Bloc Quebecois Leader Yves-François Blanchet speaks during a meeting of his caucus in the parliamentary precinct in Ottawa, on Sept. 18.Justin Tang/The Canadian Press
Young Canadians face another risk to their finances as the Bloc Québécois gains leverage in Ottawa. The party has threatened to force an election if Prime Minister Justin Trudeau does not meet its demand to increase Old Age Security benefits for retirees age 65 to 74.
Never mind that OAS is already the largest & fastest growing part of the federal budget.
If the Bloc gets its way, younger Canadians will be on the hook to pay even more taxes for boomers’ OAS benefits. This would compound the unpaid bills they already inherit because governments failed decades ago to raise enough revenue to pay for the healthy retirement that boomers deserve.
Rather than be held hostage by the Bloc, Ottawa should help economically insecure retirees by modernizing OAS to better target benefits. This would ask relatively affluent boomers to contribute more to the income needs of its generation, rather than punt expenses to their offspring.
Such offloading doesn’t make sense, because younger people typically struggle with higher housing costs, larger student debts, and a future filled with unnatural disasters because of climate change.
The “blatant discrimination” against retirees alleged by the Bloc is not supported by actual federal budget numbers.
The Trudeau government is spending more on OAS to protect retirees’ income than previous governments. If the Bloc needs help finding this information, I’ll gladly send it Budget Table A1.7, the “Outlook for Expenses.” It shows that budget 2024 will inject another $71-billion to Old Age Security between 2024 and 2028. By comparison, the Canada Child Benefit will receive $22-billion, $10-a-day child care gets $10-billion, housing gets $6-billion, and postsecondary education sees $5-billion.
Adding more to OAS than any other line in the federal budget isn’t discrimination against seniors. That’s a government standing up for retirees.
Given that retirees enjoy the lowest poverty and highest wealth of all age groups, we need financially secure retirees to ask why their generations should get the next $16-billion dollars of federal spending – the estimated cost of the Bloc proposal over five years.
Individual retirees with $90,000 incomes are eligible for full OAS benefits, meaning senior couples can qualify with $180,000 coming in. A couple with kids who together earn around $79,000 will have their Canada Child Benefit clawed back.
This discrepancy between benefits for retirees and young families merits more concern.
So I worked with Statistics Canada’s Social Policy Simulation Database to examine how OAS could be redesigned to save money. Some savings could help retirees with lower incomes and little housing wealth. Some could be invested in younger generations, or used to shrink the deficit.
One option would reinstate the plan abandoned by the Chrétien government. It would have reduced the income threshold at which OAS benefits are clawed back today from $90,000 to $70,000. This change would save the federal budget $12-billion, reducing OAS growth from the projected $71-billion over the next five years to $59-billion. 1.2 million retirees with individual incomes of more than $70,000 would be affected. Their after-tax yearly income would drop by an average of $1,300.
A second option would claw back OAS benefits when household, not individual, income surpasses $90,000 – closer to how the Canada Child Benefit works. This change would scale back the planned increase for OAS by $48-billion, dropping it from $71-billion to $23-billion. 1.8 million retirees with incomes that surpass the median would see their after-tax yearly revenue fall by about $3,100.
A third option could reinstate former prime minister Stephen Harper’s plan to eliminate OAS eligibility for anyone younger than age 67. Were that change made this year, growth in OAS spending would slow by $38-billion between now and 2028. Nearly 900,000 Canadians age 65 and 66 would lose up to $9,000, regardless of their income or wealth.
Under all three options, OAS spending would still increase more than any federal investment targeting younger Canadians.
I think option three is too blunt, because it reduces benefits for low-income seniors.
But the first two options deserve examination. Both ask retirees with relative financial security to contribute more to the cost of supporting members of their generation who struggle economically, so their kids don’t need to.
Unfortunately, the Bloc betrays this responsibility, championing retirees’ interests at the expense of their kids and grandchildren
Dr. Paul Kershaw is a policy professor at UBC and founder of Generation Squeeze, Canada’s leading voice for generational fairness. You can follow Gen Squeeze on X, Facebook, Instagram, and subscribe to Paul’s Hard Truths podcast.
