Mr. Speaker, I rise, like always, out of a sense of pride to address important issues in the House, but also with a great sense of frustration on behalf of a lot of Canadians who are very worried about their retirement futures.
They have watched the Prime Minister trial balloon this notion, this idea, that there is a crisis in the Canadian pension system. They understand the issue of the aging demographic. Canadians are serious people who understand these issues. They want government to be honest with them and to provide real solutions.
When the Prime Minister trial ballooned increasing the age of qualification for the OAS from 65 to 67 years of age in Davos, he frightened a lot of Canadians, a lot of people who look toward their retirement age of 65, people who have, in many cases, worked their entire lives in labour or in a trade, who have saved enough so they can take care of themselves with some level of dignity post-65, providing that they also receive the OAS. They are shocked, surprised and are very fearful of what their future looks like.
They are people who have done all the right things. They have worked hard. They have saved money. They have planned for the future and they fear that just as they are within reach of that future, the Conservative government is threatening to pull the rug out from under them and to, in a very callous way, destroy their future retirement.
Today, the Minister of Finance confirmed that the upcoming federal budget would include cuts to old age security. This, despite the fact that the Conservatives promised in the last election not to cut transfers to individuals or pensions. This, despite the fact that the old age security program, as it is set up currently, is in fact sustainable. The Globe and Mail wrote this week:
Expert advice commissioned by the federal government contradicts [the Prime Minister's] warnings that Canada can’t afford the looming bill for Old Age Security payments....research prepared at Ottawa’s request argues Canada’s pension system is in far better shape than the Europeans’, and there’s no need to raise the retirement age.
As we have heard, the federal government currently spends about 2.4% of GDP on OAS payments. In 2030, we are told spending on OAS payments will rise to about 3.14% of GDP.
The amount we spend on OAS clearly fluctuates with demographics. For example, in 1992, federal spending on OAS represented 2.72% of GDP.
The expected rise in old age security between now and 2030 can be manageable. It is simply a matter of priorities. After 2030, spending on OAS as a percentage of the economy is expected to fall once again until it is even below today's levels.
The Conservatives do not like it when we talk about future government spending as a percentage of the economy or a percentage of the GDP. The Conservatives want to scare us with nominal numbers without considering what our ability would be to actually pay.
This is not surprising, because the Conservatives do not like evidence. They prefer making decisions based on ideology, not evidence, and they often ignore the facts when they make decisions.
For examples, yesterday the Minister of Public Safety told parliamentarians to ignore the statistics that showed that crime rates in Canada continue to fall.
Yesterday the chief economist at Statistics Canada quit because of the Conservatives' habit of placing ideology ahead of facts, evidence and statistics.
Yesterday the Conservatives quietly made data from Statistics Canada available for free on line, but since the Conservatives got rid of the mandatory long form census, the data is really quite worthless, so they would not be able to continue selling it anyway. Nobody wants to buy data that is not statistically credible or pertinent.
Now the Conservatives are trying to scare Canadians into believing that the OAS system is somehow about to crumble.
I would like to share with members what the experts are saying on this issue.
Thomas Klassen, a political scientist who recently published research on Canada's OAS, has said:
I haven't heard any academic argue that there's a crisis with OAS, which is why I was surprised a few days ago when the Prime Minister seemed to say there was a crisis... because I don't know where that came from.
From a column in The Globe and Mail earlier this week:
Kevin Milligan, a University of British Columbia economics professor who co-authored another of the supporting research papers prepared for Ottawa, is also of the view that there's no OAS crisis. He says the government's use of statistics showing the cost of OAS will climb from $36.5 billion in 2010 to $108 billion in 2030 is not meaningful because of the impact of inflation.
He says that we should be using percentage of GDP numbers instead. He says:
As an economist, I would never characterize things in terms of nominal dollars in the future because it's hard to put those in context. I don't know what we'll be paying for a litre of milk then.
Meanwhile the Parliamentary Secretary to the Minister of Finance said measuring OAS payment as a percentage of the economy is misleading Canadians. Somehow, looking ahead to 2030 and, instead of putting it at a nominal value, putting it into real terms as a percentage of GDP was somehow misleading Canadians. To the contrary.
The Parliamentary Secretary to the Minister of Finance is misleading Canadians when she speaks in nominal numbers for 2030. Everybody else who is obviously taking the cost of the OAS as a percentage of GDP is then providing Canadians with important information. The Parliamentary Secretary to the Minister of Finance actually said “We're talking in dollars. Talking in terms of percentages is misleading”. Sadly, it is not the first time that the parliamentary secretary for finance has been confused by the expression of government expense as a percentage of GDP, but I digress.
Further, in terms of the fact that there is no evidence of a real crisis, the government's own report concludes that our pension system, including OAS and GIS, is sustainable. I will quote from this report called “Canada's retirement-income provision: An international perspective”. Edward Whitehouse states:
The analysis suggests that Canada does not face major challenges of financial sustainability with its public pension schemes... There is no pressing financial or fiscal need to increase pension ages in the foreseeable future.
Again, this is from a report commissioned by the government. It commissioned experts to provide it with expert advice based on evidence.
According to this report, the current system is working well:
Canada's public retirement income system provides strong protection for interrupted work histories without unduly affecting incentives for people to work and to save.
Even if there were a crisis in the sustainability of the OAS or our pension systems, one would think that if the government were going to try to strengthen the pension plan to ensure it was sustainable, it would do it in a way that was progressive and fair. This is what the Liberal government did in the 1990s with the CPP, for example, to ensure that it was sustainable for generations in decades ahead.
We have established that there is not a crisis. The Conservatives are doing this for ideological reasons. Even if they felt there were a crisis one would think they would want to be progressive and fair and ensure that the most vulnerable would not be affected most severely by those changes. In fact, to the contrary.
The Conservative government was able to find billions of dollars to enable income splitting which, if affordable, is fine. Yet income splitting disproportionately benefits middle and upper income Canadians. The Conservatives found billions to help with that.
This move, raising the age of qualification for the OAS, would disproportionately hurt low-income Canadians. Forty per cent of OAS recipients get by. They struggle to survive on less than $20,000 per year. More than 50% of OAS recipients make less than $25,000 per year. What kind of government, if it were in fact faced with a crisis of sustainability in our pension system, would solve it by hurting the poorest of the poor?
It is also anti-rural, anti-small town and anti-Atlantic Canada. Rural Canada, small-town Canada and Atlantic Canada have more seniors than urban Canada. That is the reality. Parts of Canada, such as Alberta and Saskatchewan, are doing very well. They had the vision, foresight and wisdom to put oil and gas and potash under the ground. However, large parts of Canada are struggling. The Maritimes, large parts of Ontario and Quebec, and a lot of rural communities are struggling. We are struggling to keep rural communities alive. In the three counties of Hants county, Kings county and Annapolis county, we have lost almost 7,000 full-time jobs since August 2008. We have seen unemployment rates go from about 5.5% to over 8% in the last three years. We have seen families struggling just to make ends meet. Small businesses are going broke. They cannot survive if people cannot afford to go to their little restaurant or to shop at their little store. Do not be fooled when the government talks about how well the economy is doing. If we break it down by region, if we break it down between urban and rural, there is a lot of hardship in Canada right now.
This threat to increase the age of qualification for the OAS would make things worse in rural Canada, small-town Canada and Atlantic Canada.
For example, in Nova Scotia, we have the highest percentage of seniors in the country as a percentage of our population. Seniors comprise 16% of the population in our province. The median income for seniors in Nova Scotia is $21,290 per year. That is almost $2,000 less than the Canadian median income of $23,110 for seniors.
In Nova Scotia, OAS represents 24.6% of seniors' income. That is much higher than the Canadian average of 21.1%.
We have established that this is a regressive step. It is bad for low-income Canadians, Atlantic Canadians, Nova Scotians and rural Canadians. It also bad for single women. For women, the OAS and the GIS are more important, in many ways, than the CPP or the QPP. Unlike the CPP, the OAS and the guaranteed income supplement cover Canadians who have taken time away from the workforce. For example, people who have stayed at home to take care of their children or who have persistently had lower paying jobs or long-term unemployment. I mention the GIS because, the way our system works, we cannot qualify for GIS unless we qualify for OAS. Raising the qualification age for OAS would be doubly regressive. Not only is OAS there to help low-income Canadians, but the GIS is absolutely essential for the lowest income retirees.
According to the 2009 report, “Government and Retirement Incomes in Canada”, by Michael Baker and Kevin Milligan, again a government-commissioned report, by the ages of 60 to 64, employment income represents 40% of income, on average, for men but just 28% of income for women. We know that generationally, particularly in the past, a lot more women were doing work that was not compensated in a monetary sense, important work, but work that was not part of the financial system or part of the formal economy. Meanwhile, 23.9% of women aged 65 received GIS, compared with only 19.6% of men. We know that the GIS and the OAS are even more important to women than they are to men.
The Conservatives' policy on income splitting, which I mentioned earlier, predominantly helps well off, single income couples. Now the Conservatives are getting ready to attack low-income families and single women who rely on OAS and GIS when they turn 65.
It is unfair to women. It is unfair to low-income Canadians. It is unfair to rural Canada. It is unfair to Atlantic Canada. It represents an off-loading to the provinces, without any discussion or consultation. The cutting of OAS, raising the age of qualification from 65 to 67, will force thousands of low-income seniors onto provincial welfare rolls.
The feds are downloading these costs, similar to how they are downloading prison costs. We know that the prisons will cost the federal government billions of dollars. We are also finding out that there will be billions of dollars imposed on provincial governments.
I am hearing from constituents in my riding of Kings—Hants, which is of course a rural Nova Scotian riding, a riding that would be hit hard by this kind of regressive step. Fred Rhymes from Centre Burlington has contacted us. He retired early because of his health. This is a guy who worked hard. He saved carefully all his life. His savings were hit badly during the financial crisis. He is now counting on OAS to fill in the gaps when he turns 65. He is very concerned about what the government intends to do. It has been trial ballooned in a callous way. Now we understand there will be some clarity in the budget.
Another fellow who called us was Bryan Draper from Port Williams. Bryan has said that OAS and the social safety net must be there for the Canadians who need it. He referred to the gap between rich and poor and the fact that it is widening. This is not just a Canadian phenomenon. The reality is the gap between rich and poor is growing around the world.
In fact, it is ironic. The Prime Minister was at the Davos conference of the World Economic Forum. Global leaders from countries around the world actually said that the gap between rich and poor is growing and needs to be addressed. Klaus Schwab said in the opening remarks that it is critically important that we address the gap between rich and poor.
I talked to somebody about this a couple of years ago. A business person with a lot of money said that Marx may have been wrong about communism, but he may yet prove correct on capitalism if we are not careful.
People like Warren Buffett, who is no slouch when it comes to business, is saying the gap between rich and poor is wrong. He actually asked the people working in his office to tell him what percentage of their income they were paying in income tax, on a voluntary basis. He found out that his cleaning lady was paying a higher percentage of her income in taxes than he does. This is Warren Buffett, hardly an anti-capitalist.
This is not a question of ideology. This is a question of civility, of doing what is right and changing our tax system and our social system to be fair. It is not just a question of the economy. It is a question of the sustainability of our society. To have the Government of Canada, this Conservative government, threatening to make it worse makes me very frustrated.
I had another note from a constituent who said:
My wife and I are two of the many Canadians who have made financial plans for retirement on the assumption the OAS would be there for us at the age of 65.
Thousands of us who have worked hard and done the right thing will be badly hurt by any wait required for OAS.
Finally, on the politics of deception, the Prime Minister knew that this demographic shift was upon us. The world has known this. Everybody who has been looking at public policy knew this. Why did he not talk about it during the election? Why did he not give Canadians the straight goods that this was a problem? Why did he tell Canadians that he would not, and he was absolutely unequivocal, cut transfers to seniors during the election? Canadians deserve to know the truth. They can handle the truth. They deserve honesty from their government.