When the province decides to put in a foreign-buyers' tax that technically gives the power to the City of Vancouver through their charter to be able to charge a foreign national, and then suddenly the Department of Finance or the minister puts down these new rules and could perhaps, as some people thought, cause a huge shock to that area, is that not getting ahead of ourselves? But I digress.
There was some discussion earlier, Mr. Chair, on concerns about consumer debt. I do know, and I have seen many ads that shock me, of some people buying very expensive vehicles on very extended, long-term payment arrangements. You're concerned about that, but we also have here in Ottawa a government that's adding payroll taxes, carbon taxes, and is making it more difficult for people to be able to get a home from which they can actually save money in the form of equity. We all know our homes are our biggest source of equity.
I find it interesting that you're all concerned about consumer debt and the ability to be able to afford a mortgage. I guess maybe this comes back to your point that you just offer a slice of advice to the person in the chair who makes the decisions. I just find it dumbfounding sometimes that we criticize other levels of government for doing things, and yet we often do these things ourselves.
Anyway, it's been a very useful conversation, at least to me.
I'd like to go back, though, to mortgages. We talked a little about this earlier. I said that I was worried about the competitiveness of the industry, particularly what monoline lenders are suggesting. I'm going to read this and I'd like to hear your comments, ma'am, and perhaps those of anyone else:
The federal government backs 100% of the mortgage insurance obligations of CMHC, a unique approach compared to other nations. A lender risk-sharing program would raise the risk associated with funding mortgage[s] and increase the capital lenders require. Once again, while the banks are sufficiently capitalized to retain loans on their books, smaller lenders are not, and thus would need to increase mortgage lending rates to offset additional risk, thus increasing costs to consumers. Additionally, as monoline lenders, who are unable to raise sufficient capital close their doors or merge with others to remain in the market, there will be less competition among lenders, thus increasing rates and costs for borrowers.... From a consumer perspective, the net effect again would be that housing become[s] less affordable, not more affordable. In our view, this is unnecessary given Canada's low default rate of circa 0.28% and the fact that CMHC has more than enough in reserves to cover outstanding mortgages in the unlikely event of a major rise in defaults.
To me, this seems to say that if we continue this, first of all you're going to have Canadians who cannot refinance. They're going to be shocked to find that out. You're going to see the market becoming far less competitive and overall prices going up. Isn't that the opposite of what we want to see? Can you explain to me the positive side of this policy?
