Finance Canada
commissioned Environics Research to conduct qualitative research among
Canadians in late January 2024 in the lead-up to the 2024 federal budget. The
research objectives were to assess Canadians’ concerns and perceptions of the
current state of the Canadian economy and related issues such as interest rates
and housing, their expectations about the role of the Government of Canada in
the economy, their current financial concerns, and their priorities for Budget
2024.
Environics
Research conducted a series of 10 online focus groups between January 24 and
30, 2024. A total of 74 Canadians took part in these group discussions
about Canada’s economy and provided their perspective on such issues as the
cost of living, interest rates, the middle class, pensions, housing, and the
upcoming federal budget. The online focus groups were conducted using the Zoom
platform. Two groups were conducted in each of five regions (Ontario, Atlantic
Canada, Quebec, the Prairies, and British Columbia), and were divided based on
age cohort (18-34, 34-55 or 55+) and/or housing situation (i.e., prospective
homebuyers, Canadians whose mortgage is up for renewal). The two Quebec
sessions were conducted in French and the other eight sessions were conducted
in English.
The
74 participants were all 18 years of age or over, and included range of age,
education, and backgrounds. The groups
lasted approximately 90 minutes and consisted of between six and eight
participants (out of 8 people recruited for each group). Participants were each
provided a $100 honorarium.
Statement of
limitations: Qualitative
research provides insight into the range of opinions held within a population,
rather than the weights of the opinions held, as would be measured in a
quantitative study. The results of this type of research should be viewed as
indicative rather than projectable to the population.
The
contract value was $129,893.50
(including HST). This includes
a subsequent round of post-budget focus groups reported on under separate
cover.
Use
of findings of the research.
By gauging and analysing the opinions of Canadians, the Government of Canada
gains insights into important policy areas related to the mandate of the
department and related services. The information gained through this public
opinion research will be shared throughout Finance Canada to assist it when
establishing priorities, developing policies, and planning programs and
services.
A.
Perceptions
of Canada’s economy
Most
participants felt the Canadian economy is in a bad state and used words such as
“unaffordable,” “declining,” “expensive,” “rough,” “strained,” “terrible,”
“unstable” and “unpredictable” to describe it. A few participants took a more
neutral view of the economy and used words like “recovering,” “flat,”
“transition” and “healing.”
The
overall economy received negative assessments largely due to perceptions of the
rising prices of food, housing, and gas. Utilities, fuel prices in Atlantic
Canada, insurance, and mortgage payments were also mentioned as contributing
factors. Some also reported hearing of lay-offs.
Some
participants, particularly from the Prairies and the Atlantic provinces, saw an
increase in crime and homelessness in their region as a sign of the distress of
Canadians struggling with the economic situation.
Common
concerns raised were that wages have not kept up with inflation and that there
is a growing gap between the rich who have become richer in recent years, and
everyone else.
Most
did not expect the economy to improve in 2024, anticipating a persistent rise
of inflation. Some were hopeful that interest rates may decline in the coming
months. Most say they would feel the economy was improving if they saw interest
rates being cut and some retail prices start to come down.
B.
Inflation
and the cost of living
Across
all regions, most participants understood that the cause of current inflation
is multifactorial and a global problem. The most common root causes of
inflation mentioned were continuing pandemic-related disruptions and supply
chain issues, price gouging/corporate greed, as well as the war in Ukraine and
middle east.
Almost
all participants said they were directly affected by the increased cost of
living. Most participants cited the cost of grocery prices and housing as items
that are becoming increasingly hard to afford. All participants also shared
examples of changes in the quantity (“shrinkflation”), as well as quality
(“de-qualification”) of the food they buy. The price of home heating oil was
also mentioned in Atlantic.
Most
did not feel that the federal government had played much of a role in causing
rising prices. A few participants, particularly in the Prairies, mentioned the
impact of the carbon tax and the “government printing money” as causes of
inflation.
Most
participants acknowledged that there was little the federal government could do
to reduce inflation, though price controls on essentials, rent controls, going
after price gougers, establishing a Universal Basic Income (UBI) could help
mitigate the impact of inflation. Some blamed the federal government for its
inaction, and some felt that tax cuts, especially to the carbon tax, could also
help.
C.
Interest
rates
Most
understood that the Bank of Canada was responsible for setting interest rates. However,
some – particularly in Quebec – suspected the federal government of also having
some say behind the scenes.
There
was widespread skepticism that raising rates will lead to lower inflation or
that reducing interest rates will make prices rise. There is little
understanding of how making many things more expensive by raising interest
rates will make things cheaper in the long run.
Most
participants said that inflation and rising prices were a bigger stress on
their household finances than were rising interest rates.
High
interest rates were a particular concern for prospective homebuyers - many of
whom are postponing their goal of home ownership - and for homeowners whose
mortgage renewal is due in 2024 or 2025 and who are relatively early in their
amortization period and pay a lot of interest. High interest rates are also
affecting some participants with other personal debts such as student loans and
car loans.
Many
expressed some expectation that interest rates may have peaked and would go
down in 2024 or 2025. In contrast there was more pessimism about inflation with
many expecting prices to keep going up to at least some extent. Some were
hopeful that prices might stabilize and stop going up at the same rate, but it
was understood that prices would likely never go back down.
D.
Supporting
the middle class
Most
participants classified themselves at various levels of the "middle
class", but they had varying definitions of what this means, recognizing
that the range from lower to upper middle class is vast. Some said it meant
just being able to meet basic needs such as food, housing and paying bills,
without needing to use a food bank. Others saw it as having enough to be able
to save for travel and other extras in life. The notion that being middle class
in Canada means being a owning your home was largely dismissed.
There
was little awareness of the federal government doing anything to help the
middle class. A few participants mentioned the climate action incentive payment
and $10-a-day childcare as examples of measures from the federal government.
There was also little sense of what the government could do to support the
middle class apart from cutting taxes.
E.
Pension
and retirement savings concerns
Many
participants expressed concerns about having enough money for retirement. For
older participants this was a more immediate concern and some spoke of having
to keep working despite wanting to retire. It was noted that if someone doesn’t
have a pension plan outside of the CPP they may have a very hard time ever
retiring.
Some
younger participants expressed concerns when prompted about ever being able to
save for retirement. But younger participants were often too consumed with the
immediate challenges of making ends meet to allow themselves to worry about it
right now.
Some
participants also reported having to financially help elderly parents who had
not saved enough for their retirement and how this was an added strain to them.
To
the extent that participants wanted the federal government to do anything to
help with retirement savings, they mentioned increasing the Canada Pension Plan
payouts or increasing the limits on how much could be contributed to Registered
Retirement Saving Plans (RRSPs). Some also mentioned cutting taxes or
addressing the cost of living in general so that people would be more able to
save for retirement.
F.
Housing
concerns
Housing
affordability was a big concern, particularly for participants in Ontario and
British Columbia where housing prices have been very high for many years, but
also in Atlantic Canada. It was less of a top-of-mind concern to participants
from the Prairies and in Quebec.
Many
participants who were homeowners aged 55 and over expressed concern for the
next generation getting into the housing market. Their own concerns were more
about affording repairs or about future downsizing.
Participants’
specific housing concerns focused on being able to afford rent, the exorbitant
price of homes making them out of reach for first-time homebuyers and the
impact of higher interest rates on mortgage payments after renewal. Many
younger participants were often very pessimistic about ever being able to
afford a place of their own and some worried about living with their parents
indefinitely.
Most
were unaware of any measures the federal government has put in place to assist
with housing affordability. Some had heard of the First Home Savings Account
(FHSA), but many pointed out that many Canadians are not in a position to save
right now, and that the $40,000 cap is too small for a down payment. Some also
heard of the Housing Accelerator Fund negotiations and about banning
non-Canadians from buying residential properties.
A
few people had also heard of new limits on international students which were
seen as hopefully reducing pressure on the housing market. In Quebec in
particular, there was some spontaneous discussion of the role of immigration
levels in causing a shortage of housing.
When
measures were shown to participants, cracking down on illegal short-term
rentals like Airbnb resonated mostly in regions known for facing such problem
(e.g., Toronto, Montreal, Vancouver) but didn't seem to be well understood
in other regions where Airbnb is less of an issue. The idea of cracking down on
non-Canadians buying residential property was quite popular among participants.
The
measures as a whole were viewed as good first steps, but some participants felt
that these measures would not help them directly or were skeptical about the
expected impact in the short to medium term. There were few suggestions for
what else the federal government could do to support housing affordability and
accessibility.
G.
Desired
budget priorities
The
budget priorities desired by participants focused mainly on the cost of living,
housing, healthcare, and education. Among the various specific measures identified
by participants to improve the state of the Canadian economy were controlling
food prices, implementing a universal basic income, maintaining interest-free
federal student loans, introducing controls over rent prices, regulating price
gouging, reducing taxes – including the carbon tax, lowering interest rates,
reducing foreign spending, opening more homeless shelters, investing in mental
health and prioritizing smaller scale affordable housing projects.
Health
care was mentioned spontaneously by some Quebec participants and some in
British Columbia specifically identified mental health as something that needed
to be prioritized.
Environmental
issues and climate change were rarely, if ever, mentioned spontaneously by
participants as a priority. Many were also dismissive of the idea of
prioritizing "green infrastructure", saying that the environment was
less of a top priority when Canadians are struggling to make ends meet.
Specific initiatives such as investment in public transit were more popular on
their own than when branded as part of “green infrastructure.”
When
showed specific possible budget measures, there was a lot of enthusiasm for
making the top 1% and wealthy corporations pay their fair share. There was also
widespread support for helping all Canadians train and retrain for new job
opportunities and programs to help the younger generation find good job
opportunities and more affordable post-secondary education.
I hereby certify as
senior officer of Environics that the deliverables fully comply with the
Government of Canada political neutrality requirements outlined in the
Communications Policy of the Government of Canada, and Procedures for Planning
and Contracting Public Opinion Research. Specifically, the deliverables do not
include information on electoral voting intentions, political party
preferences, standings with the electorate, or ratings of the performance of a
political party or its leaders.
Derek
Leebosh
Vice President, Public Affairs
Environics Research Group
derek.leebosh@environics.ca
(416) 820-1963
Supplier name: Environics Research Group
Contract
number: CW2328764
Original
contract date: 2023-09-05
For
more information, contact Finance Canada at por-rop@fin.gc.ca
