Feds say no plans to privatize CMHC 'at this time'
Published Monday, October 22, 2012 4:14PM EDT
Last Updated Monday, October 22, 2012 6:30PM EDT
The federal government offered a partial denial Monday of a report suggesting it wants to privatize the Canada Mortgage and Housing Corp.
The Globe and Mail reported that Finance Minister Jim Flaherty is looking to privatize the CMHC in the next five to 10 years.
Flaherty told the Globe in an interview that the CMHC had moved beyond its mandate of “providing adequate housing for veterans after the Second World War…”.
He went on: “I think in the next five or 10 years the government needs to look at getting out of some businesses that we’re in that we don’t need to be in.”
During question period in the House of Commons Monday, the opposition decried Flaherty’s statement, warning that privatization would jeopardize the security of Canada’s housing market.
“Today we learned from the Globe and Mail that the Minister of Finance is moving toward the privatization of the Canada Mortgage and Housing Corporation,” NDP Leader Tom Mulcair said.
“Can the finance minister inform this House, and indeed all Canadians, why he wants to dismantle a 60-year success story at CMHC? It was just four years ago that private mortgage insurance schemes in the United States nearly sank the global economy. Why does the finance minister now want to take Canada down the same road?”
Minister of State for Finance Ted Menzies responded that the government does not have plans to privatize the CMHC “at this time.
“Our government is focused on implementing Economic Action Plan 2012,” Menzies said. “And if the opposition had cared to read that, they would have seen that we’ve actually included action to improve the oversight at CMHC.”
In the face of further questioning, Menzies pointed out -- as Flaherty did in his interview -- that the federal government has gradually reduced the amortization period for insured mortgages to 25 years, which has helped reduce taxpayers’ exposure to the housing market.
But in the House Monday, NDP MP Marjolaine Boutin-Sweet argued that tighter mortgage rules have not had the desired effect, as household debt levels continue to rise. Last week, Statistics Canada revised its household-debt estimate, saying it is higher than previously believed.
“The interest of private companies is profits, not to help people with housing problems,” Boutin-Sweet said. “Why privatize CMHC when the housing sector is in jeopardy? Why put the private sector ahead of the interests of Canadians?”
Menzies replied that as a result of the tighter mortgage rules, “we’ve actually seen improvements in the market.” Menzies appeared to be alluding to figures released last week that showed home sales had dropped 15.1 per cent in September from a year ago. The same report showed a slight increase in sales from August to September.
Analysts attributed the figures in part to not only first-time buyers getting squeezed out of the market by the new mortgage rules, but also other potential buyers reassessing how much home they can reasonably afford.
“Canadians are investing in homes, but they are investing prudently,” Menzies said.