The federal government needs to close Canada’s financial help gap before it's too late

Canada’s affordability crisis is financially crushing low- and moderate-income Canadians who are increasingly spending down their savings and taking on debt they cannot afford just to make ends meet.
 
That is why Prosper Canada is calling on the federal government invest $85 million over five years to deliver free, community financial help services to 1.5 million struggling Canadians
 
According to Angus Reid, 1 in 3 Canadians report they are in “bad” or “terrible” financial shape, but this rises to 1 in 2 for the 40 per cent of Canadians with low and modest incomes, 80 and 94 per cent of whom respectively report they are finding it hard to feed to feed their households.
 
With housing and food insecurity at all-time highs, households at the bottom of the income scale continue to be the hardest hit but are the least likely to have access to the financial help they urgently need to escape deepening hardship.
 
Our research, conducted with financial sector companies, shows that they have little business incentive to serve this segment of the population. As well, they are generally not well suited to meeting some of the priority financial helps needs of low- and moderate-income households, such as tax filing and benefit assistance, debt management or credit repair.
 
As a result, people with low and modest incomes are less likely than Canadians generally to be able to access the financial help they need, even though accessing that help is associated with higher incomes and substantially greater financial resilience.
 
In fact, based on our projects, low- and modest-income Canadians who access year-round tax filing help from our community partners see an average annual income increase of $3,500. This critically needed income often means struggling households no longer have to choose between buying food and paying the rent. Individuals who are helped to file back taxes benefit even more, often receiving larger cumulative amounts they can use to find safer and better housing or pathways to greater security through training, education, or starting a small business.
 
The good news is that Canada already has a network of expert, community, financial help providers that have assisted over 1 million low- and modest-income Canadians to build their financial stability and health and connected them to over $1.26 billion in new income.
 
The bad news is that these services are tenuously funded, not available in many regions of the country, primarily serve only urban Canadians, and are unable to meet surging demand, with individual organizations turning away as many as 200 people a week.  
 
Financial sector companies and foundations have been stepping up to invest in community solutions, research, innovation and capacity building to help fill this gap, but they cannot take on funding of basic services on the scale we need to tackle this problem. This is the role of government. 
 
Canada’s National Financial Literacy Strategy has identified “expanding access to trustworthy and affordable financial help, particularly for vulnerable populations” as a priority target outcome. To date though, the federal government has failed to put money or muscle into tackling this challenge.
 
This needs to change now.
 
The federal investment Prosper Canada is proposing would establish non-profit Regional Financial Help Hubs offering free financial help across Canada, support a national toll-free Financial Counselling Hotline to serve residents of rural and remote communities, and help expand and promote a bilingual online Financial Self-help Hub with tailored information, tools and resources for low- and modest-income households.
 
Through these services, struggling Canadians will be able to access an additional $2 billion in income they are eligible for but not getting and get the help they need to stabilize financially and rebuild their financial health – paying down debt, repairing their credit scores, resolving benefit issues and building emergency savings.
 
Financial stability and security are the enabling foundation for every Canadian’s hopes, dreams and plans, and the bedrock on which our family well being and the futures of our children depend.
 
Surely that foundation is worth saving and every sector in society should be doing its part. It’s time for the federal government to step up or we’ll all be paying the price.