Commentary
By Gwyn Morgan

Most of us baby boomers followed the education-job-marriage-buy-a-home pathway of life. For many of today’s “Generation Z,” roughly those aged 18 to 34, following that path has become much more difficult.

They acquire university degrees or trades certification and take entry-level jobs to gain experience, as we did. But for many, a combination of stagnant wages, rising taxes and relentless inflation makes owning a home seem an impossible dream. Three out of four Gen Zers struggle to save enough for a down payment.

Apart from inflation, there’s another reason they’re unsuccessful savers. Unlike baby boomers, Gen Z are profligate spenders, incapable of returning from the mall empty-handed. As the saying goes, they are their “own worst enemy.”

It comes as no surprise that surveys show nearly nine in 10 Gen Zers believe owning a home is out of reach, leaving them with no other option but renting. According to a 2024 Statistics Canada report, “sustained food inflation, elevated housing prices and increasingly high rental costs are casting a shadow over the homeownership dream for many households and, in particular, young families.”

But being lifelong renters isn’t the only issue facing young Canadians. The report went on to say, “Canada has the highest household debt-to-disposable-income ratio of any G7 country at 185 per cent compared with the average of 125 per cent.” And that’s for those who can get a job. The national youth unemployment rate currently sits at 14 per cent. No wonder surveys find young Canadians are less hopeful about the future.

As a Global News report said last year, “nearly half of Canadians 18 to 34 say they feel constant anxiety over money … putting off milestones their parents once took for granted: buying a home, starting a family or even moving out on their own.”

In another Global report, Ariel Rabinovitch wrote: “Canadian youth are in a sort of youth-cession. The basics of life are getting more expensive at a time when wage growth is slowing. Young people are really getting hit on the head with the trends that are taking place right now. Sustained food price inflation and rising housing costs make it harder to meet even basic needs. Unsurprisingly, many are moving in with parents.”

In short, it’s a dismal picture. How did things get so bad?

The answer: runaway government spending. In 2015, the Harper government left Justin Trudeau’s Liberals with a zero-deficit budget and a trillion-dollar national debt. The Liberals set off on a spending frenzy that will have doubled the national debt to $2.2 trillion by year’s end. Interest costs alone will reach $53.7 billion. And that doesn’t include provincial debt interest, led by Ontario at $12.7 billion.

It’s hard to put numbers this large into perspective. When governments run deficits, future generations pay in the form of higher taxes. If you’re a 16-year-old Canadian, you’ll pay about $30,000 more in personal income taxes over your lifetime. That’s on top of any tax-rate increases future governments deem necessary.

But it gets worse. Government deficits increase the demand for borrowing. In response, interest rates rise. Private-sector borrowers must also pay these higher interest costs, reducing private-sector investment. Not surprisingly, business investment has fallen substantially since the Liberals started running massive deficits. Business investment per worker fell from $18,363 in 2015 to $14,767 in 2023.

These factors set up “perfect storm” conditions for a recession. Recessions cause Employment Insurance and other government payments to increase automatically, driving the nation further into debt and ravaging the value of the Canadian dollar, eroding the foundation for job creation and prosperity.

Not a happy scenario, but a reminder of a famous adage from Thomas Jefferson: “The government you elect is the government you deserve.”

Gwyn Morgan is a retired business leader who has been a director of five global corporations.