Skip to content

The Monitor Progressive news, views and ideas

Canada’s Incredible Shrinking Population?

February 6, 2012

1-minute read

On CTV yesterday, human resources minister Diane Finley said (45 seconds into this interview): “As we go forward, we’re going to have three times the expense in Old Age Security as we do now, but we’re only going to have half the population to pay for it.”

That sounds pretty scary. If the total cost triples, with only half as many people to pay it, each Canadian would have to pay six times as much for Old Age Security (OAS)!

The Chief Actuary does estimate that the cost of OAS, in nominal dollars, will almost triple by 2030. But where is Finley getting her population figures?

Even the low-growth scenario in Statistics Canada’s latest population projections has our population increasing from 34.8 million this year to 39.3 million in 2031. Although seniors pay taxes (including on their OAS benefits), Finley may have been referring to the “working age” population.

In the same scenario, Statistics Canada projects that the population aged 20 to 64 will grow from 21.8 million this year to 22.1 million in 2031. Over the same period, the number of Canadians between the “prime” working ages of 25 and 54 increases from 14.9 to 15.1 million. However you slice it, there will be more (not half as many) taxpayers to fund OAS going forward.

The most charitable interpretation of Finley’s comment is that she meant Canada will have half the working-age population relative to the number of seniors. The senior population, and hence the “dependency ratio,” is projected to approximately double between now and 2031.

At best, Finley is counting this increase twice. The near tripling of OAS costs reflects the rising number of seniors plus inflation.

The Chief Actuary’s report (page 9) also projects that nominal Gross Domestic Product (GDP), which approximates the federal tax base, will double between now and 2030. As a share of GDP, the combined cost of OAS and the Guaranteed Income Supplement will rise from 2.41% to a peak of 3.14%. That’s not insignificant, but it hardly warrants reducing or delaying benefits.

Erin Weir is an economist with the United Steelworkers union and a CCPA research associate.

Topics addressed in this article

Related Articles

Canada’s fight against inflation: Bank of Canada could induce a recession

History tells us that the Bank of Canada has a 0% success rate in fighting inflation by quickly raising interest rates. If a pilot told me that they’d only ever attempted a particular landing three times in the past 60 years with a 0% success rate, that’s not a plane I’d want to be on. Unfortunately, that looks likes the plane all Canadians are on now.

Non-viable businesses need an"off-ramp"

Throughout the pandemic, many small- and medium-sized businesses have weathered the storm, thanks to federal government help. In his deputation to Canada's federal Industry Committee, David Macdonald says it's time to give those businesses an "off-ramp".

Truth bomb: Corporate sector winning the economic recovery lottery; workers falling behind

This isn’t a workers’ wage-led recovery; in fact, inflation is eating into workers’ wages, diminishing their ability to recover from the pandemic recession. Corporate profits are capturing more economic growth than in any previous recession recovery period over the past 50 years.