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jeffrey simpson

What will the future look like in British Columbia and the rest of Canada? There are a host of imponderables, except one.

British Columbia's population, like the country's, will be much older. Aging will be the dominant underlying factor here and across Canada, its impact unfolding incrementally but irreversibly.

Aging will produce one change that no political party wants to tackle, certainly not in the federal campaign now under way: Governments of whatever stripe will need more money but will find their revenues shrinking.

B.C.'s population, for example, now has 31 people 65 years old or over for every 100 working-age persons. In a decade, the ratio will be 41 to 100. Ten years later, in 2035, the ratio will be 48 to 100, according to a recent paper from the Business Council of British Columbia's policy analysts Jock Finlayson and Ken Peacock.

Put matters another way. The number of people in B.C. over 65 is growing at four times the rate of the number of people 25 to 64 years of age.

Fewer people working within the overall population means – at current rates of taxation – less revenue for government. Argue Messrs. Finlayson and Peacock: "Absent a major windfall from new resource development, demographic projections suggest that the province may need to explore ways to make the tax system less vulnerable to 'revenue erosion' linked to population aging and a slowdown in the growth of the work force."

Other parts of Canada will be hit harder than B.C. In the Maritimes and Quebec, the population is already older than in the rest of Canada. Their dependency ratio – older people out of the work force as a share of the total population – is already higher than elsewhere, and will get worse faster.

Governments will not be easily shielded from the twin challenges of revenue erosion and higher costs for health care and old-age support.

Perhaps people should work longer. Terrific idea for some, but the average age of retirement in Canada has actually declined by one or two years. The average retirement age is below where it was in the early 1980s, report Mr. Finlayson and Mr. Peacock.

Get more women into the work force. Yes, but female participation rates in Canada are on the high side by international standards. Get more aboriginals into the work force. Absolutely, but that will be a slow process. Improve Canada's productivity, low by world standards. Absolutely again, but the productivity bugbear has been holding Canada back for a long time. It's hard to imagine turning it around quickly, if at all.

Campaigning politicians always promise higher economic growth. Alas for them, for reasons largely beyond their control, economic growth is going to be slower in the next decade than in previous ones. Lower taxes have been the preferred policy for stimulating growth under the federal Conservatives. Yet look at the first two quarters of this year – negative growth, with a forecast for all of 2015 likely at or below a feeble 1.5 per cent.

Canada is a storehouse of natural resources that have always provided a healthy share of natural wealth. Two factors call this into question.

First, natural resource projects are now wrapped in tangles of regulations, environmental opposition and aboriginal claims. Trying to get approval in B.C. for major projects costs a fortune for the proponents.

Second, world commodity markets have softened after a decade of boom. Bauxite and potash prices are fine, but those for oil, natural gas, many minerals and even some agricultural products have slumped. The boom days are over, quite likely for quite a while.

B.C.'s Liberal government had banked heavily on liquefied natural gas as a new source of large and sustained revenue. It isn't going to happen. Next week, the legislature will be debating an agreement between the government and the consortium led by Petronas of Malaysia.

That project might go forward – although predictably another aboriginal group has popped up objecting that it was not adequately consulted – because the developers have both upstream gas and will build the LNG facility.

Other projects will be stillborn, because Asian buyers have been signed up by Australian and U.S. producers. B.C. came too late to the LNG party.

The sharply older population will reshape society and put enormous pressures on governments. Will anyone talk about it during the campaign?

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