Among the allegedly transformational, nation-building initiatives stuffed into the 493 pages of Finance Minister Fran\u00e7ois-Philippe Champagne\u2019s first budget, there was one substantial alteration that was notable by its absence.<\/p>\n
Messing with Old Age Security was too much for Prime Minister Mark Carney\u2019s eager-beaver reformers to contemplate. Perhaps they did contemplate it. But if so\u00a0they 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.<\/p>\n
As a life-long boomer, no one has to convince me that ours is a generation that\u2019s 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.<\/p>\n
Of all the programs launched for ourselves, Old Age Security is among the most costly and by far the easiest to obtain. If you\u2019re 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\u2019re 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.<\/p>\n
While no one\u2019s 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\u2019s definitely pricey.<\/p>\n
There have been suggestions<\/a> that the outlay is unreasonable and OAS should be reformed. Paul Kershaw, a professor at the University of British Columbia who heads a \u201cgenerational fairness group\u201d argues that payments should be clawed<\/a> back at much lower levels. OAS, \u201ccosts $42 billion more than a decade ago and adds more to red ink than child care, than PharmaCare, than dental care, or defence,\u201d he says.\u00a0<\/p>\n It\u2019s worth noting that two of the programs he mentions \u2014 pharmacare and dental care \u2014 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.<\/p>\n But let\u2019s be clear about the program. It\u2019s not handing billions of dollars to fatcats, as headline writers like to suggest. Edward Rogers won\u2019t be lining his accounts with OAS cheques, because he\u2019s way past the clawback point. Mark Carney won\u2019t get a cent, not just because he\u2019s sufficiently wealthy but because he spent years working outside Canada as a finance executive and head of Britain\u2019s 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.)<\/p>\n 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\u2019s 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\u2019s 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\u2019d face a substantial clawback. Same goes if either spent part of their adulthood outside the country.\u00a0<\/p>\n 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 \u201ccouple\u201d 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\u2019re 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?\u00a0<\/p>\n Retiring on $91,000 isn\u2019t at all bad. You won\u2019t find yourself sunning on a yacht with Justin and Katy, but it\u2019s 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.<\/p>\n Who hits that mark, especially if it comes from a pension? Anyone familiar with Ontario\u2019s Sunshine List<\/a> 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 \u2026 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 \u201cB.\u201d And that\u2019s just Ontario\u2019s share of the public purse, never mind the 440,000 earners on the federal payroll, which ballooned about 40 per cent since 2015.<\/p>\n 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 \u2014 meaning you know what you\u2019ll be getting no matter what happens to the stock market or the economy, possibly indexed to inflation \u2014 against just 40 per cent of private sector plans.<\/p>\n What all this points to is that retirees who find themselves earning enough to qualify for a full OAS payment didn\u2019t 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\u2019re lucky they have a generous, defined-benefit, inflation-adjusted pension, which means they probably spent their working lives in the public service.\u00a0<\/p>\n Champagne sent<\/a> a jolt through union leaders with his determination to reduce the size of that public payroll \u201cto get back to something more sustainable.\u201d<\/p>\n \u201cSustainable\u201d means something different than past decades of exuberant federal spending. It doesn\u2019t 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.\u00a0<\/p>\n The simplest approach would be\u00a0to gradually raise the age of eligibility, as Stephen Harper did<\/a> in 2012. The reforms<\/a> 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.\u00a0Unfortunately, the Trudeau Liberals cynically reversed it.\u00a0<\/p>\n It may be that this Liberal version takes another whack at it somewhere down the road. But please don\u2019t pretend it\u2019s 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.<\/p>\n National Post<\/p>\n","protected":false},"excerpt":{"rendered":"Among the allegedly transformational, nation-building initiatives stuffed into the 493 pages of Finance Minister Fran\u00e7ois-Philippe Champagne\u2019s first budget,…\n","protected":false},"author":2,"featured_media":128526,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[114,268,27178,85,46,34918,22460,266,267,80797],"class_list":["post-128525","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-finance","tag-government-of-canada","tag-il","tag-israel","tag-mark-carney","tag-oas","tag-personal-finance","tag-personalfinance","tag-substantial-alteration"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/128525","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=128525"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/128525\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/128526"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=128525"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=128525"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=128525"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}