Mr. Speaker, data from the 2016 survey of financial security was used to assess how sensitive Canadian households could be to short-term income loss. While this survey was carried out a few years ago, the distribution of wealth evolves slowly over time, and as such, the survey is likely a reasonable approximation of the potential financial vulnerability of Canadian families going into the COVID-19 pandemic. The department estimated that over half of working households had insufficient liquid assets to fully replace a two-month interruption in after-tax income. As such, these households could see a significant deterioration in their living standards and would face difficulties in meeting their financial obligations or essential needs.
Financially vulnerable households are found across the country, with the highest shares in Atlantic Canada, Quebec and the Prairies. Younger households were at higher risk of financial vulnerability: 54% of younger households are financially vulnerable to a two-month work interruption, compared to 46% of older households. In a similar analysis, using the 2016 survey of financial security, the Bank of Canada found that households in the occupations most at risk from the pandemic, e.g., sales and service, had the weakest financial positions: https://www.bankofcanada.ca/2020/06/staff-analytical-note-2020-8/. Similarly, based on low-income cut-off thresholds, Statistics Canada reported that one in four working households would not have enough liquid assets to keep them out of low income during a two-month work interruption: https://www150.statcan.gc.ca/n1/en/pub/45-28-0001/2020001/article/00010-eng.pdf?st=DG2ZxWGC.
These results suggest that a sizable number of Canadian households had limited financial buffers to cope with temporary income losses during the pandemic. This finding underlines the importance of Canada’s COVID-19 economic response in targeting people who need it most and bridging Canadians through the shock: e.g., Canada emergency response benefit, Canada emergency wage subsidy and mortgage payment deferrals, among others. This support has been critical to helping minimize financial difficulties of households thus far during the pandemic.