In his column on November 5, Jeffrey Simpson did a good job of explaining the looming impact of the aging population in Canada and how it will eventually impact public services.
What he didn’t say is this demographic tsunami is hitting Atlantic Canada first and this region has far less capacity to address it than the rest of Canada.
In 1971, the median age of the population in Atlantic Canada was less than the national average. Alberta had an older population compared to all four Atlantic Provinces. After decades of people “goin’ down the road” and very little immigration, Atlantic Canada is now much older than the rest of Canada.
In 2010, the median age of the population in Atlantic Canada was a full seven years older than in Alberta.
In 1971, there were 3.5 people under the age of 20 in New Brunswick for every person over the age of 60. By 2010, there are now more people over the age of 60 than under the age of 20. In Newfoundland and Labrador, the total population under the age of 20 has dropped by 58 per cent since 1971 while it has increased by 35 per cent in Alberta.
This is a profound demographic shift. In the 1970s, Atlantic Canada’s economy was too weak to absorb all of the young people coming into the work force. Now there are not enough young people just to replace those heading into retirement.
This demographic reality has prompted Nova Scotia politicians to call for federal health transfer payments to be adjusted to provide more funding to ‘older’ provinces much the same way education-related transfer payments were adjusted in the previous decade to favour provinces with younger populations. However, pundits and think tanks west of the St. Lawrence were quick to condemn these callous calls for more western dollars to flow east.
Increasing health care costs are only one of many challenges brought on by the demographic tsunami. An aging population cuts into the capacity of government to generate revenue. According to Statistics Canada, the average taxpayer in New Brunswick aged 65 and older contributes 46 per cent less income tax revenue than the average taxpayer in the 45 to 54 years age cohort.
In addition, the aging population is leading to work force shortages in many communities around the region. Employers are struggling to fill jobs and putting off new investment.
The implications of the Atlantic Canada demographic tsunami will be felt in the rest of the country. No longer will this region be able to play the role of labour market incubator for the more successful provinces. In addition, if the region is unable to raise enough tax revenue the federal government will be compelled to increase transfer payments.
There are solutions. There is opportunity to get more out of the current labour market. Other than Prince Edward Island, the other three Atlantic Provinces have the lowest employment rates in the country among the 50+ population. Over the longer term, the region must attract and retain far more young immigrants. Our companies need to address work force challenges by being more productive and governments need to be more innovative in the delivery of public services.
Other parts of Canada have a track record of addressing demographic challenges. In the mid 1990s, economist David Foot warned that Ontario would run out of working age population and the province promptly responded by bringing in the largest wave of immigrants in history.
It’s time for Atlantic Canada to tackle this issue head on.
For more statistics on the regional differences in demographic trends in Atlantic Canada, visit my blog: It’s the Economy, Stupid.
David Campbell is an economic development consultant and columnist based in Moncton, New Brunswick. His daily blog on economic issues in Atlantic Canada can be found at www.davidwcampbell.com.