8 | spring 2016 cmba-achc.ca CMB MAGAZINE
"Wise management of the nation's finances
back in the 1990s restored Canada's fiscal
health, giving us a debt-to-GDP level today that
is by far the lowest of any G7 country. At the
same time, our interest rates have never been
lower, so we can borrow on excellent terms – as
governments are being urged to do by everyone
from the IMF to the OECD to the G20. Our
plan is reasonable and affordable. By the end of
our first mandate, Canada's debt-to-GDP ratio
will be lower than it is today."
is is a quote from federal Finance Minis-
ter Bill Morneau, from his 2016 Budget speech.
He is relying on Canada's exceedingly low inter-
est rate environment as a rationale to support
heavy-duty government borrowing, which will
add an estimated $100 billion to the federal
government debt over the next five years.
Deficit spending in government budgets
can be viewed as desirable and even necessary
as part of countercyclical fiscal policy when
economic stimulus is needed. Of course, deficit
budgets are only short-term stimulus measures,
which in the long haul and in boom economies
need to be balanced with surpluses. Deficit
budgets also represent a clear departure from
the Conservative governments of past years,
which were committed to balanced budgets and
fiscal restraint, even if they may not have been
successful in actually achieving these goals.
Needless to say, it takes guts for a government to
buck trends and to take what might be consid-
ered to be risky and counterintuitive measures.
e irony here is that for several years, the
government has been focused on controlling
mortgage debt and implementing policies to
discourage borrowing for real estate needs to
avoid any potential housing collapses or crises.
What is good for the government, which is
borrowing and investing in the country's future,
is apparently not good for individual Canadians,
who are dissuaded from borrowing even if it
is to invest in their own future.
For example, in the last six years, the
government has made the following changes to
high-ratio insurance rules to make it harder for
Canadians to borrow:
n
Down payment must be a minimum of
five per cent.
n
Borrowers must qualify for a five-year
fixed rate even if they choose a lower interest
What the 2016 federal budget means for mortgage brokers and consumers
By Samantha Gale
CmBa exeCutive DireCtor
Budgeting
for the Future
paul chiasson/canadian press
What is good for the govern-
ment, which is borrowing and
investing in the country's future,
is apparently not good for
individual Canadians, who
are dissuaded from borrowing
even if it is to invest in their
own future.
