Grey Storm Clouds Ahead
When political parties convene to discuss policy, they generally invite speakers who can be counted on to deliver pleasant platitudes and uncontroversial twaddle. There were some of those speakers at the Liberals’ deep-think in Montreal this past weekend. But there were also serious people telling the audience what it urgently needed to hear, no matter how uncomfortable it was to listen.
And it was plenty uncomfortable.
Rick Miner, the former president of Seneca College, looked like a doctor about to deliver the bad news when he took the podium. “We have two major trends emerging,” he said. “First, an aging population. And second, the movement from a labour to a knowledge economy.”
Over the next several years, the great population bulge known as the Baby Boom will pass retirement age and even if, as seems likely, they stay on longer than workers in the past, the labour force will lose a huge number of bodies. At the same time, the demand for skilled and adaptable labour will continue to rise rapidly, and various projections show Canada’s education and training systems won’t keep up. Combine those two tectonic forces and we are likely to find ourselves in a uniquely awful situation: We will have very high unemployment rates and severe labour shortages at the same time.
There’s still time to avoid a future in which there are “millions of people without jobs and millions of jobs without people,” Miner said. But it’s dwindling rapidly. A big push on education and training is needed right away.
It’s tempting to think Miner’s news is gloomy but not so bad. It’s a big problem, true, but we can take care of it. There’s nothing to panic about. Right?
Wrong. Oh so very wrong. There’s plenty to panic about. At least that’s the conclusion I drew the next morning when David Dodge took the podium.
The former deputy finance minister and Bank of Canada governor is known for being blunt without indulging in hyperbole. Some people call this “honesty.” On Saturday morning in Montreal, Dodge was honest. And frightening.
Dodge’s first point: health care. Costs are now going up seven per cent a year. That’s expected to rise to eight per cent by the end of the decade. In the decade that follows, baby boomers will move into the years when people put the most demands on the system and the costs go even higher. Even assuming the economy does well over the next decade, Dodge noted, the costs of health care will rise “about one-and-a-half times as fast as revenues.”
Or to put that a little more bluntly, health care is going to bankrupt Canada.
“We have to face up to this,” Dodge insisted, before checking off our four options. We could boost taxes hugely, he noted. Or slash services savagely. Or require substantial co-payments. Or finally, we could reduce the quality of services — longer wait times and so on — while allowing people to buy upgraded coverage. That’s the dreaded “two-tier medicine.” There is no Option Five.
Then there’s productivity growth. It’s pathetic. Which is the sort of thing that causes most people’s eyes to glaze over but Dodge did a good job of explaining why it’s not only economists who should worry about this. “If we fail to increase labour productivity from the miserable one per cent a year average since the 1970s,” Dodge said, “we will condemn ourselves to a standard of living which is in decline relative to the rest of the world this decade and in absolute decline next decade. Without productivity improvement, Canadians will have to work ever-more hours per year and have to retire later and later.”
But then, we’re probably going to have to do that anyway because people aren’t saving nearly enough for retirement. “Let’s not kid ourselves. Middle- and upper-income Canadians now in their prime earning years are both going to have to save more and expect to retire later in life than they’d hoped,” Dodge said. This is the “harsh reality.”
But wait! It gets worse!
Remember those baby boomers now approaching retirement? In another decade, they will increasingly be unable to live independently and demand for long-term care will soar. “In the past, we’ve relied heavily on family members, usually daughters, to provide this,” Dodge noted. “But baby boomers have had fewer children than their parents and their sons and daughters will be participating in the labour force more hours per year and later in life. And so the capacity of families to provide this sort of care will be diminished as we go forward.” Dodge didn’t suggest solutions. He simply said expanding the current system would be “inhumane and unaffordable.” And we need to be “imaginative” and come up with something new. Quick.
And remember that all this has to happen while we rapidly expand the education system in order to stave off massive labour shortages and soaring unemployment. And don’t forget the deficit! We’re deep in the red. That’s got to change, too.
It’s not pretty. But, as David Dodge repeatedly noted, we have to face up to these realities. There really will be no hope if we do not have “an adult conversation.”
An adult conversation. About hard choices. And sacrifices. In Canada.
Columnist Don Martin reports that during a particularly bleak moment in the conference former New Brunswick premier Frank McKenna leaned over and whispered to former prime minister Paul Martin, “we’re f***ed.”
That sounds about right.