Canada's Budget 2024 is an opportunity to continue to improve the health and wellbeing of all generations, from the early years onwards. Generation Squeeze recommends that the federal government strengthen accountability for investing in wellbeing by adopting four key metrics:
Monitor the ratio between spending on key social investments relative to spending on medical care
Science shows that health does not begin with medical care. It begins where we are born, grow, live, work and age. As long wait lists and uneven access to primary care accelerates pressures to spend more on illness treatment via the Canada Health Transfer, it is increasingly important to make clear that investments in things like housing, child care, climate change, reconciliation, and poverty reduction are necessary to create health.
Reporting on the social:medical spending ratio in Budget 2024 will help Canada prioritize investing in wellbeing and illness prevention with as much urgency as investing in treating illness after the fact. Budget 2024 should call on the Canadian Institute for Health Information to facilitate this reporting by using their data and expertise to track the ratio of social spending relative to spending on medical care.
Analyze the distribution of government spending by age
Budget 2024 should include an accurate and meaningful assessment of the distribution of spending by age. The flawed age accounting methods currently used invite the mischaracterization that federal spending is ‘ageist’ against seniors — even though the largest budget increases routinely expand retirement income supports. This distortion of budget spending harms younger Canadians (see this study for more information).
In Budget 2023, the biggest increase in new spending was for Old Age Security (OAS), which is growing by $85.6-billion between 2023 and 2027 (Table A1.7). The budget also added $49.3billion in new money for medical care, half of which will go to the 20% of Canadians 65+ (according to national data about how medical spending is consumed by age).
Together, this adds $110 billion in spending for retirees — equal to 84% of the projected deficit. At the individual level, Budget 2023 added $4,300 in spending for each person over 65 — nearly six times greater than the $755 of extra spending promised to those under 45.
This intergenerational tension is made worse by the fact that the cost of managing the federal debt will increase by $62 billion over the next five years. This is greater than combined increases planned for Employment Insurance, $10/day child care, and the Canada Child Benefit — all key policies for younger Canadians.
As Canada’s population ages, governments need more revenue to cover the growing costs of the health and income supports retirees expect. They need to raise this in ways that don’t financially squeeze their kid’s and grandchildren’s generations more than at present.
Adopt a measure of inflation that adequately considers home price increases
Budget 2024 should task Statistics Canada to remedy inaccurate reporting on inflation in home prices. Data that under-estimate inflation by failing to adequately account for the skyrocketing price of established homes risk sending the wrong signal to the Bank of Canada as it manages interest rates and monetary policy. While low interest rates have economic benefits, they also contribute to driving up home prices, as the lower cost of borrowing allows buyers to bid up prices. This systemic problem erodes generational fairness by reducing affordability for younger residents while growing wealth for established (often older) home owners. See this report for more information.
Strengthen accountability for meeting climate targets
Budget 2024 should resource an expansion of the mandate for Canada’s Advisory Body to include a lead role in defining emissions reduction targets, and serving as a watchdog for their implementation. Current net-zero legislation includes litle reporting for actions prior to 2030, limited transparency in emissions modeling and projections, no requirement for independent advice, and no clear implications for failure to meet targets. Whereas Canada’s Act permits the government to self-determine whether it is on track to meet targets, experience in other jurisdictions confirms the value of an independent body to provide non-partisan and evidence-based advice and monitoring. Empowering the NZAB to play this role will solidify accountability for meeting Canada’s climate goals.