OTTAWA — The Canadian government has no plans for now to
clamp down on the housing market even though prices are rising again, Finance
Minister Jim Flaherty said on Monday, but he pledged to investigate whether the
price uptick looks to be more than temporary.
Finance Minister Jim Flaherty says he will not only
balance the budget in 2015, but the surplus will be significant.
Speaking to reporters after meeting economists in Ottawa
Monday, Flaherty said the surplus that year won’t be “tiny.”
Flaherty said that it would be his department’s
responsibility to act on housing prices since the Bank of Canada has “basically
no room to move,” but added: “I have no intention of interfering in the market
for the time being.”
In its latest report last week, the central bank removed
any reference to raising interest rates, saying the economy has too much slack
and inflation is too low.
Flaherty, addressing reporters after meeting
private-sector economists to get their views, also repeated his pledge to
balance the 2015/16 fiscal-year budget, and said he would deliver “not a tiny
surplus.”
I want to ensure that this isn’t just a
temporary bubble
The minister has intervened in the mortgage market four
times since 2008 to cool the housing sector, and had expressed some satisfaction
that his moves had worked.
Some
of the economists he met on Monday suggested that he have some more
conversations with people in the building industry, Flaherty said, “because of
what we’re seeing in certain parts of the country, a reacceleration of housing
prices.”
One theory put forward for the recent rise in housing
prices is that people who perhaps should have been waiting to buy a house have
been rushing to purchase to lock in low interest rates.
“But this is speculation and we’re going to have to look
into it more, but I have no intention of interfering in the market for the time
being,” Flaherty said.
He said the projections of economists he spoke to on
Monday were close to those released by his department in July,
forecasting modest but real economic growth over the next few years.
Flaherty
said he sees some pressure on government revenues, but added this will be
offset by the government’s plans to freeze its operating budget.
Canada’s independent parliamentary budget office said on
Monday that by its calculations the government will meet its target of
eliminating the deficit in 2015, but subsequent surpluses will likely be
smaller than it projected in April.
Flaherty said the parliamentary budget officer did not
take into account the government’s planned operating budget freeze.
He has ruled out balancing the budget earlier than 2015,
and some economists told reporters that such a move would be unwarranted, given
the substantial fiscal drag it would impose.
“It could happen earlier if the minister really wanted
it,” said Carlos Leitao, chief economist at Laurentian Bank.
“I
don’t think that is desirable, nor do I think it is the government’s plan. So
2015/16 the budget will be balanced, and as the minister said, not only
balanced but in surplus territory.”
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