same time that the developer is doing the infrastructure? It doesn’t match. What are you going to do about it?
Mr. Halucha: Thank you very much, senator, for the question.
What we have been doing about it, and it’s particularly through the community housing infrastructure fund, is where we have made those investments we have been looking for relief for developers, for homeowners on, development charges. We’ve set that as a condition, if we provide money for that exact type of municipal infrastructure we’re looking for them to make reductions in terms of their development charges.
Senator Ringuette: Directly to the municipalities?
Mr. Halucha: Directly to the municipalities.
Senator Ringuette: Do you have confirmation from the developer that is the situation that is happening?
Mr. Halucha: Well, they are publicly committing to it. It’s a contribution agreement with us, the conditions are being accepted. This program has been running for about a year, but we will be confirming that it’s done.
I would say, as well, municipalities are tackling development charges in a way that they weren’t maybe two years ago. A couple of years ago, unless you were like Senator Varone and had a strong background in this sector you might not even have known what development charges were. You buy a house, they don’t show up on your bill of sale, you’re just paying them.
And when housing prices were lower, you didn’t even notice it. But as the prices have gone up in many jurisdictions the prices have gone up on development charges, and there has been a backlash.
As a result of that a lot of measures have been taken both by municipalities and provinces to reduce it. For example, in Toronto I just happen to have a list of steps they’ve done. They have frozen, to 2024 levels, the development charge rates. They have eliminated development charges for purpose-built rental housing. They have given a development charge payment deferral for condo units. So a lot of steps are being taken because they want the construction to take place, they want the development to take place so they have been taking measures. And it is quite appropriate that cities do it.
Senator Ringuette: Excuse me, and I know you’re very knowledgeable, but I don’t see any condition in regard to federal funding that was put there. It seems that we have a situation, in Vancouver and mostly Toronto, where were the conditions of federal funds to the province of Ontario and the city of Toronto?
Mr. Halucha: So with the province of Ontario we could not get housing conditions from the province and, therefore, we did not do an agreement under this program with the province. We were not able to get an agreement so we moved the money from a provincial allocation into a direct-delivery model. And we’re now working with cities and we’re asking cities to give us those conditions.
The same thing in British Columbia. In British Columbia we could not get what we wanted from them in terms of a cut to their development charges, so we scaled back our financing to the province, substantially, and to match only the reduction they were willing to do in exchange for the money. So we are trying to match them.
Senator Ringuette: So what you’re saying is that these development fees being charged by municipalities are mostly because the province of Ontario and the province of B.C. would not have an agreement in regard to those conditions?
Mr. Halucha: No, no. They charge them because they can. It’s a revenue stream for them.
Senator Ringuette: So there’s no condition —
The Chair: Senator Ringuette, your time is expired, sorry about that, not to be rude, an interesting conversation, by the way. Maybe in the second round if we have time.
Senator C. Deacon: Thank you witnesses for being here. Three quick questions.
Is your program design pro competitive? Being it really encourages innovative new entrants not just major incumbents, and the success of them? And how can you show that?
What problems are absolutely crucial for you to solve? That you’re saying, okay, we must get these three things solved in everything that we do.
And what key performance indicators will enable you to demonstrate success five years from now, that you’re tracking? That says, yes, we’re making headway here?
Mr. Halucha: Those are not easy questions, but I’ll do my best to go quickly. On innovative new entrants I think the advantage is that — if you can call it an advantage — through Build Canada Homes, by working with modular and off-site construction in most cases those are not the mainstream builders.
Senator C. Deacon: Like that one that went to Kent Homes which is Irving owned.
Mr. Halucha: I see what you’re saying. I don’t think we would discourage working with companies like Irving, for example, that have a track record, are cost competitive and bring the best value to Canadians.
Senator C. Deacon: Are you looking to make sure that your policies are pro-competitive that allow innovative new entrants, not just the big guys, to win?
Mr. Halucha: I would say yes, absolutely.
Senator C. Deacon: Can you demonstrate that to us in a follow-up letter?
Mr. Halucha: I’ll do my best. It will be in the design of a request for information or a request for proposals, what types of contribution agreements we —
Senator C. Deacon: Exactly, because procurement locks so many smaller vendors out.
Mr. Halucha: But pro-competition will be critical to this. In fact, I think incumbents will — saying that ones that are well established in a space like modular the way Irving is, or ATCO, or some of the big providers around the country, I think they will probably do well, because they have a lot of capital and they have an ability to bring —
Senator C. Deacon: Those are assumptions. They are probably fair assumptions. But ensuring your program is designed in a pro-competitive manner is not an assumption; it’s a design. I really hope that is a consideration.
What problems do you think are absolutely crucial for you to solve through this that you know in the end once you solve those, you’re really making headway?
Mr. Halucha: One of the big challenges is consumer acceptability around modular and prefab. A lot of people have concepts around what that housing looks such as how comfortable is it? Do I want to own it? Is it as durable? Will investment be sustained? And I think that will be a key thing that we need to break through, just like on electric cars; for a long period of time, people had conceptions about range anxiety sort of things. We have to have a social change around the acceptance of that type of technology, because that’s going to be essential for —
Senator C. Deacon: That’s not within your control, necessarily. What’s a problem within your control?
Mr. Halucha: I think it is in our control, because showcasing those types of home, working with modular producers — the Government of Canada does a lot of procurement. I think we will have an ability to effect that over time, and especially working with partners.
I think within our control is collaboration. For a long time, the federal government was not present in home building. I think we’re back, and I think we’re back big with this government. Therefore, there are a lot of opportunities for collaboration. We’re trying to feed that through the design on Build Canada Homes and other initiatives, so working with provinces, municipalities, industrial builders, I think that’s absolutely core, those partnerships.
Senator C. Deacon: Thank you, deputy minister. Five years from now, what key performance indicators will you be looking at to say, yes, I got the job done?
Mr. Halucha: I would say three. One, I think we need to increase the amount of supply in Canada, and we need to hopefully reduce construction costs. I think construction costs have to come down, because that’s at the heart of what I think Senator Varone was saying earlier on in terms of the market failure. The construction side of the business has to become more affordable, because they have effectively priced themselves out of a lot of markets right now.
Secondly, if we can increase the amount of affordable housing in Canada. I mentioned the 4% to 5%, getting closer to what the OECD average is. The third one would be a higher market share for modular. Right now, they’re about 2%. We know with existing capacity, like what they’re not using; they don’t have to buy more machines; they can triple that.
Getting a market share of like 10% in five years, I think, would show that this technology and this approach to building is on a growth trajectory that would bring real change to the country.
Senator C. Deacon: That’s great. If I could just clarify, the building cost is actually total cost to the consumer, I think is probably what you’re looking at.
Mr. Halucha: Absolutely.
Senator C. Deacon: Because of the influence of fees.
[Translation]
Senator Dalphond: You talked about six projects that have been selected, including one in Quebec, in Longueuil.
Can you tell us more about this project, its timelines and its challenges? I think that in Quebec, municipalities cannot receive federal subsidies without the Government of Quebec’s approval. If the Government of Quebec does not approve of a program, you cannot enable municipalities to receive money the way you did in Ontario by circumventing the lack of agreement with the Ford government.
Mr. Halucha: Thank you for the question.
[English]
The addresses of the properties have not been made public yet, so I’m going to leave it to the minister and the government to pick when they announce those. I think we’ll be transparent at the right time around timelines for each of the specific properties.
The second point you’ve made, though, around, I believe it’s called M-30, which is the provincial legislation in Quebec, which exactly as you said, limits our ability to do business directly with municipalities, I would say two things: One, we’re going to work really closely with the Quebec government so that Build Canada Homes can be successful in the province. Again, back to my point about collaboration, that’s where we’re starting.
Secondly, the land in Longueuil is actually federal land, so there’s no intention to actually send money to a municipality in that case. We’ll be going to market, they’ll be selecting a builder, they will build on that land, but we absolutely want to do it collaboratively with the municipality and the province.
[Translation]
Senator Dalphond: How many apartments will there be?
Mr. Halucha: I do not have the answer. Can I send you the number later?
Senator Dalphond: I seem to recall that, in the last federal program for building subsidized apartments, Quebec was the last province to sign an agreement. The program even needed to be extended by another year to ensure that the agreement was signed. Can this be expected to happen quickly, or could it take two years or more elsewhere in Canada?
[English]
Mr. Halucha: I’m not certain which program. We are in discussions with Quebec on the Canada Housing Infrastructure Fund, and those discussions are going quite well.
Senator Dalphond: Good to hear.
[Translation]
The Chair: We had originally scheduled 60 minutes for your testimony, but I am sure you can see that there is a lot of interest from the senators around the table. Would our witnesses be available for an extra 15 minutes? There would be a second round of questions, and turns could be limited to three minutes each.
[English]
Senator Varone: The ministry responsible for housing and infrastructure is radically different in terms of its organization than it was four years ago. Currently, you have CMHC, the Canada Infrastructure Bank, and now the Canada Lands Company — which is the land bank — under your oversight.
My question relates to CMHC. During my tour of builders this summer and industry leaders, the criticism I heard was that CMHC lacked productivity and creativity. Over the years, CMHC has morphed into something less than what it was many years ago. Many years ago, it was incredibly creative. It created products that allowed people to purchase their first home, with mortgage insurance.
I look back to when the mortgage stress test was first introduced, it was to calm a market that was overheated. But they didn’t arrange any other financial products that extended the amortization or extended the term with a CMHC guarantee.
As a department, are you looking to create a better roster of mortgage products that will help Canadians purchase homes? I’m just looking at, a 20-year term, 20-year amortization, fixed mortgage, low rate of interest, that can eliminate this bandwidth of high interest rates, low interest rates, high interest rates, low interest rates, and depending when your mortgage expires, you’re going to be in jeopardy. That’s what I’m getting at. It’s available everywhere else in North America and Europe, just not in Canada.
Mr. Halucha: My department does not have responsibility for the commercial side of CMHC. I understand they might be coming to the committee, so they could answer that question, along with the Department of Finance, who actually is the interlocutor with them.
I would say, though, a lot of the flexibilities that we have built into Build Canada Homes comes out of the same kind of critique you have raised, which is that CMHC was either not able or not willing to do some of the innovative things that were being asked of it by developers. I think a lot of the impediments were hard-wired into some of the program criteria that the government gave them. We removed a lot of that for Build Canada Homes, so the business model is actually kind of inspired by a lot of those negative stories around the constraints — restraints that were in place, including flexibility of tools that BCH will have.
Senator Loffreda: I have a question regarding the Canada Rental Protection Fund, which was a key component of last year’s housing plan, as you know. The amount of $1.5 billion has been allocated to this fund to preserve the affordability of existing rental homes and support the acquisition of new affordable units. Could you clarify whether Housing, Infrastructure and Communities Canada plays a leadership role in the administration of the fund?
Additionally, what are the outcomes of the federal government’s early consultations with experts from the community housing sector? Specifically, how is this input helping to ensure the fund is designed to effectively address growth constraints, enable rapid protection of affordable housing and promote long-term sustainability for the sector?
Ms. Goulding: Thank you very much for the question. The Canada Rental Protection Fund has not yet formally launched. There was a call for applications that launched in March and closed on May 29, and we’re in the process of completing our assessment of those applications.
I think it’s important to remember that the rental protection fund was a result of much input from stakeholders in the community housing sector. The fund is meant to be a sector-led fund, so what Build Canada Homes will be investing in now is a fund manager who will, on behalf of the sector, manage those funds and leverage other sources of funds to acquire already-affordable housing, and maintain that in a sustainable, long-term way.
The focus is very much the non-market sector, not-for-profit sector, which we know has a built-in incentive to focus on affordability. The focus of the fund will be to allow the fund manager to fill a couple of roles: one to draw in new sources of funds, so that the fund can be revolving and self-sustaining, but, two, to play some of the navigator role for the sector.
One of the things we heard clearly from the community sector stakeholders is that in this space — and it’s similar for Build Canada Homes, which will be focused on new construction, and this is on acquisition — but building that capital stack is complex.
One of the things that we heard in applying, for example, the CMHC programming is that often you had to have a number of those pieces in place before you could come to CMHC. What this is doing is putting the control into the sector and allowing them to sort of play that aggregator role and build that capital stack and build capacity, with a built-in focus on long-term affordability.
Senator Loffreda: Thank you.
Senator McBean: Thank you for your responses. I think they’ve answered a lot of the questions that I’ve come with today. I’m just going to drill into one thing specifically. You’ve mentioned a couple of times that 700 homes would be built in Nunavut. When will people be living in those homes? When can you commit to people living in those, because as we know, it’s not a new situation, as Senator Yussuff said? There are challenges in building there. It has been said many times 700 new homes. When will people be living in those homes?
Mr. Halucha: Thank you very much for the question, senator. I would say as rapidly as possible. We’re working on a contribution agreement that I hope will be signed, again, once budgets have been approved by Parliament. That’s obviously important; we need the money. The discussions we’ve had with the Nunavut government, it’s effectively already in existing programming, so they have supply that they are bringing to the market every year. We will effectively be buying into that program, so we don’t have to set anything up. This is a collaboration, partnership, where we’re effectively buying a set of outcomes, and they will deliver the homes. It’s kind of as fast as they can go, and they’ve been going very fast.
Senator Yussuff: A lot of this is based on this new model of modular home, which is not a new model. Modular homes have been built around the world except for Canada. But one of the things we haven’t done, because Canadians don’t know what we’re talking about to some degree as this is not how we’ve been building houses in the country for the most part. How does the government plan to engage Canadians in this?
I come out of the auto industry. When automation happened, cars were still being built but not the same amount of human involvement in the cars. But we built even better quality cars as a result of the technology. How do we plan to promote this to give people the comfort level that’s required, because for some of us who spent a lifetime watching the carpenters construct every little aspect of the house — this will all be done in a factory and assembled on site, and it is done much faster? How do we plan to promote it so Canadians have comfort and support for it?
Mr. Halucha: I think you will see a lot of promotion of builds undertaken with Build Canada Homes and that will be a key part of this. You’re absolutely right, the automation that took place in the auto sector is a really good example of the type of productivity improvements, and the quality being maintained.
I think what we’re going to need to do is as we’re announcing projects and as we’re partnering with companies, we’re going to have to work to help educate Canadians about the quality of these homes. As these projects happen and they happen across the country, there will be a lot of opportunities to showcase the technology that’s being done, going forward.
Senator Yussuff: It’s also the skill level that is required, which is different than what is being currently utilized.
Mr. Halucha: The skill level is different, as you said. It’s not lower; it’s different. But it is more easily available than some of the skilled trades that you need to do traditional home building. That has been the case, especially in some of the more industrialized places, and as you add more robotics, the skill level changes quite a bit.
[Translation]
Senator Henkel: There has been a lot of talk about innovation. You mentioned earlier that you were using tools such as artificial intelligence and technologies. However, all these innovations are needed very soon. It is important to construct and build quickly to make these homes accessible for Canadians.
How are you going to ensure that you know all the innovative companies, which are probably smaller than those you are used to working with, so that they too can build and contribute through their innovation? In fact, they are much more agile and highly innovative. I know just how much they are struggling to access these public contracts.
[English]
Mr. Halucha: I’ll respond in two ways. First, we’ve already been having conversations with Innovation, Science and Economic Development Canada, the regional development agencies, our supercluster for advanced manufacturing, all of whom are already working with the exact kind of companies that you talked about, those innovative firms. They’ll be a key avenue by which we get to know the companies.
The second thing, I think you’re absolutely right; we need to know them better than we do today. The intention is to have an industry day in the coming months, hopefully before Christmas, with a focus on doing a prequalification of the key companies, because we don’t know them well enough to do business with them. That will be an important step to have those introductions.
We’re self-aware that we have these gaps in knowledge, and so actually over the summer, as we were doing a lot of the research and thinking and design on Build Canada Homes, we spent a lot of time with the modular sector, both at the association level and at the company level. I took every meeting that was offered just to get to know them and get a better sense. It’s going to have to be a conscious part of our work going forward.
I spent a lot of my career at the Department of Industry, so I bring that aspect into housing in my current department as well.
Senator Henkel: The thing that hampers the most is the qualification and all those boxes that they need to actually square in order to be eligible, not just —
Mr. Halucha: I totally agree. Getting a prequalification list will be an important step. We will be looking for market actors. As Ms. Goulding mentioned, not all of the deals will originate inside of Build Canada Homes. It will be an important part of the capital stack, but there will be developers and builders who bring us projects. As they bring us those projects, we will be encouraging them to bring us modular off-site construction solutions.
What was interesting was by about August and September of this year heading into the announcement, modular companies across the country were telling me that they were receiving a huge amount of interest from not-for-profits, as well as developers who understand they need those partnerships. There’s a positive kind of dynamism happening there that we need to encourage. I agree with you, it starts with recognizing that we need to know them better than we do now.
[Translation]
The Chair: Thank you, Senator Henkel. Thank you to our witnesses. Your testimonies will be taken into consideration as part of our new study on housing.
Colleagues, we will suspend briefly before proceeding with the next portion of our meeting, which will take place in camera.
(The committee continued in camera.)