Thank you, Madam Chair and members of the committee, for the opportunity to appear. My name is Vass Bednar. I'm the managing director of a new think tank, the Canadian SHIELD Institute, which is focused on securing our economic sovereignty.
I'm appearing today to elaborate on an essay that we published in the Walrus magazine. It was titled “How 'Buy Now, Pay Later' Seduced a Generation—and Trapped It in Debt”. We also proactively submitted a brief to this committee on this invisible problem of buy now, pay later in Canada.
A country loses economic sovereignty when it loses visibility into how households are coping and when private credit products start compensating for what is fundamentally a public policy failure. Buy now pay later is more than just a trendy checkout feature; it's a new layer of household debt infrastructure, and right now too much of it is invisible. Buy now pay later is often marketed as budgeting help for young people, but in practice it's microlending at the point of sale. It lets people typically split a purchase into four or more payments and defer the full cost of something major that they'll buy. I know you know what it is.
This sounds pretty harmless when we're talking about something like a sofa, a laptop or a one-time emergency purchase, but the concern that we raised and wanted to bring forward is that there's evidence that buy now pay later is increasingly being used to bankroll everyday routine needs: groceries, clothes, household goods and other everyday expenses.
This tells us two important things. The first is that we have that data blind spot. Canada has yet to clearly define buy now pay later in our legislative infrastructure. That means it doesn't show up in the numbers that my colleagues appearing today, my friends, cited, and that's a problem. Other jurisdictions have moved much faster to have legislative infrastructure reflect those realities.
Second, buy now pay later is symptomatic of a deeper prosperity problem. People aren't using these products because they're financially careless. They're using them because the math is not mathing. Paycheques are too low and costs are too high, so people are plugging holes. We need to pay attention to that and not demonize it. That is why we think that this committee should resist treating buy now pay later as a narrow consumer protection issue. Yes, we need more disclosure and understanding, but we also need to step back and ask ourselves why a product that was designed for larger discretionary purchases is becoming part of how people manage their everyday lives, including being used for groceries.
Our debt challenge in Canada is symptomatic of the broader prosperity and productivity challenge that many have been thinking about for quite some time. If wages don't keep up with costs, debt becomes a bridge. Rents, groceries, telecom bills, transportation and basic services have been rising faster than incomes. People are reaching for this credit product. Our productivity is weak, investment is thin and our living standards have stalled. We think, by now, that is a clear example of that shift.
Our recommendations are twofold. One is that this committee should identify and continue to pursue that gap. It's not that Canada has never considered buy now pay later or that a committee has never heard of it. We just haven't gotten to the finish line. If anything, we sometimes hide behind federalism a bit. We say that certain jurisdictions say it's not their key file or it's not their key element.
Second, we could maybe stretch the mandate of the study a bit. Debt is a prosperity signal too, and rising reliance on a short-term consumer credit product that's increasingly invisible and increasingly targeted to young people should prompt bigger questions about wages, market concentration, competition, productivity, housing costs and whether public policy has allowed too many essential markets to become too expensive.
Canadians cannot manage what policy-makers can't measure, but we also can't regulate our way out of a prosperity problem just by polishing our data dashboard. Buy now pay later needs to show up in our accounting, but the bigger question is why so many people need it in the first place.
Thank you so much. I look forward to the questions.