Among the allegedly transformational, nation-building initiatives stuffed into the 493 pages of Finance Minister François-Philippe Champagne’s first budget, there was one substantial alteration that was notable by its absence.

Messing with Old Age Security was too much for Prime Minister Mark Carney’s eager-beaver reformers to contemplate. Perhaps they did contemplate it. But if so they backed off. Carney may be set on reshaping, reviving and reinvigorating Canada in a changing world, but some steps remain just too much to contemplate.

As a life-long boomer, no one has to convince me that ours is a generation that’s done more to feather its own nest than perhaps any other in history. The welfare state was built on an ever-expanding mountain of debt that is now choking the ability to deliver similar opportunity to later generations.

Of all the programs launched for ourselves, Old Age Security is among the most costly and by far the easiest to obtain. If you’re 65 and over and lived part of your life in Canada, you probably qualify. The maximum current payout is about $8,900, rising to $9,800 if you’re 75 and over. The less time you spent within Canadian borders, the less you get. Anyone with an income above $91,000 has their payments reduced.

While no one’s going to get rich off OAS, the cost to the Treasury adds up, given the expanding population and increase in seniors. A 2020 report based on 2018 data estimated annual expenditures would increase from $46 billion in 2020 to $94 billion in 2035, and $195 billion by 2060. So it’s definitely pricey.

There have been suggestions that the outlay is unreasonable and OAS should be reformed. Paul Kershaw, a professor at the University of British Columbia who heads a “generational fairness group” argues that payments should be clawed back at much lower levels. OAS, “costs $42 billion more than a decade ago and adds more to red ink than child care, than PharmaCare, than dental care, or defence,” he says. 

It’s worth noting that two of the programs he mentions — pharmacare and dental care — were added by the Trudeau government well after the budget had already swollen into the stratosphere. Of the remaining two, child care was hiked dramatically and defence is about to join it. But never mind. OAS is unquestionably a big expense and Ottawa absolutely has to get a handle on spending.

But let’s be clear about the program. It’s not handing billions of dollars to fatcats, as headline writers like to suggest. Edward Rogers won’t be lining his accounts with OAS cheques, because he’s way past the clawback point. Mark Carney won’t get a cent, not just because he’s sufficiently wealthy but because he spent years working outside Canada as a finance executive and head of Britain’s central bank. (As an old goat, yours truly gets OAS, though far below the max, and for the same reason: too long working outside the country.)

Perhaps the most disingenuous figure used in assailing OAS is that a couple earning up to $181,000 can still get paid the maximum. It’s true, but misleading. OAS pays the individual; if a retired couple happens to include two people with incomes just below the $91,000 clawback level, they might both qualify for full benefits, but it’s fair to imagine that the number of senior couples precisely hitting that magic number is limited. Both would have to have spent their entire adult lives in Canada, both would have to have the resources to earn $91,000 in retirement, and no more. If one earned $150,000 and the other $30,000, they’d face a substantial clawback. Same goes if either spent part of their adulthood outside the country. 

Fixing the cap at a lower level per household would change the plan from one based on individuals to one based on couples. Your guess on what constitutes a “couple” these days is as good as mine. Do they have to be married? What sort of marriages count? Can they be long-term cohabitants, friends with benefits, a same-gender couple living together even if they’re not gay or any combination of 2SLGBTQI+++? Should marriage only be penalized once you pass age 65, or should we start earlier across all programs? 

Retiring on $91,000 isn’t at all bad. You won’t find yourself sunning on a yacht with Justin and Katy, but it’s not nothing. Still, a significant number of Canadians lucky enough to have that level of security got there by spending their working lives being careful with money and responsible about spending.

Who hits that mark, especially if it comes from a pension? Anyone familiar with Ontario’s Sunshine List knows at least part of the answer. Everyone on the public payroll making $100,000 or more appears on the list, which last year had 18,884 pages of names. Cops, teachers, firefighters, profs, administrators, health workers, school board staff … the first 560 pages on the 2024 list were devoted solely to colleges. Next up were Crown Agencies, which filled another 930 pages. Government of Ontario workers had 150 pages dedicated solely to names beginning with “B.” And that’s just Ontario’s share of the public purse, never mind the 440,000 earners on the federal payroll, which ballooned about 40 per cent since 2015.

You get the idea. According to Benefits Canada, 87 per cent of public employees enjoy a registered pension plan, compared to 22 per cent in the private sector. More than 90 per cent of public sector plans provide a defined benefit — meaning you know what you’ll be getting no matter what happens to the stock market or the economy, possibly indexed to inflation — against just 40 per cent of private sector plans.

What all this points to is that retirees who find themselves earning enough to qualify for a full OAS payment didn’t get there because daddy left them a gold mine or a vast investment portfolio. They spent 40 years being responsible. They made their CPP payments. They put some money into RRSPs (and are now paying tax when they take the money out). If they’re lucky they have a generous, defined-benefit, inflation-adjusted pension, which means they probably spent their working lives in the public service. 

Champagne sent a jolt through union leaders with his determination to reduce the size of that public payroll “to get back to something more sustainable.”

“Sustainable” means something different than past decades of exuberant federal spending. It doesn’t mean shifting money from OAS to some other program, which just transfers debt from one place to another, doing nothing to alleviate the budget issues that make reform a necessity. 

The simplest approach would be to gradually raise the age of eligibility, as Stephen Harper did in 2012. The reforms were to be phased in over a six-year period starting in 2023. Canadians would have had a decade to prepare for the change, and then seen a gradual introduction. It was a bold move and the benefits would now be kicking in. Unfortunately, the Trudeau Liberals cynically reversed it. 

It may be that this Liberal version takes another whack at it somewhere down the road. But please don’t pretend it’s anything other than a painful retreat affecting a lot of ordinary people who worked at ordinary jobs, forced on Ottawa by too many years of reckless spending and irresponsible politics.

National Post