It's ALL your money:
The MNP quarterly barometer of Canadians’ household finances found that three in five respondents said at least half of their income is already committed to bills, debt payments and regular expenses before it arrives, a third said most of their paycheque is taken and 16 per cent said all of it has been spent.
“Many Canadians are not just living paycheque-to-paycheque, they are entering each pay period with much of that paycheque already spoken for,” says Grant Bazian, president of insolvency firm MNP LTD.
That means the next paycheque is not a reset point, but has already been assigned to bills, debt payments and regular expenses before it arrives, creating a “rolling shortfall” that leaves households vulnerable to unexpected costs, he said.
In this situation the warning signs may not always look like a missed payment or collection call, said Bazian. A household may appear to managing by cutting back or leaning on credit, all the while moving deeper into a financial hole.
The MNP Consumer Debt Index that measures Canadians’ attitudes toward their finances actually rose from last quarter, suggesting a modest improvement in sentiment, though confidence is still below historical levels.
But financial vulnerability remains, said MNP. Almost half of Canadians said they are $200 or less away from not being able to pay their bills, up three points from last quarter, with 28 per cent saying they don’t earn enough to cover their obligations.
These pressures are leading to another trend identified by the survey — “lifestyle shrinkflation.”
More Canadians are scaling back in areas of life they once considered important for social contact and quality of life. More than half are dining out and socializing less and 35 per cent said they are reducing family and personal expenses such as children’s activities and personal care. One in five are cutting back on hosting family and friends.
“Canadians are not just tightening their budgets. Many are shrinking parts of their lifestyle to keep up with the cost of essentials,” said Bazian.
“When people are cutting back on plans, using credit to maintain activities, or scaling back on the things that help them feel connected and supported, financial pressure can start to affect more than household balance sheets. It can weigh on overall quality of life and emotional well-being.”
The Bank of Canada decides on its interest rate this week, but Canadians can expect little relief there. Over 60 per cent of those surveyed in the MNP poll said they “desperately” needed rates to come down, but the central bank is widely expected to hold at 2.25 per cent.
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Savings have deteriorated for a majority of Canadians,particularly the bottom 80 per cent of Canadian households, as spending significantly outpace income growth, according to research by Boston Consulting Group.
Consumer spending is up, but that growth isn't coming from income for those outside the top 20 per cent earners. The report said that for the lowest 20 per cent of earners, spending jumped 27 per cent over the past five years, while disposable income just went up three per cent.
Households are filling that gap and covering their spending by dipping more on savings, leaning on rising portfolio values and taking on more debt.
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High-income families in Canada are paying a disproportionately large share of taxes, according to a new report from the Fraser Institute.
The report, which uses data from Statistics Canada’s Social Policy Simulation Database and Model (SPSD/M), shows that the top 20 per cent of income-earning families pay nearly two-thirds (65.3 per cent) of the country’s personal income taxes and more than half (58.3 per cent) of total taxes. This is more than their share of total family income in Canada, which is 49.5 per cent.
Meanwhile, the bottom 20 per cent of income-earning families are estimated to pay 0.7 per cent of all federal and provincial personal income taxes and 1.7 per cent of total taxes in Canada, while earning 4.3 per cent of the total family income.
In other words, the share of total income received by this group is over six times larger than their share of income taxes paid, the report says.
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Carney doesn't believe in pipelines.
Canada’s greatest energy problem is not that we produce too little oil. It is that we have spent more than a decade making it increasingly difficult to sell it. Ottawa’s decision to support, in principle, a new pipeline to Canada’s Pacific coast is encouraging, but approval alone will not restore investor confidence. Trust, once lost, must be earned back. For years, governments layered Canada’s energy sector with carbon taxes, increasingly complex regulations, emissions caps, tanker restrictions and political uncertainty. Investors responded exactly as rational investors should. They invested elsewhere.
(Sidebar: and that's not all.)
The evidence is impossible to ignore. Northern Gateway was cancelled after Enbridge had already invested approximately $373 million. Energy East collapsed after TC Energy spent roughly $1 billion pursuing approvals. Kinder Morgan ultimately abandoned the Trans Mountain Expansion, forcing Ottawa to purchase the project for $4.5 billion before its total construction cost climbed from an estimated $5.4 billion to approximately $34 billion.
Boardrooms remember those numbers. That is why no private company has yet stepped forward to champion another Pacific pipeline. This is not a failure of capitalism. It is the predictable consequence of public policy. Yet the greatest cost has not been cancelled projects. It has been the opportunity Canada has surrendered. Nearly 97 per cent of Canada’s crude oil exports still flow to a single customer: the United States. No major energy-producing nation should find itself so dependent on one market for one of its largest exports. Recent trade disputes have demonstrated how strategically vulnerable that dependence has become.
The financial consequences have been enormous. Because Canada lacks sufficient export capacity to reach global markets, Canadian heavy crude has frequently traded at discounts of US$10 to US$20 per barrel below international benchmark prices, and at times considerably more. Across millions of barrels exported every day, those discounts have cost Canadian producers, governments and taxpayers tens of billions of dollars over the past decade.
Those are not merely corporate losses. They are hospitals not built, roads not repaired, defence capabilities not funded, taxes not reduced and public debt not repaid. The true cost of indecision has never appeared in a federal budget, but Canadians have paid it nonetheless. This is why a new pipeline is no longer simply a commercial undertaking. It is a nation-building project. Every additional export route strengthens Canada’s sovereignty, diversifies our economy and reduces our dependence on a single customer. Energy infrastructure has become an essential component of national security.
If Ottawa genuinely believes this project serves Canada’s national interest, it must also acknowledge that government created much of the uncertainty that now discourages private investment. No responsible board of directors can expose shareholders to unlimited political and construction risk after watching three major pipeline projects either collapse entirely or experience extraordinary cost overruns.
But don't worry - the government has its priorities straight:
Cabinet members and political aides received dozens of free passes to attend the FIFA World Cup including four staff and a summer student in the office of Liberal MP Adam van Koeverden (Burlington North-Milton West, Ont.), Secretary of State for Sport. The tournament cost taxpayers $1.07 billion: ‘Memories will last a generation.’
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Canada Post managers last year pocketed nearly $31 million in bonuses even as CEO Doug Ettinger told Parliament the organization was “on the brink.” The disclosures were detailed in financial accounts requested by MPs: “One of the things I lose sleep about is keeping the good people who are with us.”
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