Paying for their fathers
In the 2012 book, The Real Retirement: Why You Could Be Better Off Than You Think and How to Make That Happen, the authors make the case that Canada’s supposed retirement crisis has been largely overblown and that much of our oftrepeated retirement lore — that seniors are worse off than ever before, that they need 70 per cent of their pre- retirement income to live comfortably, that it’s better for employers and employees to encourage workers to retire early — is largely exaggerated or incorrect. Rather, seniors are actually better off than what our “national retirement angst” would suggest, the authors argue, adding that Canada would benefit from seniors retiring just a little bit later than the national average of 62 — at age 66 or 67.
Fast f orward a couple of years, and one of The Real Retirement’s authors — whom we now refer to as the Honourable Bill Morneau, minister of finance — has done a complete about- face, tabling a budget that promises to keep eligibility for Old Age Security ( OAS) at 65, scrapping the f ormer government’s plan to raise it to 67. In delivering the budget, Morneau said, “For t oo many Canadians, it has become i mpossible to save enough before reaching retirement age.” That perhaps was the only thing he could have said short of acknowledging that his party made a dumb campaign promise and now he’s stuck with it.
This week, Parliamentary Budget Officer Jean- Denis Fréchette released an analysis projecting that while the OAS adjustment might be sustainable in the long run ( after the baby boomer generation fades, he said), it will cost the government $ 11.2 billion in the first year of what was to be the full phase-in.
It will also mean another seven years before the federal government manages to eliminate its debt, which doesn’t seem like an egregiously long delay if one ignores the fact that it’s a wholly unnecessary one. Indeed, despite the Liberals’ commitment to “evidencebased policy” — such as, for example, that offered in the pages of Morneau’s book — this government has decided to go with what sounds good to boomers, even while countries such as Belgium, Denmark, Germany and France move ahead with plans to increase gradually their age of retirement eligibility.
The government’s reversal on OAS is bad news, particularly for young Canadians, considering that the funds for it come out of general government coffers, not from defined contributions from employers and employees, as is the case with the Canada Pension Plan. That means that younger workers who, by and large, don’t enjoy the same job security, access to affordable housing, benefit packages or wages as in the past, will be footing the bill for an extra two years of retirement for a generation that did. Ironically, the same day the Parliamentary Budget Officer ( PBO) released his report on the price tag for the Liberals’ decision on OAS, another report commissioned by the Canadian Alliance of Student Associations suggested that the Liberals have young people to thank for their majority in the House of Commons. Perhaps that support will wane when 18- t o- 25- year- olds realize they’re on the hook for $ 11.2 billion in feel- good Liberal promises to their parents.
Along with its assessment of the government’s OAS reversal, the PBO’s report on Tuesday also showed a surplus of $ 700 million at the end of the March 31 fiscal year, not the $ 5.4- billion deficit Liberals claim. Morneau doubled down on the government’s position, however, insisting that the Harper government left him with a deficit. This dispute comes about two weeks after the PBO criticized the government for refusing to make public data that was routinely released by previous governments. Assistant Parliamentary Budget Officer Mostafa Askari said Liberal tactics made this budget less transparent than past budgets.
It’s another irony for a government elected on a promise of openness and transparency, and which seemed to revel in the Conservative government’s enduring battles with former PBO Kevin Page. Increasing the OAS age was a reasonable and pragmatic decision, which was criticized by the Liberals out of political gamesmanship. Now that they are in a position to see the actual costs, standing by it is an example of shortsighted obstinacy. Having already jettisoned a number of promises, it’s perverse that they’ve decided to stick with one that richly deserves to be broken.