The Parliamentary Budget Office, about the only worthwhile thing to emerge from nine years of the Harper Conservatives, issued two significant reports last week. The first was the latest scenario for the COVID-19 pandemic’s impact on federal finances. It showed that despite what seems like a never-ending stream of spending commitments from Ottawa, the country’s fiscal outlook has improved.

A second PBO report was even more enlightening, providing at least a partial answer to the question of how to pay not only for COVID-19-related assistance but also for mending holes in the social safety net exposed by the pandemic. The report, Estimating the Top Tail (sic) of the Family Wealth Distribution in Canada, calculated that the top one per cent of Canadian families hold almost twice as much wealth as was previously believed. “Let the rich pay” should soon ring out across the land.

Looking first at the pandemic scenario analysis, it is the fourth completed by PBO since COVID-19 and the steep drop in oil prices shook up government budgets. In spite of an additional $24.5 billion in new spending announced since the April 30 analysis, the projected deficit is less than four billion higher.

That’s because the economic fallout has not been as bad as expected, with the economy shrinking by 6.8 per cent this year instead of the 12 per cent decline projected in April. The relatively larger economy translates into a debt-to-GDP ratio of 44.4 per cent, down from 48.4 per cent projected on April 30. It puts the ratio at the same level it was in 2002 and well below the peak of 66.6 per cent in 1996. So relax, we’ve been here before and made it through – albeit some just barely.

It must be noted that the latest scenario does not include the cost of the two-month extension of the $500 per week Canada Emergency Response Benefit (CERB) approved last week, or the modest cost of the proposed one-time disability benefit.[1] When those costs are added, the national debt may crack the $1 trillion mark, up from the PBO’s currently projected $962 billion.

A trillion dollar public debt may look a bit unsettling – until you look at the numbers in the PBO’s other report last week, the one on wealth distribution. There you find that Canada’s households had almost twelve times that amount in net worth in 2016 – $11.7 trillion – and the top one per cent of families owned 25.6 per cent of that.

That’s over $3 trillion, sufficient to pay off the national debt and leave $2 trillion in net worth for the 159,300 families in the top 1-per-cent. Their remaining average net worth of $126 million should be enough for them to keep food on the table and a leak-proof roof overhead. But that’s me on a tangent. Nobody is yet talking about confiscating one-third of the wealth of the top one per cent to eliminate the national debt.

Rich much richer

The PBO report looks at the bigger picture and what it sees in terms of wealth disparity is startling.

The analysis began with the observation of a disconnect between household wealth as reported by Statistics Canada’s Survey of Financial Security (SFS) and the wealth of Canadian families as reported annually by Canadian Business magazine.

The SFS reports families with wealth up to only $27 million, but the lowest entry on the Canadian Business list of Canada’s 100 richest people in 2016 had wealth of $875 million.[2] The PBO report attributes the discrepancy between the two sources to sampling and non-sampling errors in Statcan’s survey of 12,000 households,  especially the “higher survey non-response among high-net-worth families in the SFS.” In other words, the super rich are not participating in the survey, bringing down the average.

By recalibrating the SFS with the $11.7 trillion of household net worth estimated in the National Balance Sheet Accounts, PBO created the High-net-worth Family Database (HFD), showing the top one per cent of families holding 25.6 per cent of household wealth. That’s up from 13.7 per cent estimated using the Survey of Financial Security.

Even more startling, the share held by the top 0.01 per cent – the Canadian Business top 100 plus 1,500 other families – increases thirteen-fold, from 0.4 to 5.6 per cent. And as the table shows, using the PBO methodology, wealth gains at the top are matched by losses for the bottom 80 per cent.

Table 1: Differences in wealth measurement

Quintile Share SFS Wealth SFS Share HFD Wealth HFD Difference
Top  0.01% 0.4% $ 47 billion 5.6% $654 billion +1,291%
Top         1% 13.7% 1.602T 25.6% 3.010T +     88%
Top       20% 67.2% 7.862T 73.5% 8.633T +     10%
Middle 40% 30.5% 3.568T 25.3% 2.932T –       18%
Bottom 40% 2.3% $269 billion 1.1% $132 billion –       51%

Source: PBO and my calculations

The fifth column of the table showing Wealth using the High-net-worth Family Database reveals that the 1,600 families at the top have $654 billion in wealth, nearly five times more than the 6,378,800 families in the bottom 40 per cent. Wow. As the old song has it, the rich get rich and the poor get poorer.

In a classic understatement the report observes: “The distribution of wealth among households is heavily skewed toward the wealthiest families… In Canada, a small proportion of families at the top of the distribution possess net worth that is orders of magnitude higher than the country’s median net worth.”

The eye-opening report is not just an academic exercise. The PBO first looked at household wealth in response to a plank in the NDP’s 2019 election platform calling for a one per cent tax on household net worth in excess of $20 million. The PBO estimated such a tax would raise $5.6 billion in 2020-21, rising to $9.5 billion by 2028-29. The NDP finance critic is going to be asking for updated estimates using the new methodology. We haven’t heard the last word on wealth tax – a good thing given the glaring economic inequality revealed in last week’s report.



[1] Legislation supposedly necessary to extend the disability benefit failed to get through parliament and the government now promises to deliver it through “a different path forward that does not require the legislative changes.”

[2] Bringing up the rear of a list led by the Thomson family at $39.1 billion was Rob McEwen of McEwen Mining. Also on the list that year of local interest were the usual suspects – Irving and McCain families, Ken Rowe, John Risley and John Bragg.