As I understand it, I believe the government's position is that they do favour an elected Senate. I believe it's been articulated in their platform, and they have stated so publicly as a policy intention; however, given the difficulty in achieving an elected Senate--which has its own complications, because of the nature of the amending formula--this alternative provides for a democratic process so that Canadians can be involved in the selection process.
On April 2nd, 2008. See this statement in context.