Housing unaffordability, climate change and Alberta’s unusually large age gap in government spending are all symptoms of a disease ignored by the UCP and NDP — Alberta’s broken generational system.
“Take more than we leave” is the theme of this election. Both parties will extract more tax dollars to spend on baby boomers than on younger residents. Both parties are failing to disrupt incentives for homeowners to extract more tax-sheltered wealth from the housing system, leaving less affordability for those who follow. Both parties are weak on asking people to pay for their pollution, allowing Albertans to use more than their fair share of our atmosphere’s scarce remaining capacity to absorb carbon and leaving extreme weather as a risky legacy.
To avoid being an intergenerational villain, the party that forms government on May 29 badly needs to appoint a minister responsible for intergenerational fairness, and task this person with holding Alberta to account for preserving what’s sacred — a healthy childhood, a good home and clean air, water and soil.
Intergenerational tensions in public finance
A new study shows both the UCP and Alberta NDP propose larger age gaps in government spending than B.C. or Ontario. The UCP’s 2023 budget spends about $16,700 for each Albertan over age 65, at least $1,400 more per retiree than spent by Ontario and B.C.
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By comparison, the UCP plans to spend just $9,900 for each Albertan under age 45. The $6,800 spending gap between what the government spends on an Alberta retiree and a younger Albertan is larger than in Ontario ($6,600) or B.C. ($4,800).
The NDP proposes an even larger gap ($7,000), despite allocating $2 billion more for medical care, education and social services. Our age analysis of the NDP’s costed platform reveals investments of about $17,300 per retiree compared to $10,300 per Albertan under age 45.
The large age gaps matter because they elevate the risk of crowding out important investments in younger residents. For example, these age gaps help explain why Alberta spends less per resident on elementary and high school education than Ontario and less on post-secondary education than B.C.
Although the age gap is a major weakness in Alberta public finance, a bright spot is that both parties resist running deficits when the economy is not in recession — something neither the federal nor B.C. governments can claim.
The UCP plans to run $5.8 billion in surpluses over the next three years, which could reduce government debt per person under age 45 by around $2,000. The NDP plans for a surplus of $3.3 billion, which would reduce debt per younger person by approximately $1,100.
These modest declines are important because the amount of government debt already being left for each Canadian under 45 is three times higher today than it was when baby boomers started out as young adults. That’s before pandemic and recovery spending, and doesn’t include any new spending on things like pharmacare and long-term care. The absence of any real dialogue about the cost of new investments for our aging population — and the revenue required to pay for them — makes it likely that the debt burden landing squarely on the shoulders of younger and future generations will grow. That must be monitored closely.
Intergenerational tensions in housing
When it comes to housing in Alberta, the status quo has ramped up inequality and created complacency about solutions.
Inequality, because rising home prices lead to wealth windfalls for some homeowners while eroding affordability for younger residents and newcomers, limiting opportunities for them to live up to their potential and enjoy life.
Complacency, because some (often older) homeowners who gain tax-sheltered wealth from rising prices welcome these windfalls — often without recognizing that their gains help keep many others locked out of an increasingly unaffordable housing system.
This election should be helping to disrupt this harmful status quo. Instead, the UCP is silent on housing policy, and the NDP is only moderately better.
Key to the disruption that is required is recognizing that the hard work Albertans do every day in their jobs is taxed more than the wealth homeowners gain from the rising value of their homes while they sleep and watch TV. Currently, our tax systems shelter billions in added housing wealth homeowners have gained since 1977, incentivizing people to prioritize housing as a way to get rich, rather than a place to call home.
Just like offshore tax shelters motivate moving money out of Canada to preserve assets, the homeownership tax shelter motivates us to bank on rising home prices to gain wealth. Why do we consider the former a betrayal but celebrate the latter? A system that turns homeownership into an investment strategy (beyond paying off one’s mortgage) is crushing affordability and harming younger and future generations. It’s time to protect real shelters, not tax shelters.
With taxes front and centre in this election, it’s surprising this theme hasn’t come up. The UCP features income tax cuts. The NDP features tax cuts for small businesses. Both talk about keeping corporate taxes competitive.
Neither mentions the Home Ownership Tax Shelter. Both parties ignore how it fuels inequality between older and younger Albertans, between owners and renters, between established residents and newcomers to the province. And both ignore its contribution to eroding affordability for younger and future generations.
This is out of step with what matters to Albertans. Online polling of 1,010 Canadians conducted by Research Co. on behalf of Generation Squeeze showed 68 per cent of Alberta residents support adding a modest annual surtax on home value above $1 million to pay for tax breaks for middle- and lower-income earners or to help cover the ballooning costs of medical care.
Climate change — the greatest intergenerational tension of them all
Parties have gone out of their way not to talk about climate change during this election, even as the province burns … again.
Climate change is the greatest threat to human health in the 21st century. The wildfire smoke harming so many Albertans — on top of family, community and economic disruption caused by the fires — should make this threat very real. And let’s not forget all the harm caused by recent floods or challenges Alberta farmers face from desertification.
Despite the immediacy of these risks, UCP commitments to net-zero emissions by 2050 are undermined by the party’s hostility towards pricing pollution, including cutting fuel taxes at the pump. The UCP invokes the spectre of declining affordability to justify these moves. But compromising on climate action isn’t among the most important ways to promote more affordability.
A party that cared about affordability could save families thousands of dollars by more urgently investing in $10/day child care, improving the province’s parental leave system, supporting better work-life balance — and most of all, protecting housing affordability. The UCP is weak on all of these policies, proposing instead that we should solve our wallet problems by neglecting our climate crisis.
The Alberta NDP offers stronger investments in child care and housing affordability but is also weak on climate. There are so few statements about climate on the NDP campaign website that we are unable to complete a robust assessment of the party’s strategy. The NDP has offered support for the fuel tax holiday but is silent on pollution pricing more generally (despite previous policy commitments). That’s not the kind of leadership that will serve younger and future Albertans well.
Both parties talk a lot about “economic diversification.” With one-quarter of provincial revenue coming from natural resources (especially bitumen) — compared to seven per cent in B.C. — there’s no denying that any Alberta government is going to be addicted to oil and gas revenue. Especially so long as voters demand more spending and lower taxes.
The hard truth is that voters in Alberta are implicated in the sad state of climate action in this election — and the risks it poses to our kids and grandkids. Enough voters are signalling to candidates that they want lower taxes today — and that they are OK with this being subsidized by oil and gas extraction that puts in jeopardy the quality of Alberta air, water and soil.
The status quo in Alberta will impose more severe weather on younger and future generations throughout their lives. Along with it, they will suffer less prosperity and more taxes down the road to deal with the resulting damage due to our delay in taking urgent action today.
We desperately need intergenerational fairness champions — time heroes who commit to delivering vision and leadership beyond the next election cycle — to address problems with policies on housing, family, health, climate, taxation and more. That’s why it is critical for the next Alberta government to appoint a minister responsible for intergenerational fairness. The guiding principle for her work ought to be: if you helped make the mess, you’ve got to help clean it up.
Dr. Paul Kershaw is a University of British Columbia policy professor and founder of Generation Squeeze. Andrea Long is Gen Squeeze’s senior director of research and knowledge mobilization.
They are the authors of a new study of housing commitments made by the UCP and Alberta NDP in the 2023 election. This analysis is part of Generation Squeeze’s non-partisan, evidence-based Alberta Voters Guide. The guide helps to inform Albertans about actions parties are proposing to address key issues in the 2023 election, like affordability, health and protecting natural resources. Follow us at www.gensqueeze.ca, Twitter, Facebook and listen to our Hard Truths podcast.