We've seen this story before in the mid-1990s, when out-of-control deficits and an impending sovereign debt crisis led to painful spending cuts and tax increases. The government is wrong to make the return to budget balance conditional on strong economic growth. Population aging is already taking its toll on long-term projections, and too many unforeseen events can derail the fiscal path. Only tight fiscal discipline can balance the budget within a reasonable timeframe, protecting Canadians' standards of living from future large tax increases and cuts to government services.
There are many more election promises that will improve the quality of life for all Canadians as we age -- this election has been an embarrassment of riches in that sense. Many, like pharmacare or restarting the Health Accords, will take some time to work out so it's important to start the consultation and planning process right away.
Nine-million baby boomers will retire from the workforce over the next two decades, and when they do, they will start to consume the most expensive forms of government programs. This is great news for seniors, but terrible news for our public finances and for young Canadians forced to foot the bill. Generation Y has been dubbed the "Millennial" generation because we came of age at the turn of the new millennium. A more fitting name for this cohort is Generation Screwed.
Ontario's recent budget included the Liberals' proposal for a mandatory government pension plan modelled after the Canada Pension Plan. The proposal, however, is largely based on the faulty assumption that most Canadians are not adequately prepared for retirement.
Put simply, the aging of Canada's population has resulted in large and growing unfunded liabilities. The funding shortfall is estimated at $792.3 billion for the CPP, $494.4 billion for OAS, and $894.7 billion for medicare. Together the unfunded liabilities in Canada's public pensions and health care programs total $2.2 trillion or $134,841 for each income taxpayer. These unfunded program obligations make up more than half of total government liabilities. And their sheer size calls into question the structure of taxing current workers to provide benefits for retirees. Ultimately, to maintain current levels of spending in the future, taxes will have to increase or benefits for other programs will have to be cut -- or both.
With the holiday season now behind us, the oncoming flood of credit statements to Canadian households is a powerful reminder that there are no free lunches. Borrowing to pay for current consumption brings interest payments, and ultimately, the need to pay off principal balances. But this same reality also applies to governments.
As our political leaders deliberate expanding the CPP, they would do well to consider the evidence which does not support the notion of a broad retirement income crisis. They also need to consider that a compulsory expansion to CPP could reduce private savings and the flexibility they afford Canadians.
Recently, Treasury Board President Tony Clement reportedly floated a trial balloon which would see federal government retirees' annual health insurance premiums double. For my family, that would mean an extra $500 expense -- an amount which will add up to thousands of dollars over my lifetime. I deliberately chose to leave the private sector and join the government based on what was on offer.
Dozens of Venezuelans gathered last Saturday in a citizens' assembly across many of Canada's largest cities and demanded, in a public declaration, the restitution of constitutional order in Venezuela and that the sovereignty of their country be respected.
Venezuelan Vice-president Nicolas Maduro condemned as "miserable" the proposal from Canada to send a diplomatic mission from the Organization of American States (OAS) to study the crisis in Venezuela.
The management of public finances may not have received due attention from the premiers in Halifax. But as our federal and provincial political leaders gear up for next year's budget season, they would be wise to acknowledge the seriousness of growing government debt and put forth bold plans to balance their budgets. Kicking the debt down the road simply isn't an option.
The Conservative government recently introduced C-45, an omnibus bill containing provisions to create a two-tier public sector workforce in this country. Buried in the bill is a provision to raise the age of retirement for all public employees hired after January 1, 2013
Small spending allotments are trampled by spending cuts to health and essential service agencies. A mention of money being set aside for Aboriginal education is accompanied by a cut of two per cent to Aboriginal Affairs, and 5.7 per cent cut to Health Canada. This seems like a "take from Peter to give to Paul" kind of game, with no one being the clear winner.
With the budget coming up, we need to talk Old Age Security (OAS). The cost of the OAS program will explode, going from $36 billion in 2010 to $108 billion in 2030. Refusing to deal with this problem for partisan reasons would be completely irresponsible to future generations, if not shameful.
The government has decided to make cuts to Old Age Security (OAS). The truth is that OAS is economically beneficial to all of society -- seniors on OAS spend all of their money in their neighborhoods. That is money reinvested in our economy, in small businesses that in turn create jobs.
A federal government concerned about what's being passed along to the next generation would be a leader in global negotiations for a strong, binding agreement to cut carbon pollution, put in place domestic rules to make polluters pay, and focus on building clean energy infrastructure instead of doubling down on tar sands. Instead, it's doing just the opposite.