Ms. Irene Mathyssen (London—Fanshawe, NDP)
|| That this House reject the government’s plan to raise the age of eligibility for Old Age Security and the Guaranteed Income Supplement from 65 to 67 years even though the current system is financially sustainable.
Madam Speaker, I am pleased to introduce this motion, which reaffirms our dedication to seniors and the viability of old age security in Canada. This motion highlights that the system is sustainable if we maintain the eligibility for OAS at age 65.
I am also pleased to be splitting my time with the member for Pierrefonds—Dollard.
The motion is about government priorities or, more accurately, the lack of intelligent practical priorities that benefit Canadians. Investing in seniors, investing in our economy and ensuring they have security is essential because seniors spend all of their money in their community. They shop at home and create jobs in local businesses.
I also want to talk a bit about the impact of the government's decision to increase the age of retirement to 67 on young people who are working today.
Raising the age of the OAS-GIS penalizes younger Canadians. The Conservatives claim that their changes are necessary to ensure that the pension system is viable for future generations. However, the Parliamentary Budget Officer, the OECD and numerous other pension experts dispute this claim.
This change proposed by the government will hurt younger Canadians more than the baby boomers of today. These young Canadians are already facing record levels of unemployment, which tends to reduce income levels later in life. There is an extremely high level of student debt among these young people and housing costs are eating up more and more of their earnings.
The government's decision will make life for young Canadians even more difficult. It will affect the poor the most. Those who can least afford to choose will be impacted negatively. Above all, senior women will be disproportionately affected.
I have been meeting with seniors across the country, as has my partner in the seniors pensions portfolio. Yesterday, I was in Truro, Nova Scotia where I talked to seniors who told me that investing in seniors should be a priority.
Canadians have taken great pride in the social safety net that we have in this country. Beginning in 1927, J.S. Woodsworth convinced the minority government of Mackenzie King to create the old age pension, which, in about 1952, became the OAS. Since that time, we have seen all kinds of changes, with the addition in 1967 of the GIS, all to help alleviate seniors' poverty.
The OAS is universally available to all retirees who have lived in Canada for 10 years or more and full pensions for those who have been here for 40 years after age 18 with pro-rated scales for those who have been here for less than that time. It is the first of three government supported retirement income systems, the second being CPP-QPP based on workplace earnings and the third being private savings like workplace pensions, RRSPs and RRIFs. For singles, the maximum OAS monthly payment is $540.12. The average is about $508. The maximum GIS is $732 with the average being $491. That makes a total income for a single person of $15,270. The low income cut-off in Canada is $18,373.
It is interesting and quite disturbing that when it became clear about 35 years ago that there would be lots of baby boomers, the government's response was that we must have RRSPs. In the interim, we have discovered that RRSPs are expensive in terms of government revenues. It costs about $18 billion to supplement RRSPs.
The tragedy is that RRSPs are not a good savings vehicle. About 40% of their value was lost through management fees over a 45-year period. If it is necessary to cash them in, such as if someone needs a new roof or the furnace breaks down, there is a huge penalty. Fewer than 30% of Canadians are able to find enough money at the end of the month to even consider RRSPs. Therefore, as a savings vehicle, they are not very good.
The next concern about pensions probably heated up with the Nortel employees. Many of those employees lost 40% of their pension benefits. I need to underline that pensions are deferred wages and they belong to the employees. Nortel declared bankruptcy and then sold off a great deal of intellectual property that was worth millions and billions. The governments in the U.K. and in the United States protected their Nortel workers' pensions. Canada did not. The Conservative government chose not to. It could have because the NDP had a bill before the House, workers first, that would have protected holiday pay, severance pay and pensions. The government could have acted and chose not to.
Because of the Nortel meltdown and the crisis that so many workers faced, people became aware that only 30% of Canadians have private pensions and many are dependent on CPP, OAS and GIS. In many cases, it is simply not enough for people to manage, particularly single women. The call for reform was out there, and justifiably so. The federal government agreed to meet with the provinces, and nine of them wanted pension reform. Alberta balked, and the federal government then said that it would bring in pooled registered pensions plans.
I will tell everyone about pooled registered pension plans. First, the employer may or may not set up a PRPP and the employer determines the level of contributions, although the employer may choose not to contribute. If employees want out, they need to give 60 days' written notice. The problem with these so-called pension plans is that they are not indexed. They are defined contributions without any set or determined pension benefit. They are gambled on the stock market. They are not reliable and have very high management fees. It is just another crapshoot, which is simply not acceptable. Nothing in the PRPP proposal sets management expenses at levels equal to or lower than those of the Canada pension plan. As a result, CPP is still a much better deal.
What is needed is real reform, and six provinces are still interested in talking. I will begin with CPP, which is the best way to save for retirement. It covers 93% of Canadian employed workers, essentially the entire labour force, and it is portable from job to job across the provinces. It keeps up with the cost of living and is exclusively financed by workers and their employers. It is absolutely independent of any cost to government. It is safe, secure, indexed against inflation and, as I mentioned, there are very low management fees. In terms of CPP reform, a modest increase in CPP contributions, as Bernard Dussault, the former chief actuary for Canada pension, said, is absolutely doable. Therefore, we can do that.
We can also take a very close look at OAS. We know that the Parliamentary Budget Officer has been very clear in saying that we can afford OAS now and in the future. Right now it is about 2.3% of gross domestic product. In 2030 it will climb to 3.3% and then it will go down significantly. To pretend that we cannot afford it is simply abusing the numbers.
I hope the House will support this motion. It is absolutely essential. If we respect our seniors, we will make sure their pension and their retirement is secure.
Ms. Lysane Blanchette-Lamothe (Pierrefonds—Dollard, NDP):
Madam Speaker, today is the second time the NDP has proposed an opposition day motion on old age security. It did so the first time a few weeks ago because the government raised some suspicions about how it planned to go about reforming the old age security program. The Conservative government refused to answer any questions, which is why the NDP moved an opposition day motion to ask the government not to balance the budget on the backs of seniors.
Unfortunately, we need to have a second opposition day dedicated to old age security today because the government finally announced its plans and confirmed the fears of many Canadians. The government confirmed that it would gradually raise the age of eligibility for old age security from 65 to 67.
I am proud that we, as a party, are opposing this austerity measure proposed in the Conservative budget.
Some time ago, I travelled around the province of Quebec and met with many people from across the province. I would like to share their concerns with the House today.
First of all, they asked me what would happen to their private pension plans. That is one concern that was raised and that is completely understandable. In fact, many doubts remain about what will happen to these pension plans if the government raises the age of eligibility for old age security. Some may ask, what does one have to do with the other? There is definitely a difference between old age security and private pension plans arranged between employees and employers. However, they are related. Indeed, the calculations made by employers for their private pension plans are based on the fact that employees will receive old age security at age 65 and the employers can therefore reduce the amount of the private pension when the old age security is paid out.
People are worried. Small unions have just negotiated their working conditions and pension plans, and they are worried about whether they will be able to renegotiate their pensions or whether there will be a gap between when their private pensions diminish and when they receive old age security. That is one concern for which, unfortunately, we have yet to receive a clear answer.
I was also asked when the Prime Minister intends to retire. Unfortunately, I cannot answer that question, but I would like to.
People are also wondering whether there are other ways to reform old age security, since the proposed reform seems to be a direct attack on the people who are the most vulnerable to poverty. It is true. Why is this government choosing to push back the old age security eligibility age? Unfortunately, we have no information on that either.
The government seems to be making things up as it goes along. It needs to make cuts somewhere so why not here? There are other solutions, but there have been absolutely no discussions on this whatsoever and this is another question we are unable to answer because the Conservative government is not providing us with any information.
In any event, one thing is clear: there is no need to cut old age security. To me, the types of cuts the government wants to make to old age security are not the issue, because the important thing here is that the government does not have to touch old age security.
Someone else asked me the following question. He wanted to work longer, but his employer lets go of employees when they are 50 or 55 because he says they get too old or cost too much. That person wanted to know whether the government had thought about that.
That is a very good question. Just because the government requires people to work two more years, that does not mean that everyone can. When a person does physical labour, at age 55 their body is no longer able to do the work. Even if the government threatens to cut people's pensions or to give them money later, they might not be able to work that long.
Then there are the people who want to work longer and can, but are dismissed when they reach a certain age or are strongly encouraged to leave their job to make way for young people. This brings us to another possible solution. If the government wants people to work longer, then why not give employers incentives to keep their employees longer? That would be a good way to address the problem.
The government could also help people who decide to continue working after the age of 65 or 67. That is already built in to a certain extent because people who decide to continue working for another five years are not penalized and they accumulate the amount of old age security, which they can receive later. This is one example of a very attractive incentive. No one's arm has to be twisted. However, it will not be any more effective, because those who can no longer work at 55, 60 or 65 can no longer work, and that is that. There are other ways to encourage people to stay in the labour market, and there are other ways to encourage employers to keep their employees longer.
Can the hon. member tell me how to better prepare myself? The Conservative government keeps on saying that it will give us time to prepare ourselves for the delay in accessing old age security. What can I do? Hon. colleagues, there are things that can be done to prepare for retirement. Unfortunately, not everyone can do them.
Consider that someone working full-time at minimum wage may be living below the poverty line. Will this person be able to put aside $50 or $75 a month for retirement? Unfortunately, they will not. Even if they were told 20 years in advance, this person would not be able to adequately prepare and would be affected by the increase in the eligibility age for old age security.
There is something else I wanted to talk about. I believe that these concerns and questions that are not being addressed indicate that the increase in the eligibility age will have major consequences. This is a direct attack on the middle class and on the people most vulnerable to poverty.
The government has not convinced us that it was necessary to make cuts to the old age security program. Experts have all stated that the old age security program is sustainable. The member opposite spoke about “pretty simple math”. I am sorry but, in my opinion, a minister's common sense or the “pretty simple math” done by a Conservative member do not hold up against a study conducted by a Government of Canada chief actuary. They do not hold up against the findings of a parliamentary budget officer, a study conducted by the OECD on pensions throughout the world or a study conducted by university X or Y, which all show that the old age security program is sustainable. I am sorry but the “pretty simple math” argument does not fly. I do not believe that it holds up against the opinion of experts who all agree that the program is sustainable.
The number of seniors will in fact increase for 5, 10 or 15 years, but we are able to deal with that increase since it was expected. Actuarial calculations are done over decades, 50 or 60 years even. The actuarial calculations allowed for an increase in life expectancy. Logic and common sense tell us that we cannot disregard the arguments and conclusions of experts. What is more, since the Conservatives did not have specific objectives, we do not know whether the proposed measure to increase the age of eligibility for old age security from 65 to 67 meets the objectives. We do not know if these measures will really have the expected impact on old age security.
First and foremost, the objective was not clear. Second, the government has not provided any figures or studies to show how much money it will save. Will the amount saved be sufficient to make the old age security system sustainable? I get the impression that the Conservatives are just winging it. They are saying that cuts have to be made somewhere, and this is where they are going to be made. Why? We do not really know. It is truly ridiculous that the Conservatives are going to attack a program that places Canada among the countries that are best equipped to combat poverty among seniors. They are going to make cuts to this program without explaining why and without explaining what the impact will be.
In conclusion, the NDP feels that cuts to old age security are clearly not necessary and that a lot more could be done to improve the quality of life of seniors rather than reducing it.
Ms. Kellie Leitch (Parliamentary Secretary to the Minister of Human Resources and Skills Development and to the Minister of Labour, CPC):
Madam Speaker, I am pleased to rise today to explain why the government will be opposing this motion. I am also pleased to say that I am very flattered that the opposition seems to be using my comment again and again. Obviously, repetition is something that is quite flattering, and I greatly appreciate it.
In budget 2012 our government indicated the changes that will be made to the old age security program to ensure the sustainability of the program for future generations. This morning our government tabled the jobs, growth and long-term prosperity act to implement various provisions of the budget. The legislative changes to the old age security program are contained in this bill.
It is my hope that by tabling the details of this legislation, we will be able to dispel much of the fearmongering that members opposite have chosen to wilfully bring forward. I note that they seem to be ignoring the realities of our aging population here in Canada.
Even after I and the Minister of Human Resources and Skills Development have risen dozens of times in this place and delivered the same answer, I still feel the need to reiterate that all those currently receiving OAS and GIS benefits will not lose a single cent because of these changes, no matter how often the opposition wants to fearmonger otherwise. People who are close to retirement—that is, people who are age 54 and over as of March 31 of this year—will not be affected by this policy change at all. We are providing Canadians with a lengthy period of notice in order to adjust their retirement savings plans. Sadly, we have witnessed attempts by the opposition to score cheap political points by fearmongering on both these points.
Our government is committed to ensuring the sustainability of the old age security program for future generations. These changes will ensure that the OAS remains strong and that it will be there for our children and grandchildren when they need it.
Before I go further, I will outline that these changes have nothing to do with the Canada pension plan, which is a separate program with a different form of financing. There is no sustainability issue for the CPP. It is fully funded for the next 75 years at current contribution rates. This fact has been confirmed by the Chief Actuary.
However, the same cannot be said for the old age security program. I am aware that our government has already explained why these changes are necessary many times over, but the current motion before the House indicates yet again why there is a need to reiterate these reasons. The opposition just does not seem to understand the reality of an aging population here in Canada.
Life expectancy for Canadians has gone up significantly over the last number of decades, and it is expected to continue rising. It is good news, of course, that Canadians are living longer, healthier lives. They enjoy one of the longest average life expectancies in the world, at around 81 years of age.
I am currently a pediatric orthopedic surgeon. As a medical professional, I am well aware of the many advances Canadians have made in making healthier life choices. However, with the increases in life expectancy, Canadians are collecting retirement benefits for a much longer time than when the OAS was first introduced. This has an impact in the ratio of workers who are paying for the benefits our seniors are collecting.
In 2010, 4.7 million people collected basic old age security. By 2030, the number of people collecting OAS will have nearly doubled to 9.3 million.
To put it bluntly, this means that a small number of working taxpayers will be supporting a larger number of OAS recipients. As a result, the cost of the OAS program is projected to rise dramatically, from approximately $38 billion now to $108 billion in 2030.
As members know, the baby boom generation—that is, people born between 1946 and 1964—is the largest cohort in Canadian history. Canada's wealth and economic productivity expanded enormously when baby boomers brought their values, knowledge, skills and energy into the workforce. They have contributed greatly to the development of our great country, but now, as these men and women are starting to retire in greater numbers, there are fewer and fewer younger workers to replace them.
In 1990 the ratio of working-age Canadians compared to the number of retired Canadians was roughly five to one. Today, the ratio has shrunk to four to one; in 2030, it will be two to one. The visualization and the realization are quite striking. There will be only two working people for each retired individual. This will be the first time that this has happened in the history of our country, and it will have a profound effect on the fiscal balance of our country. The fewer people we have in the workforce, the less productive our country is likely to be and the less tax revenue there will be to pay for government programs.
Canada is not alone in this demographic shift. Population aging is a worldwide phenomenon. According to the United Nations, in 2005 10% of the world's population was 65 years of age or older; by 2025, that proportion is expected to reach about 15%, or slightly more than one person in six.
If we look to our neighbours and counterparts in the industrialized world, we see that many have already started reforming their pension systems to take demographic changes into account. Twenty-two of the 34 OECD countries have recently increased, or announced plans to increase, the public pension age. These include the United Kingdom, Australia, France, Germany, the Netherlands, Italy, Japan, Denmark and many others. These countries are making changes to keep their retirement income system sustainable and ensure the financial security of their older citizens now and in the future. It is time for Canada to follow their example.
The OAS program cannot continue in its present form indefinitely. It is becoming unaffordable and needs to reflect demographic shifts. That is why we are taking action now to give Canadians certainty to plan for the implementation of these changes in the future.
If we had refused to acknowledge these realities and had simply sat back and done nothing, the OAS program would be unsustainable. OAS is the largest single program of the Government of Canada, and it is funded 100% by annual tax revenue. Let me be clear on this point: the benefits that were paid this year to our deserving seniors came exclusively from the taxes that were collected this year. This is why the ratio of workers to retirees is critical to the understanding of why we have to act now to ensure the sustainability of this program. Today we spend 13¢ of every federal tax dollar on old age security; if we do not make changes now, in about 20 years that share will grow to spending 21¢ of every federal tax dollar on this program.
If we do not make these changes to the OAS program, there are only two alternatives for dealing with this cost: raising taxes or diverting funds from other government programs and services. We know that the tax-and-spend coalition across the aisle has no problem raising taxes. Whether it is a job-killing carbon tax or increases to the GST, the opposition has not met a tax it does not like. However, considering the decreased ratio of workers who would have to shoulder the increased costs of government services, raising taxes would critically damage Canadian business competitiveness and the Canadian economy.
As an MP, I represent an Ontario riding, and my constituents know far too well the record of the leader of the Liberal Party and his track record of damaging a fragile and struggling economy by increasing taxes. This is simply not a reasonable solution, and it would cause far too much harm to the Canadian economy. As we have consistently stated in previous campaigns, the Speech from the Throne, and the most recent budget 2012, we remain committed to our low-tax plan for jobs and economic growth.
Diverting funds from other programs and services is obviously not an option. To pay for the increases in OAS, the government would be forced to take funds that are currently being used to support deserving Canadians requiring assistance from the government.
We have seen over-the-top reactions from the opposition benches as the government moves to find efficiencies for our latest rounds of deficit reduction reviews. They simply cannot have it both ways. We are talking about an 8% increase in the total cost of government spending. We are convinced that the only way, and the only just way, to relieve the cost pressures on OAS is to raise the age of eligibility. This would ensure that the OAS will still be there for our children and grandchildren by the time they reach retirement.
The proposed changes will happen with a lengthy notice period and will be phased in over several years. We will gradually raise the age of eligibility from 65 to 67. These changes will not affect people who are currently receiving OAS benefits. They will continue to receive them as they did before.
The operative word here is “gradual”. Nothing is happening overnight. In fact, the transition will only start on April 1, 2023, which is 11 years from now. Once the transition begins, it will take six years to complete. To put it another way, the process will take 17 years, until 2029. This is a longer implementation period than most OECD countries will provide when increasing the eligibility age of their public pensions.
Let me be very clear on this. Everyone will have more than a decade before the changes start to set in, and it will be close to two decades before they are fully implemented. There is ample time for all Canadians to adapt their retirement plans.
Anyone 54 years of age as of March 31, 2012, in other words those born before or on March 31, 1958, will still be entitled to OAS and GIS at age 65.
The ages at which the OAS allowance for low income spouses and the OAS allowance for the survivors are provided remain the same for anyone who is 49 years of age or older as of March 31, 2012. They will continue to be eligible between the ages of 60 and 64.
I know this is reassuring news to older Canadians after all the fearmongering that has happened from our opposition colleagues. I want to reassure Canadians that current seniors' benefits are not being affected.
For younger people, there is plenty of time to prepare for these changes and adapt their retirement plans. Canadians born between April 1, 1958 and January 31, 1962 will be eligible to receive their OAS benefits and the GIS between the ages of 65 and 67, depending on the month in which they were born. The details of the transition will be outlined in the budget and are also reflected in the budget implementation bill which was tabled this morning.
Canadians born on or after February 1, 1962 will be eligible to receive OAS benefits at the age of 67. For the allowances, the range of eligibility will shift from between 60 to 64, gradually increasing to 62 to 66 for people born between April 1, 1963 and January 31, 1967, depending on their birthday. In other words, the age of eligibility will be 62 for the allowance and the allowance for the survivor for people born on or after February 1, 1967.
Certain federal programs that are currently providing income benefits until age 65 will be changed in tandem with the OAS program so that there is no sudden gap in income for recipients 65 and 66 years of age. These programs include those provided by Veterans Affairs Canada and Aboriginal Affairs and Northern Development Canada.
Also, the Government of Canada will compensate provinces and territories for net additional costs they face resulting from the increase in the age of eligibility for OAS. Again, for Canadians who are 54 years of age or over as of March 31, 2012, they will still be eligible for the OAS pension and the GIS at age 65. If they want to stay in the workforce past 65, they will be able to defer their OAS benefit and receive a higher actuarially adjusted pension up to five years later. I will speak to this in a moment.
In addition to gradually increasing the age of eligibility, we are making two other changes to OAS we believe will benefit Canadians. The first is proactive enrolment. Right now all seniors have to formally apply for the old age security and guaranteed income supplement benefits. Between 2013 and 2016, we will begin proactively enrolling Canadians into the OAS program, eliminating the need for seniors to apply. This will reduce the government's administrative burden, but more important, it will ensure that more seniors have access to the benefits they deserve.
We are making changes to the OAS in the near future, changes which I think Canadians will appreciate. We will be providing Canadians the flexibility as to when they will be able to start receiving the OAS pension. Canadians turning 65 on July 1, 2013 will have the option to defer their OAS benefits for up to five years. People who defer receiving their OAS benefits to a later time will subsequently receive a higher actuarially adjusted monthly pension for the rest of their lives.
This change will give people more flexibility and choice when planning for their retirement, especially when they want to continue working past the age of 65.
It is no secret that Canadian seniors are choosing to stay in the workforce longer. This is a great time for the Canadian economy. More than ever, we need to be able to tap into their energy and continue to benefit from the knowledge and skills they acquired over a lifelong period in the economy.
The flexibility of deferring the OAS pension will make it worthwhile for many Canadians to stay on the job. I want to emphasize that pension deferral will be an option, not an obligation. I would also like to point that people who defer their pension will, on average, receive the same total OAS pension over their lifetime as those who do not defer their benefits.
Never in the history of our country have so many people lived such long and fulfilling lives. This is something to celebrate. However, an aging population is also creating new challenges that we have to face realistically.
When the OAS was introduced, Canadians could expect to live only a few years after retirement. Now many can look forward to two or more decades. Over the next 20 years, the number of Canadians over the age of 65 will jump from 4.7 million to 9.3 million. This is a staggering increase in a relatively short period and it comes with a high price tag. The annual cost of OAS will increase, in fact triple, between 2010 and 2030 from $36 billion to $108 billion.
At the same time as our seniors population is rising, the ratio of workers to retirees will be falling. Unlike the Canada pension plan, the OAS is financed entirely from tax revenues from workers paying that year. Currently, one in seven Canadians is over age 65. By 2030, less than 20 years from now, the ratio will change to two to one. Fewer people working means less revenue and higher costs.
We owe a lot to our seniors. They built our country and they deserve security and dignity in retirement. Our government is determined to take on this responsibility in a fair and prudent fashion to ensure that the OAS system remains sustainable. It is the responsibility of the federal government to think of the future and act in the long-term interests of Canadians. Sadly, the opposition has refused to acknowledge the realities of this aging population. Private sector economists, financial institutions and former Bank of Canada governors have confirmed that we must act now to ensure OAS is sustainable in the long term.
Unfortunately, the opposition parties have chosen the low road. Their baseless fearmongering and ignorance of the need for change do not serve the interests of Canadians. We will not follow the opposition's approach of sticking our heads in the sand and pretending we are oblivious to a coming challenge.
I ask all members in the House to consider our duty to our constituents, to our great country and to our current and future retirees, to rise above our partisanship and to reflect on the actions that need to be taken to ensure fiscal sustainability of a cherished social program. As such, I ask all members of this House to reject the opposition motion and support the actions that our government is taking for the long-term sustainability of OAS for future generations of Canadians.
Hon. Judy Sgro (York West, Lib.):
Madam Speaker, you are so right, but it is also so difficult when we stand in the House and continue to ask questions on serious topics and continue to be ignored or given answers that we know are not accurate, based on what we know.
I am pleased to speak on this very important issue. I will be sharing my time with the absolutely wonderful member for Random—Burin—St. George's, who is a constant fighter on behalf of her constituents and seniors in this country. They and we are fortunate to have her with us.
Here we go again. We are speaking in what I would call a Bill Murray moment. We are again debating a motion on how to stop the government's attack on low-income seniors.
As my party's critic for seniors and pensions, I am pleased to say that we are going to support this motion because we are all here, at least on our team, to support Canadian seniors. We are here to reaffirm a commitment that the Liberal Party of Canada made and will continue to reinforce, that in our goal to form the next government three years from now, we will make sure we maintain the age of retirement at 65.
We have looked into this issue with all seriousness. Everybody knows it is not a financial issue. It is an issue of choice and ideology, which I will speak to further.
The Liberal Party of Canada believes that 65 is an appropriate age. If people want to continue to work until 75 or 80, God bless them all. The government is going to force people to wait an extra two years when many of the people who I see have been in really tough jobs all their lives and can barely make it to 65. The Liberal Party is and will continue to be firmly committed, if given the opportunity by Canadians three years from now, to ensuring that this does not move forward.
What would the motion do? Let us be honest and not mislead anybody who is watching today. We support the motion and we will be working with our NDP colleagues on this issue. If the motion is passed, it will go the same way a lot of things go with the Conservative government. It will go into the nearest trash can, and nothing else will happen.
I do not want to mislead people into thinking we can overturn it. The current government has a majority, and when a government has a majority it does pretty much what it wants. We will stand up and holler and scream and do all the things we are supposed to do, but at the end of the day that is what a majority government is going to do. It will take the Canadian people out there to respond and work with all of us to ensure that does not happen. If Canadians rise up, speak out and vote, that would be helpful for all of us in opposition.
The intent of the motion is to roll back the Prime Minister's attack on the pensions of low-income seniors. It would assure seniors and baby boomers that the view held by the Cons is not shared by all of us. The motion echoes the Liberal call to stop and reverse the government's increase to the age of retirement.
The motion helps to remind Canadians that the Conservatives continue to govern with a mandate they secured under false pretenses. We had an election just over a year ago. This did not come out of the blue. We do not suddenly have some huge financial stress on us, meaning that we have to do this. Twelve months ago there was no mention of this.
In fact, the Prime Minister made a commitment that there would be no change to health care, that health care transfers would stay the same. He said he had no intention of touching pensions. Rather than introducing pension reform in the larger sense, all the government has introduced is PPRPs that would do very little to help people save for retirement.
That is what we should be talking about, the need for serious pension reform in this country, opportunities for people to be able to save. No matter whether they are homemakers, or on low income, people need to be able to save a few dollars. We need to introduce programs that would allow and encourage that. Even with the age being 65, far too many people continue to live in poverty today.
While many of us continue to argue for increases in OAS so that fewer people would be living at the levels of poverty we know many of our constituents are, the government has taken unprecedented and unnecessary steps to make people wait an extra two years. It is absolutely uncalled for. There are no statistics to show it needed to do that.
As my colleague mentioned, in the OECD some of those countries have very rich pensions. Some of them have a 50% or 60% replacement. What do we have in Canada? We are proud of what we have, but it is not enough. It is a 25% replacement. Many of us have been arguing for years to increase that so we do not have as many people living on $15,000 a year.
I asked some on the other side, and they have constituents living on $15,000 a year. It is not just us who have not quite as affluent ridings. Members should stop and think about what it is like to live on $15,000 a year. By the time they pay rent, transportation and medical bills, I often hear from my constituents that they have to choose between getting a prescription filled and buying a quart of milk. Life is tough for a lot of people out there, even though we would like to think that everybody in Canada is rich. They are not, seniors in particular, for a variety of reasons, including the kinds of jobs they had.
Also, people were led to believe, by their own lack of knowledge, that when they got to be 65 there would be a pension there for them. Our system is not a pension. It is a supplement to one's own savings. If we ask most Canadians who are not saving very much money, they think that when they are 65 they will have a pension. In Norway they would have a pension. In many of the other countries they would have a pension. However, we do not have a “pension” in this country because we need serious pension reform.
Notwithstanding the Conservative Party's conviction for election fraud and promising not to cut the pensions of seniors, as I mentioned a moment ago, the Prime Minister misled Canadians and tricked boomers into trusting him with their votes. I can guarantee that all the people I am meeting with will not be tricked the next time. I am sure even Pierre Poutine would be shocked by the dubious nature of this scheme. He is probably right at that age where he will be affected by this change as well.
Canadians have earned these benefits, and by pushing the OAS eligibility age from 65 to 67, the Cons are hurting those Canadians who are the most vulnerable.
What the government is forgetting is that it is not giving people anything. It is rotating their money back to them, which they paid in all of those years. It is their own money they are getting back.
Seniors and baby boomers have worked their entire lives. They have paid their taxes, raised their families and contributed to this nation. Everything that we enjoy every day came from all of them. Now as they grow older they are simply asking the government to fulfill its promise to let them live in dignity. But the Cons say, no, they will have to wait an extra two years because they have not worked hard enough. The government will say the sacrifice it is forcing seniors to bear is for the long-term prosperity of the entire system. However, all the federal government's own reports have determined that the OAS is clearly sustainable. We do not face the pressures that many of the other countries are facing because they have a very lucrative and rich system when it comes to pensions. We do not have any of that. That means the Conservative cuts to OAS are being made as a matter of clear choice. That is what government and governing is all about, choices. It makes the choice where it makes its cuts. It makes the choice as to where it invests taxpayers' money. We can see very clearly where the current government is making its choices as to what it cares about.
The Minister of Finance has said that the budget was about choices. That is one place where I agree with him. The Cons have opted for jets, jails and fancy juices, while the Liberals continue to stand for and with Canadian seniors and baby boomers. As I indicated earlier, three years from now we could very well be into another election. The Liberals have committed and will stay committed that the age of 65 will remain, so people can have a few years for a second career or a bit of a better lifestyle than having to be forced to continue to work. These are ideological cuts by the government and will only increase the pressure, in addition to all the other issues that are being downloaded to the provinces, to force people onto either welfare systems or some sort of subsidy. That is very embarrassing and humiliating for the thousands of Canadians who have worked hard, paid their taxes and were never on welfare or unemployment insurance or anything else. They worked all of those years. When 65 comes, they are planning to retire. Now some of them will be forced to apply to the province for welfare, something that is extremely humiliating for many.
I am thankful for the opportunity to speak to this very important issue. I hope we are able to raise some of these concerns as the day progresses.
Ms. Judy Foote (Random—Burin—St. George's, Lib.):
Madam Speaker, I rise today to speak in support of the opposition day motion, which reads:
|| That this House reject the government's plan to raise the age of eligibility for Old Age Security and the Guaranteed Income Supplement from 65 to 67 years even though the current system is financially sustainable.
I am not sure there is another issue that I can think of, recently anyway, that has galvanized the people of Canada so much in terms of opposition to what the government has proposed. It is totally unreasonable, unacceptable and unconscionable that a government would consider this. Seniors, some of whom have worked for years in very physically and mentally challenging environments, will now have to wait an additional two years to access a program that has been there for them for years. It is not right, not fair and is something that I hope Canadians will continue to speak out on and will continue to make representation about because, even though it will not impact those who are of age now to qualify for OAS, it will impact their children and their grandchildren.
We tend to lose sight of the fact that the longer we have people in the workforce, the less jobs there are available for those who are younger and looking to get into the working environment. Most of our young people today are unemployed or underemployed. What message are we sending them? The government is telling them that they will need to make a go of it themselves, that they will need to find a way to make it happen. If people are being forced to work until age 67, there will be fewer opportunities for young people and there will continue to be fewer opportunities as long as the Conservative government is in power because of the choices it makes that influences the people of Canada.
I will speak to how we arrived at this debate on this motion by highlighting some important dates in history. This shows the mindset of the Conservatives. In 1927, the Conservatives voted against the introduction of the old age pension. Fortunately, in 1951, a Liberal government passed the Old Age Security Act. In 1965, a Liberal government established the Canada pension plan. Later, in 1967, that same Liberal government, led by prime minister Lester B. Pearson, introduced a guaranteed income supplement and lowered the eligibility for old age security and the guaranteed income supplement from 70 to 65.
That was a government with a conscience. That was a government that recognized that things become difficult as one ages and that things tend to happen from a medical perspective as one ages. That was a government that recognized how important it was to take care of its citizens.
In 2001, the current Conservative Prime Minister and then member of the right wing National Citizens Coalition declared his disdain for national pension plans and wrote an open letter to the premier of Alberta demanding that Alberta withdraw from the Canada pension plan altogether. That puts it in perspective. That explains exactly where the government, led by the Prime Minister, is coming from.
More recently, in the 2011 election, the Conservatives assured Canadians that if elected they would not cut pensions. In black and white, on page 23 of the Conservative 2011 election platform, it says:
|| We will not cut transfer payments to individuals or to the provinces for essential things like health care, education and pensions.
Well, we know quite the opposite has happened. Unfortunately for Canadians, this commitment was nothing short of fiction.
In 2012 the Prime Minister showed Canadians his true colours when he hid during the election, which was only a year ago, and broke his promise not to cut the old age security and the guaranteed income supplement.
Unfortunately for Canadians this is not the first time the Prime Minister has made a promise to do one thing, only to do the opposite. Whether it be his broken promise in the 2006 election on the Atlantic accord, which impacted the province of Newfoundland and Labrador, or his bogus commitment in 2008 election not to run a deficit, or his phony guarantee in the 2011 election to balance the books by 2014, the Prime Minister and his Conservative government have made it clear, through their legacy of broken promises, that they cannot be trusted to keep their word.
In budget 2012, after the Prime Minister committed to all Canadians in the last election, “We're not going to cut the rate of increase in transfers for healthcare, education and pensions. That is job number one”, the Conservatives are breaking another promise and decreasing the old age security and the guaranteed income supplement by raising the age of eligibility from 65 to 67 even though the current arrangement is more than sustainable.
The Conservatives tried to manufacture a structural crisis surrounding the financing of the old age security that just does not exist. While it is true that the retirement of baby boomers will result in increased costs for the old age security program, Canada's economy is expected to grow significantly over the next 20 years. That economic growth means that by 2030 the old age security program will only comprise 0.7% more of Canada's economy than it does today. This is not unaffordable by any measure.
The Conservatives are trying to manipulate the facts by not including the entire picture. According to the Parliamentary Budget Officer, Kevin Page, 2030 is when old age security expenses will peak and following this peak, old age security expenditures will continue to decline until they return to current levels.
The Parliamentary Budget Officer has looked at this. He has come to this conclusion. He has researched the issue and it is totally contrary to what the government has said. Old age security is sustainable. Reckless Conservative spending is not.
On January 13, 2012, Jack Mintz, research director of the Government of Canada's working group on retirement income adequacies, stated:
|| The overall view that was taken about our pension system in total, when you look at Old Age Security, and the Guaranteed Income Supplement, as well as Canada Pension Plan, was that it is relatively financially sustainable...
This is more research that points to the fact that the government is off-base and has no idea what it is talking about. A government that professes to be a competent manager and cannot get something as simple as this right, begs the question why, and the why is choice. It is the way the government thinks. It does not have a social conscience and this is a prime example of that.
The reality in Canada is 40% of old age security recipients earn less than $20,000 a year in retirement. This proposed delay will cost our lowest income seniors over $30,000 in benefits. This cut to the old age security will have a devastating effect on the retirement security of our most vulnerable future seniors.
Since the Prime Minister announced his plan to cut the old age security when he was in Davos, I have heard opposition from every corner of my riding of Random—Burin—St. George's, and not just in my riding, but throughout Newfoundland and Labrador and from the rest of the country.
This unscrupulous action by the Conservative government, and there have been many more, has garnered so much opposition and resulted in so much negative feedback. It is the wrong decision and it is a decision that must be reversed or we will have a future generation of seniors who will be unable to pay for the most essential things like heat, light, food and medicine. This has to be overturned.
Mr. Fin Donnelly (New Westminster—Coquitlam, NDP):
Madam Speaker, I will be splitting my time with the hon. member for Argenteuil—Papineau—Mirabel.
I rise today to support the New Democrat Party opposition day motion sponsored by my colleague for London—Fanshawe. She has put a tremendous amount of work into this issue and I applaud her dedication to Canadians.
Through budget 2012, the eligibility age for OAS and GIS will be raised from 65 to 67 starting in April 2023, with full implementation by January 2029. This means that all Canadians under the age of 54 will be affected by this change.
I do not remember hearing about this change in the election, which was just a year ago. In fact, the Conservative election platform stated, “We will not cut transfer payments to individuals or to the provinces for essential things like health care, education and pensions”. After the election, the Prime Minister stood in the House and said, “This government has been very clear. We will not cut pensions”.
Not only did the Conservatives fail to campaign on this issue, they hid their agenda and misled Canadians. That is unacceptable.
Canada's New Democrats believe that the OAS and GIS is easily sustainable and actually projected to decrease in cost relative to the size of the economy in the long run.
According to York University pension and retirement expert, Professor Thomas Klassen:
|| I haven’t heard any academic argue that there’s a crisis with OAS, which is why I was surprised a few days ago when the Prime Minister seemed to say there was a crisis...there’s got to be a lot more evidence that there’s a problem, and I don’t see that evidence.
This is a manufactured crisis. This is not about the sustainability of the OAS and GIS; this is about an ideological agenda.
Edward Whitehouse, the leader of the OECD pension team, stated:
|| 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.
Canada's New Democrats want to strengthen Canada's pension plan, not weaken it. We believe that a better option would be to expand CPP. A modest increase in premiums can finance a doubling of the CPP, providing real sustainable retirement security for all Canadians.
I want to read a few emails that I received from Canadians who are very concerned about these changes.
The first one is from Fred and Evelyn. Fred says, “I am 68 years old next month, and Evelyn is 65. Your proposal to double pension benefits is exactly what I had in mind for some time”.
They are referring to the proposal of Canada's New Democrats. They go on to say:
|| Ourselves included, we worked hard in Canada, still paying taxes and bring up our children as good citizens. I...work 40 Hrs a week, at night, as a watchman at a major vehicle dealership, (at minimum wage), and Evelyn works part-time as a Hostess at a local Real Canadian Superstore.
|| We're not lazy, and we never were, and it would be nice sometime soon to be able to bid good bye to our employers, if our pensions were doubled in total!
This one is from Teresa, from Coquitlam, who says this about the government:
|| In addition, although the changes to the OAS do not affect me, I think you are wrong to extend the eligibility to 67 yr[s]. You will be penalizing older people in lower socioeconomic levels and vastly underrating the pain you are inflicting on working people who do not have the options that higher salaried Canadians enjoy. You do not have my support for these changes. I think many other Canadians feel the same way.
Claudette says, “This change will not only impact seniors, who will be forced to work years longer, but also our country's youth, who now see few decent employment opportunities. This will only worsen as people delay retirement because of financial hardship. Assurances by the government that raising the age for OAS would have no impact on current retirees are misleading. This change would impact everyone, and immediately.”
I also have a number of emails that were sent in when people who had looked at my website felt that they wanted to speak out and voice their concern.
John, in Port Coquitlam, says, “The Prime Minister should have raised this policy issue as part of his re-election platform. We all know what happened to our former premier”—this, of course, is in British Columbia—“for not being forthright with the electorate with the HST. We need our political leaders to be more honest, open and transparent.”
The next one is from Anne, in Coquitlam. She says, “While these proposed cuts will not affect my pension, as I have been retired for over 10 years, I have family and friends for whom these cuts will definitely have an impact. It may mean working longer, if health and job opportunity allow, or significantly reducing their ability to cover necessary costs, particularly medications and health care costs. As costs in all areas of living continually increase, this small pension can mean the difference between getting by or having to make very difficult choices affecting health and longevity.”
This one is from Sandra, in Coquitlam, who says, “This decision adversely affects women who have raised families. This is despicable and unnecessary and puts hardship on vulnerable people who were hard-working and law-abiding citizens. It seems mean and petty to me.”
Robin, in New Westminster, says, “For those of us reaching our senior years, please maintain funding for the OAS. My grandpa fought in World War I and my dad in World War II. I was born here and have lived here all my life. I have worked, paid my taxes and paid my dues. Many wonderful seniors who made this country what it is today desperately need the OAS funding. Many will find themselves in very difficult situations if the OAS is compromised.”
Nargis, in Coquitlam, says, “[The] Prime Minister...is not thinking about the seniors who have worked hard for this country and are looking forward to their retirement. I think it is very unfair if he goes through with it. Unfortunately, the Prime Minister will create more poverty amongst seniors. I do agree it is a direct attack on the most vulnerable people.”
Lennox, in Burnaby, writes, “Seniors who have worked all their lives and paid their taxes contributing to the economy of Canada should not be made to endure cuts to their pension in their old age. This is utterly unfair.”
Donna, in Coquitlam, says, “I understand the Conservatives are making plans to change the eligibility age for OAS. They do not appear to know the average Canadian too well at all. I am now 64 and will qualify for OAS in August. I understand that I will qualify, but what of the next generation to come? Pensions are being eroded or done away with completely, so what will the average Canadian live on? I was a single mother of three, and the concept of saving for a rainy day never entered into the plan. Shame on the Prime Minister and all his pals. Shame, shame.”
Mary, in Coquitlam, says, “People who do not have any source of income apart from OAS and GIS need to have additional financial assistance. The cost of living continues to rise without the funds to support the basic necessities for them.”
Finally, Eunice writes from Coquitlam, “The Canada pension plan is wholly funded by employers and employees with government management. Why does your government plan to stop CPP for those now 57 years and under, when it has been proven to be sustainable with good government management?”
Ms. Mylène Freeman (Argenteuil—Papineau—Mirabel, NDP):
Madam Speaker, I would like to take a quick second to thank my colleague from New Westminster—Coquitlam for his exquisite pronunciation of my riding's name.
I rise today in this House to defend the rights of my citizens in Argenteuil—Papineau—Mirabel—and I did say rights—because, on this side of the House, we insist that retiring with dignity is a right. The consequences of the Conservatives' attacks on old age security and the guaranteed income supplement will seriously harm my constituents' ability to enjoy this right.
This House represents a vast country. We have many rural ridings that are feeling the effects of a struggling economy. A large number of jobs are disappearing from rural areas and so are our young people, because of the lack of professional jobs. These ridings often include isolated places where it is difficult to access health services and the population is aging fast.
As MPs, we should not be reducing the deficit by stealing Canadians' pensions. In my riding, the average annual net income is $17,000, and it continues to decrease because of the recent economic problems in Canada and abroad.
Thus, my constituents would benefit the most from old age security and the guaranteed income supplement. Furthermore, we owe it to them. Old age security and the guaranteed income supplement are the cornerstones of our public pension system because they provide guaranteed measures to combat poverty.
Not only are the Conservatives stealing two years of future pension from Canadians but they are also targeting the most vulnerable. What is more, they are doing it for reasons that do not make any sense. Canada's old age security program is not experiencing a financial crisis. The latest actuarial report from the government indicates that the OAS and GIS represented 2.37% of the GDP in 2011. This percentage will experience a minimal increase to 3.16% in 2030 but will then drop below the current level to 2.35% of the GDP in 2060, which shows that there is no long-term viability problem for those affected by these changes.
It has been strongly established that the old age security and guaranteed income supplement programs are effective and economically sound. Clearly, the government's statements are unfounded. Its position is not supported by any statistics or serious research. Meanwhile, the Conservatives are making cuts to the government agencies that could provide a solid basis for decision making.
It is true that the population of Quebec and Canada is aging. As I said before, this phenomenon is even more apparent in my riding. In my riding, in the Argenteuil and Papineau regions for example, right now, the median age is 10 years higher than in the rest of Quebec. What is more, this statistic is expected to continue to increase until 2026. Yet, growing older is not a crime. The people who will be retiring soon have worked just as hard as those in previous generations. They deserve a decent retirement at the very least.
The fact that the population is aging does not make the old age security and guaranteed income supplement programs unsustainable. The government is fearmongering despite the fact that there is no causal link between the two factors. The facts tell us two things: first, the cost of the old age security program and the guaranteed income supplement is expected to drop in the long term; and second, the cost of poverty among seniors is astronomical, from both an economic and social perspective.
Like many of this government's austerity measures, this attack on the most vulnerable Canadians is despicable. In fact, this budget cut is attacking those who are most vulnerable for a number of reasons: age, illness, poverty and disability.
The middle class and the less fortunate will be hit hardest by this because they are the ones having trouble making ends meet. They cannot afford to save more money.
They work at physically demanding jobs, and because their jobs are so difficult, they are unlikely to work until they are 67. Quebeckers and Canadians with chronic illness or disabilities will also suffer because they cannot always work past normal retirement age.
The median income in Papineau and Argenteuil is 10% to 20% lower than in the rest of Quebec, but household size is about the same. Goodies for big business and cuts to economic development services will not help my constituents. They are farmers and small business people who dedicate their lives to their work, help create jobs and diversify my region's economy. Old age security is the least we owe them.
I do not understand how the Conservatives can play at sorcerer's apprentice with social programs that work. Reputable economists across Canada agree that OAS and the GIS go a long way toward helping seniors escape poverty, but that more should be done.
We also know that people living below the poverty line are more likely to be victimized. All of the evidence shows that poverty makes people more vulnerable to violence, abuse and neglect. The government claims that it takes crime against seniors seriously. But its actions on this issue suggest otherwise.
The modest income guaranteed by the public system is a more effective defence against abuse than the expensive punitive measures that the government wants to introduce. Having to wait two more years for a public pension means two more years of uncertainty and risk for these vulnerable seniors.
In closing, I would like to congratulate my colleague from London—Fanshawe and my colleague from Pierrefonds—Dollard for their work on this file. I would also like to thank my colleague from London—Fanshawe for moving today's motion. She is a heroic defender of Canada's seniors, and I truly appreciate her work.
I urge all members of the House to realize that we are on the brink of doing irreparable damage to the financial security of seniors in Quebec and Canada. I truly hope that all members will support this motion on behalf of their constituents who depend on old age security and the guaranteed income supplement in their later years.
Hon. Alice Wong (Minister of State (Seniors), CPC):
Mr. Speaker, I will be splitting my time with the member for Nepean—Carleton.
I rise today to respond to the motion put forth by the member for London—Fanshawe. We oppose this motion.
It is imperative to reiterate some facts and be clear about them.
No current recipients of old age security will see any reduction in their benefits because of these proposed changes. These changes will gradually increase the age of eligibility for OAS from 65 to 67 years starting in 2023 with full implementation by 2029. This means our government is giving Canadians up to 17 years to plan and adjust accordingly.
Unfortunately, it appears that members opposite continue to take a head in the sand approach to the whole issue of OAS sustainability.
Our Conservative government is acting now to ensure the sustainability of OAS for future generations, for our children and our grandchildren. That is why we have come up with a reasonable plan to ensure all Canadians can continue to count on OAS for a more secure retirement future.
I do not believe anyone can dispute that our government is committed to ensuring seniors have the highest possible quality of life. I am proud of the work we have done to strengthen Canada's retirement income system, and more broadly to help address issues that matter to seniors.
As a result of actions taken by our government, seniors and pensioners will receive $2.5 billion in additional targeted tax relief this fiscal year. We have introduced pension income splitting and have increased the age limit for maturing pensions and RRSPs. As a result of these actions, 380,000 seniors have been removed completely from the tax rolls. What does this really mean to the seniors I have met across this country? It means that more money will go directly into their own pockets to spend or save as they see fit.
Sadly, if it were up to the opposition parties, they would have raised taxes on all seniors, not reduced them. Whether it was a job-killing carbon tax, an increase in the GST or any number of other tax increase proposals put forward by the opposition parties, one thing is clear: if either the NDP or the Liberal Party were in power, the cost of living for Canada's seniors would be higher.
Enough of pointing out the obvious, negative, damaging effects the opposition would inflict on Canada's seniors if they were in power; rather, I would like to continue the discussion on how our government has delivered, and will continue to deliver, for seniors.
We have strengthened the support of the retirement income system and invested in a GIS top-up benefit for Canada's most vulnerable seniors. In fact, it was the single largest increase to the GIS in over 25 years. What did the opposition do? Once again both parties voted against it. In total, this top-up provided additional annual benefits for more than 680,000 low income seniors.
Going back a little further, in budget 2008 we increased the amount that can be earned before the GIS is reduced to $3,500, so that recipients can keep more of their hard-earned money without any reduction in GIS benefits. Once again, as they have been known to do, almost as if they were in a coalition, both parties voted against this measure.
The CPP was modernized in 2009 to make it more flexible for those transitioning out of the workforce and to better reflect the way Canadians currently live, work and retire.
We built a better framework for federally regulated registered pension plans, including ensuring that an employer fully funds benefits, even if the pension plan is terminated. We expanded pension options with the introduction of pooled registered pension plans for millions of Canadians who have not previously had access to a large-scale, low-cost, professionally administered company pension plan.
Shifting gears for a moment, I would also like to discuss what many consider to be the greatest policy innovation in a generation to help Canadians save for their retirement, the tax-free savings account, TFSA, which we introduced in budget 2008. I do not think I need to tell members which way the NDP voted, but I will anyway. That is right. Again, the NDP voted against it. That is shameful because the TFSA is particularly beneficial to Canada's seniors, as withdrawals from a TFSA do not affect income supports such as the age credit or OAS and GIS benefits. The TFSA also benefits seniors by giving them a savings vehicle to meet their ongoing savings needs.
As well, there have been several other initiatives that have demonstrated our support for seniors. We have eliminated the mandatory retirement age for federally regulated workers unless there is a bona fide occupational requirement. This allows the choice for Canadians to decide how long they wish to remain active in the workforce. We have also provided $400 million over two years for the construction of new housing units for low-income seniors. Since 2006, we have provided $220 million into the targeted initiative for older workers. This program is a federal-provincial-territorial employment program that provides a range of employment services for unemployed older workers in vulnerable communities. I am proud to report that about 75% of older workers who participate in the TIOW go on to find new employment. That is something we can be proud of.
I have just listed the unprecedented support our government has given to seniors since 2006. Let me highlight some other positive changes that were announced in our most recent budget. We announced our government will be working with a third-quarter project to assist seniors who are looking for jobs. For example, our government has for the first time introduced proactive enrolment for OAS benefits. These changes, which will start in 2013, will reduce the obligation of many seniors to apply for benefits and help ensure seniors receive the benefits they deserve.
Unfortunately, we have heard the same fearmongering and misinformation from the opposition about the sustainability of the OAS. Whether it be through misleading and confusing op-eds sent to local newspapers or partisan mail-outs and petitions that misrepresent the facts, the opposition parties have engaged in a reckless campaign of misinformation aimed at scoring cheap political points. We have heard a lot of questions about the savings associated with the proposal. Such questions miss the point entirely. We are taking these actions to ensure the survival of this benefit for future generations. We are implementing these measures to give predictability and certainty to those preparing for their retirement.
It is particularly hypocritical of the Liberal Party to be grandstanding on such an issue. This was the same matter that Paul Martin attempted to change in the mid-1990s to ensure the sustainability of this benefit. Unfortunately, the Liberals lacked the conviction to show real leadership and decided to pass the buck to a future generation and a future government to make the tough choices in the long-term interests of our nation. It is no surprise that Canadians elected a strong, stable, national Conservative majority government.
I would ask my hon. colleagues across the way to put aside their partisan blinders and to think of the long-term sustainability of this program. There is a greater interest than their perceived short-term political gain in considering this issue.
We need to act now to provide Canadians the certainty they need to plan for their retirements. We have heard from many private sector economists and the chief actuary, as well as pension and financial experts alike. They agree that the increased demand of a rapidly aging population is going to threaten the sustainability of the old age security program.
I would ask opposition parties to get their heads out of the sand and to stop their wilful ignorance of the very real challenges that face our nation because of an aging population and to join with the government in voting against the motion.
Mr. Pierre Poilievre (Parliamentary Secretary to the Minister of Transport, Infrastructure and Communities and for the Federal Economic Development Agency for Southern Ontario, CPC):
Mr. Speaker, in order to project the future, Winston Churchill always suggested looking to the past. If we are to project the future costs of the old age security program, we must look to the increase in costs we have experienced in this program in recent history.
When the Government of Canada introduced old age security, in roughly 1950, the age of eligibility was 70 and the average life expectancy was 69. That meant that the average person would not receive any old age security. People would not live long enough. Today, one can receive old age security at 65 and collect it until the average end of life, age 82. That means a 17-year average period of collection for a given Canadian. The massive increase in costs that result from this demographic reality are obvious.
In 1975, for example, there were seven working people for every single senior. Now, there are four working people for every single senior. That trajectory will not only continue over the next two decades; it will accelerate.
This is the point where we take the recent history and project it into the future in order to see ahead and look a little further down the road. Within 20 years, the cost of OAS will triple, the number of people receiving it will double and the number of workers supporting each retiree will fall by half.
Why will this occur? The first and most obvious example is that baby boomers are going to retire. This large bubble of population demographic has travelled through the age categories and is about to reach its period of golden years when the people are too old to work and are expected to collect from the system in the period after their retirement.
There is a second reason why the costs will go up. That is that the life expectancy of that larger group of people is increasing. That means that the duration during which that larger group of people is collecting OAS will lengthen.
I did some interesting research through Statistics Canada data and found that the average life expectancy is growing by 47 days each year. That means that people who die today at their average life expectancy will be about 47 days older than the people who died last year at their average life expectancy. Every year that goes by, the average person lives almost 50 days longer. Therefore, in 2031 the average person will live to about 84. That means, under the current eligibility for OAS, a person could collect for almost two decades.
This was a program that was created with the expectation that the average person would not reach the age to collect it at all, and over the last half century, because people are living longer and because the benefit has been made more generous with the eligibility age lowered to 65 from 70, there is already a very long time during which someone can collect this benefit.
We can understand, with the increase in recipients and the relative decline in contributors, that the cost of the program is going to rise. That is exactly what the research demonstrates.
Using information from a report by Christopher Ragan at McGill University, the Macdonald-Laurier Institute calculated, “...by 2040 Canada would face a $67 billion deficit (in today’s dollars) based on current policies and demographic change”. The same institute stated that the old age security program will account for one-quarter of total spending by the federal government by 2030.
It goes on to state:
|| The federal government currently spends about 15 per cent of all spending on OAS/GIS and that’s supposed to be go up to about 25 per cent. But if you’re going to put up spending on that by 10 percentage points of everything the federal government spends, you’re going to have to either put up taxes or make some cuts somewhere else.
Just to visualize, for every $1 that the Government of Canada spends two decades from now, 25¢ will be spent on OAS and income support for our seniors. That will mean less money for health care or higher taxes for working families in Canada. To summarize, when there are more people collecting from and relatively fewer people paying into OAS, we have eventual shortfalls. It is like a glass of water. One can only drink out of the cup what is poured into it. If there are relatively fewer people pouring into the cup and relatively more people drinking out of the cup, eventually somebody goes thirsty. That is why we must take action now to avoid such a drought.
We have a Prime Minister who, in the spirit of John A. Macdonald, seeks not short-term tactical political advantage but has the capacity to look a little farther. It is clear that there is no political advantage to the Prime Minister in making this change. It has given the opposition a great opportunity to attack the government and fear-monger with seniors, but the Prime Minister did it anyway because he is prepared to accept the short-term political cost in order to advance the long-term national interest of the nation. He is doing exactly what Germany and Australia have done, which is to gradually and with great notice increase the age of eligibility from 65 to 67, a two-year increase over a gradual period of time.
The opposition says that it opposes this approach but has no suggestion on how it would make up the cost differences that we expect due to these demographic and mathematical realities. It also proposes a 45-day work year for employment insurance, which means that somebody could work for 45 days and then collect employment insurance for the rest of the year. It has supported a Liberal bill that would make newcomers eligible for OAS after only living in the country for three years. Those proposals would cost billions of dollars and the only proposal that the opposition offers to pay for it is to increase taxes on business.
Here is the problem with that. It comes back to pensions again. The reality is that the pension system in this country is heavily reliant on those same businesses that the opposition seeks to tax. I will give one example. The Canada Post pension plan for unionized postal workers is invested in the big businesses that the opposition wants to tax. The top five holdings as of last June were TD Bank, Royal Bank, Bank of Nova Scotia, Suncor and Canadian Natural Resources, banks and oil companies, the twin villains in any left wing storyline. When we increase taxes on those companies, it is an accounting fact that they have less money to pay in distributions to their shareholders, the largest of whom happen to be pension funds that provide for seniors who worked as unionized, often blue collar people, and expect to collect a dignified retirement as a result of the after tax profitability of the companies in which those funds are invested.
We are taking responsible action to protect our safety net, to keep our economy strong and to create jobs. That is the vision of the Prime Minister. Does it take courage? Yes. Is it worth it? Absolutely.
Mr. Mike Sullivan (York South—Weston, NDP):
Mr. Speaker, I will be sharing my time with the member for Newton—North Delta.
I want to bring to the attention of the House that this is only the first of many changes that need to be made to our pension system if the Conservatives are to have their way. This is only the beginning of what will be an ideologically-driven reduction in the amount of benefit that individuals would expect to receive from their government after working a lifetime in Canada and expecting a reasonable ability to retire.
I am one of those baby boomers who is the problem. We were constantly being told that, as a result of the improvements Canada was making to our standards of living, as a result of automation and as the result of all kinds of advances in medicine and in science, not only would we have an easier life, with fewer working hours in each week, but we would all be able to retire earlier and that we should not have to worry about retiring later.
The Conservatives are ensuring that those advances are being stopped and, in fact, they are moving backward. They want to take the country backward and that is so wrong.
I am the opposition deputy critic for persons with disabilities and the Conservatives have not yet said what they intend to do to the Canada pension as it pertains to persons with disabilities.
Two individuals from my riding, who are both on a Canada pension disability pension, have written to me. They are younger than the age at which this change to the OAS will not affect people. Therefore, they will be affected by the change in OAS. They have already realized that they will have an enormous gap in their income because their Canada disability pension ends at age 65. They are both permanently disabled, cannot work and cannot do anything to change their situation. Their income is such that they do not have enough money to save more for their retirement. The Conservatives have said over and over again that they are giving people plenty of notice so they can save more for their retirement and bridge the gap between 65 and 67. However, those two individuals and many more across Canada are not able to do that. Physically and financially, they cannot manage between 65 and 67.
What is the answer? There is no answer from the government. Its answer is to give the provinces some money. Those individuals would be forced to apply for welfare when they turn 65. We are telling our disabled people in this country that they now must accept a lower standard of living. That is in violation of our signature on the Convention on the Rights of Persons with Disabilities, and that is unacceptable to this side of the House.
That is one of many side effects of the government's single-minded, ideologically-driven agenda of reducing what the government gives back to its citizens. This is not about some crisis in the aging of our population. The Parliamentary Budget Officer has said that it is sustainable in the long run.
All of the figures show that this baby boom generation is a temporary blip but the government is proposing to make a permanent change to Canada's retirement system. We cannot and we should not move backward and take the country backward with each step of the current government.
The member opposite suggested that a person's life expectancy is growing and he used the number 82. Eighty-two is really only the number for females. It is considerably less for males. However, let us say that life expectancy is growing. Part of the reason life expectancy is growing is that we are investing money in our medical system. The current government has decided to stop increasing the amount of money we invest in our medical system, limiting it instead to increases relative to inflation.
That will have the impact of shortening our lives, in particular, those people who are in the 20% lowest category of income who already have a lifetime that is shorter by 20% than the rest of Canadians. We are telling those people that it is too bad, so sad, that they are going to have to work two years longer. They cannot as they are physically unable to.
The government has failed once again to warn Canadians that this is but the first salvo in what will be a domino effect of moving to age 67 for the old age security system. That system is the underpinning of every other retirement system in the country, save and except for those individuals who make way too much money to need the OAS. Those individuals who are making more than $120,000 a year in their pension do not need our protection. However, the government has created a domino that will affect every individual who makes less than $120,000 a year. They will need something to make up the difference between 65 and 67 or they will have to wait until 67 to retire.
The government has not said yet, but I am sure it will, that it intends to change the Canada pension plan to make it dovetail with the OAS. Has anybody here had any on that debate? Have we had any discussion on the Canada pension moving to age 67?
It necessarily must follow. We cannot leave a gap and say that one set of pension plans has an age of 65, but the underpinning of all of them has an age of 67. It does not work. Financially it does not work, societally it does not work and it does not work in determining what one's retirement will be. One cannot now plan for retirement at age 65 when a big chunk of the money is missing between 65 and 67. Therefore, not only would the Canada pension plan have to change, and the government has not said anything about how it would do that, but all employer pension plans would have to change.
Employer pension plans are based on what a person can reasonably expect to live on when they turn the age of retirement. The age of retirement in every employer pension plan is 65. That will have to change to 67. The normal age of retirement that is stated in almost every employer pension plan in the country, and I have dealt with lots of them, is 65. However, it could not continue to be 65 if the other income support that it depended upon disappeared. Therefore, it would have to become 67 years of age.
This is another creeping piece of the puzzle of how the government would force all young people to wait to retire at 67 and work an extra two years. They would have a 45-year work life instead of 43. We are going backward and we do not want to do that.
Employer long-term disability plans all end at 65 or death, whichever comes first. Now those employer disability plans would have a gap between the age of 65 and 67. What are those individuals supposed to do? Will the employers magnanimously start paying more money into those disability plans in order to continue to pay people until 67? I highly doubt it. I think there would be blood on the street before that happened.
Will the employer life insurance plans, which all end at 65, suddenly become amended and end at 67 so the life insurance plans would continue? Will provincial welfare plans, which now end at 65, be suddenly amended to end at 67?
The government has said that it would help the provinces. However, we have a government that is saying that it cannot afford to keep this system up, but it has lots of money to hand the provinces so they can keep the system up. There is a bit of hypocrisy going on there.
Finally, the provincial disability plans have exactly the same problem as the Canada pension plan and disability plan in that the provincial disability plans end at age 65. Therefore, if someone says that we can change OAS without changing the Canada pension plan, employer plans and all the rest, they are either lying or dreaming in Technicolor.
Ms. Jinny Jogindera Sims (Newton—North Delta, NDP):
Mr. Speaker, it a privilege for me to speak to the motion. I am so proud of that my party is forcing a debate in Parliament over such a critical issue that does not just affect a few people in our society, but will have an impact on the full population.
There seems to be many sides to this debate. I have been intrigued by some of the arguments I have heard today.
Let us take a look at some of the facts. The facts before us are very simple. I am sure my colleagues across the aisle will be able to understand them.
The fact is the Parliamentary Budget Officer has said that there is no need to do this. He has examined the budget and there is no need to raise the retirement age.
Another fact is the report from the OECD also commends Canada and recognizes the health of our pension planning. It also does not see the need for any action to be taken.
Let us go on to people that my colleagues across the way will really respect, and that is their cabinet. Before becoming a majority government, their cabinet did not think there was a problem. In fact, when a study was done on the whole area of pensions, it did not propose any changes to raise the retirement age.
Let us get to the Prime Minister. He did not see this as an issue before the election. During the election, he made a commitment that his government would not touch pensions.
Then let us look at another fact that we keep having thrown at us, which is we are unaware of the changing demographics. I have been aware of the changing demographics for a long time, as have Canadians. I think high school students started to study the changing demographics in the 1970s and 1980s. That is one of the basic things we do.
I am one of the baby boomers, as are many of us in this room. We are proud of that baby boomer generation. There is this kind of mythology being pursued by my colleagues across the aisle that taxes are only being paid by those who are working. They use numbers that only so many people will be working and this many people will not be, but they forget to say we are nation that has been built on immigration.
When we have shortage of workers, we bring people in from other countries, just as many of us have come. Many of the cabinet ministers have roots in other countries as well. Their ancestors came as immigrants. In the same way, Canada will continue to rely on immigrants for our nation building. We are very proud of that. When those people arrive, they pay taxes because they become Canadians and they work here.
Also retired people pay taxes. Let us not say this huge number of people, the baby boomers, are going to retire and then assume that we are not going to be collecting taxes from them. I can assure members that we tax our seniors above a certain income as well.
When we look at all of this, we begin to realize that my friends across the aisle are trying to mislead the public. We absolutely understand, now that the government has clarified, after months and months of silence, that it is going to be bringing in the 65 to 67 in a gradual manner.
I have met with seniors. They know they will not be impacted, but they are worried about their children and grandchildren, and so they should be. They know what is like to work and to save. They see their young children and grandchildren unable to get decent-paying jobs for years and years. They see their young children ending up with huge educational debt.
Now they are being told, “By the way, you are going to have to work longer.” I have heard my colleagues say it does not mean people have to work longer; they are just not going to get OAS, but unfortunately, not everybody is independently wealthy, as some of my colleagues may be, and these people actually rely on OAS. The people who rely on OAS are the ones who are the most vulnerable in our society. If we had a mandatory state-run pension fund, there would not be a need for OAS. Even when OAS was implemented, it was done to lift seniors out of poverty.
It is also hypocritical. There are MPs sitting in the House who we know are going to be drawing fairly good pensions. I absolutely believe MPs, like other Canadians, should get pensions, but surely it is a bit hypocritical of us to sit in this hallowed House and start attacking other people's pensions when we are aware of our own situations. An hon. member who spoke recently is 32 years of age, and after only seven years in Parliament, he is already sitting on an annual pension of $33,000, which he can start collecting at age 55. At the same time, we are telling the most vulnerable citizens, the ones who do not have private pensions or huge investments and dividends, that they now have to work until they are 67. Where is the fairness in that?
Canadians are very fair-minded people, and they are looking at the hypocrisy of this situation. Once again I wonder why the government is moving on this agenda at this time. I believe it is ideologically driven. It is trying to force people to save money. I have constituents in Newton—North Delta who are are in their 40s and 50s and who would love to be able to save for their retirement, but they are working two or three jobs just to make ends meet for their everyday household expenses and to put their children through school. This is going to have an impact on people who have not been privileged to work in steady jobs or have pensions from work-related sources. We are talking about hundreds and thousands of Canadians who do not have access to those kinds of pension plans. The government is punishing those who are already disadvantaged. It is punishing hard-working Canadians.
I met with a young woman in my office the other day. I say “young”; she was in her 50s, but to me, at this stage, 50 is very young. She was telling me how she is a single mom of three. She has two children in university and is able to work two jobs full time because of the way she divides up her week, but she said she still hopes she can find something more. I had to ask her how she could do this. That is when she burst into tears and said she now also has the government telling her she cannot retire at age 65 and has to work until she is 67. She said, “I do not think I can last until I am 60. I am exhausted.”
We also have to think about all the people who have disabilities. What are we going to be saying to them? As it stands now, at the age of 65, they get to switch over to OAS. That is what happens. Now we are telling them they are going to get nothing at that stage. If they get something, then we will be downloading more costs onto the provinces. One of the basic principles Canadians value is that we look after each other. Surely we want to be judged as a society by how well we look after our young, our sick, our disadvantaged and our seniors.
Mrs. Stella Ambler (Mississauga South, CPC):
Mr. Speaker, I rise in the House today to promote the reasonable and necessary action our government is taking to ensure a sustainable old age security program. We are making these changes to give Canadians certainty in their retirement planning by ensuring this cherished social program will be there for future generations.
I will be sharing my time today with the hon. member for Calgary Northeast.
To begin, let me answer the question the opposition members still do not seem to understand: why are changes to the OAS program necessary? The answer is quite simple: these changes are being made to ensure the sustainability of the OAS program. If we do nothing, the costs of the OAS program are projected to rise dramatically, from approximately $38 billion now to $108 billion in 2030. How do we know this will happen? Canadians are living longer and healthier lives.
In 1970, life expectancy was 69 years for men and 76 years for women. Today, some 40 years later, it is 79 years for men and 83 years for women. What is more, the oldest members of the baby boomer generation, the largest in history, turned 65 last year. The impact of these boomers' retiring over the next two decades, combined with the increase in life expectancy of Canadians, will result in twice the number of seniors in Canada.
The OAS program is the Government of Canada's single largest program. Financed from general government revenues, OAS provides benefits to most Canadians 65 years of age and over.
The maximum annual OAS pension currently stands at $6,481, and it is adjusted on a quarterly basis, based on increases to the consumer price index. Additional support for low-income seniors is provided through the guaranteed income supplement, or GIS, which has a maximum annual benefit of $8,788 for single seniors and $11,654 for senior couples. Low-income spouses or common-law partners of GIS recipients and low-income survivors may also receive support through the allowance and the allowance for the survivor programs.
To provide some idea of the program's scope, 4.9 million individuals are currently receiving benefits. This will double to over nine million by 2030.
Let us look beyond the program's vital statistics to examine its past and where it is going.
The old age security program was established at a time when Canadians were not living the long, healthy lives they are now living. Projections show that the cost of the program will grow from $36 billion in 2010 to $108 billion in 2030. That same period will see the number of working-age Canadians per senior fall from 4:1 today to 2:1 in 2030. This compares to the 1990 ratio of five working-age Canadians per senior. That is quite a shift.
OAS is the largest single program of the Government of Canada, and it is funded 100% by annual tax revenues. Let me clear on this point. The benefits that were paid out this year to our deserving seniors came exclusively from the taxes that were collected this year. This is why the ratio of workers to retirees is critical to understanding why we must act now to ensure the sustainability of this program.
Today we spend 13¢ of every federal tax dollar on the old age security program. If we do not make changes now, in about 20 years that share will grow to 21¢ on every federal tax dollar spent. That is exactly why the changes announced in budget 2012 are necessary: to ensure that the OAS program remains on a sustainable path. These modifications will ensure that the OAS program remains strong and is there for future generations, as it is for seniors who currently receive these benefits.
What will this mean for Canadians? First and foremost there will be no reductions to seniors who are already collecting OAS benefits. These changes will not begin for another 11 years. Starting on April 1, 2023, the age of eligibility for OAS and GIS will gradually increase from 65 to 67, with full implementation by January 2029. Anyone who is 54 years of age or older as of March 31, 2012, will not be affected.
In line with the increase in age for OAS and GIS eligibility, the ages at which the allowance and allowance for survivors are provided will also gradually increase from 60 to 64 today, to 62 to 66 starting in April 2023. Regarding the allowance and the allowance for survivors, anyone who is 49 years of age or older as of March 31, 2012 will not be affected.
Let me stress again that this will occur in 2023, 11 years from now. The 11-year advance notification and the subsequent 6-year phase-in period will allow more than ample time for those affected by these changes to make the necessary adjustments to their retirement plans.
The government will ensure that certain federal programs which are currently providing income support benefits until 65 are aligned with the changes to the OAS program. We are taking this step to make sure that individuals receiving benefits from these programs do not face a gap in income at the ages of 65 and 66.
We are also examining the impact of the OAS program changes on CPP disability and survivor benefits.
We have also committed to reimbursing the provinces for the net cost of raising the OAS eligibility so that there will be no additional cost borne by the provinces. This is in stark contrast to the previous Liberal government, which changed many programs and left the provinces to pick up the tab.
I would like to take a moment to focus on some of the great OAS program modifications announced in budget 2012 which have received far less attention so far.
To improve flexibility and choice in the OAS program for those wishing to work until later in life, the government will allow for the voluntary deferral of the OAS pension for up to five years starting on July 1, 2013.
We should think about the people I spoke of earlier, those who are enjoying longer, healthier lives and who may be considering extending their careers. This is a trend we are already seeing when it comes to the average age of retirement. This measure will give these individuals the option of deferring their OAS pension to a later time, and as a result, they will receive a higher monthly amount. However, I should add that GIS benefits which provide additional support to the lowest income seniors will not be adjusted.
The details of these actions are spelled out in the jobs, growth and long-term prosperity bill which was introduced this morning and will implement various provisions of the budget.
Our government will also be improving services for seniors by putting in place a proactive enrolment effort that will eliminate the need for many seniors to apply for their OAS benefits. This measure will reduce the burden on many seniors of completing applications for benefits for which the government knows they have qualified.
As an added bonus, this automatic process will reduce the government's administrative costs, which I would observe is what sets our deficit reduction strategy apart from our predecessor's in that we are improving services to Canadians while reducing the cost of administration. Proactive enrolment will begin next year and will be fully implemented by 2016.
In summary, it is the responsibility of the federal government to think of the future and to act in the long-term interests of all Canadians. Sadly, the opposition has refused to acknowledge the realities of our aging population in order to play political games.
Private sector economists, financial institutions and former Bank of Canada governors have confirmed that we must act now to make the OAS program sustainable. That is exactly why I cannot support the opposition's motion.
Mr. Devinder Shory (Calgary Northeast, CPC):
Mr. Speaker, I appreciate the opportunity to debate the motion on old age security moved by the member for London—Fanshawe. I would like to begin with a quote from the hon. member whose motion we are debating today:
|| 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 am pleased that she understands why the government needed to act in a reasonable and forward-thinking way to secure the financial future of our seniors. However, I must admit I am a little puzzled, given the text of this motion, as I can only assume from her enlightened comment that she will be supporting this government's plan to “deal with this dramatic shift in our country's demographics”. Again, those are the words of my hon. colleague who moved this motion.
It is for this reason that on March 29 in the economic action plan 2012, the Government of Canada took the first necessary steps to ensure the OAS program remains sustainable for generations to come. The demographic challenge we are facing will leave Canada with the lowest ratio of working-age Canadians to seniors in our nation's history. Our reasonable changes will not reduce a single penny from any senior's pension. The age of eligibility for OAS will gradually increase from 65 to 67 years starting in 2023 and will be fully implemented in 2029.
People who are close to retirement, that is, people 54 years of age and older as of March 31 of this year, will not be affected by this policy change. We are providing Canadians with a lengthy period of notice in order to adjust their retirement saving plans. Our changes will ensure OAS is put on a sustainable path so it is there when Canadians need it.
As David Dodge, the former governor of the Bank of Canada and former deputy minister of finance said, “We are at least 15 years late” in dealing with this issue. He said, “it's been well understood for a long period of time”.
The demographic clock is ticking. There is no time to turn a blind eye to this issue. As legislators, it is our duty to look to the future and to take the necessary action now to ensure the long-term prosperity of our great nation.
This is not an issue of how much money will be saved, but rather of how we will ensure the viability of the OAS program in the long term. We want to ensure that these cherished social programs will be there for future generations when they need them most. Thanks to the changes we are proposing, Canadians can have confidence that OAS will continue to be sustainable for generations to come.
The facts on OAS are clear. The number of Canadians over the age of 65 will increase from 4.7 million to 9.3 million over the next 20 years. Consequently, the cost of the OAS program will increase from $36 billion per year in 2010 to $108 billion per year in 2030. OAS is the largest single program of the Government of Canada and it is funded 100% by annual tax revenues.
Let me be clear. The benefits that were paid this year to our deserving seniors came exclusively from the taxes that were collected this year. This is why the ratio of workers to retirees is critical to understanding why we must act now to ensure the sustainability of this program. In 1990, the ratio of working-age Canadians to the number of retired Canadians was roughly 5:1. Today, this ratio has shrunk to 4:1. By 2030 it will be reduced to only 2:1.
If we do not make changes, 21¢ of every tax dollar will be committed to the OAS program by 2030. That is a huge increase from the 13¢ of every tax dollar the program costs today. This would represent about one-fifth of every federal tax dollar to fund a single government program. This increase in cost would have dire effects on other government priorities, such as health, defence and public safety.
The only other option would be to significantly raise taxes, an option that would cripple Canada's international competitiveness and, by extension, our prosperity as a nation. It is our priority to ensure that the Government of Canada continues to have the fiscal room to make the right choices for all Canadians now and in the future. The time for action is now.
All members in this place know that government debt, inaction and complacency can choke an economy. We must not allow ourselves to be forced into a situation where we are faced with a choice between the country's financial security and our commitment to aging Canadians who have worked long and hard to build this great country. Our actions in the past amply demonstrate our commitment to seniors. I will give some examples of what our government has done for seniors.
We increased the guaranteed income supplement, commonly known as the GIS, in 2006 and again in 2007 for a total of 7% over and above regular indexation. In budget 2008, we also increased the GIS earnings exemption from $500 to $3,500 so that GIS recipients who work could keep more of their hard-earned money. Under budget 2011, our government introduced the GIS top-up for those most in need. This represents an increase of $300 million annually.
As of July 2011, seniors who were eligible for GIS received additional annual benefits of up to $600 for single seniors and $840 for couples. This represents the biggest increase in the GIS in 25 years. It is improving the financial security of more than 680,000 low income seniors across Canada.
We also made it easier and more straightforward for older Canadians with low incomes to access the benefits by introducing automatic GIS renewal. All they need to do is file their annual income taxes. We are providing more tax relief for seniors and pensioners, saving them $2.3 billion per year.
The results are clear. The incidents of poverty among seniors in Canada has dropped from a rate of 29.4% in 1978 to 5.2% in 2009, one of the lowest rates of low income amongst OECD countries.
As I have just demonstrated, the Government of Canada is taking concrete steps to help seniors. We are committed to retirement security for Canadians and we have done much more than the previous Liberal government did to reinforce that security over the past few years.
It is precisely because we want to protect the old security program that we are introducing these modest changes. Nearly every OECD country has taken steps to ensure sustainability of their public pension systems, including the United States, Australia, the United Kingdom, France, Germany, Sweden and Japan. We are not alone and we are not waiting to take action.
Unfortunately, all we are seeing is wilful ignorance from the members of the opposition. It is particularly concerning that the Liberals intend to support this motion. It was their own finance minister, Paul Martin, in the mid-1990s who proposed changes to the retirement income system to ensure the long-term sustainability of these benefits. Unfortunately, the Liberals lack the principle to ensure the long-term interest of our seniors and our country. That is why Canadians have rejected their failed approach and elected a strong, stable, national Conservative majority government.
We have a duty to our constituents and our country to rise above petty partisan politics and the short-term mindset of perpetual campaigning. This is why I reject the partisan nature of this motion and will be voting against it.
I urge my colleagues across the way to think beyond their narrow self-interest and do what is best for the long-term prosperity of our nation and to support the government's common sense approach by voting against this motion.
Mr. Claude Gravelle (Nickel Belt, NDP):
Mr. Speaker, I will be sharing my time with my colleague from Saint-Hyacinthe—Bagot.
I am happy to speak today to the New Democratic opposition day motion to have this Parliament oppose the increase in age of eligibility for old age security.
As I travel throughout my riding and speak with constituents, there is no issue that is more important than the matter of income security for our seniors.
A caring society must take care of our seniors.
However, earlier this year, in front of billionaires in Switzerland, the Prime Minister first broke the news that the Conservatives would raise the age when Canadians can retire and receive their old age security from 65 to 67. Predictably, an uproar ensued. Is it any wonder the Prime Minister wanted an ocean between himself and some upset seniors?
Economists have flatly rejected the Conservatives' claim that today's OAS will become unsustainable. At the peak of the baby boom retirement wave, the share of GDP spent on OAS will increase by less than 1% over today's level and then decline again.
What this really is about is priorities. The Prime Minister will ask Canadians to work two more years without OAS to pay for his skewed Conservative priorities, including the failed F-35 fighter jets, his costly prison agenda and more corporate tax giveaways.
The Conservatives are playing with numbers and manufacturing a crisis. The stated rationale is that the change would put the OAS program on a sustainable path. The Conservatives are using a temporary increase in OAS and GIS costs as an excuse for permanently cutting back on a remarkably effective and affordable social program.
The independent Parliamentary Budget Officer says that Canada can afford to let its seniors retire at 65 with the country's old age security pension intact.
While old age security and guaranteed annual income expenditures will grow with more seniors, so, too, do government revenues. By 2030, the size of the economy will be more than double and budgetary revenues will double. The burden goes up and then goes down, so there is no crisis.
Do members know who is really concerned about these changes besides our seniors? Younger families are concerned. The Prime Minister is asking future generations to bear the weight of his upside down priorities.
We need to remember that the OAS is part of our heritage and it is sustainable.
The NDP has long championed public pensions. Founding members of the CCF, which later became the NDP, J.S. Woodsworth and Abraham Heaps, pressured the Liberal government of the day to introduce Canada's first public old age pension in 1927. Since then, we have pushed to make these plans more effective, as well as being instrumental in the introduction of the GIS and the CPP. The Canada pension plan is in good shape. Not only can we look after our seniors, we must.
The NDP wants to expand the CPP through an increase in premiums and raise the guaranteed income supplement for seniors living in poverty. We need to remember that the age of eligibility is an important tool to prevent poverty among the most vulnerable seniors, including many with disabilities. It means that 50,000 social assistance recipients would be forced to live in poverty for two more years if the age requirement were changed. The lost income to Canadian seniors from this change will be significant. It will mean a loss of roughly $30,000 to the poorest seniors over these two years and roughly $13,000 over these two years for Canadians who only receive OAS.
Currently there are nearly five million seniors collecting OAS and 1.7 million seniors collecting GIS. One in three Canadian seniors already receives the GIS.
I have spoken to the residents of a number of communities in the Nickel Belt riding. Their main concern, no matter what their age, was retirement security and pensions.
After three years of economic turmoil, the Conservative government increased the amount of old age security benefits by a measly $1.50 a year, despite the fact that 225,000 seniors live below the poverty line. The cost of living is rising and bills are piling up. Now that they are being forced to pay HST on heating oil, many seniors are no longer able to make ends meet.
The Prime Minister's plan is not only inappropriate, it is insulting. It is our seniors who, through their hard work, made Canada a wonderful country. They deserve to live with dignity. We can take care of our seniors and put measures in place for future retirees. There are solutions, but the Conservatives do not have the political will to implement them.
I am very concerned about the problems that seniors are facing, whether it be with regard to retirement security or access to home care or health care. I am determined to put forward concrete, practical and achievable solutions because our seniors deserve nothing less.
Let us be clear about the OAS and its importance to Canadians. Unlike the CPP or private savings, the OAS is a universal pension that does not depend on a retiree's previous labour market participation or participation in a registered pension or savings plan. In the words of the Canadian Centre for Police Alternatives, the OAS and GIS are the basic building blocks of the public universal system, which makes up the anti-poverty part of the system.
This delay in receiving OAS until age 67 will not only increase poverty in general, but will be particularly felt by senior women, especially those who are alone. Many senior women were not part of the paid labour force earlier in their lives. 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. New Democrats will not support the Conservatives' mismanagement of the economy, which will end up harming seniors. The eligibility age for OAS and GIS should be kept at age 65.
The OAS and GIS are quite sustainable and are actually projected to decrease in cost relative to the size of the economy in the long run. During the last election campaign, the Prime Minister hid his plans to cut support for seniors; however, the NDP has always been clear. We want to improve retirement pensions, not weaken them.
The NDP has met with seniors' groups to talk about the effects that this measure will have on seniors and to discuss ways to oppose the Conservatives' ill-considered cuts. The best option for Canadians would be to enhance the CPP, as the NDP has been saying for a long time. A modest increase in premiums would make it possible to fund the NDP's project, which involves doubling CPP benefits for all Canadian workers. This would provide real and sustainable retirement security for Canadians.
What is the agenda of the Conservatives? Why was this policy announced in Europe and not in the 2011 election campaign?
The Conservative 2011 election platform stated, “We will not cut transfer payments to individuals or to the provinces for essential things like health care, education and pensions”. On June 7, 2011, the Prime Minister stood in the House and said, “This government has been very clear. We will not cut pensions”. So much for the promise of the Conservatives. Not campaigning on this crucial issue is simply unacceptable, but the Conservatives not only hid their agenda, they misled Canadians by repeatedly claiming they would not cut pensions.
The real issue is whether, as a society, we care for our seniors. New Democrats believe this is a priority for Canada.
Ms. Marie-Claude Morin (Saint-Hyacinthe—Bagot, NDP):
Mr. Speaker, it is with regret and a lot of bitterness that I rise today to denounce the Conservatives' plan to increase the eligibility age for old age security and the guaranteed income supplement from 65 to 67 years of age, even though the plan is financially viable.
I said that I am rising with regret because, just like us, the majority of Canadians believe that the Conservatives should never have started this debate. On March 29, when the 2012 budget was tabled, the government sparked shockwaves among the elderly and Canadian workers; yes, shockwaves, nothing less.
The Conservatives are using a temporary rise in the cost of the old age security and guaranteed income supplement programs as an excuse to make cutbacks in this remarkably effective, affordable, and essential social program.
The Conservatives’ plan is to gradually increase the eligibility age from 65 to 67 from 2023. The measure will be fully implemented by January 2029. Thus, on March 29, as they watched this government deliver an irresponsible budget, Canadians aged 54 and under learned that, after having worked for several decades for the benefit of our country, they will have to wait two long years more before being able to think about a well deserved retirement.
The NDP has been standing up for these public pension plans for a long time. Early last century the CCF, the NDP's predecessor, put ongoing pressure on all governments of the day and got them to introduce the very first public old age pension plan in Canada in 1927. Since that time, we have fought tirelessly to make this plan more effective, and we played a key role in getting the guaranteed income supplement and the Canada pension plan adopted.
Currently, old age security and the guaranteed income supplement are major sources of income for the elderly, especially women. Approximately 5 million seniors receive old age security benefits and 1.7 million seniors receive the guaranteed income supplement. For approximately 510,000 seniors, that is 12% of Canada’s elderly, the old age security and guaranteed income supplement benefits account for over 75% of their total income. Imagine if you were suddenly deprived of 75% of your income; I do not know how you would get by.
Women account for 80% of the people who derive over 75% of their total income from the old age security and guaranteed income supplement programs.
If they did not have access to old age security benefits and the guaranteed income supplement, approximately 100,000 newly-retired Canadian seniors would slip below the poverty line. The poverty rate for seniors would more than quadruple, increasing from 6% to 25%.
Is that really what the Conservatives want for our seniors? Is that how they reward the people who built our nation? I would really like to know. That is not what Canadians want and it is not what we are all about. The men and women of this country want their seniors to have decent living conditions.
That is not a priority for the Conservatives. They prefer to increase the eligibility age for old age security and the guaranteed income supplement by two years and erode the living conditions of our seniors.
Therefore, we must ask the following questions: how will 65-year-olds survive in 2029? Why are the Conservatives increasing the age of eligibility? According to their arguments, the increase will make the old age security program sustainable. However, that is false.
Old age security and the guaranteed income supplement are very viable. In fact, it is expected that the cost of these programs will diminish in the long term relative to the size of the economy.
Professor Thomas Klassen of York University is an expert in pension plans and retirement. He is one of the many experts who do not agree with the change in the eligibility age. He said, “I haven’t heard any academic argue that there’s a crisis with OAS, which is why I was surprised a few days ago when the Prime Minister seemed to say there was a crisis...there’s got to be a lot more evidence that there’s a problem, and I don’t see that evidence.”
Let us talk about the evidence. The government's most recent actuarial report indicates that old age security and the guaranteed income supplement represented 2.7% of GDP in 2011. By 2030 it will be 3.16%, but then it will fall to 2.3% of GDP in 2060, which is below the current percentage.
The gradual increase in the costs of the old age security and guaranteed income supplement programs until 2030 is due to the baby boomers retiring. We all know this; it is no surprise to anyone. All of the actuarial reports on old age security and the guaranteed income supplement have been saying it since 1988. I was three years old; that is a long time ago. Some of my colleagues here were not even born yet.
The Conservatives therefore cannot claim not to have been aware of these rising costs during the 2011 election campaign. That was one year ago.
The Conservatives, moreover, never addressed that subject during the election campaign. No Conservative candidate ever said anything about wanting to make seniors work two more years in order to survive. Yes, that is what I said: to survive.
The loss of income resulting from the Conservatives’ plan to raise the eligibility age will be a deciding factor in how Canadian seniors are to live. It will result in losses of about $30,000 a year for the poorest seniors over those two years, and about $13,000 over two years for Canadians who receive only old age security.
The Conservatives do not think this is a problem, because they think Canadians just have to work longer.
Some workers are physically unable to continue working after a certain age.
Twenty-five percent of retired people say they retired for health reasons. For Canadians with an annual income under $20,000, that proportion rises to 38%.
That means that about 25% of seniors retire involuntarily. Those Canadians are quite simply not able to work two more years.
What the government is telling us with this insane plan is that the poorest and most vulnerable Canadians will have to work longer than the others, in spite of their health problems or their physical condition.
A few days before the budget that sealed the fate of workers under the age of 54 was tabled, I held a public forum in my riding on the old age security and guaranteed income supplement programs with my colleagues, the members for Pierrefonds—Dollard and Marc-Aurèle-Fortin, who at that time were the critics for seniors and pensions. I met with more than 70 worried people, very worried people. They included young and not-so-young people, all of them upset about what the Conservatives intend to do. At that point, however, there was still hope.
In my riding, Saint-Hyacinthe—Bagot, there are a lot of jobs in agriculture and industry. Those jobs are physically very demanding. We cannot ask workers who are 65 years old, who have worked at physically demanding jobs all their lives, to keep working two years longer before they are eligible for a program they are entitled to and have contributed to all their lives.
One person especially touched me when he told me how sometimes it was not the will to work that was missing, it was the body that had limitations. That man and all the people who were there said they believed that other solutions could have been considered, so as not to keep creating a gulf between rich and poor, as the Conservatives are so fond of doing.
Those people, like the financial experts, are asking the Conservatives to rethink their position on raising the age of eligibility.
But the Conservatives do not listen to advice they do not like, and they do not listen to Canadians.
That is why the NDP will continue to stand up so that Canadians of all ages—and yes, I am saying all ages—can live with dignity.