From The Advocate, March 2012
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Federal budget watchdog finds no reason to change OAS
Published March, 2012 - The Old Age Security program can responsibly continue on its current path – with a retirement age of 65 – according to Kevin Page, Canada’s independent parliamentary budget officer, who said any potential changes to the system likely would be unrelated to financial issues.
“If you just look at the current structure of federal programs and the tax burden . . . there’s no reason to change (the OAS program) from a fiscal sustainability perspective,” Page said. “There may be other reasons to change retirement ages that have to do with broader policy discussions, but that goes beyond fiscal sustainability.”
The cost of federal elderly benefits is projected to nearly quadruple over the next 25 years, said Page. His office expects payments to Canadians in their golden years will top $140 billion by 2036. However, once that strain passes, he said, levels are expected to drop below current costs.
The budget officer’s report said the large projected increase is “reflecting the entry of the baby-boom cohorts into the 65-and-over segment of the population.”
Page said the fact that baby boomers are going to create an increased strain on the elderly benefit system is not a surprise and governments have known for decades about its looming costs.
He added that the question of changes to the OAS system comes down to a matter of government transparency.
“This is a government that promised they would do fiscal sustainability analysis and they have not done that and yet they have made changes to the Canada health transfer in the context of this demographic transition,” Page said. “Now they’re signalling changes on the Old Age Security program in the context of a fiscal sustainability issue and we don’t see it.”
In fact, the budget officer insists there is even some room to spare for the program. The report said “the federal government could reduce revenue, increase program spending or some combination of both by 0.4 per cent of GDP annually while maintaining fiscal sustainability. This amounts to $7 billion in 2011-12.”