Growing gap between rich and poor continues to increase in different parts of Canada
New report suggests gap growing between rich and poor in Atlantic region
Canadian Press: September 4, 2008
HALIFAX - A new study on household debt, financial security and the wealth gap in Atlantic Canada suggests things have grown worse for the region's poor over the past decade.
The latest Genuine Progress Index Atlantic report, released Thursday, concludes there is a very uneven distribution with the richest 10 per cent of Atlantic households owning about half the region's wealth while the poorest 40 per cent together own only 3.6 per cent.
"Even though the gap between the rich and poor provinces has grown that doesn't mean there isn't still plenty of wealth in Atlantic Canada,"said co-author Kimberley Tran in a release.
"The distribution of that wealth is just very uneven."
The authors of the 137-page report estimate one-quarter of Atlantic Canadian households have no wealth at all, since their debts, on average, are at least as great as their assets.
The region has at least 11,000 millionaires but about 77,000 Atlantic families are so seriously in the red that they wouldn't be able to pay off their debts even if they sold everything they owned, including their homes.
"Tens of thousands of Atlantic Canadians are suffering from severe financial stress," said Tran.
"They don't have assets to draw on to weather unexpected crises like job loss, sickness, or loss of an earning partner; and they can't deal with unforeseen and sudden cash requirements for home repairs, car repairs, medications or other needs that demand urgent attention."
The study says there's also an ongoing shift of wealth out of the region with households in Atlantic Canada experiencing the fastest growth in debt in Canada during the six-year period between 1999 and 2005.
Consumer bankruptcies have risen sharply in the region to levels much higher than in the rest of the country.
The GPI report found that poorer households are increasingly relying on high-cost debt sources, like credit cards and payday loans, just to make ends meet.
By contrast, wealthier households have the equity and financial means to access low-interest credit, which they can leverage to build assets and increase their wealth.
Tran concludes that governments need to pay greater attention to equity issues, to policies that enhance job and income security, ease student debt loads, and strengthen the social safety net.
"The evidence shows that financial security contributes far more to well-being than ever-higher levels of spending and consumption, particularly when a growing portion of that spending is financed by debt."
GPI Atlantic is an independent, non-profit research and education organization that seeks to measure sustainability, well-being and quality of life.