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.