Ontario budget doesn’t help Generation Squeeze enough

The gap between spending on seniors and younger Ontarians is still too large

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 Generation Squeeze
 Generation Squeeze

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Contact Paul

VANCOUVER, B.C. Feb. 28, 2016/ Troy Media/ – Ontario’s new budget reflects a government trying to solve big problems facing younger Canadians: pension policy, pricing pollution and access to post-secondary grants and loans.

But there remains a big age gap in provincial spending that is not adequately reported or questioned.

Ontario plans to spend $134 billion in next fiscal year and collect $131 billion, leaving a deficit of around $3 billion plus a contingency. Most of the spending – $122 billion – goes to programs and $12 billion goes to pay interest on the provincial debt.

Of program spending, medical care is by far the largest slice at $51.8 billion. Premier Kathleen Wynne’s government will spend $25.6 billion on grade school, kindergarten and child care; $7.8 billion on post-secondary education; and $16.7 billion on social services for persons with disabilities, seniors and families, including funding for low-income housing.

After adjusting for inflation, Ontario will spend $965 million more in these areas than in 2015.

Most of the new spending ($625 million) goes to those age 65 and over, so nearly twice as much is budgeted for each senior compared to each younger citizen.

The province will spend around $12,431 on each of Ontario’s 2.3 million citizens 65 and older and only $6,388 for each of the 7.7 million residents under age 45. When combined with federal and municipal spending, governments spend in total more than $33,000 per person age 65 and over in Ontario compared to less than $12,000 per person under age 45.

Medical care is at the heart of this gap. Forty-eight per cent of the $51.8-billion health-care budget goes to the 16 per cent of the population age 65-plus. Medical care for seniors now costs more than the entire grade school, kindergarten and child-care budgets; and is more than three times larger than all post-secondary spending in Ontario.

This is important to remember when the government talks about post-secondary spending changes. Starting next year, it will transform student financial assistance to make post-secondary funding more accessible in advance of students starting college, with the intention of covering tuition entirely for students from homes earning less than $50,000. These are important changes. But they are primarily an example of the Ontario government spending smarter on younger Canadians, not much more.

Spending smarter on younger Ontarians isn’t enough. Compared to when today’s aging population was starting out as adults, the typical 25-to-34-year-old now earns thousands less for full-time work in jobs that less often pay generous pensions, despite having more post-secondary education and starting with larger student debts.

And then there’s housing.

The average home in Ontario cost $218,000 in 1976 (adjusting for inflation). It used to take five years for a typical 25-to-34-year-old to save a 20 per cent down payment. Now the average home costs over $430,000, and it takes 12 years to save the down payment. In Metro Toronto, it takes 15 years. That’s a big deterioration in the standard of living for contemporary young people – especially when all this extra money more often pays for condos with balconies instead of houses with yards.

The new Ontario budget doesn’t grapple with this reality enough. When it talks of housing affordability, it refers primarily to homelessness and supports for the lowest earners. These are important priorities. But they must be accompanied by the recognition that the housing market leaves entire generations of younger people squeezed for cash and time. The squeeze tightens when people start families, because child-care services in Ontario still generally cost the equivalent of an annual mortgage payment, and going on parental leave means losing the equivalent of a third payment.

The Ontario government can and should do more to ease this squeeze — in part by matching increases in new spending for young and old alike. With 83,000 more Ontario residents joining the 65-plus age category this year, the province budgeted an extra $267 per retiree in 2016 to cover costs that come with aging. By contrast, the government found almost no new money per person under age 45.

It’s difficult for the province to see this problem, because it does not break down its budget numbers by age. That’s why Generation Squeeze is calling on all provincial and federal governments to report the age distribution in their spending.

Dr. Paul Kershaw is a professor in the UBC School of Population Health, and founder of [popup url=”http://www.gensqueeze.ca/?recruiter_id=4295″ height=”1000″ width=”1000″ scrollbars=”0″]Generation Squeeze[/popup].

Paul is a Troy Media [popup url=”http://marketplace.troymedia.com/our-contributors/” height=”1000″ width=”1000″ scrollbars=”0″]contributor[/popup]. [popup url=”https://www.troymedia.com/become-a-troy-media-contributor/” height=”600″ width=”600″ scrollbars=”0″] Why aren’t you?[/popup]


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