News & Insights

This is Paul Kershaw's first article for a new bi-weekly personal finance column for The Globe & Mail: It is a cliché now to suggest that young people today drink too many lattes and eat too much avocado toast, so can’t afford their major costs of living; that they rely too much on handouts from parents – far past when a responsible adult should. They want it all now without working for it. You may have heard this nonsense enough that you’ve come to believe it. As founder of Generation Squeeze, I’ve been on a mission to show it’s not true. Because these myths inflict real harm, causing many younger people to feel that they are doing something wrong, or that they are personally failing when they struggle to establish a solid financial foundation.

The unfairness within Canada’s housing system is a feature, not a bug. As Gen Squeeze has repeatedly pointed out, ownership of a home confers a unique tax advantage that cannot be claimed for any other asset. That’s because the principal residence exemption largely shelters  housing wealth from taxation. To understand the implications of this, let’s look at a couple of scenarios.

The poll we recently commissioned shows that a sizable minority of Canadians view housing wealth differently than wealth from other sources – especially when this housing wealth is held by retirees. This attitude stands in the way of policy solutions for generational fairness.  In particular, it’s harder to make the case for tapping into a small amount of housing wealth windfalls to create more affordable housing, or pay for services retirees want like long-term care and pharmacare.

In this month's Maclean's Magazine, Gen Squeeze founder Paul Kershaw argues for a progressive surtax on homes worth more than a million dollars. In making his case, he says "polling data shows that two-thirds of Canadians support the surtax." The poll being referenced was commissioned by Gen Squeeze to gauge Canadian sentiments about housing wealth.

It’s hard to escape the news these days that interest rates are going up in response to pressures from rising inflation. The most recent Consumer Price Index (CPI) release shows prices increasing at 6.7% annually, the highest since 1991. Inflation is concerning not only because higher prices are unpleasant – especially when wages and benefits don’t increase at the same rate.

John Ibbitson recently asked how Canada should adapt now that Canadians aged 65+ number 7 million given repercussions for medical care, long term care, etc. This is an important question. Generation Squeeze has been asking political leaders to consider the implications of an aging population for generational fairness for over a decade. But while Mr. Ibbitson deserves credit for raising the question, some of his solutions will lead today’s seniors towards a harmful legacy.

Another month, another record high notch in the Consumer Price Index, aka inflation level (as we discussed last time). Consumer prices increased by 5.7% over the last year, the most in over three decades. The price of everything has been rising, but leading the way, as usual, is home prices. They are up by a record 29% since last year; 3.5% over the last month alone.

Budget 2022 is an opportunity to continue to improve the health and wellbeing of all generations, from the early years onwards. Generation Squeeze's recommendations on priority actions to achieve this goal are summarized in this article. Some require bold leadership and action - others point to easy steps to improve accountability. All are pressing as we seek to build back better from the pandemic.

In January, Canada’s Consumer Price Index (CPI) rose 5.1%, the fastest annual increase in over three decades. This is worrying, but what is even more concerning to us, here at Generation Squeeze, is that the true rate of inflation is much higher than this CPI reading suggests. Last time, we discussed how CPI, as constructed by Statistics Canada (StatsCan), does a poor job at representing inflation because it doesn’t adequately respond to changes in home values.