Statistics Canada has some good news to report:

Canadians are now living longer according to Statistics Canada. For those born within the last two years, life expectancy has increased by more than two years, as compared to 10 years ago. The agency says much of the gains in Canadian life expectancy come from men, even though women still live the longest. Men’s life expectancy at birth rose by 2.9 years to 78.3 in 2005-2007. Among women it increased by 1.8 years to 83.0.

Life expectancy among seniors is also on an upward trend, as it has been for several years. The average man who has already made it to the age of 65 could expect to live an additional 18.1 years in 2005-2007. That’s an increase of two years from the previous decade. A 65-year-old woman can expect to live an additional 21.3 years, up by 1.3 years.

It may be good news, but it may create real problems for the total budget. The office of Parliamentary Budget Officer Kevin Page reports that the Aging population will soon strain federal finances.

The government faces a renewed battle with the provinces over health-care cash as Canada’s greying population puts an increasing strain on federal finances in the coming decades. … It is a battle that will also be fought along generational lines, as public services for Canadian seniors account for a growing proportion of federal spending, leaving working Canadians to pick up the tab even as their living standards shrink.

In the future, population aging will move an increasing share of the population out of their prime working-age years and into their retirement years. An older population puts increased spending pressures in areas such as health care and elderly benefits. In parallel, slower labour force growth will restrain growth in the economy and in the general tax base from which the government collects its revenue.

If health-care transfers are allowed to increase at the current rate, the federal government would have to raise taxes or cut spending by nearly $30 billion in the next budget to keep Canada’s debt in check.

Another factor is that the national fertility rate has fallen from a peak of 3.9 children per woman at the tail of the “baby boom,” to 1.5 children per woman now. Coupled with the longer life expectancy by 2019, individuals over the age of 65 are expected to account for more than a quarter of the population; and by 2029, more than a third.

This puts incredible pressure on the Federal parties as they consider the next federal budget.

The Conservatives are promising to “stay the course,” and will keep cutting corporate taxes. This will lead Canada into even deeper deficits. The NDP would prefer that Canada’s seniors are helped out of poverty with improvements to the Guaranteed Income Supplement (GIS). This is unlikely to get support from the major political parties. Since Liberal and Conservative governments started cutting corporate taxes 10 years ago, individuals are carrying 61 percent of the cost of government programs, while corporations now pay only 15 percent.

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