Governments Must Act to avoid $1.5 trillion Cash Crunch Caused by Aging Society: C.D. Howe Institute



    TORONTO, Jan. 13 /CNW/ - While the sagging economy is prompting calls for
governments to spend, another challenge looms - demographic pressures on
future program spending create an implicit liability amounting to $1.5
trillion, says a study released today by the C.D. Howe Institute. Short-term
stimulus can only succeed if Canadians are confident that their governments
can provide programs and service their obligations at tolerable tax rates over
the long haul, says William B.P. Robson, author of the study, "Boomer Bulge:
Dealing with the Stress of Demographic Change on Government Budgets in
Canada."

    
    The study concludes:

    -  Demographic change threatens to push the aggregate cost of Canada's
       current government programs for health, education, seniors and
       families from 15.0 percent to 19.4 percent of GDP over the next
       half-century.

    -  The discounted value of this implicit liability is $1.5 trillion - a
       burden borne by the provinces, with those in the eastern part of the
       country worst affected.

    -  Fiscal discipline, more tax room for provinces, partial prefunding of
       health programs and growth-friendly policies are all key elements in a
       strategy to secure demographically sensitive social programs in the
       future.

       For the study click http://www.cdhowe.org/pdf/ebrief_71.pdf
    





For further information:

For further information: William B.P. Robson, President and CEO, C.D.
Howe Institute, (416) 865-1904


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