Young voters are calling the shots now

Young Canadians can be forgiven for being a bit confused by the latest federal budget. For the first time in their lives, they’re looking at a budget that explicitly tries to cater to their needs and interests — and listening to politicians fighting for their votes. If their growing political power wasn’t apparent to them before, it should be now.

As Generation Squeeze noted in its analysis, “Never before has the Government of Canada formally acknowledged that hard work isn’t paying off for younger Canadians today the way it did for previous generations. Budget 2024 labels this sad reality as the starting point for a new economic framework to achieve ‘Fairness for Every Generation.’” At long last, young Canadians are getting their moment in the political sun.

But while the Liberal budget does more to address intergenerational inequality for younger people than any in Canadian history, it still doesn’t do nearly enough. According to Generation Squeeze, Budget 2024 increases spending for Old Age Security by $31 billion and sends an additional $17 billion toward health care, which is used disproportionately by those over 65. But it only allocates $2 billion towards housing, with an additional $8 billion for measures aimed at building a clean economy. The intergenerational balance is still badly skewed, in other words.

It may yet get worse, too. As more boomers exit the workforce and the ratio of working-age residents to retirees continues to decline from the high of seven-to-one in the 1970s to just three-to-one today, the pressure on today’s taxpayers will only continue to grow. Young Canadians are paying the price for the failure of previous generations to properly plan for this demographic inevitability, and it’s one the Conservative Party of Canada seems determined to ignore. As Generation Squeeze’s analysis concluded, “Any party promising to balance the budget easily without tax increases or gutting spending on retirees ignores this hard truth.”

To their credit, the Liberals did bring forward a modest tax increase on capital gains that will affect only a tiny slice of the population. That slice is heavily marbled with wealthy investors, tech entrepreneurs and other people who don’t struggle to get their message heard. To absolutely nobody’s surprise, they have said the increase — that brings the so-called capital gains “inclusion rate” back to where it was in the 1980s and 1990s — will drive away investment, kill entrepreneurship and force so-called “job creators” to create their jobs somewhere else.

Derek Holt, the vice-president and head of capital markets at Scotiabank, went even further than that. “[Justin] Trudeau and [Chrystia] Freeland are ripping off Canada’s youth who will be the ones left to face the bills for many years to come,” he wrote in a recent column in the Globe and Mail, one of many he’s written of late attacking the government. “It’s an insult to portray such a budget as being in the best interests of Canada’s youth who have fled from the Liberals in droves.”

The bigger insult, though, is older Canadians using the supposed long-term well-being of young people as a stalking horse for their own near-term self-interest. Conservatives have been doing this for decades, of course, talking up the risks associated with deficits and debts while studiously ignoring the ever-expanding price tag associated with climate change.

Holt shows his hand here by suggesting the federal government is quietly laying the foundations for a tax on the capital gains in people’s principal residences — and that this is somehow a bad thing. “Would this government, for instance, tax home equity gains on primary residences held by relatively wealthy folks? I wouldn’t trust them.”

As it happens, I don’t think they have the courage to do this. But taxing some portion of the capital gains (say, anything above $500,000) that many boomers have accumulated in their own homes through no real effort of their own would be exactly the sort of bold and brave move that would show a serious commitment to the issues of intergenerational equity and fairness.

What Holt is really upset about, both when it comes to the treatment of capital gains and the possibility of applying it to people’s homes, is simply the federal government asking Canada’s wealthiest citizens to pay a bit more than they have in the past. And that’s fine: if people don’t want to pay more in taxes they have the decency to just say so. There is also a reasonable argument to be made about the importance of encouraging entrepreneurship and risk-taking, and how this budget potentially stands in the way of both. But if you want to make that argument, well, make that argument. Stop using young people and their future — our future — as a political prop.

Young voters may well boot Trudeau’s Liberals out of office for failing to take the housing affordability crisis seriously and letting an economic brushfire spread into a full-blown existential inferno. They may also decide that Pierre Poilievre’s utter indifference to climate change and clear preference for cutting over building isn’t the solution to their problems. But however the next election goes, at least the decision will finally be theirs.