The current firestorm over deferring the OAS payments until age 67 brings up some key issues involving Canada's social safety net. Unlike the CPP (which is, theoretically, funded out of contributions made over the lifetime of the pensioner) the OAS is a direct hit on the consolidated revenue fund--that is the public cash fund from which government receives taxes and pays expenses. As Canadians age, the cohort that is upcoming (and making a significant bite into the consolidated revenue fund) is the so called "baby boomers". This population bulge will work its way through the system the way a rabbit works its way through a snake. After that, the working cohorts will contract significantly and the OAS should become more sustainable out of current taxes. However, with a smaller workforce, the tax base should contract--that is unless we woo more new working Canadians to our shores. These will make up the labour shortfall that is predicted in about 20-30 years from now. However, as lifespans continue to lengthen the OAS hit on the revenue will continue to make a sizable dent. This problem affects no only the safetynet of seniors but also will put stress on the cost of medical services and social services that deal with the elderly.
The problem with attacking the OAS is that it represents only part of the puzzle. Canada opted into a social safety net in the 1930s and that has largely distinguished Canadians from our southerly neighbors. If we are to continue to be a more enlightened society we need to rethink the whole social safetynet. This would include employment insurance (newspeak for the old unemployment insurance), social assistance for the poor, the whole medical insurance system and the guaranteed old age security system and so on. They go lock step with one another. The greater difficulty is that no level of government speaks for all of these services. Some are provided by municipalities, some by provinces and some by the federal government. If we can, for example, forsee that there will be significant immigraion in the future we can also see that families will want to bring elderly parents to Canada. These will put an undue burden on the system without making a contribution through taxes for their working life. The OAS is just the tip of the iceberg.
One area that has already been earmarked for federal provincial conflict relates to health insurance. It is well recognized that the health system is highly inefficient. However, bringing efficiencies into the equation means that some citizens will be more affected than others. Perhaps it is time to rethink the "universal" nature of our medicare system instituted by Trudeau. Perhaps we should be thinking about user fees or some private facilities that can operate more efficiently than what we now have. Whatever it is, it appears that the Harper government has served notice that current funding will continue for several years and then be recast on a formula that is not yet revealed. Just part of the puzzle.
Social services agencies throughoput North America are overworked and underfunded. Their impact on the community is challenged against higher crime rates for young offenders. There has been no real dent in poverty over the past 50 years. Social housing is a scandal. Municipalities should now buldoze many rent to income properties that are beyond repair,
Aside from education, the delivery of social services has a highest impacT on the public purse than any other public expenditure. And yet we keep pouring money into the same hole without the slightest idea of whether these "investments" are making a positive difference.
If 65 is the new 55 then the OAS should cut in at age 75. The low income unemployed should be assured that, through some program, they will be brought up to a minimum standard of living. The high income retirees are already having their OAS payment clawed back through the tax system. If people are living longer they should be entitled to contribute to tax deferred retirement accounts until age 75 with mandatory removal of tax deferred funds after that age. Those who need the money will break up their tax deferred saving accout earlies. Others will not.
We need a rethnk of the whole system. Putting a patch on the OAS doesn't cut it.
Bernie.
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