The Implications of an Aging Population for Government Finances in the Prairies

Summary

• Seniors currently compose a large share of Saskatchewan and Manitoba’s population, and will constitute an even greater share of the region’s population in the years ahead.
• This will drive increases in health care spending and slow the growth in revenues, while imposing adverse effects on the provincial economies. The risk of future recessions, rising interest rates, and other unexpected events will only compound problems further.
• Health care expenditures are estimated to increase by approximately 5.4 percent annually from now until 2040/41 in Saskatchewan and by 4.9 percent in Manitoba.
• The aging population will exacerbate challenges for provincial government in the form of persistent deficits. Projections suggest that at the current trajectory the province will not see a balanced budget before 2040.
• Saskatchewan is expected to run primary deficits (excluding interest costs) equivalent to between 2.0 and 2.8 percent of GDP absent a change in spending or tax policy. Manitoba is also on track to run primary deficits of between 0.8 and 1.0 percent of GDP until 2040/41.