As you noted, I'm a professor at the University of B.C., and I'm here today on behalf of an organization called Generation Squeeze, which is engaging Canadians in our 20s, 30s, and 40s to realize our potential as change-makers on a grand national scale in the world of politics for ourselves, our kids, our country, and the planet. We take inspiration from the Canadian Association of Retired Persons, which has been advocating for decades on behalf of those age 50 and older. We're now building the corresponding voice for those of us who are younger to help our world of politics work for all generations.
As we pursue that quest in the world of politics, our allies often make use of what we sometimes call playfully a generational spyglass, something we can look through to bring clarity to how the world has changed for young adults today compared to 1976 when today's aging population were young adults.
The spyglass is powerful. It's built on some of the best social science evidence from UBC and best generational budget analyses that exist, and it shows the following kinds of changes.
Compared to 1976, Canada's economy today is twice as big as it used to be. When you control for population growth, we produce on average an extra $35,000 per household. That's fabulous, but despite all that extra prosperity, the social science data show that increasingly the deck is stacked against younger adults.
The typical 25-year-old to 34-year-old in this country earns thousands of dollars less for full-time work than did the same age person a generation ago once you adjust for inflation. We earn thousands less even though we are more than twice as likely to have post-secondary education, and since so many more of us go to post-secondary, so many more of us start with student debt.
After going to school for longer to take jobs that pay less—and often in positions that don't have generous pensions like they used to—young adults are then asked to do the most amazing thing, spend hundreds of thousands of dollars more for the privilege of trying to live an average home. Also, more often in big cities, those average homes are smaller places with balconies and not yards.
This is leaving entire generations of young adults today squeezed between time and money pressures at the very moment they are also in their prime child-bearing and child-rearing years. Then they often have to take on large mortgage-sized costs like child care or parental leave, especially outside of Quebec.
We often look with our generational spyglass not only at how problems are changing for younger Canadians, but at the national response. Here's where the data gets really interesting. We can show that each year governments combine to spend around $33,000 per person over 65 on important things like medical care and old age security. These are the kinds of things we need to protect, because Canadians are more likely to become unhealthy when we are older, and nobody wants my grandmother to be working when she's elderly.
By contrast, we find ourselves spending less than $12,000 a year per person under 45. When you add up everything in the kitchen sink, grade school, post-secondary, medical care for young people, family supports, employment insurance, workers' comp, that is less than what we do for medical care alone for my mom and my grandmother.
Interestingly, the federal government is actually the primary driver of that age gap. Each year, the federal government spends around $21,000 per person over 65, compared to a little over $7,000 per person for those aged 45 to 65, and around $4,300 per person under 45.
So far in Canada, and at the federal level in particular, we aren't talking about the pros and cons of that age gap. One of the reasons we don't talk about that age gap is because we don't report it publicly in our budgets.
That is Generation Squeeze's first ask of the budget process this year. It's a really inexpensive ask. It doesn't cost any money, save a bit of staff time for either those in Treasury or the Department of Finance, to replicate and/or refine the kind of methodology we've developed at UBC to measure how spending breaks down by age, and to begin reporting that starting in the 2017 budget. We'd be delighted to lend our support and expertise in that cause.
Once we start reporting the age distribution of spending in our budget, we can routinize annually important conversations that ask if decision-makers in the federal government are finding the right balance with investing across generations these days. That's why we're wanting, in particular, to task the Prime Minister, in his capacity as the Minister of Youth and young adults, to task staff either in Treasury or Finance to begin that reporting.
Once we do that reporting, we think we can identify a range of interesting and important intergenerational issues that can tie together some negotiations that the federal government is currently leading with the provinces.
Take health care, for instance. It's important, from an age perspective, to recognize that Canadians are ranked amongst the countries that spend the most on health care each year. By contrast, however, we don't necessarily get the best results with international comparisons. Typically, we're at average or below average. As we think about what to do with our health care system going forward, it's going to be important for us to consider that more money, in of itself, isn't always the answer, when other countries are already getting better access to doctors, CT scans, and pharmaceuticals.
If we can recognize that and achieve the kinds of outcomes that other countries do at their costs levels, could we not take some of those savings and allocate them to things that we're weak on? UNICEF ranks us as very weak on things like child care and parental leave.
Similarly, when thinking about health care from an age perspective, it's important to recognize that we don't prepay for the health care we use when we're older in the same way that we prepay for CPP and the Quebec pension plan. Whereas our pension system is relatively fair intergenerationally, demographics are creating some tensions with respect to health care. When today's seniors were young adults and working, there were seven of them for every retiree they were supporting with medical care. Now, as they're retiring, there are only four workers coming behind them. Soon it will only be two, which effectively is asking their kids and grandchildren to shoulder much larger expenditures for health care, while earning less.
How might we square that circle? One way to do that would be to actually link the health care debates we're having right now to our national housing strategy. I'll wind up in just a minute with two points on housing. At Generation Squeeze, we know this is an important strategy because housing is at the crux of the declining standard of living for younger Canadians.
We want it to be recognized that two people may both make $45,000. One is a young renter. One got in the housing market decades ago and now owns a home outright that's worth $700,000. They're not really the same, but our tax system largely treats them the same for the purpose of measuring their ability to pay for things like medical care and other social services.
Were we to recognize some of their important differences, we could not only send new signals to dampen the growth of high housing prices, which is alarming us from coast to coast, but also potentially create revenue in new ways to cover the additional costs that our aging parents and grandparents are counting on for their health care system.
My last point about housing is we know there's a generation squeeze. Despite the fact that housing prices really hurt a younger demographic today compared to the past, there's no appetite to really bring housing prices down, in part because our parents and grandparents are counting on that for their own equity and financial security in retirement. If that means we're asking younger Canadians, going forward, to tolerate much higher housing prices than in the past, could we not bring young and old alike to say, what other big costs are facing younger Canadians at this time, that are squeezing them, that we could reduce with policy without hurting our parents and grandparents? Because parental leave and child care add a second and third mortgage, those would be great places to start. If those costs are reduced then young adults can better deal with high home prices without trying to impose the ideas that could hurt our parents and grandparents.
With that, I would emphasize that now is the time for us to start reporting how we break down spending by age, so that we can ensure that the Government of Canada is working for all generations.
Thank you very much.
