Canada’s Aging Population Puts Pressure On Government For Public Programs

Canada’s aging labor force is about to press public program budgets due to more workers retiring soon and the government should do more to prevent “relentless fiscal pressure,” as stated in a new report.

Colin Busby, C.D. Howe Institute associate director of research said that Canada’s younger employees will face two problems. One is the slow growing government revenues and also increased pressure on social programs.

“You’ve got increased pressures for a number of demographics and social programs, predominantly health care,” Busby said in the report.

Busby also said that changes have already made in Atlantic provinces, this is where the government is feeling the pinch of an older population. “I think that same level of understanding and commitment doesn’t really exist elsewhere in Canada,” he wrote.

One likely change in healthcare policy is testing an increase in home care he said. “That’s going to be a very important part of how we figure out who should pay for what,” Busby mentioned and also stating that we will need to have “uncomfortable discussions that we haven’t had, particularly when it comes to those sort of old-age components of healthcare.”

In addition the report also suggests to the federal Old Age Security benefit as a tool for the government to stabilize an older retirement age. This will however lead to tax increases for future working population. If the retirement age was to be increased from 65 to 67, this would reduce that increase.

Busby noted that Canada’s federal government should not approve workers retiring at a young age. “So there has to be a bit of working together between the federal government and the provinces to really look big picture at this intergenerational challenge and try to take it head on,” he mentioned.

Busby also said the Canada Pension Plan could be one of the solutions of how programs could be solved and made sustainable. In 2003 the government raised CPP contribution rates from 6 per cent of pensionable earnings in 1996 to 9.9 per cent. They also established the Canada Pension Plan Investment Board to control the money.

He said that financing these public programs like health care, the provincial and federal government has not yet handled the problem of the aging population due to it being a “slow-moving problem.”

“We have to be thinking about how to deliver our public programs more effectively, particularly those that try to give better health care to elder populations, and we have to start to design our programs in a way that accommodates their needs more effectively, yet also find way to even out the generational burden here.”

“We’ve known this is coming for a long time and we never dealt with it, and it’s a pity, and I won’t be the only young worker that thinks that way.” He wrote in his final statement.