First, thank you for the invitation to address the committee on the very important issues raised by the current budget bill.
Since the invitation only came yesterday afternoon, I have had only a brief time to prepare specific remarks. I apologize in advance if my remarks sound a bit grumpy, but I figure we might as well have, as they say, a full and frank discussion here. I will focus my remarks on changes to the old age security and guaranteed income supplement, the OAS and GIS, specifically the proposal to raise the age of entitlement from 65 to 67 starting after 2020, phasing in over a number years.
To use an impolitic phrase, perhaps, I find the proposal half-baked and ignorant. While these words may sound harsh, let me explain.
The proposal is half-baked in that it starts from a perfectly reasonable premise, that with steadily increasing life expectancy and the improving health status of Canada's population, it is appropriate that the age at which Canadians typically withdraw from the paid workforce should gradually increase.
The proposal is ignorant in that it ignores decades of excellent policy analysis on these issues and charges ahead with a piecemeal, ad hoc change, coupled with poor—and depending on which piece you read—even disruptive explanations of the rationale.
Let me briefly expand on these two characterizations.
The idea of raising the age of entitlement is not at all new. Indeed, at the beginning of my career in the federal public service, more than 30 years ago, I worked on the report on the retirement income task force published by the Department of Finance in 1979, if my memory serves me correctly. At that time we projected the aging of the population, which we have since experienced—and so we can ourselves a little pat on the back for the projections.
We noted that the U.S. had recently legislated a gradual increase in the age of entitlement, and we recommended more than 30 years ago that the government consider following suit. So I'm not at all opposed, in principle, to the idea; indeed, I was involved in the analysis that recommended it ages ago. But that report and many others have all focused on Canada's retirement income system, not on specific programs only.
The OAS and GIS interact with other programs, both explicitly in terms of the various formulae like the income tax, and implicitly in terms of informal relationships, for example, with workplace pension plans. So this OAS proposal is only half-baked because it fails to consider OAS and GIS as part of a system of interrelated programs, including the Canada and Quebec pension plans, income taxes, RRSPs, workplace pensions, etc..
I know from my experience in the public service that the policy branches in various ministries, including Finance and Human Resources, have the talent and capacity to recognize these key factors and to produce policy advice that is well thought out—or at least they used to have this capacity. I don't know now.
I cannot figure out where the failure is occurring with this government, though one fairly consistent theme is an inclination to disregard evidence, indeed to limit or destroy the public service's capacity to produce high-quality information. For example, I read in a recent issue of Policy Options, the magazine of the IRPP, a portion of the Prime Minister's speech at Davos. He said literally that the CPP was fully funded. Whoever wrote that speech clearly does not know the facts.
Just pick up the report on the CPP by Canada's Chief Actuary and you will see that the Canada pension plan is less than 20% fully funded. The apparent attempt to rationalize dealing with the OAS alone without bringing in the CPP looks seriously ill-informed. Both major programs involve intergenerational transfers.
Moreover, some of the words—and I can't point to them specifically—look to be fanning the flames of intergenerational conflict. But our objective, assuming a thoughtful, well-informed, and well-intentioned Parliament, should be to find a set of principles and then legislation that will make all the components of Canada's retirement income system both fair, and understood to be fair by all Canadians.