Retesting should definitely be pursued as there are very few good drivers on the road already. The fact of the matter is the majority of our roads are designed for higher rates of speed but speed limits are posted much lower for one reason: the majority of drivers are unable to function with dependability at those speeds in the given conditions. Mandatory retesting is the first step to raising speed limits and everyone spending less time in the car. Take for instance the reason for most slowdowns on the 400-series highways: it's not accidents or breakdown, but people tapping their brakes to either check it out or no reason at all. This causes all cars behind to believe there is a real stoppage occurring and clogs all the roads for no reason at all. That first moron needs to be weeded out so that we all can get home an hour earlier each day, and putting him/her on a mandatory retest will do it.
As for those whining about waiting in line, you already have to do that every 5 years to get another photo taken for a renewed license so why not do a test while you are there? Another thing to consider is that doctors are totally deficient in their duty to remove licenses due to medical conditions so a mandatory retest of all necessary skills will remove these people from the road and save all our lives. As for the cost, it would likely be minimal if rolled together with process of reissuing the license since you'd only need to pay extra for the testing and not the extra desk staff that instead will already have your file up for the reissue (as well as no extra line-up). And while we're at it, we might as well restructure the license to give basic driving privileges and then have additional certifications that can be granted or revoked (such as one for highway driving and another for night driving, but could also have others) without losing a license altogether. Some people can drive in city conditions but are hopeless on highways or at night, so why not allow them to have such a basic license available? As for the testing being too easy, the current graduated licensing system has people who fail it all the time and then come back as better drivers as a result, and I see no reason why it couldn't be implemented to everyone every 5 years. I think most current drivers on the road would fail the current test the first time around anyways.
Finally, the insurance angle is definitely one to explore or legislate as well. Would you like to pay less insurance by paying an extra $30 every 5 years? As an added bonus, the government could start such a program of retesting by making it optional with the guarantee of an insurance decrease with participation. And even if they don't offer such incentives, they should force those people who garner moving violations to get a retest as a condition of continuing to hold a license that is not the right of anyone to hold in the first place.
In the end, the system of restesting has proven results in many jurisdictions and coupled with an insurance reward sytem it would do well for everyone....well, except the vultures who tow wrecked cars, those at the body shops, and the lawyers.
PAL