[Recorded by Electronic Apparatus]
Tuesday, April 30, 1996
.1105 
[Translation]
The Chair: I call the meeting to order. I would like to welcome you all.
[English]
I'd like to wish you a hearty welcome. We have before us today Mr. Marc Rochon, the man in charge of Canada's fourteenth-largest financial institution.
I know that Marc has had an illustrious career in the civil service, and I've asked him today to tell us how he is using his usual magic to redirect the CMHC.
Mr. Rochon, you have the floor.
[Translation]
Mr. Marc Rochon (President, Canada Mortgage and Housing Corporation): Madam Chair, thank you for giving me the opportunity to speak before the members of the Standing Committee on Government Operations.
[English]
We have tabled with the committee a more exhaustive document, which will give you more insight into the details of the current operations in CMHC.
[Translation]
I am accompanied this morning by three of my colleagues, Ms Karen Kinsley, Vice-President, Finance and Treasurer;
[English]
Doug Stewart, who is vice-president, policy and research;
[Translation]
and Claude Poirier-Defoy, who is Vice-President, Programs, General Counsel and Corporate Secretary.
[English]
As you know, in its recent budget the government announced a number of measures that impact on housing and CMHC's mandate. I would like to take a minute, if I may, to review these with you.
[Translation]
One of the key measures announced in the budget, affecting CMHC, is the statement of the government's intention to operate the Mortgage Insurance Fund (MIF) and the Mortgage-Backed Securities Guarantee Fund (MVSGF) on a more commercial basis. Changes in the operating environment, most notably the arrival of an American-based private sector competitor, have prompted this move. Commercialization is required to enable CMH to compete on a level playing field, while continuing to ensure that mortgage financing is available through approved lenders to home buyers in all regions of Canada.
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The federal government has also indicated through the budget that it will be proposing a stronger partnership with provinces and territories in the management of social housing. Specifically, the government is offering to provincial and territorial governments, the opportunity to take over the management of existing federal social housing resources.
[English]
The Canadian government will continue to meet its financial obligations related to social housing, currently about $2 billion a year. Provinces and territories will be offered greater flexibility in the management of these resources, subject to national principles and a national accountability framework, which will ensure that federal subsidies are used for housing and are targeted to low-income households.
The role of non-profit and cooperative housing organizations, as well as aboriginal groups, in the administration of the social housing stock is something that will be taken up with the provinces and territories in the upcoming negotiations.
To further advance the creation of jobs and growth for Canadians, the government is providing $105 million in funding a number of short-term housing initiatives. These include home adaptation for seniors' independence, the shelter enhancement program, the remote housing initiative, the on-reserve remote housing initiative, and the residential rehabilitation assistance program. The proposed initiatives are expected to generate about 2,300 jobs and would help to bridge the current transition period of economic and government restructuring.
[Translation]
Export promotion is an increasingly important component of CMHC's research and information transfer activities, and is an area which holds considerable promise for expanding business opportunities for Canada's housing industry while promoting employment opportunities for Canadians.
CHMC is working closely with the industry to assist it in diversifying into offshore markets. This will help to improve the industry's growth prospects and maintain its competitiveness in the long run.
[English]
It is highly appropriate, in my view, that CMHC is celebrating its fiftieth year of service to Canadians. The corporation has received a renewed mandate from the government, which will allow it to better meet the needs of Canadians in the years to come.
I would be pleased, Madam Chairman, to answer any questions you or your colleagues may have on CHMC's operations. We are in your good hands. Merci.
[Translation]
The Chair: Thank you, Mr. Rochon.
Mr. Fillion, you have the floor.
Mr. Fillion (Chicoutimi): Mr. Rochon read through his document very quickly. I would have appreciated receiving it ahead of time to be able to look at it closely and adapt my questions to the content.
As you recall, in its last budget, the federal government put an end to funding for its social housing programs. It is giving the provinces the possibility to manage the existing stocks themselves.
In Quebec, we are very happy with that initiative, because it will enable us to avoid overlap and duplication, which was very costly.
However, a lot of unanswered questions remain. I do not need to demonstrate the need for social housing in Canada. Moreover, a lot could be said about the statistics published by Statistics Canada concerning social housing. More than 2 million citizens devote more than 30% of their incomes to housing. That argument must be taken into account.
In our area, we can see that the current stock of housing units is deteriorating. That reminds me of the taxis here in Ottawa. They are not in good shape. It's more or less the same thing for housing units.
I remember that during the election campaign Minister Martin promised cooperatives that he would ensure stable funding for social housing. Today, there seems to be a lack of interest in it.
.1115
Mr. Rochon, the government has indicated that it wants to decentralize social housing to clarify jurisdictions. What is the status of the negotiations? Have they progressed enough for you to tell us how this decentralization will take place? Will the federal government remain the owner of the existing units? I would like you to give us an overview of that, please.
The Chair: I apologize, but I asked Mr. Rochon to shorten his presentation to give us more time for questions.
Mr. Fillion: I agree with you, Madam, but we could have received his document ahead of time, with the word ``embargo" on it, which would have prevented us from making it public.
Mr. Rochon: My apologies to the member. We will make amends next time.
Mr. Fillion: Thank you.
Mr. Rochon: I will ask my colleague, Claude Poirier-Defoy, to give you the details, since he manages the project regarding provincial relations.
First of all, I would like to point out that the federal government is not withdrawing funding for social housing. ON the contrary, it continues to invest $2 billion per year. Last year, in 1994-95, $357 million were paid out to the government of Quebec for social housing.
I just wanted to set the record straight. I will ask my colleague Mr. Defoy who has been in contact with the provinces since March to give you more details on the situation as it is unfolding.
Mr. Claude Poirier-Defoy (Vice-President, Programs, General Council and Corporate Secretary, Canada Mortgage and Housing Corporation): I imagine you already know that the Canada Mortgage and Housing Corporation held a provincial-territorial Deputy Ministers' meeting on March 26th. At that time, we apprised the provinces of the federal government's decision to transfer the administration of the social housing portfolio.
At the same time, we apprised them of the applicable conditions, including the two national principles which would apply as well as the system for accountability which was to underline the two conditions in question.
Since then, we have written to all of the provinces. In the case of Quebec, following the meeting of March 26th, we sent the details of the portfolio to the province, including the sums of money involved, the fees which would be paid by the federal government and the description of the programs. We have already started some discussions.
I must point out that we had already had a meeting with the province of Quebec prior to the budget, as part of some discussions on government efficiency, on what we call overlap and duplication. We had had a meeting with the president of the Société d'habitation du Québec, and the Société d'habitation du Québec had already expressed a lot of interest in the proposals we were preparing to make.
During the meeting of March 26th, Quebec was not officially represented at the table. There was an observer who represented the Société d'habitation du Québec. The observer's reaction and the discussions following the meeting show us that the province has an interest in negotiating with us.
Quebec is awaiting a mandate to negotiate from its government. I was assured, in a letter I receive last week, that we could sit down at the table and start negotiating within the next two weeks.
Mr. Fillion: You mentioned the details of the portfolio, the sums involved, etc. Is this information currently available? Could it be given to the committee?
My interest obviously lies in Quebec, but social housing is also a national issue, and your corporation can provide me with a response. So I would like to obtain the documents. Will the corporation continue to apply national standards in the future?
Mr. Poirier-Defoy: Yes. To have access to the portfolio and to the funds accompanying the portfolio, the province will have to accept two fundamental conditions. The money from the federal government will have to continue to serve strictly for housing, and these housing units must serve low income people in need.
.1120
Mr. Fillion: Could you clarify these national standards?
Mr. Poirier-Defoy: There are only two. The money we transfer to the provinces must be used to fund housing. Bear in mind that the $2 billion the federal government is currently spending is already fully committed, under agreements with the provinces, municipalities, non profit organizations or cooperatives.
For Quebec, it means roughly $537 million. There is not much flexibility for the time being. The money is committed to specific organizations and will remain with them for the duration of the commitment, whether it is 25, 35 or 50 years.
Mr. Fillion: Yesterday, I received a communique from the minister responsible for the Canada Mortgage and Housing Corporation which targeted the areas where you would be involved.
I know that your involvement is first and foremost for adapted housing, isolated regions, natives, and the like, but in urban areas, whether in Quebec or in Canada, there are also housing units that continue to deteriorate. Have you abandoned these places. Are there specific reasons?
Mr. Poirier-Defoy: Since 1993, the successive governments, have ended funding for any new commitment. This government decision was made in 1993 and renewed in 1994 and 1995.
You are referring to these strategic initiatives that were announced. These are very short term, one year initiatives. They are not necessarily new programs. They are initiatives designed strictly to create jobs. They are not long term programs.
Mr. Fillion: If I've understood correctly, there is no more money for subsidizing or building low cost social housing units and cooperatives in urban areas with 60,000 to 75,000 inhabitants which are not on reserves, etc.
Mr. Poirier-Defoy: That is correct.
Mr. Fillion: There is none at all.
Mr. Poirier-Defoy: That is correct.
Mr. Fillion: The corporation injects $2.2 billion annually. Is there a part of the $2.2 billion which is set aside to help the people?
Mr. Poirier-Defoy: What is good about the proposal offered to the provinces is that as long as they comply with the two conditions I already mentioned, within a very specific structure that isn't agreed upon, we will allow them to harmonize the programs. They will have the opportunity to use the savings. Since there will be less overlapping and duplication, the result will probably be increased efficiency and consequently, savings. Provided that the two conditions are met and that savings are made, this money can continue to be reinvested in social housing units to be used for people in need.
Mr. Fillion: Do you foresee that happening in the short-term? Will we have to wait three, four or five years before the effects are being felt?
Mr. Poirier-Devoy: You would have to ask the Société d'habitation du Québec. Once we have signed an agreement, at the end of the year, we hope, the Société d'habitation du Québec will be in charge and will be able to determine the future of these programs.
The Chair: There will be a second round.
[English]
Mr. Gilmour, you have ten minutes.
Mr. Gilmour (Comox - Alberni): Thank you, Madam Chair.
Last week we had a representative from the Auditor General's office and he was critical in some areas of many crown corporations, in terms of accountability. In a private corporation, the accountability goes to the shareholders. To whom is CMHC accountable?
.1125
Mr. Rochon: The people of Canada.
Mr. Gilmour: That's a pretty broad response -
Mr. Rochon: It is.
Mr. Gilmour: - but it doesn't give me any encouragement. What is the mechanism?
Mr. Rochon: I will start by saying that in 1994 we had a special audit by the AG and we were one of six crown corporations that came out of this with - not a medal, because it never gives praise - the judgment that our accountability structure and the mechanisms within are what is needed for the current times and they are very effective.
We have a number of accountabilities. As employees of the corporation, we serve our board, our board is appointed by the government, and through that board we serve the government and therefore the people of Canada. This is done by producing a workplan, a business plan that has some years of duration, and we are measured against that plan year after year by our board, by the government's central agencies, by committees like this one. That is the way the process works.
We do have a business plan, which was probably tabled with you or could be tabled with you, where we outline what we are doing, why we're doing it, how we're going to go about doing it, and what the costs will be.
Mr. Gilmour: I haven't looked at who is on your board. How often does the board meet and in what detail does the board go through the business plan of CMHC?
Mr. Rochon: I believe the board meets a minimum of four times a year.
Mr. Poirier-Defoy: Seven times.
Mr. Rochon: It meets seven times a year. It is very demanding, I must say. The board scrutinizes everything we do, and we are really in its hands in terms of the kinds of questions that are asked, the kinds of research it wants us to do and the kinds of reports it wants brought forward. We have some audit mechanisms within and we have evaluation mechanisms for our programs. We are a very transparent organization, we find.
Mr. Gilmour: Switching over to liabilities, what is CMHC's ongoing liability, basically, in commitments, stretching from five to ten and to fifteen years? Do you have those figures? Are they in your audits or in your books?
Mr. Rochon: Yes, we do have those figures. Maybe Ms Kinsley could be more precise on this matter.
Ms Karen Kinsley (Vice-President, Finance, and Treasurer, Canada Mortgage and Housing Corporation): Yes. In our 1994 annual report, a copy of which has been circulated to the committee, there is a note to our financial statements that provides the commitments we have incurred as an agent of the Government of Canada for the ensuing five years. So in our note to the financial statement, it does profile, in dollar amounts for the next five years, what the commitments are under our government programs.
Mr. Gilmour: Okay. That commits for five years. Do you have commitments beyond the five-year limit?
Mr. Kinsley: Yes, we do. I think Mr. Poirier-Defoy mentioned a moment ago that our commitments can go up to 25, 35, or 50 years. Our reporting is only for a five-year time horizon, which is why the commitments end at that point, but we do have a profile of how those commitments phase over the years. I think it's fair to say that the bulk of the commitments for which the $2 billion a year is spent really don't start expiring before the year 2015. So, to give you a snapshot, we are committed roughly at the level we're at today, with some adjustment, up until about 2015, when those commitments start to drop off in a major way.
Mr. Gilmour: I have one final question. In native housing, can you explain the relationship between CMHC and the Department of Indian Affairs? What is the relationship? Who has the final say? Is it CMHC or is it...?
Mr. Rochon: We're partners in this. The lead is Indian Affairs. We are partners with them in terms of our expertise and our funds, but it is basically the Minister of Indian Affairs who drives this file.
Mr. Gilmour: Thank you, Madam Chair.
The Chair: Mr. McTeague.
[Translation]
Mr. McTeague (Ontario): I found your exchange with the BQ member very interesting, especially regarding decentralization.
I would like to talk about an issue that arises because of the market.
.1130
[English]
I've noticed here that you've talked about the process of change and renewal and coming to grips with current fiscal realities. In Canada we've seen in many regions of the country a marked decrease in the valuations of real estate or realty. CMHC had to bite the bullet with respect to some of the mortgage insurance it has had in the past, particularly as a result of the 5%, in that many people have found themselves in the situation of having to give the key back, turn the house in, because the actual first mortgage or insured mortgage is far greater than the value of the home. What has that done for your bottom line?
Mr. Rochon: Karen, are you in a position to answer that?
Ms Kinsley: Yes.
I guess there are two points to your general question about the impact on the mortgage insurance fund in areas of market decline. We are very cognizant of the market conditions when we underwrite our product. We have a market analysis function within CMHC, so we put additional safeguards into our underwriting process when we're underwriting in areas where we believe there is some volatility to house prices. At the outset of the underwriting process we try to ensure, in terms of loan-to-house value and so on, that we're not getting ourselves into a situation of underwriting at an inflated price a product we in turn will take back and potentially lose money on during a resale.
To your very specific point relating to a first-home loan insurance, we are seeing that the default in this business is slightly higher than it is in our regular business, but not alarmingly so. We do monitor the profile of the borrowers as well, and we're finding that the profile of the borrowers in terms of their income and their ability to pay is not substantially different from those we would be underwriting at 90% loan to value, as an example. Although there is a higher level of default, at this time we're not suggesting that it's alarming, given the characteristics of the borrowers themselves.
Mr. McTeague: That part of the analysis and extrapolation is always kept in-house. This is not something that will be brought under the rubric of commercialization or something for which you will go to a private sector, independent analyst. This is done in-house, is it not?
Ms Kinsley: No. In fact, we use an external actuary, who values the position of the fund on an annual basis. Currently that actuary is a private sector firm out of Montreal. From that standpoint we have an independent review and a formal report submitted to management and the board on the financial health of the fund yearly.
Mr. McTeague: I have no further questions, Madam Chair. Thank you.
The Chair: Mr. Bryden, please.
Mr. Bryden (Hamilton - Wentworth): Actually, I'll pass for a minute.
The Chair: Mr. Jackson, then, please.
Mr. Jackson (Bruce - Grey): Thank you, Madam Chair.
I guess the mandate for CMHC occurred simply because there was a shortage in housing and the government needed to step in. Is this process going to continue, or what's going to happen in the evolution of the CMHC? Is there any vision as to what is going to take place as we look towards different ways of providing resources?
Mr. Rochon: The vision we have is that CMHC will endure. CMHC will try to untangle itself from the day-to-day management of the housing stock that exists, and this is why we are entering into negotiations with the provinces.
We want to invest where the added value will be the greatest, which is in research and development. We want to continue to offer Canadians financing that is relatively economical, and this is why we will become more visible in the marketplace in terms of our insurance fund. We also have been asked by the government to become more active internationally, to assist the Canadian developers and builders in exporting the Canadian housing system, as we call it, which are all facets of activities that come into building a home. We are gradually trying to find a niche for ourselves on the international front. Basically we are becoming a financial institution much more and a research institution much more than we were in the past.
Mr. Jackson: Thank you.
The Chair: Mr. Crête, please.
[Translation]
Mr. Crête (Kamouraska - Rivière-du-Loup): I would like to discuss a problem that I encounter systematically in my riding. The strategic initiatives include a grant for renovations of up to $2500 for seniors, but that is not where my problem lies.
At present, in a lot of rural parishes, there are projects to build residences for independent seniors. Very often, the community and the seniors themselves have a substantial equity in the project.
.1135
Systematically, in examining CMHC guarantees, we see standards and criteria being applied which most of the time exclude small communities. To ensure their economic future, small municipalities have to keep people at home.
In my riding, the city of Rivière-du-Loup is the hub of the area. Several seniors from surrounding villages end up there, because there are centres. The municipalities realize that, and they would like to have small senior residences. As far as I can, there are no programs that could lead to interesting openings.
Systematically, with almost all requests that end up with CMHC, the response is that the market will not allow it, that there is no certainty that the units will be occupied.
Do your operations include any kind of opening in that respect? What are the reasons for this type of attitude?
Mr. Rochon: I will ask my colleague, Mr. Defoy, to respond to your question, sir.
Mr. Poirier-Defoy: Since there is no more direct subsidies, it is increasingly difficult to fund organizations or projects of that nature.
However, there are...
Mr. Crête: I'm not talking about social housing units.
Mr. Poirier-Defoy: No, no.
Mr. Crête: This is not necessarily subsidized housing.
Mr. Poirier-Defoy: To offset this, there is a public-private partnership centre at the Corporation. A considerable amount of progress has been made in recent years, primarily this year, where over 62 projects were funded.
When third parties like churches or communities take things into their own hands and provide land or some form of security, we extend our standards considerably.
However, we have to ensure the project is viable. The insurance fund cannot allow itself to face a potential deficit when it faces a one or two-year default.
When a good market study has been conducted, we are in a position to provide the necessary assistance. We even have a start-up fund of up to $75,000 which is available to organizations.
However, I must point out that in Quebec, we've not had the same response as elsewhere. Where does the problem lie? I can't say exactly, but there are some provinces where it works extremely well. The start-up funds are used. We have not had many requests for start-up funds in Quebec. The funds are available.
I am willing to provide you with the information you want on the public-private partnership centre which, I believe, compensates for this problem to a large extent.
Mr. Crête: I would greatly appreciate obtaining this information so that we can analyze the reasons why this program doesn't work as well in Quebec as elsewhere. I may be mistaken, but I'm under the impression that it is caused rather by a lack of openness on the part of the Corporation. I am sharing my perception with you, and I am not indulging as partisan politics in this regard. When I have the information, I will undoubtedly find it very interesting.
Regarding loans already granted, this is the opportunity to remedy certain situations. In my riding, there is a seniors' residence which has been accepted by the CMHC. And there are a few other examples.
Over the past few years, has there been a change or a tightening-up of your practices which has made you approach - I do not mean to insult you - look more and more like that of a bank, and less and less than that of a public organization? One might wonder what distinguishes your services from those offered by banks. In my view, the CMHC is supposed to offer possibilities other than bank programs.
Mr. Poirier-Defoy: Three years ago, the Corporation undertook an initiative which greatly improved the lot of non-profit organizations.
When the government decided to offer direct loans to non-profit organizations and cooperatives, we did in fact replace the banks, but at a better rate. That enabled non-profit organizations to make reduced capital and interest payments as compared to what was happening in the past. We replace the banks because now, non-profit organizations must be funded by the corporation.
We do not need to prove that we've always been more sympathetic than the banks.
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Mr. Crête: My question was not so much on non profit organizations as in the operation of profit-based organizations which are sole owners. In several areas, we're under the impression that, for example, for property transfers, the standards applied to the initial project had to be tightened up.
Has your mandate changed or have you been instructed to be more strict? Have losses forced you to adopt such an attitude? But here again, this is a perception. At home, it is not necessarily easy to deal with the CMHC.
Mr. Poirier-Defoy: You should not confuse us with a bank. You're talking about funding that is not guaranteed by the corporation, but by the private sector. The banks have lent the money for the buildings in question.
Mr. Crête: With guarantees.
Mr. Poirier-Defoy: The loans are often guaranteed. Banks often use the name of the corporation in vain and pass us as the villain, saying that the conditions and standards are required by the corporation, which is not the case. The risk must be taken into account, because the money belongs to the bank, it's the lender's money. The bank decides how it will renew the loan and what conditions it will impose. All we do is guarantee the bank loan. We have no direct contact with the client.
A very simple answer to your question is that there has been no changes. The banks have tightened up their credit, but as for us, there have been no changes.
Mr. Crête: There certainly is the effect of the decrease in staff in the regional offices. At home, in eastern Quebec, the territory that your representative has to cover is absolutely incredible.
Mr. Poirier-Defoy: I know that our Rimouski office is closed. You are probably referring to that office.
Mr. Crête: It is not so much the fact that it is closed, but that could be one of the reasons why we have not been as successful in...
Mr. Poirier-Defoy: There is that perception, but I can assure you that with today's technology, we provide service within 24 to 48 hours.
Mr. Crête: There is a difference between looking at a file on paper and going out to see what's really happening in the municipality. The person's perception is different. If the person is all alone or if there are very few people to do it...
I'd like to come back to the issue of the difference between Quebec and the other provinces. You say you have noted a difference, but you've not done any analysis to determine the cause of the difference. In your view, what is the main reason why the start-up fund is used a lot less in Quebec than in any other provinces?
Mr. Poirier-Defoy: We looked into the issue because it bothered us. Quebec is not the only province in the same situation. Other provinces are slow as well.
Mr. Crête: Which other provinces?
Mr. Poirier-Defoy: I could name the provinces where the fund has really caught on: British Columbia, Alberta and Ontario quickly realized there were start-up funds.
Our initial conclusion was that there needed to be a better partnership among the various stakeholders, primarily the town, the community, the province and us. We cannot be the only partner involved. There has to be a partnership among the three levels of government and we have to keep working on it. That is clear.
The Chair: Thank you.
[English]
Mr. Gilmour, you have the floor.
Mr. Gilmour: Mr. Rochon, you mentioned you may be expanding into the international market. I find that a little puzzling. Where in CMHC's mandate would you be on the international scene? I have some difficulty understanding the mandate and which areas you would expand into.
Mr. Rochon: Basically, the approach is that a number of developing countries have massive housing needs, low-cost housing needs. We are the preferred instrument of the Government of Canada in terms of housing systems, how a house is put together, how building practices are improved and so on and so forth. We've been recognized nationally and internationally as providing excellence in this fashion.
So the government is asking us to monitor the needs of foreign countries and try to present the Canadian point of view, the Canadian way of doing business and the Canadian way of putting a house of quality together. Behind us come the business people who design the houses, build them, and so on and so forth. So basically we are trying to increase exports through the good offices of CMHC, working through Canadian embassies abroad. It's that simple.
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Mr. Gilmour: Would this be in the form of aid?
Mr. Rochon: No, we bring no money. We just bring expertise. We demonstrate the quality of the Canadian product to our interlocutor in order for that person to develop an appetite and come our way, rather than go to another country for these types of services.
Mr. Gilmour: Thank you, Madam Chair.
The Chair: Mr. Bryden.
Mr. Bryden: In the past and today, do you subsidize and support housing for specific cultural groups, ethnic groups? Has that been a practice in the past and is it a practice today?
Mr. Rochon: No. There are some residences dedicated or built by churches or associations and so on, but we do not support specific groups of any type.
Mr. Bryden: Okay, but I notice in your annual report that you do support urban native groups. Is that not a cultural group, in your eye?
Mr. Rochon: Urban native groups?
Mr. Bryden: Yes, I see that you have various programs involving urban native property management. I presume they support units that are specifically earmarked for urban natives. Is that so?
Mr. Rochon: Yes, that is correct.
Mr. Bryden: Do you not make a distinction between aboriginals as a group and other ethnic or cultural groups?
Mr. Rochon: In this case we do. These are migrant aboriginals. We have programs on reserves and we have programs for migrant natives living in urban centres.
Mr. Bryden: What I'm driving at is that this is an exception. Aboriginal groups are an exception and these are particular groups you support in public housing in urban centres whereas you don't normally support other ethnic groups in the same sense.
Mr. Rochon: That's correct.
Mr. Bryden: Okay. Is that policy? You don't, say, support a Portuguese group wanting to produce assisted housing for Portuguese.
Mr. Rochon: If a Portuguese group comes to us for insurance because they want to put a project together, we'll look at the business case and we'll decide whether we insure that project or not. It's open to any citizen or groups of citizens who have a need.
Mr. Bryden: That's what I'm trying to drive at. So there's no really special provision for aboriginals.
Mr. Rochon: No. This is an initiative of the Government of Canada. Over the years money has been targeted to native Canadians living outside reserves.
Mr. Bryden: I notice in your annual report you say CMHC will publish an urban native property management manual and an urban native tenant counsellors guide. Can you tell why it's felt you have to produce such a document for urban natives as opposed to other citizens or other people who may be in social or public housing or CMHC-assisted housing?
Mr. Rochon: The government has asked us to focus on this population. In terms of the research being done, I'll ask my colleague, Doug Stewart, who's responsible for research, to give you more information on this project.
Mr. Douglas A. Stewart (Vice-President, Policy and Research, Canada Mortgage and Housing Corporation): The key thing to remember here is that we have a specific program. The two initiatives you refer to are geared to make that program work better. We are expending moneys in support of those housing units, and those two documents are aimed at ensuring that money is spent most efficiently.
Mr. Bryden: So there is a perception that it's necessary to support this type of program as opposed to any other social housing you have. I could understand if you had a manual for everybody that tells them how to run these projects. But it would appear you see a special case here.
Mr. Stewart: In the past those types of documents have been produced for the broader social housing portfolio. But there are some particular requirements for this particular program, and it was thought a particular type of document would be required.
Mr. Bryden: I take it this is a program that has been driven by Indian and Northern Affairs, not by CMHC. Where is it coming from? It's not something you initiated yourself.
Mr. Poirier-Defoy: The urban native program is a specific program the government has asked us to deliver for a number of years. It's fully targeted to low-income aboriginal people. Of course, we don't have any more money. So those 10,000 units are an existing commitment. We're not providing any more subsidy to urban native programs.
Mr. Bryden: Are you still going to continue to build units on reserves though? Are subsidized units being built on reserves?
Mr. Poirier-Defoy: Yes. Because of the fiduciary obligation of the government we will remain involved on reserves.
Mr. Bryden: Will you be implementing or in any way taking into account the government's newly announced program for business set-asides for aboriginal companies? In other words, will these units being built on reserves be subject to the considerations of the aboriginal set-asides by companies that have aboriginal content?
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Mr. Rochon: This will be handled through a proposal that will shortly be made by Minister Irwin to cabinet in terms of a renewed approach native housing.
Mr. Bryden: So the answer is yes, that new housing on reserves financed by CMHC or in any way supported by CMHC would be affected by the program put forward by Mr. Irwin, which would require aboriginal companies to execute the contracts.
Mr. Rochon: I'm not aware of what precisely is the proposal in Indian Affairs.
Mr. Bryden: But you do know it's coming, I take it.
Mr. Rochon: Yes.
Mr. Bryden: Out of curiosity and for the benefit of the committee, could we have a copy of the special examination of the CMHC done by the Auditor General? Would that be appropriate?
Mr. Rochon: Karen, do you want to...?
Ms Kinsley: We have released the results of the special examination, which is the opinion of the Auditor General. In fact, there are excerpts of it in our 1994 annual report. We're quite happy to release the opinion and what we call the corporate representation, which is the summary of the findings within the document. The full body of the report itself is not something that is in the public domain, but the summary and the opinion are.
Mr. Bryden: So the full body is not in the public domain. Why not? Is there something in it that is...? I mean this very candidly: why would you not want to have that in the public domain, or at least available to MPs of this committee?
Ms Kinsley: Our reasons are twofold. One is that we look at it like a corporate plan and a corporate plan summary. The summary of a corporate plan for crown corporations is a document that's in the public domain, but there is an element of commercial information in a full corporate plan itself that the government recognizes is not appropriate to have in the public domain. It therefore requires us to present a summary of that for parliamentarians and other shareholders. In that same way, we provide a summary of our special exam as well as our opinion.
I should point out that we're probably one of the few who actually make any portion of that public.
Mr. Bryden: Yes, I appreciate that. That's why I'm asking the question.
The problem though is that if no one other than the corporation and the Auditor General has access to this information, there's no real way of assessing it. Would it be acceptable to table the entire document for examination by this committee in camera? Would that be a way out of the problem? I don't think these committee members would be out broadcasting corporate secrets.
There's an important principle here, and that is that this committee, with some restrictions, should have access to everything that goes on. At least that's my opinion. Is there any way we can resolve this?
Ms Kinsley: Perhaps we should go back and look at the accountability framework set out in the FAA in terms of the special examination process and the accountability framework that references the corporation's responsibilities and those of the board, the minister and ultimately the Government of Canada. The special examination document is tabled to the board of directors of the corporation. It is only on exception provided under the FAA that the special exam results would be brought forward to the minister, and even further still on exception brought forward to Parliament. I think it's for that reason that a lot of crowns haven't made their results public - because they consider it to be a corporate document.
We don't take that view and have shared our results in broader forum. It is not a cornerstone of the accountability regime as laid out by the FAA to Parliament.
Mr. Bryden: How often does the board meet?
Ms Kinsley: Seven times a year is our average.
Mr. Bryden: Okay. Is that sufficient to intelligently monitor the corporation?
Mr. Rochon: I think so.
Mr. Bryden: Fair enough. Can you tell me how much they're paid?
Mr. Rochon: I don't have those figures handy.
Mr. Bryden: That's okay. I think I can actually get those figures.
Can I find out how much you're paid?
Mr. Rochon: Yes.
Mr. Bryden: You'd be willing to table that information for the - -
Mr. Rochon: We can give you the range for my position.
Mr. Bryden: What's the range?
Mr. Rochon: The range for my position is $154,400 to $188,500.
Mr. Bryden: Okay. That's very handy. Thank you very much.
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Mr. Rochon: I'm told that the board of directors, other than the chairman, are paid a per diem in the range of $310 to $375 for attendance at meetings of the board and its committees, and a per diem in the range of $310 to $375 for other services in respect of their offices as directors.
Mr. Bryden: So you have no objection in principle to what the Ontario government did, which was to require the disclosure of salaries of individuals earning above a set benchmark - they used $100,000. In speaking for CMHC, in principle you would have no difficulty with that?
Mr. Rochon: I never said that; you are saying that. I'm saying the position of the Government of Canada is to publish the range one is paid within. As for my precise salary, that is personal information, which I'm not willing to share with you at this time.
Mr. Bryden: I see. Would you be willing to share with me the salary ranges of everyone earning more than $100,000 at CMHC?
Mr. Rochon: Yes.
Mr. Bryden: Thank you.
[Translation]
The Chair: Mr. Fillion.
Mr. Fillion: I'm referring to the CMHC contribution to deficit reduction. In the fifth paragraph, on page 5, you say:
- These reductions will come from efficiencies anticipated in these years. For example, our direct
lending initiative is currently saving one-half a percentage point on the interest payments made
by social housing groups. This generates savings in our subsidy requirements while meeting our
current financial obligations.
Am I to understand that cooperatives are bearing the brunt of these savings, since you will be providing them with fewer subsidies? Are we in the process of generating savings on the backs of cooperatives which used these subsidies to reduce the cost of housing or to manage their operations. Am I to draw a parallel between that and the economies of scale that you are making with cooperatives?
[English]
Ms Kinsley: No, in fact that is not the case. In large part the savings are coming from our efforts to refinance social housing projects at lower rates than they've previously been financed at in the private sector. So this is not affecting either the operation of the project in terms of its requirements or the constituents in the projects in terms of their needs. This is purely an economy in the financing of the projects that will in part be redirected for deficit reduction purposes.
[Translation]
Mr. Fillion: There is an expression in the government's budget that I have trouble grasping. I would like to know the nuances. The government intends to operate its mortgage insurance fund on a more commercial basis. What exactly does that mean? Is the bottom line that there will be fewer possibilities to obtain subsidies for social housing units? What does the government mean by «operating the mortgage insurance fund on a more commercial basis''?
Mr. Rochon: There is a difference between the social housing issue and the insurance fund. These are two different products, two different business lines. There is now an American competitor in the market. As its goal is to make money, it is choosing the best risks.
The more the competition chooses the best risks, the more our risks increase, because we are also an insurance company. If the risks increase too much, we will be forced to increase premiums and Canadians will be forced to pay more to improve their housing. So we have asked the government to let us be more aggressive on the market and adjust our approach based on the marketing and sales strategies used by our competitor; no more, no less.
Mr. Fillion: Will that not have an effect on housing? Will there not be less money available to upgrade or build housing units?
Mr. Rochon: Not at all.
[English]
The Chair: I have two follow-up questions. One pertains to Mr. Fillion's question about the concern that social housing may be deteriorating. It's kind of a subjective question, so I just throw it open for discussion.
Is it your opinion that the government's role should be as a provider of housing rather than provider of individual financial support to afford private housing? I guess I'm asking whether we should be in the business of building units rather than giving individuals access to money to afford decent housing.
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Mr. Rochon: I believe, Madam Chairman, the government has decided that it will not build housing any longer. It will try to assist through other avenues those who are in greater need.
The Chair: Can you give us insights into any pending legislation?
Mr. Rochon: We are coming to the government with a cabinet document that will outline how the new direction the government's asking us to take will impact on the current legislation for the National Housing Act and the CMHC Act. Should the government agree with what is being proposed, I presume there will be legislation affecting CMHC presented in the House in the fall. I hope there will be legislation affecting CMHC presented in the fall.
The Chair: Thank you.
I have one last quick question. I understand that the Auditor General of Canada has undertaken to give an award for excellence in annual reporting by the crown corporations. Has the corporation participated in the five-year award program? If so, I guess I'm asking for an honest and frank appraisal of how you did.
Mr. Rochon: Madam Chairman, this is an interesting question. We do participate in the contest the Auditor General has launched, and it has been so successful for us that it is the private sector that is sending us plaques and medals and awards for the quality of design and for the quality of our annual reports over these last few years. Unfortunately, we haven't brought the plaque, but one came in recently. Yes, we are participants, and at some point I am sure the taste of the Auditor General will improve to the point of recommending CMHC for another prize of excellence.
The Chair: On that happy note, I think I'll bid you adieu and thank you for appearing before us. I think I can safely say on behalf of all my colleagues that one thing the housing corporation does have is experts and a great deal of talent. Thank you for appearing before us and I'll hope you'll come back again.
Mr. Rochon: Merci, Madam.
The Chair: We have some unfinished business to attend to. Mr. Gilmour was kind enough to provide us with his notice of motion last week. He is moving that the Standing Committee on Government Operations study vote 1 under the heading ``Parliament'' of the main estimates and that the committee invite the chair of the Senate's board of internal economy to appear as a witness.
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Before we actually vote on the motion, I have a few notes that I would like to impart to all of you.
Maybe Mr. Jackson should be at the table.
Apparently the Senate estimates have never been studied by the House of Commons, so this would certainly be a first if it passes. The practice -
Mr. McTeague: Excuse me. On a point of order, is this to be broadcast?
The Chair: Is there any objection to having an open meeting?
Mr. McTeague: It was just a question.
The Chair: We're an open committee.
[Translation]
Mr. Fillion: It has to be open.
[English]
The Chair: We're an open committee.
[Translation]
Mr. Crête: The more open these proceedings are, the better it will be.
[English]
The Chair: The practice is that by a reciprocal arrangement the Senate does not generally look into House of Commons estimates and the House does not look into the Senate estimates. However, in the 1970s and early 1980s, apparently it happened that a House of Commons committee did send a letter to the Senate asking for a letter attesting to the fact that they looked at the Senate estimates for the year.
Apparently, not long ago, in 1990, a motion was adopted by unanimous consent in a House of Commons committee to invite the Senate concerning its main estimates. I have some documentation that I'll happily make available to you.
I'm told that it's a long and complicated process with no guarantee of success. If the motion is adopted by the committee, the committee would have to table a report in the House and the House would have to debate and adopt the report. A message from the House would have to be sent to the Senate requesting that the Senate grant leave to attend.
So with these notes, I leave you to deliberate and vote on the motion.
Also, most importantly, there is no guarantee that the Senate, even if we choose to invite them, would agree to come before us.
Mr. Bryden: They would require an agreement. They would have to volunteer to come. It's not like other witnesses.
The Chair: That's right. It would be voluntary.
Mr. Bryden: Can I ask Mr. Gilmour what he's fishing for? What's the intention?
Mr. Gilmour: There were a couple of points. There was a $250,000 committee expense and Senator Kenny is looking for an additional $4 million, preferably $7 million. I think in terms of accountability there should be some mechanism to have a look. I'm not looking for skeletons in the closet, I'm just looking for accountability and basically an up-front use of taxpayers' money.
[Translation]
The Chair: Do you have a comment, Mr. Fillion?
Mr. Fillion: Madam Chair, we will be in favour of Mr. Gilmour's motion for the following reason: it is the government that gives the Senate money. Therefore, we have to be accountable for that money, and I think we are entitled to know how the money is managed. Of course, this approach may seem very complicated, and someone will say: ``We will not go through with it."
Even if it almost never happened in the past, that does not mean that we should give up. At some point, we have to know what is going on, and this is one of the ways our committee can do so.
Whether the approach be long or very short is of no importance to me. What is important is getting these people to appear before the committee. The committee has the necessary mandate. Therefore, I would support the motion.
[English]
The Chair: Is there any further debate? Mr. Jackson?
Mr. Jackson: Madam Chair, I haven't quite made up my mind on whether or not I'll support this motion. The problem is that the motion came at me without any prior notice. When I vote on anything, I like to have all the facts.
The Chair: Mr. Jackson, as a point of clarification, they were sent to your office.
Mr. Jackson: We just had a notice of motion, but I didn't see anything about the Senate on it. I had a notice of motion, but it didn't say anything about the Senate, did it?
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The Chair: Let's see what the motion means.
Mr. Gilmour: It was exactly the same as this.
Mr. Jackson: Anyway, the point is that this place is designed in a certain way and it's a convoluted process under the British democratic process that we use. Personally, I think we have to work with the Senate. The Senate approves bills that leave the House. I think there are probably appropriate processes in the Board of Internal Economy and other places to get the information. I'm partial probably at this time. Because I haven't had enough information, I'm going to vote against the motion.
Mr. Bryden: I take the view that the highest authority in the land is the elected officials represented by the House of Commons. The Senate is not elected. Just as in any other area, the bureaucracy is not elected. They are appointed or employed or whatever is the case.
So as the highest authority in the land, which is represented by this committee, I think we have a right and a duty to examine every area of government, including the Senate. So I would support the motion.
Mr. McTeague: I have more or less a query that will help me as far as my deliberation is concerned. Does the Senate have the ability or is there a mechanism, an outlet, that exists to anyone's knowledge that allows them the process of a self-examination that is public? In other words, would what we are doing here be considered redundant to what they do? Does anybody know that?
The Chair: It's my understanding they have something equivalent to our Board of Internal Economy.
Mr. McTeague: My heart tells me that what Mr. Bryden said is very much the right thing to say and it's the right way to go. My head also tells me that Parliament is divided into two chambers. Until such time as we decide to disband the other, this may be seen as trespassing on the privileges of that particular part of the Parliament.
I'd like to know more specifically if anybody could tell me what process is involved where the Board of Internal Economy comes public or in other words comes clean with how they dispense and spend taxpayers' money. I just want to know if they have a public process.
The Chair: It's my understanding that senators can ask questions in the chamber. They also have the finance committee, which studies the estimates.
Mr. McTeague: Okay.
The Chair: Is it the will of this committee that we seek further information?
Mr. McTeague: It is. I'm not trying to suppress the good motion that's been put forward here. I just want to know if what we're doing here is already being done in other committees. If that's the case, then I think we have to accept the fact that we might be perceived as intruding on them without justification or just cause. That's my only concern at this point.
Mr. Bryden: Mr. McTeague's remarks are very well taken. However, I'm hung up just on the fundamental principle. We are the highest authority in the land. If this committee decides it wants information from any other agency or body in the land, we should be entitled to get that information.
Mr. Jackson: I agree with Mr. Bryden, but it's not about information. My comments have nothing to do with information. I think we should get information. I think everything should be open and information should be available. But I tend to think this information is available and there probably is another arena where the same information could be had.
The Chair: Mr. Gilmour, I'm just wondering if you'd be in agreement that we submit a list of questions to the Senate and see if you obtain the response you would like. From my understanding, it's a long and complicated process and it may not even in the end result in the answers you're seeking.
Mr. Gilmour: It's long and complicated for a reason, and that's to make it difficult to get the answers we desire. I'm afraid I'm just stepping on people's toes. We're talking about taxpayers' dollars and how they're being spent. I think that is perfectly valid.
This is the committee that happens to be the one that studies the estimates for the Senate. I just feel it's appropriate and it's timely that we have the chair of the Senate's board of internal economy here. He can tell us if there are other areas that are being done that are duplicated and he can bring it with him. I just think it's prudent for us to do that.
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The Chair: A final word by Mr. Crête.
[Translation]
Mr. Crête: We will perhaps be setting a precedent. I am in favour of being innovative and ensuring that the Senate, which is comprised of non elected people, is held accountable for this situation before elected representatives.
These days, people are looking everywhere for money and criticizing the government for the way it spends, and this is an expenditure by an organization over which we have no control.
If members of Parliament make mistakes regarding budgets, some pay for it in the next election. Some mistakes are corrected through the choice electors make, but Senators do not have that type of obligation.
Personally, I do not think it would be a good strategy to simply ask specific questions. Meeting with them would enable us to get an overview of the situation. I think that would be a better way of proceeding.
[English]
The Chair: Perhaps we can call for a vote. Essentially we are asking the Senate to appear and they're under no obligation to come before us. So I'd like to call for the vote.
Motion agreed to [See Minutes of Proceedings]
The Chair: Thank you very much. We are adjourned.