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What the party leaders just won’t say

Andrew Coyne on why it’s madness to ignore the fact that the boomers are about to retire


 
What the leaders just won't say

Sean Kilpatrick/CP

Back and forth rolls the popular wisdom. There are no real differences between the Liberals and Conservatives! It’s an empty, issueless election that will change nothing! No, the differences between them are stark! It’s a clash between two fundamentally different visions!

Perhaps, when the waters have settled, we will conclude: there are small but significant differences between the parties. There are policy issues in this campaign, even if we in the media are doing our traditional stellar job of ignoring them. True, the government of Canada would continue to do almost all of the same things it does now, at much the same cost, no matter which party is elected—at least for the next few years. But where the parties do disagree, there are clear differences in direction signalled, and over time these could grow to be large indeed.

And there’s a wild card—with a minority government looking increasingly probable, the policies of the other parties, notably the NDP, take on rather greater significance than they might otherwise, as potential bargaining chips in any post-election haggling over power. So the main parties’ platforms must be assessed in light of the gravitational pull likely to be exercised upon them by these lesser stars.

The broad facts are these. Over the next four years, the recent budget proposed to spend roughly $250 billion a year. The Tory platform proposes to cut some of that spending—$1 billion the first year, rising to $4 billion in the fourth—but would add back a few hundred million annually in new spending, most of it in the form of tax credits. The Liberals invert that: they’d spend about $5.5 billion more annually (as of year two: the Liberal plan does not extend out beyond that), mostly for social benefits, and cut about $800 million from other spending. In other words, the two parties are both promising to spend about as much as the budget, plus or minus one or two per cent.

Of course, that’s assuming either of them stick to the track they’ve laid out. Neither party has spelled out where they would find the promised savings, a deficiency that would seem particularly glaring on the Tories’ part, given that they are promising to find eight times as much as the Liberals. And even to follow the budget path will require the closest thing to fiscal discipline Ottawa has seen in some years: a cut, in real (inflation-adjusted) terms, of roughly 12 per cent per capita. There’s two ways to look at that. On the one hand, it’s the most sustained fiscal squeeze in decades, outside of the crisis years of the middle 1990s. On the other, that’s measured against the vastly inflated benchmark of 2010, a year in which spending jumped $36 billion. In fact, even under the Tory plan, by 2015, the government of Canada will still be spending almost 10 per cent more real dollars per person than it was when the Tories took office.

The differences are more substantial on the tax side. The Tories propose three major tax cuts. One, they would continue with the second slice of their two-year plan, begun this year, to cut corporate tax rates from 18 per cent to 15 per cent. Two, allowing limited “income splitting” for couples with children, in which the higher earner could allot $50,000 in income to the lower earner and thus lower their collective tax burden. That’s projected to cost $2.5 billion in its first full year, though it would not go into effect, the Tories say, until 2015. And three, doubling the amount that can be invested inside tax-free savings accounts, to $10,000, again starting in 2015. That won’t cost much at first: just $30 million in its first full year. But over time, the cost will mount. In just five years, a couple could put $100,000 into their TFSAs—enough, the economist Kevin Milligan calculates, to spare 91 per cent of households from paying any tax on their investment income. If everyone did that, the revenue loss could be in the billions.

I haven’t spelled out the revenue cost of the corporate tax cut, because it’s a subject of some controversy. That’s because the Liberals would raise the corporate tax rate back up to 18 per cent. Big deal, you might say: that’s where it was last year. But it’s three percentage points more than the 15 per cent the Tories would cut it to next year—enough, the Liberals say, to add between $5 billion and $6 billion to federal revenues, and pay for their new spending. Except it’s hard to find any independent expert who thinks it will raise anything like that amount. The parliamentary budget officer estimated it at $4.6 billion but acknowledged this was based on “static” analysis, i.e., it did not take into account how corporations tend to react to increases in tax rates, which is a) to shift income to lower-taxed activities and jurisdictions, and b) to cut investment, and therefore to earn less income. The economist Jack Mintz has estimated that the revenue gain could be as little as $100 million.

That’s not the only tax increase in the Liberal plan, though it’s the only one they explicitly account for. The Liberals also pledge to “work with the provinces and territories to enhance the Canada Pension Plan,” including “a gradual increase of the defined benefits under the core CPP.” (They also propose a voluntary CPP supplement called the Secure Retirement Option.) They don’t say how much of an increase, but it surely implies a commensurate increase in CPP levies. And the Liberals also propose a national “cap and trade” system of tradeable emissions permits, building on a plan already in the works in some provinces, known as the Western Climate Initiative.

The plan envisages an annual auction of emission permits, but doesn’t say how much revenue it would raise. The economist Andrew Leach has calculated that if companies were required to buy all of the permits required to reach the Liberals’ targeted reduction in Canada’s greenhouse gas emissions—80 per cent below 1990 levels by 2050—the cost would be on the order of $30 billion a year. It’s unlikely to be that high: the WCI sets an initial target of auctioning 10 per cent of credits, though it says that would rise in later years. But how much the Liberal plan would cost is as much a mystery as how much CPP rates would rise.

Fortunately, the NDP’s plan is more explicit. The party would spend quite a bit more than either the Liberals or Tories: an increase of $20 billion a year over the budget track by 2014-15. Where would it find the money? In large part, again, from raising corporate taxes: the NDP would hike rates all the way back to 19.5 per cent, which it claims would yield an additional $9.9 billion. It also proposes a cap and trade scheme, with auctions of permits much like the Liberal plan, with revenues forecast at $3.6 billion in the current year (assuming one could be implemented in time) rising to $7.4 billion by 2014-15. And the CPP? The NDP commits to “an eventual goal” of doubling benefits. Does it also propose to double contributions, then?

The Tories once expressed interest in both ideas. But plans to expand the CPP were abandoned for lack of support among the provinces (the Tories instead propose an add-on known as a pooled registered pension plan). And while the Tories favoured a cap and trade system as recently as the 2008 election, they have made it conditional on implementation of a similar system in the United States. Plans there have stalled in the face of opposition in Congress.

Of course, there is much the parties agree on, as well. All the parties would increase payments to low-income seniors under the Guaranteed Income Supplements, though the Tories would do so by less than the Liberals and NDP. All have hastened to support paying Quebec $2.2 billion in “compensation” for harmonizing its sales tax with the GST, a feat that was supposed to have been achieved 20 years ago. And all three leaders, within the space of a few hours, committed themselves to continuing to increase health care transfers to the provinces at the current rate of six per cent annually, past the 2014 deadline to which the federal government had previously been pledged—the Liberals and NDP indefinitely, the Tories for another two years.

All of which would be fine, were we not about to undergo a fundamental demographic transformation that will reverse all of the assumptions that have guided policy for the last 50 years and make irrelevant the parties’ careful assurances that their plans have been “costed”—i.e., they come with numbers attached—and that these numbers can be made to add up if you arrange them in columns and put a line under them. I speak, of course, of the arrival of the baby boom generation at retirement age, and the enormous twin challenges this will present over the next 40 to 50 years: on the one hand, to pay the costs of looking after them, notably for health care, and second, finding enough workers to pay the tab.

The timely arrival of a study on the costs of health care, co-authored by David Dodge, the former governor of the Bank of Canada, for the C.D. Howe Institute, just as the parties were releasing their platforms, casts a weird light of unreality on the proceedings. If nothing were done, Dodge forecasts, health care costs would rise from 12 per cent of GDP today to 19 per cent of GDP by 2031. On the other hand, if everything were done, if we wrung every drop of efficiency out of the system and caught every break we could, we might succeed in holding the increase to…16 per cent of GDP. Add in the unfunded liability in the CPP/QPP, currently estimated at roughly $800 billion, and the economist Bill Robson, also of C.D. Howe, calculates the aging population represents a net unfunded liability—that is, promises to pay that we have not set aside the funds to actually pay—on the order of $2.8 trillion. But never mind: all of the parties promise to balance the budget in 2014-15. (Well, all except the Liberals, who pledge to bring it down to one per cent of GDP within two years. It’s currently budgeted at 1.7 per cent of GDP.)

With the proportion of the population of retirement age projected to double in the space of 20 years, it is simply madness to be throwing still more money at the elderly, let alone doubling the CPP. As it stands, Canada has one of the most generous retirement systems in the world, which goes far to explain why the elderly have a lower rate of low income than the rest of us. Likewise, with the workforce projected to decline, not only as a share of the population, but over the next decade, in absolute terms, it is simply arithmetical nonsense to pretend that we can raise health care spending at six per cent per year ad infinitum—even if the current five-year plan allows for it. As it is, the provinces are devoting nearly half their budgets to that one department, and the baby boomers have only just begun to retire.

This is the great, slow-motion crisis that all of the parties have refused to confront. It isn’t only the problem of how to rein in galloping health care costs—a problem that will mostly confront the provinces, whatever level of assistance the federal government may offer. The real challenge, if we do not wish to impose such an enormous relative burden on the next generation of workers, will be to expand the denominator—to achieve faster rates of growth in productivity, and thus to make our children so much wealthier than we are that they can afford the costs of looking after us. That will require much more radical policies, and much more political daring, than any of the parties have shown in this election.


 

What the party leaders just won’t say

  1. Another side-effect of the boomers retiring is that economic growth will become that much harder to achieve. We've had roughly 50 years of (relatively) easy growth as boomers were promoted up the corporate ladder and spent more money. That's gone once they retire and cut back on their spending.

    The parties all seem to expect a certain amount of economic growth to boost government revenues – but how will they manage if the growth just isn't there? That leaves them either raising taxes or cutting spending to balance the books, and I don't see that anyone has the will to do either of those to the level that will be required.

  2. But you don't finish the thought, which is that there is no government policy, aside from reduced government interference, that will actually materially affect growth rates positively. Harper is too cautious to proceed down that road, and all other political options are towards more government and thus reduced economic growth.

  3. We do not have a Government of the people for the people but

    CAG Canadaian Government which is a foreign belligerent corporation
    Whereas a Parliament is also acorporation and where all we do at election day is elect the directors of that corporation whose whole responsibility is to that corporation, profits and all!!

    By the way a Parliament is a concoction of two parts:

    !1. parlia (French) meaning – talk
    !2. ment (Latin) meaning – lie

    Together : PARLIAMENT — TALK LIES

    They do not serve us – we are enslaved to them since birth – unvitingly

    BY: Mat .. of family klemencic, ALL RIGHTS RESERVED

  4. Andrew, the cost of doubling CPP benefits *gradually* (ie, only take full effect after 30 or so years) is an increase in contributions of 6% on top of the current 9.9%. Presumably, the bottom 3.9% is the cost of funding the unfunded liability created prior to CPP reforms in the 1990s. It's a tax from the 70s and 80s on the workers of today. I don't particularly favour increasing CPP benefits. SRO is a sensible option, and not incompatible with the Tories' pooled pension plan proposal.

    I don't understand why you're jumping up and down about 6% increases in health care transfers. If health costs are to rise as a share of GDP, funding will necessarily have to increase faster than GDP growth. I agree that there is plenty of room for reform. We definitely need to get real about all the ideologically motivated social programs. We need effective programs that deliver high benefit/cost. Subsidy programs that are essentially pushing on a string have very low benefit/cost, and should be canned. We need to focus on the what or why of policies, and let rational policy determine the how.

  5. I can't help but feel like we are slowly circling the drain but are not willing to acknowledge it. When you look at future unfunded liabilities of health and pensions alone, not to mention necessary massive switches of energy infrastructure to alleviate the effects of fossil fuels (which ironically are one of the few sure forms of revenue for our government's), and top that off with already crippling debt for virtually the entire world apart from China, and meanwhile you see the unwillingness and inability of any party to even acknowledge these not so distant economic threats–let alone set out a plan to solve it–is very hard to be anything other than pessimistic about our chances not descending into the sewer.

  6. Has anyone calculated the revenue that will go to government coffers when RRSPs, which were supposed to be a way of deferring taxes not avoiding them, are cashed in as it were? And could not more revenue be gotten from this in the future. Instead of the old make the rich pay, you could have make the rich old pay (their proper share of course).

  7. Meanwhile, HR managers of the Boomer generation continue to insist on years of employment experience while whining that they can't find anyone to fill positions despite high levels of unemployment among even university-educated young.

    Never mind even economic growth – if Boomer generation employers don't start smartening up and hiring with a view to training new employees rather than expecting someone else to have done if for them, we'll be doing well just to be treading water economically. Demographically, it has a knock-on effect of further reducing fertility and making matters even worse further down the line.

  8. An afterthought, any «increase the consumption tax» promises in the various party platforms?

  9. The suffix -ment in French is not related to the word 'mentir' (to lie). Broadly, it means something like "medium". It's found all over – e.g. jugement/judgement, bâtiment, etc.

  10. —So cruel of you to inject that bit of reality in the middle of a campaign about a Quebec lady looking for a job and a young lady asked to leave a rally.

    If we continue to have the same type of minority situation that has a government constantly looking over it`s shoulder at the opposition then by the time we make the tough decisions that is needed to cope with this aging baby boom tsunami it will be too late.

    I think you know the best chance for us as a country to get ahead of this tsunami is to have a majority government that will do what it takes to govern responsibly instead of the useless back and forth we have had the past few years.

  11. Agreed, I see this madness everywhere… Junior positions often demand years of experience… where are they supposed to get this experience? Day after day I seeboomers starting a mass retirement exodus and because of poor succession planning we are not seeing any of their skills passed on to their replacements… replacements often found months after it's too late.

    The result is that youth end up working in any job they can just to survive, not a job that allows them to afford to start a family.

  12. Agreed

  13. So basically what I get from this is I'm going to leave Canada and go to a country with a younger population in the coming years.

  14. Used to know an elderly immigrant doctor who asked that his patients "breeze deeply shrew your
    mouse". Recommended.
    There are a number of advanced nations that are deeper into this process than Canada.
    Japan, some countries in Europe, … some of which are facing economic distress but certainly
    not because of demographics. All of this deserves careful observation and some concern. But
    let's not furrow too many brows about another attempt to undermine social programs … unless
    you want to, of course. Carry on while I ponder the wonders of Y2K, peak oil, the population bomb …

  15. "more government and thus reduced economic growth"

    Not a proven equation.

  16. "The Tories once expressed interest in both ideas. But plans to expand the CPP were abandoned for lack of support among the provinces (the Tories instead propose an add-on known as a pooled registered pension plan)."

    Lack of support in the provinces or lack of support in the province of Alberta?

  17. An election is no time to discuss serious issues.
    – Kim Campbell

    I'm probably the only person on here that admires Kim Campbell for her crass honesty…

  18. This is one of the few times I have seen the Libs $6B tax revenue from Corporate taxes challenged. Most economists say ot will be close to neutral for the reasons Andrew states in this article PLUS it will hurt investment in the long term. Why are they not being taken to task for this?

  19. You must be from Quebec. Here's a little hint Andre, the government (especially the feds) do not create economic growth simply because government money comes from taxes. Government costs economic growth, government impedes economic growth.

  20. Opps, wrong spot, should have posted further up.

  21. "If nothing were done, Dodge forecasts, health care costs would rise from 12 per cent of GDP today to 19 per cent of GDP by 2031. On the other hand, if everything were done, if we wrung every drop of efficiency out of the system and caught every break we could, we might succeed in holding the increase to…16 per cent of GDP."

    To me, the logical conclusion is that we should both
    (a) push to improve the efficiency of the health care system as much as we can, holding down costs to 16% of GDP; and
    (b) plan to gradually increase taxes an additional 4% of GDP to pay for the rise in costs, rather than promising large tax cuts as the Conservatives are doing.

    Am I missing something?

    I assume Dodge's estimates already assume there's going to be some growth in GDP. Planning to escape the problem with faster GDP growth seems imprudent.

    An article from a couple years ago on controlling health care costs: http://reviewcanada.ca/essays/2009/11/01/too-much

    With respect to the CPP/QPP, it was reformed back in 1997 to make it fiscally sustainable. Bruce Little has written extensively on this. The big problem is going to be health care costs. <a href="http://web.archive.org/web/20031230200028 /http://www.cppib.ca/info/articles/ap-07-01-2002.html” target=”_blank”>http://web.archive.org/web/20031230200028/http://

  22. Interesting point, but it has been a long succession of majority governments which have placed us in the predicament we're in, not merely the past 6 years of minority rule. The problem I believe is that the interests of the Party will always outweigh the interests of the nation. It's rare to find a politician who truly thinks about the long-term interests of a policy or institution. Mulroney did it with free trade, Chretien/Martin/Dodge did it with CPP reform.

    Mind you as I write, I will note (and this adds credence to your argument, Sir) that both these men could pull off these reforms as they were safe from a) braying Liberals in the case of the former and b) braying Reformers/CCRAP/Alliance members in the latter.

  23. So sorry for the pedantry. But as a suffix. – ment is usually an adverb in French, is it not? Roughly equivalent to '-ly' in English (As you say, a mediation). Ment- and -ment adhere to the latin root of 'mind'. So in the French evolution of the Latinate, 'parliament' could roughly be 'speaking of mind' or 'mediated talk', 'judgment' roughly 'mediated law'. (Though' how 'mentir' became the verb 'to lie' in French, who knows? Equivocation?) Again, apologies for the pedantry. Just an etymology geek,

    Still, the comment you replied to was novus in its interpretation, was it not? And Coyne is correct, nobody wants to talk about tomorrow.

  24. Indeed, post-war Germany has really fallen down because of its non-majority governments. Australia is doomed!

  25. So the Tory stance on immigration makes sense. We can't afford to have sponsorship of elderly parents by current immigrants. Not only that, they can sometimes get entitlements for which they've never paid into.

  26. The cashing in of all those RRSPs presents another problem that i haven't seen addressed here (or, for that matter, just about anywhere): What happens to stock market values and corporate cash flow once retirees start pulling their funds out at a greatly accelerated pace? And then, what happens to corporate taxes when all those business are suddenly struggling?

  27. I agree as well.

  28. that has been talked about elsewhere, but the market continually need money to go in, or the system is in trouble. Hence the 'liquidity crisis' we had a couple of years ago. The system is set for: a)continually mounting debt, or b) failure?

    A discussion for another time, but one well worth having.

  29. this is a silly comment.

    he said provinces.

  30. the glib answer is because they are liberals.

    The real answer is that the media is looking/following scandal, or even the hint of one. Sadly, that is what sells. Very few take Andrew's approach, and explore the numbers/issues.

  31. Thank you Andrew, for the best Canadian article I have read all year.

    This is an issue that can't be ignored for much longer. . . We need a majority gov't, as it will not be dealt with by an minority (either one).

  32. Given that people (are going to) live until they are nearly 80, they can't all retire as early as 55 and no later than 65; they are going to have to work for a few extra years.

  33. I agree Andrew, there should be discussion of the two looming entitlement crises – CPP/OAS and healthcare in an election. Put part of the blame on the paralysis minority government causes to all parties public policy discussions. Broad-ranging policy discussions within a party during a minority runs the risk of a snap election and having to defend unvetted and unhoned policy positions.

    As for the solutions lets look at the causes of the two problems that the Boomers – in their typical narcissistic habit – see as being paramount and in dire need of repair before it seriously affects them.

    CPP/OAS – The single greatest public policy mistake made in the democratic world was the fixing of the social security retirement age at 65 in the 1930s – at a time when the average life expectancy was less than 65. Today the average is 80 plus and for newborns it is 106 (!!). Thus, the retirement entitlement is unsustainable.

    Forget about increasing the benefit. 9.9% contributions are already causing a movement to contracing out. Increasing the benefit would increase the deduction and contracting will become SOP.

  34. What needs to happen is to move the retiremant 65 age slowly but steadily up (say one year every five) until it is roughly 10 years below the avg life expectancy. That would likely mean that newborn would not see a benefit until the age of 80. They will have lots of time to plan for it. For those over 40 at thetime the change is implemented, they could have the age 65 grandfathered.

    As for contribution rates; the employer would pay the same rate – 5% regardless of the employee's age whereas the employee would pay a rate based on their eventual retirement age – younger people would pay a substantially lower rate. Those over forty could opt to get on the adjusted upwards retirement age and reduce their contirbutions too but, they cannot reverse that decision once made.

    The upcoming pooled pension that the CPC is planning is an excellent idea BTW.

  35. Healthcare. Two things are blocking real reform and innovation in healthcare – the two things that need to happen in order to prevent collapse of the universality of the system. (check out what the Stelmach gov't was planning to do – if you don't know what i'm talking about andrew, drop me an email and ill fill you in on the details):

    The Canada Health Act and federal health transfers.

    last one first: The provider also has to be the taxer/payer. Otherwise the accountabilty is lost – we wind up with bleating from the provinces for money and the in vain attempt by the feds to get some kind of control over what the provinces do with the money. There is no real competition between provinces to do the best job – build the best system. And what little effort they put into making changes is blunted by the strictures of the CHA (more on that shortly).

  36. What needs to happen is what has been put forward inside the CPC as a future policy – it's no real secret – get all of the provinces on the HST bandwagon (AB is being a real jackass in this regard as the ABPCs don't know how to bring it in without getting killed at the polls – there is a way but I'm not telling them) and then give the HST to the provinces based on how much is earned by the respective provinces. Any shortfalls would be made up for in more equalization payments (and yes, equalization needs to be rejigged – more on that some other day).

    CHA reform – the act largely has to be scrapped – what would be left behind would be the requirement that catastrophic and high cost care would be paid for by government. Things like deductibles, co-pays, and fees would be allowed, but also things like government-funded Health Spending Accounts and ebay-style provider markets would be permissible.

  37. Provinces left to autonomously design and operate and fund their healthcare systems whilst adhering to the reformed CHA would compete amoungst themselves to provide the best system. the reformed CRA would allow more competition and accountibility within the healthcare system and accountibilty and incentives for the those on the recieving end of the entitlement.

    Both are daunting challenges – especially when viewed from the perspective of a politician who has te reapply for his job every four years (or less in a minority). But they can be done and the can be both better more efficient and perpetually sustainable – and they can be done in a way the doesn't banish the pioneering party that implements the changes to the opposition benches in perpetuity.

  38. Dear Andrew, You I perceive as a bright star in the dismal medium sky of political commentary; I agree with you that we usually get pooor analyses, and looked forward to see you improve on that in your current piece. But horrors: you fail miserably with the paragraph relating to "cuts per capita", There are some 33 million capitas in our country, hence you are saying a total cut of 10 percent per capita amounts to 330 million percent for thr country!
    As the late Donald Kerr once complained: Illiteracy is bad, innumeracy is worse!

  39. Zombies no think and turnips can tell them anything.

  40. It is also madness to ignore the fact that our immigration system as currently designed cannot possibly alter the demographic balance. The age of the average immigrant is only about 2 years less than the age of the average Canadian. "Family reunification" often means bringing aging relatives over.

  41. We already have way too much of that under the Tories. They need to take a clear stand in favour of making this much more difficult than it is currently. Admittedly, their stance is better than Ignatieff's, who wants to make family reunification even easier.

  42. The Supreme Court will knock down the CHA sooner or later. They nearly did it in 2005 already, with one judge actually abstaining to make it a 4-4 split decision. It's only a matter of time before another charter challenge destroys the CHA. Maybe the Charter is good for something after all.

  43. Or, it could be distributed according to population and be used as a replacement for equilization.

  44. And Layton was almost begging for the old folks to get in ASAP in the English leaders' debate…

  45. Not even unproven, but disproven. More government involvement, if done correctly, can increase the pace of economic growth. And anybody who questions that need merely look back to the great depression. As government got involved, economic times got better. When conservative thinkers got in and started cutting it back, things got worse, and this continued until WWII basically lit a fire underneath the whole manufacturing sector of the economy.

  46. Learn about economies of scale.

    Then try learning about demand side theories of economic growth rather than the supply-siders version which has been shown to be false

  47. The QSC has already ruled that the Charter supercedes the CHA. That will be affirmed by the CSC and the prohibition on private options and insurance for them will be removed. That is in part what i was alluding to when ireferenced the Stelmach leaked plans…

  48. That would be taxation without representation – province A would be sending tax revenue to province B. Better to let the federal govt's tax system equalize it. But equalization needs huge reform too. Que and MB in particular are gaming the current system by alomst giving away crown produced hydro power to their citizens and companies – artificially underreporting their provincial revenues. In Quebec that amounts to over 8 billion more in equalization than it should be recieving. also there is no penalty for provinces spending more per cap than others. So Quebec gives its citizens highly discounted post-secondary education and daycare while AB does not yet AB sends via equalization billions Quebec's way.

  49. Some people are inclined to believe that the Canadian dollar is too high & making us uncompetitive
    Some people are inclined to believe that printing money will devalue the currency
    Some people say we have a budget shortfall. What is it $50 billion?
    So… Borrow the money from the Bank of Canada at 1 or 2 percent simple interest & pay off the debt.

    Voila! Problem(s) solved.

  50. The CPP is currently being eroded due to the high contribution rate of 9.9%. Many employees are now being contracted out to avoid CCP deductions (even the provincial governements are doing this as are the feds). And business owners are using EPSPs to reduce tax and create RRSP deposit room AND opt out of CPP contributions (note: Minister Flaherty mentioned that the EPSP tactic may be outlawed sometime on the future.) Increasing the generosity of the benefit would cast it to collapse completely. Increasing the retiremnt age and using pooled MPP options are the route sustainability and a more universal adoption of employee/employer pension arrangements.

  51. Paul Martin admitted as much in 2006, the day after his hail mary pass to remove the Notwithstanding clause from the Constitution. Gloria Galloway asked him what he'd do if the Surpreme Court overturned the CHA. He fudged 3 times, but she stuck to her guns and forced him to answer. He said he would have to allow the Charter ruling to stand. Really, what else could he say? And really, what else could be done. Of course Jack Layton did some elctoral calculus and decided that this was one issue where the Canadian public would accept the government using the notwithstanding clause to exempt itself from a Charter ruling and stated he would do just that.

  52. You are correct. But that already happens with equilization anyway. I'd rather have the messy equilization program replaced with a straight tax-and-redustribute policy, with funding determined by population alone. That would keep with the Charter's guarantee for equilization, and also attach a finite limit on what the provinces could demand from the feds. If they provinces wanted more, the feds could just say, "Shall we raise the HST?"

  53. Iggy wants to make reunification easier as well. As did Martin in 2004-06. Not that the Conservatives did a single thing to stop it, or reverse it once they got in. Immigration, of all kinds, is much like the CHA. Politicians must swear absolute allegiance to the status quo in order to be deemed fit for public office. God help the naive pol who dares to step out of line on either of those two issues.

  54. Many Boomers will have to work whether they like it or not; some would like to continue working because they enjoy working.

    I would propose that we have an income splitting arrangement where Boomers go from full to part time work and receive half their pension to make up the difference. This will help reduce the logjam of oldsters who are blocking young people from finding work, but enable people over 65 who haven't saved for retirement to live productive lives with dignity. It also means that the anticipated worker shortage would be forestalled.

  55. it can at best, BEST, redirect it. most times it makes losers out of winners and subsidizes the worst and least efficient.

  56. I would argue that AB is already "harmonized" since there isn't a PST. Any party bringing one in would be deadmeat very quickly. What is a good argument for a PST in AB?

    Re: Healthcare. Stelmach shouldn't have cancelled the premiums. Those could be brought back with less grief than any kind of PST.

  57. Learn about economies of scale.

  58. The effects of our aging population are primarily going to be felt in labour, not health care. In fact, the common wisdom that older Canadians are going to cripple our health care system is proven false – not just by theory but concrete examples. Sweden has one of the oldest populations in the EU, but over the past 17 years their spending on health care has held steady at 9% of GDP. Japan, with a declining birthrate and much older population, spends about $1,000 per capita on health (compared to about $3,500 in Canada and $7,000 in the US).

    Here in Edmonton, a study was done which found that about 76% if hospital admissions were for individuals under the age of 65, and about the same for out-patients. While health care delivery costs are higher for seniors, the aging population is not going to lead to sudden pressures on our emergency rooms.

    The issue with the health care system is on the supply side. I've spoken with physicians who are frustrated by MRI wait times because in many cases, a far less expensive X-Ray would do. The amount that drug companies spend on marketing is more than they pay on R&D. If we simply keep growing spending at 6%, it sends the message that the current delivery model is doing fine. There are many efficiencies we can put in place, just so long as Canadians are aware that it won't solve problems over night.

    For instance, with an aging population, we can expect to see more use of (potentially unnecessary) prescription drugs. Even allowing for the proliferation of drugs to go unchecked, we can reduce the financial burden by increasing the number of nurse practitioners who are able to fill prescriptions (along with many other services) for much less than training and paying doctors.

  59. What a fine example of Conservative family values you are presenting.

  60. The Economist magazine that I get did a special report on the this subject and stated that if you think the structural deficit is bad at $19 Billion dollars a year, which is the Parlimentary Budget Officers estimate, multiply that by 10 and you get the structural deficit $190 Billion dollars by 2050 when the estimated percentage those who are 65 and plus years old will reach 40 to 45 per cent. By 2050 gone will be the days of nice pension of $2,000 a month. The Economist's estiamte is more like $600 to $700 a month. This is both private and public pensions.

  61. There is a decreasing marginal return on health care as people age, and we will all die sometime, whether our care package is excellent or not. We as a nation are going to have to discuss where this marginal return is too small to be worthwhile – whether or not a fearful baby boomer demographic is going to let this discussion take place is the real question. Paying for health care that gives an 82 year old person another few months or years of life may not be a particularly good investment, and we need to be upfront about the costs that this will impose on a younger generation, lest we end up with yesterday's workforce draining the prosperity out of today's.

  62. Is Harper for us or against us? H, speech: "Canada is Northern European welfare state in worst sense of term – very proud of it. don't feel bad, as long as they're receiving generous social assistance & ui.

    Senate appointed by PM puts buddies, fundraisers. Until PM calls next election same vote on every issue. Qsk me, "What's the vote going to be on gun control?'' we know already. NDP proof Devil lives & interferes in affairs of men, believes opposite on everything that anybody in this room believes..Term PC will immediately raise suspicion in your minds. It should. An oxymoron. Conservative party running largest deficits in Cdn history. Reform closer to conservative Republican. Reform does not stand for direct democracy …party led committed, evangelical Christian….as are most party's sr people. We're headed to a civil war.
    Reform modern manifestation of Republican movement in Western Canada; Reformers highly resistant philosophically to open, modern, multi-ethnic society & set of ethnic-special-status principles. Completely unacceptable, particularly to philosophical conservatives in Reform party.

    Good luck in your own battles."

  63. Gag

  64. legalize marijuana, institute an estate tax, there is lots of money out there to look after everything. people do just not want to part with it.

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