Grey clouds looming

Now, the right-of-centre think-tank the C.D. Howe Institute does love to make a splash with its studies — and you don’t get a much bigger bang than producing a study that talks about a 60 per cent tax hike.

That’s part of the institute’s newest report, headlined “How to Head Off Newfoundland’s $75 Billion Healthcare Surprise.”

And it’s more than just a surprise: it is, the institute suggests, a storm created by a population that’s aging faster than the population in any other province in Canada.

“Our projections show the share of demographically sensitive programs, including health care, education and other age-based programs, doubling from 12.4 per cent of provincial gross domestic product today to 24.5 per cent over the next five decades. Meeting these demands from its own resources would require the St. John’s government to raise the tax bite it takes from Newfoundlanders’ incomes by 60 per cent,” writes Colin Busby, one of the study’s authors.

That’s big money. And those dollars won’t be coming from Ottawa, either.

“A scan of our results for Newfoundland and Labrador and other provinces … shows that while pressure for change will be particularly intense in Newfoundland and Labrador … similar pressures will exist across the country. That fact makes significantly larger net transfers to Newfoundland and Labrador through the federal government unlikely.”

Instead, the authors suggest the province should start cutting health-care costs now, and should hit up taxpayers — particularly baby boomers who are preparing to shuffle into retirement — with fees to “prefund” their future health costs.

For example, “Focusing only on costs, if Newfoundland and Labrador brought its hospital costs in line with the national average, it would spend some $410 million less annually,” the report notes.

The provincial health minister has already suggested that earlier studies of this province’s health costs didn’t take into account the province’s unique geography. There will no doubt be similar attempts by the provincial government to downplay this institute’s latest offering.

And there may be good reasons to question it. You have to love at least one line in the report’s conclusion: “The province has had a good run.”

If you happen to remember that “good run,” put up your hand. But the institute’s central point still is a good one: an aging population will pay less in taxes and have greater medical needs. The money will have to come from somewhere, and the chances that the somewhere is the federal government are extremely unlikely.

The provincial government has shown a few knee-jerk reactions towards this province’s demographic woes, like appointing a deputy minister, Ross Reid, to oversee a population growth strategy.

At the time, Premier Kathy Dunderdale said it “was real work that needs to get done.”

If it doesn’t, it could be really expensive work indeed.