02.01.2012 08:15 PM

Canada Live, Feb. 1: Harper awakens the sleeping gray beast


I speak to Mr. Harper, but Mr. Harper does not listen.

41 Comments

  1. Michael S says:

    Income Trusts. Now This.

  2. nic coivert says:

    off topic but what gives with this? is this standard procedure for political hopefuls now or clumsy or just plain invasive. i felt the latter, and i wouldnt be ticking off any of those little boxes.

    https://secure.ndp.ca/leadership_member/index.php?candidate=LDR12_CULLENN&language=e

  3. Philip says:

    Just another day in the life of the “create=a-crisis” Conservative Party. It’s embarrassingly obvious now that there is no OAS sustainability issues, thanks to the report commissioned in 2010 by the Conservative government. A report they are deliberately ignoring in order to mislead Canadians into think that the OAS is at risk and needs to be modified.

    • Marc L says:

      That defies everything I have read about this — we’re talking a $12 billion dollar projected increase in today’s dollars which is not nothing. There may not be a crisis today, but it is certainly something that should be adressed so it doesn’t become a crisis in the future — much as Paul Martin did by gradually raising CPP contribution rates. But in the interest of looking at this from all angles and giving you the benefit of the doubt, could you please provide me with a link to the report you are referring to? Thanks.

      • Philip says:

        Marc, the report pegged the top of the OAS bubble at 2030, it declines through to 2050. At 2050 OAS demand will be marked less than it is now. The report also concluded that peak OAS funding moves to 3.5% of GDP from roughly 3.0% now. This report has been available for days now on the Globe and Mail site. It has also been linked to, at least once on this site in the past couple of days.

        • Marc L says:

          It sounds to me that you are just taking Liberal talking points, I did a bit of searching as you suggested. The report that was commissioned in 2010 that you are referring is a report by the OECD that compares pension funding across OECD countries. The report concludes that Canada is much better off than many other countries, and consequently, that there is no real funding crisis of the Canadian public pension system as a whole. The numbers you are referring to are from the latest tri-annual chief actuary report on OAS, published in 2009. They have nothing to do with anything commissioned by the government.
          As far as the numbers go, the Actuarial report does indeed point to a peak in the ratio of OAS costs to GDP in 2030. But your argument is a very strange one. What the numbers imply is that the annual cost of the program will rise by an admittedly modest 0.73% of GDP by 2030 and decline gradually over the next 30 years afterward. That 0.73% of GDP amounts to about $12 billion in today’s dollars. That is a sustained dran ion the budget, year after year after year. It drains the budget a bit less than that in the years before, and a bit less in the years after. But that is money that has to come from somewhere since it is not pre-funded. And that is with a significantly smaller labour force as a share of the population to pay for it, on top of all the other age-related costs. So it may not be a crisis now, but it IS going to put significant pressure on public finances in 2030 (well before that in fact), and in contrast to what you are saying, it does not just go away overnight. Isn’t it a good idea to start to address the issue now rather than waiting for it to become a problem?

        • Marc L says:

          One more point. It is not true that in 2050 it will be “markedly less” less than it is now. It is still slightly higher.

          • Philip says:

            Marc L:
            When you read the report, I’m sure you caught the part where the authors state that to use dollar amounts when talking about OAS costs this far out into the future is misleading as dollar values fluctuate it is statistically more accurate and useful to use % of GDP instead. When using the metric of % of GDP it seems we are in agreement, there is no crisis in the sustainability of OAS into the future. Rather there is a growing shortfall that certainly needs to be addressed but no crisis. As you mention OAS will consume a slightly larger percentage of GDP in the future but nowhere near a crisis level stated by Mr. Harper.

            You mention that the OAS is not pre-funded and you are correct. But then again many medium and long term government projects are not pre-funded but are undertaken anyway as useful to society as a whole. Power generating plants and the 400 series highways are two immediate examples of this. Some other unfunded long term government expenditures, you might be familiar with, would be the purchase of the untested F-35 jets and the omnibus crime bill, both of which are neither pre-funded nor fully costed and are obligations which run out to 2030 and beyond. It’s about what we choose, as a society, to invest our resources in. Judging from that outcry which Mr. Harper unleashed after Davos, it seems as though most Canadians are willing to make funding OAS a priority.

            While future increases in OAS are not pre-funded, OAS levels are currently being maintained within our government’s operating budget and this enables us to maintain one of the better senior poverty rates in the entire OECD. Ireland, has a senior’s poverty level of 30.6%, the highest in the OECD compared to Canada’s 4.4%. This is something Canadians can be justifiably proud of.

            That being said there will definitely be some choices Canadians will have to make if we are to adequately fund OAS and the resource tested GIS through the Baby Boomer demographic bubble. Then let us have that debate in a calm and reasoned manner, coming up with solutions that will enable us to continue to take care of our senior citizens into the future and not manufacture a “crisis” with Davos as stage dressing dropping the phrase “look what happened in Greece” at every opportunity.

          • Marc L says:

            Philip, I agree that the debate has to be civil. At least we agree about that. That does not mean there is no issue — there is one, and the debate should be about the solution, not whether or not there is an issue. Unfortunately, the tack that Bob Rae is taking for purely partisan political purposes is the opposite.
            On your point about dollar amounts vs % of GDP — I obviously agree. That’s why I stated that the $12 billion is in TODAY’s dollars. It would be much more than that in nominal dollar terms in 2030.

          • Philip says:

            If Bob Rae is play partisan political games, he isn’t the only one. Why would Harper announce the changes to OAS in Davos, Switzerland instead of here at home in the House of Commons? Using a very real crisis as a stage backdrop for an issue ( an issue yes, but I think we agree not a crisis) is misleading at best and false at worst.

    • Bill says:

      They are not in the process of “create a crisis”. They are in the process of positioning Canada stronger economically. People on the Left must understand the world has changed and we must adapt to this new environment. Many tough decisions will be made this year. If house price correction is bigger than 20% Canada will have some major issues. A price drop will occur, just how much I don’t know. Harper government is preparing us for this event.

      • Philip says:

        Please. Harper announced the rise in age eligibility in Davos, Switzerland in an attempt to tie Canada’s OAS in with the debt crisis in the EU. The fact that there is no funding crisis in Canada’s OAS was well understood by the Conservative government because some very nice experts had told them so. Those experts even wrote a report on it, in 2010. We had a non-issue being called an issue against the backdrop of an actual debt crisis. Cue the PMO talking points emailed to MPs and press releases. That is how the Conservative Party creates a crisis, where none existed before.

        A couple of years ago that might have been enough but now Canadians have seen this movie many, many times. Nobody is buying whatever sad shit your Conservative Party is trying to peddle as gold.

        • Marc L says:

          Philip, see my post above. The report you are talking about says nothing of the sort. It says that Canada’s pension system as a whole is not in crisis, and is in much better shape than most other countries. It does not focus on OAS specifically, nor does it talk about the future drag from OAS on government budgets. In fact, much of it refers to CPP which is pretty well-funded. You’re mixing stuff up.

          • Philip says:

            I see we agree that there is no crisis in any component in Canada’s pension system. Although spending increases will need to be addressed, there is no question that our pension system is sustainable in the long term. So why all the ridiculous drama in Davos? Is Mr. Harper incapable of conducting a forthright adult conversation with Canadians on any subject?

        • Bill says:

          It’s not about buying in Philip. It’s reality. Debt across all the industrialized nations has reached a tipping point. The US and EU are in huge trouble and Canada is not far behind (add Prov & Fed debt). Entitlements need to be funded, the CPP and EI are great models. OAS is to generous. OAS should only fund people making 25 000 or less. It’s currently funding people who make $60 000 a year, that’s not right. Expand the CPP if thats what people want.

          A crisis is on the horizon. Largest trading partner will be making some big changes in less than 2 years. These changes will be negative for Canada’s economy. Fat cat pensions (public servants aswell) and obsolete OAS configuration needs adjustment ASAP.

          • Philip says:

            But our pension system doesn’t need adjustment ASAP, Bill. That is reality. A reality known to Mr. Harper before he staged his little drama in Davos. EU debit and our pension systems are completely unrelated, united only by Mr. Harper’s need for stage dressing in order to manufacture a crisis.

  4. Philippe says:

    Even as a Liberal, I would be 100% on board with this if it wasn’t for the fact that they’re spending my dollars on jets and jails- when we need neither.

  5. Dana says:

    Really doesn’t matter what blunders Harper makes. He’ll have enough of a split on the centre/left until hell freezes over – just like the LPC had the split on the center/right.

    Only difference is the centre/left is too stupid to do anything about it and wipe the floor with Harper and his cabal.

  6. john morse says:

    Feb. 1

  7. frmr disgruntled Con now happy Lib says:

    Where’s a Solange Denis when you need one?….. But who am I kidding?…..at least Mulroney was capable of empathy……not so “Dear Leader”……

    • Marc L says:

      So you are saying there is no problem, no issue that needs to be adressed and this is just a diversion — in which case I would like to understand how you arrive at that conclusion — or you just don’t care as long as Liberals can hope to score political points — much as in the Mulroney era you refer to, where the Liberals fought against deficit reduction and against balanced budgets. Which one is it?

  8. Pat says:

    The life expectancy piece is wrong, Gord. The Echo Boomers, like myself, are actually supposed to be the first generation to have a lower life expectancy than their parents, and the Boomer life expectancy is not over 100.

  9. Marc L says:

    I fear that we are about to see the worst of opposition politics in this debate — much in the same way that we saw the Liberals and the NDP fight with grand hysterics against deficit reduction, the FTA and the GST under Mulroney. Whether it is good policy or not doesn’t matter. As long as the opposition can hope to gain political points by scaring the population they will go ahead and come up with all the twisted and flawed arguments they can, even if it amounts to bad policy that will cost us all in the end. Bob Rae is already on the attack.
    If the current government handles this issue properly and fairly, without burdening current recipients and taking measures that over time adress the longer-term issues in a relatively balanced manner, they will greatly increase in my esteem and my perception of the opposition parties will really go south. So, let’s see what they actually propose.

  10. GPAlta says:

    I think that they know this issue will be loud and will provide a lot of cover for current patronage and mismanagment scandals involving the Public Appointments Commission Secretariat, the Canada Employment Insurance Financing Board, and the Canada School of Energy and the Environment.

    They want to appear as if they are making hard choices to responsibly balance the budget through shared sacrifice (and then come to the rescue of seniors in the nick of time) instead of letting the fact come to light that they have now wasted more money on patronage appointments that literally do nothing in the public interest than was used improperly or illegally as part of the sponsorship program.

    The opposition has to take the bait on this issue, but not take their eyes off of the real vulnerabilities and misdeeds of this government. Even the omnibus crime bill is essentially a patronage issue when you get down to the fact that no one thinks the new jails will be effective except for businesses that stand to profit from them. And the Conservatives have just been caught drawing up lists of “adversaries” in a meeting with the Canadian Association of Petroleum Producers in an effort to make their private businesses more profitable.

    This is the your-money-in-our-friends-pockets government, and anything that distracts from building that case is a smoke screen.

  11. Marc L says:

    There are a couple of good columns on this issue that are worth reading. First off, Andrew Coyne in the NP. And, Kevin Milligan of UBC, adding to last week’s article on the issue. Milligan is being quoted by the opposition as “proof” that there is no issue, which is obviously not what he is saying if you bother actually reading what he says instead of listening to Bob Rae’s sound bites.
    Reading through this, it’s pretty clear that there is an issue that needs to be adressed. How it is adressed is debatable, but just screaming “NO” as the opposition parties are doing is irresponsible. The cost of OAS — while relatively low as a share of total expenditures — is nonetheless expected to increase by 0.73% of GDP by 2030, which amounts to $12 billion in today’s dollars. That is a $12 billion hole in the Federal budget, and this in an environment where there will be a smaller labour force as a share of the overall population. And one where there will be several other pressures on public finances — most notably health-care costs — as a result of the ageing of the population. It is not peanuts. Responsible policy would indeed take a forward-looking approach and adress the issues now. One solution might be to eventually increase the retirement age (from what I saw, this would only be done 10 years from now). There are certainly other solutions that could and should be debated. But the way the opposition is acting by denying there is an issue to score cheap political points now is just wrong.

  12. dave says:

    I sure like the attitude of the Conservative government and its supporters in taking action now for the sake of future generations.

    A small problem with this attitude, though, is that it might spill over into other areas, like the extracting right now all of our finite fossil fuel resources and shipping them raw to foreigners, leaving future generations only the sun to provide for their mobility and warmth. It would do great damage to our economy if our government were to salt away royalties for future generations’ use, or worse, to preserve finite resources for future generations’ use.

    I think it was Camus who gave a caution about sacrificing the present for the sake of the future. Profit now is the name of the game, and any artificial interference with that would be a threat to our fragile economy.

  13. Anne Peterson says:

    The opposition parties are telling the truth. It is all a matter of priorities. Prisons and tax cuts for rich corps (which incidentally are not creating jobs) versus pensions. Lots of military hardware versus pensions. Lots of nice Canadian tax payer’s dosh for conservative promotion versus pensions.

    Or how about raising the GST 1% to cover the boomers demographic bump? Really, they are the stupidest government we have ever had.

  14. Anyong says:

    Why hasn’t a percentage of our taxes been put into a money making reserve for OAS and GIS year and years ago???? It is our taxes that pay for this program and also GIS as well except of course for multi nationals and the very, very wealthy. Stop blaming retirees and potential retirees for the supposed problems of OAS and GIS where there are none. There has been a number of bloggers commenting on LiberalsONLINE.com regarding the above who don’t seem to know if a person is only receving OAS with GIS they are living below the POVERTY LINE. Give your head a shake. And you Mr. Harper, leave it alone. When you can find money to pay for hockey rinks and other non essentials just to garner votes then you and your government can easily find a way to leave OAS and GIS ALONE! Perhaps dropping a few thousand from your pension as well as your cohorts into a money making fund for OAS and GIS would help don’t you think? You need to remember it is our taxes that keep you were you are…..is that not a definite fact?

  15. Lawrence Stuart says:

    A counter logic from Frances Woolley who argues that while the savings are small, the political costs are even smaller. Why? Because it’s all done slowly, and those who will actually pay the costs have a short attention span regarding things that happen in the distant mists of the future.

    http://worthwhile.typepad.com/worthwhile_canadian_initi/2012/01/raising-the-entitlement-age-not-if-but-when.html

    One might also expect some sweeteners, come budget time (RRSP or RRIF rule changes, etc.)

    I think in the long run she may be right, but in the short term Harper’s coms strategy has been, as Warren said in the clip, crap.

  16. Lawrence Stuart says:

    A counter logic from Frances Woolley who argues that while the savings are small, the political costs are even smaller. Why? Because it’s all done slowly, and those who will actually pay the costs have a short attention span regarding things that happen in the distant mists of the future.

    http://worthwhile.typepad.com/worthwhile_canadian_initi/2012/01/raising-the-entitlement-age-not-if-but-when.html

    One might also expect some sweeteners, come budget time (RRSP or RRIF rule changes, etc.)

    I think in the long run she may be right, but in the short term Harper’s coms strategy has been, as Warren said in the clip, crap. He needs to convince today’s grey beast that it won’t be the one to pay.

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