Canada's federal, provincial and municipal governments must be prepared to address a $93-billion shortfall by 2025 if they hope to keep pace with the needs of the country's rapidly aging population, a global consulting giant said Tuesday.
A report from Accenture said demands for public services will outpace Canada's economic growth over the next 13 years, leaving all levels of government unable to provide public services at present-day standards.
The country's growing group of senior citizens would bear the brunt of the shortfall, Accenture said.
People aged 65 or older currently make up 14.1% of Canada's population, according to Statistics Canada. Accenture projects that number will increase to 20.6% by 2025.
Canada currently spends about 28% of its gross domestic product on providing public services such as health care, pensions and social supports that benefit the country's seniors
GDP is on pace to grow 2.3% between 2010 and 2025, but the report found that wouldn't be enough to sustain the country's elderly residents.
Provinces and territories spend an average of $10,700 on people over 65, more than five times higher than the average of $2,000 required to care for those 64 or younger, the report said.
One official with Accenture said Canada would need to spend a larger chunk of its GDP in order to maintain the status quo. Programs are expected to cost $745 billion, or 32% of GDP, by 2025.
Canada's total expenditure gap of 4.1% of GDP is third highest among 10 countries analyzed for the report, trailing only the United Kingdom and United States. Italy boasted the narrowest gap of 1.3%.
The official from Accenture said Canada's governments are well-positioned to address the shortfall if they commit to long-term cost-cutting measures.
The report found that reducing inefficiencies at all levels of government by 0.9% each year would be enough to close the expenditure gap by 2025 and provide public services that stack up to today's standards.
Accenture said the onus is on the public sector to avoid widespread tax hikes.
The changing nature of Canada's economy prevents tax-leery businesses from relocating too readily if corporate rates were to rise, he said. Companies that want to maintain access to the country's oil, minerals and other natural resources have little choice but to remain and do their share, he said, adding Canada's tax rates are already among the lowest among G-8 countries.
