Flaherty vs. Garneau: Is an aging population just one cost-driver among many?

by John Geddes

Anyone paying even glancing attention to public policy debates over the past decade or so can’t have avoided taking in the received wisdom that an aging population is one of the most pressing challenges.

When he was prime minister, Paul Martin ranked demographic change at home right up there with the rise of Asian economies abroad as his top policy preoccupations. Stephen Harper’s government has kept up the drumbeat—with Harper saying in his big speech in Davos at the start of this year that the demographic shift amounts to “a threat to the social programs and services that Canadians cherish,” Human Resources Minister Diane Finley slamming the opposition as “not interested in facing reality” when it comes to an aging population, and Finance Minister Jim Flaherty noting that the issue comes up all the time in pre-budget consultations.

Against that backdrop of constant, anxious emphasis, comments this morning from Flaherty downplaying our nation’s greying as merely one concern among many sounded strangely sanguine.

It came up at a news conference when he was asked about this opinion piece by Marc Garneau, in which the Liberal MP (and possible contender for his party’s leadership) argues that equalization payments to the provinces should be adjusted to pay extra to those with more old people, largely to cover higher health costs.

Population aging is a particular issue in the Atlantic provinces. But Flaherty said it’s just one cost pressure among many, and so can’t be singled out for special consideration in the equalization formula, which is now being reviewed.

“This is a complex federation,” he said, “and there are people in Western Canada and people in Eastern Canada and people in Central Canada, all of whom have their own demographic challenges.”

Flaherty went on to cite large and fast-growing First Nations populations as an example of a comparable concern. “Some of the provinces speak to me about the size of their Aboriginal populations, and what a challenge that is for them, in terms of training and education and underemployment. There are lots of challenges that are complicated in a federation like Canada, not simply demographic challenges.”

That sounds even-handed. Yet Flaherty’s suggestion that other cost pressures on provincial programs might be fairly considered equal to those represented by aging breaks with a lot of recent political rhetoric and prominent policy thinking. (Here’s a sage overview from the Bank of Canada.)

Numbers alone can’t tell the whole story, of course, but forecasts suggest aging is in a league of its own when it comes to the changing profile of the Canadian population.

By 2036, Statistics Canada projects the Canadian senior population will reach 9.9 million to 10.9 million, more than double the 4.7 million 65-plus population of 2009. Sometime between 2015 and 2021, we’ll reach the point where we have more seniors than children for the first time ever. To use Flaherty’s point of comparison, Statistics Canada expects the number of Canadians of Aboriginal identity to hit 1.7 million to 2.2 million by 2031—in other words, roughly a fifth of the population of seniors.

Garneau’s case for using equalization to help out provinces with more old people is wide open for debate. There are many other options. But Flaherty’s response, effectively downplaying demographics as just one social-policy factor among many, seems an unconvincingly offhand response to a serious proposal.

Flaherty vs. Garneau: Is an aging population just one cost-driver among many?

  1. There’s a reason for this downplaying: Alberta’s getting younger.

    Basically, our immigration rates, most notably of young adult males for the oil sands, but also of their families and all of the associated employment positions, has meant that Alberta really doesn’t have a “greying” problem to speak of.

    As such, any equalization formula that takes that into account, provides less credit to Alberta, and more reason for a resurgence of a new Federal Reform party– something I’ve been hearing the occasional quiet grumble for — and something which the federal CPC obviously does not want to see happen, obviously.

    • According to Statscan & the Alberta government, the population of Alberta is getting older.
      See here:

      Alberta Seniors, Government of Alberta. 2004. Fact sheet: A portrait of Alberta seniors. (Edmonton: Government of Alberta).Available at http://www.seniors.gov.ab.ca/ policy_planning/factsheet_seniors/factsheet-seniors.pdf.

      and here:
      Statscan Population Projections for Canada, Provinces and Territories (2009-2036). (Cat. No. 91-520 XIE).
      Addmitedly, Alberta is aging somewhat slower than some other provinces, but it is aging nonetheless, and will not be as far from the national median by 2036 as it is now.

      • Hm. That’s interesting actually, my information suggested otherwise. I’ll see if I can dig up something more recent than 2004 or a 2008 projection.

        • Okay. Here we go: http://www.statcan.gc.ca/daily-quotidien/120529/dq120529a-eng.htm

          Take away lines therein: “Among the provinces, Alberta (11.1%) had the lowest proportion of seniors.”
          “The working-age group represented 70.1% of Alberta’s total population, the highest among the provinces. This situation was mostly the result of the net inflow of working-age people into Alberta from other parts of the country over the years.”
          “For the first time in 50 years, the number of children aged 4 and under increased in all provinces and territories between 2006 and 2011.The largest increases occurred in Alberta (+20.9%), Saskatchewan (+19.6%), Quebec (+17.5%), Nunavut (+15.7%) and Yukon (+13.8%).”
          “In 2011, all census metropolitan areas (CMAs) located west of Ontario had a proportion of people aged 65 and over below the national average of 14.8%, except for Kelowna (19.2%) and Victoria (18.4%), both in British Columbia. In Calgary, the share was 9.8%, the lowest of all CMAs.” (Emphases added)

          It’s not definitive, of course, but I suggest that perhaps the projection in 2008, based on immigration patterns before the economic collapse, is no longer accurate — to say nothing of the stats from 2004.

  2. “This is a complex federation,” he said,

    Yup, Jim….just like the EU.

  3. Perhaps the provinces that are losing their young people should change their destructive economic policies which are causing their stagnation and faster aging rather than asking for greater handouts.

    Garneau is suggesting a policy solution that exacerbates the problem, rather than attempts to fix or reverse the problem.

    No province should plan to be a permanent recipient of equalization. Permanent imbalances lead to situations like one has in Europe, where Spain, Italy, and Greece used the cheap financing brought about by the common currency to consume and indulge and borrow, rather than to build competitive wealth producing economies.

    Equalization is a necessity, but when one is receiving equalization, one should realize that one has to pursue a new economic path.

    • Because the options for PEI are so vast.

      HInt: Economies of scale is not a musical number.

      • Take away the housing bubble in Ireland, an amazing number of global companies set up their because of their highly trained English-speaking workforce and competitive corporate taxation, which is also helping Ireland recover faster than Greece and Spain.

        Why cannot Atlantic Canada do what Ireland did (apart from the irresponsibility in their housing and domestic banking sectors)?

        • Population PEI: 140,204
          Population Ireland: 4,487,000

          Again, economies of scale is not a musical number.

          Consider, for instance, the tax base involved if you’re trying to give free post-secondary (as Ireland has) to the citizens. High quality educators are inherently more mobile, after all, and would see little reason to accept a lesser amount of pay just because there are fewer citizens to pay taxes.

    • They are not ‘losing’ their young people….the birth rate is down.

      And it’s not just Canada, its happening all over the world.

      PS….Equalization is in the Constitution, so it’s not going anywhere. All provinces have gotten it at one time or another.

    • Note Garneau suggested just that – one option other than shifting equalization could be to boost growth in the east to address the imbalance:

      “… there are various paths we can take. Former governor of the Bank of Canada, David Dodge, has proposed stronger federal efforts to improve growth in eastern Canada to address regional imbalances and head off the potentially growing tensions over equalization.”

  4. I see two angles. Lab-on-a-chip tissues enable better diagnosis and testing, but might be dangerous in some applications. You wouldn’t want people to get cytokine storm capabilities with high school equipment. And more treaments means a better FDA. So better patient conflict-of-interest vetting. If someone wants to risk a brain tumour, if their mentality is like a K2 climber, fine. But if they are desparate enough to believe anything….they basically need to be comfortable with death or something, before being injected with the alien stem cells.
    Yes, plastics fractions abound…

  5. Large immigrant numbers in Vancouver, Toronto, and Montreal present a different type of demographic problem than just the aging population of Atlantic Canada. The growing urban First Nations populations on the Prairies after a century of failed Liberal government policy with respect to First Nations also present a demographic challenge. There are also enormous spending challenges because of the economic growth on the Prairies because of net in-migration. Schools and hospitals and roads and other infrastructure have to be built. Quebec has the problem of maintaining its “distinctiveness” in a North America.

    Garneau is taking a very narrow view of one particular problem. The aging problem is encapsulated in with a constant reevaluation of all the factors that go into equalization. Equalization should continue to look at all the factors, and not just cherry-picking like Garneau is doing.

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