The Four Parties Converge in their Spending on Retirees
There are important similarities between the four parties. Most notably, they all commit to boost annual spending on the population of Canadians age 65+ by more per person than any other age group.
Spending on seniors will increase by:
- $18.2 billion under a Conservative government
- $20.2 billion under an NDP government;
- $20.3 billion under a Liberal government; and
- $19.9 billion under a Green government.[i]
In all four party platforms, approximately $13 billion of the new spending on Canadians age 65+ will go to support incomes in retirement (For more detail, see Table 1 in our full study). The remainder consists largely of medical care spending. We use the most recent per capita health care spending estimates from the Canadian Institute for Health Information (2014) to project that 49 per cent of medical care spending in 2019 will go to the population age 65+.
In 2019, there will be approximately 6,747,110 Canadians age 65+, representing 18 per cent of the population.[ii] To calculate the amount each party would invest per senior, we divide the total amount of proposed new spending by the total number of people age 65+.
- Conservatives will invest $2,691 per person age 65+.
- The NDP will invest $2,997 per person age 65+.
- The Liberals will invest $3,008 per person age 65+.
- The Greens will invest $2,948 per person age 65+.
Inflation and Population Aging
The parties do not control for inflation in their platform promises so spending increases in 2019/20 are actually somewhat smaller in real terms after adjusting for inflation. The Government of Canada estimates inflation will be 0.9 per cent in 2015; 2.2 per cent in 2016; 2 per cent thereafter.
Coming into the federal election, the Conservative government spent $20,868 on average for each of the 5.8 million Canadians age 65+, compared to $7,185 for each of the 10.1 million Canadians age 45 to 64, and $4,349 for each of the 20.1 million people under age 45.
By 2019, the Canadian population is expected to grow by another 1.8 million people, and to become older on average. There will be almost an extra million people age 65+. By contrast, there will be an extra 350,000 people age 45 to 64, and an extra half million people under the age of 45.
What these statistics illustrate is that the segment of the Canadian population on which the federal government spends the most money is also the segment that will grow the most between 2015 and 2019. This is important, and why all four national parties promise platforms that will at the very least preserve the amount spent per senior at the same level they are today after adjusting for inflation. It will cost minimally an extra $17.2 billion in annual spending by 2019/20 to preserve the per person amount we currently allocate to each retiree as the number of seniors increases by 1 million over the next four years.[ii]
This $17.2 billion annual increase has not been prepaid by the growing group of seniors in the same way they prepaid for much of the Canada and Quebec public pensions they will receive. As a result, it is important that all parties and the federal government routinely break down how its revenue and spending decisions distribute tax collection and investment by age group so that we can assess whether our country lives up to the goal of working fairly for all generations while adjusting to the fiscal realities of an aging population. This goal will require preserving the federal government’s fiscal capacity to invest in policy that eases the time, money, service and environmental squeeze facing Canadians in their 20s, 30s, 40s and the children they represent while Ottawa also adapts to the needs of an aging population.
To support this goal, Generation Squeeze called on all political parties to commit in their platforms to report the age distribution of spending in future Government of Canada budget cycles.
In response, the NDP committed to producing “an Intergenerational Report every four years, which will detail demographic and economic changes to identify challenges Canada will face over the next 40 years and how this may influence decision-making today.”
The Liberal party “will make Statistics Canada fully independent. We will work with Statistics Canada and other stakeholders to provide a broader range of information, including detailed labour market information, child development data, and statistics about our population.” While this platform commitment does not speak directly to the Gen Squeeze call for reporting the age implications of government decisions, it does hold open the possibility that Statistics Canada could assume responsibility for such reporting.
In reviewing documents for this study, we could not find material in Conservative or Green party platforms that speaks to the need to report the age distribution of governments spending and revenue collection.
Generation Squeeze looks forward to working with all parties to strengthen government reporting about the age implications of their policy priorities in the years ahead.
[i] The extra $2,691 to $3,008 that each party invests per retiree does not mean the amount that each senior receives today will increase by that amount. The impact of the extra average amount is moderated substantially by the fact that there are a million more people in the age category where individuals receive on average many, many thousands of dollars in additional spending compared to before they turned age 65.
[i] These numbers are not adjusted for inflation because the party platform and Government of Canada budget forecasts do not make this adjustment. The 2015 budget does provide Consumer Price Index estimates of inflation for each of the next four years. We rely on these estimates in other parts of the study when examining what the party platforms mean for per capita spending patterns as the population grows and ages.
[ii] Statistics Canada (2014) estimated the population at 35.5 million as of 2014 with almost 20 million people under the age of 45; 10 million people 45 to 64; and 5.6 million people age 65+. We estimate the population will grow 1.1 per cent larger each year, which is the population increase in 2014 and the average annual population age increase over the last 30 years. We prorate the age distributions accordingly in keeping with the rate of change reported for each age cohort in the previous year.