Thursday, August 22, 2013
No plans to intervene in housing market, Flaherty says
Federal finance Minister Jim Flaherty said today he is satisfied with the measures his government has already taken to calm the housing market and has "no plans" to intervene any further.
Flaherty said the government watches the housing and condo market closely, and noted that in the last five years, he has taken steps, including changes to mortgage lending rules, to deal with a hot housing market. But, he said, "there are no plans presently to intervene further."
Flaherty was asked about the housing market and a range of other issues when he spoke to reporters Wednesday ahead of his annual summer policy retreat in Wakefield, Que., across the river from Ottawa.
Flaherty hosts an invited group of experts and representatives every summer to discuss what governments as well as the private sector can do in response to current economic challenges. The retreat feeds into preparations for the government's fall economic statement and the 2014 budget. This is his seventh summer meeting.
The finance minister said the government does have contingency plans for the housing market if necessary.
"What has been done before can be done again — if we have to. But so far I'm satisfied that we have a balance in the real estate sector."
Flaherty described the condo markets in Vancouver and Toronto as "bumps" in that balance, but said "overall I'm satisfied that the measures we've taken over the past several years have adequately calmed the markets."
Canada is in a relatively good economic situation right now, Flaherty said, but the European and American economies remain concerning.
One of the questions Flaherty and his guests may discuss is the future of stimulus measures in the United States. Improving U.S. economic numbers have some wondering whether the U.S. Federal Reserve will soon back off its monthly monetary stimulus that has kept borrowing rates low, and that has some investors worried.
Flaherty said he's "not a big fan of so-called fiscal easing or whatever it's called."
"We're moving toward a balanced budget, I think that's the best protection for Canadians," he said.
He said he anticipates the issue of quantitative easing will come up at the G20 meeting in September in Russia, and that it is contentious.
"As you know, we in Canada have not been fans of quantitative easing unlike the United States and elsewhere," said Flaherty.
"The danger in the longer term, to me as a finance minister, is inflation."
Flaherty said the financial assistance from the federal government to Alberta and Quebec to help with this summer's flooding and the Lac-Mégantic train derailment tragedy will not affect balancing the budget by 2015.
"We'll be OK. I've looked at the numbers," he responded. "There's enough room."
It's not known yet how much money the federal government will give to those provinces to help with rebuilding efforts.
The finance minister said the government is on track to balance the budget by 2015 and that when Prime Minister Stephen Harper launches a new agenda after a throne speech this fall it's unlikely there will be any big spending programs.
"If you're looking for anything startling from the department of finance I think you'll be disappointed," he told reporters.
Seventeen people were participating in Wednesday's meeting according to a list provided by Flaherty's department. He was asked about the cost of hosting the annual gathering and whether it is worth the money, given that he and his department hold pre-budget consultations across the country.
Flaherty said this is a time of year when he can get academics, businesspeople and others together in one room and that their advice will help him prepare for the next budget.
"I think it's incredibly invaluable to the Canadian people," he said about the retreat.