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Member of the panel of chairs for the legislative committees

Ken Hardie

  • Member of Parliament
  • Member of the panel of chairs for the legislative committees
  • Liberal
  • Fleetwood—Port Kells
  • British Columbia
  • Voting Attendance: 67%
  • Expenses Last Quarter: $140,090.09

  • Government Page
Context: House Hansard - 57 - Apr/25/22
Mr. Ken Hardie (Fleetwood—Port Kells, Lib.)
  • Apr/25/22 12:45:57 p.m.
  • Watch
Madam Speaker, the occasion to comment on the 2022 federal budget includes an opportunity not only to highlight certain aspects of the government's plan that people in Fleetwood—Port Kells and indeed right across Canada will find of great value, but also an opportunity to illustrate the budget as yet another sign of a choice Canadians have in their relationship with the federal government. Prior to 2016, we had 50 years of social and economic ideology that counted a great deal on the free market lifting us to prosperity. The results, though, have been economic and social inequities and gaps that have become more deeply rooted. The legislation our government has shepherded through Parliament, including our budgets, has sought to address the gaps that the free market cannot or will not address. These are economic gaps between those few who have the leverage to grow their wealth much faster and the rest of us, social gaps that threaten the well-being of too many marginalized people, and gaps in the security of achieving and maintaining a quality of life that those who work hard should reasonably expect in a nation as wealthy as ours. The highlights of budget 2022 I will cover today are the ones chosen by independent third parties. It is all right for us, as government, to say that this or that is important, but it is really interesting to see what people at street level, and the commentators and observers, have to say. My own thoughts will focus on areas where perhaps the budget itself has been silent. In the time available, I am going to concentrate only on the number one issue at home in Fleetwood—Port Kells: The budget's measures concerning housing. Budget 2022 takes steps to return some semblance of equity for first-time homebuyers. Here is an area where the underregulated laissez-faire free market has left the dream of home ownership entirely out of reach for too many and has left some Canadians literally out in the cold. The Edmonton accounting firm Hahn Lukey Houle highlighted the tax-free first home savings account, which would help first-time homebuyers save up to $40,000 to help with their down payment. Money going into the account would be tax-free and money taken out of the account to buy the home would be tax-free. The market could not offer something like this. Only the government could do it, and this one is. The market has been unwilling or unable to deal with practices that disadvantage homebuyers and distort prices along the way. The Vancouver legal firm Clark Wilson, the most named firm in rankings by the publication Business in Vancouver, highlighted the concept of a homebuyers' bill of rights in budget 2022. Over the next year, this bill of rights would put an end to blind bidding, where buyers have no idea what has been bid by others for a property. That is a key driver of higher housing prices. Prospective buyers would have the right to get the property inspected. Too often, it is a corner now being cut by people forced to rush some kind of a home purchase. There would be more transparency on the sale price history of properties and a new disclosure agreement for real estate agents if they happened to be working both sides of a transaction. The bill of rights could also include a requirement for lenders to offer a six-month deferral of mortgage payments when families experience a job loss or other major life event, such as a pandemic. Most media outlets have identified the provision in budget 2022 of a two-year prohibition in Canada on the sale of non-recreational residential property to foreign commercial enterprises and people who are not Canadian citizens or permanent residents. Exemptions to this ban are expected to include refugees, individuals in Canada on work permits and international students who could be on the path to permanent residency. That last group has been identified by people I have spoken with as one that needs to be carefully monitored, because many believe the treatment of international students creates loopholes for foreign capital to buy up real estate. Most commentators expected something on property flipping, and the budget delivered. Any individual selling a property that has been held for less than 12 months would be subject to full taxation on any profits as business income. The measure would apply to residential properties sold on or after January 1, 2023. There would be some exceptions to this for Canadians who sell their homes due to certain life events or hardship circumstances. Another version of speculative trading in the Canadian housing market has to do with assignment sales. Those occur when someone reaches a deal to buy a housing unit that has not even been built yet and then flips the right to buy the unit for a profit. This can happen multiple times as a townhouse, condo or home is under construction, and each time, the ultimate cost goes up for the family who will eventually actually move in. GST will apply to all assignment sales of newly constructed or substantially renovated housing. That is going to happen very soon. It will be a week from Saturday, in fact, on May 7. Storeys, a real estate news and industry publication, noted that the housing accelerator fund will apply $4 billion in 2022 to help municipalities speed up their development permit and approval process. I know this is a huge issue in Surrey, one of Canada's fastest-growing municipalities and soon British Columbia's biggest city, but the long lag to get construction approved by city hall is driving up the prices of finished homes because labour and material costs increase over time, especially during the long lag that it takes to get something built. Add the flipping and assignment sales and the development cost charges, and the cumulative impact on prices is significant. I have heard stories too about another area that we really have to pay attention to. During the two weeks we had away from Parliament, I had a chance to touch base with a lot of people. I heard stories of people who leveraged the lift in their own home's value to qualify for another mortgage to buy a revenue property. Then, using the rise in that property's value, they got another mortgage for another property and so on. Is this actually going on? It would be worth finding out, because it sounds like the whole thing is a gigantic bubble, and if it pops due to mortgage rate increases, the banks could end up owning a lot of property. Then there are trusts. The Globe and Mail, in an article focused on money laundering, noted the still unresolved issue of large, suspicious transfers between lawyers' trust accounts. These transfers are shielded from reporting requirements that are in place for banks, accountants, real estate companies and securities dealers. Even casinos have to report, but lawyers do not. In 2000, the federal government passed a law that allowed FINTRAC to carry out warrantless searches of law firms and seize materials. The Federation of Law Societies lawyered up, and by 2015 it was ultimately deemed unconstitutional by the Supreme Court, which told us to go back and improve the language. One would hope an improved version of that legislation is somewhere on someone's to-do list. More broadly, trusts are perceived as offering perfectly legal loopholes to avoid taxes and obscure the real ownership of property. Watchers at street level say there is a fairness problem here. While budget 2022 aims to tackle the long-standing need to identify the beneficial ownership of real estate through a public registry, right now it is only going to apply to federally chartered companies. This is a good start, but for the provinces it is voluntary, a gap that knowledgeable people say needs to be closed. Our government is attacking affordability issues that have been allowed to grow and mutate for decades. Fixing them is going to take time plus the talent and commitment to adjust and refine measures as we move forward. That said, all of us here should not underestimate the talent and commitment out there in the community to find ways around any step we take. This is more than a high finance or sound legal game of whack-a-mole. To the people faced with no prospect of qualifying for a mortgage, much less actually owning a home, this is not a game. It is in their interest that we get to the heart of a question our citizens ask at every election: What should government's role be when things are tilted against people? Just over a year ago, former Bank of Canada and Bank of England governor Mark Carney spoke about what the role of government should be if Canadians believe in free enterprise but with a social conscience. Mr. Carney called our free markets “the most powerful instruments we’ve ever created. Their energy and dynamism can be...directed to serve great purposes, but the market is also indifferent to human suffering, and it can be blind to our greatest needs.” That's why politicians who worship the market tend to deliver policies that hurt people, and those who default to laissez-faire, or who leave the free market to its own devices, leave us unprepared for the future. Put simply, as he goes on, “Markets don’t have values, people do. And it’s our responsibility to close the gap between what we value and what the market prices. That’s the work of politics.” Or, in a view well represented in budget 2022, it should be and it will be.
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