MNI INTERVIEW:Trudeau Hints At Govt Homebuilding-Ex Adviser

Canadian Prime Minister Justin Trudeau is signaling willingness to leap back into more direct government involvement in new home construction, potentially adding to spending pledges in his quest to win a fourth straight election, a former adviser to cabinet ministers told MNI.

Comments by the prime minister Tuesday after a housing announcement hinted at such a move according to Elliot Hughes, senior advisor at Summa Strategies and a former policy director to a defense minister and to Bill Morneau, Trudeau's first finance minister after election in 2015.

“I wouldn’t say it came out completely saying that the federal government is going to get back into the game of building homes, but I would say he kind of went up all the way up to the line. And that to me is a shift in policy,” he said on MNI's FedSpeak podcast. “This is perhaps where we might see a little bit more forcefulness, a little bit more engagement in a direct way from the federal government.”

Canada's federal housing agency CMHC was created to address shortages during the baby boom following World War II but in recent decades its focus has shifted towards mortgage financing. Opposition Conservatives led by Pierre Poilievre have overtaken the governing Liberals in some recent polls by saying home affordability has been swept away since Trudeau became prime minister in 2015. Trudeau said that while housing isn't a federal responsibility "it is something that we can and must help with."

PLAYING TO A DRAW

“Politically what the government probably wants to do is play to a draw, and to be able to at least say when it comes up in the debates or during the election, that they can sort of point to what they’ve done on the housing file for Canadians,” Hughes said. (See: MNI INTERVIEW: Canada House Building Hit By Rates, Shortages)

Trudeau emphasized housing in a cabinet shuffle last week where one of the biggest moves was to promote Sean Fraser from immigration to a combined ministry of housing and infrastructure, Hughes said. Other key economic officials remained in place, like Chrystia Freeland at finance, and at the ministries of industry and environment, suggesting continuity in other economic files for a government that has courted progressive voters with new spending programs.

“Perhaps there is going to be some more money, there are going to be some new policies that are going to be coming out, and I’m sure there will be, but I think a lot of it had to do with the fact of ‘We haven’t told our story very well,’” Hughes said.

The next election is shaping up to be a more polarized campaign with Liberals moving further left and the Conservatives going right, as neither side sees votes among moderates, Hughes said. “You continue to go to the left, and that’s what they’ve done,” he said of the Liberals. “A lot of those things cost money.”

POTENTIAL RUDE BOC AWAKENING

Other former officials say fiscal policy is likely to remain loose as Trudeau looks to an election he must call by 2025 or sooner if he loses the support of the left-leaning New Democrats. (See: MNI INTERVIEW:Trudeau Pushes BOC To High-For-Long Rate-Asselin)

Sticking with stronger political positions will also hold for the Conservatives, Hughes said, referring in particular to Poilievre's pledge to fire Bank of Canada Governor Tiff Macklem.

“There would probably be a desire for a new mandate,” with the central bank under closer government control, he said.

“Some people may say that’s great, that’s exactly what I want, the Bank of Canada has been raising rates on me, my mortgage payments have doubled, the cost of food is through the roof, and I blame these guys,” he said. “There’s no doubt in my mind that under a Pierre Poilievre government, the Bank of Canada would be in for an extremely rude awakening.”