Finance Committee on April 23rd, 2026

[Sheri Aberback]

Absolutely. I think the earlier that you start on the education, the better it is. Even in primary school, you can start to explain to them what the math is: that you can only spend what you have. Back in the day—when you talked about having cash—when you had a $20 bill in your pocket, once it was gone, it was gone. Today, that's not the same thing. It's very easy when you tap with a credit card or a debit card and it's gone. It's fun. It's a different type of experience.

The earlier we can start teaching the kids, the better. Then, as it goes into high school and later on, you're hoping that they'll have a much better understanding as to the financial products that are out there and what it truly means to be solvent, to have more, to put away and to put aside—and to start, even if it's a dollar per week, putting away and saving for the future.

[Philippe d'Astous]

I can only agree with this.

One thing I want to add is that students come into my classroom and, for example, don't understand that you still pay interest on your credit card if you make only the minimum payment. However, once you teach them that you do pay interest, they understand it, and they're going to use it.

Financial education does work. Financial literacy is important. It's the basic building block to make sure that in the future they won't find themselves in over-indebtedness.

[Kent MacDonald, Liberal, Cardigan, PE]

High household debt is obviously something many Canadians are struggling with. As government officials, what would you recommend we do differently in policy, other than the affordability measures we've put in?

Since our government was formed a year ago, we've brought in a groceries and essentials benefit, which is going to help out families with up to $1,900 this year, and then with $1,400 for four years afterward. We've brought in a reduction in income tax rates for all middle-income Canadians. Are there other measures we should be looking at?

Anyone can opine on this.

[The Chair, Liberal, Karina Gould]

Be very brief. You have about 20 seconds.

[Grant Bazian]

Ultimately, for the long-term effect, to fix that would be education, as we all alluded to. On short-term effects, there definitely is an understanding that long-term debt is fine to have in this country. I was never brought up that way. I don't think you were, either.

It's difficult to fix it immediately. There's a long-term look we have to have here in terms of education and maybe changing society's outlook on debt as something you can have for a long period of time.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. MacDonald.

Mr. Garon for six minutes.

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

Thank you, Madam Chair.

I'd like to thank all the witnesses for joining us this morning.

I’ll start with you, Professor d’Astous. In the conversations we’ve had since this study began, I sometimes get the impression that we’re talking about debt as if it were inevitable, as if people were forced into debt or as if banks were lending them money without them asking. As I understand it, there’s also a factor of individual freedom at play here. People go into debt because they want to go into debt.

This brings us to the issue of financial literacy. To manage debt properly, you need to be able to create a budget and understand contracts. That requires financial literacy. Witnesses who appeared before the committee told us that Canada is almost a global model when it comes to financial literacy. I’d like to know if that’s true.

Beyond that, when we look at the research in this field—including your own—we realize that it’s not so much financial literacy that matters as the timing of when it’s applied. People often go into debt in circumstances where they are experiencing a shock, such as job loss. It's a very emotional and very short-term decision. These are moments when, sometimes, the rational side of human nature is not at the forefront.

What good is having taken financial literacy courses over the past 15 years when you’re forced to borrow at a time when you’re vulnerable?

What can be done to help people who are vulnerable when they borrow?

[Philippe d'Astous]

Thank you for the question.

When it comes to financial literacy, when I compare Canada to other countries in the Organization for Economic Cooperation and Development, or OECD, I see that we’re pretty much in the same boat. I wouldn’t say that Canada stands out significantly, either positively or negatively. We’re all pretty much the same. We all have our shortcomings.

Next, I’d like to come back to just-in-time education. When students walk into my classroom and I talk to them about retirement plans, pensions and annuities, they aren’t interested. But when we start talking about mortgages, credit cards, budgets, and loans and grants—that’s when they perk up. That’s what we see in our research, too. So, we need to make sure we talk to young people in the right way, at the right time, about the topics that matter to them and that will be relevant. If there’s a debt problem or an issue with sports betting, we need to go talk to these young people to prevent these problems before they arise.

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

So I understand that this is an ongoing process that varies depending on the stage of life.

A professor from the Institut national de la recherche scientifique, or INRS, came to talk to us about the difference between debt and excessive debt. According to her research, some people are overextended and highly vulnerable to bankruptcy, particularly to shocks that can occur at certain points in their lives: job loss, childbirth, workplace injuries and so on.

We know that the Canadian Employment Insurance program, for example, does not cover nearly half of those who should be insured. We know the importance of the social safety net. Many programs are provincial.

How can public policy—which is our social safety net—help us prevent the worst for certain households that have excessive debt or have been pushed into excessive debt due to personal circumstances?

[Philippe d'Astous]

In some of our research, we specifically examine job loss, using administrative data from Statistics Canada. We have found that in recent years, more and more people have turned to what is known as on-demand work or entrepreneurship after losing their jobs, resulting in income losses that can persist for several years. This is well documented in the literature on job loss.

The fact that we see, in our research, that people are turning to entrepreneurship suggests that there may be a gap to fill. We were talking about the 108,000 net job losses. Some of these individuals may turn to self-employment, gig work, or entrepreneurship to make ends meet.

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

Thank you.

Your opening remarks surprised me a bit. I get the impression that young people have never been more interested in financial matters, investing, or real estate. As I’ve mentioned several times to this committee, social media has played a major role in this. However, what you’re essentially telling us—to summarize—is that your students are unable, or nearly so, to create a budget or understand the financial implications of their decisions. I’m not saying this applies only to HEC Montréal. Please don’t take this as an attack.

Are young people perhaps misinformed? Are they getting their information from the wrong sources?

Furthermore, what role do the Autorité des marchés financiers, or AMF, the provinces, Quebec, and the federal government play in countering the misinformation circulating on social media, which has become a major source of information for young people?

[Philippe d'Astous]

As you so aptly said, it’s important to note that young people are more interested in personal finance than ever before. Of all the courses I teach, this is the one that interests people the most. However, it’s true that we sometimes have to steer them back on track, for example when they listen to podcasts or financial influencers.

Young people have access to a lot of information. There’s a lot of content circulating on social media, but in an academic setting, we’re able to refocus them, get them back on track, and show them, in a very practical way, the implications of their choices.

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

What about the ones who aren't going to university?

[Philippe d'Astous]

This is where it’s absolutely essential to consider financial literacy courses early on. In Quebec, we’re lucky because we have one. There’s a financial literacy course in grade 11. I’ve seen groups of students who took it and others who didn’t, since it’s a recent addition, and I see a difference in how they think about and approach these issues. So, obviously, this needs to start before students take my course.

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

Thank you.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Garon.

I will continue now with Mr. McLean for five minutes, please.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you, Madam Chair.

Welcome, guests.

I read MNP's brief on this, and the one statistic that we hear a lot is the number of Canadians—I think it's 40% of Canadians—who are within $200 of insolvency every month. Can you please explain what that means?

Does that mean that 40% of Canadians come home at the end of the month and realize that if they didn't have that $200 they had in their balance sheet right now, they would be facing bankruptcy? Is that what we're talking about? Can you please explain it? We've heard it for a long time.

[Grant Bazian]

That comes from our survey, and it's—

[Greg McLean, Conservative, Calgary Centre, AB]

Can you please explain what it means?

[Grant Bazian]

Sure, of course. It's a sentiment survey; this is what people feel. Whether or not they're going home and doing the math, they're feeling that at the end of every month, they're $200 away from being insolvent, meaning they cannot pay their debts in an ordinary fashion or that their assets are less than their liabilities. It's just a state of financial being. It's defined in our legislation. What they are feeling is that if they had $200 less every month, they may be insolvent and they may be at a point where they have to come see a trustee.

[Greg McLean, Conservative, Calgary Centre, AB]

Okay. Thank you.

I'm going to switch now to talking about debt service ratios, because, in Canada, our debt service ratio for consumers is around 14%. About 14% of disposable income in Canada goes towards debt service. The commensurate number in the United States is about 11%. It is 11% versus 14%.

Can you explain why it's higher in Canada than it is in the United States?

[Grant Bazian]

I really can't with any form of certainty. I would imagine that the cost of living may be a part of that. It could be relative to interest rates and inflation. I haven't really studied it enough to answer that with any sort of certainty.

[Greg McLean, Conservative, Calgary Centre, AB]

Our cost of servicing debt in Canada is 3% higher. About half of that is mortgage debt, and half of that is consumer debt of some some sort—autos or credit cards—yet the Bank of Canada rate is 2.25% versus about 150 basis points higher in the United States. The United States banks charge more interest, yet the United States consumer pays less interest.

Have you thought about how that doesn't work and how that equation isn't fitting for Canadians versus Americans?

[Grant Bazian]

I haven't done the comparison, so, no, I haven't thought about it.

[Greg McLean, Conservative, Calgary Centre, AB]

Maybe I can prompt you a little here. Our debt situation in Canada has mounted extremely high in the last handful of years. We're up to, at the federal level, $1.3 trillion in debt. When you include the provincial debt, we're at $2.5 trillion. There is an extra $2.6 trillion of consumer debt on top of that.

With the mounting debt in Canada, which is primarily from governments, do you see a potential crowding out of debt available for consumer means and, as a result, higher interest rates?