Canada’s aging and unhealthy population is about to create a significant liability totalling about $2.8 trillion for all levels of government, according to a new study from the C.D. Howe Institute.
It could play a key role in prolonging the economic recovery, author William B.P. Robson wrote in “The Glacier Grinds Closer: How Demographics Will Change Canada’s Fiscal Landscape.”
Spending patterns for public programs such as healthcare, education, elderly and children’s benefits are causing major strains on the economy. Canadians will divert more of their incomes from other public and private purposes to fund them, according to the study.
An aging population will push government spending in these areas from 17% to 24% of GDP over the next 50 years, the study warns.
The provincial and territorial governments will be stuck with most of the burden, with Eastern and Northern regions suffering the most.
Robson’s study suggests improving fiscal discipline, broadening the tax base, along with introducing policies that will stimulate growth. He also suggests implementing a forward-thinking plan that includes a partial pre-funding of healthcare programs, where those approaching retirement age would pay more to prepare the system for future claims.
You can read the entire report on the C.D. Howe Institute’s website.
