Hot! Stephen Harper’s scary scenario about Old Age Security is wildly overblown, budget watchdog argues

TheStar.com – opinion/editorials
Published On Sat Feb 11 2012.   Editorial

Can Prime Minister Stephen Harper’s Conservative government be trusted to do what’s right for the country, as it prepares to tackle the federal deficit? Given the uproar in Parliament over proposed cuts to Old Age Security, we’re not so sure.

Harper and his ministers have fanned fears about the “crisis” that they say looms for OAS, the program that pays Canadians age 65 and over up to $540 a month. It’s a key element in our retirement safety net. The Conservatives argue that OAS will become “unsustainable” as more people age. So benefits will have to be cut back for future recipients, if not for current retirees or those close to it.

But a report this past week by Parliament’s budget watchdog, Kevin Page, has shredded the government’s credibility on this issue. After parsing the numbers, Page concluded that the crisis is a manufactured one. “You cannot argue the government has a fiscal sustainability problem,” he says.

That gives credence to interim Liberal leader Bob Rae’s charge that the Tories are practising “the politics of deceit and abandonment.” And Liberal MP Judy Sgro’s taunt that they have “caviar tastes when it comes to jets and jails, but a baloney budget when it comes to seniors.”

The Conservatives richly deserve this blowback. Officials have been stoking fears by throwing around numbers designed to scare. They point out that OAS costs will triple to $108 billion by 2030, from $36 billion now, as the number of seniors grows. That puts the retirement benefits of future Canadians “at risk,” they say.

What to do? There’s talk of hiking the OAS eligibility age to, say, 67 from 65. Ottawa could also claw back more benefits from better-off retirees. Or partially de-index benefits that now rise to offset inflation. And the pain may not end there. Making seniors wait until 67 for OAS could mean that the very poorest would have to wait longer to get the Guaranteed Income Supplement, a linked benefit. The cost of helping these neediest may then fall to the provinces.

Certainly, the Conservatives can’t be faulted for wanting to trim costs. Ottawa does have a $31 billion deficit. But why target less-well-off seniors? And why the scare tactics? What we need, as the Canadian Labour Congress has pointed out, is a rational national debate on pensions and other aspects of retirement security. This isn’t it.

As Page’s report makes clear, Ottawa’s “crisis” scenario ignores the fact that Canada’s economy will grow over the decades, as will federal revenues. The OAS burden will never be as heavy as the government suggests.

Projected across a lifespan of 80 years, elderly benefits that accounted for 14.8 per cent of federal program spending in 2010 will gradually rise to 20.9 per cent in 2030 and then fall back to 14.9 per cent in 2080, Page found. The Tories tried to strengthen their case by drawing attention to the 10-year stretch when costs will be highest. But even for those worst years, the cost will rise by something like 40 per cent, not by 300 per cent as they imply.

This jiggery-pokery is unworthy of the Conservatives. Even worse was Finance Minister Jim Flaherty’s reaction to being challenged. He derided Page’s assessment as “unbelievable, unreliable, incredible.” In fact, Page has consistently produced more accurate numbers than the government, on subjects from the cost of our Afghan mission to the size of projected deficits and performance on infrastructure projects. Tellingly, Flaherty didn’t come up with more believable, reliable or credible numbers of his own.

Canadians will want to hear more before they bow to this high-pressure cost-cutting drive.

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