Federal policy-makers did the right thing when they moved to try to cool Canadians’ seemingly insatiable appetite for debt. But the fact the feds had to take this step highlights the frequent failure of Canadians to make sound financial decisions on their own.

The Bank of Canada has been making noises about the disconcerting growth of household debt for some time. In mid-January, the federal Department of Finance decided to act, changing several mortgage rules with the aim of deterring people from taking on more mortgage debt than they can handle or piling on much more debt than they can afford.

There are signs Canadians are starting to get the message. A recent CIBC World Markets Inc. report finds that mortgage demand is softening, although it’s still running at a 7% annual growth rate. Other forms of credit are still growing, although they appear to be decelerating as well.

Still, the question that policy-makers should be asking themselves is why the government should have to step in to slow such borrowing in the first place. Although it may be logical to borrow heavily when interest rates are at record lows, surely Canadians that understand this and can also foresee that rates will have to rise — taking their debt-servicing costs with them. Yet, the fact that household debt/income and debt/asset ratios are reaching record-high levels indicates they don’t think enough about the long-term cost of that borrowing. Instead, it falls to the government to intervene.

The obvious conclusion is that Canadians often don’t act in their own long-term best interests. The fact many Canadians may have been taking on too much debt is the flip side of the predicament policy-makers face when they contemplate the lack of provisioning for retirement — and poor financial decision-making is at the root of both problems.

Yet, upgrading that decision-making is a conundrum of its own. Ideally, Canadians need easy access to sound, independent, unconflicted financial advice — then they might be able to make better choices about how much to spend, save and borrow. Facilitating that is something policy-makers should consider next time they find themselves fretting over Canadians’ financial behaviour.