Mr. Speaker, I will be splitting my time with the member for Mississauga—Streetsville.
I welcome this opportunity to reply to the motion as presented by the member for London—Fanshawe on the government's proposed changes to ensure the sustainability of the old age security program.
The OAS is an important feature of our social security system. Together, with the guaranteed income supplement, it helps alleviate poverty among seniors by providing a modest base upon which they can build their retirement income.
Our changes will ensure that OAS is put on a sustainable path so that it is there when Canadians need it most.
Younger generations expect us to ensure that the system is sustainable so they, too, can count on this program. That is a responsibility this government takes very seriously.
Demographic changes are putting pressure on our retirement income system and on many other programs the government supplies. This has been clearly documented by a number of experts. The number of OAS pension beneficiaries is expected to almost double, from 4.7 million in 2010 to 9.3 million by 2030. As a result, the costs of the OAS program are projected to rise dramatically, from approximately $38 billion now to $108 billion by 2030.
On February 27 of this year, on CBC's The National, economist, Patricia Croft, said:
The fact of the matter is Canadians are getting older, the demands on the system are getting greater, and the costs are going up.
We will not turn a blind eye to the numbers that could present a looming crisis. Instead, the government will take action. We are not a crisis-management government but a government that has the prudent foresight to plan and avoid issues before they become crisis issues.
The OAS is the largest single program of the Government of Canada and is funded 100% by annual tax revenues. The benefits paid each year from our system to deserving seniors come exclusively from taxpayers through the taxes collected each year. That is why the ratio of workers to retirees is critical to understand why we must act to ensure the sustainability of the program.
In 1990, the ratio of working age Canadians compared to the number of retired Canadians was roughly 5:1. Today, the ratio is 4:1. By 2030, it will be reduced to only 2:1.
If we do not make these changes to the OAS program, there are only two alternatives to address rising costs: either by raising taxes or by diverting funds from other government programs and services. We will not remain complacent when facing today's emerging problems that threaten to become crises in the future.
We have a proven track record in helping the most vulnerable seniors, including the GIS top-up announced in budget 2011 for which, I might add, both the Liberals and the NDP voted against. We are committed to ensuring that social programs remain sustainable for future Canadians.
The issue of the demographic shift is one that is well-known to world leaders. Thankfully, Canada 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 jump from one in seven today. By the year 2030, every fourth person we see will be over the age of 65. This is a reality we are moving toward in Canada. It is inevitable that Canada is becoming much greyer. However, the choices we make today mean that our future does not have to look grey.
Meanwhile, the number of Canadians below the age of 65 will almost remain flat. By 2030, the picture this paints is a country with the same number of workers but twice as many seniors.
The annual cost of the old age security program is projected to increase from about $36 billion in 2010 to $108 billion in 2030. Today, 13¢ of every federal tax dollar is spent on old age security. If no changes are made, in about 20 years that will grow to 21¢ or one-fifth of all federal tax dollars spent.
The total cost of benefits will become increasingly difficult to afford for tomorrow's workers and taxpayers. Today, there are four working age Canadians for every senior. By 2030, the ratio will be 2:1. Is that the legacy we want to pass on to future generations? Can we burden them with that tax load?
Our government is committed to undertaking the transformation needed to position Canada for long-term growth and prosperity over the next generation, and yes, we are committed to taking the necessary steps to ensure the sustainability of old age security.
As members know, there is no reserve fund for OAS. The numbers speak for themselves. Today, OAS is the largest statutory program and by 2030 it will represent almost 20% of all federal government spending. 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 we take responsible action.
This is what the economic action plan proposes. Starting April 1, 2023, the age of eligibility for the OAS pension will be gradually increased from 65 to 67 with full implementation by January 2029. That means that younger Canadians have been given substantial notice with a reasonable adjustment period.
The second date I mentioned is also important. The change in the age of eligibility will not be fully implemented until January 2029. That means that the change will be phased in gradually over a period of six years. We believe this will prevent any hardship to Canadians.
I want to reassure all Canadians that despite the opposition's fear-mongering and over-the-top rhetoric, there will be no reduction to seniors' pensions with this legislation. This is an important point to make. The people who are close to retirement, those aged 54 and over as of March 31 of this year, will not be affected by this policy change.
We have made a clear commitment to the people of Canada and we intend to keep it. We are strengthening the long-term sustainability of the OAS system as a whole.
I encourage the members across the way, particularly those of the Liberal Party who were in fear in the nineties when Paul Martin was finance minister, to summon the courage to do the right thing. They may have missed the chance in the nineties to ensure the long-term sustainability of the OAS but they now have the opportunity to make it right.
I encourage the members of the NDP to listen to the words of the member for London—Fanshawe in a press release on December 5 of last year when she stated:
Issues facing seniors are only going to intensify as more Canadians reach their senior years. Action now is critical -- we need a plan in place, we need the structures in place to deal with this dramatic shift in our country’s demographics.
I encourage NDP members to heed their colleague's advice and support our government's common sense approach by voting against this motion. I will be voting against this motion.