Liberals urged to cut Old Age Security spending in upcoming budget

OTTAWA — Advocates are calling on the Carney Liberals to start with the biggest line item when deciding where to cut spending ahead of the upcoming federal budget.

Paul Kershaw, the head of generational fairness group Generation Squeeze , told reporters in Ottawa that the $80-billion Old Age Security (OAS) program desperately needed to be reined in, with federal spending hurtling toward a crisis point.

“(OAS) is now the single biggest driver of federal deficits. It costs $42 billion more than a decade ago and adds more to red ink than child care, than PharmaCare, than dental care, or defence,” said Kershaw.

Kershaw noted that the interim budget watchdog said in a recent committee appearance that the federal government was spending at an unsustainable rate.

Generation Squeeze is calling for OAS payments to be reduced for retired couples with incomes over $100,000. Under the current rules, couples with incomes of up to $182,000 qualify for the full $18,000 benefit.

The group says its proposal would save Canadians $7 billion a year, while increasing the benefit for some single seniors.

Kershaw said that OAS has drifted too far from its original aim of “protecting insecure retirees” to “padding the comfort of affluence.”

“Let’s be clear, helping poor retirees is a duty. Subsidizing affluence is a waste,” said Kershaw.

He added that the billions saved from scaling back benefits for better-off seniors would be enough to lift most of the 400,000 Canadian seniors living in poverty to an adequate standard of living.

Kershaw also called on Prime Minister Mark Carney to reject a Bloc Québécois-led push to boost OAS payouts for younger seniors, between the ages of 65 and 74.

“Prime Minister Carney’s first budget must resist the retiree lobby and the Bloc Québécois. Both are pressing Ottawa to pour billions more into (OAS) in ways that would do too little to help seniors that need it, and too much for those who don’t need the help,” said Kershaw.

Under the Bloc’s proposal, the maximum OAS payment for 65 to 74-year-olds, currently around $740 per month , would go up by 10 per cent to bring it in line with the maximum payment for seniors aged 75 and over.

A Bloc motion to increase OAS for all people aged 65 and up was adopted by the House of Commons last year, with the support of the Conservatives, NDP and Greens.

Bloc finance critic Jean-Denis Garon put the OAS proposal at the top of a list of six non-negotiable demands for the federal budget last week.

The Liberals are three seats short of a majority , and could use the Bloc’s 22 votes to give them some breathing room in passing the budget, set to be introduced on Nov. 4.

The Bloc’s OAS proposal would add roughly $3 billion per year to federal spending, according to figures from the Office of the Parliamentary Budget Officer.

Carney has said the budget will deliver “austerity and investment.”

Anthony Quinn, the president of the Canadian Association of Retired Persons, said that Kershaw was trying to spark “intergenerational warfare,” rather than put forward constructive ideas for bringing down the deficit.

“I think Mr. Kershaw is short-sighted, not understanding that we all become seniors if we’re lucky. And these programs are entitled to make sure Canadians are aging with dignity,” said Quinn.

Quinn said that Generation Squeeze’s OAS math didn’t account for various “costs of aging” such as at-home care and pricey medical devices and mobility aids.

According to a recent report from RBC Wealth Management , a healthy couple between 65 and 74 spends roughly $13,000 a year on health care. This jumps to $23,000 between 75 and 84, and $40,000 over the age of 85.

“There’s no guarantee that everyone is a rich, fat cat senior, and that’s how Kershaw is framing all his arguments,” said Quinn.

National Post rmohamed@postmedia.com

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