Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Saturday, May 19, 2012

Changes to Old Age Security equal big savings for Ottawa, big costs for seniors

Raising the Old Age Security eligibility age to 67 will save Ottawa $10.8-billion a year once the plan is fully implemented in 2030, according to new figures released by the government.

Federal ministers have long resisted opposition demands for a price tag on the OAS changes, but Finance Canada decided Friday to release a preliminary estimate that was compiled by the Office of the Chief Actuary.

The gradual phase-in of a higher OAS eligibility age from 65 to 67 is contained in the Conservative government’s omnibus budget bill, C-38.

A Finance Canada official noted that by law, the Chief Actuary is required to produce a new report whenever the program is changed. That final report will be released some time after the budget bill is approved by Parliament.

The Chief Actuary has, however, provided the government with a preliminary estimate. Spokesman David Barnabe said in an e-mail that the estimate shows the federal government would spend $97.9-billion in 2030 on OAS if the changes are implemented. Prior to the announced changes, the Chief Actuary estimated the cost of providing OAS would cost the government $108.7-billion in 2030.

“To better inform the discussion, and ensure proper focus on the substance of what and why OAS is being changed, the Government has agreed to release this information,” Mr. Barnabe said.

NDP finance critic Peggy Nash said the timing of the government’s release of information is suspicious, given that ministers have been refusing to answer that direct question all week.

“Suddenly the Friday afternoon before a long weekend their calculators spring into action and they come up with this figure,” she said in an e-mail.

Most Canadians 65 and older currently qualify for OAS and the average payment is $6,122.52 a year. That means the loss of income for a couple affected by the new rules is $24,490.08 over two years. The change will be phased in between April, 2023 and January, 2029, meaning it will not affect anyone who was 54 or older as of March 31, 2012.

According to the most recent public report from the Chief Actuary, 5.1 million Canadians were expected to collect OAS in 2012 (including 1.8 million who would also receive the Guaranteed Income Supplement for low-income seniors) for a total cost of $41.3-billion.

As a percentage of GDP, the cost of the OAS program – before the change – was projected to rise from 2.43 per cent of GDP in 2012 to a peak of 3.16 per cent of GDP in 2030, before falling back to 2.35 per cent of GDP in 2060.

The opposition has repeatedly noted that the Conservative government never mentioned its plans to raise the OAS eligibility age during the 2011 election. The NDP and the Liberals have suggested they will campaign on reversing the change during the next federal campaign.

The decision to raise the eligibility age has prompted a heated debate over whether the program is sustainable in its current form. The Conservatives argue the rising costs show that it is not and point to academic papers that say OAS spending needs to be addressed. The opposition points to reports by the Parliamentary Budget Officer and other academic papers that argue the costs are manageable over the long term.

The academic papers on both sides of the issue generally agree on one point: Curbing the cost of OAS means less pressure to raise taxes, while leaving OAS eligibility at 65 would require spending to be curbed elsewhere.

Original Article
Source: Globe
Author: BILL CURRY 

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