THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Tuesday, December 9, 2025
The Standing Senate Committee on National Finance met this day at 9 a.m. [ET] to examine the subject matter of Bill C-15, An Act to implement certain provisions of the budget tabled in Parliament on November 4, 2025.
Senator Claude Carignan (Chair) in the chair.
[Translation]
The Chair: Good morning. I wish to welcome all senators as well as the viewers across the country who are watching us on sencanada.ca. My name is Claude Carignan, senator from Quebec and chair of the Standing Senate Committee on National Finance. I would like to ask my colleagues to introduce themselves.
Senator Forest: Good morning and welcome. Éric Forest, Gulf division, Quebec.
Senator Gignac: Good morning. Clément Gignac from Quebec.
Senator Galvez: Rosa Galvez from Quebec.
Senator Cardozo: Good morning. Andrew Cardozo, Ontario.
[English]
Senator Ross: Good morning. Krista Ross, New Brunswick.
Senator MacAdam: Jane MacAdam, Prince Edward Island.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
[Translation]
The Chair: Today we are continuing our study on the subject matter of Bill C-15, An Act to implement certain provisions of the budget tabled in Parliament on November 4, 2025. Today we are studying the divisions of the bill that were not referred to the other committees: that is, Divisions 3, 5, 6, 7, 26, 34 and 38.
For our meeting today, we are pleased to welcome Olivia Doucette, Executive Director, Corporate Accounting, Employment and Social Development Canada; Lindsay Boldt, Director General, Build Canada Homes Transition Team, Housing, Infrastructure and Communities Canada. We also welcome, from the Department of Finance, Michael Mosier, Senior Director, International Trade Policy Division; and Matthew Emde, Director General, Funds Management Division. Finally, we welcome Brennen Young, Senior Director, Regulatory Policy and Cooperation Directorate, Regulatory Affairs, Treasury Board Secretariat.
Welcome and thank you for accepting our invitation to appear today. We will now hear opening remarks, after which we will proceed to question period. We will begin with Ms. Doucette, followed by Ms. Boldt, and then Mr. Mosier and Mr. Emde.
[English]
Olivia Doucette, Executive Director, Corporate Accounting, Employment and Social Development Canada: Honourable senators, thank you for the invitation to appear before this committee.
The budget item is for the removal of the audit requirement for the government annuities account. The Government Annuities Act, or GAA, came into force in 1908 to enable Canadians to provide for their retirement through the purchase of deferred and immediate annuities. The government began the sale of those annuities as a way for Canadians to secure retirement income. These annuities predate the establishment of the Canada Pension Plan and the Old Age Security program.
In 1975 the Government Annuities Improvement Act ceased the sale of the annuities, and the account now only serves to pay out existing annuities and contracts.
As a result, both the number of the annuitants and the value of the account are in significant decline. Currently, there are 11,000 Canadians who still hold these annuities, and it is decreasing every year by approximately 2,000. Overall, the value of the pension obligation is $53 million as of March 31, 2025, compared to $1.3 billion in 1975, with an annual payment amount of $8.7 million compared to $98 million in 1975.
Canadians will continue to have assurance through independently validated reporting. The Office of the Superintendent of Financial Institutions actuary report provides details on the overall value of the pension obligation, and it is presented as part of the Public Accounts of Canada and the Government of Canada’s financial statements.
The public accounts are audited by the Office of the Auditor General of Canada on an annual basis, and the financial transactions of the GAA, as well as the pension obligation, would be part of that audit. The GAA financial statements have a strong history of compliance with no errors or management letter points in well over a decade. The program has well-established controls in place that support strong reporting. The controls and processes will remain in place, ensuring continued management oversight over the program and its operations.
Given the diminishing size and activities in the account, as well as the overall value of the pension obligation in the context of the Public Accounts of Canada, the continuation of the audit of these statements represents an inefficient use of government resources and a disproportionate level of effort compared to the risk assessment of these transactions.
We have consulted with the Office of the Auditor General, the Office of the Comptroller General as well as our departmental audit committee, and no one has expressed any concerns with the removal of the audit. The removal of this audit requirement would help us ensure effective allocation of resources toward audits that present greater complexity and risk. This would ensure that resources and efforts are focused on delivering the highest value to Canadians.
Thank you.
Lindsay Boldt, Director General, Build Canada Homes Transition Team, Housing, Infrastructure and Communities Canada: Thank you for the opportunity to be here today on behalf of Housing, Infrastructure and Communities Canada, or HICC.
As you may be aware, the government launched Build Canada Homes as a special operating agency, or SOA, within Housing, Infrastructure and Communities Canada in September. The mandate is to build affordable housing at scale. This will be achieved by bringing together flexible financial tools, access to federal land and prioritizing modern methods of construction.
This is a bit of a catch-all term we are using to be able to capture innovative technologies, factory-built housing, prefabricated housing — all of these different techniques that will ideally lead to a more productive and innovative homebuilding industry.
In Budget 2025, Build Canada Homes received $13 billion over five years, starting in 2025-26. The Budget Implementation Act contains two clauses. I mention in particular clause 200, which will establish statutory appropriation to fund the operations and activities of Build Canada Homes. This clause would allow the Minister of Housing, with the concurrence of the Minister of Finance, to make payments not exceeding $11.5 billion to fund these activities and operations.
The second clause is clause 201, which allows the Minister of Housing to make payments not exceeding $1.515 billion to the Canada Lands Company, or CLC, to fund the development of housing on properties within CLC’s portfolio. This provision aligns with the September 2025 announcement made by the Prime Minister that the CLC will be transferred under the Build Canada Homes portfolio to streamline the construction of property on federal land.
I would like to point out that this is a statutory appropriation, so the idea here is that Build Canada Homes, with the concurrence of the Minister of Finance, would be able to draw down funding as required to manage multi-year portfolio deals and align its investments with the opportunities that are brought forward by the sector.
[Translation]
Finally, I would like to take a moment to talk about Build Canada Homes’ four initial investments.
First, with a $1.515-billion investment for the development of public lands belonging to the Canada Lands Company, Build Canada Homes will prioritize six sites to build up to 4,000 prefabricated housing units on public lands in Dartmouth, Longueuil, Ottawa, Toronto, Winnipeg and Edmonton.
Second, the $1.5 billion rental protection fund will be launched under Build Canada Homes. This initiative will help the community housing sector purchase at-risk rental housing buildings to ensure that they remain affordable in the long term.
Third, Build Canada Homes will deploy $1 billion to build transitional and supportive housing for people who are homeless or at risk of homelessness. It will collaborate with key provincial, territorial, municipal and Indigenous partners to pair these federal investments with employment and health care supports.
Finally, Build Canada Homes will partner with the Nunavut Housing Corporation to build over 700 public, affordable and supportive housing units. Approximately 30% of the units are expected to be built off-site, using innovative construction methods such as factory-built housing.
A large part of the funding remains available beyond these initial investments and can be used by Build Canada Homes to support future projects aimed at increasing the supply of affordable housing and stimulating a more productive construction industry, including through the use of flexible financial tools, leveraging public land and helping builders launch large projects.
Thank you for your attention.
[English]
Michael Mosier, Senior Director, International Trade Policy Division, Department of Finance Canada: Thank you for the invitation. I will speak about Division 26 regarding duty relief for donated goods.
The duty drawback framework under the Customs Tariff allows importers to receive a refund of duties when they re-export or destroy unused goods in their original condition.
Destroying unused and undamaged goods offers importers a low-cost option to receive duty relief while ensuring the goods do not enter the economy of Canada without paying applicable duties.
However, there has been some criticism of the framework for incentivizing environmental waste by requiring the destruction of goods rather than allowing them to be donated in Canada.
To reduce waste from the destruction of unusable goods, the government proposes to amend the Customs Tariff to allow for duty drawback for certain goods when they are donated to a registered charity.
These amendments would initially apply as a pilot project to apparel, footwear and certain textiles and accessories. This would allow the government to assess the feasibility and efficacy of the donation option to determine whether this option could be extended to other sectors. It is quite a simple change, so I’ll stop there.
I will turn to my colleague from the Department of Finance, Matthew Emde, to speak about Division 38.
Matthew Emde, Director General, Funds Management Division, Department of Finance Canada: Good morning, senators. I appreciate the invitation to be here this morning. I’m here to speak to Division 38, on the Borrowing Authority Act. I have some short words on that.
The Borrowing Authority Act was enacted in 2017. It provides the Minister of Finance the authority to borrow money up to a maximum overall amount as set by Parliament. In July of 2024, the maximum borrowing amount was set at $2.126 trillion.
In Budget 2025, the debt management strategy estimates that total government borrowing will approach this maximum by the end of fiscal year 2026-27.
Consequently, the proposed measure will raise the borrowing limit to $2.541 trillion to support smooth financing operations for the government. This amount accounts for projected borrowings of the Government of Canada, Crown corporations and Canada Mortgage Bonds, excluding Canada Mortgage Bonds purchased by the Government of Canada from fiscal year 2025-26 to fiscal year 2028-29.
In addition, the amount includes a prudence buffer of 5% as has been the case in the past. Thank you.
[Translation]
The Chair: Thank you very much.
We will proceed to question period.
[English]
We will start with Senator Marshall for the first round. We will have five or six minutes each. We will have time for a second round because the witnesses are here for two hours.
Senator Marshall: Mr. Emde, my question is on Division 38. As you said, the ceiling is going from approximately $2.1 trillion to $2.5 trillion, which is a significant increase because the $2.1 billion was only established 18 months ago.
I was trying to figure out how you got from $2.1 trillion to $2.5 trillion, because the public accounts say it is $1.787 trillion as of March 31, 2025. Then I looked at the strategy; it said $138 billion in 2025-26, then $149 billion in 2026-27, and I only get to $2.074 trillion.
Can you go through that math for me? It is a big difference. It looks to me as if you are asking for $467 billion that you are not going to need. Can you go through briefly and explain where your numbers come from?
Mr. Emde: Certainly. I think probably one of the keys is how many years in the future we are going. With the Borrowing Authority Act, the idea is we are including projected borrowings for fiscal year 2025-26, then three additional fiscal years beyond that.
Senator Marshall: So it is not just to 2026-27 but also two years after that? Okay.
Mr. Emde: Right. It is all the way to 2028-29.
Senator Marshall: Can you send to the clerk how you got there? I don’t have those extra two years. With the extra two years, it still sounds like a lot — $467 billion. It indicated in your strategy — there is $66 billion for the Crown corporations in 2025-26 and $48 billion in 2026-27. Are those just estimates or are they specific to specific Crown corporations?
I’m trying to see how you build up your number. Regarding the $66 billion, do you if the government has already decided which Crown corporations are going to get that $66 billion?
Mr. Emde: Yes, certainly. There are projections for each of the Crowns.
Senator Marshall: Okay.
Mr. Emde: The details are not published.
Senator Marshall: I would appreciate it if you could show how you get from the current ceiling to the new ceiling by fiscal year, as well as which Crown corporations are getting the extra money in each of the four fiscal years — 2025-26, 2026-27 and then the extra two years you just mentioned.
Can you tell me how much the buffer is? I always had a problem with the buffer.
Mr. Emde: It is 5%.
Senator Marshall: What is it 5% of?
Mr. Emde: It is of the total amount that you get to by the end of 2028-29.
Senator Marshall: Okay. My argument has always been that you already took the 5% when the act was enacted, then you took that 5% last time and now you are taking 5% on the money again. I really appreciate that. Thank you.
I will move to Division 3, on Build Canada Homes. The chair will have to cut me off when my time is up.
You said it was statutory, the $11.5 billion. The legislation is authorizing that the money be paid to Build Canada Homes or any other entity designated. But Build Canada Homes doesn’t exist yet. It is not incorporated. In the briefing note, it says, “The Government proposes to introduce legislation establishing the final organizational form of Build Canada Homes.”
You have also indicated that you are part of the transitional team. Does that mean Build Canada Homes doesn’t have a legislative framework yet?
Ms. Boldt: Thank you for the question. On the first part of the question, Build Canada Homes has been launched as a special operating agency, which means that it is operating within HICC.
Senator Marshall: How has it been established? Is it by legislation or just by someone saying so?
Ms. Boldt: Currently, that is a Treasury Board Secretariat, or TBS, authority, to be able to establish special operating agencies. The government indicated in the budget that it intends to introduce legislation to establish an end-state version of Build Canada Homes.
Senator Marshall: What’s this “any other entity” that is designated? That is pretty broad.
Ms. Boldt: The idea is that by introducing this statutory funding, if there is a decision to establish a legislated end-state version of Build Canada Homes, right now, it is set up so that the special operating agency can draw down that funding. Likewise, you would have that statutory funding. If there is a decision to legislate Build Canada Homes, you would also have that ability to draw that funding down from that end state. It is just meant to provide flexibility.
Senator Marshall: If this bill is enacted in February and the legislation establishing Build Canada Homes has not passed, who receives the $11.5 billion?
Ms. Boldt: That can be drawn down by Build Canada Homes, the special operating agency.
Senator Marshall: Okay. That’s very strange. What’s the accountability to Parliament? There is no framework. The $11.5 billion goes out. We are going to see it in the supplementary estimates or the estimates document. Where does the reporting come back to? There is no provision for reporting or accountability.
Ms. Boldt: The special operating agency operates like a Crown corporation. From a corporate planning perspective, a special operating agency does need approval of a business plan, which lays out forecasted expenditures. That’s the way you would see the reporting on the expected investments of Build Canada Homes. In addition, in order to draw down that funding, there is a requirement to seek the approval of the Minister of Finance. It does go through a bit of a different process.
Senator Marshall: Okay. So Build Canada Homes doesn’t really exist yet, except as an operating account.
Ms. Boldt: Yes, as a special operating agency, and it will have specific reporting requirements given that it is within Housing, Infrastructure and Communities Canada.
Senator Marshall: Thank you.
[Translation]
Senator Forest: Thank you for being here. My first question is about Division 5 of Part 5, which introduces an exemption to “stimulate innovation, competitiveness or economic growth.” The scope of this measure is very broad. The Centre québécois du droit de l’environnement has expressed concern about this measure, stating that this was no longer a sandbox, but rather an entire desert of sand, so broad is its scope.
What safeguards are in place to limit abuse, particularly with regard to the environment?
Brennen Young, Senior Director, Regulatory Policy and Cooperation Directorate, Regulatory Affairs, Treasury Board of Canada Secretariat: Thank you for the question.
Good morning. My name is Brennen Young and I am Senior Director at the Regulatory Policy and Cooperation Directorate at the Treasury Board of Canada Secretariat. I am the person responsible for this bill.
We are trying to bring in a number of measures to ensure that these new powers are used responsibly. You can see in subsection 12(3) of the bill that the minister must be of the opinion that it is in the public interest. The minister must be of the opinion that the exemption would enable the testing of an innovation, that is, a new product or service. It cannot be for just anything.
Whenever there is an exemption, it is only for one entity at a time. A minister could, in theory, have several orders for several entities, but this is not a class exemption. It does not apply to all companies in a sector.
The minister must be of the opinion that the benefits outweigh the risks, that an implementation plan has been developed to ensure that regulatory oversight will be possible and that sufficient resources are allocated to that oversight. That is in the bill.
In addition, we also published a new policy on regulatory sandboxes that falls under the Cabinet Directive on Regulation. This policy further specifies conditions for using sandboxes, namely, consultation with stakeholders, Indigenous groups, other departments, other levels of government, the provinces and territories to seek out opportunities to work with them. There is also a need for transparency. The intention to conduct this test, this regulatory review, must therefore be published in advance in the regulation plan, which is published annually. Individuals must contact Treasury Board, which will produce an annual report stating how many and which sandboxes were used that year.
Senator Forest: Is it Treasury Board that has the important responsibility of verifying that the steps have been followed correctly, that the necessary consultations have been carried out and that the risks have been assessed in relation to the benefits? Is Treasury Board responsible for this?
Mr. Young: As with every regulatory regime, the minister is responsible for determining whether the regime complies with the act and regulations. The responsibility rests with the minister.
Senator Forest: The law is pretty straightforward. Only the Criminal Code is at play. All other laws have sunset provisions as part of any initiative associated with a sandbox.
Mr. Young: Could you repeat the question?
Senator Forest: Complying with the law is not difficult. Only the Criminal Code applies. From that perspective, obeying the law becomes quite easy.
Mr. Young: That is how ministers use bills or existing legislation. It is the responsibility of the minister and the departments to oversee the respective laws for which they are responsible.
Senator Forest: I have a question about Division 3 of Part 5, Ms. Boldt. I’m trying to understand. The purpose of this division is to establish a statutory appropriation of up to $11.5 billion on a cash basis to fund the operations and activities of Build Canada Homes. However, there is some confusion about the numbers. The government has committed to increasing its efforts in the area of housing. According to the Parliamentary Budget Officer’s report, program spending on housing is expected to decrease by 567%, from $9.8 billion in 2025-26 to $4.3 billion in 2028-29. Can you explain that? The goal is to increase support for the construction of homes and housing units, but according to what appears in the budget planning, investment is decreasing.
Ms. Boldt: I’d like to introduce my colleague.
Senator Forest: Gladly.
Jean-Sébastien Langelier, Executive Director, Build Canada Homes Transition Team, Housing, Infrastructure and Communities Canada: Good morning. I am Jean-Sébastien Langelier, Executive Director with the Build Canada Homes Transition Team.
Your question has to do with the Parliamentary Budget Officer’s report and whether the report identified a decrease in budgets.
Senator Forest: From $9.8 billion to $4.3 billion by 2028-29.
Mr. Langelier: One of the programs planned is the national housing strategy. The government will present its intentions on that in the months and years to come. This explains the decrease identified by the Parliamentary Budget Officer.
Senator Forest: You’re saying that, right now, the figures we are seeing are prior to the creation of Build Canada Homes? Are budgets not being planned for the 2028-29 period?
Mr. Langelier: The Parliamentary Budget Officer has taken Build Canada Homes investments into account. However, Build Canada Homes is part of a broader strategy. There are other programs that deal with housing.
Senator Forest: Does that mean that the Parliamentary Budget Officer should not have taken that into consideration?
Mr. Langelier: Not at all. The facts that have been identified are correct. However, he does take into account some funding that will end, but no decisions have been made about some of these programs. This is about more than just funding for Build Canada Homes. It is about a broader series of plans for various programs.
[English]
Senator Cardozo: I have a few questions around Build Canada Homes. First, however, I want to ask one question further to that of my colleague Senator Forest.
As I understand it, the National Housing Strategy, as it stands, expires in a couple of years. Are there plans to renew that at this point?
Mr. Langelier: Well, the government will announce its intent regarding a National Housing Strategy when it’s time to do so.
Senator Cardozo: Okay.
Mr. Langelier: Right now it has not been, so yes.
Senator Cardozo: I convey that, from the people who work in the area, there is a real hope and expectation that it does get extended; I’m sure you’ve heard that. It is a key part of how people are building housing.
Mr. Langelier: Yes. There are some discussions right now with provinces and territories. We understand the importance of those investments. So, yes, there is recognition of the impact that those investments have made in this sector.
Senator Cardozo: Thank you. It is good to hear that.
I have a few more questions on the transition aspect of Build Canada Homes, and maybe that is for your colleague, Ms. Boldt. I’ll pose my question, then you can decide who can respond to it.
In terms of Build Canada Homes being a special operating agency, is that under CMHC or Housing, Infrastructure and Communities Canada? It makes for a lot of names of agencies.
My question is this: How many staff will the new agency have? Are many of the staff coming from CMHC or the department? What steps are you taking to ensure a seamless transition? One of the concerns about setting up a new agency is always that it could take many months, if not longer, to set the thing up before it starts doing its work.
What steps are you taking to ensure there is a seamless process and we’re not spending many months waiting for the agency to get set up while the Treasury Board figures out a whole lot of details about a new agency, as it often must?
Mr. Langelier: Thank you for the question. In terms of the special operating agency, it is situated within Housing, Infrastructure and Communities Canada, which is the department.
Senator Cardozo: That is the department.
Mr. Langelier: One of the reasons why that model has been chosen is to leverage the expertise that already exists. We are looking at working with CMHC to leverage their expertise as well. We have some people who help us. We are looking at different ways to set up and ramp up the SOA.
Senator Cardozo: Are you with the agency — with Build Canada Homes?
Mr. Langelier: I am with the transition office.
Senator Cardozo: Okay.
Mr. Langelier: It is within the department. We all work within the department.
Senator Cardozo: Who is at Build Canada Homes? We met Ana Bailão a few weeks ago in another study we are doing. Are there other staff who are currently in Build Canada Homes now working with her, or are we still in a transition phase?
Mr. Langelier: We are in a transition phase and are ramping up. In terms of exactly how many staff, this is not something I have at my disposal.
Senator Cardozo: But is there not necessarily a deputy minister but is there a senior public servant, a deputy head? If Ana Bailão is the head of the agency, is there a senior deputy head of the agency currently there?
Mr. Langelier: Anna would be the CEO.
Senator Cardozo: Okay.
Mr. Langelier: She is the head of the agency. She is the one who is accountable.
Senator Cardozo: Who reports to her? Is there somebody under her?
Mr. Langelier: We have started to add —
Senator Cardozo: Is there somebody who is from the Ottawa public service who knows how the public service works?
Mr. Langelier: Yes, there is. As the transition office, we are providing some services in terms of the policy, programming and set-up. We are supporting a team that is being built up.
Senator Cardozo: Okay.
Mr. Langelier: We have some vice-presidents who have been and will be hired.
Senator Cardozo: So in terms of transition team — sorry to keep hammering on this — you’re not just figuring out how many desks and pencils are going to the agency; you are actually doing the work.
Mr. Langelier: Yes, absolutely. The portal has been opened recently. There are projects being submitted; they are being reviewed and assessed. We have an investment policy framework. So, yes, it is up and running, and we are also ramping up.
Senator Cardozo: Thank you.
Senator Ross: Thank you for being with us this morning. My question is also for Build Canada Homes, although I’m not sure which witness.
Have you set specific housing supply targets by region as well as by type? How is that all going to be measured? When will the first homes actually be ready for people to move into?
Mr. Langelier: May I invite Ms. Boldt?
Senator Ross: Yes.
Ms. Boldt: Regarding the first part of your question, on regional targets being set up, at this point, of the number of housing units that have been announced in the initial four investments, there were announcements related to 700 units to be built with the Nunavut Housing Corporation, of which 30% would be factory-built.
There were also announcements related to the Canada Lands Company Limited and the six sites, direct-build construction that would take place; that would be up to 4,000 housing units that would be built on these initial six sites.
Most recently, yesterday, there was an announcement as well related to a joint partnership between Build Canada Homes and the City of Ottawa; that was an agreement for up to 3,000 mixed income and affordable housing units with a joint investment of $400 million.
Those are some of the initial investments and targets for housing units.
I would also reiterate that Build Canada Homes is meant to be catalytic when it comes to modern methods of construction. The idea is that if Build Canada Homes can drive demand for these different, more innovative homebuilding techniques — if we can mainstream that adoption, then ideally you would also have that kind of catalytic effect across the homebuilding industry.
Senator Ross: I am wondering about the impact of inflation on the actual builds and numbers. How will you ensure they continue to be affordable, that inflationary impact doesn’t cause there to be fewer homes built and that you stay on target with the numbers that you have set — 700, 4,000 and 3,000?
Ms. Boldt: With construction, that is always going to be a factor that will come into play. A big piece of how Build Canada Homes is looking to operate is really in partnership. It would be bringing to the table financing, its development expertise or, again, one of those tools, federal tools, while also looking for partners to bring forward their pieces, whether that is from financing, lands or other elements.
Given that it’s looking as well for large-scale portfolio deals, there will need to be a continued conversation about what that looks like if inflation were to come into a play. Since the financial commitment is for a larger portfolio, that should give an opportunity to make adjustments. It is a different approach. The current approach has been project by project, which has limitations that can come into play. This is where the idea of that different, more flexible investment approach across a portfolio gives an opportunity to make adjustments as the years go by.
Senator Ross: If you were thinking about roadblocks or obstacles operationally between funding and shovels in the ground, what would you predict those might be?
Ms. Boldt: Well, you pointed to one, obviously, with some of those unknown factors. In this partnership model, Build Canada Homes is bringing forward federal tools, but it is also looking for its partners to come forward and bring their tools into play.
If you’re thinking municipal or provincial, you have different fees, development charges and permitting. Some of those unknown factors can implicate the construction timelines or the ability of a proponent to offer depth of affordability.
Those are elements that are not within the federal toolkit, but, again, with this model that relies on partners coming together toward a shared outcome across a portfolio of projects, it will allow them to work through some of those potential barriers.
Senator Ross: Am I hearing that the more cooperative municipalities are, the more likely they are to obtain some type of agreement?
Ms. Boldt: Build Canada Homes will look for everybody who is coming to the table to come forward with their tools as well. Yes, I would say that is the case, if a municipality is looking and saying they have a portfolio of projects they would like to bring forward and know what they would like to ask of the federal government. Likewise, the question that Build Canada Homes will be asking is this: What are the things that the municipality will be able to bring forward so that we can drive affordable housing development? At that point, it may end up being cooperation as it relates to permitting and different fees.
Senator Ross: Thank you very much.
Ms. Boldt: Thank you for the question.
Senator MacAdam: Division 7 amends the Public Service Superannuation Act to authorize certain contributors to exercise temporary early retirement. Who can best speak to that? Do you have an estimate of the number of public servants you would expect to exercise this option to retire early?
Nadine Labrie, Acting Executive Director, Pension Policy and Programs, Office of the Chief Human Resources Officer, Treasury Board of Canada Secretariat: As an estimate, there are approximately 68,000 people eligible to retire, and within those 68,000, we have an estimate that approximately 15,000 people might take it.
Senator MacAdam: I understand that the Treasury Board will develop parameters for eligibility. When will these parameters be set? When will the eligibility requirements be set? As for the timeline, could you walk us through how this is going to roll out and what has happened so far?
Ms. Labrie: The parameters will be set by the Treasury Board before Royal Assent, but I don’t have a timeline of when and which Treasury Board meeting that will be, but it will be before Royal Assent, which is expected on January 15 or later. We would expect Royal Assent to come sometime around February, but we don’t control that.
To walk you through the process, it would be that a preliminary letter has been sent to the employees who may be eligible, just so they can start thinking about this option, if they would like to utilize it. A second letter, when Royal Assent is received, would be sent to say, “You are now eligible.” If they want to take up the early retirement incentive, they only have 120 days to make the decision, and from Royal Assent, they have 300 days to leave the public service and retire.
Senator MacAdam: What kind of communications and supports are provided to employees to help them make those decisions?
Ms. Labrie: There is the letter we sent to them to explain to them how it works. There is the pension portal, and we have the Pension Centre as well that they can call. We also publish information notices on our pension site at gccanada.ca, and we update the information notices as soon as we can when there are changes. It has already been updated three times as information from the budget is made available. We update it to make sure. This has been communicated to all deputy heads and heads of HR to share with their employees as well. The info site was also in the letter that each individual received.
Senator MacAdam: You have said the parameters are being developed. Can you provide assurance that there is due consideration being given to jobs and occupations for which there is already difficulty attracting and retaining employees?
Ms. Labrie: Yes, that is being considered. Business continuity — as it was in the budget — is one of the main criteria being looked at.
Senator MacAdam: Will that be considered when you are looking at eligibility and making final decisions?
Ms. Labrie: Yes.
Senator MacAdam: If people take the package from the early retirement incentive, will they be prevented from returning to the public service, either full-time or part-time? Are there provisions for that?
Ms. Labrie: Those criteria are being developed as well, so we don’t have that answer at this time.
Senator MacAdam: Thank you. With regard to Part 5, Division 26, amendments to the Customs Tariff Act, as I understand it, it’s meant to be a pilot project that you will undertake. Can you speak about the items that were selected for the pilot project and why they were chosen?
Mr. Mosier: Initially, we would envision the pilot project applying to clothing, apparel, footwear and accessories. These are a perfect pilot project because they are goods for which relatively high duty rates apply. These goods are nonperishable, meaning they make for goods that are easily donated, can last and be provided. There is a need for these goods — clothing, footwear, et cetera — for charities. When you think about the broad range of other goods that could potentially benefit from duty drawback, many of them would be perishable goods that may not make good candidates, and others would be input goods that could be used to make other products in Canada, for which we would expect duties to be paid, so they don’t make good candidates. There is a broad range of considerations with respect to other goods. When it comes to clothing, footwear and apparel, it was quite clear that these were final goods, easily donated and nonperishable, which make for a good pilot program.
They also make up quite a significant percentage of the goods that make use of the current obsolete or surplus goods program; about 20% of goods using that program are currently apparel and clothing.
Senator MacAdam: What oversight mechanisms would the Government of Canada use to verify that donated goods are used for charitable purposes and not resold in Canada?
Mr. Mosier: The program would be administered by the Canada Border Services Agency, or CBSA. The obsolete or surplus goods program is currently up and running. The CBSA has responsibility currently to verify that goods are destroyed in a manner that is acceptable to the Minister of Public Safety. Regulations would be developed and procedures would be put in place by the CBSA to ensure that goods are donated to a registered charity in a manner that is acceptable to the Canadian Border Services Agency and that they are donated and don’t re-enter the economy of Canada. The CBSA would have the ability to go in and verify with the registered charities where those goods are and how they are keeping track to ensure they are not re-entering the economy of Canada.
Senator MacAdam: Thank you.
Senator Kingston: I have a few questions, but for the first one, I would like to follow up on Senator MacAdam’s questioning on Division 26.
Have you given any thought or, through the program you already have, do you know how this is best done? At first, I thought maybe you were going to work with national charities — I’m thinking of Food Banks Canada, for instance — but we know that a lot of these transactions, if you will, happen at the local level, i.e., getting the goods to the people who actually need them.
When you say it’s the border people who are looking after this, is it each border, like the border at Woodstock, for instance, or the border at Saint Croix in New Brunswick, or is it more of a national approach to getting these goods distributed to people who really need them?
Mr. Mosier: Right. There are two questions there.
When it comes to the charity, again, certain regulations and administrative procedures would be developed. These goods would be donated by the importer to a registered charity in Canada. Then it would be up to the registered charity to distribute those goods as they see fit in accordance with their mandate.
With regard to enforcement, these are goods that would have already entered Canada and had applicable duties paid on. It’s really an after-border measure, where the importer would make an application to the Canada Border Services Agency for the return of duties under this program.
Then the Canada Border Services Agency — not necessarily those working at the land borders or other borders, but officials from the agency — would be able to verify that the goods were donated as reported under the duty drawback program.
Senator Kingston: So there are no restrictions on what the registered charities are or how that happens? It sounds a little clunky to me in terms of how you actually get the goods to the people who really need them through local and national charities. Has this all been worked out?
Mr. Mosier: The program to date, and what is envisioned here, is to provide an option for importers to donate the goods to a registered charity.
The government is not taking a role in how the goods are then distributed. We’re just providing an option for the return of duties if goods are, in fact, donated in Canada.
This isn’t a program that’s taking on how these goods would ultimately be distributed. We leave that up to the charities.
Senator Kingston: I would like to switch gears.
The next question I have regards Division 3 and Build Canada Homes. I asked this question another time during these proceedings.
But when I look at the information that we’ve been given, one of the things that is bulleted for our information is that:
Build Canada Homes will deploy $1 billion to build transitional and supportive housing for people who are homeless or at risk of homelessness. It will collaborate with key provincial, territorial, municipal, and Indigenous partners to pair these federal investments with employment and health care supports.
I have been, for as long as I have been here, concerned about the pairing of physical infrastructure with social infrastructure, and this bullet seems to say to me that there may be some offloading to the provinces. What I mean is that the province I live in, at least, is not completely developed in terms of providing the types of supports for the people I’m thinking of — who are the most in need, if you will — in order to both achieve and maintain housing. I’m looking for some information regarding how you plan to do this.
For instance, you add health services. Right now, health services in my province and many others do not cover outreach services, which are very much needed for a certain portion of the population who also need deeply affordable housing.
Can you talk to me about what your thoughts are? Because there would need to be work done, possibly incentivized through some changes to the transfer payments, for instance, both on the social level and the health care transfers.
Ms. Boldt: Thank you for the question. So you’re speaking to the $1 billion that has been identified, within the $13 billion, to support supportive and transitional housing.
You have pointed to the bullet where it indicates that absolutely does come with the collaboration with provincial, territorial and community partners to ensure that those supports are available.
There is understanding around the need for these services and supports for this type of housing. It does create a necessary partnership.
Build Canada Homes aims to complement other federal tools that are out there. Reaching Home, for example, is obviously a big opportunity and a big program for the government to be supporting in providing and building those partnerships.
The idea is that Build Canada Homes would still complement those programs. It is not meant to duplicate or displace what is already there.
This idea goes back to where we had pointed to the partnerships piece. It brings an opportunity to have conversations around the investments Build Canada Homes is making.
It is $1 billion in capital. I know you have pointed to some of the other important services and supports. It allows an opportunity to draw in those other federal supports that we have, or to try to point to some of the obstacles and challenges.
In particular, I’m visualizing a bit of the housing continuum, looking to where we’re thinking about — in the space where you have the supportive and transitional — the ways in which the federal government can lean in.
Again, I know that in comparison to the challenge, $1 billion is not going to be all that is needed. So what are the ways in which we can either pull in other federal partners or identify other solutions?
Senator Kingston: Here are two flags: First, the Reaching Home funds are not assured after, I think, 2027; and second, the Reaching Home funds, although very flexible during COVID, have since stopped being as flexible. One of the gap areas regards the health services being tied in. Again, it has to do with the provinces not being ready to provide those kinds of outreach services; that needs to be brought along. It will need some incentives, I would think, in order to do that. Have you thought about that particular piece, the gap in health care as part of the wraparound service that is required?
Ms. Boldt: Well, I know that is a part of the conversation, again, especially from the Reaching Home perspective.
It is not one that, at this early stage, I have seen brought into this conversation right now as we’re working with provinces and territories to identify those opportunities for the supportive and transitional aspects.
But knowing many of the players, again, this is another way in which the federal government can be supporting this important area of housing, so I think it’s one where we have the players who have started those conversations.
I will definitely take this point back.
Senator Kingston: Thank you.
Senator Galvez: My question is for Mr. Young. It concerns Division 5 of Part 5, on the amendments to the Red Tape Reduction Act.
[Translation]
A Government of Canada website states the following:
Regulatory sandboxes must protect the health, safety, security, and well-being of Canadians and of the environment. A regulatory sandbox may not be appropriate or possible in all circumstances and regulators should factor this into their decision before running a regulatory sandbox.
[English]
That is very clear. Yet what we see is that, as my colleague said, it is not a sandbox; it is a whole desert. We are giving a lot of latitude and authority to circumvent regulations and laws already passed by Parliament.
It is interesting because, having worked under the legislation of Europe, Canada, the U.S. and Latin America, it is the first time I’m seeing this. I’m really worried and concerned. So I have a few questions. If you can answer today, fine. If not, please provide your written answers to the clerk.
To what extent is it necessary to grant these exemptions not only to businesses but also to an individual, a corporation, a partnership or an incorporated association or organization? Why is this necessary?
My second question is this: How many projects and technologies do you expect to cover under this reduction of red tape? What are the criteria to choose these technologies? What budget will be assigned to each of these exemptions?
The last question regards something that really concerns me. To my colleague’s question about who checks whom, you said that a minister can decide which laws and when to cut red tape, but he is going to check himself to see if he is respecting what is supposed to be — and respecting the protection, safety and health of Canadians and the environment. I find that this is a conflict of interest for the minister in question.
Mr. Young: Thank you very much for those questions. Regarding your first question, relating to extent, the purpose of this legislation is to provide the opportunity for regulators to allow the introduction of new innovations, be they products or services, into the Canadian marketplace. Currently, the regulatory regimes that exist do not always allow that to take place. So you could have a new innovation but it is not able to be introduced because the regulatory regime or the legal regime doesn’t permit it. Sometimes that innovation may come from a person. Sometimes that idea or new process may come from a company. Sometimes it is just a matter of being able to collaborate with a different province in a way that isn’t permitted in the existing regulatory regime.
In the legislation proposed, we defined “entity” as a person, a company, a province or another jurisdiction so that any sort of new innovation that was not going to be allowed could still get captured. That way, if there is something new, it could be introduced in a safe and secure manner.
The fact is that these authorities already exist internationally. Canada is definitely not the only country that has the sandbox authorities in place. When we created the drafting instructions, we looked extensively throughout the Organisation for Economic Co-operation and Development, or OECD members. We drew from Germany, France, South Korea and the United States. There are many instances of regulatory sandbox authorities at the national and sub-national levels in the United States as well. Within the federal government in Canada, they exist within many different legal regimes already. They are in the Canada Transportation Act, the Pilotage Act and the Canada Shipping Act. So these examples already exist.
What we are trying to do is allow for these to be introduced in a safe manner with regulatory oversight. It is still a complex process to actually run a sandbox, because you will see in the legislation and also in the associated policy that the minister needs to be convinced that there is a sufficient oversight regime in place to maintain the health and safety of Canadians and of the environment. So resources need to be dedicated to do this: to be able to find what the measurement is, how to evaluate whether the sandbox has worked and to make recommendations on whether a regulatory regime needs to be changed or the status quo is sufficient. That takes time and resources. That is why there are transparency provisions in the policy.
All this means that I don’t actually expect that the sandboxes are going to be used very frequently. They are not used very frequently with the legislation that already exists within the current legal regime, so in extending it to more ministers, I’m not expecting a tsunami of projects to be launched. This is just one more tool to try to help regulators keep up with the ever-changing pace of technological advancement.
Regarding your last question, around who checks whom, as with any regulatory regime, it is up to the minister to enforce the rules for which he or she is responsible. Any derogation from the rules can be challenged through judicial review. There are exemptions in many pieces of legislation, not just for the purposes of testing, research or sandboxes, but also for emergency situations or other reasons. All of these are subject to judicial review if someone believes that the minister has acted in bad faith. So as long as the minister follows the rules that we are proposing in the legislation, they would still be subject to judicial review.
[Translation]
Senator Gignac: Welcome to the witnesses.
I have a question for the Department of Finance regarding the borrowing limit in Division 38. You asked for that limit to be increased not too long ago, in June 2024. We are now looking at Budget 2025, presented in November. This time the increase is $420 billion, so it’s substantial. We know that the borrowing requirements are much higher than the deficit, because while the deficit is $78 billion and will stay as high as $60 billion in the coming years, borrowing requirements will be between $100 million and $150 billion per year for the next five years. How long will you be able to operate without asking for another increase in the borrowing limit? I think it’ll be closer to three years, rather than six.
Mr. Emde: Thank you for the question.
Economic, fiscal and political changes can happen at any time. When the borrowing limit was set in July 2024, the idea was that it would remain at that level for three years, until 2026-27. However, as you said, we found that it had to be increased before that.
One factor to consider is the timing of the budget presentation. We are now in a fall cycle. As a precaution, we decided that it would be better to make the changes to the 2025 budget rather than next year, in 2026, because that might be too close to the limit. It’s true that we might be looking ahead more than we need to, but the government decided to be extra cautious. As for the increase, yes, that is a big number, but as I explained to Senator Marshall, the projection date has also changed. The previous time frame was 2026-27. Now, the projection extends to 2028-29.
[English]
Senator Gignac: I understand that. Going back to the history, usually with the financial requirement and the deficit, the gap was not as large. But now I have noticed that since 2024-25, that Crown corporation borrowing requirement is huge and is on a recurrent basis. It is not one shot. It seems to be a new strategy on the part of the federal government to use more Crown corporations, which does not affect the deficit on the balance sheet. Can you explain what happened? For example, with Build Canada Homes, you probably have $5 billion or $6 billion going to the borrowing requirement and not program spending. You also have other Crown corporations. Is that something new? Historically, I have not seen so much requirement for Crown corporations on a recurrent basis. Can you provide more information? It is a follow-up from the question asked by Senator Marshall.
Mr. Emde: It is a good question. I can’t speak to all that’s going on around Crown corporation policy, but one thing to highlight is that, yes, Build Canada Homes is new. The other thing is that the government announced in Budget 2025 that the annual issuance limit of mortgage bonds has been increased from $60 billion to $80 billion. That’s every year. That’s a good part of what is going on. You are right, though, that there has been a policy decision to utilize the Crown corporations, particularly in what is going on with trade policy south of the border. Export Development Canada, or EDC, and the Business Development Bank of Canada, or BDC, are being used. I’m not sure about the extent to which it is a widespread policy.
Senator Gignac: Thank you. We will ask the minister. Thank you for your transparency. In the past, when the deficit was explained by program spending, it was normal to have a short duration of debt. Is it your thinking that if we go now, the deficit will be much more for capital investment, which is a long-term view, and so forth, plus the fact that Crown corporation is a long-term investment? Do you intend to increase the debt duration? The finance minister will decide, but does it make sense for you to recommend to the finance minister to extend the debt situation? What would the impact be on the provinces? Usually, provinces borrow long term and the federal government borrows short term. Do you have any thoughts about that?
Mr. Emde: It is a good question. I have certainly received that one before. At this point, we don’t think there is a strong case to change our average term to maturity and extend our debt out longer. As you know, one consideration is that the provinces tend to borrow longer. We would not want to encroach on their space.
More importantly, we are always taking into consideration various factors. The cost of our debt is obviously going to be higher if we term it out longer. The flip side is that you can reduce your refinancing risk if you have longer maturity. We are balancing these things. At this point, we think that the appropriate balance is to maintain it where it is, which is 6.7 or 6.8 average maturity. We are thinking about it, but at this point, no change is imminent.
Senator Gignac: Thank you.
[Translation]
The Chair: I have a question for Mr. Young regarding red tape.
We really appreciate it when the Department of Finance sends us a list of possible questions we might have, along with the answers and explanations, but sometimes that list prompts other questions.
In response to the question about why the regulatory system can’t keep up in order to justify the sandboxes and red tape reduction, the answer indicated that the current system has over 3,000 regulations, many of which are prescriptive and outdated. You say that most of the regulations are outdated, so here’s the burning question: Why not simply get rid of those regulations? Have you identified which ones are outdated?
Mr. Young: Thank you for the question.
Since there are 3,000 regulations and it takes an average of 18 months to two years to make changes to regulations, it would be impossible to change everything to update the highly complex system of regulations that currently exists. Instead of making these changes and not knowing whether we’re changing the right ones, we want to give ministers and departments the authority to really test a regulatory regime before making any changes to the regulations. This will give regulators the data they need to inform their decisions about changing regulations.
The Chair: Let me stop you there. What is the test? You said, “to really test a regulatory regime.” What is the test? Is it the sandboxes?
Mr. Young: A sandbox does allow the minister to test a regulatory regime. As part of the regime, there will be the issue of exemption, which is important, but the conditions put in place at the same time are even more important.
The Chair: I understand. You said earlier that there would not be many exemptions, that they would be rare. Does that not help cut red tape and reduce the number of outdated regulations? On the one hand, you reassure us by saying that there won’t be many, and on the other hand, you say this will serve to reduce the 3,000 regulations that are outdated. That seems contradictory.
Mr. Young: We don’t think the 3,000 regulations will be reduced. At the Treasury Board Secretariat, we want to identify systematic issues that hinder innovation. We know that regulators do not have the opportunity to test the innovations that we’re trying to bring to market.
The Chair: Why are you saying that? Another question asks for an example of an existing use of a regulatory sandbox. The Department of Finance explained that Transport Canada ran one to explore using light sport aircraft for pilot training. At the same time, it states that this practice is not currently permitted under existing regulations. It’s not permitted, but they did it anyway.
Mr. Young: That already exists, because some ministers have the authority under their respective acts to use sandboxes, and this includes the Minister of Transport under the Canada Transportation Act. They invoked that authority to test the new aircraft technology.
The Chair: Why not only include ministers who are likely to need this, rather than all ministers? Are the Minister Responsible for Seniors, the President of Treasury Board and the Minister of Indigenous Services included, or are all ministers included? Are we painting everyone with the same brush, rather than targeting the areas that need more innovation, such as transportation?
Mr. Young: That is being done. Some ministers already have these powers. We are trying to ensure that the regime is consistent across the government. What is happening now is that several ministers have these powers, but the conditions are different for each legislative regime.
The Chair: Can you provide us with a table listing the ministers who have these powers and the conditions that apply to each of them?
Mr. Young: We have examples of laws that already exist, such as the Canada Transportation Act. Another example is the Pilotage Act.
The Chair: There are several. It would take too long to list them all. Can you commit to sending us the laws that currently allow these sandboxes, with the conditions for each minister?
Mr. Young: We can send you some examples.
The Chair: All of the examples.
Mr. Young: I don’t think we’re in a position to review all existing laws. We have examples of how they are already being used.
The Chair: Send me whatever you find.
Regarding the pension fund, Ms. Doucette, the estimates document indicates that savings from retirements will amount to $82 million per year and that $1.5 billion will be taken out of the pension fund.
Ms. Doucette: That is not within my purview.
The Chair: Who is taking questions about pensions?
Ms. Labrie: I am.
The Chair: We’re told that $1.5 billion is being taken from the pension fund to save $82 million per year. This represents early retirement of approximately five years on average, resulting in potential savings of $410 million. Why take $1.5 billion from the pension fund to save $410 million?
Ms. Labrie: The cost of early retirement to the pension plan has never been estimated before, because the law needs to be changed to get that estimate. This increases the pension plan’s obligations by $1.5 billion, because people are retiring five years earlier, or could do so.
The Chair: Will this increase premiums and obligations for pensioners and the employer?
Ms. Labrie: It does not increase premiums, but it does increase the pension plan’s obligations.
The Chair: Did you consult with the unions and get them onside to do this?
Ms. Labrie: We did consult afterwards. We do not consult with unions on pension plans, because they are not negotiated. However, we have a committee made up of six union representatives, six employer representatives and one pensioner representative. These topics are discussed by that committee.
The Chair: They were consulted afterwards?
Ms. Labrie: For the budget.
The Chair: Thank you.
[English]
Senator Marshall: My questions are also for Mr. Young. You keep using the word “regulatory,” but it applies to more than just regulations. The concern I have with the legislation is that the minister can override statutes that have been enacted by Parliament. I don’t see within the legislation any requirement for public notice, consultation or independent review. There is a reference there to transparency, but I don’t see the transparency.
Can you just tell me this: Is there something within the legislation that provides a rationale, risk assessment, disclosure regarding which provisions are being suspended up front or even reporting back to Parliament to let the parliamentarians know that the legislation they have enacted is being overwritten by a minister?
Mr. Young: Absolutely. The requirement to publish an exemption order is in the legislation. A minister will have to make it public as soon as it is feasible for them to do so.
Senator Marshall: Can you tell me what section that is in?
Mr. Young: It is under the transparency section. I’m afraid my computer has just shut down. I don’t have the exact numbers because they switched it around when it became part of the Budget Implementation Act, or BIA.
Senator Marshall: I’m looking at the section on transparency and parliamentary oversight. It says that the minister must “. . . make the order and the following information publicly accessible.” Then it goes on to say, “The minister may exclude information that, in the minister’s opinion, would be inappropriate to make publicly accessible.”
There is a catch there that the minister will provide the information but can withhold what he or she deems — the term used is — “inappropriate.” I don’t know what that means.
I’m moving on now into the parliamentary and transparency oversight: It talks about the President of the Treasury Board and the reports that have to be laid before Parliament, but it doesn’t specify as to what has to be included in those reports. Why would that not be specified?
Mr. Young: The minister will have to publish in the report which acts and regulations were exempted and the rationale for doing so in the decision making — that’s part of the legislation — and then in the accompanying policy on regulatory sandboxes, which is a cabinet-directed policy, it includes more information on what sort of requirements would be published.
Senator Marshall: Given the seriousness of this, this legislation is very concerning. Why wouldn’t the act that we are discussing here today not itself list what should be included in that report? This legislation is very broad and very serious. When you talk about reporting back to Parliament to tell them that legislation they have enacted has been overwritten by the minister, why would it not be significant enough to outline in the tabling of the report what has to be included in that report?
Mr. Young: You will find that the reporting requirements are actually stronger than in many other pieces of legislation that have the same sort of exemption authorities of regulation and enactment. This is providing some additional transparency than what exists in existing regimes. In order to try to ensure that we don’t have to change the legislation on an ongoing basis, we put those requirements in policies so they can be brought up to date in a much more effective manner.
Senator Marshall: Okay, but the meaning of “effective” would depend on the reader. The point I’m making is that this is almost a frightening piece of legislation. It seems that when you go through it — it is not very long — there could and should be stricter controls. I have a real problem with the fact that after Parliament enacts legislation, a minister can override that legislation. If that does happen, I truly believe that the information that goes in that report to Parliament should be in the legislation itself. That’s the way I feel.
Do I still have time?
The Chair: Maybe for a third round.
Senator Marshall: I wanted to go back to the housing issue. Thank you, Mr. Young.
[Translation]
Senator Forest: The issue of accountability that Senator Marshall mentioned is very important and often gets lost in the fog.
Ms. Boldt, I have two questions regarding Build Canada Homes. You talked about working with municipalities. Are you aware that developing new housing usually requires new infrastructure? This can include things like increasing the capacity of the water treatment plant or extending streets. Does the program offer support for the municipalities that are being asked to accommodate these new homes?
Ms. Boldt: Build Canada Homes has invested in housing, but there are also collaborations with other federal programs and tools to address infrastructure. There are infrastructure programs that promote housing. This is key to supporting new housing. Discussions will be held with other federal partners to ensure a level of support for housing when it comes to infrastructure as well.
Senator Forest: This is a huge challenge. Collaboration and communication channels among all of these programs are crucial. I am thinking in particular of small municipalities, which also have basic needs but don’t always have the resources to sort through all the programs. Do you intend to consult with the main municipal associations — I am thinking of the Federation of Canadian Municipalities — in order to be effective and optimize our investments in this sector?
Ms. Boldt: Absolutely. Discussions will be held with municipalities, as well as with the provinces and territories. It’s important to have a mixture of support in terms of federal, provincial and community contributions. I think Build Canada Homes is looking to ensure that there is collaboration among the various levels of government.
Senator Forest: We will eagerly watch the progress of your initiatives and get back to you next year.
[English]
Senator Cardozo: I have a couple more questions about Build Canada Homes. I want to pursue the question a bit further from what Senator Ross was asking.
In terms of the transition housing and the Nunavut housing, can you say a little bit more about what’s involved and how quickly we will see this happening? It’s December 2025 now. It may be hard to build things in Nunavut at this time of year. Will we see housing happening in Nunavut in the summer or the spring?
And on the transition housing, can you say a little bit more about who gets to use it and for how long? Does it link to other, more permanent housing? I assume transition housing is providing short-term housing for people who are unhoused currently, and they would be transitioned to permanent housing. Am I right?
Ms. Boldt: I will begin with the questions around the Nunavut housing. It was announced in September. Since that time, there have been conversations taking place with Nunavut Housing Corporation and the Government of Nunavut, wanting to ensure from an Inuit perspective as well that we are drawing in those conversations. Build Canada Homes has been having a series of conversations on what that agreement will look like.
At this point, the announcement was for over 700 housing units, so we want to ensure that we maximize the number of housing units but also have 30% of those factory-built. That is another element. Obviously, in the North, the construction season is different, and the construction techniques are going to be different. This is a piece they are working into that conversation.
Time definitely is of the essence, and they are working to have shovels in the ground as quickly as possible, but at this point it has been focused on wanting to land that agreement on what the joint collaboration will look like between the federal government, from Nunavut and with Indigenous partners.
Senator Cardozo: In the meantime, is someone in the South starting to build the prefab parts of what will be in the houses? Or does that not start until all the agreements are inked?
Ms. Boldt: There are definitely conversations taking place with factory-built options. On this one, I don’t have the insight for the particular deal. It is definitely a key piece of the conversation around what the agreement looks like and to what extent will factory-built, prefabricated housing be able to be pulled in and leveraged.
Then, on your question on supportive and transitional housing, this is an element that will rely on that collaboration that we were talking about with the provincial, territorial and community partners.
As it relates to transitioning them into other housing, I think this really drives at the importance of, again, the housing continuum. So you have shelters, and then that moves into supportive and transitional housing, and then you move into the non-market housing space, which is where Build Canada Homes is trying to focus its efforts, considering the mandate of where the federal government should focus its efforts and ensure it is not displacing others who are already working in the housing system. The idea here is that if you can build up the capacity and grow the size — whether we’re talking about community housing, co-operatives or not-for-profits — you have more housing units. Then, ideally, the idea is that you can transition into these housing units. At this point, it is a very small share of the housing sector. Non-market housing is about 4% — lower than 7%, which is the OECD average, and lower than other jurisdictions like the U.K. and France, which are more like 14% to 16%.
So growing that supply should hopefully create a bit of a channel into more affordable housing.
Senator Cardozo: Does this provide housing to those folks who are left with nothing but encampments? Is the federal government able to help any of them have a proper roof over their heads?
Ms. Boldt: At this point, Build Canada Homes wants to work in collaboration with some of the other federal tools that we have out there, in particular those that relate to homelessness. We talked about Reaching Home and wanting to complement those efforts but not duplicate. There is the $1 billion supportive and transitional housing piece, but at this point, when you’re going into more of the encampments and the homelessness supports, that is through programs such as Reaching Home.
Senator Galvez: My question is to Mr. Young. You gave an example of another jurisdiction where this sandbox has been created, but I think you haven’t told us what problems that this has created in this jurisdiction where this sandbox has been applied.
We know of examples where untested products are put into the market. We know that, for example, once the companies get out of the sandbox, they have difficulty scaling up because the market doesn’t have these sandboxes. And there are even unintended fraud situations, for example, in vaccines or medications, where you allow not disclosing some ingredients and then something goes into the market.
Yes, jurisdictions are adopting this, but there are a lot of unintended consequences. As my colleague said, if you are ditching laws, how can we have oversight on this? Can you please explain?
Mr. Young: I can’t speak for what goes on in other jurisdictions, but I can speak to the Canadian marketplace. The important part to remember about a regulatory sandbox is that it will still have regulatory oversight. So it is not an exemption with a carte blanche or an ability to allow any product to be introduced without any sort of supervision. The whole point is that it will continue to have regulatory supervision with conditions imposed by the minister, and those conditions are meant to test what a new regulatory regime could be and inform whether changes to the existing regulatory regime should be made — and, if so, how.
It allows you to test what sort of regulatory regime would allow for a new product to be introduced safely while still monitoring the product as it’s introduced.
Currently within Canada, we have different ways of regulating products. There are post-market approvals and pre-market approvals. So consumer products, for example, are post-market approvals. They are introduced and they are allowed to be introduced to — anything you buy in the dollar store, for example, unless someone complains, and Health Canada will then issue a product recall, for example.
It all depends on what sort of regulatory regime exists for that kind of product. There may already be circumstances where products can be introduced into the marketplace without any sort of federal regulation applying to it before it’s introduced.
Senator Ross: My question is about Part 5, Division 38. In 2017, the Borrowing Authority Act was $1.168 trillion, and now it’s going to $2.541 trillion. Looking at projected deficits and growing debt, obviously this gives us legal room to keep borrowing, but at what point would it be unsustainable? Do you think this could impact our credit rating?
Mr. Emde: Thank you for the question. In terms of fiscal sustainability, the government continues to publish a long-term fiscal outlook. It was part of this budget in November. It continues to show that federal debt is on a declining path.
In terms of our credit rating, I can say we’re in very frequent contact with all the credit rating agencies. Before the budget, they were wanting to know as much as they could, and we have had follow-ups with a few of them after the budget, and all of them have maintained their current credit rating and outlook for Canada.
So the message is still positive on this front. Canada has a AAA credit rating with three of the top four credit rating agencies. Clearly, they see a lot of strengths for Canada. They do always point out that the fiscal situation is something they are keeping an eye on.
What they have highlighted to us is that they understand what the government is trying to do — really attempting to increase capital investment and address productivity and housing issues. From their point of view, Canada is starting from a strong fiscal position, so you have got that room to make those changes. What they really want to see is the longer-term plan, like if it is sustainable and there is a credible path. That is what they will keep an eye on is the forecast and the projections and the changes to that.
I would say it’s so far, so good, and they are convinced that the government’s plan is reasonable, and so we just continue to have conversations with them.
Senator Ross: In less than eight years, it’s more than doubled, though — the borrowing authority. What will happen in the next eight years? How far can it go?
Mr. Emde: It’s a good question. I don’t know. Obviously, there are a lot of things that are affecting the amount that the government borrows. There is the economic side, where unexpected things happen, and then there are the policy decisions. So it’s a combination of those things. I don’t want to speculate for Canada where those limits are. Clearly, for people that remember back to a few decades ago, Canada had reached levels that financial markets were concerned about. So I think that is still in the public consciousness and in the government’s mind as they think about this, that there are limits, and so it’s trying to find that balance.
Senator Ross: Thank you, Mr. Emde.
Senator Kingston: My questions are around Division 7. I’m old enough to remember when something like this happened before, in terms of an early pension offering, during the 1990s. Am I correct in thinking that this has a lot of similarities? Are we working on lessons learned from that particular exercise? I think there were some positives that came out of it even in terms of how it was handled and so on, but I’m sure there were things that could have been done better. I would just like you to comment on lessons learned from that experience in the 1990s, which seemed to me to be somewhat similar.
Ms. Labrie: We are looking at the lessons learned that were done in the 1990s. There was a report done that we are now analyzing. It is a little bit different from what was done in the 1990s. This is a voluntary departure program, and it was not voluntary in the 1990s. It was involuntary. On top of that, in the 1990s, you had a cash incentive as well with the early departure that you don’t have at this time. It is really just an early retirement incentive, which is voluntary for the people that have the means to use it.
Senator Kingston: There was a voluntary aspect in the 1990s. I remember that as well.
Ms. Labrie: I would have to go back. I was, unfortunately, not part of the 1990s program. I have read up on it, but I would have to go back to confirm.
Senator Kingston: Could we be provided with a link to the report you speak of?
Ms. Labrie: Yes, for sure.
[Translation]
Senator Gignac: My question is for Ms. Boldt from Build Canada Homes.
I would like you to reassure us a bit. The Parliamentary Budget Officer’s report raised a few eyebrows. The report states that, in terms of budgetary expenditures, $7.3 billion will be allocated to Build Canada Homes over the next few years. However, the Parliamentary Budget Officer estimates that the impact will be only 26,000 units over five years. If I do the math, this comes to $280,000 per unit. I find that quite expensive. Do you agree with the Parliamentary Budget Officer’s estimates of the impact on residential construction? If not, do you have any other estimates to share with us?
Ms. Boldt: Thank you for the question.
The Parliamentary Budget Officer actually used estimates based on federal contributions only. So this doesn’t take into account contributions from other partners. Build Canada Homes and the current maintenance and CMHC programs absolutely do include contributions from other partners. This is one approach to covering all the costs of the units.
[English]
Senator Gignac: My question was about how effective this program is, because if it has a $7-billion impact on the deficit and you accelerate by only 26,000 unit starts, it’s not huge, and that is quite expensive by unit. My question is more about whether you believe that the impact will be minimal. They say the impact will be only 2% on annual housing starts per year, so it looks like peanuts to me.
[Translation]
Ms. Boldt: I think that there will be simulations.
[English]
The idea is that Build Canada Homes is also going to be catalyzing. This is a piece that should have a multiplier effect for the amount of housing that it will be able to support the building of.
If you’re able to have these modern methods of construction, the more innovative homebuilding techniques, not only is Build Canada Homes going to directly support housing that uses these techniques, but then you also create that sustained demand. Ideally, that can be something that becomes mainstreamed across the homebuilding industry. So you can imagine how indirectly Build Canada Homes will also contribute to a much larger supply of housing.
Senator Gignac: What about the fact that the federal planned spending on the housing program is set to decline by 56% over the next five years because you have a Build Canada Homes increase but CMHC will decline? So overall, the federal government will reduce their effort on the housing sector. Is what was mentioned true?
Ms. Boldt: I know we spoke earlier about the National Housing Strategy. While it does, you can see that there is that upcoming — right now it looks like an upcoming decline because there will need to be a decision about renewing the National Housing Strategy. A lot of the funding support that flows through that strategy, Build Canada Homes is not meant —
Senator Gignac: Sorry to interrupt. You mentioned to me that if the government renews this kind of program on housing, the deficit will be higher in the next five years than what they have already said because the deficit is based on the fact of the phasing out of CMHC. So if the government wants to maintain its effort on housing, it is ultimately a deficit coming.
Ms. Boldt: There will need to be a decision about whether or not to renew the National Housing Strategy. I would say that provincial and territorial partners have expressed their desire to see that renewed. Build Canada Homes is not meant to replace all of the programs in the National Housing Strategy.
Senator Gignac: Thank you.
[Translation]
The Chair: This is probably part of the $400 billion.
[English]
Senator Marshall: Thank you very much. I want to go back to Build Canada Homes and the operating agency. Where is the authority to establish the operating agency? Because I would have thought that Bill C-15 would create Build Canada Homes. All it is doing is getting the money out the door. What is this operating agency you referred to earlier?
Ms. Boldt: A special operating agency is something that Treasury Board has the authority to establish within a department. You do need to have departmental enabling legislation, which provides the legal framework for any special operating agencies that are within it —
Senator Marshall: You don’t have the departmental legislation, but you are saying Treasury Board has issued something to create it as an operating agency. Can you send that to the clerk? I would like to take a look at that.
The other question I have is this: The $11.5 billion that is going to go to Build Canada Homes, which I guess would be the operating agency, or “any other entity designated . . . .” Has there been another entity designated to receive that $11.5 billion?
Ms. Boldt: For “any other entity designated . . . .” the idea there is that if there is a decision to introduce legislation which would create Build Canada Homes as a legislated entity, that would then have the ability to also draw upon that funding. On that decision on an end form for Build Canada Homes, there has not yet been a decision there.
I want to be clear on the legal framework right now. Housing, Infrastructure and Communities Canada does have a legal framework. We have departmental legislation. So that is the legislation under which Build Canada Homes is currently bound.
Senator Marshall: But it’s not the governance structure for Build Canada Homes. You are saying there has been no other entity designated at this point.
Ms. Boldt: No. The intention with the legislation you see before you is that Build Canada Homes in the special operating agency —
Senator Marshall: When do you think we will see the enabling legislation for Build Canada Homes? That’s my last question.
Ms. Boldt: In Budget 2025, the government has indicated they intend to introduce it. At this point, I don’t have a specific date, but will be eagerly —
Senator Marshall: Mr. Young said it took 18 to 24 months for regulation, so I am wondering how long it will take for a bill. Thank you very much.
Senator MacAdam: Some of what I was going to ask was just asked by Senator Marshall. However, I wanted to get some clarification around the organizational and governance structures regarding Build Canada Homes and its relationship with Canada Lands Company Limited. As you said, Build Canada Homes is a special operating agency now. The intention is at some point in the future it will become a stand-alone Crown corporation and there would be enabling legislation at that time. That’s just sort of what I’m understanding so far. The Prime Minister announced in September 2025 that Canada Lands Company would be transferred under Build Canada Homes to streamline construction on public lands. I want to get some clarification on that. Will Canada Lands Company Limited become a subsidiary of Build Canada Homes at some point? Is that the expectation in the future? How does that all work?
Ms. Boldt: I would say that the decision to be made on the final form is the PM’s prerogative and there is not yet a decision on what that final form will be, which I think definitely speaks to several of the questions you have raised.
I would say that in this interim period when the Prime Minister did announce that the Canada Lands Company would fall within the Build Canada Homes portfolio — right now there is a partnership that is taking place. In particular, those six sites where the direct-build projects will take place are Build Canada Homes sites. CLC is providing the development expertise and, again, making their land holdings available so that Build Canada Homes can bring federal land into the conversation. Right now, it is operating in a partnership form.
Senator MacAdam: With regard to the governance structure, it is a special operating agency so the governance is within the department at this point. And should it become a Crown corporation, it would have its own board, et cetera.
Ms. Boldt: Exactly.
Senator MacAdam: As Senator Gignac mentioned, it seems that more incentives for housing are going through Crowns. This is something I have noted — Crown corporations or other agencies — which really impacts the timing of the financial impact on the annual deficit. Similar to what was already mentioned, it is more through Crowns, less through departments. Thank you.
[Translation]
Senator Forest: I can see that you’re building the airplane while flying it. It’s quite perilous. My question is the following. Who will ultimately be responsible for the commitments made and the management? I think that a great deal of cooperation among the various federal programs, and also with the provinces and municipalities, is essential. Will Treasury Board of Canada or Build Canada Homes be in a position next year to be called upon to report on how the project has progressed?
Mr. Langelier: Good question, senator.
The answer to this question is that the government stated that it plans to introduce a bill on the entity and then on the form. The members of Parliament will have the opportunity to ask questions about how this will work.
Obviously, it’s a Crown corporation, so there will be a board of directors. Ultimately, a Crown corporation reports to a minister, and the minister is accountable to Parliament. The reports are public. A Crown corporation always has governance attached to it through corporate plans that must be approved by Treasury Board of Canada.
If this is the form chosen, it would be this type of model. When it’s in the department, the accountability is tied to the minister. However, the department releases reports on plans and priorities and reports on results. Lastly, since Build Canada Homes is part of the department, it must also document its results.
Senator Forest: There are already six major projects. However, I applaud your courage. You’re truly building the airplane while flying it. You have taken off, and the governance model has yet to be defined.
[English]
Senator Cardozo: I have one quick question, though I initially had a couple: Is there any focus on housing for young people?
Ms. Boldt: Definitely, as we think about who is looking for affordable housing — thinking of students, for example — that is one that comes forward. We absolutely know that young Canadians are struggling to be able to have access to affordable housing. That is one of the drivers — that type of housing — as Build Canada Homes thinks about where its investments should go.
I would also say, when we think about youth, in stimulating a more productive homebuilding industry, there are opportunities in the construction industry when we talk about apprenticeships and whatnot. There is close collaboration taking place with, for example, colleagues at ESDC, who are thinking about the skills agenda and how we can ensure that those are coming together and that we are supporting young Canadians.
Senator Cardozo: I would encourage you on both those, both the housing for students and the employment. There is a huge opportunity and obligation here. Thank you.
[Translation]
The Chair: This brings our meeting with our witnesses to a close. Thank you.
Could you send us your commitments? We’ll suspend for the holiday season on Thursday or Friday. One commitment seems more complicated than the others, as it concerns legislation that already allows for sandboxes, and some commitments involve technical matters. Given this, we could perhaps set a deadline of Thursday, January 15, 2026. So, we’ll give you the holiday season to follow up on your commitments and set the deadline for Thursday, January 15, 2026. We’ll look at this. In any case, we’ll continue our review of the budget when we return from the holidays. We may have the opportunity to see you again for the next stage.
Thank you and happy holidays. Take time to rest. Much work lies ahead for you in 2026.
Senator Marshall has a motion to follow up on a request.
[English]
— you could move the motion.
Senator Marshall: I really can’t take credit for it, because it stems from a question that Senator Adair asked during one of our meetings on the public service insurance plans when we were looking at the Supplementary Estimates (B). She was wondering if we had looked at the cost trajectory. The Parliamentary Budget Officer said he would get back to us. He said he could do some work on it if it were a motion of the Standing Senate Committee on National Finance.
So I move:
That the Standing Senate Committee on National Finance request the Parliamentary Budget Officer to examine the cost trajectory of the public service insurance plan and programs, and compare those costs with other jurisdictions.
I would like the support of my colleagues on that.
[Translation]
The Chair: Does everyone agree?
Hon. Senators: Yes.
The Chair: It’s unanimously passed.
In theory, we’ll resume the meeting at 3 p.m. if the Senate adopts the motion. We’ll be in the room next door, which is W120. Thank you.
(The committee adjourned.)