Pensions - Part 3

I hearsd that panel say changes to pensions are ten years away, and that Harper will likely form a study group to see where to go on this.

You are muddying a perfect example of "cutting off one's nose to spite one's face," JKR.:) It demonstrates why many on"the left" don't understand the forces at work out there, and clearly aren't about to bother finding out...in this case, why Cons want to "drown the remnants" of the CBC in their neoo-liberal bathtub.

And the CBC is apparently not always "totally useless." :)

E. May writes (on FB): "Yesterday was the first day back in the House of Commons. Four Conservative MPs presented petitions to remove all funding for the
CBC."

This is the true face of the Liberals, and quite frankly, thanks, but no thanks. - from his facebook page. Don Davies Cons and Libs join together - AGAIN - to vote for private sector pooled pension plan. New Democrats stand alone for raising CPP, the largest, cheapest, most portable and strongest public pension plan in Canada....

 

They've been too good to us all along. It's time to start earning our keep. And besides, who wants to start slacking off at 65, I mean, really?

Well, I got on Cross Country checkup just now.  I rambled on again pretty uselessly but made my points. My take on this show today is it is setup with a particular frame in mind, that of supporting the government and trying to sell people on the idea that not everyone needs it. Did anyone hear me today, and how bad or ineffectual did I sound. I can't help it you know, that Rex is such an arrogant ignoramous, he just gets under my skin. I wish I had done better today. This is why I don't call very often.

Ack, sorry I missed you Arthur. I can't stand listening to that show since that foul-smelling person took it over. But I'm sure I would have cheered your effort!

 

Great job Arthur on CBC. In an interview with Harper on Friday, John Ibbotson (who else) learned that they won't begin phasing the OAS changes in for ten years to give people time to adjust (and hopefully keep current 55 plus voters from voting against them on this issue). He said it would take about six years after this ten year period to fully implement the change. The interesting thing is that their "crisis date" is 2030. After that date as baby boomers die off and the smaller next generation hits retirement the percentage of GDP consumed by OAS actually declines from 3.2% to 2.4% in 2060, which is roughly where it is today. In other words, the change is only fully implemented near the point at which its cost as a percentage of GDP starts to reverse. This is the very definition of a manufactured "crisis". Note how the government never says anything about what happens after 2030. Naturally, it is the poor, the disabled and those working in fields such as construction and nursing (in which many jobs involve lifting patients etc.) where a minority make it past 60, let alone reach 67 on the job, that will be hit hardest. The result will be an increase in welfare payments and a downloading of costs onto the provinces. 

The allusions to the pension crises in Europe and Japan are also misleading because their pension systems are consuming a minimum of 7% of GDP and often significantly higher. We will not even reach half these levels at anytime in the forseable future.

Rex Murphy's "nonpartisan ... expert" on pensions of course came from the financial services industry which will benefit greatly from poor public pensions when people feel they have to save under such schemes to have a respectable retirement. He of course used such "nonpartisan" words as "sense of entitlement" and "freebie" when referring to OAS. He forgot to mention his sector's entitlements: very low and falling corporate tax rates and capital gains taxes that are much lower than income tax rates.

Government revenue and expenditures are about choices. By not buying $150,000,000 a plane and climbing F-35s, by not building a prison system to match that of the US when even Texas (the most rabid jail and hang 'em state) is reducing its prison system because of its failure to reduce crime and its astronomical costs (we could give 3 people OAS for the cost of one prisoner), by not giving the world's richest industry, the oil companies, $1.5 billion in subsidies every year, and by raising corporate tax rates, the temporary increase in percentage of GDP costs of OAS could be covered.

Furthermore, by bringing in workers as landed immigrants, rather than the ever growing number of guest workers, we would reduce downward pressures on both salaries and pensions, thereby building a healthier pension system. in addition, this would reduce the risk of the social strife found in Europe as the children of "temporary" guest workers rebel against their non-citizen or second class citizen status.

 

Arthur, I only caught the last hour so I'm thinking I might have missed your call.

The guest from the Rotman School of Business didn't offer anything substantive but I did catch him rail against one caller who said that trusting the stock market for your security was a mugs game. He jumped on him for being anti-capitalist and accused him of being against wealth creation.

I was amazed that the caller didn't just hang up and said that he wasn't against meaningful wealth creation but what was currently on offer was a total failure.

Rex also had the audacity to suggest that military and other in the firing line professions deserve extra special considerations and enhanced benefits.

Arthur, great job sticking up for workers!

We should also remember that an NDP government could revamp the CBC. IMHO, replacing corporate advertising revenues with secured public funding and having an independent board that represents all kinds of Canadians, including workers, run the CBC would be the two most important steps in fixing the CBC.

I think the party needs to focus on this issue. First and foremost, from a social justice point of view. However, it plays very well politically and not just from the point of view of those who lose their pensions. John Ibbotson in his interview on Cross Country Checkup noted that the Conservatives had been planning this for some time. In other words, they were not transparent about where they were going on this issue during the election despite stating that their platform identified all the major issues they would deal with. In BC, this approach is what led to the great fall in Liberal Party support when they introduced the HST after denying they were going to do it in the election. However, it took Bill Vanderzalm leading the initial attack, while at first the provincial NDP held back, to rile up the public because most of the media and people just said how can you change a government policy when they have just been elected.

While there is no referendum to directly overturn the rule, the party should clearly state it will reverse this policy if elected in 2015, which wont't be hard, since it will not even be implemented at that time. It also needs to point out that this is an artificial crisis. Initially, the % of GNP used to support OAS rises less than 1% from 2.4% now to 3.2% of GNP in 2030. Since Ibbotson said that Harper told him this policy won't start to be implemented for 10 years and will take 4 to 6 years to fully implement, it will not be in full effect until the cost of OAS is almost at its highest percentage. No wonder the Cons never discuss what is going to happen to this percentage after 2030.  Then it starts to decline as the baby boomers die off until it is roughly back at the current rate in 2060. Meanwhile those who are disabled, poor, or working in jobs where they are laid off late in the careers or where few last to 60 because of the physical and/or mental strain of the work (for example, construction and nursing) have only welfare to fall back on. Instead of spending billions on prisons (which even American conservatives now admit rob education and social programs of money without preventing drug dealing - the biggest source of prisoners in the US and soon to be in Canada - or improving living conditions ), $150,000,000 F-35 jets, and oil company subsidies and low corporate tax rates, this money could fund OAS until its % of GNP falls back down.

Governing is about making revenue and expenditure choices. OAS is a far better expenditure choice than those listed above. I believe we can win this argument from a social justice, transparency and judicious spending point of view if we persist in explaining the alternative path in a rational , straightforward manner over time.

jerryM:

I couldn't agree with you more. When I was on I said almost at the beginning that I believed the government had intended to do this before the election and didn't tell anyone about it. I don't understand where the NDP is on this. They need to really go after this harder and non stop, along with Atawpiskat. Those are really key issues, and the party's chance to show how it is different, and why people should support it.

There is no question, these guys want to take away our pensions. Partially in response from their Bay Street buddies, and also because ideologically, they just think people should stand on their own, regardless of the consequences. Stupid, nasty fools that they are!

The Parliamentary Budget Office has demolished the Con argument for changing OAS as shown below in its report. Here are excerpts from the an article on the report showing why.

Hill Dispatches: Non-partisan report contradicts Harper on pensions By Karl Nerenberg | February 8, 2012 The Parliamentary Budget Office (PBO) does not use dramatic language. It takes the "just-the-facts-m'am" approach.

And so, when the PBO decided to issue a report on pensions, it called it, blandly: "Federal Fiscal Sustainability and Elderly Benefits." The PBO reports to parliament, and not the government. Its role is to provide independent, non-partisan analysis. The purpose of the PBO's sustainability reports is to assure that Canada can afford to pay for programs to which it is committed, in the short, medium and long term. And so, when the PBO decided to take on the question of pensions and other elder benefits is did so without a dog in the race. Its interest is in whether or not these benefits are affordable.The PBO does not recommend political choices. That is up to the elected representatives.

The PBO's newest report states, in essence, that the OAS and GIS are sustainable in the long term, even if we assume what it calls a "modest enrichment" of the benefits, that is, increases greater than inflation.

OAS will grow, then decline

The PBO report starts out by citing the fact that  "federal elderly benefits" ( the OAS and GIS) will grow from 2.2 per cent of GDP in 2010-11 to 3.2 per cent of GDP 24 years from now, in 2036-37, an increase of one percentage point. (And this is based on an assumption of enriched benefits. The PBO says that if benefits merely rise in line with inflation, the increase, in percentage of GDP terms, will only be .8 per cent not 1 per cent). The report then goes on to consider the affordability of elderly benefits in terms of projected federal revenues. It does this because, in the report's words, "the elderly benefits program should be assessed in the broader framework of fiscal sustainability, which requires that government debt cannot ultimately grow faster than the economy."

The PBO starts out by assuming a federal tax "burden" of 15 per cent of GDP, which is what it is projected to be for 2015-16. (And which is, by the way, 2 percentage points of GDP lower than the average over the last 50 years.)Under this scenario, elderly benefits are projected to increase from a little under 16 cents per dollar of tax revenue in 2010-11 to nearly 20 cents in 2030-31 -- an increase of about 4 cents per dollar of tax revenue. However, the PBO report adds that, in the years following 2036-37, there will be a steady decline in the cost of elderly benefits to 12.8 cents per dollar of revenue by 2080-81. But the government keeps saying it is concerned about long-term sustainability, here. Human Resources Minister Finley repeated that mantra about five times during today's question period.

And so, the PBO has given the government a long-term picture. And that picture shows that there is no financial, "bookkeeping reason" to cut OAS or other benefits, either directly or by raising the eligibility age. The PBO is a prudent and small-c "conservative" agency. It is not in the business of spinning optimistic, fiscal fairy-tales.

And so, when the Parliamentary Budget Office says that it "estimates that the federal fiscal gap is -0.4 per cent of GDP," it is not kidding! Note that the "gap" is a negative number. Were it positive, that number would indicate the amount one would have to increase revenue or decrease spending to prevent the debt-to-GDP ratio from continuing to rise. In Canada's current case, the negative number indicates the increased amount that we can spend (either directly or through reduced revenues) and still have the debt-to-GDP ratio go down.

 

I'd have preferred that the "petition against Harper's proposed changes to the OAS" was not created by the Liberal Party of Canada. :)