Media Clipping — Thurs, Sept.4th, 2008 The Chronicle Herald

Prospects poorer for the poor

The poorest households in Atlantic Canada are dropping into an ever-deepening financial hole, according to a report released Thursday.

The most striking find in GPI (Gross Progress Income) Atlantic’s 126-page report, Financial Security and Debt in Atlantic Canada, is that the disparity between rich and poor is increasing, said co-author Ronald Colman.

"We found an overwhelming reliance on very high-cost loans," he said, mentioning a dependence on credit cards and payday loans.

"What we were surprised to find is an increasing number of Atlantic Canadians and Canadians in financial distress during a period of apparent prosperity."

He said Atlantic Canada has money, with 11,000 millionaire households. But at the other end of the spectrum, seven times that many households are so deep in debt that they’d still be in the red if they sold off everything they owned, homes included.

Mr. Colman and another researcher used Statistics Canada financial security data gathered in 2005 and 1999 and a 1984 survey to come up with most of their findings. The most recent Statistics Canada sample size was too small to provide accurate breakdowns for individual Atlantic provinces.

The report’s co-authors found that a quarter of Atlantic Canadians have no wealth — their assets are matched by their debt. Another telling statistic is that the richest 10 per cent of households have half the region’s wealth, while the bottom 40 per cent of households account for less than four per cent of the wealth.

From 1999 to 2005, household debt in Atlantic Canada grew by 62 per cent, more than anywhere else in the country. Asset growth was only 35 per cent in Atlantic Canada, creating the widest gap in the country.

Household debt is defined in the report as the value of a household’s assets versus its debts.

The national rate for households in debt is 69 per cent, while Atlantic Canada’s figure is the highest at 74 per cent.

Mr. Colman said the researchers set out to look at debt, but the resulting figures said too much about wealth disparity to be ignored.

"Atlantic Canada is increasingly losing its share of the national wealth," he said.

GPI Atlantic’s report makes three recommendations:

• The federal government should find ways to ease the burden on younger households through such means as reducing tuition and student debt and increasing job and income security.
• People should be better supported to educate themselves about financial management.
• More study of equity-related issues should be done to keep an eye on trends.

Asked about the report, Premier Rodney MacDonald said the province is "doing a great deal" to help those struggling to make ends meet.

He pointed to the working families Pharmacare program, which he said is specifically designed to help 180,000 Nova Scotians who can’t afford drugs.

"That goes directly to the situation that many of these people find themselves in," the premier said after cabinet Thursday.

He said he plans to unveil a plan next week to help Nova Scotians deal with skyrocketing home heating costs.

But the premier also pointed out that growth in Nova Scotia’s economy has brought quality, high-paying jobs to the province.

"And that’s not a bad thing, either," he said. "We want to provide opportunity for all Nova Scotians, but we want to see more jobs that are higher-paying."

Dianne Swinemar of Feed Nova Scotia said fewer families are relying on food banks but those that do are becoming more dependent on them. She attributed the reduced number of clients to many unemployed people moving to Western Canada.

Families that continue to use food banks are using them more often, she said.

"Now we’re seeing those same families . . . just about every month and sometimes two and three times a month."

More than half of those families rely on social assistance, which isn’t matching the rising cost of living, Ms. Swinemar said.

GPI Atlantic is an independent, non-profit organization that received some provincial funding to complete the report but raised about 70 per cent of the cost itself through contract work.

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