We almost had an election campaign about the rising cost of living in 2019, but Liberal Leader Justin Trudeau’s blackface scandal took things in a different direction.
Two years later, we’re in the first week of an election campaign in which affordability has already become a big issue. The three main parties are hammering away on cost-of-living issues that include inflation, housing costs, daycare, cellphone bills and gasoline prices. Adding some urgency to all of this is the news earlier this week that inflation reached the highest level in a decade last month at 3.7 per cent.
A reality check on the campaign promises you’re hearing about right now: With the notable exception of reducing daycare costs, they will do little to reduce anxiety about the cost of living.
The reason is that worrying about our living costs and finances in general has become a permanent feature of life in the modern world, regardless of income. The fast pace of change in the global economy is part of it, especially the recent jump in the inflation rate. So are lingering issues in the Canadian economy, including the growth of temporary work at the expense of permanent jobs, and disappointing wage growth.
Another explanation is more personal. The internet and social media have intensified the pressure we feel to live well, and we worry about not keeping up.
“For some, the cost of living is about survival, it’s about getting through the paycheque to paycheque,” said David Coletto, chief executive officer of the polling firm Abacus Data. “For others, it’s a more of a lifestyle question. It’s, ‘Do I have enough to go on vacation? Can I put my kids in these after-school programs? Can I afford a new car?’”
A recent poll by Abacus found the cost of living was the most pressing issue in the election by far. Sixty-two per cent of respondents said this issue would influence their vote on Sept. 20, compared to 47 per cent for access to health care, 46 per cent for climate change and 42 per cent for the COVID-19 pandemic recovery plan.
The cost of living was also the top issue in the 2019 election, when it was mentioned by 55 per cent of participants in a similar Abacus poll. The inflation rate that September came in at 1.9 per cent.
Prices are rising almost twice as much today, and we have more economic uncertainty. But life in the summer of 2021 offers a few major financial advantages. If you’ve owned a house for any length of time, it’s way up in value. Same with stocks, and let’s not dismiss that as a benefit just for the well-off boomer. Young adults have participated in an unprecedented way in the market rally of the past year and a half.
Households fortunate enough to have maintained their jobs and income through the pandemic have also piled up a lot of cash held in savings accounts. The total value of that money was estimated at roughly $200-billion at peak levels. It’s undoubtedly being drawn down now, as the economy reopens, but still offers a massive financial cushion for some households.
A lot of people have had big financial wins in the pandemic, but it’s not soothing their anxiety about living costs. Mr. Coletto said rising house prices don’t help pay for groceries. Rising investments are often held in accounts for retirement and not used for daily spending.
Daycare is an area where politicians might really have an effect on living costs. You can get the lowdown on daycare expenses in episode seven of our Stress Test personal finance podcast for young adults. A quick overview: Median fees for infant care can run as high as $1,000 to $1,866 per month in Ontario, Alberta and B.C. cities, according to a study by the Canadian Centre for Policy Alternatives.
If you’re a parent of young children, then your best hope for relief on rising living costs in the election will be to compare daycare proposals. The Conservatives are offering a refundable tax credit for low-income families to cover up to 75 per cent of the cost of child care, while the Liberals and NDP have plans to offer $10-a-day child care.
Beyond daycare, governments can take just microsteps to help keep living costs manageable. Anxiety about the affordability of our lives is here to stay.
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