Paul Kershaw: Ontario’s $14.6 billion deficit exposes a revenue problem for Boomer medical care

Commentary

Doug Ford speaks in Port Colborne, Ont., May 29, 2018. Aaron Lynett/The Canadian Press.

Ontario’s 2025 budget projects a $14.6 billion deficit. This shortfall is strikingly close to the $14.9 billion increase in medical spending on residents over age 64 since Premier Doug Ford took office in 2018.

The parallel is no coincidence. It reflects a larger, largely overlooked truth: the fiscal pressures created by an aging population are driving Ontario’s red ink—as they are for many governments across Canada. Unfortunately, Ontario’s latest budget gives this reality little more than a passing mention, devoting more text to addressing aging physical infrastructure than to the rising costs of caring for aging Ontarians.

Ontario’s budget obscures the primary driver of its deficit by failing to report the age breakdown of public spending. That leaves researchers like me to piece together the numbers and hope a few curious readers take notice. This isn’t just an oversight; it’s an institutional failure to publish data that would expose some of the most important trends shaping our fiscal future.

Without transparent age-based reporting, it’s easy to miss the scale of the shift underway. During Premier Ford’s tenure, the increase in medical spending for the 18 percent of Ontarians over age 64 has outpaced the increase for the remaining 82 percent of the population. It also rivals the combined growth in funding for K-12 education, postsecondary institutions, and all social services. These are not marginal reallocations. They are structural, generational shifts.

It’s time for governments to shine a light on the age dynamics of public spending that are reshaping our fiscal foundation. Ontario fiscal reporting should incorporate National Health Expenditure data from the Canadian Institute for Health Information, which show that Canadians consume more medical care after age 65 than they do in their first six-and-a-half decades. This means regularly disclosing how provincial spending patterns vary by age—and what those patterns imply for deficits, debt, and intergenerational trade-offs.

Government reporting must also confront the sharp decline in the ratio of retirees to working-age residents. When Boomers entered adulthood, there were seven workers for every retiree. Today, that ratio has dropped to just three-to-one. Back then, many hands made light work. Now, Millennials contribute 20 to 40 percent more in income taxes toward Boomer retirements than Boomers did for the retirees who came before.

Governments knew decades ago that population aging would create serious budgetary pressures. Ottawa responded in the late 1990s by adapting its revenue strategy for the Canada Pension Plan. But provinces failed to take similar steps for health spending—missing the chance to build reserves from Boomers during their peak earning years to cover the predictable medical costs of retirement.

As a result, we now face a clear and very specific revenue problem to meet the medical care needs of our aging loved ones. A recent C.D. Howe Institute study estimates that this failure leaves Ontario with a $723 billion liability over the next 45 years—and a staggering $2 trillion liability across Canada.

It’s not too late to act. Ontario, and every province, should launch a “Better Late Than Never” task force to develop sustainable plans for funding Boomer retirements that treat younger and future taxpayers fairly. The longer we delay, the more the status quo quietly piles up unpaid bills for Millennials and Gen Z—generations already burdened by crushing housing costs.

The Ford government’s new three-year fiscal plan shows clear signs of strain from decades of inadequate planning. Despite mounting demands for improved services, Budget 2025 offers little new spending after adjusting for inflation. Once population growth is considered, real per-capita spending declines across most major budget lines.

Post-secondary education is hit especially hard, facing a 10 percent reduction in total funding over the next three years—before inflation or population growth are even considered. In this way, Ontario’s 2025 budget doesn’t just overlook how demographic change is reshaping public finances; it also sidesteps the growing frustrations of younger residents for whom housing, education, and child care are often out of reach.

Failure to engage with these generational trends creates social and political risks. During the recent federal election, widespread commentary pointed to a deepening generational divide in Canadian politics.

To meet the moment, Ontario should appoint a minister for generational fairness. The province faces difficult choices. But denying the intergenerational tensions driving government deficits won’t make them disappear. It will only delay the honest conversations we urgently need to ensure public finance serves both young and old, now and into the future.

Paul Kershaw

Dr. Paul Kershaw is a policy professor at UBC and the founder of Generation Squeeze, Canada’s leading voice for generational fairness. You…

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