Finance boss vows no further cooling
Federal minister’s comments on housing and ‘job churn’ raised millennials’ concerns
Canada’s finance minister said the Liberal government is not considering any further actions to tamp down overheated housing markets.
The federal government’s recent mortgage rule changes, which will end tax breaks for non-residents and make it harder to qualify for mortgages “were the right thing to do,” Finance Minister Bill Morneau told a Toronto Region Board of Trade audience Friday.
However, he told reporters afterward that while the government continues to be “vigilant in monitoring the market, we have no further actions under consideration in terms of housing.”
“Our role is to ensure that we protect the housing market for the long term, that we create the kind of stability that Canadians need as they consider housing investments,” he said after a speech that focused on financial stability.
The mortgage changes announced earlier this month are the second set of measures aimed at cracking down on potential risks in the housing market — but they have been met with criticism that they will keep first-time buyers out of the market for longer.
The new rules require all borrowers seeking insured mortgages to undergo a “stress test” ensuring they qualify at higher interest rates.
The goal is to ensure borrowers don’t take on more debt than they can afford when interest rates rise.
The Canada Mortgage and Housing Corporation issued a “red” warning Wednesday for the first time ever for the national real estate market, signalling that it believes there is strong evidence many housing markets, especially in the greater Toronto and Vancouver areas, are overvalued.
High home prices, along with Morneau’s recent comments that young Canadians should get used to “job churn,” or precarious employment, have raised concerns among millennials that they face worse economic prospects than their parents.
Prime Minister Justin Trudeau was heckled at a youth labour forum earlier this week by protesters who believe the Liberal government has betrayed the demographic that heavily supported him during the election.
Morneau did not answer whether he is concerned that the challenges faced by this generation could impact his key platform of ensuring long-term economic stability when asked Friday by the Star.
“What the federal government needs to ensure it’s enabling Canadians to be successful and this means young people as they seek to get their first job, families as they seek to buy their first house,” he said.
Morneau focused on the government’s role “in giving them the way to be successful.”
He cited government training and retraining programs, the expansion of the Canada Pension Plan to provide pensions amid fewer employersponsored programs and measures the government put in place to reduce the risks of overburdened homebuyers.
Morneau was also asked about concerns raised by government watchdogs about Liberal Party fundraisers that offering lobbyists face time with cabinet ministers, such as Morneau, in exchange for hefty donations. Lobbying Commissioner Karen Shepherd said this week her office is investigating the events, while Conflict of Interest and Ethics Commissioner Mary Dawson is calling for new regulations to restrict the practice.
“I know that we have very closely followed all of those federal rules to ensure that we withhold the highest standards,” the finance minister said.
Morneau will present a fall economic update on Tuesday, which he said will outline the current economic situation and outline measures “to amplify our budget measures from 2016.”
He said the government remains committed to reducing its net debtto-gross domestic product ratio, but provided no specific timeline on when the budget could be balanced.
The minister would not confirm reports that the government is considering additional short-term stimulus measures to get Canada’s economy growing above the Bank of Canada’s meagre 1.1 per cent growth expectation for growth in 2016.