Mark Janson | CUPE Research

In 2012, Stephen Harper announced that beginning in 2023 the age of eligibility for Old Age Security (OAS) and the Guaranteed Income Supplement (GIS) will rise from 65 to 67. Cana­dians born after March 31, 1958 will have to wait up to two years longer to receive payments from these public pension plans. This is the biggest cut ever made to Canada’s modest public pension system, making retirement more difficult for Canadians and potentially pushing thousands of seniors into poverty.

The OAS program is the foundation of Canada’s retirement security system. Individuals qualify for OAS by simply living in Canada. Canadian seniors from age 65 onwards receive just over 500 dollars per month from the OAS program. GIS is a sub-program of OAS specifically designed to eliminate senior poverty.

Harper’s cuts to OAS-GIS capture his real agenda: gutting effective social programs that middle class and vulnerable Canadians depend upon, in the interest of moving towards a fend-for-yourself society. The tax revenue saved through these cuts is passed on to wealthy Canadian individuals and corporations through tax breaks. The way the cuts were announced and enacted without debate also perfectly captures the Harper method: secret agendas, fear-mongering, and contempt for the democratic process.

Here are 10 things to know about Harper’s OAS-GIS cuts. Thankfully, these cuts can be reversed if an NDP government is elected this year.

1. OAS-GIS is an effective public pension program that should be preserved and expanded.

Since its introduction in the 1950s, OAS has become a crucial part of Canadians’ retirement security. One-fifth of all senior income in Canada comes from OAS-GIS. Since the introduction of GIS in the late 1960s poverty rates among seniors have declined significantly – an achievement frequently recognized as one of Canada’s great social policy successes. In an age where job and pension security are eroding, effective public pension programs like the OAS-GIS are a model we should build upon, not tear down.

2. Middle-class Canadians will see 13,000 dollars cut from their retirement funds.

Old Age Security pays about 6,500 dollars per year from age 65. Losing two years of these payments will cost middle class Canadians (born after 1958) about 13,000 dollars (in today’s dollars).

3. Hundreds of thousands of future seniors could be pushed into poverty.

GIS is remarkably effective at keeping Canadian seniors out of poverty. The government’s own numbers suggest that GIS alone keeps up to 1.7 million Canadian seniors out of poverty, roughly 1 in 3. If we cut these important poverty-preventing payments for two years many more future seniors will live in poverty. Government estimates show that nearly 250,000 Canadian seniors will lose their poverty-preventing GIS each year by 2030.

4. Harper had a secret agenda to cut pensions.

The 2011 Conservative Party election platform unequivocally stated, “we will not cut transfer payments to individuals or to the provinces for essential things like health care, education, and pensions.” Less than one year after his election victory Harper revealed his secret plan to cut OAS. Between the election and the announcement of the cuts, no new information on OAS came to light, so there is no reason Harper could not have campaigned on this point honestly.

5. Harper’s claims that the OAS was “unsustainable” were misleading.

Harper has claimed that “the cost of [OAS] will grow from 38 billion dollars in 2011 to 108 billion dollars in 2030.” While the numbers employed are indeed the latest projection, their presentation is misleading. In 2030, Canada’s population and economy will be much larger and inflation will have eroded the value of the today’s dollar significantly. Harper’s 2011 to 2030 comparison compares apples (today’s dollar) to oranges (tomorrow’s dollar).

6. The OAS is sustainable without Harper’s cuts.

For an appropriate comparison we can simply look at the program’s costs over time as a per cent of GDP. Federal actuarial reports show that the cost of the OAS-GIS before Harper’s cuts was projected to increase from 2.4 per cent in 2011 of GDP to 3.1 per cent in 2030, largely because of the temporary demographic bulge of the baby boomers. After 2030, the program’s costs as a per cent of GDP begin a long-term decline. Contrary to Harper’s claims, the OAS actually becomes more affordable.

7. We can afford the temporary increase in costs for OAS.

Harper’s position is that we can’t afford this program, but he is perfectly happy with countless tax breaks. Corporate tax cuts, income splitting schemes, and plans to expand the Tax Free Savings Accounts pri­marily benefit wealthy and privileged Canadians and cost the public purse much more than his OAS-GIS cuts will save.

8. Harper rammed the OAS-GIS cuts through Parliament in an anti-democratic omnibus bill.

Harper buried the cuts to OAS-GIS in the 2012 “omnibus” budget bill. The cuts to OAS-GIS were a mere five pages of a 452-page bill. In just two months, this mammoth bill was introduced, passed three readings in the House, a Finance Committee study, Senate debate and numerous votes. The NDP and the labour movement opposed the bill and called for it, at the very least, to be split up so elements like the OAS-GIS cuts could be examined and properly debated. In an affront to the democratic process, the huge bill made it through this process virtually unchanged.

9. Many seniors simply cannot work longer.

Some argue that the retirement age should increase along with life expectancy. However, longer lives do not necessarily mean longer work lives. Health concerns, disability, family care responsibilities and the inability to find a job prevent significant portions of seniors (primarily lower-income seniors) from working longer. Even worse, it’s higher-income Canadians who are doing most of the “living longer” in the first place, and who continue to have much longer life expectancies than low-income Canadians.

10. We can reverse the cuts.

The cuts to OAS-GIS don’t begin to be phased in for another eight years. The legislation can easily be changed between now and then so that the cuts don’t ever come into effect. The federal NDP has a long-standing commitment to reversing these changes. Electing as many NDP MPs as possible is the best way to undo this damage.

Do you want to lose 13,000 dollars so Harper can give tax breaks to rich individuals and profitable corporations? Share these facts with friends, family members and neighbours so they can see how Harper misled Canadians and how decent retirement security for everyone at 65 is something we can afford.