Investing Fairly in All Generations
UPDATED May 24, 2023 @ 12:10pm
Table of Contents
Introduction
This election, Generation Squeeze is undertaking a rigorous assessment of Alberta provincial party platforms and commitments on five key issues: investing fairly in all generations, investing in wellbeing (not just medical care), housing affordability, family affordability, and climate justice.
Our mission: to help voters better understand how far each party's platform goes towards actually solving big problems facing Albertans, and how these problems help prop up a broken generational system.
Gen Squeeze does not tell you who to vote for, and we don’t aim to portray any party in a favourable or unfavorable light. Our goal is to help voters be as informed as possible about the positions of all of the parties on big issues for generational fairness in Alberta. Learn more about our methodology and commitments to non-partisan and evidence-based analysis.
Failing to budget fairly between generations is one key symptom of generational unfairness. Fair budgeting doesn’t mean allocating the same amount of spending to each age group. Rather, it means ensuring that spending decisions respond to needs across the life course, and are informed by the financial and social wellbeing of different age groups given current political and economic trends.
We’ve analyzed the degree to which the UCP and Alberta NDP are proposing measures that will advance fair budgeting between generations across their platforms. The nine actions we assess are identified in our comprehensive policy solutions framework.
Punchlines
The price of this election is the wellbeing of young people and future generations
“Take more than we leave” is the theme of this election. Both parties will extract more tax dollars to spend on Baby Boomers than on younger residents. Both parties fail to disrupt incentives for homeowners to extract more tax-sheltered wealth from the housing system, leaving less affordability for those who follow. Both parties are weak on asking people to pay for their pollution, allowing Albertans to use more than their fair share of our atmosphere’s scarce remaining capacity to absorb carbon, leaving extreme weather as a risky legacy.
Intergenerational tensions in public finance
Our platform analysis shows both the UCP and Alberta NDP propose larger age gaps in government spending than B.C. or Ontario.
The UCP’s 2023 budget proposes a $6,800 spending gap between an Alberta retiree and a younger Albertan. The NDP proposes an even larger age gap ($7,000). The gaps proposed by both parties are larger than in Ontario ($6,600) and B.C. ($4,800).
The fact that both parties favour large age gaps matters, because they elevate the risk that important investments in younger residents will be crowded out.
Although the age gap is a major weakness in Alberta public finance, a bright spot is that both parties resist running deficits when the economy is not in recession — something neither the federal nor B.C. governments can claim.
Intergenerational tensions in housing
When it comes to housing, the status quo has ramped up inequality, and created complacency about solutions. This election should be about disrupting these harmful trends. Instead, the UCP is silent on housing policy, and the NDP is only moderately better.
Key to this disruption is recognizing that the hard work Albertans do every day in their jobs is taxed more than the wealth homeowners gain from the rising value of their homes while they sleep and watch TV. Currently, our tax systems shelter billions in added housing wealth homeowners have gained since 1977, incentivizing people to prioritize housing as a way to get rich, rather than a place to call home.
A system that turns home ownership into an investment strategy is crushing affordability and harming younger and future generations. It’s time for Alberta to protect real shelters, not tax shelters.
Climate change — the greatest intergenerational tension of them all
Parties have gone out of their way not to talk about climate change during this election, even as the province burns… again.
UCP commitments to net-zero emissions are undermined by the party’s hostility towards pricing pollution, including cutting fuel taxes at the pump. The UCP invokes the specter of declining affordability to justify these moves. But compromising on climate action isn’t among the most important ways to promote more affordability.
The UCP could save families thousands by more urgently investing in $10/day child care, improving the province’s parental leave system, supporting better work-life balance, and protecting housing affordability.
The Alberta NDP offers stronger investments in child care and housing, but is also weak on climate. In fact, there are so few climate commitments on the NDP campaign website that we are unable to complete a robust platform assessment. That’s not the kind of leadership that will serve younger and future Albertans well.
Alberta desperately needs intergenerational fairness champions to address problems with policies on housing, family, health, climate, taxation and more. That’s why it is critical for the next Alberta government to appoint a Minister responsible for intergenerational fairness. The guiding principle for her work ought to be: if you helped make the mess, you’ve got to help clean it up.
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Summary score table
The table below summarizes scores for the United Conservative and New Democrat parties on each of the 9 criteria for investing fairly in all generations. We welcome feedback from parties, including concerns that we may have misinterpreted elements of their platforms when assigning our scores. We commit to revising our scores in light of party evidence that their platforms or other election documents include commitments that align with the evaluation criteria.
Invest Fairly in All Generations Criteria
Party Scores
Detailed commentary
CLEAR GOALS AND PRINCIPLES
Criterion 1: Do the platforms embrace the goal of budgeting fairly for all generations?
We are looking for platform language that affirms the importance of designing budgets to invest fairly in all generations.
It’s important to note that ‘fair’ does not mean ‘the same.’ Our health and support needs increase as we age, so it’s reasonable and appropriate to spend more on older Canadians. However, financial wellbeing and wealth also matters for assessing whether we’re finding a fair spending balance. If the financial wellbeing of one age group is growing — or being squeezed — more than others, we may need to revisit how public investments can help compensate. That’s why it’s important to consider that Canadians over age 65 have the lowest rates of low-income of any age group in the country, in significant part because of the accumulation of housing wealth. At the same time, the financial wellbeing of younger Canadians has deteriorated, thanks to stagnating wages and rising costs for things like housing, post-secondary education and (until recently) child care.
Neither the UCP nor the Alberta NDP feature the goal of intergenerational fairness when describing what motivates their decisions about budget priorities. No points are awarded.
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Criterion 2: Do the platforms commit to the principle that we’re all in this together?
Generational solidarity requires that governments consider and adapt to the needs of different age groups in their decisions about where to invest and raise revenue, to advance the wellbeing of all generations now and in the future.
Neither party emphasizes the principle of intergenerational solidarity. No points are awarded.
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Criterion 3: Do the platforms commit to the principle of fostering generational reciprocity?
The principle of generational reciprocity reminds us that each generation should pay for the things it wants and uses, contributing in proportion to the needs, opportunities, and wealth it inherits. This doesn’t mean each generation should contribute equally — but it does mean each generation should contribute fairly.
Neither party speaks to the ‘intergenerational golden rule’ — do unto other generations as you would have those generations do unto your own. The UCP and the Alberta NDP don’t consider whether different generations are paying fairly for the services they wish to use, or whether they are stewarding wisely key assets like affordable homes, clean air and water, or a stable climate. No points are awarded.
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POLICY PILLARS
Criterion 4: Do the platforms invest fairly for young and old alike?
Budgets that work for all generations start with ensuring that we invest fairly for young and old alike. But what is a fair level of investment, and how do we calculate it?
We recommend regular reporting on the ratio of medical and social spending on Canadians age 65+ relative to those under age 45. We’ve developed a rigorous methodology for calculating this ratio: adding up spending on old age security, the guaranteed income supplement for seniors, and medical care for retirees — and comparing it to spending on child care, parental leave, grade school, postsecondary, family income supports, and medical care for younger Canadians. You can find more details in our policy solutions framework.
For this analysis of 2023 Alberta election platforms, we use the 2023 Alberta Budget as the starting point for all parties. The UCP has not published a costed platform, so we rely entirely on the 2023 budget to assess its campaign plan. Our analysis of the NDP accounts for the changes to the 2023 Budget it proposes in its costed platform.
We subtract 1 point from both the UCP and NDP for this criterion. The UCP will grow spending for each resident age 65+ 2.7 times faster than for each resident under age 45. The NDP will grow spending for older residents 2.4 times faster than for younger residents. We calculate these age patterns in proposed party spending as follows.
UCP: In the 2023 Budget, the UCP includes a “Historical Fiscal Summary” (schedule 25, p. 164). This summary shows:
- Medical care spending will grow from $24.4 billion in 2022/23 to $28.2 billion by 2025/26
- Grade school spending will grow from $10 billion to $10.7 billion
- Postsecondary spending will grow from $5.4 billion to $5.9 billion
- Social service spending (less child care) will grow from $5.9 billion to $6.9 billion
- Child care spending will grow from $1.1 billion to $1.6 billion
Guided by Kershaw and Anderson (2016), we allocate the investments planned in Budget 2023 by age group, as follows:
Our analysis shows that the UCP’s 2023 Budget will increase medical, education and social service spending on Albertan’s age 65+ by $2.3 billion. When this figure is divided by the 780,000 people in this age category, the spending increase equals $2,962 per person age 65+.
By contrast, the UCP’s 2023 Budget will increase medical, education and social service spending on Albertans under age 45 by $3.2 billion. When this figure is divided by the 2.9 million people in this age category, the spending increase equals $1,088 per person under age 45.
By this metric, the UCP plans to grow spending on retirees 172% faster than for younger residents. As such, we subtract one point for this criterion.
Alberta NDP: The following Table presents the same information found in the 2023 Alberta Budget, plus all additional spending promises made by the NDP. Based on these figures, the NDP plans to spend:
- $626 million more on medical care than the UCP
- $3 million more on K-12 education
- $352 million more for postsecondary
- $414 million more for social services
- $300 million more for child care
- $150 million on a new Kids Activity Tax Credit
- $149 million more for Better Supports and Care for Seniors
Allocating the investments proposed by the NDP party by age yields the following:
The NDP plans to increase medical, education and social service spending for Albertans age 65+ by $2.8 billion. When this figure is divided by the 780,000 people in this age category, the spending increase equals $3,580 per person age 65+.
By contrast, the NDP plans to increase medical, education and social service spending on Albertans under age 45 by $4.3 billion. When this figure is divided by the 2.9 million people in this age group, the spending increase equals $1,472 per person under age 45.
By this metric, the NDP plans to grow spending on retirees 143% faster than for younger residents. We subtract one point.
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Criterion 5: Do the platforms commit to putting a high enough price on pollution to reduce environmental debts?
The climate crisis is arguably the largest debt to be passed from one generation to the next in all of human history. The most recent science shows we have less than a decade to avoid irreversibly locking in this debt.
Putting a high enough price on pollution is a way to revoke the free pass we’ve given to polluters — that’s pretty much all of us — to cause environmental and health harms at no cost, and to motivate meaningful action to quickly reduce carbon emissions.
A ‘high enough’ price is one that increases at least $15/tonne per year, and reaches or suprasses surpasses $170/tonne by 2030.
Since Alberta does not have its own pricing pollution plan, the province is subject to the federal ‘backstop’ price on pollution. The federal plan aligns with the requirements of this criterion.
Alberta does have an industrial price on carbon, which satisfies the pan-Canadian pollution-pricing framework. However, the UCP promises to fight the federal price on pollution paid by consumers. The party also commits to extending the fuel tax holiday until the end of 2023, reducing the price of fuel by 13 cents per litre at the pump. Together, these policies run contrary to having an adequate price on pollution. We subtract half a point.
While NDP leader Rachel Notley opposes the federal emissions targets, she has indicated her party has no plan to swap out the federal backstop price. While in Opposition, the NDP also called for the gas tax holiday. Given the interaction of these two positions, we award only half a point to the NDP for this criterion.
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Criterion 6: Do the platforms avoid growing debts on younger people (outside of a recession)?
The amount of government debt left for each Canadian under 45 today is three times higher than it was when today’s Baby Boomers started out as young adults. That’s before pandemic and recovery spending — and doesn’t include new spending many are calling for on things like pharmacare, long-term care and dental care. Given the absence of any real dialogue about the cost of these new investments — and the revenue required to cover them — the debt burden landing squarely on the shoulders of younger and future generations is likely to grow.
Both parties receive a full point for this criterion.
The UCP proposes to run a surplus of $5.8 billion over the next three years, reducing debt per person under age 45 by $1,971.
The NDP plans to run a surplus of $3.3 billion over the same period, reducing debt per younger person by $1,127.
We focus on debt per resident under age 45 in recognition that it is younger residents who are asked to assume disproportionate responsibility for paying the interest charges incurred on public debt, and/or paying off that debt in the future. See the Tables below for more detail.
UCP: Schedule 25 on p. 164 of the UCP’s 2023 Alberta Budget (line 19) shows that the party plans to accumulate an operating surplus of $5.8 billion over the next three years. When this three-year total is divided by the $2.9 million residents under age 45, we calculate that the UCP plans to reduce debt per younger person by $1,971 over the same time period.
NDP: The Alberta NDP’s costed platform proposes to run $3.3 billion in operating surpluses over the next three years. When divided by the 2.9 million residents under age 45, we calculate that the NDP intends to reduce debt per younger person by $1,127 over the same time period.
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Criterion 7: Do the platforms take action to rebalance taxes on income vs wealth (especially housing wealth)?
Canada’s tax system relies heavily on taxing income, and very little on taxing wealth. This criterion assesses whether parties are proposing measures that will shift this approach to taxation by taxing income less (especially for lower and middle-earners), and wealth more (including housing wealth). This shift is necessary to respond to changes in factors affecting financial wellbeing in Canada that are creating serious intergenerational tensions. In particular, younger Canadians are being locked out of home ownership by rising home values that are growing wealth for long-term homeowners — wealth that is sheltered from taxation. The Home Ownership Tax Shelter costs Ottawa about $10 billion annually, and costs provincial coffers around half that amount again.
Neither party earns points for this criterion.
UCP: The UCP proposes to cut income and gas taxes, while also campaigning on a “no tax hike guarantee.” Given this commitment not to raise taxes, the party clearly does not mention taxing wealth differently. It also does not address the Home Ownership Tax Shelter that contributes to increasing housing wealth inequality in the province, especially in Calgary.
NDP: The Alberta NDP plans to eliminate small business taxes for 100,000 small businesses. In turn, the party will moderately raise the corporate income tax rate for larger companies, while still keeping this rate lower in Alberta than elsewhere in Canada. These NDP proposals don’t engage directly with issues of wealth taxation, nor the Home Ownership Tax Shelter.
By overlooking the potential value of a shift away from income taxation and toward more taxation of housing wealth, both parties reinforce a status-quo that creates inequality and complacency. Inequality, because rising home prices lead to wealth windfalls for some while eroding affordability for others, which limits their chances to live up to their potential and enjoy life. Complacency, because some homeowners reap wealth windfalls from skyrocketing prices without recognizing that their gains help to keep many others on the outside looking in, especially younger people, newcomers to Alberta, and renters of any age.
Unfortunately, neither the UCP nor Alberta NDP offer any avenues for creative disruption of this harmful status quo. Key to the disruption required is recognizing that the hard work Albertans do every day in their jobs is taxed more than the wealth homeowners gain from the rising value of their home while they sleep and watch TV. Across Canada, our system currently shelters from taxation the $3.2 trillion in added housing wealth homeowners have gained since 1977 — motivating people to prioritize housing as a way to get rich, rather than a place to call home.
Just like offshore tax shelters motivate moving money out of Canada to preserve assets, the home ownership tax shelter motivates us to bank on rising home prices to gain wealth. Why do we consider the former a betrayal, but celebrate the latter? A system that turns home ownership into an investment strategy is crushing affordability and harming younger and future generations. It’s time to protect real shelters, not tax shelters.
This view is widely supported in Alberta, where 68% of residents support disrupting the current approach to taxing housing wealth.
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MONITORING & ACCOUNTABILITY
Criterion 8: Do the platforms propose to initiate annual reporting on age trends?
Monitoring spending over time supports political leaders to make informed and efficient spending decisions. To ensure that age is considered in these decisions, we’re asking governments to include as part of their regular data an analysis of spending by age.
No party promises to report age trends in public finance. We award no points.
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Criterion 9: Do the platforms propose to appoint government point people for generational fairness?
It’s much more likely that the wellbeing of younger Canadians will be addressed as urgently as other age groups if governments have a Deputy Minister, Parliamentary Secretary or other high-level official specifically tasked with advancing generational fairness in public finance.
Neither party promises to appoint a high-level official responsible for generational fairness. We award no points.
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