Finance Committee on April 13th, 2026

[Charles St-Arnaud, Chief Economist at Servus Credit Union, As an Individual]

Thank you, Mr. Chair and honourable members of the committee.

It's a pleasure to be here making my first-ever appearance in front of a House of Commons committee. Thank you for the opportunity to share my expertise with you.

Household debt in Canada is elevated and has been exceeding 170% of disposable income for roughly the past 15 years. Canadian households are third among the most indebted in the 44 countries that the BIS, the Bank for International Settlements, is tracking. We're just behind Switzerland and Australia.

As a result of the elevated level of debt, the average Canadian household must spend about 15% of its disposable income to make the obligatory payments on the debt. This includes both interest and principal. Given that some households are debt-free, we can imagine that the debt service ratio is likely to be significantly higher for a proportion of the population.

The high level of household debt renders the Canadian economy more vulnerable to shock. In recent years, household finances have been under pressure due to the erosion of purchasing power resulting from higher inflation and weak income growth and from higher interest rates. This has led to an increase in household financial stress.

However, there are some signs that the economic system is flexible, allowing households to adapt to the environment of higher interest rates. As such, while consumers' insolvencies have increased sharply in recent years and are approaching their highest level since the global financial crisis, the increase is mainly in proposals, mainly in what could be seen as renegotiations of the terms of those lendings, rather than bankruptcies.

As a reference, bankruptcies are currently 40% lower than they were pre-pandemic and account for less than 25% of total insolvencies, compared to about 40% of insolvencies pre-pandemic and 80% of insolvencies during the global financial crisis.

There is evidence that households are lengthening the amortization period of their debt to reduce the impact of higher interest rates on their debt payments. While this means that households will carry debt for longer and will increase the total debt cost, it has prevented a surge in the debt service ratio in recent years, making their debt more sustainable. This flexibility exists only because household income has remained solid.

The resilience of the labour market in recent years, characterized by a lack of major layoffs, has played a crucial role. Any significant increase in layoffs leading to a decline in income would rapidly remove the flexibility in the system, with potentially serious consequences for households' financial situations, Canada's financial system and the economic outlook, hence the increased economic vulnerability caused by a high level of household indebtedness.

The high level of household debt has also had some broad structural impacts on the Canadian economy. There is evidence that the constant high household borrowing over the past 30 years, at an average pace of about 44% of GDP per year, has crowded out business investment, thereby negatively affecting productivity growth over the past few decades. This is very similar to how big government spending and deficits in the late 1970s and 1980s crowded out business investment. The result can be seen in the fact that Canadians were recently spending almost as much, as a share of GDP, on home renovation and home ownership transfer costs—in other words, exchanging homes—as they did on machinery, equipment and intellectual property.

There is an important feedback loop between poor productivity growth, affordability and household finance. Weak productivity growth led to tepid salary gains and stagnant income. As such, disposable income per person, adjusted for inflation—a measure of purchasing power—has been growing at a pace since 2015 that is a full percentage point slower, on average, than it was between 1995 and 2015. The cumulative impact of those slower gains in purchasing power means that Canadians have lost about 10% in purchasing power compared to where they should have been if income growth had remained the same.

Let me conclude with this important point on the subject. The affordability crisis and the increase in financial stress are as much an issue of underperforming incomes as they are of rising costs.

With that, I will be happy to answer the committee's questions.

[The Vice-Chair (Jasraj Hallan), Conservative, Jasraj Singh Hallan]

Thank you very much.

Next, from Consolidated Credit Canada, we have Mr. Jeffrey Schwartz.

You have five minutes, Mr. Schwartz.

[Jeffrey Schwartz, Executive Director, Consolidated Credit Canada]

Thank you.

Mr. Chair and members of the committee, thank you for the opportunity to appear before you today as part of your study on consumer debt in Canada.

My name is Jeff Schwartz. I'm the executive director of Consolidated Credit Canada. We're an accredited non-profit credit counselling agency. We help Canadians consolidate and pay off unsecured debt, often at reduced or zero interest, while providing the financial literacy education that prevents debt crises before they begin.

In the past year alone, Consolidated Credit supported approximately 125,000 Canadians through education, counselling and debt management services. The average unsecured debt load among our clients was close to $20,000.

I want to focus my remarks on three points: the critical role of financial literacy, the need for consistent and equitable funding, and the reason accredited non-profit agencies must be central partners in any national strategy to address consumer debt.

Education is our best and first line of defence. By the time a Canadian reaches our office in financial distress, the damage is often done. The goal must be to reach them before that point—before the impossible choice between heating the home and making a minimum payment.

Accredited non-profit agencies like ours deliver preventative financial literacy every single day. We teach Canadians how to budget, understand credit and recognize the warning signs of economic abuse and coerced debt. This work is the foundational infrastructure for a healthy financial system.

This brings me to my second point—funding. Accredited agencies are primarily funded by financial institutions through a share of the debt we help our clients repay, which is typically between 10% and 20% of the principal. This model works. Banks recover debts that might otherwise default, and Canadians avoid insolvency. The economy benefits from households that remain financially stable.

The problem is that not every institution participates fairly. The majority of Canada's federally regulated institutions demonstrate leadership by contributing to this ecosystem. However, a small number of large institutions do not. These outliers benefit directly from our services, yet they do not invest a single dollar in the infrastructure that makes those outcomes possible.

This is a free-rider problem. It distorts the marketplace, strains the capacity of agencies like ours and ultimately harms the Canadians we are trying to serve. Our internal estimates suggest that if these non-participating institutions contributed fairly, consolidated credit alone could support an additional 21,000 Canadians annually, while significantly expanding preventative outreach to underserved and high-risk populations.

We are asking the government to use the power of moral suasion, through mechanisms like the proposed code of conduct for the prevention of economic abuse, to set clear expectations that all participating banks would provide annual financial support to accredited non-profit credit counselling agencies. Transparency is a powerful tool. Public disclosure of institutional participation would encourage fair play without the need for prescriptive legislation.

Finally, I will speak to our role as essential partners in the financial protection ecosystem. Accredited non-profit credit counselling agencies are uniquely positioned to serve Canadians in financial distress. We provide client-centred care.

When a survivor of economic abuse needs to untangle coerced debt from their credit profile, they need expert intervention, not a pamphlet. Government departments, financial institutions and regulators should view us not as an afterthought, but as the primary delivery mechanism for financial literacy and debt remediation.

We urge you to recommend that departments, ministries and financial institutions formalize their partnerships with us and that the funding to sustain this work be consistent, equitable and transparent.

In conclusion, Canadians are asking for a fair chance to learn, recover and build a secure financial future. With consistent funding and genuine partnership, accredited agencies like Consolidated Credit can help tens of thousands more Canadians each year avoid the dead end of insolvency.

Thank you. I welcome your questions.

[The Vice-Chair (Jasraj Hallan), Conservative, Jasraj Singh Hallan]

Thank you, Mr. Schwartz.

Next, we have Guyllaume Amiot from Raymond Chabot Inc. for five minutes.

[Guyllaume Amiot, Licensed Insolvency Trustee, Raymond Chabot Inc.]

Good afternoon.

Mr. Chair, members of the committee, allow me to deliver my remarks in French.

Thank you for the invitation to appear as part of your study on the impact of consumer debt in Canada.

I am a senior manager in recovery and insolvency at Raymond Chabot Inc., a subsidiary of Raymond Chabot Grant Thornton. I am a licensed insolvency trustee, or LIT, a profession regulated by the federal agency known as the office of the superintendent of bankruptcy, or OSB. Therefore, I act as a practitioner in the field of consumer and business insolvency and recovery on a daily basis. I should also note that I am the chair of the Conseil des syndics autorisés en insolvabilité du Québec. This organization represents nearly 225 LITs practising in Quebec.

From the outset, I consider the starting point of your study to be fully justified. My practical experience allows me to say that the problem goes beyond macroeconomic trends and recent statistics, which show the increase in the ratio of household debt and consumer insolvencies.

Moreover, the profile of Canadian debtors facing insolvency has changed in recent years. New consumer groups that were previously less represented in cases of insolvencies are now emerging, such as seniors, workers with fluctuating incomes and single-parent families. In addition, the rise in mental health problems and the ease of access to online gambling are all factors that influence insolvency situations on a daily basis.

For the middle class, it is seldom one bad choice alone that leads to insolvency. Rather, it is a succession of shocks and cost increases that gradually reduce their financial capacity. Many people are living paycheque to paycheque, with little room to manoeuvre, while the cost of living has risen sharply. In the end, it becomes difficult for consumers to balance their budgets, and a life event, such as an illness or job loss, can quickly tip the consumer into insolvency.

When liquidity runs out, non-mortgage credit becomes a tool for fiscal survival. This is also when many vulnerable households turn to high-interest credit or even payday loans to cover essential day-to-day expenses such as groceries.

Also of note is the case of owner households, which may appear to be financially steady because of the real estate equity accumulated in recent years. These households often lack liquidity, which complicates any refinancing. In the event of insolvency, the LIT takes into account the high value of the residence to propose repayment to creditors. However, these households generally cannot offer this value to creditors without selling their home, due to their already high debt-to-equity ratio. Selling makes it possible to pay off debts but forces them to move to a home that is often more expensive than the mortgage.

Another common problem is online fraud. Vulnerable people, especially the elderly and those living alone, are particularly affected. These individuals often contact us ashamed of having lost all their savings and going into debt because of malicious manipulators they met on the Internet.

Not to mention the fact that many debtors demonstrate a lack of financial literacy in that they struggle to differentiate between budget, income, assets and liabilities. They are often unaware of their debt structure or of their monthly income or expenses. The trustee then plays a key role in assessing the debtor's financial situation.

In closing, I cannot ignore the important role of LITs in the financial rehabilitation of consumers. We have little control over macroeconomic trends, but we remain the only professionals who can provide legal financial recovery measures to Canadian consumers. The regulatory framework, which is currently under review by the OSB to facilitate access to simplified insolvency proceedings and adapt trustee compensation, must evolve to ensure Canadians' access to LITs.

Thanks to your questions, I will have the opportunity to further clarify the picture of households in insolvency and the role and contribution of LITs. I would like to point out, however, that we can take action by limiting the damage and accelerating the return to balance in consumers' financial situations.

Thank you very much for listening.

[The Vice-Chair (Jasraj Hallan), Conservative, Jasraj Singh Hallan]

Thank you very much.

We'll move into our first round of questioning and start with Ms. Cobena for six minutes.

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

Thank you, Mr. Chair.

My first couple of questions will be for Mr. St-Arnaud.

In your opening statement, you mentioned the crowding out of business investment, which, of course, would ultimately affect jobs for Canadians.

Could you expand on that?

[Charles St-Arnaud]

What I meant by “crowded out” is that the excess borrowing we've seen over the past 30 years in the household sector reduces the availability of resources that can be loaned to businesses. A great way of seeing it is through total lending in the financial system. A constant increase in the share going to households is at the expense of the share going to businesses. There's a direct link. We've also seen business investment in machinery, equipment and intellectual property—which are productive investments—declining over the same period.

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

You also made a comment around the increase in government spending and deficits driving low productivity. Could you expand on that?

[Charles St-Arnaud]

Yes. That was comparing what we're seeing right now, with the impact of constant borrowing from households over the past 30 years, to the situation we saw in the seventies and the eighties, when successive governments, whether at the federal or provincial level, were running extremely high deficits. This led to a crowding out similar to what we see right now.

Business investment started to underperform significantly in the seventies and the eighties because of the excessive borrowing from government. We are not in that situation right now because government borrowing is much lower than it was during that period.

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

Well, that's important to know, of course, because we want to look at the trend of borrowing. Thank you for that.

My next question is for Mr. Amiot.

The Prime Minister has stated in the House that affordability is the best it has been in over a decade, yet consumer insolvencies reached 140,000 filings in 2025, which is the highest volume since 2009 and the second highest since your office began tracking in 1987, as I think you said in your opening statement. Could you speak to this trend of consumer insolvencies and what is driving that?

[Guyllaume Amiot]

Yes, absolutely.

I just want to tell you that my office has not done any statistics on insolvency. It's really the office of the superintendent of bankruptcy that compiles the statistics.

However, I can tell you that, in practice, we are indeed seeing an increase in insolvency as a result of people managing their budgets. Budget management has been, in a way, affected by the successive increases in the inflation rate for everyday items such as food and housing. It has definitely had an impact and made consumers more vulnerable.

At one time, the average consumer in our office was someone going through a life event: a job loss, an illness or a situation that really affected their financial situation. Today, they are people who, from month to month, have accumulated debt, sometimes at high interest rates, and used their credit card somewhat as a survival tool to be able to pay day-to-day expenses. It's something we used to see less of a while ago in our offices, and now we see a little more.

I don't know if that answers your question.

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

That was good. It reminds me of yesterday, when there was a senior in my riding, in Aurora, who approached me and said, “You know, I was looking forward to retirement. I worked very hard, but because of the cost of living, I have been forced to go back to work.”

Obviously, he's older. He's tired. I've known the senior for 21 years. He's still living in the same house, so he's very fiscally responsible. Would you agree, then, that affordability is in fact getting worse and that it's not the best it has been in the last decade?

[Guyllaume Amiot]

Obviously, I'm not an economist, so it's hard for me to look at trends specifically.

However, as I said, this is something we see in my office: people struggling to make ends meet month after month. Certainly, the clients who come to my office are having trouble affording some essential goods.

As I said at the outset, we have little control over the macroeconomy, but it does have an impact on the possibility of balancing a budget.

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

It has been well established that the cost of living is a central driver for insolvency. This includes, in particular, the rapidly rising grocery prices, which are up 30% since 2019. Do you believe that reducing the cost of transportation inputs—for example, by removing federal taxes on fuel—could help keep the prices of food down and relieve this pressure on insolvencies from Canadians?

[Guyllaume Amiot]

That's a great question. Once again, unfortunately, I can't comment on the major trends that this measure could involve, as I'm neither an economist nor a legislator.

However, anything that can lead to a reduction in the cost of food would certainly be welcome. In fact, a little earlier, it was said that 9% of budgets was allocated—

[The Vice-Chair (Jasraj Hallan), Conservative, Jasraj Singh Hallan]

Thank you, Mr. Amiot. That concludes the round.

Next we have Mr. Lavoie for six minutes.

[Steeve Lavoie, Liberal, Beauport—Limoilou, QC]

Thank you, Mr. Chair.

Good afternoon to all the witnesses and thank you for being here.

Mr. Amiot, I believe this is your first time as a witness. You'll see: It will go well and won't be painful.

I'm going to ask you an easy question, like the one I asked the other witnesses earlier. In your opinion, do consumers have too-easy access to credit?

[Guyllaume Amiot]

That's a great question. I think—

[Steeve Lavoie, Liberal, Beauport—Limoilou, QC]

Earlier, you talked about easy access to online gambling, in particular.

[Guyllaume Amiot]

Online gambling is indeed a particular problem. People who—

[Steeve Lavoie, Liberal, Beauport—Limoilou, QC]

What about access to credit?

[Guyllaume Amiot]

What I see in my office are people who are struggling, who have to choose between buying their groceries and paying their rent. I won't say that access to credit is a false debate, but I would say that it has become such a tool for people's survival that I don't necessarily see any potential limitation on that tool.

[Steeve Lavoie, Liberal, Beauport—Limoilou, QC]

I just want to tell you that I worked in banks for 20 years, and like you, I know businesses.

You're telling me that the majority of people who file for bankruptcy aren't people who have necessarily accumulated credit card debt, and that it's only for rent and groceries. Is that correct?

[Guyllaume Amiot]

No.