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The aging of our
society is the single biggest issue facing Canada
- Including our Goan Community
Look at Florida to see what
the future holds for us
TheStar.com - opinion –
May 06, 2007
RUDYARD GRIFFITHS
http://www.thestar.com/printArticle/210635
Want to see what the future has in store for Canada?
Forget about crystal balls, soothsayers and opining
pundits. The future of the country is unfolding in
real-time in our favourite winter getaway destination,
the state of Florida.
No, I am not predicting climate change will transform
Toronto into a city of alligators, citrus groves and
palm trees on the banks of Lake Ontario. What Florida
today and Ontario in the not-so-distant future have in
common are an aging population, a shrinking workforce
and sky-high government expenditures.
One in five Floridians today is over 65 years of age.
The Sunshine State currently has the fourth highest
level of per capita drug sales ($10 billion last year
alone) nationally and the third highest payments for
Medicare benefits as a percentage of state GDP.
An aging population also means Florida has the worst
old age dependency ratio of any state - e.g. the
percentage of working-age taxpayers versus retirees.
As a result of declining tax revenues, the state has
clawed back public health-care programs and an array
of social entitlements.
In 2020 - a short 13 years from now - the average age
of Canada's population will be that of Florida today.
In addition to more "early bird" dinner specials and
neighbourhood walking groups, Canada too will confront
an unprecedented rise in public expenditures and
declining government revenues.
Economists estimate the increase of Canadians over the
age of 65 to 18 per cent by 2020 will cost $38 billion
per year - more than all the money the last federal
budget allocated to address the fiscal imbalance
through to 2014.
The culprit here isn't simply rising health-care costs
- these make up less than half of the $38 billion
annual tab. Rather, our looming social and financial
crises are the product of a dwindling workforce and
exploding numbers of retirees.
Specifically, decades of comparatively low birth rates
are combining with the retirement of the baby boomers
to drain Canada's workforce along with government
coffers. At current employment levels, a modest 4 per
cent decline in overall employment by 2020 would
translate into a loss of $20 billion in tax revenue.
This loss would occur alongside an additional $12
billion in pension payments to the 5 per cent more of
Canadians over the age of 65 by 2020.
Significantly raising immigration levels to increase
Canada's workforce to drive up government tax revenues
will only delay the inevitable as the average age of
newcomers is only slightly lower than the population
as a whole.
What about increasing fertility rates? Canadian women
are having on average 1.5 babies each - half a child
short of population replacement. Given the mixed
results of Europe's efforts to boost birth rates by
offering generous child benefits, kick-starting
another "baby boom" in Canada anytime soon is
unlikely.
This leaves us with the Florida approach of shifting
the responsibility and cost for taking care of an
aging population from the state to the individual. We
Canucks, however, see our country as being defined by
its entitlement programs and, as in the case of
health-care, will fight to defend the status quo.
The reality is that there are no quick and certainly
no painless solutions to the demographic crisis that
Canada will confront in the run-up to 2020. This
crisis will pit the young against the old, place many
of the country's cherished institutions and social
conventions in jeopardy and endanger our long-term
prosperity.
While our economy is strong and we still have
government surpluses, let's act now to mitigate the
worst effects of falling birth rates and ballooning
numbers of retirees. To start, we can even more
aggressively pay down the federal debt. This will give
us additional fiscal room to navigate the difficult
times ahead.
Next, let's take a hard look at the myriad of
government subsidies - from below-market prices for
electricity to corporate welfare to urban sprawl -
that we benefit from today but which our tax-strapped
children will end up paying for.
Finally, the greying of Canada demands we stop being
so doctrinaire about our health-care system and start
figuring out how market mechanisms can be used to more
efficiently deliver health care within a public
system.
Demographics is destiny and like it or not dealing
with the issues associated with an aging population
will be an inevitable part of Canada's future.
Rudyard Griffiths is the co-founder of the Dominion
Institute.
rudyard@dominion.ca |
