Quote:
Originally Posted by Harry Lime
The aging population argument has always bugged me. There is a lower birthrate in Canada, as there is in many first world countries, but the people arriving in Canada don't have that cultural issue, and the existence of babies being born into the country is never used to offset the aging of Babyboomers.
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Whether it bugs you or not, it's a huge issue. The ratio of young, taxpaying citizens versus older, retired citizens who no longer pay income tax and are very costly in terms of health care has a huge impact on public finances and services.
Back in the 50s to 80s, when Canada (and most Western countries) had very young populations, we saw a huge expansion of public infrastructure and services. Schools, roads, hospitals. We also laid the foundation for our pension systems, and set up generous salaries and guaranteed pensions for public servants. As Fuzz says, it's a system built on the assumption of growth. Which was fine, as long as we still had a high ratio of young taxpayers to older citizens.
The decreased birth rate and ever-increasing life-spans have shrunk that ratio dramatically. The taxbase is stagnating at a time when public costs are rising steeply. The status quo in spending is not sustainable. Something has to give.
Canada and other Western countries have several options.
* Substantially increase the population of young, taxpaying citizens through immigration.
* Substantially increase taxes.
* Substantially cut spending.
It will be up to each country to determine what combination of the above it pursues. Of course, many citizens want their government to do none of the above. And governments that don't have the courage to take painful measures are only going to delay the reckoning. I expect the finances of several Western countries will collapse within the next 20 years.
Here's a sobering example. In 1956, there were 9 working teachers for each retired teacher. In 1986, that ratio was 5:1. It's now about 1.5:1, and expected to reach parity shortly. How do you think that ratio affects teacher's pensions? The head of the fund that manages the Ontario Teachers' Pension fund has warned that a system where teachers work for 30 years and then retires for 30+ is not sustainable. That's a glimpse of how changing demographics are putting tremendous pressure on balance sheets.