Federal Finance Minister Jim Flaherty said Thursday he is not concerned about slumping housing sales in some Canadian markets and has no plans to reverse mortgage restrictions imposed earlier this year.
Housing sales plunged dramatically last month in cities such as Calgary, Victoria and Greater Vancouver compared with one year ago.
But Flaherty, in Calgary to deliver a speech on Ottawa’s proposal for a national securities regulator, said he believes the housing slowdown is a sign that consumers are being more careful about financial risk-taking. He hinted the federal government wouldn’t shy away from additional mortgage restrictions, if needed.
“I, for one, am not particularly concerned about the softening we’ve seen in some markets in Canada in residential real estate,” Flaherty told reporters, noting that Ottawa has twice tightened mortgage rules.
The most recent changes, which took effect in April, made it more difficult for some Canadians to qualify for a mortgage.
“This is entirely intentional, to tighten the market, so that we avoid the excesses that we’ve seen in other countries,” Flaherty said. “If we have to do more, we’ll do more.”
Housing foreclosures have plagued the U.S. and its financial sector, while Canada’s banking system has for the most part weathered the recession.
In his speech to the Calgary Chamber of Commerce, Flaherty said Canada’s banking system is a model for the world, except for one “signifi-cant weakness”: the country’s patchwork of 13 securities regulators.
“A Canadian securities regulator would provide better protection for investors, more efficient regulation and lower costs for firms,” Flaherty said. “We need to provide better protection for retirees, families and whole communities in Alberta, and elsewhere in Canada, against abuses such as Ponzi schemes and insider trading.”
While the federal government’s plan to create a single securities watchdog has support in several provinces, Alberta and Quebec have joined forces to oppose the initiative. Flaherty said Canada’s system for regulating securities is broken, too cumbersome, and scaring off some foreign investors.
Alberta and Ottawa are also at odds over possible changes to the pension system. Flaherty said the federal government is concerned that some Canadians aren’t saving enough for retirement, but he doesn’t expect pension reform ideas will be ironed out by the time he meets with his provincial counterparts in December.