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

3:45 p.m.

Conservative

Colin Mayes Okanagan—Shuswap, BC

Mr. Speaker, the experts are saying that if the OAS system stays on its present path it will not be sustainable.

When the problems with the CPP arose, his party, when it was in government, had to deal with that. The experts at the time said that it was not sustainable, that it would not be there for future generations and that the government needed to increase the premiums. The member's government at the time listened to that information and made the adjustment, which was a wise thing to do at that time.

We are doing the same thing right now with OAS. We are listening to the experts, looking at the projections and realizing that we need to take action now so that this program will be sustainable for future generations.

Opposition Motion—Pensions
Business of Supply
Government Orders

3:45 p.m.

Macleod
Alberta

Conservative

Ted Menzies Minister of State (Finance)

Mr. Speaker, I agree with the member's analysis.

When I was at a pension conference earlier this week with about 20 different countries, they all applauded the fact that Canada was looking at this pragmatically. Many of them wished that they had done this earlier. Many of the European countries have already done this. Australia, some of the African countries and the Caribbean countries are all feeling the same pressures.

I know my hon. colleague is a family man with grandchildren. I would like him to explain to us how he could dare tell his grandchildren that he did not help prepare for their futures as well. I am sure that he will answer positively that he is helping them prepare to enjoy the retirement system, the OAS system, that we have into the future.

Opposition Motion—Pensions
Business of Supply
Government Orders

3:45 p.m.

Conservative

Colin Mayes Okanagan—Shuswap, BC

Mr. Speaker, the prudent planning of our government is to ensure these programs are available for future generations.

My colleague is absolutely right. I wanted to be here today and make the right decisions for my grandchildren so that when they retire they will have the same opportunities to have the benefits that will be put away for them to retire in dignity.

I support the government's policy. It is thinking for future generations.

Opposition Motion—Pensions
Business of Supply
Government Orders

3:45 p.m.

Conservative

Brad Butt Mississauga—Streetsville, ON

Mr. Speaker, I am pleased to rise today to respond to the motion from the member for London—Fanshawe on our government's plan to raise the eligibility for the old age security program from 65 to 67 years of age.

We cannot hand over our problems to the next generation and expect it to solve them. That is the irresponsible course of action that the opposition is arguing in favour of with this motion today. Sadly, this would not be out of place if it were a Liberal motion. In the mid-1990s, then finance minister Paul Martin attempted to bring forward his plan to ensure the sustainability of the old age security program. Unfortunately, the Liberals lacked the principle to do the right thing at that time. I am hopeful they will see the time is now to correct that inaction and to join with us in making these common-sense and reasonable changes.

In 2010, annual OAS costs were $36 billion. If nothing is done, in less than 20 years the program costs will triple to $108 billion. In other words, from 13¢ of every federal tax dollar to 21¢ will be the jump in cost. However, this is not an issue of how much money will be saved but, rather, whether we will make the choices now to ensure the very sustainability of the OAS program over the long term. This is what these changes are about, making sure the system will be there for future generations when they need it.

The aging of our population is forcing us to confront a new reality. In 1970, the average man lived to be 69 and the average woman lived to be 76. Today, life expectancy is 79 for men and 83 for women. That is good news, but it also means that without changes Canadians will be collecting retirement and social benefits for a much longer time than they did when the OAS was first introduced, at a time when seniors will comprise a larger proportion of Canadian society. The Chief Actuary forecasts that the number of OAS recipients will double from 2010 to 2030, from 4.8 million to 9.3 million. In the same time period, the ratio of working-age Canadians relative to the number of seniors is expected to fall. Right now, there are four working-age Canadians for every senior. By 2030, that number will shrink to two working-age Canadians to every senior. This is a critical ratio, as OAS benefits are paid out of the taxes collected in a given year.

Currently there are four working-age Canadians to support every senior and, as I said, in 20 years there will only be two. So not only are program costs rising, but there will be fewer taxpayers available to pay for the social programs seniors will be relying on.

These numbers are not new. The reality of an aging population has been known for quite some time. The result will be less financial room for other government priorities such as the Canada health transfer, the Canada social transfer, public safety and children's benefits. Can the member for London—Fanshawe please tell us which of these programs she would cut?

The Edmonton Journal's editorial board has this to say:

...we should thank...[the Prime Minister] for having the courage to start the conversation. It would have been far easier to pass the buck to his successor a few more years down the road.

Unfortunately, that is exactly what the previous Liberal government did. It simply passed the buck. We can see the result of that. In five out of six elections since the Liberals formed government, Canadian voters returned fewer and fewer Liberals to this place than were here before. This is also why Canadians decided to elect a strong, stable national majority Conservative government.

They understood that under the leadership of our Prime Minister, Canadians would be guaranteed a principled government that would act to ensure the long-term prosperity of our great country.

Let us clear about one thing. Our proposed changes do not affect current OAS or GIS recipients. These individuals will not lose one cent. We will gradually raise the age of eligibility for OAS from 65 to 67 starting on April 1, 2023. That is 11 years from now, and the change will be phased in gradually over a period of 6 years. We believe this will prevent any undue hardship to Canadians. People who are close to retirement, that is people age 54 and over as of March 31 of this year, will not be affected in any way by this policy change.

I would also like to highlight two other changes to the OAS program that were announced in budget 2012, proactive enrolment and voluntary deferral.

Starting in 2013, we will begin the proactive enrolment of many seniors for their OAS benefits. This will largely eliminate the need for eligible seniors to apply for OAS benefits. It will also ensure that more seniors receive the benefits to which they are entitled. This measure will reduce the application burden on many seniors and reduce the government's administrative costs.

On July 1, 2013, our government will provide Canadians the choice to voluntarily defer their OAS pension. This will permit individuals to delay receiving their OAS pension by up to five years in exchange for an enhanced monthly pension for the rest of their life. This will provide increased choice to Canadians as to when they wish to retire and will allow Canadians who do continue working to increase the size of their monthly benefit after they stop working. To be clear, the amount received by those who delay their OAS will be the same over the life of an individual as those who begin receiving their benefits as soon as they are eligible.

We will also ensure that certain federal income support programs that currently end at age 65, including programs that are provided for our veterans and low-income first nation individuals on reserve, are aligned with changes to the OAS program. This will ensure that individuals receiving benefits from these programs do not face a gap in income at ages 65 and 66. We will also compensate the provinces for the net cost to their social programs caused by the increase in the age of eligibility.

To be clear, these proposed changes will not affect the Canada pension plan, as the CPP and the OAS are two separate programs, and there is no reduction to seniors' benefits. The Chief Actuary has confirmed that the CPP is financially sound and fully sustainable for the long term. The changes proposed to the OAS program will secure the retirement benefits of future generations making the program sustainable for the long term.

The numbers tell us that we have to confront our fiscal and demographic realities to serve the best interests of all Canadians both now and in the future. If we do not reform the OAS, there are only two other solutions, either to raise taxes or to divert funds from other programs and services.

I do not think it will come as a surprise to members in this House that our government remains committed to our low-tax plan for jobs and economic growth. That is why we are proposing these modest changes to ensure the OAS is put on a sustainable path so it is there when Canadians need it most.

Canada's prospects are bright. Among the G7 countries, Canada has posted the strongest growth in employment, with 693,000 jobs created since the depth of the recession.

Thanks to the strong leadership of our Prime Minister and our Conservative government, Canada is in the enviable position of having the financial flexibility to phase in these changes over a lengthy period of time.

Sadly we are witnessing more narrow-minded political games from the opposition. Its reckless approach would jeopardize the very sustainability of the OAS program and demonstrates a wilful ignorance of the reality of our aging population.

I urge the member and her party to listen to what she has said in the past and support our government by voting against this motion.

Opposition Motion—Pensions
Business of Supply
Government Orders

3:55 p.m.

NDP

Alexandre Boulerice Rosemont—La Petite-Patrie, QC

Mr. Speaker, I would like to thank the hon. member for his speech even though we have fundamentally different views.

I would like to ask him a question. It must be amazing to live in the Conservative universe, where there is no poverty and there are no low-income workers.

The Conservatives are saying that the changes will be gradual and that people will have time to set some money aside. What money? A person who earns minimum wage or $25,000 or $30,000 a year is not able to buy $2,000 worth of RRSPs. Not everyone has wealthy friends who are able to plan their own retirement.

The reality is that people are having trouble making ends meet. There are workers who have to go to food banks. What would he say to these people? This is an attack on the most vulnerable members of our society.

Opposition Motion—Pensions
Business of Supply
Government Orders

4 p.m.

Conservative

Brad Butt Mississauga—Streetsville, ON

Mr. Speaker, this government has done a tremendous amount for the lowest income people in this country, including our lowest income seniors, with the largest increase in the guaranteed income supplement in 25 years. We take those issues very seriously, and we act.

The other bill the member may want to support when it comes back concerns our new registered pooled pension plan, which is directly designed for the lowest income people to have a new, flexible retirement pension plan tool that they can contribute to. It is flexible. If they work at Tim Hortons today and McDonald's tomorrow, it is portable. They can take that pension plan with them. We encourage all Canadians to take advantage of that great program when we establish it.

Opposition Motion—Pensions
Business of Supply
Government Orders

4 p.m.

Liberal

Stéphane Dion Saint-Laurent—Cartierville, QC

Mr. Speaker, I want to thank my colleague for recognizing that the Liberal government fixed the pension plan, but he must also admit fixing the OAS in a way we do not need in Canada, increasing the age to 67, as other countries are obliged to do because they are not being as prudent as the Liberal government has been.

It is what the OECD said, that the cost of government spending for pensions in Canada, the seniors' benefits, is 4.5% while the OECD average is 7.4%. When the aging population is at its peak in Canada it will be 6.1%, still below the average today.

It is why the OECD concluded, and this is my question, there is no pressing financial or fiscal need to increase pension ages in the foreseeable future in Canada. Is the member aware of the study by the OECD? Will he commit to reading it, if he is not?

Opposition Motion—Pensions
Business of Supply
Government Orders

4 p.m.

Conservative

Brad Butt Mississauga—Streetsville, ON

Mr. Speaker, I followed quite closely and with some humour, over the years when the Liberals were in government, how many issues they avoided and pushed to the back burner, ignored and sloughed off, and they never got the job done.

What is happening? The Liberals totally ignore demographics. They totally ignore the fact that people are living longer. They totally ignore the fact that the senior population is growing much more rapidly than any of the other population demographics in the country.

The Liberals can ignore it. We are acting on it. They are living in la-la land. We are getting the job done.

Opposition Motion—Pensions
Business of Supply
Government Orders

4 p.m.

Conservative

James Bezan Selkirk—Interlake, MB

Mr. Speaker, I want to thank the member for Mississauga—Streetsville for his great intervention today and for laying out the mathematics and the reality of what is facing Canada in the next 30 years.

We had seven workers for every senior in 1975; today we have four working Canadians for every senior. By 2030, we are going to have two working Canadians for every senior. The opposition is suggesting that it is going to be sustainable.

I am wondering if the member would agree with me that the only way it is sustainable is if those two working Canadians for every senior pay a lot more personal income tax to support seniors under the OAS system.

Opposition Motion—Pensions
Business of Supply
Government Orders

4 p.m.

Conservative

Brad Butt Mississauga—Streetsville, ON

Mr. Speaker, here are the facts. We are addressing the reality. We are not ignoring the reality of where we are going. The fact is that by 2030 there will only be two working people paying taxes to support OAS for every one person collecting it. I think my 12-year-old daughter in grade 7 can figure out the math as well as anybody.

Let us be realistic here. We are acting in a prudent, responsible way. People my age and younger are being given ample notice about this gradual change. I think we are acting in a fair and responsible way.

Opposition Motion—Pensions
Business of Supply
Government Orders

4 p.m.

NDP

Dan Harris Scarborough Southwest, ON

Mr. Speaker, ample notice about getting hosed does not change the fact that we are getting hosed.

Mr. Speaker, I would like to share my time with hon. member for Chambly—Borduas.

I am very happy to rise today to speak in support of this motion.

In this year's budget, the Conservative government laid out plans to raise the age at which Canadians can receive old age security from 65 to 67, claiming, and claiming yet again today, that it is not sustainable because of our aging population. However, economists flatly reject this claim. At the peak of the baby boom retirement wave, the share of GDP spent on OAS will increase by less than 1% over today's level, and then decline again.

There is a clear battle of priorities. Stephen Harper will ask Canadians to work two more years--

Opposition Motion—Pensions
Business of Supply
Government Orders

4 p.m.

An hon. member

Please; it's the Prime Minister.

Opposition Motion—Pensions
Business of Supply
Government Orders

4 p.m.

An hon. member

I'd want to say his name, too, buddy.

Opposition Motion—Pensions
Business of Supply
Government Orders

4:05 p.m.

NDP

Dan Harris Scarborough Southwest, ON

Mr. Speaker, my apologies. The Prime Minister will ask Canadians to work for two more years without OAS to pay for his skewed Conservative choices, including failed F-35 fighter jets, his costly prisons agenda and more corporate tax giveaways.

The budget was about choices, and the government made choices that will punish hard-working Canadians for the government's own fiscal mismanagement. An alarming report shows that the Prime Minister's Conservatives have turned their backs on Canada's most vulnerable citizens.

The report also found that the number of seniors using food banks is on the rise. Tens of thousands of the people who built our country cannot afford enough groceries, and that is simply unacceptable. In a country as wealthy as Canada, there is no excuse for letting our most vulnerable citizens go hungry. It is an issue that should have every Canadian concerned and every politician promising action and then delivering, as our proposals in the last election to actually raise OAS and GIS in order to lift every senior out of poverty would have done.

However, the government failed the grade there. It is leaving struggling families and seniors out in the cold. It refuses to raise the guaranteed income supplement enough to lift every senior out of poverty, while at the same time it is giving tax breaks to rich CEOs instead of helping families. Now it will make seniors wait an extra two years for OAS.

I have heard the talking points from the government on this issue. It is saying that it cannot sustain OAS in the long term as it is. The stated rationale is that the change puts the OAS program on a sustainable path. The Conservatives are using a temporary increase in the OAS and GIS costs as an excuse for permanently cutting back a remarkably effective and affordable program when in reality the program is actuarially sound and totally financially sustainable.

The government wants to keep telling Canadians this change will be insignificant, but we know that the lost income to Canadian seniors from this change will be very significant. It will mean a loss of roughly $30,000 to the poorest seniors over two years, and roughly $13,000 over these two years for Canadians who receive only OAS.

Unlike the CPP or private savings pillars, the OAS is a universal pension that does not depend on retirees' previous labour market participation or their participation in a registered pension or savings plan.

In the words of the Canadian Centre for Policy Alternatives,

The basic building blocks of the public universal system are Old Age Security and the Guaranteed Income Supplement, which make up the “anti-poverty” part of the system.

and that is what the government is cutting.

We know how important programs like the OAS and GIS are to the thousands of Canadians who depend on them on a daily basis. The guaranteed income supplement is frequently cited as a major factor in reducing the level of poverty among seniors in the recent decades.

In October 2011, there were nearly five million seniors collecting OAS and 1.7 million seniors collecting GIS. One in three Canadian seniors receives the GIS because many senior women were not part of the paid labour force earlier in their lives. The OAS and GIS are particularly important retirement instruments for them. Senior women are less likely than senior men to draw income from the CPP, private pension plans, RRSPs or employment earnings. This makes universal programs like OAS and GIS particularly important to female seniors. The median income for senior women is about two-thirds the median income for senior men.

OAS and GIS are paid from general government revenues. This is in contrast, of course, to the CPP, which is funded through equal contributions from employees and employers. Last year the government spent $27.2 billion on OAS and $7.9 billion on GIS; combined, these two programs comprise 13% of overall government expenses.

I do not think I need to delve more into how important these programs are to Canada, so I will explain to the House how it is that they are sustainable, since this is the big issue and question for the government.

Essentially, the government wants to restructure the entire Canadian retirement system because of an affordable short-run demographic change, that being the gradual retirement of the baby boomers, who began to retire in 2011. It has cited that the cost of OAS will increase from $36 billion in 2010 to $108 billion in 2030. This is true, but simply citing the base cost does not account for the growth of the Canadian economy, the rate of inflation and population growth. When examined alongside these factors, this is a modest and affordable increase in cost.

The government's latest actuarial report on indicated that OAS accounted for 2.37% of GDP last year and will rise to 3.16% in 2030. Then it will begin to fall. It will be 2.35% in 2060, below today's levels. The previous actuarial report, released in 2008, showed that this cost would actually drop below 2% by 2075, when children born now start to retire. This figure was curiously not included in the most recent actuarial report. At some point I would like to ask the Minister of Finance why that is.

The most recent report clearly indicates that the growth in cost is driven largely by the retirement of the baby boomer generation and does not describe any long-term issues of sustainability. Therefore, in the long run the current system is clearly affordable and will be a smaller share of the budget than it is today.

I would like to now go into a few of the studies that have been done in regard to this issue. A major 2009 study conducted for the Department of Finance, entitled Canada's Retirement Income Provision: An International Perspective and written by the head of the OECD pension team, Edward Whitehouse, found that Canada's pension system faced no sustainability problem. He wrote:

The analysis suggests that Canada does not face major challenges of financial sustainability with its public pension schemes.... Long-term projections show that public retirement-income provision is financially sustainable. Population ageing will naturally increase public pension spending, but the rate of growth is lower and the starting point better than many OECD countries.

In 2010, the finance committee studied Canada's retirement income system. None of the reported recommendations, not even the Conservative recommendations, even hinted that OAS or GIS were unsustainable or recommended raising the age of eligibility.

I would like to ask any member of the government why it is wilfully ignoring, to quote the member for Mississauga—Streetsville, their own ministry of finance's reports.

When compared to other countries, we actually spend very little on our public pension system. According to the OECD, total public social expenditures on old age benefits as a percentage of GDP are estimated at 4.2% in Canada. The equivalent average in OECD countries is 7%. Crisis countries, such as Italy, spend 14.1%. Canada spends one-third of what Italy does of GDP on public retirement. Austria, France and Greece spend roughly 12%. Germany, Poland and Portugal spend roughly 11%. Comparisions to the troubled eurozone are therefore not appropriate and are only being used to create fear that our time-tested Canadian programs are unsustainable. Even the United States spends more than we do on old age benefits, at 6% of GDP.

It should be noted that Canadian public pensions are not overly generous and in fact are very sustainable.

Opposition Motion—Pensions
Business of Supply
Government Orders

April 26th, 2012 / 4:10 p.m.

Liberal

Wayne Easter Malpeque, PE

Mr. Speaker, I would like to congratulate the member on his remarks. He has made a lot of good points that outline how sustainable the OAS system is, as is. It was looked at when the Liberals made the Canada pension plan sustainable, and it was found to be sustainable at that time.

The government is really trying to create a false argument here by turning to demographics and going to the war of the ages. It is because it has its priorities wrong. That is why it is trying to use this to extend the age to 67. The previous speaker talked about no one over 54 being affected. However, I would ask the member this: is it not true that this could be considered grand theft for those who are under 54, because the government has its priorities wrong and is really stealing money out of othe pockets of those who are now in the working generation under 54?