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Demographics be damned: Ottawa sees little but fiscal blue skies ahead

Federal Finance Minister Jim Flaherty delivers an update of economic and fiscal projections in Edmonton on Tuesday, November 12, 2013.
Image Credit: THE CANADIAN PRESS/Jason Franson
November 14, 2013 - 4:53 AM

OTTAWA - Forget the aging workforce and soaring demands for health care: as far as Ottawa is concerned, the looming demographic disaster actually looks pretty nice.

The latest federal government long-term analysis of its fiscal outlook suggests it will enjoy an ever-increasing string of surpluses beginning in 2015, even in the face of the aging baby boom.

By the year 2050, Ottawa's embarrassment of riches will hit $212 billion, assuming it does not increase spending or cut taxes in the meantime.

And the national debt — currently $600 billion and rising — will become a surplus sometime around 2038.

There's more good news: the government says by 2036, the average life expectancy at birth for females will rise to 87.3 years from the current 82.9, and to 84 years from the current 78.2 for males.

The Finance Department and economists caution that long-term forecasts are imprecise and don't account for nasty surprises such as recessions or changes in government policy.

Former parliamentary budget watchdog Kevin Page says the projections should not be seen as prophecies, but as stress tests for government finances and whether they are on a sustainable track.

For Ottawa, the answer appears to be yes, he says, in part because it has downloaded risks tied to health care costs to the provinces, and reined in elderly support programs like old age security.

Page says the outlook is less rosy when it comes to the fiscal prospects of the provinces — particularly non-resource rich jurisdictions like Ontario.

News from © The Canadian Press, 2013
The Canadian Press

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