Younger Canadians pay for a deficit debate that’s missing the point

Trump-washing and pledges against new taxes have become fixtures of Canada’s political culture, including in British Columbia, ahead of the province’s coming snap election.

One party points to U.S. President Donald Trump’s economic turmoil to explain the province’s fiscal challenges. Another promises a tax freeze to address them.

Neither confronts the largest driver of provincial deficits, nor how to repair them. For decades, governments of every political stripe have failed to prepare for the predictable rise in medical costs created by population aging.

We won’t balance provincial budgets until politicians ask a question they have too long avoided: Who should pay for those costs?

No-new-tax pledges are politically attractive because they appear to protect affordability for everyone. But that’s not what happens when governments face rising medical costs from population aging. Canadians older than 64 use four times as much medical care as those under 50, according to the Canadian Institute for Health Information. So as the share of the population older than 64 doubled with the retirement of the large baby-boom generation over the past half-century, medical spending rose accordingly.

Canada is becoming a super-aged nation this year. Are we prepared?

If governments now refuse to raise revenue from financially secure members of the generation who are using more care, the medical system will remain overwhelmed for old and young alike. Governments will also shift the unpaid bills onto younger generations through deficits and weaker investments in housing, child care and education.

That is not protecting affordability for everyone. It is protecting affordability for some, financed by economic sacrifices imposed on their children and grandchildren. Most grandparents would not knowingly choose such a legacy.

Governments recognized long ago that the baby-boom generation would drive up demand for medical care and public pensions. In the late 1990s, Ottawa anticipated the fiscal impact for the Canada Pension Plan, increasing premiums 68 per cent. Those higher contributions, paid in part by baby boomers during their working years, helped build a reserve for the CPP to remain sustainable as they now draw down their largely prefunded benefits.

Provinces made no comparable adjustment for medical care.

Instead of anticipating these cost increases as boomers aged, governments let medical spending outpace revenue. The result is evident in provincial deficits across the country, regardless of which party governs.

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Take the example of B.C. from an analysis conducted by my Generation Squeeze lab at the University of British Columbia. The analysis shows that if the age of our population still looked like it did when baby boomers were young – with just 10 per cent of residents above 65 in 1976, compared with 20 per cent today – the province would be spending roughly 22 per cent less on medical care, saving $8.5-billion. That’s enough to transform B.C.’s $7.7-billion deficit in 2025-26 into a modest $800-million surplus.

No one should be surprised that people need more medical care as they age. That’s a success story reflecting longer lives and medical progress. The problem is that governments failed to prepare revenue systems to cover the extra $8.5-billion, which adds up to roughly $7,300 for each of B.C.’s 1.2 million seniors.

That failure helps explain the spending choices in B.C.’s most recent budget, and why this election should focus on whether any party offers a different approach.

By 2028, the province’s plan is for annual medical spending to rise by $3.2-billion – more than double the combined increase for K-12 education, child care, trades training and social services. Meanwhile, the province projects another $37-billion in deficits over the next three years, even as young residents already pay more income taxes to support healthy retirements for boomers than boomers paid to support seniors when they were young.

Not all rising health care costs stem from an aging population. What else is driving the increase?

These choices should prompt a critical conversation about who should pay for the increased medical costs of an aging population that drive our deficits. Instead, parties enter elections blaming Mr. Trump for our fiscal woes, or promising no new taxes to overcome them. Both approaches evade the central question while crowding out investments in younger generations and leaving them a larger debt burden to carry.

That outcome runs contrary to the intergenerational love visible around many family tables. Parents and grandparents often look for ways to help their children and grandchildren navigate rising housing, education and child care costs. Few would knowingly leave their kids a larger public debt because governments avoid difficult conversations about how to finance their generation’s rising medical expenses.

The personal finances of all Canadians are at stake, as are the credit ratings of our governments. Voters deserve answers about who should shoulder the additional medical costs of population aging. Our ability to restore balanced budgets, sustain high-quality medical care and improve affordability for young and old alike depends on them.

Dr. Paul Kershaw is a policy professor at UBC and founder of Generation Squeeze, Canada’s leading voice for generational fairness. You can follow Gen Squeeze on X, Facebook, Bluesky, and Instagram, as well as subscribe to Paul’s Hard Truths podcast.