Mr. Ellis:

Would the minister not say that next year the same situation will apply; that the approved lenders might find it more advantageous to invest their money in other types of construction work; in other words, the situation which exists this year. What reason has the minister for suggesting that the situation will be materially different next year or the year after?

Mr. Green:

The situation has already changed considerably because money is now cheaper and the yields are not as high, for example, on bonds, and also the tight money policy is not in effect and it is easier for builders to borrow money from the banks.

Mr. Ellis:

If money is cheaper why can the effect of that cheaper money not be passed on to house builders?

Mr. Green:

I think that earlier in the year the situation was out of line. Mortgage lending was not an attractive investment. The position is now getting back to normal where you do not ordinarily expect to get the same return from a bond, a provincial bond, for example, as you would get from a mortgage. That was almost the situation last spring.

Mr. Marler:

I should like to add a few remarks to what has been said on the subject of the rate of interest. I think it is a fact that the increasing of the rate to 6 per cent during the early part of this year had the definite effect of increasing the supply of money for mortgages. I had the occasion earlier in the year, after the increase of the rate to 6 per cent had come into effect, to talk to the president of one of the large life insurance companies of Canada and he told me that as a result of the increase in the

rate his company was going to invest a larger sum of money in mortgages this year than they had originally planned to do. I think the truth of the matter is that though all of us would like to see a much lower rate of interest prevailing on mortgage loans the rate must always be set at a level which will attract not just government money but outside money.

The point I was trying to emphasize yesterday when we were at the resolution stage of the bill was that in the three years, 1954, 1955 and 1956, a period of great activity in Canada, a period of great development and a period when there was tremendous demand for investment moneys of all kinds for all kinds of purposes, more than $1,500 million was put up by the lending institutions of Canada to build, I would say, pretty close to

400,000 dwellings. Of the total, as I said yesterday, the amount put up by Central Mortgage and Housing Corporation was, I think, in the neighbourhood of $65 million. In other words, the government contribution was small and the lending institutions were satisfied with a lower rate of interest than now prevails to advance some $1,500 million. I hope, Mr. Chairman, that that situation is going to repeat itself and we are going to find that lending institutions generally will be attracted by the mortgage as a form of investment for their funds, that is to say, the funds of their policy holders and in some cases the funds of their shareholders.

But, Mr. Chairman, I should like to say a word in reply to what the minister said on the question of tight money. The fact of the matter is that you can call it tight money and try to attribute responsibility to the former government for that situation. If there is responsibility for the former government there is certainly responsibility for the present government which has done nothing whatever to change the tight money situation.

Mr. Green:

This $150 million is helping that.

Mr. Marler:

No, all the minister is doing by taking the $150 million and applying it to housing is to increase the amount available for housing but he is subtracting a corresponding amount from the supply that is available for other forms of endeavour.

Mr. Green:

Oh, no.

Mr. Marler:

I know the minister will not understand that because he has repeated the same thing too often now to be convinced. But I do want to say that the truth of the matter is that in Canada we have had a program of expansion without precedent and every form of industry which wished to

develop wanted to borrow money or wanted to obtain money by the sale of shares or in some other fashion. Personally I think we have been very fortunate in that we have succeeded in attracting some $1,500 million into the mortgage field and building as many houses as have been built in the last three years. In the year 1957 I think conditions have been more difficult because there has been a much greater demand from industry for money and those people who have some association with investors and mortgages know that a great many investors prefer the simplicity of a bond, the fact that they can go to their safety deposit boxes and clip the coupons every six months. They do not have to worry whether the taxes on the property are paid, whether the house is going to burn down, whether it is insured, whether the borrower is keeping up with his payments.

The unfortunate fact is that in comparison with other forms of investment a mortgage presents greater difficulties of administration, is less negotiable and consequently is less popular with certain investors. I think that is a disability that is very difficult to overcome and, while it may not be popular to say so, I think the rate should be at a level which will attract funds rather than discourage them. Whether or not that rate should be 6 per cent is something for the government to decide but it should always be a rate which is going to attract funds into the housing business because we certainly need to go on building houses.

Mr. Knowles (Winnipeg North Centre):

Mr. Chairman, I am not quite sure which is the pot and which is the kettle in this exchange between the Minister of Public Works and the hon. member for St. Antoine-Westmount. I was not sure whether the member for St. Antoine-Westmount was trying to put up a better defence for present government policy than the minister has put up or whether he was defending the policy of the former government. But it does seem that what has been said by the minister and the member for St. Antoine-Westmount underlines the contention that we in this corner of the house sometimes make. Members of the two old parties do not like it, but it has been demonstrated again tonight that there is not really much difference between them when it comes to something fundamental.

Mr. Pickersgill:

Facts are facts.

Mr. Castleden:

And interest is interest.

National Housing Act

Mr. Knowles (Winnipeg North Centre):

The hon. member for Bonavista-Twillingate, with whom I used to have interesting discussions in the halls of United College in Winnipeg in bygone days, says that facts are facts. Well, the fact is that both the Minister of Public Works and the hon. member for St. Antoine-Westmount talk about this matter in terms of housing being an attractive investment to those with money to lend. It is our contention that that is what is wrong, that is what is bankrupt about the policies of both the old parties.

Mr. Pickersgill:

You want to make it unattractive.

Mr. Knowles (Winnipeg North Centre):

They think of housing in relation to the amount of profit that can be made by private investors. In one little sector of this housing legislation, which was put on the statute books by the Liberals and which the Conservatives are using there is a slight departure from that principle, namely in the one little sector where provision is made for public money to be used when private money will not come into the breach because not enough profit is being made. Yet even when the Minister of Public Works is taking credit for the loosening up on tight money by extending more money through agency loans, he still says that this cannot go on forever, that it is only temporary. The Minister of Public Works said that you cannot ask for the return on money invested in housing to be out of line with the return that investors can obtain in other fields. We contend that what is out of line is that the cost of homes for our people is out of line with the priority that should be given to homes, out of line with the social desirability of homes being one of the things that we produce first with the effort that our people apply to our raw materials.

If it is being demonstrated by the facts, as the hon. member for Bonavista-Twillingate put it, and by the arguments of the Minister of Public Works and the hon. member for St. Antoine-Westmount that the present system is not able to get homes built for our people, then we contend we have got to move a great deal further along the line of making public money available so that in effect we channel the savings of our people into the socially desirable purpose of building homes. We regret very greatly the slowness and delay of the present and the former government in this field but at least we welcome the fact that the picture is becoming clear that both of the old parties think in terms of housing only as an attractive investment. We think rather of housing as a social end that should

National Housing Act

be achieved, an end to which the resources, raw materials and the labour power of this country should be devoted.

One of the reasons we have given support to the bill is that it proposes to extend slightly the amount of money available for agency loans. However, we are just as sure as we are that we are here in the house that the day will come when we will have to move a great deal further in that direction. We think the Canadian people deserve a government that will move that way because the government believes in it rather than because it is forced into it.

Mr. Regier:

Mr. Chairman, I assume that part of the $150 million allocated a few months ago and part of the additional $150 million now being asked for will be supplied to approved lenders and will reach the purchasers of homes by way of purchaser loans. Am I right in the assumption that a share of the first $150 million and of the additional $150 million for which the minister is asking will be used to supply additional insured loans to the Canadian people?

Mr. Green:

I am not very sure that I heard the hon. member's question correctly. Agency loans are quite different from insured loans. In the latter case the money is put up by the lending institution. The agency loan is put up by Central Mortgage and Housing Corporation which in turn obtains its money from the receiver general. Agency loan money did not go into the insured loan plan.

Mr. Regier:

I wish to thank the minister. In other words, I am now assuming that none of the $300 million is to be used for the purpose of supplying any of what we have been used to labelling insured loans.

Now, I must return to the question I was asking yesterday. Could the minister tell me, if I obtain one of these new loans from a bank on which I have to pay the standard 6 per cent, how much does the bank have to pay to the government for this money?

Mr. Green:

In so far as the insured loan is concerned, the lending institution does not get money from the government at all. It advances its own money. All that is done under the National Housing Act is that repayment is insured under the insurance terms of the act.

Mr. Regier:

The minister has explained that none of this money will be used for the purpose of issuing insured loans. However, I understand that if I want one of these loans I will have to apply at a lending institution, one of the approved lenders, and I must pay the approved lender 6 per cent. How much

does the approved lender have to pay in order to get this money out of the government?