Canada Beyond 150’s Capital and Debt research team explored the future of ownership. The team looked at how accessing services, rather than conventional ownership, could benefit all Canadians. Its proposed policy recommendations include measures that could drive the development of new types of assets, and potentially lead Canadians to participate in the access economy.
Many Canadians are now deeply in debt. In 2017, the average Canadian household had a debt-to-income ratio of 167.8%, with 7.9% of them at 350% or greater1. This higher debt seems to be connected to the decline in labour’s share of national productivity. Wages have not gone up as quickly as the cost of housing, food, education and care. At the expense of their savings, Canadians service mortgage debt, car loans, credit cards, and lines of credits as sources of debt. Nearly 50% of Canadian households live paycheck to paycheck, and are more likely to fall into arrears from unexpected costs or sudden income disruption.
Governments, agencies, and non-government organizations offer support and programs to help Canadians manage debt and plan for their financial well-being. These include information provided by the Financial Consumer Agency of Canada on financial literacy to the Canada Pension Plan, and Learning Bond to support retirement and post-secondary education.
These supports offer help for Canadians to overcome challenges and achieve prosperity. Yet Canadians form fewer assets, and have higher debt levels since the post-2008 financial crisis. Future businesses and households, retraining and reproduction are all needed for economic growth, but respond negatively to high debt levels.
Access to services could displace ownership: Individuals are using digital technologies to access “solutions” rather than owning assets. In countries such as India, some forms of ownership (like cars) may be leap-frogged entirely. In China, the transaction volume of the access economy topped $500 billion USD in 2016, a 103% increase over 2015. Unlike the traditional economy, the access economy uses new technologies that let individuals rent out goods or services that they own, such as clothing, cars, rooms in houses, parking spots, tools, etc. This has made it easy to rent a product for a short period of time, and increased the goods and services we can access on demand.
If widely adopted, the access economy could free Canadians from having to buy goods, especially those that need financing. Consequently, Canadians could have more liquid capital, less debt, and potentially access to higher quality products. This could be useful in helping Canadian households lower their debt and avoid extreme debt. With fewer assets, Canadians could lack the collateral to access affordable credit. Depending on how far this new access model displaces ownership, an individual may no longer own their lifestyle–instead they might effectively rent it. This new model could either speed up the concentration of power and wealth, or break it up. The result depends on the makeup of peer-to-peer (e.g. Airbnb) and big companies (e.g. Zip Car) in the access economy.
More Canadians may be financially strained and may turn to shared goods and services to cut costs (choosing access to a vehicle rather than owning one could save the average Canadian family almost $3,000 a year).
More peer-to-peer exchange will likely make accessing goods cheap and fast. Goods that people previously had to buy to enjoy could become more accessible and non-rivalrous (e.g. goods and services that can be used by multiple parties simultaneously).
Better worker mobility could favour rented goods and services that cut down on resource expenditure. Month-to-month or pay-by-use services are easier to cancel than assets bought through conventional ownership models.
Canada Beyond 150’s Capital and Debt research team explored the future of ownership. The team looked at how accessing services, rather than conventional ownership, could benefit all Canadians. Its proposed policy recommendations include measures that could drive the development of new types of assets, and potentially lead Canadians to participate in the access economy.
Many Canadians are now deeply in debt. In 2017, the average Canadian household had a debt-to-income ratio of 167.8%, with 7.9% of them at 350% or greater1. This higher debt seems to be connected to the decline in labour’s share of national productivity. Wages have not gone up as quickly as the cost of housing, food, education and care. At the expense of their savings, Canadians service mortgage debt, car loans, credit cards, and lines of credits as sources of debt. Nearly 50% of Canadian households live paycheck to paycheck, and are more likely to fall into arrears from unexpected costs or sudden income disruption.
Governments, agencies, and non-government organizations offer support and programs to help Canadians manage debt and plan for their financial well-being. These include information provided by the Financial Consumer Agency of Canada on financial literacy to the Canada Pension Plan, and Learning Bond to support retirement and post-secondary education.
These supports offer help for Canadians to overcome challenges and achieve prosperity. Yet Canadians form fewer assets, and have higher debt levels since the post-2008 financial crisis. Future businesses and households, retraining and reproduction are all needed for economic growth, but respond negatively to high debt levels.
Access to services could displace ownership: Individuals are using digital technologies to access “solutions” rather than owning assets. In countries such as India, some forms of ownership (like cars) may be leap-frogged entirely. In China, the transaction volume of the access economy topped $500 billion USD in 2016, a 103% increase over 2015. Unlike the traditional economy, the access economy uses new technologies that let individuals rent out goods or services that they own, such as clothing, cars, rooms in houses, parking spots, tools, etc. This has made it easy to rent a product for a short period of time, and increased the goods and services we can access on demand.
If widely adopted, the access economy could free Canadians from having to buy goods, especially those that need financing. Consequently, Canadians could have more liquid capital, less debt, and potentially access to higher quality products. This could be useful in helping Canadian households lower their debt and avoid extreme debt. With fewer assets, Canadians could lack the collateral to access affordable credit. Depending on how far this new access model displaces ownership, an individual may no longer own their lifestyle–instead they might effectively rent it. This new model could either speed up the concentration of power and wealth, or break it up. The result depends on the makeup of peer-to-peer (e.g. Airbnb) and big companies (e.g. Zip Car) in the access economy.
More Canadians may be financially strained and may turn to shared goods and services to cut costs (choosing access to a vehicle rather than owning one could save the average Canadian family almost $3,000 a year).
More peer-to-peer exchange will likely make accessing goods cheap and fast. Goods that people previously had to buy to enjoy could become more accessible and non-rivalrous (e.g. goods and services that can be used by multiple parties simultaneously).
Better worker mobility could favour rented goods and services that cut down on resource expenditure. Month-to-month or pay-by-use services are easier to cancel than assets bought through conventional ownership models.