Canada is getting old. According to the latest census, the number of seniors exceeds the number of children in the country. However, it’s a close margin where seniors make 16.9% of the total population and children under the age of 14 compose 16.6% of it.
The increase in the senior population was mostly attributed to baby boomers – they are retiring and getting old – and the life expectancy in the country has greatly improved.
However, the same aging population is an indication that there will be greater pressure on government spending – healthcare being one of them. This increased government spending may lead to larger budget deficits and the consequent increase in the country’s debt in the foreseeable future.
According to a recent Fraser Institute study, the problem is big and visible enough to see.
However, governments – both provincial and federal – aren’t taking the relevant steps to prepare for the expected reduction in revenues and increase in spending.
The study reveals that between 2010 and 2063, people over 65 years of age will make up for more than 25% of the Canadian population. That is almost ten percent more than their current share in the population.
The increase will necessitate a proportional increase in public spending. In addition, as more and more people retire, Canada’s collective rate of labour force participation would decline too.
These two major factors working together will lead to major budget deficits for both provincial and federal governments – deficits that may amount to as much as $143 billion by 2045. This figure is three-and-a-half times bigger than the total budget deficits of the provincial and federal governments in 2017.
There is an escalating need for government to start making difficult choices that can help them deal with the impending crisis in a better way. To start with, the think tank suggests a reform to the policies surrounding economic growth and public spending.