Good news! 45 percent of Canadians are just a $200 bad break away from failing to meet their financial obligations. Oh, some context might help: that’s actually a 6 percent improvement from the last time the MNP Consumer Debt Index weighed in. 

As the sentences you just read suggest, Canada’s overall debt picture remains bleak. About a quarter of Canadians can only make their minimum credit card payments, and 22 percent are sinking further into credit debt. As of Q3 2023, we owed a collective $113.4 billion on our credit cards, an eye-popping number attributed to growing interest rates and the ever-creeping cost of living. 

These are not new developments. In May, Canada officially became the G7’s most debt-laden country, with the cost of homeownership singled out as the largest contributor. Ominous reports about the state of our finances appear like clockwork or, more fittingly, like monthly bills. These reports often end with worrying financial forecasts, a slurry of statistics and scenarios. But what does all this debt actually mean for Canadians? 

The secret costs of debt 

“Debt is the dirty little secret most people have,” says Stacy Yanchuk Oleksy, the CEO of Credit Counselling Canada. “We’ve melded your self-worth with your financial worth. And we’ve kept people uneducated about money. You feel like you’re the only one in the room, in the country, who just doesn’t know what’s going on. We would rather talk about everything else, including sex.” 

Debt-laden consumers often feel embarrassed and isolated. MNP’s report touches on this, with three in five Canadians attributing their stress and anxiety to debt. And our inability to talk about money with friends or family leads people to plug “financial help” into Google and click the first link, which may not be a legitimate one. 

“There’s a perception of what’s good and bad debt,” Oleksy says. “Student loans or mortgages, they’re okay. But when we get into credit card debt, high-interest loans, we don’t talk about that. You’ll ask friends about a hairdresser, but we’ll never ask for financial advice. People just keep their heads down, and it’s really stressful.” 

Thanks to a patchwork of regulatory authority, free credit counselling services exist alongside for-profit operations, predatory loans, and outright scams. In November, CTV reported on a rise in unlicensed debt firms that demand upfront payment for services they cannot legally provide, as well as scammers who slip through legal loopholes and social media filters to take your money and vanish.  

“It gets confusing,” Oleksy says. “We expect a consumer who’s experiencing tremendous stress to navigate this and figure out who’s for-profit, who’s accredited, what’s a scam, what’s legit. That’s hard on the best of days. Scammers run fantastic ads. I had a client who ran into a scam on Facebook and transferred $18,000 of crypto. Gone. Desperation fuels that, we’ll take the first life raft available.” 

Governments have struggled to adapt to the sheer bandwidth at which modern scammers operate, but our financial omertà is especially prone to sending desperate people into their waiting arms. There is no simple solution, but Oleksy advocates for greater financial education in primary school and beyond. 

“There are so many opportunities to teach people at every age about money,” Oleksy says. “You can give kids some basics about impulse control, budgeting, saving, investing. If you’re going to university, a class on financial education isn’t going to do you any harm. A lot of universities will allow credit card companies to come and advertise. You’ve got students signing up without understanding the fundamentals.” 

That ignorance can continue into adulthood; how many people sign a mortgage without fully understanding it? Olesky notes there are further opportunities to educate adults, such as offering credit counselling in employee benefit packages. Those, however, are long-term ideas. In the short term, some obvious problems loom. 

Debt is forcing more Canadians to work past retirement age; over half of working Canadians over 60 are still working out of financial necessity. Those who have retired aren’t necessarily doing so in comfort, as Deloitte found that 73 percent of near-retirees households would not be able to weather the financial burden of long-term medical care. 

“Any dollar that goes towards debt is a dollar not paying for whatever someone wants to do in their retirement,” Olesky says. “Children can be a stressor too. A lot of adult children will move back home or ask for money. We’ve seen grandparents getting into financial difficulty trying to help their children or grandchildren out. It gets miserable and messy.” 

Collectively, these problems are a potent cocktail. “I’m an eternal optimist, but I think the debt load is going to go up. Worst case scenario, insolvencies will continue to climb, and credit card debt will continue to climb. Many Canadians are absorbing shocks, but that’s not sustainable forever.” 

Making housing less worse 

It’s impossible to discuss debt without discussing housing; 74.3 percent of our household debt is tied to mortgages. Easing this financial burden—or, more realistically, slowing its growth—is essential to keeping Canadians afloat. To start with some good news, UBC economist Thomas Davidoff is cautiously optimistic about the homeowners of 2020 and 2021 weathering imminent refinancing.

“I think rates are starting to come down, so those people are likely to be in better shape than the class of 2019 or 2018 was,” Davidoff said. “We got through the class of 2018 okay, people reset at higher rates and there hasn’t been a flood of properties on the market. I think a scenario where people are defaulting left and right is unlikely, albeit not completely out of the question.” 

Rate cuts are expected to produce a growth in home sales, despite prices still climbing. Rent, however, continues to squeeze Canadians—nationwide average rent went up 11 percent in 2023—and there are few options for short-term relief. 

“It’s a tough rental market,” Davidoff says. “There isn’t a way out of the housing disaster that people who don’t currently own a home face.” Still, he notes that few of us would want to live in a world where a wave of mortgage defaults collapses the market. So what are our options? First, to state the obvious, we need to build more homes. But to avoid debt or disappointment, Canadians need to adjust their perception of what a good home is. 

“More houses will really help. There are too many people for not enough homes. But lots of people will always want to be in Canada. There’s just a lot of parts of the world that aren’t in great shape. I think it’s great that Canada is so welcoming, but the downside is that it makes the housing market more competitive. We need more apartments. People are going to have to compromise in what we get in a home.”  

Some gears are turning. “Provinces, and particularly the federal government, are clearly acting. They recognise they have to get more multi-family housing built. The accelerator fund has forced the provinces to deal with municipalities that won’t upzone.” 

And, to be blunt, time will take its course. “The age pyramid might start to get more favourable,” Davidoff says, as boomers, predicted to sell en masse since the ‘80s, enter nursing homes. In the interim, there are some policy options. Davidoff’s work contributed to a speculation tax on non-local owners in British Columbia, and he argues that further tax restructuring could help ease the rental burden. 

“Raising property taxes and cutting income and sales taxes, that helps renters at the expense of owners. Probably most of the country would benefit from a shift away from sales taxes to property taxes, which subtract from the price of homes. So that would be efficient, and it would help renters, but politically it would be very hard because people hate paying property taxes.” 

Changing our expectations 

Ultimately, both Olesky and Davidoff were blunt about the need for Canadians to reexamine their housing goals. “Give up on your dreams” is not pleasant advice, and communicating it is political suicide. But reality tends to prove unyielding no matter how much we object to it.   

“Rates are probably going to come down and we’ll get through the rodeo without too many people getting in trouble,” Davidoff says. “Governments are really working on the policy level, but I think all the policy options on the table involve making the rate at which things get worse slower. I don’t think everybody gets a nice home that they like at a reasonable price. That’s not coming back.” 

With housing out of reach for the foreseeable future, how will Canadians react? How should they react? “The economic conditions for every generation are different. It’s easy to feel ripped off,” Olesky says. “Everyone needs shelter. I rent. Do I want a forever home? Yeah, but I don’t need it. Homeownership has become this dream everyone has to achieve, where you’re a better person if you have a home. But if you go to the bank and they give you more than you can really afford, the riskier it becomes when we have economic shocks.” 

It would be insipid to conclude that our debt woes and housing crisis could be solved if everyone cut back on Starbucks, but as crushing as the cost of living has become, Canadians are trying to reclaim the unique conditions of the past. If we don’t embrace caution and realism, that could lead to an ugly future. 

“I think we’re starting to see people say, ‘Hey, let’s reconsider this whole immigration thing,’” Davidoff says. The rate of growth might be addressed by immigration policy, but fundamentally if we want to offer people the opportunity to come to Canada that’s going to impact the housing market. My preference is to deal with housing. But the Trumpian attitude of ‘They’re taking your house,’ it’s only a matter of time because younger people must be pissed off.”

Now that a new year is upon us and red-robed Supreme Court justices have returned to their seats in Ottawa, we at The Hub thought it would be a good time to ask lawyers and law professors from across the country which significant and potentially impactful Supreme Court cases they will be keeping an eye on.

Here’s what they’ll be watching for in 2024:

Should ministers’ mandate letters be secret?

Gerard Kennedy, assistant professor, Faculty of Law, University of Alberta (Edmonton, Alberta)

2024 will almost certainly see the release of the Supreme Court’s decision in Attorney General of Ontario v. Information and Privacy Commissioner of Ontario, et al. Heard by the court last spring, the case concerns Premier Doug Ford’s refusal to release the mandate letters he sent to his cabinet ministers in 2018.

Despite often disagreeing on high-profile cases, Justices Andromache Karakatsanis and Malcolm Rowe asked similar questions in the hearing: if first ministers wish the mandate letters to be the beginning of a conversation with their cabinet ministers, in an effort to craft government policies, they must logically remain confidential. Perhaps not coincidentally, Justices Karakatsanis and Rowe both previously led their provinces’ civil services.

There is no question that Ford could choose to make the mandate letters public like Prime Minister Justin Trudeau and former Ontario Premier Kathleen Wynne did. But doing so essentially turns them into press releases. There is nothing wrong with press releases. But, it is another matter whether first ministers should be obliged to release press releases at the expense of starting real discussions with their cabinet.

The case also raises another important issue: should Ontario’s Information and Privacy Commissioner be deferred to in deciding whether mandate letters are subject to cabinet confidentiality? Despite the Attorney General of Ontario conceding the answer to this question is “yes”, several judges at the hearing asked whether this should be the case. Shouldn’t documents subject to such confidentiality have that secrecy maintained whether before a particular bureaucrat or any other actor in the justice system?

Soon enough, the Supreme Court will give us its answers to these questions.

Should governments be able to recover opioid health-care costs from companies?

Andrea MacNevin, Lawyer at Barteaux Labour and Employment Lawyers (Halifax, Nova Scotia)

I’ve selected Sanis Health Inc., et al. v. His Majesty the King in Right of the Province of British Columbia, which will be heard this May. This case is on one hand a fun Canadian constitutional interpretation case for all the nerds at the front of the class. On the other, it has important ramifications for our ailing health-care systems to either recover costs for opioid-related damages more efficiently or in lengthy piecemeal cases.

The Opioid Damages and Health Care Costs Recovery Act (ORA) created a new tort of an opioid-related wrong, providing government the ability to recover health-care costs relating to opioid-related wrongs from the manufacturers and distributors of opioid drugs. The money collected in damages would go back into health care, so it’s not directly restorative for individually affected families but hopefully would slow or curb opioid wrongs committed by corporate actors, which may save or lengthen lives.

There was an active class action lawsuit brought by the province of B.C. against manufacturers and distributors of opioids at the time the ORA came into force. Section 11 of the ORA allows British Columbia to bring an action on behalf of a class consisting of one or more of the governments of Canada and the provinces or territories. The applicants (which includes Shoppers Drug Mart), who are the named defendants in a proposed class proceeding brought under the ORA by the province of B.C., claim that goes beyond the scope of constitutional powers granted to provinces under the Constitution. They say it should be deemed of no force and effect.

The B.C. Supreme Court dismissed the defendant corporations’ application, which was upheld at the B.C. Court of Appeal.

How much should third parties be able to influence your vote?

Bruce Ryder, associate professor at Osgoode Hall Law School (Toronto, Ontario)

At issue in the appeal of Working Families Coalition  v. Ontario, to be heard by the Supreme Court, is the constitutionality of the spending limit of $600,000 on third-party political advertising that is applied for the year before the start of Ontario election campaigns. Third parties include groups like unions, special interest groups, and corporations.

When this limit was first enacted in 2017 by the provincial Liberal government it applied only to a six-month pre-writ period. In 2021, the Ford government doubled it to 12 months. Working Families along with several teachers unions successfully challenged the 12-month period as an unreasonable limitation on freedom of expression. The Ford government then decided to preserve the law by adding a notwithstanding clause to legislation for the first time in the province’s history.

After a lower court ruled with the government, Working Families then launched a new challenge, alleging Section 3 of the Charter (the right to vote) had been violated. Voting rights are among the few rights not subject to the notwithstanding clause legislative override. The Ontario Court of Appeal, in a split 2-1 decision, found that extending the pre-writ third-party spending limits to 12 months infringed the informational component of the right to vote, protected by Section 3 of the Charter. They found it undermined the ability of citizens to meaningfully participate in the electoral process.

The Ontario government’s appeal gives the Supreme Court an opportunity to address the scope of the right to be reasonably informed of your electoral choices as part of your right to vote.

At what point do spending restrictions cease to be voting rights-enhancing and become voting rights-restricting? The appeal raises important issues regarding the respective roles of courts and legislatures in determining the rules that shape our electoral democracy. The appeal also gives the court an opportunity to explore the relationship between freedom of expression and the right to vote. This issue is especially important because freedom of expression is subject to the notwithstanding clause, while democratic rights are not.

Who’s got the power?: judicial review of government’s actions

Paul-Erik Veel, partner at Lenczner Slaght LLP (Toronto, Ontario)

Two cases that will be heard by the Supreme Court in 2024, raising seemingly unrelated issues, will decide significant questions about the underlying relationship between our governments and our courts. Auer v. Auer raises the legality of the Federal Child Support Guidelines, which set out rules around the amounts parents must pay in child support.

Meanwhile, TransAlta Generation Partnership v. Alberta (Minister of Municipal Affairs) has to do with the legality of portions of the Alberta Linear Property Assessment Minister’s Guidelines, which involves calculating municipal taxes.

While the specific issue in each case is different—child support and taxes—both cases raise the same underlying issue: how should courts review government regulations?

Meaningful judicial review of government action is truly a cornerstone of the rule of law. While the role of courts in reviewing government action has been hotly debated in this country for decades, those debates were largely settled by the Supreme Court’s 2019 decision in Canada (Minister of Citizenship and Immigration) v. Vavilov. Interestingly, that case involved the Canadian Registrar of Citizenship’s decision to cancel the citizenship of a man named Alexander Vavilov because his parents were covert Russian agents. That landmark decision set out a framework for judicial review that was relatively clear, consistent, and defensible. 

What it did not decide, however, is how courts should review the legality of regulations declared by the government. That is, how should courts evaluate whether regulations established by the government are properly authorized under their enabling statute?

This is a critical issue to the scope and legitimacy of the government’s authority since much of the modern administrative state is defined not by legislation but by regulations.

In a 2013 decision in Katz Group Canada Inc v. Ontario (Health and Long‑Term Care), involving Ontario banning the sale of private label drugs in pharmacies through regulations, the Supreme Court established a very deferential standard. It stated government regulations should only be held ultra vires (beyond the authority of the courts) when they are shown to be “inconsistent with the objective of the enabling statute”. This standard has made the vires of regulations virtually impossible to challenge.

So, both Auer and TransAlta squarely raise the question as to whether the extremely deferential standard in Katz continues to apply to the assessment of regulations, or whether that standard must be revisited in light of Vavilov.

These cases will be key ones to watch in 2024, as they determine fundamental questions about what the rule of law actually means, and how far courts must defer to government legislation.