Social Spending Across the Life Course
Summary Report
Prepared for Health Canada by
the Canadian Council on Social Development
May 17, 1999
INTRODUCTION
The main objective of the report, Social Spending Across the Life Course, was to examine how much of public social security spending is directed at children and youth, and how much at older adults and seniors. In the report, the level of public expenditures in the areas of health, education and income security programs for the fiscal years 1980/81, 1984/85, 1988/89 and 1994/95 were examined. These areas of public spending constitute what Human Resources Development Canada (HRDC) broadly defines as "social security spending." Social security spending is influenced by increases in the population, and the changing age profile of the Canadian population, consequently, the amount and distribution of spending by program type is similarly affected. To calculate these figures data were used from HRDC, Social Security Statistics, Canada and Provinces, 1970-71 to 1994-95, Minister of Supply and Services Canada, 1994 and the Survey of Consumer Finances. While the findings in this report are revealing, calculations according to age are imprecise and thus the reader is cautioned to view the figures as estimates rather than facts.
SOCIAL SECURITY EXPENDITURES IN CANADA
In 1994/95, social security spending totalled $191.9 billion. In relation to the three broad areas of social security spending, income security programs received the largest share of funding. Income security programs include social assistance, benefits for the elderly, employment, child benefits and others. In 1994/95, these expenditures totalled $88.9 billion and represented 46 per cent of total social security expenditures. Spending on health totalled $51.9 billion, while spending on education totalled $51.1 billion. These two areas each accounted for 26 per cent of social security expenditures. When adjusted for inflation, total social security expenditures between 1980/81 and 1994/95 increased by 49 per cent. Health spending increased by 50 per cent, education spending by 26 per cent, and income security spending increased by 64 per cent. On a per capita basis, total social security expenditures during this period increased by 25 per cent: health spending increased by 26 per cent, education spending by 6 per cent and income security spending by 38 per cent per capita.
Table 1. Composition of Social Security Spending by Age Group for 1980/81 and 1994/95
|
|
Health (%) |
|
Education (%) |
|
Income Security |
(%) |
|
Age Group |
1980/81 |
1994/95 |
1980/81 |
1994/95 |
1980/81 |
1994/95 |
|
0-14 |
10.3 |
10.3 |
63.3 |
64.1 |
26.4 |
25.6 |
|
15-44 |
22 |
20.8 |
45 |
42.1 |
33 |
37.1 |
|
45-64 |
40 |
34.2 |
2 |
3.3 |
58 |
62.5 |
|
65 and older |
40.8 |
39.7 |
0 |
--- |
59.2 |
60.4 |
Source: Prepared by Health Canada using calculations done by CCSD using HRDC, Social Security Statistics, Canada and Provinces, 1970-71 to 1994-95, Minister of Supply and Services Canada, 1994, and Statistics Canada, Survey of Consumer Finances (1995 income) micro data files. Figures for age group by year total to 100.
Table 1 shows little change in the proportions spent on social programs for different age groups, except for a drop in health expenditures on persons aged 45 to 64, and a rise in spending on income security programs for this age group and for persons aged 15 to 44. For those aged 0 to 14, the majority of social spending is on education. This age group received the smallest proportion of health spending, a proportion that remained stable over the time period examined.
HEALTH EXPENDITURES BY AGE
FIGURE 1
Source: Prepared by Health Canada using calculations done by CCSD using HRDC, Social Security Statistics, Canada and Provinces, 1970-71 to 1994-95, Minister of Supply and Services Canada, 1994, and Statistics Canada, Survey of Consumer Finances (1995 income) micro data files.
In 1994, seven per cent of public health expenditures went to children under age 15, while 27 per cent went to persons between 15 and 44, and 48 per cent went to persons aged 65 and older. Between 1980/81 and 1994/95, seniors received the largest share of health spending and the only share that grew. All other age groups received a declining proportion of health dollars. This growing share of health expenditures on older Canadians can be attributed to their increased numbers and the greater demands they tend to place on the health care system.
EDUCATION SPENDING BY AGE
Public spending for all levels of education in 1994/95 totalled $51.1 billion. About 61 per cent of this ($31 billion) went to elementary and secondary education, 20 per cent ($10 billion) went to universities and 18 per cent ($9 billion) went to other post-secondary education. Looking at expenditures by student age group, 43 per cent of total education spending in 1994/95 went to children under age 15, while 42 per cent went to children and youth between 15 and 24. These two age groups accounted for 85 per cent of total public education expenditures.
INCOME SECURITY SPENDING BY PROGRAM TYPE
Canada and Quebec Pension Plans
Spending on the Canada and Quebec Pension Plans includes four main areas: retirement benefits, survivor's benefits, disability benefits and child benefits. The majority of CPP/QPP spending (71.9 per cent in 1994/95) went to persons aged 65 and older. Total CPP/QPP spending increased dramatically between 1980/81 and 1994/95, from $5.28 billion to $19.76 billion, reflecting the large increase in the senior population.Some CPP/QPP expenditures are intended for persons under age 18. In 1994/95, an estimated 2.4 per cent of these benefits ($493 million) went to persons under age 18.
Old Age Security/Guaranteed Income Supplement/Spouse's Allowance
The bulk (97 per cent) of OAS/GIS/SPA spending is dedicated to persons aged 65 and older. Spending on this age group increased steadily between 1980/81 and 1994/95, from $14.08 billion to $20.07 billion.From 1980/81 to 1988/89, the share of these expenditures on persons aged 55 to 64 increased from $0.34 billion to $0.54 billion. Between 1988/89 and 1994/95, OAS/GIS/SPA spending on this age group fell to $0.45 billion.
Unemployment Insurance
Expenditures on Unemployment Insurance (now known as Employment Insurance) include regular benefits, sickness benefits, family leave, fishing, training, retirement, work sharing, job creation and self-employment benefits.There was a dramatic and steady decline in the share of UI benefits going to persons aged 15 to 24, which contrasted with the increase in the number of unemployed youth over the same period. In 1980/81, persons in this age group received 25.6 per cent of all UI benefits; by 1994/95, their share had dropped to 11.4 per cent. During this period, UI expenditures on persons aged 35 to 44 increased steadily, from 16.6 per cent to 27.8 per cent.
Children's Financial Benefits
Programs providing financial support to families with children have undergone a number of changes in recent years. In this analysis, the total children's financial benefits are based on the age of the child, even though the monies are sent to the parent or guardian. These figures, therefore, are presented as estimates.Total spending on children's financial benefits declined between 1980/81 and 1994/95, from $5.57 billion to $5.06 billion. However, the share of the total benefits for children under age 7 increased from 30 per cent ($1.67 billion) to 44.4 per cent ($2.25 billion).
Social Assistance
Social assistance expenditures include provincial and municipal welfare programs and federal transfers under the now-defunct Canada Assistance Plan. It is, however, difficult to determine the distribution of SA benefits by age, as the SA system is comprised of many programs with different eligibility rules and benefit rates. For purposes of comparison in this report, it was assumed that SA benefits were distributed evenly among family members. Total social assistance expenditures increased steadily between 1980/81 and 1994/95, from $12.2 billion to $16.35 billion. In 1980/81, persons aged 15 to 24 received the largest amount of SA spending ($2.08 billion). By 1994/95, the largest expenditures ($2.73 billion) were directed at persons aged 35 to 44. Children under age 15 received about 23 per cent of SA expenditures throughout this period.
Other Income Security Expenditures
The two largest categories of "other" income security expenditures are Workers' Compensation benefits and Provincial Tax Credits and Rebates. Expenditures in both these areas increased between 1980/81 and 1994/95, from $7.99 billion to $12.12 billion.
Total Income Security Expenditures by Age
An estimated $8.68 billion, representing 9.8 per cent of total income security program spending was directed at children under age 15. Spending on children under age 7 increased in real dollars from $2.82 billion in 1980/81 to $4.25 billion in 1994/95, but their share of total income security spending declined slightly, from 5.2 per cent to 4.8 per cent. Expenditures on children aged 7 to 14 declined in real dollars during that same period, from $4.9 billion to $4.43 billion. Also, their share of total income security spending decreased from 9 to 5 per cent. A similar decline occurred for youth aged 15 to 24.
PUTTING IT ALL TOGETHER:
SOCIAL SECURITY SPENDING ACROSS THE LIFE COURSE
Source: Prepared by Health Canada using calculations done by CCSD using HRDC, Social Security Statistics, Canada and Provinces, 1970-71 to 1994-95, Minister of Supply and Services Canada, 1994, and Statistics Canada, Survey of Consumer Finances (1995 income) micro data files.
In 1994/95, social security spending on children under age 15 totalled $34 billion and accounted for 17.7 per cent of all social security spending. Education was by far the largest area of spending on this age group, at $21.8 billion (64 per cent). Total social security spending on children under age 15 increased by $4.8 billion between 1980/81 and 1994/95, but the share of total social security spending going to this age group declined in each year.
Persons aged 15 to 44 received $67.4 billion, or 35.1 per cent of total social security spending in 1994/95. Roughly equal amounts were spent on education and income security. This age group received the highest percentage of spending in each of the four years examined.
Persons aged 45 to 64 received $27.5 billion in social security dollars - about 63 per cent of this came from income security programs.
For persons aged 65 and older, social security spending in 1994/95 totalled $62.9 billion, representing 32.8 per cent of total social security spending. Nearly all of this spending was directed toward health and welfare programs. This is the only age group which showed a continuous increase in expenditures in each of the four years.
The type of social security spending that a person receives changes as they progress through the life course. Among younger persons, education comprises the bulk of social security spending. Youth and young adults primarily receive education and welfare benefits. For those aged 45 to 64, and for those aged 65 and older, expenditures on welfare and health make up the vast majority of social security spending.
SOCIAL SECURITY SPENDING IN RELATION TO POPULATION
In 1994/95, children under age 15 made up 20.4 per cent of the population and received 17.7 per cent of social security spending. Although this age group comprised a smaller proportion of the population in 1994/95 than in 1980/81, their share of social security spending declined more sharply. Expenditures on persons aged 15 to 64 were low in relation to their proportion of the population. Individuals in this age group accounted for 67.7 per cent of the population in 1994/95, but they received only 49.4 per cent of all social security spending. For the most part, persons in this age group rely heavily on private or market sources of income. Persons aged 65 and older rely heavily on pension income, and they may require additional health care interventions as they age. Social security spending on seniors increased more rapidly than their proportional representation in the population between 1980/81 and 1994/95.
COMPARING METHODOLOGIES
In the full report, the author presents two approaches that can be used to determine social spending by age. The first is to calculate spending on the basis of the intention of the program; that is, by determining the amount of public expenditures devoted to the individual. The second, or "shared resource" approach is based on the assumption that the benefits of social security spending extend beyond individual recipients to include other family members. The values presented in this summary, and those in the full report, have been calculated using the first method.In some cases, the shared resource approach produces a different distribution of social security spending. Using the shared resource approach, children under age 15 received an additional $2.36 billion in 1994/95. This is not the case for 1980/81, however. Both methodologies show that social security spending on children declined between 1980/81 and 1994/95, but increased for older Canadians.
CONCLUSION
Public social spending on children and youth is often viewed as an "investment" that can not only improve the quality of life and well-being of our young people today, but can bring with it a significant longer-term "payoff" tomorrow. To understand the magnitude of the investments made in our children, this report has examined the expenditures in the areas of health, education and income security, and attempted to show the distribution of this spending by age.Because of the complexity of public programs - in terms of their funding, delivery, and accounting - the task of compiling social spending figures and distributing it according to age is one which is both difficult and imprecise. For these reasons, the approaches outlined in this report and the resulting findings should be interpreted with caution. The report is an exploratory document. It shows that social security expenditures on children are roughly in proportion to their population. That is, children under age 15 accounted for about one-fifth of the population in 1994/95 and received slightly less than one-fifth of total social security spending in that year. However, the share of spending allocated to children has decreased over the past 15 years. This should be a concern to those who advocate for increased investments in our children.
Finally, it must be stressed that there is no basis within this report for determining whether the levels of spending on children are equitable, appropriate or sufficient. The measurement of spending in relation to population share is a useful method of controlling for demographic shifts, but there may be little reason to argue that expenditures by age should be in proportion to an age group's presence in the population.
REFERENCES
Lochhead, Clarence. "Social Spending Across the Life Course." (1998) Ottawa: Canadian Council on Social Development.Human Resources Development Canada, Social Security Statistics, Canada and Provinces, 1970-71 to 1994-95, Minister of Supply and Services Canada, 1994.
Statistics Canada, Survey of Consumer Finances, various years.