Federal budget squeezes younger generation

2015 budget spends more on grandma’s medical care and income security, while asking grandma to contribute less to paying for these benefits

The federal government’s 2015 budget spends more on grandma’s medical care and income security, while asking grandma to contribute less to paying for these benefits. It may sound like a reverent thing to do for one’s elders. But it is a blow to generational equity.

The Canada Health Transfer reaches $34 billion in 2015, up $2 billion from the previous year. Nearly 50 cents of every healthcare dollar goes to the 15 per cent of the population age 65+. Old Age Security is also up $2 billion, now at $45.7 billion.

Simultaneously, the Conservative government increased the contribution limit for Tax Free Savings Accounts which are primarily used by older, affluent citizens. TFSAs shelter the deposited investments from further taxation. Plus, the budget cut another $167.5 million per year in taxes for affluent seniors by changing rules governing Registered Retirement Income Funds.

This pattern might be okay if the evidence showed that our aging population had prepaid for its medical care as it has prepaid much of its Canada and Quebec public pensions. But spending on medical care for citizens aged 65+ is up $32 billion annually compared to 1976 (when measured as a share of our economy) and governments haven’t raised any more revenue to pay for this.

I want my 70-year-old mom and 99-year-old grandmother to have the medical care they need.

They want to pay their fair share. They know they have personal responsibility to do so. Otherwise, they leave the bills to their kids and grandchildren, or leave less in government coffers to adapt to new challenges facing their offspring.

This problem is already playing out. Total government spending on family time, cash and services along with grade school and postsecondary is down around $15 billion annually compared to 1976. This spending is down even though twice as many young people now attend postsecondary, and the demand for family time and child care services has skyrocketed along with the proportion of young women in the workforce.

But wait. Hasn’t the government been calling this the Family Tax Cut budget? Doesn’t this benefit younger generations?

When we examine total federal spending in 2015 on elderly benefits, Employment Insurance, children’s benefits, the Canada Health Transfer and the Canada Social Transfer, the government allocates approximately $11,000 per person age 65+, compared to around $2,000 per person under age 45. The Conservative income splitting plan did little to influence this distribution. Income splitting helps just 38 per cent of families with children. Only well-off one-earner couples will save the maximum.

Since few benefit from income splitting, the Prime Minister Stephen Harper also increased the universal child care benefit by $60/month for children under 18. This change will not yet bring federal spending on income supports for families with children back to the level it was when today’s aging population enjoyed the universal Family Allowance program while raising their children.

Nor does the Prime Minister’s plan build child care spaces, or bring their cost down from above university tuition levels. This is a problem, because affordable child care is a major missing piece of our social policy puzzle along with the loss of parental time at home compared to the past. Both problems are now much greater for younger Canadians in their prime child rearing years since their full-time earnings are down thousands of dollars compared to 1976, while housing prices are up hundreds of thousands.

In anticipation of the budget, the Canadian Association of Retired Persons organized public demonstrations in support of TFSA increases and medical care spending, among other issues. Their organizing contributes to a world of politics that responds accordingly. So long as the aging population has a strong lobby, younger generations deserve one too. When younger generations don’t organize, the world of politics doesn’t work for all generations.

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

 

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