Harper's dystopian "vision" for Canada II

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Catchfire Catchfire's picture
Harper's dystopian "vision" for Canada II

Continued from here

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M. Spector M. Spector's picture

Old Age Security pensions are paid out of general government revenues, unlike the Canada Pension Plan, which is funded out of moneys segregated and invested for that specific purpose.

The government has known about the post-WW2 baby boom for 60 years now, but has not chosen to make sure the OAS is on a secure financial foundation like a real pension plan. (Not that anything under capitalism can really be considered financially secure, thanks to market economics.) Now Harper is warning that the OAS payouts are going to get much bigger in the next few years. Who knew all those boomers would live past 65? Crikey!

So what to do about putting the OAS on a stable basis? The fairer thing to do would be to continue funding the OAS out of government funds, only at higher levels, to meet the demand. It would be fairer because government revenues are at least partially based on progressive taxation, so the burden of the extra funding would continue to fall on the taxpayers in the same proportions as the funding has done to date. The government should also manage the OAS like the CPP, as a segregated pension fund operated on sound actuarial principles.

But Harper wants to make it less fair by reducing the OAS benefits to seniors. This will not impact the wealthy, because they are already subject to the clawback provisions; only those whose income is below the clawback level will pay the price for the paltry benefit that OAS represents ([url=http://www.servicecanada.gc.ca/eng/isp/oas/oasrates.shtml]currently a maximum of $540.12 per month, but the average pension is only $508.35[/url]). How will they pay? No details yet, but most likely by forfeiting two years' worth of pension benefits right off the top (that's $6,000+ a year for two years, essentially taken out of the pockets of non-wealthy seniors, AND/OR by lowering the clawback levels (so that only the absolutely destitute will get the benefit of the OAS), AND/OR by reducing the benefit levels and/or the cost-of living adjustments (which are already a sick joke), AND/OR by changing the tax treatment of OAS pension income, AND/OR by making it harder to qualify for full pension benefits.

Note that NONE of these methods involves any expenditure of money (or forgoing of income) by the wealthy. It's austerity for the working classes, and a free ride for the rich.


and in a matter of such importance, it would be a definite mistake for any resistance contemplated to be left solely in the slippery hands of the usual suspects...

knownothing knownothing's picture

Kenney has bureaucrats stand in as "New Canadians"



Of course the wealthy should not receive benefits under the Old Age Assistance program.  Certainly the benefits for very low income people are not generous...$500 or so a month plus an extra $400 or so for the lowest income bracket.  Not much to live on.  But what about the middle income people?  There's a graduated "clawback" starting around $60k, and by the time your income reaches $100k it's all clawed back (I'm approximating the sums because I can't be bothered looking up the exact figures, my bad).  Question: why should a senior with an income of, say, $65,000 get anything at all from OAS, let alone someone with $80,000.  $65,000 must be substantially more than the average income for seniors.  It doesn't seem very progressive to me that such people should get cash benefits.  What do rabblers think?

M. Spector M. Spector's picture

I think $65,000 a year is not "wealthy", by Canadian standards.


--I think $65,000 a year is not "wealthy", by Canadian standards.


I agree.  I wrote " But what about the middle income people?  There's a graduated "clawback" starting around $60k"  I would characterize $65 as middle income.  My question was why people with that income need government assistance....

M. Spector M. Spector's picture

[url=http://www2.canada.com/topics/news/national/story.html?id=6121583]Old Age Security is sustainable under current rules[/url]

The Old Age Security program in Canada can responsibly carry on its current path - with a retirement age of 65 - according to Canada's parliamentary budget officer, who said any potential changes to the system likely would be unrelated to financial issues....

The cost of federal elderly benefits is projected to nearly quadruple over the next 25 years, Kevin Page said. A report released Wednesday by his office anticipates that payments to Canadians in their golden years will top $140 billion by 2036. However, once that strain passes, he said, levels are expected to drop below current costs.

"If you just look at the current structure of federal programs and the tax burden . . . there's no reason to change (the OAS program) from a fiscal sustainability perspective," Page said. "There may be other reasons to change retirement ages that have to do with broader policy discussions, but that goes beyond fiscal sustainability."

Page released a report Wednesday on federal fiscal sustainability and elderly benefits that projects overall elderly benefits to account for 3.2 per cent of Canada's gross domestic product - or $142 billion - by 2036-37. In 2010-11, elderly benefits soaked up 2.2 per cent of Canada's GDP, or $36 billion.


NDP Pension Critic Wayne Marston stands up against Harper's plans to roll back OAS

macleans.ca wrote:
"Mr. Speaker, first the Conservatives said that OAS was unsustainable and needed to be cut. On Friday, the Finance Minister said that changes to OAS would be delayed until 2020 or 2025. Then a government spokesperson said the finance minister is wrong," Mr. Marston recounted.

This was merely the short version-leaving out both the Prime Minister's triumphant speech in Davos at the start of this three-week saga and the Parliamentary Budget Officer's rebuke this weekend. But, of course, this was mere prelude to the question that still hangs over all of this.

"Seniors and families are worried. Canadians deserve straight answers so that they can plan for their retirement," Mr. Marston summed up. "Is the government going to change the eligibility for OAS from 65 to 67, yes or no?"

Up for the umpteenth time came Diane Finley. "Mr. Speaker, let us face it," she demanded, "Old Age Security, if it continues on the current course, will become unsustainable."

"No!" moaned various voices.

"Not true!" chirped someone on the House's left side.

Mr. Marston gave it another go. "Mr. Speaker, the Prime Minister promised not to touch OAS, then he made up a false crisis and broke his promise. Then the Minister of Finance said OAS changes will not take place till 2020, 2025. Then a government spokesperson says the Minister of Finance is wrong," he reviewed. "How can Canadians trust the government when it clearly does not what it is doing? One more time: Will the government raise the eligibility for OAS from 65 to 67, yes or no?"

Which parts of 'Yes' or 'No' do these Reform Party retreads not understand?

Katherine Scott, CCSD wrote:
Just two years ago, a study done by the OECD for the federal Department of Finance concluded that "Canada does not face major challenges of financial sustainability with its pension schemes."

The Harpers said nothing about touching OAS in their election campaign lies. And now they can't tell the NDP and all Canadians why they lied. The Harpers continue to prove why they are not fit to govern.