In the 1990s, then-prime minister Jean Chrétien and finance minister Paul Martin sought to ‘restructure’ Canada’s public pension system. In part they were proposing that Old Age Security (OAS) and the Guaranteed Income Supplement be folded into a new package called the Seniors’ Benefit. The restructuring would have cut the retirement benefits of individual seniors by thousands of dollars a year and created more poverty among the elderly. The Council of Canadians launched a massive three-year campaign against the restructuring – which included a petition that drew half a million signatures – and won.
In recent days, prime minister Stephen Harper was at the exclusive gathering of the world’s corporate elite in Davos, Switzerland making the case that, “We’ve already taken steps to limit the growth of our health-care spending. …We must do the same for our retirement-income system.” The argument is that the cost of the OAS will rise from $36 billion a year to $108 billion a year by 2030. So just as Harper intends to cut $31 billion from federal transfers to the provinces for health care over the next ten years or so, he is signalling that it is on his agenda to take billions more from public pensions.
How would this be done? The Canadian Press has reported, “Although he was not specific, speculation had been building for weeks that Ottawa would increase the age of eligibility for Old Age Security by two years to 67 and that the measure would form part of the upcoming budget.” Why is the pension crisis argument so weak? The OAS as a slice of Canada’s gross domestic product is tiny. Despite the dollar amounts used, the cost will only increase from the current 1.8 per cent to 2.5 per cent of the GDP in 2030. What would the impact be? Andrew Jackson of the Canadian Labour Congress says, “Raising the retirement age will cut a basic building block of retirement security, the OAS pension of $540.12 per month which now goes out to 4.9 million Canadians aged over 65. Receiving OAS also makes seniors eligible for the GIS top up, which provides one in three seniors with a supplement which ensures they have a minimally adequate income in old age.”
It could be that the ideological Harper will push for the pension cuts while he can. Globe and Mail columnist John Ibbitson writes, “Simply put, the Prime Minister, who has never had the luxury of a majority government before, has a year and a half left to be bold before the ticking of the election clock drowns out everything else.” Or as rabble.ca columnist Duncan Cameron writes, “By floating the cut-the-old-age-pensions balloon he wants to soften public opinion up for the budgetary cuts to public services, public servants, and, Ottawa, the national capital.”
Either way, the Council of Canadians is prepared to stand with others in civil society, notably the Canadian Association of Retired Persons, the Canadian Labour Congress, and the Canadian Centre for Policy Alternatives, to stop Harper’s callous pledge in Davos to “limit” spending on “our retirement-income system”.
