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Ontario renters can’t wait: the province must step up

April 19, 2020

2-minute read

The federal government has announced $27 billion in measures intended to mitigate the economic hardship brought about by the COVID-19 pandemic. Another blog examines them in detail. Overall, the public response has been positive. When the economy slows down, governments are supposed to ramp up spending, making money go around, so businesses continue to operate and people continue to consume. The federal government has shown it is willing to do so, and that’s good news.

But time is of the essence, and these income supports will not reach people’s bank accounts for weeks or even months. Middle-income families can tap into their savings to bridge from here to there. Low-income families don’t have the same luxury.

Of particular concern is the 1.2 million Ontarian households who don’t own a home and whose primary source of income is wages and salaries or self-employment income. Everyone will be eventually affected by the COVID-19 crisis, but these families will be hit first. The rent is due soon.

Do they have enough savings to wait weeks for support? The short answer is most don’t.

Statistics Canada’s Survey of Financial Security (SFS) collects information on how much money households have in savings and property (assets), and how much they owe on mortgages, car payments, credit cards and other loans (debt). The purpose of the survey is to provide a picture of the financial health of Canadians. (The most recently available data is 2016.)

The two most common and most liquid assets for Canadian families are money in regular bank accounts and investments in tax free saving accounts (TFSAs). People can simply walk into the bank and leave with cash, any time. Sometimes they can even do it online. There is also a clear incentive to maximize TFSA contributions before putting money in non-registered investments, where earnings are taxed.

Using SFS data, we calculated how many of the 1.2 million Ontario households who pay rent and depend on wages or self-employment have enough money in regular banking accounts and TFSAs combined to go one month without pay. We did the same for two weeks without pay. Here’s what we found.

  • 49% (close to 600,000 households) have less than one month of employment income in regular banks accounts and TFSAs; the average combined amount is $1,400.
  • 37% (close to 446,000 households) have less than two weeks' of employment income in regular bank accounts and TFSAs; the average combined amount is $700.
(Some families use registered retirement savings plans [RRSPs] as a rainy-day fund. But 77% of the households with less than a month’s worth of savings don’t have RRSPs; the remaining 23% may or may not be able to make prompt RRSP withdrawals depending on the plan they have.)

The question then is, what will these families do 11 days from now when rent is due? Should they use the little money they have saved to buy groceries, pay this month’s higher-than-usual heating bill, or settle their rent? Too many Ontarians are presently grappling with that decision.

And that brings us to our provincial government. What has it done for workers and low-income families so far?

The labour minister has introduced legislation that prevents employers from requiring doctor's notes from sick employees—just like we had back in 2018 before this government cancelled Bill 148. The legislation will also increase job security by ensuring that employees unable to work for medical reasons won't lose their jobs.

The provincial government has also suspended all evictions notices, ensuring that people will not be thrown out on the streets while being ordered to stay home.

That’s a good start, but working families who pay rent will need much more from Queen’s Park.

They will need an income support program that complements and helps them to bridge the waiting time for federal supports, whose exact delivery date is unknown at this point.

And they will need decisive measures related to rent deferrals and rent forgiveness.

“Your government has your back,” the premier keeps saying. If there was ever a time to put your money where your mouth is, this is that time.

Ricardo Tranjan is a political economist and senior researcher with the Canadian Centre for Policy Alternatives’ Ontario office. Follow Ricardo on Twitter @ricardo_tranjan.

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