Canada's aging population to add to budget woes: official

OTTAWA — The Canadian government's current fiscal structure is not sustainable, due largely to an aging Canadian population, the parliamentary budget officer warned Thursday in a report.

"Under the current fiscal structure, the government?s debt relative to GDP (gross domestic product) is projected to increase on a substantial and sustained basis over the long term," the report said.

Thus "the government's current fiscal structure is not sustainable over the long term," it said.

Parliamentary Budget Officer Kevin Page explained that "a major demographic transition" is starting to strain government finances.

As a large portion of the Canadian population nears retirement, spending pressures on health care and elderly benefits are likely to intensify, according to the report.

At the same time, slower labor force growth is projected to restrain growth in the economy, which will in turn slow the growth of government revenue, it said.

To close the gap, Ottawa must increase taxes or reduce program spending, Page concluded.

However, a fix is not required immediately, he added.