My first reaction to the Conservatives’ reduction in old age security and guaranteed income supplement benefits was to see it as an attack on seniors, but it really is an attack on the young and the poor.
Moving back eligibility for OAS/GIS benefits from age 65 to age 67 will only be phased in between 2023 and 2029, so it will have no direct effect on anybody currently 54 or older. And the highest-income seniors don’t get to keep the OAS anyway because of the Mulroney clawback provisions.
So the people who will lose out will be low- and middle-income, young- and middle-aged workers – in fact, most Canadians who depend on public pensions for most of the retirement income.
Ironically, these are the people who need improved, not reduced, public pension benefits, because of the declining rate of workplace pension coverage. And the OAS/GIS provides the majority of retirement income for the poorest seniors, predominately women, so they will be the hardest hit.
Harper claims that the rising future costs of the OAS/GIS make these changes necessary, but this is refuted by the numbers and all independent observers. The cost of the OAS/GIS was projected to increase from the current 2.43% of national income to a peak of 3.16% by 2030 and then to actually decline as the baby boomers start to die off. The Harper benefit cuts will kick in just before OAS/GIS costs were going to decline anyway.
In any case, it is not clear how much the OAS/GIS cuts would actually reduce public expenditures overall, since much of the cost of supporting poor 65- and 66-year-olds will simply be shifted to the provinces in higher welfare and other costs.
The Conservatives say that any loss of income can be covered by seniors just working a few years longer, but that is not an option open to many seniors, particularly those with health problems. And it may just serve as another roadblock for young workers trying to find decent employment (another attack on the young).
Given the facts, it is hard to understand why Harper is cutting the OAS/GIS, apart from a right-wing ideology of cutting public benefits, (and probably polling which indicates that they can get away with it, because most younger people don’t vote). He may also see it as an RRSP marketing tool for his backers in the banking industry.
There are lots of important things to be done about our aging population – better access to health care and drugs, home care, long-term care, nursing care, better public pensions. Cutting public pensions should not be on the list.