House of Commons Hansard #72 of the 41st Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was seniors.

Topics

Opposition Motion—Old Age Security
Business of Supply
Government Orders

10:35 a.m.

NDP

François Choquette Drummond, QC

Madam Speaker, I thank the member for Hamilton East—Stoney Creek for his excellent speech. I would like him to comment on the Conservative government's timing of this debate as well as its decision to drop this bomb in Davos before a group of millionaires and billionaires.

What does he make of it? We know that the statistics, taken from actuarial reports dating back to 1990 that were trotted out by the government, have been available for a long time. There is no excuse for not having included this issue in the government's platform. It makes us wonder about this hidden agenda—

Opposition Motion—Old Age Security
Business of Supply
Government Orders

10:35 a.m.

NDP

The Deputy Speaker Denise Savoie

I must allow enough time for the answer.

The member for Hamilton East—Stoney Creek has 30 seconds left.

Opposition Motion—Old Age Security
Business of Supply
Government Orders

10:35 a.m.

NDP

Wayne Marston Hamilton East—Stoney Creek, ON

Madam Speaker, in my office I am getting phone calls from very angry seniors. They are saying very bluntly that had this been in the budget, had this part of it been in the platform in the last election, they would not have voted Conservative. They are absolutely offended that the Prime Minister would make these kinds of announcements outside Canada, on the world stage.

Opposition Motion—Old Age Security
Business of Supply
Government Orders

10:35 a.m.

Haldimand—Norfolk
Ontario

Conservative

Diane Finley Minister of Human Resources and Skills Development

Madam Speaker, I will be splitting my time with the member for Souris--Moose Mountain.

I stand here in the House to provide some clarity on a significant demographic shift that is happening in our country. I will provide some detail on that in a moment, but first let me be very clear with the House and with Canadians. Over the past few days, the opposition has created, and indeed perpetuated, fear and confusion among Canadians. They are intentionally misleading Canadians, and particularly our seniors, about the old age security program and I would like to put an end to that today.

Let me confirm right now that our government will ensure the security of retirement benefits for Canadian seniors and for future generations. Specifically, as I have said in the House many times, seniors who are currently receiving benefits will not lose one cent because of any potential changes. Any changes to OAS will be implemented gradually and with substantial notice for all concerned.

We will not jeopardize the well-being of our seniors. We want to protect the OAS and ensure that it is sustainable for future generations. Therefore, we are changing some measures in order to protect Canadians' pensions in the long term.

Let me put this in context. It is no secret that Canada's population is aging and that this is going to bring significant changes to our society. These are changes that we need to think through and that we need to prepare for right now.

Why is Canada aging? There are two main factors. First, our birth rate is low. In fact, it is less than the level needed to replace ourselves. At the same time, average life expectancy for each individual has gone up. The average Canadian can now expect to live to 81 years old.

When it comes to longevity, our country ranks among the world's leaders. We are living longer than ever and we are enjoying more years of good health as we get older. However, with fewer people being born and more people living longer, the age structure of our population is being significantly reshaped.

By 2030, 25% of the population will be over 65, compared to the current 14%. This new reality will have a serious impact on the labour force. With fewer workers, our productivity will decline, which could slow down our economic growth.

With fewer workers to pay taxes, we will also face a shortfall in revenue. A shrinking tax base means it will be harder to finance our unfunded social programs. Looking to the longer term, that means some programs, like OAS, will soon become too expensive and unsustainable if not addressed.

This is not a short-term problem, nor does it have anything to do with deficits or deficit reduction. Frankly, the issues with old age security sustainability will come into play long after we have achieved balanced budgets, but they are tomorrow's challenges that need to be addressed today.

Any important decision needs to be assessed carefully and implemented responsibly. We all make important decisions every day, at home and at work, for ourselves and for our families. Some can be made at lightning speed, reactively, and they really do not make a dent in the grand scheme of things, but others take longer to make. We need to look at all of the angles and assess all of the facts. Some decisions cannot be made in a snap because the future is involved. We have to plan or invest for those moments down the road.

As a government, when we talk about potential OAS changes, we are talking about prudent planning for the future, for the long term. It is one of those decisions where we will examine all of the angles and assess all of the facts. In doing so, our job is to take time today while we still can to think about how we can introduce changes gradually that will improve Canada in the future.

It is our job to figure out how to ensure the sustainability of programs that Canadians cherish, like OAS. The opposition, of course, has the luxury of ignoring these looming challenges, but our government does not. We will not sacrifice seniors' benefits in the future for the sake of recklessly keeping our head in the sand, as the opposition would have us do.

I promised some detail when I started my speech this morning. I would like to paint a picture of the present versus the future.

Today there are four working Canadians for every person who is retired. By 2030 that will be cut in half to only two working Canadians for every retiree. With fewer citizens working there will be less revenue to invest in programs for retired Canadians. Here is the kicker: the estimated cost of OAS will nearly triple. Half the people will be paying three times the price.

I want to pause at this point to make an important distinction between OAS and CPP, the Canada pension plan. When I talk about retirement benefits today and their cost, I am not referring to the Canada pension plan. The CPP is 100% funded by contributors. It is paid by employers, employees and the self-employed through premiums.

In the 1990s, important changes were made to the CPP to address the potential impact of the aging population. Now it is secure and it is sustainable; in fact it is rock solid for at least 75 years.

In contrast, OAS is 100% funded by tax dollars on a pay-as-you-go basis. There is no reserve; there is no fund. Since it was created in the 1950s, the OAS has never been adjusted to reflect our aging population, nor has it been updated to incorporate the fact that people are living longer and collecting OAS for a longer period of time.

It has not been changed to address the fact that very soon there will be an unprecedented number of Canadians retired and eligible for OAS. The outdated nature of the OAS program becomes important when we return to the point that taxpayers fund it each and every year.

This means that today's Canadian workforce pays for today's OAS recipients. And tomorrow's Canadian workforce will pay for tomorrow's OAS recipients.

Today, OAS is the largest single transfer that we make to Canadians, at around $36 billion a year. By 2030, it will be $108 billion, nearly triple the cost. The number of basic OAS pension beneficiaries is expected to almost double. The per cent of GDP expenditures will increase to 3.14%, in 2030, accounting for billions of dollars in increased costs. By that time, as I mentioned, we will have fewer Canadians contributing to the tax base and active in the workplace, compared with those retired. With those dramatically changing costs and statistics, the current OAS program will present a tremendous burden on tomorrow's workforce and taxpayers if it stays the way it is.

Our government holds the responsibility for protecting future generations, whatever the opposition may believe. This is not a crisis that we invented. I am very disappointed that its only apparent interest is in deliberately misleading and confusing Canadians on this issue. It is clear that the opposition is not interested in facing reality. It is also clear that it is not interested in proactively discussing Canada's long-term challenges and opportunities.

The opposition's irresponsible approach to Canada's finances would, quite frankly, put the entire OAS system at risk. Actions speak louder than words and its flawed actions today and over the past few days show that it does not have the best interests of Canadians at heart.

The motion would indicate to hard-working Canadians that the opposition prefers to play tricks and games in the House. It prefers to ignore the facts that hundreds of experts are confirming. It prefers to ignore the changing landscape.

As I close, I want to acknowledge the Canadian seniors who built our great country. We are not considering change for the sake of change. We are considering change because it is in the best interests of Canadians.

Opposition Motion—Old Age Security
Business of Supply
Government Orders

10:45 a.m.

NDP

Rosane Doré Lefebvre Alfred-Pellan, QC

Madam Speaker, I listened very closely to what my colleague opposite said in her speech, particularly when she was talking about our seniors' quality of life. She said that seniors have an average life expectancy of 81 years. The maximum old age security benefit is $540 per month. I do not know if there is anyone here who would be able to make ends meet on $540 a month, particularly given the cost of food and rent. That is absolutely unbelievable. How can seniors live with dignity and enjoy quality of life on $6,481 of old age security a year?

Why is the government giving big oil billions of dollars instead of investing in quality of life for Canadian seniors?

Opposition Motion—Old Age Security
Business of Supply
Government Orders

10:45 a.m.

Conservative

Diane Finley Haldimand—Norfolk, ON

Madam Speaker, OAS was never designed to be a complete retirement income in and of itself for seniors. It was to be in addition to the Canada pension plan and in addition to individuals' own savings. For those seniors who are at the poorest level, there is also the guaranteed income supplement to raise them out of the lowest poverty line.

OAS is only one part of our retirement income system. We also have RRSPs and the TFSA program. As is being debated this week, we are looking for the pooled retirement savings programs, which would be of benefit to millions of Canadians who now do not have access to employer funded pension schemes.

Opposition Motion—Old Age Security
Business of Supply
Government Orders

10:50 a.m.

Liberal

Gerry Byrne Humber—St. Barbe—Baie Verte, NL

Madam Speaker, the words of the minister and the Prime Minister are now written in stone. We need to find out if their actions are written in stone.

I want to ask the minister a very direct question. Is there any intention to either create a change in policy or in legislation to the Old Age Security Act, as it applies to the guaranteed income supplement, to limit the use of optioning when it comes to the withdrawal of registered retirement income funds?

The minister has said that no current beneficiary of the OAS, which, by implication, includes the GIS, will have any benefit or any opportunity of a benefit reduced or cut in any way.

We know there is a requirement of the government to make a technical amendment to the Old Age Security Act for the allowance of optioning as it applies to RRIFs to be a legal initiative. It is, however, the policy of the government to allow that. Will that be retained? Will there be a technical amendment to the OAS Act in the upcoming--

Opposition Motion—Old Age Security
Business of Supply
Government Orders

10:50 a.m.

NDP

The Deputy Speaker Denise Savoie

Order, please. The hon. minister.

Opposition Motion—Old Age Security
Business of Supply
Government Orders

10:50 a.m.

Conservative

Diane Finley Haldimand—Norfolk, ON

Madam Speaker, as the hon. member said, the Prime Minister and I have both been very clear, here in this House and elsewhere, that no senior who is currently receiving old age security benefits will lose a penny. We have also been clear that those who are near retirement will not be affected by any changes that are being contemplated. Not only that, we will ensure that those who are in my age bracket or even younger will have sufficient time to plan for these changes to their own retirement. We want to ensure that we are sustaining the old age security benefits that currently exist, not just for this generation of retirees but for generations to come.

Opposition Motion—Old Age Security
Business of Supply
Government Orders

10:50 a.m.

Conservative

Ron Cannan Kelowna—Lake Country, BC

Madam Speaker, I represent the riding of Kelowna—Lake Country in the Okanagan which, in the last census, had the oldest demographic and the highest number of seniors in Canada in the census' metropolitan areas. Therefore, this issue is very near and dear to my constituents and I appreciate the fact that we are looking at this issue to have sustainability for future generations as well.

My colleague clearly said that the facts are that our population of seniors is doubling. Basically, there will be two times as many people who are beneficiaries. Costs are going up three times and at the same time—

Opposition Motion—Old Age Security
Business of Supply
Government Orders

10:50 a.m.

NDP

The Deputy Speaker Denise Savoie

Order, please. I must give the hon. minister time to respond. There is only 30 seconds left for a response or comment.

Opposition Motion—Old Age Security
Business of Supply
Government Orders

10:50 a.m.

Conservative

Diane Finley Haldimand—Norfolk, ON

Madam Speaker, it is exactly the kind of people that my colleague represents so well who are interested in this. Seniors today need not worry that there will be any impact on their retirement income as a result of the changes we are contemplating. We will protect their current and future retirement income and that of their children and grandchildren.

Opposition Motion—Old Age Security
Business of Supply
Government Orders

10:50 a.m.

Conservative

Ed Komarnicki Souris—Moose Mountain, SK

Madam Speaker, I welcome the opportunity to correct the record on what is a misguided, misleading opposition motion.

I can state with certainty that the changes being contemplated for the old age security have nothing to do with deficit reduction. Because of the long notice period and the gradual phase-in period, any changes to the OAS will happen long after Canada's return to balanced budgets. For opposition members to suggest otherwise is reckless, misleading and speaks ill of their understanding of this issue.

To avoid the rhetorical excess that appears to have consumed this debate, I will add some facts to this discussion.

We will provide a lengthy notice period before any changes occur. As the minister has stated, seniors who are currently receiving benefits will not lose a penny by the changes being contemplated. The old age security program is an important feature of our retirement income system. Together with the guaranteed income supplement, it helps alleviate poverty among seniors by providing a modest base upon which they can build. This is a universal program for all people over age 65 who have resided at least 10 years in Canada.

I stress from the outset that the survival of the OAS is a priority for this government. That is why we are acting now to ensure this critical social program that Canadians have come to rely on is and will be affordable for current and future generations. We will not turn a blind eye to the numbers that illustrate this looming crisis. We will not continue the unfortunate trend of past governments in ignoring this pending challenge until it is too late to act. Instead, our government will take action.

We have a proven record of balancing the economic interests of Canada with the compassion Canadians expect from their government. That is why Canadians gave us a strong majority mandate in the last election to guide Canada through these fragile economic times. Thanks to the strong leadership of our Prime Minister and the Minister of Finance, Canada can approach this democratic challenge from a position of relative strength. Many of our OECD counterparts do not have the flexibility afforded to Canada because of the strength of our fiscal picture.

We have also been consistent over the past six years of our mandate in our support for our most vulnerable seniors, providing fiscal support, such a GIS top-up announced in budget 2011 and implemented over the summer months. I say that to drive home the point that we are committed to ensuring that social programs remain sustainable for future generations and continue to be available for the most vulnerable individuals. We are ready to take action now and make the tough decisions that are necessary for Canada's future because it is the right thing to do.

On January 26, at the World Economic Forum, the Prime Minister once again demonstrated Canada's economic leadership on the world stage. In his speech, which outlined how Canada would make the transformations necessary to sustain economic growth, job creation and prosperity, he demonstrated a vision that stretches beyond the next election cycle and the immediacy of politics in this place.

It is my hope that all members of the House will see the need to ensure that Canada makes the necessary economic choices now to prepare for the demographic pressures we will face in the future. The issue of the demographic shift is one that is well-known to world leaders. Unfortunately, it is evident that some countries have been unable to avoid their own crisis, sometimes through lack of leadership or political courage, for which their populations are now paying a very heavy price. That will not be the case here.

Thankfully, our Prime Minister has the foresight to explore changes now well in advance of any future crisis. In less than two decades, close to one in four Canadians will be over the age of 65, a drop from one in seven today. Meanwhile, the number of Canadians below age 65 will remain almost flat. The result is that by 2030 we will be living in a country with the same number of workers but with twice as many seniors.

Furthermore, the number of Canadians over the age of 65 will increase from 4.7 million to 9.3 million over the next 20 years. By 2030, OAS program expenditures will triple to $108 billion from $35.6 billion in 2010. Here it is important to remember that OAS is the largest statutory program in the federal government. Finally, by 2030 the number of taxpayers for every senior will be two, down from four in 2010.

This is not a short-term problem: it will affect many generations to come. As a government, it is our responsibility to future generations to ensure that this type of growth is addressed. At the same time, we will ensure that any changes will not affect current recipients. Therefore, any seniors currently receiving benefits as well as those nearing retirement will not be affected.

We are raising these issues now to be transparent and open with Canadians about the road ahead. We are considering these important steps now to ensure the viability of OAS for future Canadians. It is the right thing to do.

We are currently engaging the public on this issue through our debate here, at the kitchen tables of the nation and across the airwaves. We cannot bury our heads in the sand. We cannot misinform Canadians for our narrow political gain. Unfortunately, this has not been the case to date.

There may be some misunderstanding as to how the OAS system works. All OAS benefits are paid from taxes collected that year. This means that any benefits that cannot be paid from taxes collected that year will have to be borrowed.

Canadians understand that continued deficit spending is not a viable alternative. Beyond our own history, the economic crisis in Europe serves as a fresh reminder of the dangers of debt financing.

By acting responsibly now we can address this issue of intergenerational fairness and ensure that our children and their leaders are not forced into unacceptable financial choices because of our actions. We want to ensure that the OAS will be there for future generations. We have a responsibility to future generations to take action now to secure their future as well as our own.

The situation, thankfully, is not the same with the Canada pension plan. The chief actuary recently reviewed the CPP and pronounced it actuarially sound for the next 75 years.

Some confuse the CPP with OAS when they are talking about retirement. Many people are familiar with the CPP simply because of the deductions off their paycheques every month. They do not realize that hidden in the income tax deductions is another pension contribution.

Let us be clear in this debate that when we are talking about sustainability, we are only talking about the OAS system and not the CPP.

Demographic changes are putting pressure on our retirement income system and on many other programs. This has been clearly documented by many experts.

All of us, young and old, cherish our future and want to grow old knowing that we have a secure one. It is this security that this government is committed to providing to every Canadian at every stage of life. This government will act to ensure that our programs are viable for generations to come. Sadly, we are not seeing the same foresight from the opposition. Instead, we see the tired politics of fear and misinformation. Such wilful ignorance of the facts in the face of demographic trends that have been known for decades is disappointing to say the least.

We have an opportunity here to look beyond this sitting, to look beyond this session and this Parliament to the future of our nation. The trends are clear; the facts are unmistakable. Now is the time.

The opposition motion before us here today is sadly misinformed. It does not provide a solution to the demographic challenges our nation faces. For these reasons, our government cannot support it. I would ask that all members of the House do likewise.

Opposition Motion—Old Age Security
Business of Supply
Government Orders

11 a.m.

NDP

Sana Hassainia Verchères—Les Patriotes, QC

Madam Speaker, the member spoke of crisis and compared Canada's situation to that of other countries. I suppose he was talking about Greece or Italy. I would like to point out that public spending on pension plans is an estimated 4.7% of Canada's GDP. In the countries he mentioned, it is 12% to 14% of GDP.

Why raise the spectre of crisis and make cuts to a program that is essential but still inadequate?

Opposition Motion—Old Age Security
Business of Supply
Government Orders

11 a.m.

Conservative

Ed Komarnicki Souris—Moose Mountain, SK

Madam Speaker, it is not a crisis, but it is time to look at the facts and to deal with them responsibly and in advance.

The reason it is not a crisis, as it may be in some other countries, is that we have done the planning for our economy to continue and to ensure that there are jobs with people who pay taxes. We have also looked at the most vulnerable by ensuring that we have programs in place to take care of them in their time of need. We want to make sure that these programs continue now and into the future.

We would ask the members of the New Democratic Party to support us when we put provisions forward, like the increase in the guaranteed income supplement, like the increase in the age credit, and like income splitting and a number of initiatives to help ensure the protection of our seniors and the enhancement of their benefits. Unfortunately, the members opposite voted against those measures for whatever reasons, reasons they would know. However, I would ask them to join us in looking forward into the future to ensure that these programs can be preserved.