Although the majority of Canadians are concerned about wealth inequality in Canada, a new report says they’re also underestimating the sizable gap between the rich and the poor.
The Broadbent Institute asked 3,000 Canadians how they think wealth should, ideally, be distributed in Canada and the results were fairly evenly allotted with the richest 20 per cent holding 30 per cent of the wealth. In that ideal, the poorest 20 per cent held about three times less (11.5 per cent) and those in the middle held roughly 60 per cent.
Those surveyed were well aware, however, that reality doesn’t reflect the ideal. When asked how they think wealth is actually distributed, Canadians thought the richest 20 per cent held 55.5 per cent of wealth, the poorest had 5.8 per cent, or about 10 times less. The middle class, while holding less, is still holding on to a sizable chunk.
The reality is even less rosy.
According to the Broadbent Institute, a left-wing think tank, Canada’s richest 20 per cent hold 67.4 per cent of wealth and, with debt taken into consideration, the poorest 20 per cent don’t even register on the scale. The middle 20 per cent actually hold nine per cent of wealth, considerably less than the 23.7 per cent Canadians said would be their ideal.
The numbers counted wealth as bank account savings plus the value of things such as real estate and stocks, minus the debts like loans such as mortgages.
Why is there such disparity between perception and reality? Rick Smith, executive director of the Broadbent Institute, said some simply have trouble believing how wide the gap is.
“Certainly, anecdotally, I have this experience all the time when I make speeches for instance and tell people that the bottom 50 per cent of Canadians only own about 5.5 per cent of all the wealth in the country. People can’t believe it,” Smith told Postmedia.
“The bottom 20 per cent of Canadians basically have a negative net worth and when I lay out the extent to which income and wealth is accumulated in the top 10 per cent or the top one per cent of Canadians, people have a hard time wrapping their heads around it.”
Broken down by political leanings, those who voted Conservative in the 2011 federal election were more likely to underestimate how much wealth Canada’s richest people own. Seventy-six per cent of Conservative voters also said the gap between the rich and the rest of us increased in the last ten years, compared to 84 per cent of those who voted for another party.
Supporters of the NDP were most likely to say in the gap is “a very big” or “somewhat of a problem” (93 per cent) compared to 90 per cent of Liberal voters and 74 per cent of Conservative supporters. With an overall average of 86 per cent of those surveyed expressing concern, it’s an issue politicians would be wise to pay attention to when Canadians head to the polls in 2015.
Smith said their findings show concern about wealth inequality isn’t “some fanciful left-wing notion.”
“There is a significant problem that needs fixing. Even Conservative voters agree with that,” he said.
He believes concern about the wealth gap is hitting a boiling point, as demonstrated by backlash over the Conservatives’ recently-enacted income splitting plan, which Smith said only stands to benefit Canadians who are already wealthy. The plan was announced during the 2011 election, but Smith said the reaction in Canada has since shifted.
“You have to ask yourself what changed between 2011 and 2014 and I think what changed is that public angst about income inequality and wealth inequality is now so profound that there’s a new acid test that Canadians are going to apply to any policy proposal, and that is ‘is this going to make income inequality better or worse,'” said Smith.
“Politicians who don’t pay attention to this issue do so at their peril.”
Overall, 73 per cent of Canadian surveyed said the government has a role to play in reducing the gap, with 80 per cent saying they would back higher taxes for the wealthiest income bracket.
An Organisation for Economic Co-operation and Development (OECD) report released last month found that in most of its 34 member countries, the income gap between the rich and the poor is at a 30-year high. While the incomes of the bottom 10 per cent have seen slow growth, if at all. The top 10 per cent, meanwhile, now earn 9.5 times more than the poorest 10 per cent. The report said this disparity in income has actually hindered economic growth in member countries.
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