House of Commons Hansard #111 of the 41st Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was age.

Topics

Opposition Motion—Pensions
Business of Supply
Government Orders

12:20 p.m.

Nepean—Carleton
Ontario

Conservative

Pierre Poilievre Parliamentary Secretary to the Minister of Transport

Mr. Speaker, in order to project the future, Winston Churchill always suggested looking to the past. If we are to project the future costs of the old age security program, we must look to the increase in costs we have experienced in this program in recent history.

When the Government of Canada introduced old age security, in roughly 1950, the age of eligibility was 70 and the average life expectancy was 69. That meant that the average person would not receive any old age security. People would not live long enough. Today, one can receive old age security at 65 and collect it until the average end of life, age 82. That means a 17-year average period of collection for a given Canadian. The massive increase in costs that result from this demographic reality are obvious.

In 1975, for example, there were seven working people for every single senior. Now, there are four working people for every single senior. That trajectory will not only continue over the next two decades; it will accelerate.

This is the point where we take the recent history and project it into the future in order to see ahead and look a little further down the road. Within 20 years, the cost of OAS will triple, the number of people receiving it will double and the number of workers supporting each retiree will fall by half.

Why will this occur? The first and most obvious example is that baby boomers are going to retire. This large bubble of population demographic has travelled through the age categories and is about to reach its period of golden years when the people are too old to work and are expected to collect from the system in the period after their retirement.

There is a second reason why the costs will go up. That is that the life expectancy of that larger group of people is increasing. That means that the duration during which that larger group of people is collecting OAS will lengthen.

I did some interesting research through Statistics Canada data and found that the average life expectancy is growing by 47 days each year. That means that people who die today at their average life expectancy will be about 47 days older than the people who died last year at their average life expectancy. Every year that goes by, the average person lives almost 50 days longer. Therefore, in 2031 the average person will live to about 84. That means, under the current eligibility for OAS, a person could collect for almost two decades.

This was a program that was created with the expectation that the average person would not reach the age to collect it at all, and over the last half century, because people are living longer and because the benefit has been made more generous with the eligibility age lowered to 65 from 70, there is already a very long time during which someone can collect this benefit.

We can understand, with the increase in recipients and the relative decline in contributors, that the cost of the program is going to rise. That is exactly what the research demonstrates.

Using information from a report by Christopher Ragan at McGill University, the Macdonald-Laurier Institute calculated, “...by 2040 Canada would face a $67 billion deficit (in today’s dollars) based on current policies and demographic change”. The same institute stated that the old age security program will account for one-quarter of total spending by the federal government by 2030.

It goes on to state:

The federal government currently spends about 15 per cent of all spending on OAS/GIS and that’s supposed to be go up to about 25 per cent. But if you’re going to put up spending on that by 10 percentage points of everything the federal government spends, you’re going to have to either put up taxes or make some cuts somewhere else.

Just to visualize, for every $1 that the Government of Canada spends two decades from now, 25¢ will be spent on OAS and income support for our seniors. That will mean less money for health care or higher taxes for working families in Canada. To summarize, when there are more people collecting from and relatively fewer people paying into OAS, we have eventual shortfalls. It is like a glass of water. One can only drink out of the cup what is poured into it. If there are relatively fewer people pouring into the cup and relatively more people drinking out of the cup, eventually somebody goes thirsty. That is why we must take action now to avoid such a drought.

We have a Prime Minister who, in the spirit of John A. Macdonald, seeks not short-term tactical political advantage but has the capacity to look a little farther. It is clear that there is no political advantage to the Prime Minister in making this change. It has given the opposition a great opportunity to attack the government and fear-monger with seniors, but the Prime Minister did it anyway because he is prepared to accept the short-term political cost in order to advance the long-term national interest of the nation. He is doing exactly what Germany and Australia have done, which is to gradually and with great notice increase the age of eligibility from 65 to 67, a two-year increase over a gradual period of time.

The opposition says that it opposes this approach but has no suggestion on how it would make up the cost differences that we expect due to these demographic and mathematical realities. It also proposes a 45-day work year for employment insurance, which means that somebody could work for 45 days and then collect employment insurance for the rest of the year. It has supported a Liberal bill that would make newcomers eligible for OAS after only living in the country for three years. Those proposals would cost billions of dollars and the only proposal that the opposition offers to pay for it is to increase taxes on business.

Here is the problem with that. It comes back to pensions again. The reality is that the pension system in this country is heavily reliant on those same businesses that the opposition seeks to tax. I will give one example. The Canada Post pension plan for unionized postal workers is invested in the big businesses that the opposition wants to tax. The top five holdings as of last June were TD Bank, Royal Bank, Bank of Nova Scotia, Suncor and Canadian Natural Resources, banks and oil companies, the twin villains in any left wing storyline. When we increase taxes on those companies, it is an accounting fact that they have less money to pay in distributions to their shareholders, the largest of whom happen to be pension funds that provide for seniors who worked as unionized, often blue collar people, and expect to collect a dignified retirement as a result of the after tax profitability of the companies in which those funds are invested.

We are taking responsible action to protect our safety net, to keep our economy strong and to create jobs. That is the vision of the Prime Minister. Does it take courage? Yes. Is it worth it? Absolutely.

Opposition Motion—Pensions
Business of Supply
Government Orders

12:30 p.m.

NDP

Denis Blanchette Louis-Hébert, QC

Mr. Speaker, I thank my hon. colleague for his speech. Although it was meant to be reasonable, I did hear some absolutely absurd things. For instance, he said that shareholders will receive less money because pensions have to be paid. It is a question of priorities. Would we rather give priority to all individuals, or only to those who have a lot of money?

My colleague said that the Conservatives are responsible and that they are taking measures. The first question we need to ask is this: if this issue is so important, why did this government not hold a public debate before making a decision?

Opposition Motion—Pensions
Business of Supply
Government Orders

12:35 p.m.

Conservative

Pierre Poilievre Nepean—Carleton, ON

Mr. Speaker, the question of whether or not to hold a public debate is a public debate in itself. The answer is therefore the same as the question.

He also asked about the shareholders of these companies that he wants to tax more. Of course, all of the cornucopia of benefits that his party wants to sprinkle across the population it claims will come by just taxing businesses.

Who are these shareholders that he would ultimately be taxing? One of them is the Canada pension plan. Members of the NDP claim to support the Canada pension plan but that has $18 billion invested in domestic equities. Domestic equities are Canadian companies. The only benefit that the Canada pension plan gets from investing $18 billion in those companies is on the after tax profit of those enterprises. If we increase the taxes, the benefits are reduced. The Canada pension plan would be poorer if we start taxing its assets at a higher rate.

What the NDP and the Liberals are proposing every time they wag their finger at successful Canadian businesses and promise a tax increase is nothing less than a new tax on public pensions. It is a tax on the pensions of unionized workers at places like Canada Post. These are mathematical facts. The member cannot argue with the laws of gravity.

Opposition Motion—Pensions
Business of Supply
Government Orders

12:35 p.m.

Liberal

John McCallum Markham—Unionville, ON

Mr. Speaker, I would like to ask the parliamentary secretary a question that my colleague from Saint-Laurent—Cartierville tried very unsuccessfully to ask. It is a very simple question.

The OECD, the Chief Actuary of Canada and the Parliamentary Budget Officer have all said explicitly that OAS is sustainable over the long term. This is partly because Canada's pensions are less generous than in other countries, so that they can be sustainable, notwithstanding the aging of the population.

With those three authorities saying clearly and explicitly that OAS is sustainable, why do government members continue to say the opposite?

Opposition Motion—Pensions
Business of Supply
Government Orders

12:35 p.m.

Conservative

Pierre Poilievre Nepean—Carleton, ON

Mr. Speaker, unfortunately for the hon. member, here is what the OECD study on pensions, entitled “Pensions at a Glance 2011”, actually said on page 47:

If life expectancy continues to increase, as most forecasts show, then significant increases in the effective retirement age are required to maintain control of the cost of pensions.

That was from the OECD. Those are the facts. The member referred to the OECD and I have told him what it said.

What the hon. member fails to address in his question is how pension funds, which are overwhelmingly invested in successful Canadian businesses as the principle source of income for those funds, would make up the gap if his party, along with the NDP, were to increases taxes on the earnings of those companies? He should indicate to the pensioners across this country why he wants to tax their pensions at a higher rate and how he expects them to make up the difference.

Opposition Motion—Pensions
Business of Supply
Government Orders

12:35 p.m.

NDP

Mike Sullivan York South—Weston, ON

Mr. Speaker, I will be sharing my time with the member for Newton—North Delta.

I want to bring to the attention of the House that this is only the first of many changes that need to be made to our pension system if the Conservatives are to have their way. This is only the beginning of what will be an ideologically-driven reduction in the amount of benefit that individuals would expect to receive from their government after working a lifetime in Canada and expecting a reasonable ability to retire.

I am one of those baby boomers who is the problem. We were constantly being told that, as a result of the improvements Canada was making to our standards of living, as a result of automation and as the result of all kinds of advances in medicine and in science, not only would we have an easier life, with fewer working hours in each week, but we would all be able to retire earlier and that we should not have to worry about retiring later.

The Conservatives are ensuring that those advances are being stopped and, in fact, they are moving backward. They want to take the country backward and that is so wrong.

I am the opposition deputy critic for persons with disabilities and the Conservatives have not yet said what they intend to do to the Canada pension as it pertains to persons with disabilities.

Two individuals from my riding, who are both on a Canada pension disability pension, have written to me. They are younger than the age at which this change to the OAS will not affect people. Therefore, they will be affected by the change in OAS. They have already realized that they will have an enormous gap in their income because their Canada disability pension ends at age 65. They are both permanently disabled, cannot work and cannot do anything to change their situation. Their income is such that they do not have enough money to save more for their retirement. The Conservatives have said over and over again that they are giving people plenty of notice so they can save more for their retirement and bridge the gap between 65 and 67. However, those two individuals and many more across Canada are not able to do that. Physically and financially, they cannot manage between 65 and 67.

What is the answer? There is no answer from the government. Its answer is to give the provinces some money. Those individuals would be forced to apply for welfare when they turn 65. We are telling our disabled people in this country that they now must accept a lower standard of living. That is in violation of our signature on the Convention on the Rights of Persons with Disabilities, and that is unacceptable to this side of the House.

That is one of many side effects of the government's single-minded, ideologically-driven agenda of reducing what the government gives back to its citizens. This is not about some crisis in the aging of our population. The Parliamentary Budget Officer has said that it is sustainable in the long run.

All of the figures show that this baby boom generation is a temporary blip but the government is proposing to make a permanent change to Canada's retirement system. We cannot and we should not move backward and take the country backward with each step of the current government.

The member opposite suggested that a person's life expectancy is growing and he used the number 82. Eighty-two is really only the number for females. It is considerably less for males. However, let us say that life expectancy is growing. Part of the reason life expectancy is growing is that we are investing money in our medical system. The current government has decided to stop increasing the amount of money we invest in our medical system, limiting it instead to increases relative to inflation.

That will have the impact of shortening our lives, in particular, those people who are in the 20% lowest category of income who already have a lifetime that is shorter by 20% than the rest of Canadians. We are telling those people that it is too bad, so sad, that they are going to have to work two years longer. They cannot as they are physically unable to.

The government has failed once again to warn Canadians that this is but the first salvo in what will be a domino effect of moving to age 67 for the old age security system. That system is the underpinning of every other retirement system in the country, save and except for those individuals who make way too much money to need the OAS. Those individuals who are making more than $120,000 a year in their pension do not need our protection. However, the government has created a domino that will affect every individual who makes less than $120,000 a year. They will need something to make up the difference between 65 and 67 or they will have to wait until 67 to retire.

The government has not said yet, but I am sure it will, that it intends to change the Canada pension plan to make it dovetail with the OAS. Has anybody here had any on that debate? Have we had any discussion on the Canada pension moving to age 67?

It necessarily must follow. We cannot leave a gap and say that one set of pension plans has an age of 65, but the underpinning of all of them has an age of 67. It does not work. Financially it does not work, societally it does not work and it does not work in determining what one's retirement will be. One cannot now plan for retirement at age 65 when a big chunk of the money is missing between 65 and 67. Therefore, not only would the Canada pension plan have to change, and the government has not said anything about how it would do that, but all employer pension plans would have to change.

Employer pension plans are based on what a person can reasonably expect to live on when they turn the age of retirement. The age of retirement in every employer pension plan is 65. That will have to change to 67. The normal age of retirement that is stated in almost every employer pension plan in the country, and I have dealt with lots of them, is 65. However, it could not continue to be 65 if the other income support that it depended upon disappeared. Therefore, it would have to become 67 years of age.

This is another creeping piece of the puzzle of how the government would force all young people to wait to retire at 67 and work an extra two years. They would have a 45-year work life instead of 43. We are going backward and we do not want to do that.

Employer long-term disability plans all end at 65 or death, whichever comes first. Now those employer disability plans would have a gap between the age of 65 and 67. What are those individuals supposed to do? Will the employers magnanimously start paying more money into those disability plans in order to continue to pay people until 67? I highly doubt it. I think there would be blood on the street before that happened.

Will the employer life insurance plans, which all end at 65, suddenly become amended and end at 67 so the life insurance plans would continue? Will provincial welfare plans, which now end at 65, be suddenly amended to end at 67?

The government has said that it would help the provinces. However, we have a government that is saying that it cannot afford to keep this system up, but it has lots of money to hand the provinces so they can keep the system up. There is a bit of hypocrisy going on there.

Finally, the provincial disability plans have exactly the same problem as the Canada pension plan and disability plan in that the provincial disability plans end at age 65. Therefore, if someone says that we can change OAS without changing the Canada pension plan, employer plans and all the rest, they are either lying or dreaming in Technicolor.

Opposition Motion—Pensions
Business of Supply
Government Orders

12:45 p.m.

Conservative

Royal Galipeau Ottawa—Orléans, ON

Mr. Speaker, Canada has to deal with an aging population. Right now, there are four workers investing in pension plans for every pensioner. However, in 20 years, there will be only two workers for every pensioner.

The actuarial tables show this. We need to plan for the future.

Seniors today are not being threatened by anything that is being proposed, but the opposition is recommending that we do nothing.

If we do nothing, it will cost taxpayers a lot more to pay for the benefits they want to have. Who will pay for that? Businesses, through higher taxes? What exactly are these businesses? Businesses are the pension funds. Who should pay for these additional costs?

Opposition Motion—Pensions
Business of Supply
Government Orders

12:50 p.m.

NDP

Mike Sullivan York South—Weston, ON

Mr. Speaker, we do have a plan to solve this crisis, and it is not a crisis, but a blimp or bump. Part of the spending of the government is on guaranteed annual income supplements. If, as we suggest, the Canada pension plan were to be doubled, as it should be, it would end those guaranteed income supplement payments to a lot of seniors and that would reduce the government expenditures by enough to continue the system.

We do not need to move the ages from 65 to 67. What we need to do is ensure that the systems that are in place are sufficient to provide people with a standard of living at age 65. Right now those systems include a lot of government support and we suggest that the Canada pension plan take over some of that slack. This then would actually improve the government's financial position when the baby boom generation finally exits the earth.

Opposition Motion—Pensions
Business of Supply
Government Orders

12:50 p.m.

NDP

Linda Duncan Edmonton—Strathcona, AB

Mr. Speaker, I would like to follow up on a comment that was made by the previous presenter, the parliamentary secretary. He asked why people were complaining that there was not a public debate when there was one. I remind the House that the only reason there is any public debate is because we, the official opposition, have called the public debate.

What is equally reprehensible to the actual amendment the Conservatives have made to access to old age security is the way in which it has been done, and Canadians have resoundingly spoken out against it. This issue is only second to the top priority of Canadians, which is protecting public health care, another area where the government has refused to conduct a public consultation.

Does the hon. member believe it would be more appropriate to table such an amendment and then open it up, over many months, for direct consultation of Canadians on a variety of options and the pros and cons?

Opposition Motion—Pensions
Business of Supply
Government Orders

12:50 p.m.

NDP

Mike Sullivan York South—Weston, ON

Mr. Speaker, I believe this is too big an issue to be tossed away in a comment in Davos, Switzerland by the Prime Minister and then become buried as part of a much larger budget. This issue will be rammed through by the government in the passage of its budget because it has a majority. There is no attempt to have the dialogue with seniors, and not just seniors but with the children of seniors. I do not think our seniors want to leave the country worse off than they found it, but that is what the government will do.

I do not think this dialogue needs to be with seniors only. It needs to be with their children and their children's children. We will not have that dialogue when the budget is rammed through in the next few days.

Opposition Motion—Pensions
Business of Supply
Government Orders

12:50 p.m.

NDP

Jinny Sims Newton—North Delta, BC

Mr. Speaker, it a privilege for me to speak to the motion. I am so proud of that my party is forcing a debate in Parliament over such a critical issue that does not just affect a few people in our society, but will have an impact on the full population.

There seems to be many sides to this debate. I have been intrigued by some of the arguments I have heard today.

Let us take a look at some of the facts. The facts before us are very simple. I am sure my colleagues across the aisle will be able to understand them.

The fact is the Parliamentary Budget Officer has said that there is no need to do this. He has examined the budget and there is no need to raise the retirement age.

Another fact is the report from the OECD also commends Canada and recognizes the health of our pension planning. It also does not see the need for any action to be taken.

Let us go on to people that my colleagues across the way will really respect, and that is their cabinet. Before becoming a majority government, their cabinet did not think there was a problem. In fact, when a study was done on the whole area of pensions, it did not propose any changes to raise the retirement age.

Let us get to the Prime Minister. He did not see this as an issue before the election. During the election, he made a commitment that his government would not touch pensions.

Then let us look at another fact that we keep having thrown at us, which is we are unaware of the changing demographics. I have been aware of the changing demographics for a long time, as have Canadians. I think high school students started to study the changing demographics in the 1970s and 1980s. That is one of the basic things we do.

I am one of the baby boomers, as are many of us in this room. We are proud of that baby boomer generation. There is this kind of mythology being pursued by my colleagues across the aisle that taxes are only being paid by those who are working. They use numbers that only so many people will be working and this many people will not be, but they forget to say we are nation that has been built on immigration.

When we have shortage of workers, we bring people in from other countries, just as many of us have come. Many of the cabinet ministers have roots in other countries as well. Their ancestors came as immigrants. In the same way, Canada will continue to rely on immigrants for our nation building. We are very proud of that. When those people arrive, they pay taxes because they become Canadians and they work here.

Also retired people pay taxes. Let us not say this huge number of people, the baby boomers, are going to retire and then assume that we are not going to be collecting taxes from them. I can assure members that we tax our seniors above a certain income as well.

When we look at all of this, we begin to realize that my friends across the aisle are trying to mislead the public. We absolutely understand, now that the government has clarified, after months and months of silence, that it is going to be bringing in the 65 to 67 in a gradual manner.

I have met with seniors. They know they will not be impacted, but they are worried about their children and grandchildren, and so they should be. They know what is like to work and to save. They see their young children and grandchildren unable to get decent paying jobs for years and years. They see their young children ending up with huge educational debt.

Now they are being told, “By the way, you are going to have to work longer.” I have heard my colleagues say it does not mean people have to work longer; they are just not going to get OAS, but unfortunately, not everybody is independently wealthy, as some of my colleagues may be, and these people actually rely on OAS. The people who rely on OAS are the ones who are the most vulnerable in our society. If we had a mandatory state-run pension fund, there would not be a need for OAS. Even when OAS was implemented, it was done to lift seniors out of poverty.

It is also hypocritical. There are MPs sitting in the House who we know are going to be drawing fairly good pensions. I absolutely believe MPs, like other Canadians, should get pensions, but surely it is a bit hypocritical of us to sit in this hallowed House and start attacking other people's pensions when we are aware of our own situations. An hon. member who spoke recently is 32 years of age, and after only seven years in Parliament, he is already sitting on an annual pension of $33,000, which he can start collecting at age 55. At the same time, we are telling the most vulnerable citizens, the ones who do not have private pensions or huge investments and dividends, that they now have to work until they are 67. Where is the fairness in that?

Canadians are very fair-minded people, and they are looking at the hypocrisy of this situation. Once again I wonder why the government is moving on this agenda at this time. I believe it is ideologically driven. It is trying to force people to save money. I have constituents in Newton—North Delta who are are in their 40s and 50s and who would love to be able to save for their retirement, but they are working two or three jobs just to make ends meet for their everyday household expenses and to put their children through school. This is going to have an impact on people who have not been privileged to work in steady jobs or have pensions from work-related sources. We are talking about hundreds and thousands of Canadians who do not have access to those kinds of pension plans. The government is punishing those who are already disadvantaged. It is punishing hard-working Canadians.

I met with a young woman in my office the other day. I say “young”; she was in her 50s, but to me, at this stage, 50 is very young. She was telling me how she is a single mom of three. She has two children in university and is able to work two jobs full time because of the way she divides up her week, but she said she still hopes she can find something more. I had to ask her how she could do this. That is when she burst into tears and said she now also has the government telling her she cannot retire at age 65 and has to work until she is 67. She said, “I do not think I can last until I am 60. I am exhausted.”

We also have to think about all the people who have disabilities. What are we going to be saying to them? As it stands now, at the age of 65, they get to switch over to OAS. That is what happens. Now we are telling them they are going to get nothing at that stage. If they get something, then we will be downloading more costs onto the provinces. One of the basic principles Canadians value is that we look after each other. Surely we want to be judged as a society by how well we look after our young, our sick, our disadvantaged and our seniors.

Opposition Motion—Pensions
Business of Supply
Government Orders

1 p.m.

Liberal

Kevin Lamoureux Winnipeg North, MB

Mr. Speaker, there are very few issues that have had the type of impact that this issue has developed across the country when the government made the decision to increase the age of eligibility for OAS from age 65 to 67. Overwhelming numbers of Canadians across the country, of all ages, have looked at the government's actions and are really starting to challenge the government. They are saying this is just not right.

Canada as a nation has great wealth, and to be treating our seniors with such lack of respect when it comes to retirement has caused a great sense of disappointment. These programs have been in place for many years. Liberals administrations from the past have put in programs such as the GIS and the OAS, and Canadians have grown to rely on these programs.

I ask the member to provide confirmation on this particular point. As a direct result of the government's action, because of this policy change, there is no doubt that more seniors will be living in poverty in the years ahead. Would she not concur with that fact?

Opposition Motion—Pensions
Business of Supply
Government Orders

1:05 p.m.

NDP

Jinny Sims Newton—North Delta, BC

Mr. Speaker, I want to thank my colleague for his very well thought out question. It does not take rocket science. Actually, I think children in grade 1 would be able to understand that with this legislation, there will be more seniors living in poverty.

Whether I speak with elementary school kids, secondary school kids, people at my town hall meetings, or those who have come to raise concerns with me when I am grocery shopping or standing by a soccer field, this is what I hear from them. They do not want to see their seniors having to struggle the way they are seeing some of our seniors struggling in my riding. I know they are struggling in my riding. We are seeing that right across.

That reminds me that the budget officer actually said there was enough money in the system to make improvements for our seniors right now. The government, based on that, has decided to make it worse for seniors. Why do they not like seniors?

Opposition Motion—Pensions
Business of Supply
Government Orders

April 26th, 2012 / 1:05 p.m.

NDP

Francine Raynault Joliette, QC

Mr. Speaker, I want to thank my colleague for her impassioned speech. On March 10, a public consultation on old age security was held in the riding of Joliette. Many people came out to learn more about this issue, even though the consultation was held late on a Saturday afternoon. Some people also wrote to us.

I would like my colleague's opinion. It is scandalous to cut retirement income without offering an alternative solution. Millions of people will end up living in poverty. How does my colleague propose we help these people? They are quite worried.

Opposition Motion—Pensions
Business of Supply
Government Orders

1:05 p.m.

NDP

Jinny Sims Newton—North Delta, BC

Mr. Speaker, I think that is a question that a lot of Canadians are asking: what are the policies of our current government? Is it a race to the bottom when it comes to wages for working people? Of course, now we are going to be allowing foreign temporary workers, but employers can pay them a lot less and get away with it. In the same way, the government is saying that it is okay to force seniors to work longer.

By the way, there are many seniors who will want to work longer, and that is their option right now. We are not saying that people should be forced to retire.

Old age security is not $30,000 a year, but a very small amount of money, something like $500 a month. When we really look at it, it is less than $7,000 a year, and now the government is saying people have to wait two more years. I do not know about others, but some of my constituents started to work when they were 18 or 19 and feel they are already done by the time they are 55. Their bodies are telling them they are done.