Mind the gap: A generation battle brews over budget
Staff - From Thursday's Globe and Mail
PublishedWednesday, Mar. 28, 2012 6:59PM EDT
Last updatedWednesday, Mar. 28, 2012 7:15PM EDT
Thursday’s landmark budget will do much more than chart a course to eliminate the deficit through cuts in government spending. The budget aims to place government and the economy on a sound footing for years to come. But there is a price, as generation is pitted against generation, one kind of immigrant against another, the growing, prosperous parts of the country against regions in decline.
Stephen Harper laid out this budget’s agenda in an address at the World Economic Forum in Davos, Switzerland, two months ago. Perhaps the most ambitious – and controversial – of changes hinted at will be in the area of retirement reform. The Prime Minister says changes to Old Age Security are needed so that the program will be sustainable for future generations. But it’s the older generations who will receive more money.
Other priorities have emerged through speeches by ministers, answers to media questions and leaks. This budget promotes job growth through tight controls on government spending and encourages more skilled immigrants while limiting the ability of immigrants already here to bring their families into Canada.
To ensure the pension system is sustainable, younger workers will have to wait longer before they qualify for Old Age Security. New regulations will promote the energy economy while playing down environmental protection. And there will be little, if anything, for workers in seasonal industries in poorer provinces.
An online Globe and Mail survey conducted in mid-March, in which about 400 readers revealed their hopes and fears for the federal budget, reflects those strong generational tensions among Canadians.
Students are concerned about high tuition costs, and those in their late 20s and 30s worry about an impenetrable housing market and weak job prospects – which they blame, in part, on baby boomers. Seniors and those nearing retirement, on the other hand, were concerned about upcoming reforms to Old Age Security.
The Conservatives have previously brought in other major initiatives aimed at seniors, including tax breaks through income splitting and an increase to the tax credit for seniors.
But retirement expenditures are only one part of the challenge. One of the biggest obstacles posed by Canada's aging demographic is the labour force – keeping people working for longer. At the moment, there are 4.6 workers for every person over 65 in Canada. That ratio, known as the dependency ratio, is expected to drop below three to one by 2031, which would mean fewer people working and paying taxes to support social programs. Canadians also live longer now, so someone retiring at 65 can expect to collect a pension for nearly 20 years.
Jobs and support for retraining programs are expected to be major themes of the budget. With youth unemployment running higher than the national average, the budget could include measures that help youth improve their marketable skills.
In The Globe’s survey, there was an almost unanimous desire for investment in job creation and innovation to propel the economy. With a budget that pushes for cost controls, respondents of all ages said MPs and civil servants should walk the talk and slash their own pensions and curtail spending.