The oncoming demographic time bomb of baby boomers retiring won't cause a fiscal crisis Canada's budget watchdog said Wednesday, despite the Harper government's repeated assertions to the contrary.
Parliamentary Budget Officer Kevin Page said in a report that the federal government will have the fiscal ability to enrich benefits for seniors and cut taxes, if they choose to do so.
Prime Minister Stephen Harper set off a political firestorm in January after suggesting in a speech delivered in Davos that it was a priority of his government to reform pension benefits.
Since then, government ministers have repeatedly said Canada's pension system is "unsustainable" and in "crisis."
During question period in the House of Commons Wednesday, the opposition demanded to know why the government is taking that position.
Interim Liberal Leader Bob Rae said Page's report is proof the Conservatives only have a political agenda in mind for changing the pension benefit system.
"The report says clearly there is no fiscal issue with the federal pension plan in Canada, none whatsoever. The only risk to Old Age Security . . . is the government of Canada," he said.
Defence Minister Peter MacKay said no Canadian currently receiving Old Age Security benefits would lose a "red cent" under any changes made by his government.
He then quoted former prime minister Jean Chretien who said "everyone recognizes that demographic changes in our society mean that we will have to make changes to ensure that our pension system remains sustainable for future Canadians."
NDP MP Wayne Marston asked why the Conservatives are "upsetting Canadians for no good reason" when Page says the system is sustainable.
One of the potential changes that the government has not denied it is contemplating is raising the age of eligibility for OAS from 65 to 67.
Marston asked the question directly to the government during question period.
Minister of Human Resources Diane Finley answered the question, saying the government would "take care of seniors" but did not directly respond to the OAS eligibility age issue.
Rae said the government's plans will "hurt poor people."
Page's report
The PBO report says the government's burden to pay for aging senior will increase -- from 14.8 per cent of program spending today to 20.9 per cent in 2030-31-- but it won't break the bank.
"PBO's updated long-term debt-to-GDP (gross domestic product) show that the federal fiscal structure is sustainable even under the baseline assumption that there is some additional enrichment to elderly benefit payments," the report states.
"This indicates that... 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."
The Harper government has said that the total cost of OAS benefits, which are about $500 a month for Canadians over 65, will triple from $36 billion now to $108 billion by 2030.
Page said the cost will likely be about $142 billion by 2036-37.
