Provinces in Dark about Aging Population
Imagine reaching age 63 and then thinking, “I should start saving for retirement, I’d like to retire in a couple years.”
The thought of such a reckless predicament would give most of us a degree of heart irritation, ranging from chest pains to an accelerated heart beat or worse. Everyone knows it’s wise to squirrel away some savings throughout your working years in order to prepare for your retirement. No one wants to be caught flat-footed.
Sadly, provincial governments don’t seem to be in that type of long-term, prudent planning camp.
Despite the fact that Canada has been facing the prospect of a huge wave of baby boomer retirements for decades, new research by the Manning Centre suggests provincial governments across the country have no idea what the financial impact will be on their finances.
To be clear, we’re not talking about the impact to the Canada Pension Plan, we’re talking about the impact to provincial government finances. Our nation’s aging population will put a tremendous strain on our health care system as a massive wave of older Canadians start to require expensive procedures such as hip replacements and nursing home services. At the same time, governments will feel a revenue squeeze as millions of people leave the workforce and begin to draw on their retirement savings.
Since 2010, the federal government, through the Office of the Parliamentary Budget Officer, has studied this situation in order to evaluate whether or not federal spending is sustainable over the long-term. While the last report indicated the federal government’s finances were sustainable, previous reports indicated they were not. That’s why the federal government made the decision to push back Old Age Security benefits to age 67 years of age beginning in 2023.
Earlier this year, the Manning Centre asked each provincial government in Canada for copies of their own analysis. Surprisingly, the most common response was “no records exist.” The Ontario government told us “no records were located” while the Alberta government told us their staff “failed to retrieve any records.” B.C., Saskatchewan, Manitoba and Newfoundland also conceded they don’t have such analysis. Prince Edward Island, Nova Scotia and New Brunswick provided a bit more information, but they too were lacking comprehensive financial analysis. (We did not receive a response from Quebec).
In summary, provincial governments have a major financial problem on their doorsteps and yet they don’t appear to have bothered to calculate the size of the issue or how they’re going to address it. If that’s not troubling then what is?
Going forward, two things need to happen. First, provincial governments should immediately begin analyzing their own finances several decades into the future; just like the federal government does. This practice will help each province recognize the severity of the situation and encourage more prudent spending in the short-term.
Second, provincial governments should place a priority on sharing of cost-effective strategies with each other. For example, the Saskatchewan government expects to save $93 million by partnering with a private company to clean hospital linens. Other provinces should copy that approach and share their own initiatives that save money. By focusing on cost-saving techniques, they’ll help improve the sustainability of the health care system.
One thing is clear, this issue deserves a lot more attention than it’s been receiving.
- Craig is the Director of Communications with the Manning Centre and the author of The Government Wears Prada.
This column was published by the Toronto Sun, Ottawa Sun, Calgary Sun, Edmonton Sun and Winnipeg Sun on December 8, 2015