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OTTAWA — If the Loonie meets economist’s expectations and sails to parity or beyond next year Canadian businesses shouldn’t expect help from the federal government, said Finance Minister Jim Flaherty.
In a wide-ranging year-end interview Flaherty explained his government has limited tools to cope with a rising Loonie and ruled out subsidies to soften the blow.
“We have no plans to have major new tax initiatives or major new spending programs in the budget,” said Flaherty.
When asked if he expected to use the tools he did have, such as tax credits, to ease the impact of a high Loonie on exporters, Flaherty said it was “not something we’re considering.”
Flaherty says he is concerned more by currency speculators that could spark wild swings in the value of the dollar than he is about it remaining high.
Flaherty also said it was a difficult personal decision for him as a Conservative to agree to the near $14 billion bailout of General Motors and Chrysler earlier this year.
“I like to see companies stand on their own two feet and ... I knew how well, relatively speaking, Honda and Toyota were doing,” said Flaherty. “I took some heat for that too, being a minister form Ontario, a minister of Finance for Ontario at the centre of the car industry.
“There isn’t as much empathy for the car industry in other parts of the country,” he said.
As difficult as it was, Flaherty said the auto bailout was still the right choice because without the government money tens of thousands of jobs would have been lost in the parts industry and that would have ended up costing more.
Flaherty also said he’s paying close attention to the housing market after signs of growth in some areas of the country raised concerns that low interest rates are inflating the market.
“The Governor (of the Bank of Canada) and I have both encouraged the banks to maintain their lending standards, that’s important,” Flaherty said.
“We don’t ever want to end up in a situation like the Americans ended up with — people getting into a lot of trouble with the interest rates on their mortgages.”
Flaherty says there’s nothing that has him concerned about the housing market for now, but if that changes, his government could increase the required down payment to buy, shorten mortgage terms or tighten credit regulations.
peter.zimonjic@sunmedia.ca