Ottawa's battling to rein in record deficits but there's a bigger problem at play that will make life even more miserable for politicians and taxpayers: Canada's aging population.
In a report released today, Parliamentary budget watchdog Kevin Page warns it's not good enough for Ottawa to simply balance the books - because of the increasing squeeze Canada's greying ranks will place on coffers.
He predicts that even if Ottawa slays the deficit, it will still have to confront an expanding "fiscal gap" in revenue over the decades ahead that rises to $20-billion to $40-billion annually within seven decades.
This will arise as Canada's work force shrinks in proportion to its growing pool of retirees, a trend that should both slow the growth of government tax revenue and increase demands for health-care spending and old-age benefits.
Mr. Page's new report effectively pours cold water on the idea Canada can "grow" its way out of trouble - as the economy expands and generates more tax revenue - or make do with a moderate restraint program.
The budget watchdog says the federal government must prepare to eliminate this revenue gap - through tax hikes or spending cuts - in order to keep its debt levels stable relative to the size of Canada's economy.
<snip> Ottawa faces growing 'fiscal gap' - The Globe and Mail