The Conservative government is laying out its arguments for reforming pensions – warning Canada’s low birth rate and growing seniors population puts long-term growth and productivity at risk.
Yet federal ministers continue to give vague answers on to what changes are afoot even as they assure Canadians that any measures likely won’t take effect for more than a decade.
Lashing out at “fear-mongering” from the opposition, Human Resources Minister Diane Finley came armed with a pile of statistics on Thursday as the House of Commons debated an NDP motion opposing changes to the Old Age Security program.
“The demographics are such that we have to take action now for the long term,” Ms. Finley said.
The minister responsible for OAS argued that changes are needed because fewer and fewer taxpayers will soon be footing the bill for more and more senior citizens.
“Looking to the longer term, that means that some programs, like OAS, will soon become too expensive and unsustainable if not addressed,” Ms. Finley said.
Yet even with the opportunity of a full day of Commons time on the topic, government ministers continued to offer hints rather than details of what reforms they have in mind.
The latest hint was Ms. Finley’s suggestion that any changes to OAS won’t take effect until “long after we have achieved balanced budgets.”
The government’s most recent plans do not anticipate a balanced budget until 2015-16.
Conservatives offered that bit of detail to counter the wording of the NDP opposition day motion, which called on MPs to reject efforts “to balance the Conservative deficit on the backs of Canada’s seniors by means of raising the age of eligibility for Old Age Security... .”
Ms. Finley insisted plans to change OAS rules have nothing to do with erasing the deficit, a point Finance Minister Jim Flaherty also made on Thursday in a conference call with journalists from Israel.
Liberal interim leader Bob Rae argued that if that’s the case, the changes are beyond the Prime Minister’s mandate because there will be a federal election in 2015.
“They have no business doing it,” he said.
NDP MP Peter Julian expressed frustration that Prime Minister Stephen Harper refused to answer repeated questions in the House as to whether he is planning to raise the eligibility age for OAS to 67 from 65.
“When he’s asked five times the same question [and]five times refuses to answer, then it’s very clearly on the table,” Mr. Julian said.
Ms. Finley continued to describe the demographic challenges as a “crisis,” even though research prepared for the federal government concluded Canada’s pension programs are sustainable and that there is no need to raise the eligibility rate for OAS.
Bill Robson, the president of the C.D. Howe Institute, said that while he agrees with research that finds the OAS has no major funding challenges, he suspects Ottawa is acting to cover a broad range of future costs, including pensions for retired public servants. He added that a move by Ottawa would help cash-strapped provinces justify a raise in the eligibility age for their own seniors’ programs.
“There’s a bigger picture here,” he said.
According to the latest actuarial report, the number of people receiving OAS is expected to climb to 9.3-million in 2030 from 4.9-million in 2011. The cost of the federal program will climb from 2.37 per cent of GDP in 2011 to a peak of 3.16 of GDP before falling to 2.35 per cent by 2060.
Opposition MPs say they are hearing a strong negative reaction from Canadians about the government’s talk of changing OAS, but Mr. Flaherty made clear the government isn’t backing away from the controversy.
“The important point is that actions need to be taken to ensure long term sustainability. This is not an issue that can be ignored, unless we want to put at risk the fiscal track for the country,” he said.
The finance minister said he has yet to announce a budget date.