1 Notes for a Speech by the Minister of Public Works and Government Services The Honourable Diane Marleau, P.C., M.P. Minister Responsible for Canada Mortgage and Housing Corporation at the 54th National Conference of the Canadian Home Builders' Association Calgary, Albe(1:a February 10, 1997 "' Please check against delivery
2 Good morning. " Let me start by saying what a pleasure it is to address you today. For one thing it gives me a chance to congratulate your President, Jerry Roehr. Jerry, on the occasions we have had a chance to meet I have always been struck by your keen understanding of the issues confronting your industry, and your commitment to promoting the interests of the members of CHBA. I would also like to welcome your incoming President, Bob McLaughlin. Bob, I know you bring a great deal of experience to your new position and I look forward to working with you, and to continuing a productive partnership. CHBA and the Federal government have a lot in common. Your priority is building homes, and the key to building homes is a solid foundation. One of our priorities is job creation. And the key to that is a solid economic foundation. You know as well as anyone that jobs and economic growth don't simply appear. They're the result of entrepreneurship, -consumer and investor confidence, access to capital, effective use of technology, a trained workforce, and growing exports. In your business, you get an early look at both sides of the cycle. Housing starts are one of the clearest measures of how well the economy is doing. People buy a home when they have a job, when they're confident they'll keep it, when interest rates are low, and inflation is under control. These elements are as essential to a sound economy as a solid foundation is to a stable house. Over the past three years and a half, our focus has been on economic fundamentals and we've made it our priority to ensure they're in place. The first was to create an environment for lower interest rates. The most effective way to get interest rates down is to get government finances under control. When government takes up too much of the capital pool, everyone else gets squeezed. The federal government is making more room in the pool. Our target when we took office in 1993 was to reduce the deficit from 6 per cent of Gross Domestic Product to 3 per cent. We achieved that goal ahead of schedule; the deficit will be down to 2 per cent of GOP by next year; it's on track to come down to 1 per cent before 1999; and we are committed to eliminating it. Another element was deficit reduction and we're meeting it head-on. Rather than increasing taxes, we've cut spending. In the last three budgets spending cuts account for almost 90 per cent of the deficit reduction. By next year, program spending will be reduced to 12 per cent of GOP, its lowest level in 50 years. The results can be seen by anyone who wants to start a business, expand a business; or buy a home. Short-term rates are down by more than five percentage points since early Canadian rates are lower than the United States. The bank rate is the lowest it has been since 1964.
3 A report last fall by one of the banks pointed out that payments on a $100,000 mortgage cost $765 a month. In 1990, the same mortgage would have cost $1,200 a month. That's a difference of more than $5,000, or the equivalent of getting an $8,000 raise. Lower interest rates are making it easier for families to buy homes and for you to build them. " Another part of a solid economic foundation is low inflation, which allows people to spend on long-term needs. Inflation is now at its lowest level in 30 years, and Canada has one of the lowest inflation rates in the industrialized world -making it easier for families to buy homes, and for you to build them. A solid economic foundation has to include consumer confidence. Deep recessions at the beginning of both the 1980s and 90s undermined confidence, and restoring it had to be a major priority. Low interest rates, deficit reduction, and low inflation are turning the tide of consumer confidence. These strategies are contributing towards the growth we are seeing, growth you can feel in your sector. The figures for January housing starts are out today, and they are the best since November CMHC forecasts a 14 percent growth rate in housing starts this year. Spending on housing renovation is forecast to increase by 5.6 percent. This should translate into 13,500 direct jobs in That's really the bottom line - jobs across all sectors of the economy. More than 660,000 jobs have been created in the past three years. These are good results. But we can do better - and I'm confident we will. Getting the basics right is essential to a solid economic foundation, but in our globalized economy the basics are broader than they used to be. If our future is to be brighter, we must invest in it. Government does not have the resources to do everything. The days of big government are gone. People now want smart government. The federal government must concentrate on what it needs to do to ensure a vibrant Canadian society while clarifying and strenghtening its partnerships with other levels of government and the private sector. We have to make strategic choices, and invest in areas where we get the biggest bang for our buck. We have chosen to invest in three areas: Trade, technology, and people. As you know in your own industry, international markets are opening at a staggering speed. Exports are the engine of the Canadian economy, and low interest rates and a low inflation rate are stoking that engine. But government's role doesn't end there. Pro-active efforts like Team Canada help maximize trade opportunities, and federal government support for export financing helps exporters take advantage of them. The potential benefits are enormous. For every $1 billion of exports, more than 10,000 jobs are created in Canada - in your industry and for your potential customers. In the construction industry, you also have a keen understanding of the importance of innovative technology. The Technology Partnerships Canada program has been set up to. encourage the development of environmental technologies, advanced manufacturing and materials. The Business Development Bank has been given a new mandate, which includes emphasis on knowledge-based, exporting growth businesses.
4 And all industries understand the importance of providing opportunities for young people. As homebuilders, young people are your best new market; as parents, they are your most important concern. The federal government is increasing education tax credits, and increasing the limits on contributions to Registered Education Savings Plans. We have reallocated more than $300 million to create new youth employment opportunities. We're making it a priority to help young people get the first step they need to build a career, a home, a family. Government can't achieve these goals by itself. We have to form strategic partnerships with the private sector. You're the people who know how to create jobs. As the minister responsible for CMHC, I know that home builders are important partners. You are also important partners when it comes to promoting exports. Last year, Canada exported more than $15 billion in housing-related exports. Housing firms have been involved in Team Canada to help bolster this performance. CMHC led a trade mission to Korea in April last year which helped to develop strong business relationships. During the recent Team Canada trip to Korea, five Canadian housing firms signed ten contracts worth over $29 million. We have been working with your industry to identify potential opportunities in foreign markets, and the impediments to taking advantage of them. As a result we have a wealth of valuable information to make available to you, including risk assessments and descriptions of the business culture in national and regional markets around the world. We are also providing a high-tech link between foreign demand and domestic suppliers with the ability, willingness, expertise and commitment to deliver housing-related goods and services into specific foreign markets. Some countries require government involvement in any business transactions. The Government of Canada can help open doors for your industry in many of these markets, such as China. You are also important partners when it comes to technology. Canadian consumers benefit from a housing industry capable of producing high-quality housing with state-of-the-art technology developed through years of research. We have also worked very hard at renewing CMHC's mandate and, I believe, we've done good work to get government right. That is why we are re-engineering our mortgage insurance business to ensure low cost housing financing continues to be available all across the country while competing on a level playing field with the private insurer. And that is why we are playing a more pro-active role in encouraging the export of Canadian housing products and services. As part of the renewal of CMHC's mandate, the Federal government has offered the provinces and territories the opportunity of assuming the overall administration of social housing while respecting our financial commitments in this sector. By providing one-stop shopping, we can reduce costly overlap and duplication, while making more efficient use of resources available for assisting low income Canadians. CMHC's new mandate also reinforces its commitment to provide support through research and information transfer, as well as market analysis. Partnerships between your association and CMHC have yielded enormous benefits over the years, including joint initiatives such as the Affordability and Choice Today program and the Renovation Demonstration Initiative, and technical research projects we have undertaken together. CMHC will continue to work together with you in support of research and development activities leadingto the transfer of new technologies and building practices to the private sector.
5 And of course you're important partners when it comes to providing opportunities for young people. Your industry is a natural vehicle for young people. Its technologically advanced, and it has export potential. The federal government is pursuing partnerships to create entry-level jobs for young people. You and your association have a lot you can contribute to the effort. I hope you'll take part. I' We are pursuing several other initiatives that are important to your industry and many of the consumers you serve. Innovation and cost-effective client services are the focus as CMHC renews its mortgage loan insurance operations. The goals are improved housing affordability and choice, market efficiency and competition, and access to low-cost mortgage financing. Over the past 18 months CMHC has worked with its Approved Lending partners to re-engineer the process of assessing risk and delivering mortgage loan insurance for existing homeowner properties - which will be expanded to new construction by the second half of this year. If you want to get a sense of the efficiency of the new electronic mortgage loan insurance system, consider this: 15 years ago it took 15 days to process a loan application. Today it takes 15 seconds. That means consumer satisfaction through faster, more risk-free access to mortgage loan insurance. I know that another area you are concerned about is the underground economy in the renovation industry. Your industry is very competitive. It's been hard enough for builders and renovators to make a living in the past few years. You don't need unfair, dishonest competition making your situation even worse. You can't compete with those who choose to bypass the tax system for their own profit, at the expense of the greater society. We will continue to work with Revenue Canada toward our common objective of eliminating the underground economy, and once again give honest contractors the chance to compete on a level playing field. In consultation with your industry, Revenue Canada has instituted a voluntary Contract Payment Reporting System which will permit a more intense auditing of GST payments. For its part, CMHC is helping Revenue Canada to register contractors involved in CMHC programs. I talked earlier about the need to make strategic investments. CMHC has addressed this need by designing its programs to accomplish two goals at once: improving the housing conditions of canadians and stimulating job creation. As Canada's economic recovery continues, it is essential that we continue to invest in programs like these. That is why, today I am very pleased to announce the extension of 4 federal housing initiatives for 1 year. The first initiative is the Residential Rehabilitation Assistance Program - known as the RRAP program - which provides assistance to low-income Canadians to bring their properties up to minimum health and safety levels. Also, CMHC will require RRAP clients to file an invoice for work completed, which will make it easier for Revenue Canada to reduce tax fraud.. The second initiative is the Emergency Repair Program which provides assistance to homeowners in rural and remote areas to undertake emergency repairs required for the continued safe occupancy of their houses. Thirdly, the Home Adaptations for Seniors Independence which provides assistance to adapt the homes of seniors facing difficulties in their daily lives.
6 And, finally the Shelter Enhancement Program provides assistance to finance the capital costs.of bringing existing shelters up to acceptable health, safety and security standards. The combined value of these four initiatives is 51.9 million dollars. I am delighted that we are able to extend these programs for another year. There are a number of ways we can work together. The federal government recognizes that with your industry we have the potential for a virtuous cycle. Jobs and consumer confidence bolster the housing market; a strong housing market creates jobs. A reduced deficit, lower interest rates, and a low inflation rate and are your industry's necessities - and the federal government's priorities. We intend to continue t.o do what you do - build a solid foundation for Canadians. Thank you.
7 Nous allons continuer de travailler avec Revenu Canada pour atteindre notre objectif commun, c'est-a.-dire eliminer I'economie souterraine et redonner la chance aux entrepreneurs honn~tes de se livrer une concurrence juste et saine... En consultation avec votre industrie, Revenu Canada a mis sur pied un systeme volontaire de declaration des paiements contractuels qui permettra une verification plus intense des paiements de T.P.S. Pour sa part, la SCHL aide Revenu Canada a. inscrire les entrepreneurs qui participent aux programmes de la SCHL. J'ai parle plus tot de la necessite de faire des investissements strategiques. La SCHL a tenu compte de cette necessite en concevant ses programmes de maniere a. atteindre deux objectifs a. la fois : ameliorer les conditions de logement des Canadiens et des Canadiennes et stimuler la creation d'emplois. Dans la foulee de fa reprise economique au Canada, if faut continuer d'investir dans ce genre de programmes. C'est pourquoi je suis tres heureuse de vous annoncer aujourd'hui la prolongation de quatre programmes de logement federaux pour une peri ode de un an. Le Programme d'aide a. la remise en etat des logements (PAREL) aide les Canadiens et les Canadiennes a. faible revenu a. redonner a. leur propriete un minimum de salubrite et de securite. En outre, la SCHL exigera des clients du PAREL une facture pour les travaux realises afin qu'il soit plus facile a. Revenu Canada de limiter les fraudes fiscales. Le Programme de reparations d'urgence vient en aide aux proprietaires-occupants de regions rurales et eloignees qui doivent effectuer des reparations urgentes pour que leur maison demeure sure pour les occupants. Le programme Logements adaptes : aines autonomes foumit une aide qui contribue a I'adaptation des logements de personnes agees qui ont de la difficulte a s'occuper de leurs taches quotidiennes. Le Programme d'amelioration des maisons d'hebergement contribue au financement des couts en immobilisations requis pour rendre les maisons d'hebergement acceptables du point de vue de la sante, de la salubrite et de la securite. Ensemble, ces initiatives totalisent 51,9 millions de dollars. Nous pouvons collaborer de diverses fayons. Le gouvemement federal se rend compte qu'ij peut, avec votre industrie, creer un cercle vertueux. Les emplois et la confiance des consommateurs renforcent Ie marche du logement et un marche du logement fort cree des emplois. Un deficit reduit, des taux d'inten3t a la baisse et un taux d'inflation faible, telles sont les cles du succes pour votre industrie, des cles dont Ie gouvemement federal a fait ses priorites. Nous avons I'intention de continuer ce que vous faites vous-meme : batir des fondations solfdes pour les Canadiens et les Canadiennes. Merci.