Has Canada given up on its future?

Older Canadians, a cohort which includes this writer, vote in large numbers and therefore command political attention. They have little time to withstand market drawdowns or make up for bad investment decisions and thus focus on wealth conservation. Those who spent decades accumulating homes and retirement savings naturally resist policies that would impair them. This is not irrational, but it has produced an intricate system of subsidies, tax advantages, and entitlements for the demographic having the highest net worths. At the same time, we have demonstrated remarkably little interest in building conditions under which younger Canadians might thrive, defaulting instead to a pervading Horatio Alger mystique whereby young Canadians are extolled to pull themselves up with perseverance and effort, just like their elders did. Every generation has its unique challenges, but this narrative ignores the fact that Boomers accumulated homes and a lot of their financial assets during two decades of unprecedented financial repression, which swept in historically low interest rates and resulted in dramatic asset price inflation. That was a great situation to be in if you already owned things; not so much if you are now aspiring to enter the economy. Asset-owning Canadians recoil at any suggestion that those valuations might need to normalize in order for younger people to participate. This was memorably encapsulated in Housing Minister Gregor Robertson’s response to the question of whether home prices in Canada needed to decline. He replied bluntly: “No.” The priority, he argued, was maintaining market stability because housing represented “a huge part of our economy.” It was an unusually candid articulation of modern Canadian economic policy: existing homeowners must be protected, even if younger Canadians are permanently locked out. Culturally and politically, Canada now prioritizes preservation over dynamism. Its fiscal structure increasingly resembles a machine designed to preserve the balance sheets of asset owners. Although incomes for younger people have grown in absolute terms, they have not kept pace with the inexorable rise in housing and asset prices. Little wonder that the happiness gap between old and young has exploded in the last 10 years. Consider the tax system. Retirees over 65 are permitted to split pension income with their spouses to minimize taxes, yet single-income families raising children receive no equivalent income-splitting privileges. Even more remarkably, while seniors receive an Age Credit bonus for merely attaining senior status, children themselves are not even entitled to a Basic Personal Exemption. From the perspective of the Canadian government, children are effectively a discretionary expenditure, akin to painting your fence or buying a boat. This is a peculiar strategy in a country where the fertility rate has fallen to an all-time low and lingers well below the replacement rate. It is true that the Canadian government replaced personal exemptions for children with the Canada Child Benefit (CCB), but the amounts start to be clawed back somewhere below the poverty line and are eliminated entirely by the time family income is high enough to purchase a median house. The message embedded in the tax code is difficult to ignore; retirement is a social good worthy of subsidy, whereas children are a private lifestyle choice. But wait, there’s more! Old Age Security (OAS) alone now consumes roughly one out of every six federal dollars spent—materially larger than either defence spending or direct federal health-care transfers. Unlike the CCB, it doesn’t start to get clawed back until about double the poverty line and doesn’t fully disappear until personal income (not household) reaches $150,000. And unlike the Canada Pension Plan, OAS was never prefunded through contributions. It is financed directly from general revenues, meaning from taxes on current workers or, more accurately, from debt imposed upon those future workers who are not being born in sufficient numbers. Layer on the Guaranteed Income Supplement, pension-income tax credits, pharmacare supports, home-care subsidies, and the myriad other programs disproportionately benefiting older Canadians, and the picture becomes difficult to deny: Canada has gradually reorganized itself around sustaining the elderly rather than building for the future. Even the seniors’ discounts for everything from bus passes to movie tickets to groceries could, on average, be better applied to younger people. Even the much-anticipated “great intergenerational wealth transfer” may prove largely illusory. Canadians are living longer than ever, while modern medicine grows increasingly capable of extending life at extraordinary cost. Assisted living, long-term care, memory care, and private supplementary medical services are consuming increasing portions of accumulated family wealth. Inheritance may arrive too late—or too depleted—to meaningfully alter the trajectory of younger generations already locked out of asset ownership during their prime earning years. This is not merely socially corrosive; it is fiscally irrational. Canada’s long-term budget outlook already depends upon a shrinking pool of younger workers supporting exploding entitlement obligations for an aging population. The Parliamentary Budget Officer projects structural deficits stretching as far as the eye can see. Yet rather than aggressively orienting public policy toward family formation, productivity growth, and asset accumulation among younger Canadians, the federal government continues to favour consumption-oriented transfers toward older voters. Ironically, the one reform that may eventually force some fiscal realism is one the Boomer generation enthusiastically embraced: Medical Assistance in Dying (MAID). MAID now accounts for more than 5 percent of all deaths in Canada, among the highest rates in the world, and advocacy organizations continue lobbying aggressively for broader eligibility and expanded applicability. A society increasingly reluctant to invest in younger generations may eventually become equally reluctant to bear the growing costs of prolonged old age That is the uncomfortable endpoint of a civilization that ceases planting trees for future generations: eventually, there may be nobody left willing to tend the shrinking forest.