Tuesday, February 14, 2012

Why pensions should remain a "hot topic"!

By Jim Harding
No Nukes
February 14, 2012

“Pensions” have been the hot topic on coffee-row ever since Harper announced his plan to cut Old-Age Security (OAS). I can’t remember as many people engaging me about my R-Town column as on this.

This is good for we’re going to need all the public participation we can muster to convince Harper to back-off. And it’s mandatory that our collective memory about this lasts until the 2015 election. Canadians needing OAS at that time will be much more vulnerable unless Harper is stopped in his tracks now.


We need to know his end-game. It’s quite simple: to shift pensions from the public to the private market. This means shifting pensions from the government to the individual, who will then be at the mercy of the profit-hungry financial sector. It’s no different than what Harper is doing in other sectors. By undermining the farmer-elected Canadian Wheat Board, without consultation or respect for the rule of law, Harper leaves farmers individually more vulnerable to the profit-seeking grain and rail companies.

Harper’s game-plan is to turn back the clock on progressive social programs. He can’t directly attack Medicare, so he tries to undermine it indirectly. His recent arbitrary decision to only provide per capita funding to the provinces, regardless of the proportion of seniors, who naturally require more healthcare, could balkanize Medicare and make it more vulnerable to encroaching privatization. Harper is always trying to use divide-and-rule politics to undermine the federal commitment to social programs. Playing generations off against each other over pensions is his latest ruse.


Facts don’t matter. This is an ideologically-driven agenda and Harper will continue to lay the ground for OAS cuts regardless of the overwhelming evidence otherwise; just as he did with the omnibus crime bill. The Department of Finance, the OECD and Parliamentary Budget Officer have all said that the OAS is not threatened by the aging of the baby boomers. The number of seniors on OAS will certainly double by 2030, but the cost of pensions will only rise from 2.3% to 3.1% of the GDP, which is the most relevant figure. And the cost will then fall to 2.6% by 2050. These are among the lowest costs for pensions in the G7. When it serves his purposes, even Harper admits how low our public debt is relative to GDP, compared to other countries.

Harper controls politics by controlling messages created out of half-truths or non-truths. Message control is how he divides to win and rule. In the aftermath of his announced OAS cuts his Ministers reassure today’s seniors that they won’t be affected; Finance Minister Flaherty tries to deflect the matter by saying nothing will happen until 2020 or, when pushed, until 2025. But think about it; this means that someone who is turning 57 might have to work to 67 before they qualify for old-age security.


The OAS is not vulnerable to Harper’s predictable attack on public programs for wasting taxpayer’s money. The OAS is one of the best examples of the taxpayer protecting the taxpayer; citizens pooling resources for the common good. You have to live in Canada for ten years after turning 18 to qualify, and full benefits only come after 40 years of residence. (The GIS remains available for low-income immigrants.) The OAS is also income-tested; full benefits don’t accrue if one’s income is above $69,000.

Harper will predictably try to undermine the progressive, universal aspect of the OAS by saying wealthier seniors who don’t need public pensions are driving up the costs for the taxpayer. Seniors may even be scapegoated for jeopardizing pensions for future generations. But this is utter hog-wash, for there are hardly any wealthy seniors; only 6% of all Canadian seniors are subject to the OAS clawback due to higher income.

Further, one-third of seniors require the income supplement, the GIS, which provides additional income for those in need. The OAS simply works! It stabilizes senior income security. It provides up to 75% of the income of low-income seniors. Most compelling, it provides base income for women who have done unpaid domestic work their whole lives, and don’t qualify for the CPP.

All OAS benefits are taxable. Not only did all the baby-boomers pay taxes all through their working lives, but they will continue to pay income taxes on their pensions. Seniors also pay property taxes and the GST; they more than pay their way.

The biggest impact from raising the retirement age would be on the lowest-income seniors, especially those with ill health. Harper’s handlers will talk of our growing life expectancy as if we are all in the same boat. We aren’t. The lowest 20% of earners have, on average, six fewer years of life compared to the top 20%. If the retirement age is raised it will adversely affect those struggling the most.


The viability and fairness of the OAS is not Harper’s interest. He wants to use wedge politics to compound conflict between the generations to try to turn more young people, already struggling with low job security and incomes, against “seniors’ entitlements”. As one Harper-supporting financial advisor, appealing to the myth of “Freedom 55” put it, “If I was 25 I’d be really mad.” We hear it over and over in his Ministers’ scripted messages: “we must be sure that the pension system is there for the next generation”. If this was their concern then they’d strengthen the OAS and CPP. But it is not. Harper wants to can get younger people to resent seniors getting pensions; he wants to convince youth that they will face a huge burden paying for baby boomers. Then he can manoeuvre the cuts he wants.

Harper’s desire to shift public pensions to private savings is totally unrealistic. At present there are 11 million Canadians without workplace-based pensions. The up-and-coming generations will have even less workplace pensions available to them; corporations are already cutting these back. Furthermore, the ability to personally save for retirement is becoming even harder; only one-third of those presently eligible for RRSP’s use these to their limit. And the new Tax Free Savings Accounts (TFSA) which benefit those with the necessary cash-flow and are excluded from the OAS income test will reduce taxes available to fund seniors’ programs. You can see how Harper’s appeal to narrow self-interest undermines our true public self-interest.


Harper’s politics is built on base emotions such as fear, anger, blaming and resent. Fueling these distracts the public from an evidence-based politics. It enables Harper to rule by the force of law rather than the rule of law. It’s insidious but, so far, it’s gotten Harper from the Canadian Taxpayer’s Association to the PMO’s office. The only antidote is to enhance knowledge and solidarity so the wedge doesn’t work. Today’s seniors not only have to fight for themselves but for their kids and grandkids.

Harper will have a publicly funded pension of, perhaps, $200,000 a year. He won’t need or qualify for the OAS. It is easy for him to say that sixty-five year-old seniors getting $6,000 taxable OAS benefits a year isn’t sustainable. Like CEO’s who continue to give themselves pay hikes after public bail-outs and job-cuts to workers, Harper is headed for the 1%. Farmers, First Nations, Métis, environmentalists, artists, workers, seniors and youth are all going to feel the brunt of Harper’s wedge. These groups should consider creating a progressive democratic alliance so that Canada can rid itself of Harper and his wrecking-ball crew. We owe it to our country.

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