For the millions of Canadians living paycheque-to-paycheque, affordability is top of mind when it comes to the federal budget set to be tabled next week. Prime Minister Mark Carney has already announced some affordability measures, including automatic benefits which will make tax filing easier, protecting the school food program and lowering costs for families travelling over the holidays.
And while it’s not clear if these measures will help people like Aneta Wozniak, she says every extra dollar in her pocket makes a difference.
“It’s a huge challenge to live in downtown Toronto,” she says. “With one income, it’s not enough to pay rent, buy food and pay my bills. Every day is so stressful.”
Wozniak is a single mom with a job and a side business baking cakes. She says she picks up extra shifts at work but is still behind on rent and worries she might soon be evicted.
“I don’t pay fully my rent because I don’t make enough,” she says. “My one income is not enough for me and my daughter. But I am doing my best.”
According to Statistics Canada, nearly half of all Canadians say the rising cost of living is impacting their ability to pay for daily expenses. Food inflation was up four per cent in September compared to the same month last year, following a 3.5 per cent year-over-year increase in August.
StatCan says household debt is also on the rise. The ratio of household credit market debt to disposable income now sits at 173.9 per cent on a seasonally adjusted basis. This figure essentially means that Canadians owe $1.74 in debt for every dollar of disposable income.
While the rising cost of living is having a greater impact on families with lower incomes, few are immune to the squeeze on finances.
“It’s fairly widespread,” says Josh Sheluk, a portfolio manager at Verecan Capital Management. “In all of the financial planning work I’ve done over the past six to 12 months, it’s more evident today that budgets are being squeezed than it has been in basically my entire time in this industry.”
Sheluk says he will be watching next week’s budget to see what impact it might have on income, corporate and sales taxes, as those are the areas that tend to have the biggest impact on his clients’ finances. He also notes some policies, like rebates for skilled trades and personal support workers, could be a boost to people working in those industries.
But Sheluk cautions that rarely do budget measures make an immediate impact on household finances.
“I can’t imagine anything in the budget that is targeted specifically for you that is going to be material enough to take you from a situation of financial despair to financial success overnight,” he says. “That is an unrealistic expectation.”
While spending is expected to increase in some areas, Carney has warned that sacrifices will have to be made during this period of economic uncertainty.
Sheluk says Ottawa has to strike a balance, which can be tough to do.
“What we can all agree we want (the budget) to be economically stimulative but there is a limit on how stimulative it can be without causing inflation.”
