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young money

“Stop coming down on boomers. … We, boomers, lived within our means, no government handouts.”

Minus some name-calling, that was the opening line I received in a recent e-mail from a reader of a recent column. The reader took issue with my sharing evidence that boomers, as a generation, did not pay enough taxes during their working lives to cover fully the costs for their Old Age Security and medical care as they age.

I wish the reader were right. Finances for younger Canadians would be much better had boomers lived within their means. But the data show otherwise. A simple focus on the expansion of government debt over boomers’ working lives makes this clear, since the amount of debt inherited per younger person tripled on their watch. It’s time for boomers to own up to this part of their legacy.

Boomers came of age as adults around 1976, when total government debt was approximately $39-billion. When this debt is divided by the 17 million residents under the age of 45 in that year, and adjusted for inflation, the data show that the debt per younger person in that era was equal to $10,500 today.

Compare that with 2021, the most recent year for which there are complete data. Total government debt is $1.1-trillion. When you divide this figure by the 21 million residents under 45, debt per younger person is now $53,000. That’s a fivefold increase over the past 45 years.

Just as the debt inherited by boomers was shaped by multiple generations alive at the time, so the debt inherited by younger people today reflects the influences of multiple generations. Still, for much of the past 45 years, boomers were the largest generation driving economic and political trends. As a result, much (but not all) of the responsibility for today’s larger debt rests with them.

Wait a second, some might say. The pandemic years weren’t business as usual for government spending. Emergency response measures added an outsized amount to our debt. Fair enough, so let’s exclude the pandemic years. In 2019, debt per person under 45 was $43,000 – four times higher than in 1976.

Another potential caveat is that the figures I report above don’t account for our economy being more affluent today than in 1976. Back then, gross domestic product per capita was approximately $40,000 when adjusted for inflation. Now it is 65-per-cent higher, at $66,000.

If we adjusted debt levels in 1976 for the economic growth that Canada has enjoyed since then, the debt per young boomer would be $17,395 (not $10,500). Even by this charitable approach, there’s no getting around that boomers were involved in racking up government debts on their watch that are around three times larger than what they inherited. That doesn’t sound like “living within our means” to me.

Leaving a larger debt in itself isn’t always a problem. Had debt tripled because governments made historic investments to fix housing unaffordability, or decarbonize the economy to reduce climate risks, young Canadians might cheer. But those aren’t the primary reasons that debt has grown. The last decade may be especially concerning, because – as I’ve written before – the largest increases to government spending have been on income support and medical care for retirees.

The cost of servicing the debt on boomers’ unpaid government bills has real implications for younger people today. For example, the British Columbia government just tabled its 2023 budget. Interest payments on provincial debt will be $1.4-billion higher as of 2025-26. That’s 23 per cent more than B.C. will add to spending on kindergarten-to-Grade 12 education over the same period.

Just imagine how much more quickly governments could scale up $10-a- day child care, improve parental leave benefits, reduce university tuition, or invest in climate adaptation if they were only paying interest on the amount of debt boomers inherited – not the much larger debt they now leave behind.

I get it. People don’t like being told they risk leaving a questionable legacy to their children and grandchildren. And political parties routinely sidestepped their responsibility to be forthright with boomers about the large gap between the taxes they paid during their working lives and the cost of the public benefits and services on which they will count in their older years.

But don’t shoot the messenger. I’m not “coming down on boomers.” I want to help that generation rescue its legacy so that it will be remembered well, by inviting boomers to grapple with the size of the unpaid bills they risk leaving for those who follow.

Dr. Paul Kershaw is a policy professor at UBC and founder of Generation Squeeze, Canada’s leading voice for generational fairness. You can follow Gen Squeeze on Twitter, Facebook, Instagram, and subscribe to Paul’s Hard Truths podcast.

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