Now that the political universe has unfolded the way the Conservatives have long believed it should, Canada’s new natural governing party is taking stock of the challenges ahead.
The Conservatives have proven to be expert in knowing who votes for them and who doesn’t, so they are likely to be tracking Canada’s demographics closely. But if the government is not, there have been two recent rude reminders that it should be.
Recently, some internal documents from Human Resources and Skills Development Canada that surfaced in the media have warned of an impending demographic “perfect storm”: age-related spending is expected to balloon as both economic productivity and government revenue deflate.
HRSD Canada’s briefing notes point to Canada’s “dependency ratio” — the proportion of retirees to taxpayers who can support them. That ratio is projected to fall to 2.5 taxpayers per retired person by 2050, down from 4.7 in 2009.
There was a time when the Canadian economy was cranking out annual productivity gains of 4% until 1973. But as the workforce has aged, productivity gains have averaged 1.2% a year between 1976 and 2,000 and a measly 0.7% a year between 2000 and 2008.
Over the most recent 15-year period, the number of seniors has grown by 3%. Statistics Canada projects that the number of Canadians 65 years and older will grow by 3% — a year — over the next 15 years.
This is why parliamentary budget officer Kevin Page has been nagging the federal government to start thinking hard about what will be holding up Canada’s welfare state in the years to come.
Just before the new majority government was sworn in after the May 2 election, Page had said Ottawa needs to be planning for the impending spike in health-care and benefits costs for the elderly.
So far, the Harper government has been dismissive of Page’s warning. But its own figures point to what is ahead.
The May issue of Finance Canada’s monthly Fiscal Monitor states old-age security payments had jumped by $1.1 billion (4.4%) over the first nine months of the fiscal year ended March 31.
An aging population stands to increase government spending and decrease government revenue. As a result, the Conservatives are likely to have a more difficult time politically in eliminating the current budget deficit than the Liberals did with theirs in the 1990s.
So far, the Conservatives have responded to the aging demographic by creating a junior cabinet portfolio for seniors. They probably know that is far from enough.
Watch for signs of a policy shift on the retirement system after the 2012 budget. As things stand now, the Conservatives are hoping the 2012 budget will be the decisive measure to get rid of the deficit. After that, the Conservatives will begin preparing older Canadians for less expensive retirement and health-care systems.
At the other end of the age spectrum, Brigitte DePape, the 20-year-old Senate page who told Canadians to “Stop Harper” during the recent throne speech, may have done the Tories a favour by alerting them to changing attitudes among her generation. Figures from the May 2 election show younger voters were a driving force behind the New Democratic Party’s surge.
There are increasing signs the so-called “millennial generation” is polarizing against the Tories. A quick surf around the Internet shows an increasing number of websites that demonstrate a visceral dislike among young voters, such as Harper Dictatorship.com or shitharperdid.ca.
The children and grandchildren of the baby boomers may not dominate politics as quickly as their parents did with Trudeaumania in 1968. But they will be an increasing force throughout this decade.
The next four years will be tricky for the Conservatives. First, they have to deliver on their promise to get rid of the deficit by 2014. But they will have to renew the health accord with the provinces in the same year, at a time when health-care costs will be rising sharply. The retirement system and the aging population will have to be dealt with — at the same time as trying to appease younger voters.
Much of what happens in the 2015 election will depend on how well the NDP can adapt to the prospect of power in the next four years. IE
Deficits vs rising costs
With both deficit-reduction efforts and rising government costs, the next four years will be tough for the Tories
- By: Gord McIntosh
- June 24, 2011 October 29, 2019
- 11:03