[wopchop]

Sounds all a bit over the top. Roberston has been Minister for two days now.
All the articles reporting in it are just carrying clickbait titles like "Higher housing supply, not lowering home prices, are the solution for Canada’s housing crisis, Canada’s new housing minister said ".
Titles like that really just proves how bad journalism is in this day and age. How, pray tell, would the Federal government reduce the cost of existing homes? What can they realistically do to do that that wouldn't destroy the economy?
Obviously it can only really happen by encouraging an increase in supply (by leaning on Provinces or building themselves) or drastically reducing demand further (i.e. immigration), which is already happening and has reduced prices.

 

[afransen]

How does Robertson think supply and demand work? Delivering more supply will bring prices down. Do they vet these cabinet candidates for basic economics?

Pretty much every politician has to tie themselves into knots to say they will make housing more affordable while not devastating home values. Show me one politician on the federal scene that has been unequivocal about reducing the value of existing homes. It's a political non-starter. So if someone says they want to increase supply and waffles on what that does to the price of existing homes, I do not blame them for it. And to be honest, I think it would take very dramatic policy to reduce home prices from new supply. Demand side measures have already been implemented (reductions in immigration, particularly temporary residents) and that has cooled rental markets and housing prices. I don't think the government wants a real estate crash, either, as that would destabilize the financial system. I think the preferred path is significant growth in housing stock that keeps nominal values stable and real values declining gradually as prices normalize with incomes.

 

[81-717]

It may well be that PP is the next PM, but the next 3-4 years will hopefully season him further and require him to elevate his rhetoric from child-like slogans.

Hey, as long as he doesn't mess with MAiD legislation (due to take effect in 2027) and the line 2 renewal, which would hopefully already be well past the contract award phase (currently due Q3 2026) by the time the next election comes around...

 

[Mihairokov]

Sounds all a bit over the top. Roberston has been Minister for two days now.

Nobody voted Liberal with the belief that dropping housing prices was a key policy point. Robertson is just being blunt with what we already know.

 

[Northern Light]

I agree with both @wopchop and @afransen 's takes above.

I will say, I do think the government can certainly take policy actions to cut the price on existing housing and apartments and indeed it has, and I'd like to see a bit more of same (further reductions in TFWs as example).

But its one thing to erode nominal prices by 10-20% and another to push them down 40% or more.

Clearly there's a point where you risk sparking mass non-renewal of mortgages and financial destabilization.

If you can find the sweet spot......where nominal prices have dipped, but not too drastically, but incomes have risen faster than inflation, a few years running, such that effective prices might be down 30%, and affordability up 45% over say, 5 years........that's the ideal. Navigating those waters, however, is challenging.

Regardless, one doesn't expect the government to come out and say explicitly that they want to crash the market, even if they did. A sizable portion of society, particularly the more monied 1/2 would have a meltdown.

If the government comes close to the ideal above, the messaging will be a non-issue, because the problem has largely been resolved.

If they fall far short........ no amount of messaging will save them from an ever angrier electorate.

 

[UtakataNoAnnex]

Not sure anyone here is advocating devaluing of existing homes though…

 

[Admiral Beez]

‘Carney has to pick a lane’: Advocates and opponents worry about mixed signals from Liberals on fossil fuels

Conflicting messages from the heart of the new Liberal government highlight how the precise orientation of the Carney administration is a question.

www.thestar.com

Paywall free: https://archive.is/eIAR8

Carney should follow Norway’s example, where the nation embraces its domestic petroleum industry and actively promote its export while using that oil wealth to develop green technologies for its domestic economy. Norway is like a global drug dealer, where you sell what the market wants, but don’t use the product yourself. As one who visited Norway and seen their quality of life, I’d say that’s the model for Carney to follow.

 

[afransen]

‘Carney has to pick a lane’: Advocates and opponents worry about mixed signals from Liberals on fossil fuels

Conflicting messages from the heart of the new Liberal government highlight how the precise orientation of the Carney administration is a question.

www.thestar.com

Paywall free: https://archive.is/eIAR8

Carney should follow Norway’s example, where the nation embraces its domestic petroleum industry and actively promote its export while using that oil wealth to develop green technologies for its domestic economy. Norway is like a global drug dealer, where you sell what the market wants, but don’t use the product yourself. As one who visited Norway and seen their quality of life, I’d say that’s the model for Carney to follow.

I think what Canada should really emulate is the sovereign wealth fund (the Government Pension Fund Global). We have that, to an extent, in the CPP, but the CPP is solely dedicated to paying retirement benefits. Their fund has assets of ~USD$350k per resident. They have averaged a return of 9.7% over 10 years and 6.45% since 1998, which is significantly above government borrowing rates. I think it would be sensible for Canada to have a sovereign wealth fund, which could be seeded with government borrowing. It might even be good to have it as a bit of an automatic stabilizer where when the economy is heated we increase consumption taxes and sock away the money.

Government Pension Fund of Norway - Wikipedia

en.wikipedia.org

 

[Admiral Beez]

I think what Canada should really emulate is the sovereign wealth fund (the Government Pension Fund Global).

I like it, but how do we implement and run that when resources and resource wealth is the purview of the provinces?

 

[afransen]

I like it, but how do we implement and run that when resources and resource wealth is the purview of the provinces?

There's no need for it to be tied direct to resources, royalties, etc. The federal government derives significant revenue from resource companies directly through corporate income tax and indirectly through individual income tax. But even beyond that, funding such a sovereign wealth fund could be done purely out of general government revenue/borrowing. It could be seeded with $30-50B/year in debt issuance, so long as we took steps to balance our operating budget. Borrowing to acquire productive assets makes sense. Borrowing to fund pensions and health care spending, less so. 10 years of $50B contributions, if it earned 7% rate of return would grow to nearly $700B in assets and would grow by $50B even absent any further contributions.

I think the federal government should aim for a constant level of indebtedness as % of GDP, generally trending downwards, and any surplus borrowing room used to acquire productive assets.

Federal net debt to GDP has been bouncing along around 40%. Martin had targeted getting down to 25%. At a certain point, government debt provides a useful purpose in the economy, and there should be a reasonable amount available, at least on a gross basis, relative to GDP.

Is government debt really causing our economic problems?

Governments regularly borrow money to fund infrastructure and services. When these investments lead to economic growth, improve quality of life or prevent higher costs in the future, borrowing can make good fiscal sense.

cupe.ca

 

[UtakataNoAnnex]

^That chart going down over the years is good, no?

 

[Monarch Butterfly]

(Donald Trump did not attend Pope Leo XIV inauguration mass, but went to play golf.)

 

[afransen]

^That chart going down over the years is good, no?

Indeed. Lower is better. That chart is made by a labour union, so you should recognize their bias. They show net debt, which is not the total level of debt but gross debt less assets held by the government.

 

[Northern Light]

Indeed. Lower is better. That chart is made by a labour union, so you should recognize their bias. They show net debt, which is not the total level of debt but gross debt less assets held by the government.

I will say, the yellow line in the chart is the one I'm more comfortable using as a baseline, as the idea that we're fiscally sound because we can raid the CPP nest egg doesn't really work for me.

Those funds are segregated and should remain such, so net debt, in my estimation should not include CPP/QPP as a liquid financial asset.

In that context, I think net debt remains too high.

Let's keep in mind that in fiscal 2024-2025 the estimated cost of interest payments on the federal debt is a whopping 54.1B that was larger than projected federal deficit in last year's budget..........

Alternatively, that's enough to cover the full cost of Universal Pharmacare, Universal Dentalcare, and you would still have 20B leftover, per year.

I'm not opposed to prudent borrowing, but I think we've done a lot of imprudent borrowing over the years and could use to trim that number.

 

[chrisw]

Including CPP in net debt makes more sense when comparing with other countries that have less funded social security programs.