The alpine city of Davos, Switzerland, may seem an odd venue for alerting Canadians that Ottawa might make some wait longer for social-security entitlements, but Stephen Harper chose the location with careful purpose.
Europe is where many governments are struggling with debt – exacerbated by the 2008-09 financial crisis, but in significant part caused by exceptionally generous social programs.
They face the prospect of dramatic spending cuts and social upheaval as they try to extricate themselves from the mess. Complicating the challenge is an aging population, with the massive boomer generation retiring and expecting long-promised government support.
“Europe is facing stark choices. Canada doesn’t want those stark choices,” one federal government official said, explaining Mr. Harper’s decision to discuss the matter during the annual Davos World Economic Forum.
“So the time to act is now.”
In a wide-ranging speech, the Prime Minister strongly hinted that he plans changes to old-age security payments – reforms that experts believe could ultimately raise the age of eligibility to 67 from 65.
He admonished industrialized countries for complacency about economic growth and affordable spending, saying Canada must work hard to avert a fiscal mess as its population ages and lives longer than previous generations.
“Is it a coincidence that, as the veil falls on the financial crisis, it reveals beneath it, not just too much bank debt, but too much [government]debt, too much general willingness to have standards and benefits beyond our ability or even willingness to pay for them?”
Sources say Mr. Harper had a major hand in writing his Davos remarks – he frequently shapes his own addresses – and some supporters are likening it to a Speech from the Throne, which governments deliver when they open a new session of Parliament.
Reworking old-age security to make it less costly is not a short-term initiative and would not likely affect would-be seniors for many years, so that Canadians have advance warning.
Mr. Harper appears to regard it as a legacy project and one his party and ministers now are selling to Canadians.
Ted Menzies, the Tory Minister of State for Finance, hammered home the notion on Friday that Canada must learn from the European experience.
“When you look at Europe right now, the reason that many of those countries are in the situation they’re in – a good portion of their problem – is unsustainable retirement promises to their citizens,” the minister said.
“Many countries have more people retired than are working and they’re all receiving a defined-benefit pension plan. We don’t want to get ourselves in that situation and we will guard against that,” he said.
An internal Conservative message sent to supporters on Friday described old-age security as a significant burden for ordinary Canadians that needs to be fixed.
“OAS is funded primarily through taxes on working people and is unsustainable on its current course,” the Tory message said. “If we do nothing, OAS will eventually become too expensive.”
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