Federal parties should use election as chance to revisit seniors’ benefits
*This OPED piece in The Hill Times is written by Ghazy Mujahid, Board Member of Ontario Society of Senior Citizens Organizations
With the changing balance between working-age Canadians and seniors, it should be obvious that the current coverage and level of benefits cannot be sustained without overburdening the taxpayer.
With the 2019 federal election round the corner, issues related to the continuing aging of Canada’s population should come up for discussion.
Canada’s population has been aging at an accelerating pace. The proportion of seniors went up from 13.7 per cent in 2006 to 14.8 per cent in 2011 and 16.9 per cent in 2016. Also, the cohort of seniors has been increasing faster than the adults of working ages (15 to 64 years).
As a result, the number of working-age adults per senior declined from five in 2006 to 4.6 in 2011 and to 3.9 in 2016. The aging trends are expected to continue, and the proportion of seniors in the population is projected to increase to 23 per cent by 2030 with the number of working age adults per senior declining to 2.7.
It is the working-age adults who provide tax revenues from which benefits for seniors are funded. From the changing balance between these two groups of population, it should be obvious that the current coverage and level of benefits cannot be sustained without overburdening the taxpayer with adverse consequences for economic growth. The next government will therefore have to revisit the gamut of seniors’ benefits to ensure putting in place a scheme that is sustainable.
Seniors constitute a significant, and increasing, proportion of the electorate and in the 2015 federal election, seniors ac- counted for 23.4 per cent of the votes cast (up from 21.4 in 2011). It would therefore be advisable for all parties to come out with realistic policy proposals instead of ignoring the issues or holding out false hopes for the seniors.Taking seniors on board to support any proposed changes will be essential for the success of any reforms in this area.
Some of the benefits seniors are now eligible to receive would need to be revised on grounds of long-term sustainability and some on grounds of equity.
All those who reach the age of 65 and have lived in Canada for at least 10 years are eligible to receive an Old Age Security pension funded from tax proceeds. This age limit was incorporated in the Old Age Security Act in 1970, having been lowered from 70 years gradually over the preced- ing five years.The age of eligibility has remained unchanged for half a century, despite continuing significant changes in the demographic structure. In 1970, seniors accounted for eight per cent of Canada’s population and there were on average 7.7 adults of working age per every senior. The support base of taxpayers has halved to 3.9 since 1970. By 2030, it is projected to shrink by a further 30 per cent to 2.7 working-age adults per every senior.
With the tax base shrinking vis-à-vis the population of seniors, it is evident that the OAS cannot be sustained in the long run without placing an excessive burden on the taxpayer. There is therefore a need to consider revising the age of eligibility as well as the residence requirements for the OAS. More than 60 per cent of members of the Organisation for Economic Co-operation and Development, faced with similar demographic changes, have increased or announced increases in the age of eligibility for public pensions.These include France, Germany, Greece, Spain, the United Kingdom, and the United States, where an increase has gone into effect within the last few years. There is need for a broad discussion on whether Canada, too, needs to change the conditions of eligibility for the OAS.
Seniors are eligible for discounted fares on a wide range of public transport services. Amtrak andVia Rail offer seniors a 10 per cent discount. Throughout Canada, public transport systems offer similar discounts. For example, the Toronto Transit Commission gives discounts to passengers who are 65 years of age and older on TTC rail fares. Similarly, seniors are eligible for discounted fares on GO Transit and also on the Ottawa transit system.
An across-the-board discount based on age is neither necessary nor justifiable on grounds of equity. An increasing number of seniors continue working full time and have sufficient incomes to afford full fares.
It is unfair that a senior working full time should get a discount on their commute to and from work while a younger adult has to pay the higher full fare. It should be noted that seniors are likely to have less liabilities, with their mortgage paid off and offspring settled, as younger persons who have to pay a mortgage and raise a family. Equity demands that discounted fares for seniors be linked to hours of employment or earnings.
This is the case in Australia, where seniors working less than a specified number of hours are issued the Australian Seniors Card, entitling them to the discounted fares.
Since modifications will hurt seniors, it would be necessary to bring them on board by involving them in the discussions.
It should not be difficult to explain that changes are necessary in the long-run interest of seniors themselves to ensure that the most deserving seniors can be guaranteed an acceptable quality of life.
Ghazy Mujahid, a former United Nations population policy adviser, serves on the board of the Ontario Society of Senior Citizens’ Organisations and is an affiliate with the Ryerson Centre for Immigration and Settlement and a research associate with York University’s Centre for Asian Research.