Liberal MPs torpedoed an opposition request to study the effects of the government’s stringent new mortgage qualification rules, which a Conservative MP says has forced some to sell their house.
The stress test, which came into effect in January, now requires homebuyers with a 20 per cent down payment to demonstrate that they can withstand an interest rate increase of two percentage points on their mortgage. Conservative MP Tom Kmiec said the test is making life difficult for anyone refinancing a mortgage and that a stress test of two percentage points is too high. It is particularly cruel, he said, to introduce this policy in a year when nearly 50 per cent of mortgages are being refinanced. Kmiec, who represents a suburban Calgary riding, said some of his constituents have reported getting fleeced by their bank when refinancing and, in a small number of cases, being forced to sell their home. Anyone staying with their current lender can avoid the stress test when refinancing but Kmiec said that takes leverage away from consumers and hands it to the banks. “That causes you not to be able to go out and shop around for the best rate that you can possibly get. That’s where a lot of the angst is coming through. That’s where a lot of people are getting pinched,” said Kmiec. Kmiec said he would prefer a stress test that used market projections of interest rates, rather than a set number of two percentage points. Liberal MPs at the finance committee meeting on Wednesday night offered a variety of objections to studying the mortgage regulations, including that members of the committee simply won’t have the time with pre-budget work starting in the fall. Kmiec said the subcommittee wouldn’t necessarily have to involve current members of the finance committee and offered an amendment to form the subcommittee immediately after the pre-budget work was finished. The motion was still soundly defeated, with all Liberal MPs voting against it. “It tells me they’re not taking it seriously,” said Kmiec. Liberal MP Francesco Sorbara said it was still too early for a subcommittee, considering the measure had only come into effect this year. “There has not been sufficient data that has been collected yet to see what impact this has had on our housing market,” said Sorbara. “We require a number of quarters still to see the direction of the Canadian housing market.” Although the new rules may be making life more difficult for some homebuyers, the early signs are that they are having the desired cooling off effect on the housing market and Canadian household debt as a whole. Statistics Canada reported on Thursday that mortgage borrowing decreased $2 billion to $13.7 billion in the first quarter of 2018, which is the lowest level since 2014. That was accompanied by a 17 per cent decrease in the value of residential resale activity in the first quarter. Canadians hold about $1.2 trillion in mortgage debt and $628 billion in consumer debt. Although the housing market appears to be cooling off, particularly in Toronto, the Canada Mortgage and Housing Corporation said there’s nothing to fear about the Ontario market. “The combination of the level of overvaluation easing in Toronto, growing employment and income rates, new households formed, and only moderate increases in interest rates, has led to a low likelihood of a serious price correction in Ontario, relative to historical bust periods,” the CMHC said on Thursday. A report from Royal LePage released earlier this year said young homebuyers are the main group affected by the rules. The report said that purchasing power dropped $40,000 for millennials aged 25 or older as an immediate result of the stress test. The report also illustrated how much of the real estate problem for young buyers is centred in Vancouver and Toronto: for the price of a down payment in one of those two cities, a buyer could afford a detached home in Moncton, N.B. A study by a subcommittee would allow MPs to voice the concerns of their constituents in a way that private sector and departmental studies couldn’t, Kmiec said. The outgoing Liberal government has described its plan to study hydrogen trains for the GO Transit network as a bold and visionary exercise.
But soon after the transportation minister announced the initiative last year, senior figures at Metrolinx privately expressed serious concerns, with one board member describing the effort as a “folly” that could endanger the public, and the agency’s new CEO doubting the “unproven” technology would be ready in time for a major expansion of GO service. On June 15, 2016, Steven Del Duca, who was Liberal transportation minster at the time, made the surprise announcement that the province and Metrolinx, the provincial agency responsible for transportation in the GTHA, would look into using hydrogen-powered trains as part of the GO expansion program called regional express rail (RER). Estimated to cost $13.5 billion, RER is supposed to be complete by 2025. Using hydrogen train technology, or “hydrail,” as part of the program would be ambitious, to say the least. Although French manufacturer Alstom said last year it plans to launch a fleet of 14 hydrogen trains in Germany by 2021, the technology has never been deployed on the larger type of bi-level cars GO operates. Metrolinx estimates deploying hydrail for RER could require at least 70 hydrogen locomotives and 84 sets of four hydrogen-powered self-propelled carriages by 2025. It would be the first use of hydrogen trains on such a scale anywhere in the world. According to documents obtained by the Star through a freedom of information request, one day after Del Duca’s announcement, Howard Shearer, a Metrolinx board member, sent agency chair Rob Prichard a blistering email warning that the hydrogen project “must be taken seriously for the folly it represents.” New TTC and GO stations difficult, dangerous for people with disabilities, advocacy group says in new video “It is simply madness that the Ontario government is seriously considering this,” wrote Shearer, who is also chief executive of Hitachi Power Systems Canada and a board member of the Energy Council of Canada. “One accident in the implementation of this technology presents grave risk to government, public confidence and Metrolinx,” he said, arguing the storage and distribution of hydrogen could be dangerous. He predicted it would take “years beyond” the planned RER completion date of 2025 for hydrail to accumulate a safety record Metrolinx could trust, and argued the government’s “rush” to use the technology was “reckless” and would “put lives at risk.” Shearer doesn’t appear to have ever made his concerns public. He didn’t raise the safety issue when hydrail was discussed at a public Metrolinx board meeting two weeks after Del Duca’s announcement. In an email to the Star last week, Shearer said he was satisfied with how Metrolinx handled his concerns because the agency acted on his recommendation to have the Canadian Nuclear Laboratories, which has experience with hydrogen technologies, take part in the study. He added that his concerns about the early adoption of hydrogen technology “remain the same.” Although Transport Canada has yet to develop specific safety regulations for hydrail, Metrolinx says hydrogen fuel technology is safe. A feasibility study the agency published in February determined that while “there are potential hazards,” including the risk of combustion, the technology presents “no unresolvable safety issues.” Metrolinx CEO Phil Verster also expressed reservations about hydrail, not about safety but about the wisdom of potentially pinning the success of RER on an unproven technology. Weeks before Verster officially took office on Oct. 1, 2017, he received an update on the hydrail program from Metrolinx staff. Afterward, he sent an email to two Metrolinx executives. “I sense that there may be a fundamental stumbling block — the application is untested in a train application, without a reference system and without the development kinks ironed out?” he wrote on Sept. 11, 2017. “This is in itself a showstopper because we cannot risk the annual benefit from RER on a belief the train builder will resolve such issues on time.” He noted that “train builders often struggle to deliver standard, existing technology trains.” “I therefore cannot see how we can include this in the RER scope as it is simply not ready as an application and it is unproven,” he wrote. In an interview with the Star last week, Verster said he wrote the email to express concern about potentially committing to hydrogen for the GO expansion. Instead, Metrolinx has decided it will leave it up to the companies bidding on RER whether to propose hydrogen or stick with conventional electrification. Metrolinx plans to issue the request for proposals to design, build and operate RER in early 2019. Verster said he supports this more cautious approach, and backs the hydrogen initiative as due diligence to ensure Metrolinx doesn’t miss out on potentially transformative technology. “If there’s an opportunity for something, for this technology to prove feasible, it is worth considering,” he said. Verster described the September 2017 email as consistent with his public statements on the issue. He told reporters last fall “we are not going to take risks and jeopardize (RER) with technology that isn’t fully proven.” As part of its assessment, Metrolinx is planning to pay three manufacturers up to $1 million each to develop a concept for a hydrogen-powered locomotive and has contracted Alstom and Siemens at $1.5 million each to design self-propelled carriages. The companies are expected to complete the work this year. Metrolinx will also pay Hydrogenics, a Mississauga-based company that is supplying hydrogen fuel cells for the trains Alstom plans to operate in Germany, up to $970,000 to provide “support” to the manufacturers. Including the design work, feasibility study and a hydrail symposium Metrolinx hosted last fall, the entire assessment project is expected to cost at least $10.9 million. The involvement of a GTA-based hydrogen company was central to Metrolinx’s plans, with the agency stating one of the goals of the project was to help position the province as “a global leader in hydrogen technology.” In a speech at the hydrail symposium in November, Del Duca said hydrail was “a win for Ontario-based know-how. And that’s good news for our province’s economy.” “This is about vision. This is about aspiration. This is about innovation,” he said. Critics of the plan say it’s not Metrolinx’s responsibility to foster economic activity in the province. RER would involve nearly quadrupling weekly GO trips by 2025, and electrification is a vital component of the plan. Electric trains can accelerate and decelerate faster than diesels, and are necessary to run the more frequent service. Until Del Duca’s announcement last June, the province had planned to electrify large sections of the GO network using the traditional system of overhead wiring, called a catenary. Metrolinx considers hydrail a form of electrification because hydrogen fuel is produced through electrolysis, a process that uses electricity to separate water into hydrogen and oxygen. An on-board hydrogen fuel cell powers the train, and the only exhaust is steam and condensed water. Hydrail could potentially offer many benefits compared to a traditional catenary system, including eliminating the need for the disruptive implementation of an overhead wire system along hundreds of kilometres of track. Metrolinx’s study concluded “it should be technically feasible to build and operate a hydrail system for the GO network” but said pursuing the technology carried risks, including potential delays to RER and high costs caused by fluctuating electricity prices. “It is critical for us to understand where technology and innovation is leading worldwide and to undertake appropriate due diligence,” said agency spokesperson Suniya Kukaswadia in an email. “If a hydrogen powered train can meet the highest of safety standards, our service needs and reduce costs, we should be looking at it as other countries have done.” The incoming Conservative government has not said whether it plans to make changes to the hydrogen project. |
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