Finance Committee on April 13th, 2026

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

Thank you.

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

Thank you.

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

That concludes this round.

Now we have Mr. Kelly for five minutes.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

We've heard testimony at this committee that the level of indebtedness is rising, that Canadians are reporting they're getting deeper in debt and that the size of outstanding credit is growing, but the number of participants is not really growing much. In other words, people are getting deeper in debt. We are not seeing a new crop of young borrowers who are able to get into home ownership. We are simply seeing people getting deeper into debt.

You talked about some of the consequences of that. You also said in your opening remarks that while there is flexibility—and we have heard that people are depleting their savings, refinancing their loans and cutting back on other expenses, including necessities—the kicker is unemployment. If people experience a loss of income, this is what triggers insolvency, bankruptcy and, in your words, erases the flexibility.

Could you talk about that? Let me ask you if you are concerned about the recent unemployment figures, in which we saw 108,000 full-time jobs lost in February.

[Charles St-Arnaud]

As I was explaining, a lot of the flexibility in the system comes from the fact that households haven't had an income shock in recent years. Yes, the unemployment rate has increased, but most of it has been due to more people coming into the labour force than big layoffs.

I agree that, since the beginning of the year, we've been seeing something a bit more concerning. We've seen some job losses, and the concern is there. Considering how much the average household has to spend of its disposable income to service debt, the question is what the consequences will be of losing this income. It means that a lot of the flexibility that was available to them, by lengthening the amortization of their loans and so forth, disappears suddenly. This will push households toward insolvency. That's the question for me. When I look at it as a macroeconomist, that's when I'm concerned. It makes the Canadian economy much more susceptible to negative shock because, if you have a critical mass of job losses, you could have a big wave of households falling behind and have an increased wave of bankruptcies and insolvencies that would have a further negative impact on the economy and on the financial system.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Right now, Canadians are not getting further ahead. We have seen over the last 10 years virtually unchanged per capita GDP. Incomes are not growing. You mentioned that for the majority of Canadians who are still working, they haven't experienced an income shock, but they are not seeing growing incomes. The per capita GDP is flat, so higher costs are simply coming out of their enjoyment of life, their ability to pay for things other than necessities.

Now we are seeing unemployment rising. Are you concerned that it's not a matter of higher incomes or a growing economy that is forestalling what would otherwise be a debt crisis, that we're barely getting by?

[Charles St-Arnaud]

At the moment, what I feel has been helping the economy in preventing a further increase in insolvency—considering all the shocks from underperforming purchasing power, increased costs, higher interest rates than in the decade before the pandemic—is the fact that households haven't seen the income shock, which has allowed them to better weather all those shocks.

The concern is going forward. Each time we have a negative shock, we need to be careful. If we see a big wave of rising unemployment and layoffs, this could unravel very rapidly.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

All right.

I have only a few seconds left. Is this your top concern around this extremely high level of indebtedness? Is unemployment the key to this?

[Charles St-Arnaud]

Well, employment is key to this. It's a very big vulnerability in the Canadian economy that could make a negative risk even bigger in terms of negative shock on our economy.

For me, what's also important is all the structural impact that brought us there. The high level of debt and the increase in borrowing have also—

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

Thank you, Mr. St-Arnaud.

Next we have Mr. Leitão for five minutes.

[Carlos Leitão, Liberal, Marc-Aurèle-Fortin, QC]

Thank you very much, Mr. Chair.

Mr. St‑Arnaud, we could continue to discuss these issues. I appreciated your comment that debt levels have remained relatively stable over the last ten years, but that they are high. They are high, that is a fact, but we are able to manage this situation. Of course, it increases vulnerability.

What I wanted to get at—and I find this interesting—is the issue of excessive household debt, which you raised. I fully understand the consequences of this, but do you have any idea, theory or impression as to what led to this? Why have Canadian households significantly increased their debt over the last ten years?

[Charles St-Arnaud]

I think there are various ways to explain and account for this.

Firstly, I think that, to answer a question your colleague asked, households have had very easy access to credit for several years. We see that it is even easier for households to borrow than it is for businesses, and this has, in a way, increased household debt.

Furthermore, we must not forget that we went through a period following the financial crisis in the late 2000s and early 2010s during which we benefited from very low interest rates for a very long time. This actually allowed households to increase their debt levels without necessarily seeing the impact on their monthly payments. So, for example, it allowed people to buy a bigger house, since interest rates were low, and this meant lower mortgage payments.

So, all of this together has contributed to the situation. From a much more macroeconomic and structural perspective, we could almost say that, in a way, it is linked to productivity. In a way, in Canada, we have adopted the wrong growth model over the last 30 years. We have placed a great deal of emphasis on economic demand, particularly from households, at the expense of supply and the ways in which we increase productivity and business investment.

We must not forget that, in order to consume, households must have an income, and that income depends on their wages. These wages depend on productivity gains. That is where we stand after more than 30 years. In a way, the elastic has been stretched to its limit, and we are now facing some fairly significant problems.

[Carlos Leitão, Liberal, Marc-Aurèle-Fortin, QC]

I see that the member for Mirabel agrees.

Indeed, I also believe that far too much emphasis has been placed on the demand side, particularly by keeping interest rates extremely low for too long, but also through all the measures subsequently implemented to facilitate access to credit. I am thinking of mortgages amortized over 30 years, or those with no deposit, for example, and other similar measures that have led to excessive debt.

Now, we must ask ourselves how we are going to sort this out. I believe this will be achieved by focusing, this time, on the supply side and by implementing measures and public policies aimed at increasing the Canadian economy’s production capacity.

I now come to my question: Do you not think we must also be mindful of consumer debt? If we implement measures too quickly to stimulate and promote supply—and therefore business investment, amongst other things—don’t you think we could cause a credit crunch for consumers?

If credit becomes more expensive and less available, that could also trigger problems, couldn’t it?

[Charles St-Arnaud]

Yes, I agree with you. We will need to balance the two approaches and ensure that there is a relatively constant and gradual transition or reduction in debt.

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

Thank you, Mr. St-Arnaud.

That concludes this round.

[Carlos Leitão, Liberal, Marc-Aurèle-Fortin, QC]

Thank you.

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

Next we have Mr. Garon for two and a half minutes.

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

Thank you, Mr. Chair.

I would like to address you again, Mr. Amiot. I am pleased that Mr. Leitão said we agreed on something. That can happen once in a while. However, there is always the question of how things are done as well.

Mr. Amiot, I would like you to tell us about older people, because in your opening statement, which is in the document you provided us with, you said that some older people were in great difficulty, that they were coming to your offices and that they needed to restructure their finances.

What is the typical profile of a person aged 65 or over, for example, who is experiencing financial difficulties? Where do these problems stem from? Is it because the person has a fixed income? Do you ask them to return to work? In a minute and a half, I would like you to outline a typical profile for us, with all the necessary nuances, of course.

[Guyllaume Amiot]

Indeed, we are seeing more and more of them in our offices. In fact, the elderly people we see are generally those on fixed incomes, whether from annuities, state pensions or benefits. Generally, these incomes are not very flexible, if at all. So, it is difficult, if not impossible, for them to increase their income to offset the inflation affecting them, unless they return to the labour market.

Generally, the people we see in our offices do not own a home, meaning they are not property owners with significant accumulated wealth. Rather, they are people who rely on state benefits or fixed-income schemes. Furthermore, it is clear that these elderly people are less accustomed to using the Internet and are therefore more vulnerable to cyber-fraud. We sometimes see people in our offices who have exhausted all their savings following a cyber-fraud incident and who will receive little or no compensation.

Sometimes, in our offices, we also see people who own their own homes. They will not file for insolvency, but, to get through a period of high inflation, they will have to take out a loan against the value of their home. We sometimes see reverse mortgages. These are products that generally have quite high interest rates and terms that are often disadvantageous to the elderly person. However, if that is what it takes to balance the budget—

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

Thank you, Mr. Amiot.

We now have Mr. Eric Lefebvre for five minutes.

[Éric Lefebvre, Conservative, Richmond—Arthabaska, QC]

Thank you, Mr. Chair.

I would like to thank the three witnesses for being with us.

Mr. Amiot, you have spoken to us about the debt ratio of our fellow citizens, which is too high. It breaks my heart to know that families have to use credit cards just to get by from month to month. We know that the cost of groceries, the cost of rent and the cost of gas have risen. For our part, we have put forward proposals to ease the burden on Canadians.

I would like you to paint a picture of the people who come to your office. Would you say that the range of people has widened, and that you are even seeing couples finding themselves in this kind of emergency situation, even though both partners are working?

[Guyllaume Amiot]

Indeed, people from all walks of life come to our offices. We therefore see both well-off people and those living in poverty or on very low incomes.

We find that there is a common denominator: liquidity. People on high incomes do indeed have access to property and equity, but the latter is largely or entirely out of reach because, firstly, their debt-to-income ratio is already too high, meaning their application for finance is rejected, and, secondly, they would not even have the financial capacity to take on a higher mortgage payment.

In fact, this applies to people who have an income and who are, let’s say, in the middle class, or even sometimes people with high incomes. We can confirm that we see people from all income levels in our offices.

A budget is something that fluctuates over time, but rarely adjusts quickly. If someone has recurring expenses, such as a car loan or mortgage payments, they cannot change these payments overnight. That is why we really do see people from all sectors of the population in our offices.

[Éric Lefebvre, Conservative, Richmond—Arthabaska, QC]

Have you noticed that these sectors have expanded over time? Do you now encounter a type of client who wasn’t in your offices two, three or four years ago?

[Guyllaume Amiot]

In recent years, very few homeowners used to come into our offices. We are now seeing more and more of them.

For example, when you want to make a consumer proposal, you have to repay the equity on your assets to your creditors. Even if we spread this repayment over a long period, these people are often unable to pay it off. This is what I mentioned in my opening statement, namely that people have to sell their homes, move into rented accommodation and pay higher rent than their mortgage payments.

We see this happening, but the Bankruptcy and Insolvency Act is designed this way. We therefore apply the act in its current form with the equity offset.

[Éric Lefebvre, Conservative, Richmond—Arthabaska, QC]

It is sad, because if people want to buy something, to create leverage, it is often through their main residence that they manage, over the years, to build up wealth. Now, unfortunately, they have to sell it, at a loss, to pay off their debts and end up in accommodation that costs them even more than what they were paying for their house. It is incredibly sad.

Mr. St‑Arnaud, you spoke of our economy being more vulnerable to shocks. I would very much like you to tell me a little more about that. You also spoke of the low productivity of our businesses. As we know, we are several decades behind global standards. I would like you to tell us more about the vulnerability of our economy.