New wealth survey should wake up and shake up Ottawa

Statistics Canada’s new Survey of Financial Security–the first comprehensive study of personal assets and debts since 1984–paints a shocking portrait of the skewed distribution of wealth in Canada, but it says almost nothing about the reasons for this sorry state of affairs.

For answers to that question, Canadians should start by looking to Ottawa and the ill-advised policies that successive federal governments have foisted upon us in recent years.

Both the Chretien and Mulroney governments went out of their way to assist Canadians who were already well-heeled and did little to help Canadians at the low end of the income ladder who really needed a hand.

With that as background, the results of the wealth survey should come as no surprise. It found that the richest ten percent of family units accounted for 53 percent of the net worth of all family units, and their median net worth was a whopping $703,500. Net worth is all the assets accumulated over the years by Canadians minus all their outstanding debts.

The survey also reported that the poorest 20 percent of family units have no net worth to speak of. They live from hand to mouth, they spend all or most of their current incomes on immediate needs, and they are unable to save much of anything for that proverbial rainy day.

Two of the groups that fared especially poorly were lone-parent families and people under 35, including students coming out of colleges and universities.

The truly shabby way we as a society treat lone-parents and their children has emerged as one of the great tragedies of our time. Study after study by Statistics Canada shows single-parent mothers and their children at the bottom of the economic heap, and the latest survey is no exception. The median net worth of lone-parent families in 1999 was a mere $14,600, much less than the median net worth of $119,300 for all families combined.

Yet we have a federal government that encourages provinces to “claw back” increases in the Canada Child Tax Benefit from most lone-parent families, a federal government that broke its promise to provide more affordable child care to working families, and a federal government that all but abandoned children in the February 2000 budget in favour of tax cuts aimed primarily at higher income Canadians

Until the federal government gets serious about the plight of lone parents, they will remain among the poorest of the poor.

Another group with little good to say about the federal government is the growing number of students who listened to all the political rhetoric about the value of education, continued their studies past high school, and wound up burdened with student loans to repay when they got out of school.

Statistics Canada said 12 percent of all family units shared $15 billion in student loan debts in 1999, with the bulk of the debts owed by people under age 35. Overall, family units where the major income recipients were under 35 suffered the largest percentage drops in median net worth between 1984 and 1999. The increase in debt due to student loans was only one factor. Most of the losses probably arose from the failure of the federal government to tackle high levels of unemployment, declining labour standards and a shortage of full-time work. The sad truth is that Ottawa offers little support to young people who are struggling to establish themselves in the work place.

While lone parents and younger people and many other Canadians were losing ground, wealthy people were laughing all the way to the bank. Canada is one of the few developed countries in the world without inheritance taxes, and that fact alone explains much of the continuing and increasing concentration of wealth.

Moreover, recent federal governments have gone out of their way to provide huge additional breaks to the rich. Both the Mulroney and Chretien governments lost billions of dollars of revenue by slashing taxes on capital gains, for example. The government’s own taxation statistics show that the lion’s share of the breaks were claimed by wealthy people.

All this should serve as a wake-up call to the politicians and senior bureaucrats in Ottawa who seem to spend much of their time telling each other what a great job they are doing. The new wealth survey suggests just the opposite.

Read the news release here.