Right now, the debate over old age security always seems to come down to a pair of numbers: Can our seniors start collecting at age 65 or age 67? The difference between the two ages is not insignificant, particularly for those now facing 730 additional days tethered to a job. On the one hand, extending the age would stall the shrink age in Canada’s workforce as baby boomers retire. It also seems reasonable to raise the retirement age given our much longer lives. On the other, it could rob low-income seniors of much-needed income.
But picking an age isn’t the real issue. It’s more like the fine print. In isolation, old age security (OAS) and other elderly benefits, like the Guaranteed Income Supplement, are sustainable as Canada’s population ages, according to Parliamentary Budget Officer Kevin Page. This view has been corroborated by government reports and outside experts in recent years, but focusing on those programs alone misses the scope of the problem. As the baby boomers enter their dotage, health-care costs will also rise, and growth in government tax revenues will slow. Taken together, these factors could result in a $67-billion deficit, according a study last year by McGill economics professor Christopher Ragan. The real concern is not how do we address any one situation created by our aging population, but how do we address all of them at once?
Within this broader context, OAS merits review, despite its sustainability as an individual program. But the OAS program requires reforms far greater than simply changing the age of eligibility. Drawn from general government revenues, OAS is, in effect, a welfare program. Yet it’s a welfare program that supports Canadians making as much as $112,770 each year. While the benefits for wealthier seniors are reduced through taxes and clawbacks, the result is an overly complicated system that provides a safety net for those who don’t need one.
If the patchwork of seniors benefits were instead merged into a single program along with more selective means-testing, it would free government revenue to address other concerns, such as rising health-care costs. (Such a scheme might keep the current age of eligibility, ensuring the needy get help sooner.) A similar plan supported by Liberal Finance Minister Paul Martin in 1996, if enacted, would have meant $2.1 billion in savings in 2011, according to the initial projections.
The public uproar that greeted Martin’s suggested reforms led them to be stalled, then shelved, then sacked. It is considered to be politically unwise to offend seniors. Not only are they almost twice as likely to vote in federal elections as younger people, it is also bad for your image to be viewed as beating up on the Golden Girls.
So it is not surprising Harper’s government has been tentative in its approach, endlessly testing the public’s mood and tackling small issues individually. But this piecemeal approach is unhelpful. The opposition parties assert the government’s plan should have been unveiled during the last election campaign. They’re right. Elections are when political parties should detail their plans for the future. Now, the Conservatives need to deliver a comprehensive blueprint for financing our aging population, not just a small corner of their plan. Any other handling of the issue is just playing games.