“I will continue to act to ensure that household debt levels are sustainable, that lenders are acting prudently, and that increases in interest rates or a housing market downturn don’t put at risk the economic growth we are working so hard to accelerate,” Morneau said back in fall 2016.
Since then, Toronto has followed Vancouver’s trajectory to unprecedented levels of overheated activity.
“Yet Morneau has flashed less of the bravado he displayed that day at the board of trade. Instead he has appeared reluctant to do more than nudge local authorities to make tough decisions,” markets observer Kevin Carmichael wrote in a recent piece for Canadian Business. “The governments of British Columbia and now Ontario have responded with a series of half measures that may help at the margins, but stop miles short of addressing the core drivers of Canada’s property frenzy.”
This is despite Morneau’s apparent policy and ideological differences to predecessors Jim Flaherty and Joe Oliver
“Flaherty, as is the case with Morneau, was advised by an informal committee of agency heads: the deputy minister of finance, the governor of the Bank of Canada, the superintendent of financial institutions, the president of Canada Deposit Insurance Corp., and the commissioner of the Financial Consumer Agency of Canada. In Ottawa, this group is known as SAC, or Senior Advisory Committee, and the chief executive of Canada Mortgage and Housing Corp. attends when invited,” Carmichael explained. “These are the people you want in the room for an assessment of what’s happening in financial markets.”
“However, the SAC has no authority, and it operates far from view. The committee never releases anything for public consumption,” the analyst added. “That could be because the politicians don’t always like what the SAC has to say.”
More importantly, “[policies] that would more effectively attack speculation, such as subjecting home sales to capital-gains taxes, don’t even appear to be on the table. That’s because such a move would irritate some voters and all real-estate lobbyists.”
This essentially means that the public has no other choice but to take Morneau at his word, despite the federal government’s current policy direction appearing to support the status quo.
“I’m convinced we have something in place that’s working,” Morneau told the press last week.
MBN
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