Last week, just a couple of days into the election campaign, Conservative Leader Stephen Harper vowed to bring back the Home Renovation Tax Credit. This week, he floated another home-related goody, promising Wednesday to increase the RRSP withdrawal limit for first-time buyers.
Question: What happened to the Conservatives who once focused on cooling the housing market and getting Canadians to cut back on household debt? You know – the Tories from last year? Who are these new ones who are encouraging people to draw down their savings, acquire mortgages and invest money in new decks and bathrooms? We miss you, Jim Flaherty.
Mr. Harper says his government would raise the amount first-time buyers can pull out of their RRSPs from $25,000 to $35,000. He justified his promise by saying the family home is most Canadians' "biggest asset and their most significant investment in their future financial security." He made a similar argument while promising to revive the home-reno tax credit and make it permanent, which could cost Ottawa $1.5-billion a year.
As we said, there once was a Conservative party that would not have encouraged people to transfer their retirement savings into their home equity in the middle of a countrywide price surge that the Canada Mortgage and Housing Corp. says is at high risk of a correction. That other Conservative party would also not have subsidized the overheated housing and the construction industry by resuscitating a tax credit created as a temporary stimulus measure during the 2008-09 Great Recession.
But the Conservatives do have one good idea on housing. Mr. Harper announced Wednesday that a new Tory government will collect data "on foreign buyer activity in Canada's housing market." Market regulators and observers have long called for better information on what is driving prices. Then again, promising more information is also an admission that information is lacking, and that the market may be out of balance.
When he was the finance minister, the late Mr. Flaherty fought to reduce Canadians' risks by tightening the mortgage market. It's disappointing that his caution and wisdom have been abandoned.