I was reminded this past week of my relative newness as a Member of Parliament. Although it has been almost eight months since being sworn in to serve, I must confess that I have not developed the kind of ‘thick skin’ or ‘water off a duck’s back’ attitude that I witnessed by some of the more experienced politicians, particularly when faced with a controversial issue. After hearing some recent comments made publicly about the OAS and pensions in general I feel compelled to respond. I would like to again clarify that there has been no discussion whatsoever about reducing the OAS benefits to retired seniors. For the record our government has been firm in the commitment to retired seniors that OAS benefits will not be reduced in any way. Likewise our Government has also made the same commitment for those taxpayers who are near retirement. Our Government has further confirmed that no changes to OAS benefits would occur that did not include a substantial notice of change to younger taxpayers.
To be clear, the changes coming to Canadian demographics are not a political issue, they are a reality. Over the next two decades the amount of Canadians over the age of 65 will double. When OAS was first created in 1952 the age eligibility was 70. Interestingly enough the average life expectancy at that time was 66 for men and 71 for women. I expect not many Canadians lived long enough to qualify and likely that was part of why the OAS qualifying age was lowered from 70 to 65 in the year 1965. The good news for Canadians is that today the average life expectancy is 79 for men and 83 for women. This is why today OAS represents annual spending of $ 36 billion and based on the aging of our population is expected to rise to $108 billion in the year 2030. Critics have pointed out that as a percentage of the GDP this represents a spending increase from roughly 4.5% of current GDP to roughly 6.2% in 2060 (depending on what forecast you follow).
That may not in itself seem like a significant increase; however there is another important fact that must also be taken into consideration. In 1975 there was a ratio of 7 working taxpayers for every retired senior. Today that ratio is almost cut in half and has been reduced down to 4 taxpayers per retired senior. More importantly by 2030 that ration will be further reduced down 2 taxpayers per retired senior. If OAS were the only program funded under Canada’s vast social safety net then likely it would be easier to ignore this trend as most critics suggest should be done. However I have also heard from retired teachers and retired members of the British Columbia Government Employees Union who have shared some of the challenges that occur if a long term view is not taken in the funding of pension plans.
I would also like to clarify that I am not suggesting there is a crisis; only that as Canadian taxpayers we need to recognize that in the future we will have fewer taxpayers supporting our vast social safety net at a time when Canadians are living longer. Before I sign off on this week’s report I would like to thank the many of you who have taken the time to share your views with me on this important subject. I will continue to take comments and suggestions forward. While I have heard both support and opposition for taking a proactive approach on the OAS, one area where I have heard a consensus is that no OAS reform should occur without similar considerations being applied to the MP pension plan. I have taken your views to Ottawa and for the record I will vote in support of changes to the MP pension plan that are more respectful to the taxpayers of Okanagan-Coquihalla.
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Dan Albas is the Member of Parliament elect for Central Okanagan-Similkameen-Nicola.