In Debate: Challenging the Conservative Changes to OAS
April 30th, 2012 - 4:06pm
Ms. Irene Mathyssen (London—Fanshawe, NDP):
Mr. Speaker, I asked for this late show to follow up with the minister regarding the question I asked in the House about old age security. The minister quoted from a speech I made in which I said that we need a plan in place and we need the structures in place to deal with this dramatic shift in our country's demographics. The minister said that she agreed with me. If she does indeed agree, I would encourage her to continue to convince the government to reverse its decision to change the age of retirement from 65 to 67.
As I have already said, we need a plan in place to ensure there is adequate investment in the security of seniors, because there will indeed be more seniors. To prevent poverty and ensure dignity in retirement, we need to make investments and budgetary decisions now that will properly support our aging population.
Big business tax breaks, jails for unreported crimes and fighter jets costing billions do not meet the needs of Canadians as they look ahead to retirement. These are not the smart investments that will maintain our social safety net.
Old age security is sustainable. We can afford it. The Parliamentary Budget Officer has made it clear time and time again that no changes are needed. Because of the government's wrong-headed decisions, it is seniors who will suffer in the future.
A report just released by the NDP found that OAS and GIS make up more than half the income for about 1.2 million seniors, or 28%. For females, it is about 38% who get more than half of their income from OAS and GIS. For 510,000 seniors, or 12% of Canada's seniors, OAS and GIS make up more than 75% of their income. These are all individuals with incomes under $20,000.
Females make up 80% of those for whom OAS and GIS make up 75% or more of income. Of those for whom OAS and GIS make up 75% or more of income, 89% do not have an employer pension. Right now about 34,000 persons who are 66 or 67 are currently poor; without their OAS and GIS, about 129,000, or 95,000 more, will be poor. Without OAS and GIS, the poverty rate for these seniors increases from about 6% to 25%. The loss of OAS and GIS for senior households who have someone aged 66 or 67 would increase their poverty rate to nearly 40% in Atlantic Canada and to 50% for single females.
Surveys of recent retirees suggest that many seniors are not in a position to simply work two more years in response to changes to old age security. This population is unable to work for two more years.
I would say that any plan to change OAS is absolutely unacceptable. The government needs to take poor seniors into account when it does its budgeting, but it has not done so. This country cannot afford to make changes to the OAS and leave more and more seniors living in poverty.
Ms. Candice Hoeppner (Parliamentary Secretary to the Minister of Public Safety, CPC):
Mr. Speaker, I am pleased that the member opposite, even in her own words, understands that the government needs to act in a responsible and forward way to secure the financial future of seniors. It is disappointing that the NDP appeared to either not understand the situation with OAS or refused to acknowledge it.
The fact is that Canadians are living longer, healthier lives than past generations and we will be relying on retirement income for longer periods of time. As David Dodge, who is the former governor of the Bank of Canada and deputy minister of finance said, we need to address the fiscal problem of old age security. He also said that denying it would not make the problem go away. He said that we are “15 years late in getting started...and, because labour participation rates will start to fall later this decade, we're up against the wall”. We need to ensure that our retirement income system can adjust to this trend and stay strong and sustainable for generations to come, and that changing demographics do not affect the affordability of the OAS program.
As I said earlier, 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. This is a situation that must be addressed and it takes government leadership to do that. Again, it is disappointing that the NDP members do not acknowledge this.
Right now there are four working-age Canadians to every senior and by 2030 this will shrink to two. This is the issue. If we were going to ignore the coming demographic changes, we would simply be passing the buck to a future Parliament and to future generations, including our children. The choice would be to raise taxes to such an extent that they would cripple our economy or parliamentarians would be forced to do the unthinkable and examine the very sustainability of this program. We refuse to allow this to happen. We will make the common sense changes now, with a lengthy notice period, to ensure the sustainability of this program.
I will clarify once again that no current seniors will lose a penny because of these changes. The gradual increase to qualify for OAS from 65 years of age to 67 will begin in 2023 and finish by 2029. This is over 11 years away. The opposition should stop playing politics, stop fear-mongering and support our common sense changes to ensure the very sustainability of this very cherished social benefit.
Ms. Irene Mathyssen:
Mr. Speaker, this has nothing to do with common sense. This is about undermining our social safety net. This is about pitting one generation against another. Yes, there will be more seniors. We have known that for 40 years. What has been done? Nothing. The Conservatives have undermined health care, affordable housing and now they are undermining the old age security system.
The Parliamentary Budget Officer made it very clear. Yes, it will cost more but as we have an increased number of seniors we will also see an increase in our gross domestic product. Right now it costs 2.3% of GDP to support seniors. By 2030, it will be 3.3%, about the same as in the 1990s. By 2030, it will begin to decline right back down to where it is now, with a further decline to 1.4%.
This has nothing to do with supporting seniors of the future. It has everything to do with the fact that the government does not believe in being government, it does not believe in our social safety net and it does not believe in Canadians.