44th Parl. 1st Sess.
June 6, 2023 10:00AM
Madam Speaker, in his speech, my colleague talked about hope for families. However, right now, hope for families is diminishing for another reason, and that is the climate crisis.
The climate crisis is escalating. Forest fires are growing in number and intensity, and the fire season has only just begun. This creates anxiety for everyone, young and old alike.
Considering what we see when we leave the House of Commons, I would have liked the Conservative Party to say more about the climate crisis. Basically, what I want to say is that I am disappointed to see that the Conservatives have not progressed despite what we are now seeing across Canada from coast to coast to coast.
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Madam Speaker, unfortunately, I must rise today to talk about a crisis we are going to have to face in the medium term.
I am not talking about the fact that, right now, after eight years of this Prime Minister, nine out of 10 young people believe that they will never be able to buy a house. I am not talking about the fact that one out of every five Canadians are skipping meals because of the cost of food after eight years of this Prime Minister. I am also not talking about the fact that 1.5 million Canadians need to use food banks to be able to eat. I am not even talking about the fact that, after eight years of this Prime Minister, Canadians have to allocate 63% of their pre-tax income to pay their monthly housing costs. In Vancouver, they are using 98% of their pre-tax income.
That is not the crisis I am referring to. The crisis I am referring to is something no one is talking about, but that could explode if we do not change direction. The crisis is the following. When the government decided, in 2021 and 2022, to print $400 billion to finance excessive spending, one of the effects was to create inflation, which always happens when you print money. This also caused a huge bubble in our financial system, caused by the mortgage situation.
Huge numbers of Canadians took out mortgages because they were easily available and because of their artificially low cost. In fact, 38% of all current mortgages were taken out between January 2021 and June 2022. Almost 40% of all mortgage debt today dates from that 18-month period, because interest rates were extremely low. People decided to go to the bank, make changes to their mortgage and borrow huge amounts of money, because it cost almost nothing to borrow money from the bank.
The problem is that these mortgages have a five-year term. These high mortgages will all be renewed in 2026 and 2027, at a significantly higher interest rate. We are not talking about billions or tens of billions of dollars. We are talking about mortgages totalling hundreds of billions of dollars that will be renewed at a higher rate. Even the Bank of Canada acknowledged that it was a systemic risk, not only for people who took out mortgages, but also for the banks, which will probably have trouble getting their money back.
If families cannot pay the increased interest rates, what will they do? They will have to sell their homes. However, if everyone is selling their house at the same time and there are no families that can afford the increased interest rates, there will be sellers but no buyers. That could cause house prices to fall. We already have the largest housing bubble in the G7 and almost the largest in the world. What are we going to do about it?
We are stressing the importance of balancing the budget today precisely because that is a key element in avoiding this serious looming crisis. Even all the Liberal experts are saying it: deficits cause inflation. Inflation causes interest rates to rise. If we do not lower inflation rates over the next year, we will be unable to reduce interest rates in time to avoid a housing bubble in 2026 and 2027.
What we want is a government plan aimed at balancing the budget in order to reduce inflation and interest rates. I know that it is the Bank of Canada that sets interest rates, but the economic environment in which it makes these decisions is a determining factor.
If the government drives up inflation with inflationary deficits, the Bank of Canada will be forced to raise interest rates. Former minister of finance John Manley said that, when the Bank of Canada puts its foot on the brake, the government puts its foot on the inflation accelerator. We need to take our foot off the accelerator to reduce inflation and allow the Bank of Canada to reduce interest rates before the crisis hits. That is plain common sense. It is nothing new.
Deficits drive up inflation and interest rates. Balanced budgets reduce both. That is what we are going to do. We will put a ceiling on spending to eliminate deficits and waste in order to balance the budget, reduce inflation and allow all Canadians to continue paying their mortgage and keep their home.
We recommend that the government proceed with the utmost caution, and we are asking that it keep the promise it made six months ago to balance the budget in the medium term. As soon as the government does that, we will allow a vote and perhaps let this budget pass if the votes in the House permit it. It is just common sense. We will bring back common sense.
There is a crisis in this country, and the crisis is not just that 1.5 million people are eating at food banks or one in five are skipping meals because of the price of food. The crisis not just that a majority of Canadians now tell pollsters they are struggling to make ends meet or that even nine in 10 young people believe they will never afford a home. The crisis is not even that it takes 63% of average monthly income to make monthly payments on the average home, a record-smashing height. The crisis is not even that it now takes 98% of pre-tax income in Vancouver for the average family to pay a mortgage on the average house. Those things are all insane and unprecedented, but they are the reality after eight years.
The real crisis is that there is massive mortgage bubble that is ready to detonate in the years 2026 and 2027. Here is how this bubble occurred. Today, 38% of all mortgage debt was originated between January of 2021 and June of 2022, all when rates were at rock bottom because the government printed $400 billion of cash and pumped it into the financial system, causing it to be artificially abundant and artificially cheap. People took on mortgages they would otherwise not be able to afford. This inflated housing prices and mortgages together, but those mortgages come up for renewal five years later. That will be between January 1, 2026, and June of 2027. If interest rates are as high then as they are now, these people will run into a brick wall.
The Bank of Canada says that they will face a 40% increase in mortgage payments, so if their payment right now is $3,000, they will be paying an extra $1,300 a month, which equals almost $15,000 a year. If the average Canadian does not have more than $200 left at the end of each month, they will not be able to pay it. That will lead to mass selling and there will be no buyers because the buyers will not be able to pay the higher rates on those prices. That is a real crisis that we face if we do not change course immediately, so what must be done?
We need to reduce inflation so that the Bank of Canada can reduce interest rates. How do we do that? We do it by doing the opposite of what we are doing now. Even top Liberals, like former finance minister John Manley, have said that deficits are like putting the foot on the gas of inflation. What we need to do is take the foot off the gas to balance the budget, to reverse the $60 billion of inflationary spending that the government has put forward and to honour the promise the government made just six months ago to have a medium-term plan to balance the budget within a half decade.
If the government will do the common-sense thing, rise to its feet and present a plan to balance the budget, then Conservatives will allow a vote to occur. We know that the only way to rescue people from this crisis is through common sense: by balancing the budget to lower inflation and interest rates, bringing down the tax burden so that there are more powerful paycheques and allowing people to pay less and bring home more. This is just common sense. It is the common sense of the common people, united for our common home: their home, my home, our home. Let us bring it home.
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Madam Speaker, as we are all experiencing it today, there is smoke in the skies. We are clearly in a climate crisis. Instead of us moving forward in a direction to begin implementing sound solutions to address this climate crisis and the horrendous impacts we are all experiencing as a result, the Conservatives are playing games with stalling tactics, ensuring these are not being implemented.
Could my colleague share her thoughts on the importance of us putting into place sound solutions to address the climate crisis and to not see hold-ups and unnecessary parliamentary games to keep us from moving forward in a positive direction?
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Mr. Speaker, on July 1, while Canadians are celebrating Canada Day, Quebec will be marking a special day. It is moving day.
That is the day everyone moves. All the leases come to an end. The vast majority of Quebeckers who move to a new place or buy a home, although I do not think that anyone is buying a home right now, do so on July 1. Last year, in Montreal alone, 600 people did not find housing. This year, every organization is expecting it to get worse.
We are halfway through the national housing strategy that started five years ago. For five years, the Liberals have been saying that they are getting things done. Just this afternoon, the Prime Minister said that they are investing, that we are going to see a housing accelerator and that housing will be built. However, every organization is saying that this year, the situation is going to be worse than ever.
What is being done to deal with the housing crisis?
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Mr. Speaker, the member is right. Canada really does have an affordable housing crisis. We have indeed invested in a lot of programs to address that. There is still a lot of work to be done because it is true, the statistics cannot be denied. We continue to work hard to develop and finance good programs to try to make a difference.
I think it is very important for everyone here, the members from all parties, to work together to give advice and collaborate. We all have the same goals. We must recognize that it is a real problem; we have invested in possible solutions, but it is still a problem, I agree.
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