Thank you very much.
As a reminder, I'm a policy professor at the UBC School of Population Health and founder of Gen Squeeze.
Gen Squeeze is a force for intergenerational fairness to improve Canadian well-being. It is powered by the voices of Canadians in our 20s, 30s and 40s, the kids we represent and the family members who love us, all backed by cutting-edge research.
When you requested my participation a couple of weeks ago, I focused in particular on the need for policy-makers to reduce an intergenerational tension in our housing system.
Our current policies incentivize many everyday households to want two incompatible things from housing. On the one hand, we often want housing to provide an affordable place to call home. On the other hand, we want housing to provide a good return on investment. The problem is that those two things are incompatible, because when something provides a good return on investment, by definition its value grows faster than local incomes. When something grows faster than local incomes, it becomes less affordable.
For the last several decades, a cohort of Canadians who tend to be older and reside more in urban areas have reaped substantial gains in wealth as a result of rising home prices, all while sleeping, watching TV, cooking, raising kids and making our homes. I share with you my own story about how my own wealth windfalls are implicated in that.
Unfortunately, one of the outcomes from housing wealth windfalls for people like me and others is that those who follow in our footsteps, our kids and grandchildren, have a much more challenging time to find a place to call home that is affordable, even in places where they grew up.
I pointed out last time that our national housing strategy so far fails to address this intergenerational tension, because it never once mentions the word “wealth”. That omission reflects a hesitancy on the part of our world of politics to address intergenerational tensions. By being silent, our world of politics is collectively standing by as many Canadians are over-consuming wealth windfalls that erode the sustainability of the housing system to deliver affordability for generations to come.
It's quite similar to our climate change problem. While the last couple of years clearly signal some important federal progress, Canadian policy remains quite slow to address the reality that Canadians today are over-consuming the atmosphere's scarce capacity to absorb carbon. We don't yet price pollution at a high enough value for the harm that it's causing, so what do we do? We leave younger Canadians and future generations to pick up the tab for our present over-consumption of this scarce capacity, and that over-consumption undermines the sustainability of the very climate on which younger Canadians are depending for their health and economic well-being, and we know that's a big price to impose.
It's not just environmental debt; there's also government debt, which we know is ballooning as a result of the emergency response to COVID. That response is appropriate in this emergency moment, but the sustainability of government finances was already being disturbed prior to the pandemic, in no small part because the federal government was not prioritizing balancing budgets even when we were not in a recession.
One of the concerns I want to draw attention to today with the moments that I have remaining in my opening remarks is that the world of politics has shied away from helping Canadians to recognize another intergenerational tension, in this case in regard to our old-age security system, which is a very important system to protect, but it's at the heart of an intergenerational tension in our budgets. Our budget messaging coming out of Ottawa each year is risking burying those details in its fine print, which is not a partisan problem; it's a long-term problem.
The most recent budget is really instructive. Everyone in this room could be forgiven for thinking that child care was the biggest social spending increase in federal budget 2021. You should know that Gen Squeeze is proud of what happened in that budget. We worked hard to popularize the concept of $10-a-day child care when we first gave this label to a pan-Canadian child care recommendation in our lab over a decade ago, and along with tremendous mobilization by the Coalition of Child Care Advocates and early educators in B.C. , a 10aday.ca movement was born, and it's clearly had an important influence on national thinking.
I want to congratulate the federal government for really investing now in a meaningful way in child care, but it should be known that child care is nowhere near the largest social spending investment in the 2021 budget. Increases to OAS absorbed far more taxpayer dollars, and I beg of everyone in this room to go pay a lot of attention to table A1.6 of the budget, which shows that the Government of Canada plans to increase spending on OAS by $22 billion as of 2025, compared to a year ago.
That $22-billion increase is three times more than the roughly $8 billion that Ottawa plans to add to child care in 2025. It's more than the nearly $18 billion that budget 2021 plans to spend over several years for its green recovery to create jobs, build a clean economy and protect us against climate change. Also, it's about 10 times greater than the $2.5 billion that budget 2021 adds for affordable housing over the next several years. When Canadians and our politicians reflect on why our national government still plans a $31-billion deficit in 2025, well after we hope the pandemic-induced recession is over, it's going to be important to acknowledge that growth in OAS spending is a primary factor.
To be clear, OAS spending itself is not a problem on its own. Old age security is important because it helps seniors enjoy financially secure and healthy retirements. Almost every younger Canadian will have a parent or a grandparent who uses OAS. My mom and dad do, and so do my in-laws. However, it is a problem that governments resist being honest with Canadians about the need to consider new ways to raise revenue to cover its growing cost.
This means that today's retirees can rightly claim that they paid taxes towards OAS throughout their working lives, but the problem is that our governments weren't sufficiently honest with them about how much they needed to contribute in the past in order to ensure that their generation didn't take from the current system more than they put in. That outcome is unpaid bills that they leave for their kids and grandchildren.
Let me close. Intergenerational tensions are at the heart of a lack of political commitment to sustainability in our housing system, sustainability in our climate system and sustainability in our government budget system. Now is the time for us to come together to build for our world of politics the political cover to be courageous, to act on the evidence, to reduce these tensions, so that Canada truly works for all generations.
Thank you.
