Thank you very much.
Good afternoon, Mr. Chairman and committee members.
I'm pleased to be here today to speak to you as parliamentary secretary to the Minister of Finance, the Honourable Bill Morneau.
I am also pleased today to be in the good company of Rob Stewart and Cynthia Leach, who will be here to help me if there are any questions that I need some assistance with.
One of the most important responsibilities of the government and the Minister of Finance is to ensure that Canada has a healthy, competitive and stable housing market.
This is why our government has been focused on housing issues since coming into office. This has included a series of carefully targeted measures to ensure stability and to promote affordability. Today I want to clearly explain the benefits of these changes and why our government has taken action.
Investing in a home is the single, largest, and most important financial decision most Canadians will make in their lives. Home ownership is vital to the economic and financial health of Canada and middle-class families. It is vital that we do what we can to ensure that the market is stable, and to provide peace of mind to homeowners across Canada. Especially in markets like Vancouver and Toronto, there is a risk that some middle-class families buying their first home could be taking on high levels of debt as house prices climb, reducing the likelihood that they would be able to afford their properties over the long term if economic situations or circumstances occurred.
Those who already own their homes want to know that the market is stable and that their most important investment is safe. We've heard that quite a bit during the testimony. Affordability and market stability are, therefore, issues that concern many middle-class families. These concerns are real, and this government takes them extremely seriously.
Last October, Minister Morneau announced tighter mortgage insurance rules—among other measures—designed to improve stability, reduce risk to taxpayers, and ensure that everyone is playing by the rules. The more robust mortgage rate stress test for insured mortgages is meant to ensure that Canadians are taking on mortgages they can afford, even if interest rates go up or if their income drops in the future.
Other changes were also made to target safer forms of lending. These measures are focused on addressing the buildup of housing debt across Canada. As you have heard, these measures will require borrowers and lenders to make adjustments in the short term. Fundamentally, these measures are important in containing risk to preserve the long-term stability of the housing market in Canada.
We have seen in other countries what can happen to the housing market and the overall economy when housing risks and leverage are not appropriately managed. In these situations, it is often the middle-class families who suffer the most. Ultimately, the government's efforts to contain risk in the housing market will support its plan to create conditions for economic growth over the long term, growth that will benefit the middle class and those working hard to make it to the middle class.
One fundamental point that has yet to emerge clearly in this committee is the fact that the government's support for the housing finance system remains significant, especially compared with other jurisdictions like the U.S., the U.K., and Australia. Mandatory mortgage insurance promotes the extension of low-cost credit to a large proportion of homebuyers—many of them first-time homebuyers—and mitigates risks to financial systems.
No other country supports mortgage insurance like the Canadian government does here at home. At the same time, discretionary mortgage insurance and government-sponsored securitization programs support access to low-cost funding for mortgage lenders. Some lenders have built their business models around this support, which will continue to be available for mortgages that conform to the new requirements. They can also continue to provide loans that do not meet the new requirements, but on an uninsured basis.
One element that we know we need to make greater progress on is a better understanding of the factors that drive developments in housing markets. This includes the impact of purchase by foreign investors on demands for homes, but it also includes factors that impact the housing supply. This is why in the 2016 budget the government provided funding to Statistics Canada to gather data on purchases of Canadian housing by foreign homebuyers. Work on this initiative is ongoing.
The government has also created the federal, provincial, and municipal working group of officials to review the range of factors affecting regional housing markets. In addition to sharing data and identifying information gaps, this group has been looking at factors relating to housing supplies in Canada. A healthy supply of new homes is an important component of any strategy to promote access to housing.
This brings me to affordability. Our government knows that it needs to work with provinces and municipalities to provide housing that meets the needs of the most vulnerable citizens. This is why it is also acting on affordable housing fronts.
In the last budget, the Government of Canada spent $2.3 billion on affordable housing. It will continue to work closely with the provinces and municipalities on this file. As you may know, the Honourable Jean-Yves Duclos, Minister of Families, Children and Social Development, is currently developing a national housing strategy.
We know that the financial security of Canadian families depends on sustainable debt levels and stable housing markets. The federal government takes its responsibilities seriously by making sure the housing policy framework remains healthy, competitive and stable and protects all Canadians and the economy from potential excess housing market volatility. That's why the Minister of Finance took action twice during the first year of our mandate and continues to follow the file very closely.
Measures that ensure a sound and stable housing market and financial security for Canadian families are part of the government’s economic plan. This economic plan is based on the notion that, when you have an economy that works for the middle class, you have a country that works for everyone.
As we look to the future with the goal of creating growth that benefits all of us, nothing could be more crucial than protecting what for many Canadians is the most important investment they will ever make in their lives. At every step of the way, our government will continue to listen to Canadians, homeowners, and stakeholders as it seeks to ensure a healthy and stable housing market for the benefit of all Canadians.
In that spirit, it gives me great pleasure to be here today to take some of your questions on behalf of the minister.