Finance Minister Joe Oliver says the federal government could take "moderate steps" to address Canada's strong housing market as he began two days of meetings on Sunday with his provincial counterparts.
- Joe Oliver looks on the bright side of low oil prices
- Oil price slide expected to be on the agenda as finance ministers meet
- Average house price in Canada rises almost 6% to $413,649
The two-day gathering also gave Oliver the chance to reveal the latest figures on federal transfer payments to the provinces and let the ministers talk about the effect of plunging oil prices.
On his way to the first meeting, Oliver was also asked about Canada's rising household debt and the country's potentially overvalued housing market — two risks repeatedly raised by the Bank of Canada.
The federal finance minister said his department is very carefully monitoring household debt levels and the real-estate market, but said he doesn't think there is a housing bubble.
Oliver said the government may take some moderate steps, but nothing dramatic. He did not elaborate and added his department had yet to make a decision on this subject.
Mortgage rules tightened
"But our longer-term objective is to reduce the government's exposure to the mortgage market, and we keep that objective in mind going forward," he said.
Oliver has said he intends to further reduce Canada Mortgage and Housing Corp.'s share of the mortgage insurance sector.
The Finance Department has tightened mortgage regulations on several occasions in recent years in an attempt to limit excessive speculation in the housing market and diminish the number of marginal buyers.
Last week, Bank of Canada governor Stephen Poloz warned the country's real estate market could be overvalued by as much as 30 per cent, though he also reiterated his prediction that a soft landing was still likely for Canada.
The bank used a new model to crunch numbers on the potential overvaluation of the housing market, a calculation that suggested it may be running between 10-to-30 per cent above where it should be.
Earlier this month, Poloz maintained the bank's trend-setting interest rate at one per cent, where it's been frozen since September 2010.
Most experts don't expect the rate to increase until at least the middle of 2015. There are concerns some Canadians might have accumulated too much debt in recent years to be able to handle rate hikes.
Poloz gave a presentation Monday at the finance ministers' meeting, a get-together that also revealed how much each province and territory will receive from Ottawa in transfers and equalization payments that the provinces use to fund health and post-secondary education, among other social programs.
Transfer payments to provinces and territories
Total federal transfers to the provinces and territories are rising to $67.9 billion in 2015-16 from $64.8 billion this year, according to the Department of Finance. Here is a look at the new funding levels:
- Newfoundland and Labrador, to $692 million in 2015-16 from $676 million in 2014-15.
- P.E.I., to $554 million in 2015-16 from $544 million in 2014-15.
- Nova Scotia, to $2.9 billion in 2015-16 from $2.8 billion in 2014-15.
- New Brunswick, to $2.7 billion in 2015-16 from $2.6 billion in 2014-15.
- Quebec, to $20.4 billion in 2015-16 from $19.6 billion in 2014-15.
- Ontario, to $20.4 billion in 2015-16 from $19.2 billion in 2014-15.
- Manitoba, to $3.4 billion in 2015-16 from $3.4 billion in 2014-15.
- Saskatchewan, to $1.5 billion in 2015-16 from $1.4 billion in 2014-15.
- Alberta, to $5.5 billion in 2015-16 from $5.2 billion in 2014-15.
- B.C., to $6.1 billion in 2015-16 from $5.8 billion in 2014-15.
- Nunavut, to $1.5 billion in 2015-16 from $1.5 billion in 2014-15.
- Northwest Territories, to $1.3 billion in 2015-16 from $1.3 billion in 2014-15.
- Yukon, to $923 million in 2015-16 from $897 million in 2014-15.
No promise of infrastructure money
Last week, Ontario Finance Minister Charles Sousa sent a letter to Oliver, saying Ottawa's recent unilateral rule changes on transfer payments put Ontario's plan to balance its books by 2017-18 "at risk."
Sousa said his province was the only one to see a decline in transfers.
The finance ministers asked Oliver to increase infrastructure spending, which they argue would help boost the economy.
However, British Columbia Finance Minister Mike de Jong said the federal minister didn't commit to anything.
"Minister Oliver was not specific," he told reporters following the meeting. "As you might expect he received ample invitations from the provinces and territories to consider such a request."
Sousa said the federal government is putting $70 billion into infrastructure across Canada over 10 years, while Ontario alone is spending $130 billion.
"Today the governor of the Bank of Canada spoke to us collectively, reinforcing that now is the time to make those infrastructure investments, especially in light of low interest rate environment," Sousa said.