Finance Committee on March 26th, 2026

[Sandra Cobena, Conservative, Newmarket—Aurora, ON]

Can you speak a bit about the trend of the debt levels for consumers? Of course, you see it before we see the headlines. What's driving that? What does your forecast say for the next near to short term?

[Sue Hutchison]

Unfortunately, they didn't give me a crystal ball at Equifax. There are a lot of factors, which Becky can chime in on as well.

There's a lack of confidence in this economy. There's a lack of confidence from consumers. If they have a job, they're worried about whether it will be replaced by AI. If they're in sectors like auto and aluminum and steel, or in parts of those supply chains, those folks are very much impacted with direct job losses, with shifts that have been cut or with the threat in the future. That's for businesses as well. Of course, we're a country of small and medium-sized enterprises. Those businesses are run by consumers. They also are worried about investing, spending and hiring in this period of uncertainty.

There's a whole number of factors, I think, depending on the certainty we have going forward, in particular about our largest trading relationship. I think that will have a very big impact.

Go ahead, Becky.

[Rebecca Oakes]

I would absolutely agree. I think many factors, both nationally within Canada and internationally, can have a significant impact on consumers and the outlook for the rest of the year. As Sue mentioned, it really depends on what happens on that front as well and stability in the economy.

[Sandra Cobena, Conservative, Newmarket—Aurora, ON]

Just to clarify, do the ratios we're seeing here include that invisible debt you talked about, the private lenders and the buy now pay later options?

[Sue Hutchison]

They do not. Some of the private lenders are starting to report, but the lion's share do not. It's the same with buy now pay later in this country. They're not obligated to do so the way they are in such jurisdictions as Australia and the U.K. That is a growing amount of outstanding debt. It might be for a $400 pair of jeans, but we've seen case studies in which a consumer may have 17 loans of $400.

[The Chair, Liberal, Karina Gould]

Thank you, Ms. Hutchison. We have to conclude that round.

Mr. MacDonald, you have five minutes.

[Kent MacDonald, Liberal, Cardigan, PE]

Thank you, Chair, and thank you to the witnesses.

I have the TransUnion report on my phone right here in front of me, so I'll ask a couple of questions on this data. It's been a long period of time since I looked at economic graphs and charts. The classroom is a long piece behind me.

I do see the graph that deals with minimum payments continuing to increase on most products, but the rate of growth has slowed. When we look at this graph, you see the mortgage dropping the most in minimum payments. Can you speak to that? Is that an indication that the lower interest rates are starting to affect payments?

[Matt Fabian]

Yes. When you think about the different types of products, some products, such as a mortgage or a line of credit, are very sensitive to interest rates. Others are more fixed rate, such as your credit card or, in some cases, loans. What we are seeing is that as interest rates came down...and we saw some of that with mortgages, obviously. The consumers were starting to get better rates, so the minimum payment required as a function of the size was affected. As well, I think home values generally have started to ebb a bit in a lot of markets. The size of homes being financed was also contributing to that.

I think for other products there's a bit of deleveraging, but I think generally it's interest rate-related.

[Kent MacDonald, Liberal, Cardigan, PE]

When we look at your graph on delinquency, it kind of shows that most credit products have pretty well flatlined for a number of years. They haven't really increased or decreased, except for personal loans. Can you speak to that personal loan trend? What would that be in relation to?

[Matt Fabian]

For that one, it's really a function of that market. Part of it is the reporting structure as well. We've seen a lot of newer and alternative lenders that play in that subprime or below-prime space. It's a function of both supply and demand. Consumers who are looking to get access to credit where they can't get it elsewhere are going to these lenders, but these lenders are also playing in that market, so they're pricing for that risk. It's not really a shock to that industry, but we are seeing that trend significantly higher.

[Kent MacDonald, Liberal, Cardigan, PE]

Maybe Ms. Hutchison would like to speak to that too, then.

[Sue Hutchison]

These are all aggregated numbers, which are very dangerous.

Go ahead, Becky.

[Rebecca Oakes]

I was going to say the same thing. Absolutely, I agree with what the TransUnion data is showing at the aggregate level. When you start to break that down into some of the subgroups of the population, you see variations. You see, in some cases, that missed payments are still rising. On the flip side of that, you see some consumers who are really resilient right now, and we're seeing their missed payments come down.

It really is important to think about the divergence we are seeing. As you conduct your study, keep that in mind when you start to look at some of these aggregated numbers.

[Kent MacDonald, Liberal, Cardigan, PE]

You spoke earlier about consumers' choices and their reliance on more of these buy now pay later services, personal loans or even credit card debt.

As MPs, what policies can we give direction to that will improve consumers' choices? You also spoke about the younger generation using some of these products more, as well as education. Could you elaborate on that?

[Sue Hutchison]

In particular for buy now pay later, these are often younger consumers, who don't have much, or any, credit history. To compel those firms to have them report to credit bureaus really helps those consumers in terms of financial inclusion. If they can get credit for those loans that are $400, $800 or whatever they're buying, that will help them build a credit history and help them come into mainstream financial services versus payday lending, buy now pay later, and this usurious cycle that lower-income Canadians often cannot get out of.

[Kent MacDonald, Liberal, Cardigan, PE]

Another thing I noted is that you got cut off when you were talking about the rent credit as part of being given a credit report on consumers. Is that getting close to being an acceptable way of evaluating credit?

[Sue Hutchison]

If you think about Canadians, they're renting. There has been 20% growth in rental in the last 10 years, according to StatsCan. Not as many Canadians are buying homes, because of affordability, in particular in the large cities. If you think about it, if someone pays $2,000 a month for 10 years to rent and someone else pays $2,000 a month for a mortgage, mortgages are included in terms of building your credit history, but rent is not. It's quite illogical.

Yes, we're starting to gather, or we started a few years ago. We're starting to compile scores that lenders can use as an alternate with different data.

[The Chair, Liberal, Karina Gould]

I apologize, Ms. Hutchison, but that concludes the time.

Mr. Garon, you have the floor for two and a half minutes.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Madam Chair.

I'm going to ask a more open question to the Equifax and TransUnion representatives at the same time.

A recent article in La Presse reported on a study by the Bank of Canada according to which the risk of a person defaulting on their mortgage could be identified in their credit file two years in advance. A report by the parent company of TransUnion, for instance, said that economic conditions were improving in the United Kingdom and Canada, but now there's the war in Iran, and interest rates could go up. As I said earlier, there has never been an oil crisis without an interest rate hike.

Are you seeing any warning signs of an increase in mortgage default rates right now?

I would also like to know, more generally, what you think of that analysis, which says that you have the necessary information to predict a change in mortgage default rates two years in advance.

I'll give you the rest of my time to answer those questions.

[Rebecca Oakes]

First of all, typically one of the drivers behind when we see missed payments on mortgages is heavily linked to the balance of those mortgages and the payment rates associated with that. As interest rates go up and down, we absolutely see missed payments move up and down at the same time, but there is a lag effect. Once the interest rate comes in, you have to wait for the renewal point potentially on that mortgage, and it can take 12 to 24 months to see the impact of a rising interest rate on missed payments and the flip side as it comes down.

The numbers we see now in our data, where for some mortgages across Canada they did go up and then started to come back down again, are indicative of that reduced interest rate and that lag factor. What we have called out in a lot of our reports recently, though, is the fact that there are still provinces such as Ontario and British Columbia where that number is rising despite that. Now it is slowing down, but it is still being impacted by those payment shocks, particularly because of those high-balance mortgages.

I don't know if Matt from TransUnion wants to add to that.

[Matt Fabian]

Yes, I would echo that sentiment.

I would say also that one of the things that are important to remember is the lag effect on consumers' ability to pay in terms of even delinquency, right? If you think about someone who is unemployed, they might have EI or continued payments that keep them going for a bit of time, so delinquencies also tend to be on a 12-month to 18-month lag.

[The Chair, Liberal, Karina Gould]

I apologize, Mr. Fabian. We're going to have to wrap it up there.

Colleagues, we have about five minutes left in the meeting. Is it okay if I split the time equally between the Conservatives and the Liberals? Is that a yes? Okay.

You have two and a half minutes, Mr. Hallan.

[Jasraj Singh Hallan, Conservative, Calgary East, AB]

Well, Madam Chair, in that case, I'd actually just like to move a motion that's been on notice.

Given that:

a. Taxes on beer, wine and liquor will automatically increase on Wednesday, April 1, 2026;

b. Since the Liberal government implemented the automatic alcohol tax hike in 2017, excise rates have automatically increased by more than 18%, costing Canadians nearly $1 billion, making taxes nearly half the price of what consumers pay for a drink;

c. Canadians and businesses cannot afford another tax increase; and

d. A coalition of unions representing Canadian brewery workers is calling for the government to cancel the upcoming automatic alcohol tax hike,

The committee report to the House that it calls on the government to cancel its Wednesday, April 1, 2026, tax increase on beer, wine and liquor.

Madam Chair, I move this motion today as it is the last opportunity to do so before April 1, when the government will hike taxes on beer, wine and spirits. Since 2017, Canadians have had annual tax hikes on alcohol without a vote in Parliament, violating a fundamental tenet of the Westminster parliamentary system that goes back to the Magna Carta.

What has made these tax hikes even worse for Canadians is the cost of living crisis that the government has created with its continuing massive deficits and borrowing debt, not to mention with hidden taxes like the industrial carbon tax and packaging taxes that drive up the costs of food, fuel and other essentials.

Today, restaurants are closing by the thousands—7,000 of them alone just last year. Sharp increases in costs for food, supplies, wages and utilities and reduced customer spending have left restaurants hurting. We are hearing all across the country about the impact of these increases, so, once again, Conservatives are calling for a pause on this excise tax. We'd like to see a vote on that today, and I hope all parties can agree to that.

[The Chair, Liberal, Karina Gould]

Is there anyone else who...?

Mr. Turnbull, go ahead.

[Ryan Turnbull, Liberal, Whitby, ON]

Well, I'm surprised that we're getting this, although I know the member put the motion on notice a while back. We had negotiated a schedule with a number of studies right until, I think, the House rises in June. It's a bit of a surprise here, but it's not really that surprising, because I know members opposite are able to move motions that are on notice.

I'm certainly empathetic to the beer industry and the excise tax challenges that they've communicated to us, but I think today's meeting is not really the time to be doing this. It would have been nice if we'd had some notice from the opposition so that we could have discussed this and maybe found a way forward. I don't think there's any way we're going to get to a vote on this today. There's absolutely no chance, because I have issues with the wording of the motion. There are significant issues with the wording of the motion. There's highly charged partisan language in it, which I won't agree to and which I'm sure none of the members on our side will agree to.

There's no contravention of the Westminster system in an excise escalator that's been passed in Parliament in the past and that is slated to increase on an ongoing basis or an annual basis. That's not a contravention of the Westminster system at all. There doesn't have to be a vote on every change to an excise tax that happens to be indexed to inflation.

I think we could debate this some more today, but we're wasting valuable time with highly reputable expert witnesses, I would say, on a study that the Conservatives proposed. You're essentially wasting time that we could use to ask witnesses questions. You're actually taking away from my ability, because I was in the last round and was looking forward to questioning these wonderful individuals who gave up their time today in order to come here to lend us their expertise. I think household debt is a worthwhile topic for us to venture into. I was pleased that we could come to an agreement to actually study that.

We only have a few minutes left in the meeting, but there's no way we're going to get to a vote on this today. That's for sure.