British Columbia

Q&A: Former finance minister Kevin Falcon explains B.C. Liberal role in housing crisis

Much of the uptick in Metro Vancouver’s housing market happened under the previous B.C. Liberal government, which was in power for 16 years before the NDP took over last summer.

Vancouver's housing landscape shifted during the 16 years the Liberal Party was in power

Kevin Falcon was B.C.'s finance minister until he resigned in 2012, after 12 years as an MLA.

Much of the uptick in Metro Vancouver's housing market happened under the previous B.C. Liberal government, which was in power for 16 years before the NDP took over last summer. 

Kevin Falcon played a key role in the Liberal cabinet as B.C.'s finance minister.

After his resignation, Falcon became vice president of real estate development company and private equity firm Anthem Capital.

He sat down with Stephen Quinn, the host of CBC's The Early Edition, to give his take on what went wrong.   

The B.C. Liberal government is now widely the subject of a lot of criticism when it comes to the housing situations that we currently find ourselves in. Is that criticism valid?

Some of it is, but I also think that it's important that we step back and really try to look at the facts and the global trends.

The combination of [historical events to showcase Vancouver to the world like Expo 86 and the 2010 Olympics] plus a focus we had in government to open up trading opportunities for British Columbia, along with the global economic meltdown in 2009-2010, resulted in a lot of very scared capital in the world looking for safe places to park.

When that capital started coming to the Lower Mainland, did anybody say, "hey, this is a bad thing?" 

In 2012 post-budget, I was travelling to the world's financial markets.

One of the specific questions I kept raising in the different markets I was in, particularly in Singapore, Hong Kong and China, was trying to get an understanding of what impacts they were seeing in the real estate market.

They were struggling to deal with a huge amount of capital outflow from China coming into their residential real estate markets, driving up prices.

When I came back, I said to my staff, this is something we need to look at. If it's happening there, it's definitely going to be happening in British Columbia at some point.

You recognized that there was a danger of this. What was the reaction in government when you brought that up?

I retired from government and announced my resignation that summer. I suspect that the follow up minister behind me didn't continue to run with that line of inquiry.

The data didn't seem to reflect the true numbers of foreign buyers, Falcon says. (Darryl Dyck/Canadian Press)

Where is the demand for real estate coming from?

We're seeing most of the buyers are clearly local buyers.

That doesn't mean that foreign buyers aren't here.

They are clearly here, but maybe there are ways that they are able to buy into the market that is somehow masking the fact that there are foreign buyers.

I applaud the provincial government for one of the responses to not allow buyers to be hidden behind trusts or numbered companies.

Isn't that something your government could have gotten a handle on early on?

Absolutely, there is no question about it.

Why didn't you?

To be honest, when I was finance minister, that issue of nominee buyers was not even raised.

But there is no doubt that we as a government, even after I 'd left, we ought to have moved faster to ensure disclosure on things like that.

Click on the audio link below to hear more of the interview with Kevin Falcon:

This interview has been edited for length and clarity.

If you are interested in housing affordability, check out CBC's new podcast, SOLD! Host Stephen Quinn explores how foreign investment in real estate divides community, class and culture. Find it at CBC Podcasts or Apple Podcasts.