The author shows that S(n)->S(n+1) and that proof is correct if n is at least larger than 1. The hidden assumption of n>1 is the "gotcha" moment, but that part of the proof is still valid as induction step. Imagine starting with this and amending the instructions with "given that n>1".
However, for the purpose of showing that all Canadians are the same age, we now need to find a base case - the first (and now second) step of induction. And here, we see that while n->n+1 holds (for n>1), there simply isn't any n>1 for which S is true! The case of S(1) is irrelevant, since it's not included in the assumption of the induction step.
If we would have started with the induction step, and concluded that our argument holding for n>1 is good enough, we would have then clearly realized that there is no base case and therefore we can not complete the induction proof.