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Statistics Canada is facing heat for its proposal to make Canadian banks hand over the financial information of 500,000 individuals in order to perform an analysis of spending patterns. A Conservative senator said on Thursday that the plan was “almost totalitarian.” The agency’s chief statistician, Anil Arora, has defended the proposal – but not very effectively. Here’s what we think he should say:

We have an ambitious plan here, and yes, there are risks. However, we believe these risks can be made smaller than those Canadians accept while banking online every day.

And we believe the benefits greatly outweigh the risks. Statscan uses data about spending habits to create an accurate picture of what’s going on in the economy – for example, the inflation rate. That in turn helps the Bank of Canada set its benchmark interest rate and determines payments from government programs like Old Age Security and the child tax benefit, which are tied to the Consumer Price Index.

A better picture of what people are spending, and on what, can also help policy-makers. If Canadians are spending a big share of their incomes on prescription drugs, say, that might tell us something about the need for better government drug coverage.

Right now, however, our picture of household spending is getting blurrier. Currently, we get a random sample of about 20,000 households to fill out a survey, but people are not responding to the survey nearly enough. The response rate is down to around 40 per cent, and those who do reply are leaving things out. Respondents sometimes forget about digital purchases like an Uber ride or a Netflix subscription.

The result is that we’re losing the ability to say with confidence how much stuff consumers are buying and how much they are spending. That leaves policy-makers in the dark and could create situations where we’re underpaying old-age pensioners or setting dangerously low interest rates that overheat the housing market.

So let’s have a conversation about the risks of giving banking information to Statscan, but let’s not leave out the risks of not doing so. A modern country needs reliable government data to make smart decisions. That can involve small intrusions of privacy. We think it’s worth it.

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