A7

Pierre-Marcel Dejardins, Colin Busby and William B.P. Robson
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Immigration is said to be the key tool to fight the prospects of an aging population. While reversing youth outmigration would improve the demographic outlook in New Brunswick, even dramatic reversals in migration patterns cannot, on their own, counteract the impact of the province's greying boomers on living standards and public finances.

The prospect of a rapidly aging population means that New Brunswick must follow a suite of policies, such as those to boost investments in workers and pre-fund some government programs, to dampen the costs of slower workforce growth and rising health care needs.

How powerful are these demographic forces? Suppose long-term outmigration trends in New Brunswick continue, fertility stays constant, and longevity keeps improving at middle-of-the-road rates. Even if net interprovincial outmigration gradually declined to zero over the next 10 years and international migration continued at recent rates, the working-age population - the number of 18- to 64-year-olds - would shrink from 489,000 today to 462,000 in 2018, and a shocking 414,000 in 2028. The old-age dependency ratio - the share of the population aged 65 and up compared to those of working age - would more than double, from 23 per cent today to 48 per cent in 20 years' time.

Suppose, by contrast, that migration trends reverse: net international migration to New Brunswick expands to around 5,000 persons each year, up from the current level of 1,300, and interprovincial outmigration stops. The result: the working-age population would rise to 502,000 in 2018 and then plateau over the next 10 years, and the share of those aged 65 and up to the working age population would expand to around 40 per cent by 2028.

Clearly, more favourable migration patterns help. So one key task is to improve the prospects on that front.

One promising initiative is the creation of the Canadian Experience Class of immigrants, which facilitates the immigration of foreign students at post-secondary institutions. This requires the support and cooperation of universities and colleges, as they would play a much larger role in the immigrant screening process.

Without turning its back on rural regions that face unique challenges, the province also needs to exploit the virtues of its metropolitan centers, which seem to have more attraction power for immigrants than do its rural regions.

But even the more favourable migration scenario would see a stagnating workforce in the province and a historically unprecedented rise in the old-age dependency ratio. Because spending on public health care programs is strongly geared to age, this prospect threatens much higher tax bills - which, in turn, would make attracting and retaining potential migrants more difficult. So more is needed.

Here's a radical idea: pre-fund some elements of health services, such as pharmacare, which has recently been growing at 6 per cent annually. That is how Canada as a whole stabilized the cost of the Canada Pension Plan in the mid-1990s. If savings on money set aside today earn a return of 5 per cent each year, such a reform would stabilize drug spending at an affordable level of some $400 to $500 dollars per adult annually. Rein the growth of pharmacare spending back to around 4 per cent annually, and the cost of the program could be stabilized at no more than $200 per adult annually.

New Brunswick can also improve its attractiveness as a place to invest, in order to equip workers with better tools to do the job. Recent tax reforms are helping boost capital investment in the province, from $5,900 per worker in 2002 to $9,900 per worker in 2009. Yet New Brunswick still lags the national average of around $11,100 of new tools per worker this year, so it should do more.

Though politically sensitive, one necessary discussion is reform of programs that discourage people from moving where the jobs are. Federal programs, like regionally-linked EI benefits, continue to impede the intraregional movement of workers. Regional mobility in benefits would help this problem.

Another area where innovation is needed is in the literacy skills of adult workers. An estimated 56 per cent of New Brunswickers performed at the either the lowest or second-lowest level of literacy during the latest international adult literacy survey - the worst results among Canadian provinces. As workers switch jobs over their career, low investments in adult training will limit workers' adaptability, hindering the province's ability to cope with demographic change. Improving the acquisition and retention of skills by adults is therefore an important route to raise productivity and living standards, with the added benefit of limited outmigration pressures.

Reversing the migration trends in New Brunswick will help the challenge of an aging population. But this alone won't be enough to cope with the prospect of slowing workforce growth. Other policy initiatives, such as a more flexible and skilled workforce, must be pursued as well.

Pierre-Marcel Desjardins is a professor at Université de Moncton. He, Colin Busby and William B.P. Robson are authors of "Stress Test: Demographic Pressures and Policy Options in Atlantic Canada" at the C.D. Howe Institute. The paper can be found online at www.cdhowe.org.