Tucked into the middle chapters of the Liberals’ 2024 budget is a chart that should be terrifying to all Canadians. Breezily titled “Seniors’ Benefits Are Rapidly Increasing,” it is part of the Liberals’ boast about the largesse that they have lavished on retirees.
As the accompanying graphic shows, a stunning rise in payments to seniors is predicted in the next three decades (a combination of Old Age Security, the Guaranteed Income Supplement and related allowances).
Payments to seniors have already doubled since 2010, rising to an estimated $80.6-billion this year from $34.7-billion. The budget forecasts those payments nearly tripling by 2056, to $233.5-billion. The bulk of those funds flow through the OAS – an income support program that pays $18,832 in annual benefits to senior couples 75 and older with a household income of $173,000.
The Liberals frame this as a great accomplishment rather than as what it really is: their single greatest policy failure. It’s also rather out of tune with the main political thrust of the budget, wooing the 25- to 45-year-old set that has forsaken the Liberals for the Conservatives.
It is true that inflation has driven some of the surge in the indexed benefits. And the aging of the baby boomers is most definitely a factor. Which is where the Liberals’ gross irresponsibility in 2016 comes into play.
The newly elected Trudeau Liberals made good on their pledge to reverse the Harper government’s policy of shifting, between 2023 and 2029, the eligibility age for full OAS payments to age 67 from 65. That would have slowed the growth of elderly benefits, as well as reflecting the longer life spans of Canadians.
But the Liberals scrapped that plan and added to that error in 2022, when they increased OAS payments by 10 per cent for seniors 75 years and older. The stated rationale, that older seniors face greater costs, was nonsensical. There is already an existing program for low-income seniors – the GIS. If poor seniors were the concern, enriching the GIS would have been the solution.
Of course, the real problem was the need to shore up support among seniors ahead of the 2021 election. Which brings us back to the 2024 budget and the Liberals’ need to shore up support with, well, pretty much everybody, but particularly millennial and Gen Z voters.
The Liberals touted billions of dollars being spent for a “fair chance” for those voting cohorts. But the numbers in the budget are plain enough: spending on seniors far outstrips those commitments, particularly once health care is included.
Paul Kershaw, a University of British Columbia professor and founder of Generation Squeeze, calculates that this month’s budget adds $3,500 per senior in new spending through fiscal 2028 – more than four times greater than the per capita increase of $800 for each person under the age of 45. For his part, Prof. Kershaw views the budget as “an important first step” in reducing generational inequities.
Any serious effort at redressing that imbalance (including no longer running up the debt burden for future generations) will have to start with reforming OAS and reducing the extent of projected spending increases. Any changes need not, and should not, affect the poorest seniors. Sensible reforms could free up funds for those on the edge of poverty, while stopping the ludicrous practice of sending monthly income support payments to wealthy Canadians simply because they are older.
The Liberals, scrabbling to climb out of their deficit in public opinion polls, are unlikely to reverse course and propose responsible reforms. But they have, inadvertently, shone a light on the extent of the challenge awaiting a future government.