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The Big Gap: Governments cater to seniors at the risk of future generations

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OTTAWA -- It has been a pretty good month if you are over 65 in Canada.

Seniors in Manitoba will, within two years, no longer have to pay education property taxes. It was the only really good news in a budget brimming with bad.

Ontario's cash-strapped government somehow came up with $156 million to improve physiotherapy for seniors.

The B.C. NDP, kicking off an election campaign that is expected to see them sweep the Liberals out of office after more than a decade, is promising investments in home care for seniors and to cut the costs of prescription drugs.

It is all part of a pattern that has governments nationwide catering to the fast-growing -- and voting -- seniors sector. The younger, less engaged sector is often left with less.

"Our provincial and federal governments are literally pitting the health and welfare of grandparents against their kids and grandkids," said Paul Kershaw, a professor of early learning at the University of British Columbia.

Kershaw is also the head of Generation Squeeze, an advocacy group to lobby governments for a "new deal" for Canadian families that would see more investments in child care and parental leave.

His website, www.gensqueeze.ca, has tracked the vastly different scenarios young families face today compared to what they faced three decades ago, and the difference in how much governments invest in the young versus the old.

According to Kershaw, governments spend an average of $12,000 in social benefits per person under the age of 45 compared to $45,000 per person over age 65. That includes items such as the $100-a-month Universal Child Care Benefit for children under six, parental-leave costs, investments in education, medical care, child care, Old Age Security, tax credits and pension-income splitting.

It means while people over 65 make up 15 per cent of the population, they enjoy 42 per cent of social spending.

The impact of this is good for seniors but not so good for kids and young families.

It's all happening at a time when Canada's oldest have never been wealthier and families just starting out have seen their incomes erode during the last 35 years.

The median hourly income for a Canadian between 25 and 34 is $3 an hour less today than it was in 1976 when adjusted for inflation. This despite 67 per cent of people in that age group being post-secondary education graduates compared to 30 per cent in 1976. They also carry bigger student loans and face housing prices that have skyrocketed 78 per cent.

On the other end of the spectrum, baby boomers are hitting retirement often sitting on fortunes due to those same skyrocketing housing prices. And poverty among seniors has plummeted, thanks to medicare, the Canada Pension Plan, Old Age Security and the Guaranteed Income Supplement. Between 1980 and 2003, the poverty rate among Canadians over 65 fell from more than 20 per cent to 6.8 per cent.

Despite the House of Commons in 1989 voting to work to end child poverty by 2000, it has never happened. The child-poverty rate in the 1980s was 15.8 per cent. In the late 2000s it was 15.1 per cent.

That means kids are more than twice as likely as seniors to live in poverty.

The Organization for Economic Co-operation and Development ranked Canada third out of 17 OECD comparable nations for its seniors poverty rate, but 15th of the 17 for the child-poverty rate.

In 2012, almost half the 63,000 people who used a food bank in Manitoba were children, compared with three per cent who were over age 65.

Kershaw said he does not advocate taking away from the old to give to the young, but says governments must do a better job at balancing out investments to ensure younger Canadians aren't getting left behind.

In the recent Manitoba budget, while seniors were given a $50-million break on education taxes, young families were handed $2.9 million in savings by eliminating the provincial sales tax on bike helmets, car seats and baby gear.

At the same time, the government cut back on its promised increase in funding to post-secondary schools from five per cent this year to 2.5 per cent. At least that's still better than Alberta and Nova Scotia, which reduced funding, or B.C., New Brunswick and P.E.I., which froze it.

It's not all roses for seniors either. The federal government recently took a political gamble on raising the age of eligibility for the Old Age Pension from 65 to 67. But the change won't even start to be phased in until 2023, meaning anyone who is already at least 54 won't be affected, but the younger Canadians struggling to pay for child care and college tuition now will also have to find a way to save more for retirement or work longer than their already wealthier parents and grandparents.

But there are many who think long-term economic prosperity would be given a big boost by investing in children now.

Last November, TD Economics released a special report on early childhood education. Chief economist Craig Alexander wrote investing in early childhood education should be the first priority of governments as they emerge from deficit budgets because it supplies the biggest bang for our bucks.

The report found for every dollar spent on early childhood education, the economic benefits would range from $1.49 to $2.78. In the United States, studies suggest the benefits could be as high as $17 when applied to disadvantaged children.

Alexander cited studies showing the benefits of early childhood education -- that the quality of education before age six will have a lasting impact on their entire education experience, their health, their future job prospects and their lifetime earnings. Kids who get quality early childhood education are more likely to have positive experiences in grade school, graduate on time and go on to post-secondary school.

Availability of affordable and quality child care also eases the burden on families, allows parents to work more, earn more and raise their families' incomes and their children's long-term health and welfare at the same time.

Yet Canada has one of the worst records on the issue, Alexander noted. Education is provided in a piecemeal fashion, formal public education not starting until most kids are at least four and often five years old, and the availability and affordability of child care are different depending on where you live and how much you earn.

Among comparable OECD nations, Canada ranks dead last in spending on early childhood education as a percentage of GDP, with about $11 billion spent by the federal and provincial governments each year or 0.25 per cent of GDP. That is 17 per cent below the OECD average, Alexander said in his report.

Glen Hodgson, chief economist at the Conference Board of Canada, said he'd like to see more research on the impact of investing in the young versus the old, but it's not something high on most policy lists.

"It's a very good question," he said. "It's an issue I've thought about for a very long time."

Hodgson said one of the things that makes such a comparison difficult is the impact on younger generations of the debt racked up by their elders.

Since 1976, the Canadian economy has more than doubled in size, but the national debt has nearly tripled. It leaves the upcoming generation with huge debts to pay off, and governments are often unable to invest in child care or reducing childhood poverty because of the large debt load.

Both Kershaw and Hodgson note part of the problem is that governments cater to the people who elect them, and when it comes to voter turnout, older Canadians are far more likely to make it to the ballot box than young people.

In one report on Generation Squeeze, Kershaw notes if young people want to be "dealt in" to government policy, "they need to care less about who is being voted off some island on TV and more about who is being voted into our legislatures."

mia.rabson@freepress.mb.ca


Median household income, adjusted for inflation

Couples age 55-64

1976-1980: $60,340

2005-2009: $69,020

Couples age 25-34:

1976-1980: $59,660

2005-2009: $63,100

-- Statistics Canada/Generation Squeeze

Spending on early childhood education as a percentage of GDP:

Canada: 0.25 per cent (17th out of 17 comparison countries in the OECD)

 

Percentage of Canadians over 65:

 15 per cent

Percentage of federal and provincial social spending on Canadians over 65:

42 per cent

 

$45,000 on average per Canadian over 65:

Pension Income Credit: $232

Pension Income Splitting: $296

Recreation & Culture: $487

Age Tax Credit: $595

Tax breaks for housing: $613

RRSP Subsidies: $3,181

RPP Subsidies: $4,033

Old Age Security: $7,694

CPP/QPP: $8,942

Medical Care: $12,758

 

$12,000 on average per Canadian under 45:

Universal Child Care Benefit: $141

Parental Leave: $160

Workers Compensation: $215

Other Children's Tax Credits: $234

Child Care for Kids under 6: $303

Tax Breaks for housing: $354

Employment Insurance: $472

Recreation and Culture: $487

Canadian Child Tax Benefit: $535

Post-secondary education: $2,241

Medical Care: $2,337

Grade 1 - 12: $2,635

Republished from the Winnipeg Free Press print edition April 27, 2013 A6

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