Nova Scotia spends less on Gen Squeeze than any other province

Nova-Scotia-web.pngPremier Stephen McNeil primed Nova Scotians for a “tough” budget in 2015.  But he didn’t tell us his government would save the toughest treatment for younger citizens

Coming into this fiscal year, Nova Scotia already contributed to a combination of federal, provincial and municipal spending that totals more than $33,000 per person age 65+ compared to less than $12,000 per person under age 45.  In his 2015 budget, Premier McNeil reproduced the provincial part of this age gap. 

The bulk of Nova Scotia spending goes to health care ($4.1 billion), early child development and grade school ($1.2 billion), postsecondary and other training ($0.7 billion), along with social services for persons with disabilities, seniors and families ($0.9 billion). Total spending in these areas is up slightly from 2014 after adjusting for inflation – by 0.7 per cent or $46 million.      

Once we account for demographic changes, all the new spending will go to those age 65+. 

This will happen partly because another 6,200 citizens will age into the 65+ category, while the population under age 45 drops by 4,200. 

But it’s not just demographics driving new spending. So do government priorities.  The 2015 budget allocates approximately $13,460 to each of the 179,000 citizens age 65+, compared to $5,992 for each of the 478,500 Nova Scotians under 45. 

At these levels, Nova Scotia spends less on younger citizens than any other province.  The government tolerates this dubious distinction while spending $2,000 more per retiree than in New Brunswick.

Medical care is at the heart of this age gap.  Around 53 per cent of Nova Scotia’s $4.1 billion health care budget will go to services and procedures for the 19 per cent of the population age 65+.  This means medical care for seniors adds up to nearly double the entire budget for early child development and grade school, and is three times larger than all provincial spending on postsecondary and labour. 

Medical care for the aging population is important.  My grandmother is 99, and my mom 70.  I want to protect their medical care as does every family member with an aging relative. 

That’s why we need to focus more on revenue sources than we have lately. As citizens age 65+ grew from 9 per cent of Canada’s population in 1976 to 15 per cent today, governments added $32.5 billion in annual medical care spending for this age group.  But governments did not increase revenue to pay for it.

Instead, governments held postsecondary spending relatively constant since 1976, even though twice as many young people pursue this extra education to compete for jobs.  Similarly, governments didn’t build a child care system, even though young Nova Scotia women increased their labour force participation by 75 per cent – more than any other province with the exception of Newfoundland. 

These trade-offs persist in the 2015 budget.  While protecting spending for the aging population, the government didn’t protect the cap on postsecondary tuition, which is already $3,300 higher than in 1976.  Nor did it fund a meaningful plan to grow child care spaces and bring down fees.

We don’t have to cut important services for seniors to escape such age trade-offs.  Other reallocations are possible, or we can listen to the recommendations of the Tax and Regulatory Review commissioned by the province from Laurel Broten in advance of the budget.  She recommends that Nova Scotia raise revenue less from income taxes and more from systems that put a price on pollution. 

From a generational perspective, it’s time to think about this option.  Since we’ve spent decades raising medical care spending for the aging population without collecting additional revenue, we now have less to invest in younger generations.  By pricing pollution, Nova Scotia could ease the squeeze that younger citizens face from earning thousands less than in 1976 (after adjusting for inflation) while paying pay higher housing prices, larger student debts and child care fees that cost more than university.  By pricing pollution, Nova Scotia could do all this while reducing environmental debts left primarily to younger Canadians, their kids, and the children they still want to have.


 Dr. Paul Kershaw is the Founder of Generation Squeeze, and a policy professor in the UBC School of Population Health


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  • commented 2015-09-15 13:27:09 -0700
    This comment was sent in by Edd Twohig:

    The Government of Canada wisely uses income tax rules to encourage savings and investment. Or do they? Maybe they have designed the programs to enrich those who already have the wealth. Maybe they have just enacted programs promoted by the financial sector to provide another way to enhance their businesses. Certainly their efforts do not assist all Canadians or our economy.

    Who saves the most income tax by taking advantage of the Registered Retirement Savings Plan or the Tax Free Savings Account? Those who are in the highest tax bracket. They are are also the taxpayers who can afford to save the maximum allowable amounts. Those are the 25% of taxpayers that receive 40% of the national income. Those are also the ones who have the power to minimize their income by the loopholes, and special deals.

    Even those in the second highest rate bracket, those with taxable incomes over $89,401., probably take full advantage of putting savings into RRSP and TFSA. They would be investing in the stock market anyway, why not invest more by delaying, or eliminating, the payment of tax. They also can afford to employ the lawyers and accountants required to master the intricacies of thousands of pages of statute and regulations, to take advantage of the loopholes.

    Then we drop down to the third tax rate bracket from the top. This is where we find the workers and small business people who are the ones actually producing goods and services. This income bracket may exclude many from taking advantage of the tax saving programs. Here are the two family income couples. Here are those who may not be able to divert their income from the cost of living. Here also are those small business people struggling to pay for increases in inventory, new equipment, and the upfront cost of adding new employees. All of these must be paid from tax paid income. Here are the people most vulnerable to the downturns in the economy, or their employers business, who are most in need of some savings to carry them over periods of lost income.

    Then we drop to the lowest tax bracket. This is where the $37,519. mean of income is included. This bracket is where 50% of taxpayers are represented. Tax deferment of the lowest rate and the lowest incomes. Government PR is telling all Canadians what great things are being done for them, but one half get no benefits from these savings vehicles. What if a taxpayer you can only save a little bit, a thousand or two, enough to get you over a hard time? Is not that saving just as good, or better, for the country as a bigger one? It is certainly better for the person or family to put a bit away. Why is an RRSP put into the stock market any better for the economy than a savings account or investment in local business? It may take some revenue away from the financial traders, but is still in the economy. And the overhead costs do not eat away at the savings. And the taxpayer can use it when the disaster strikes.

    What about administration of self administered tax deferred savings and filing of income tax returns? Canada prides itself on having an honor system of filing income tax returns. It seems to work well with those taxpayers in the lower tax brackets. Should a taxpayer wish to defer tax on savings in a bank account, or invest in a neighbors business, or buy stocks, or whatever, a detailed list, with or without documented proof, would be provided with the annual filing of the tax return. Any risk taken in the selection of savings choices is not the business of Government. The scams regarding investing have been perpetrated by the financial institutions. Government’s role should be restricted to regulation and prosecution of businesses who perpetrate crimes.

    To further level the playing field related to savings and investment it might be proper to provide the same percent of tax deferment to all who save. That is to either limit the tax deferment to 15% of the saving or allow those in lower tax brackets to increase their deferment to 29%. For example, a thousand dollar saving would be deductible from taxable income, thus saving $150. tax, and $140. would be deducted from other tax payable.

“Yes, Canadian governments need to make younger people a priority. I want a Canada that works for all generations."

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