Tuesday, January 31, 2012

Juxtaposing Harper: OAS version

Harper to the House of Commons, yesterday, when questioned on his proposed cuts to Old Age Security:
“Everybody understands that there are demographic realities that do threaten the viability of these programs over the longer term. We will ensure that these programs are funded and viable for the future generations that will need them,” Harper told the Commons.
Expert advice commissioned by the federal government contradicts Stephen Harper’s warnings that Canada can’t afford the looming bill for Old Age Security payments.
But research prepared at Ottawa’s request argues Canada’s pension system is in far better shape than the Europeans’, and there’s no need to raise the retirement age. Edward Whitehouse – who researches pension policy on behalf of the Organization for Economic Co-operation and Development and the World Bank – was asked by Ottawa to study and report on how Canada stacks up internationally when it comes to pensions.

His conclusion: “The analysis suggests that Canada does not face major challenges of financial sustainability with its public pension schemes,” and “there is no pressing financial or fiscal need to increase pension ages in the foreseeable future.”
The government’s claims leave experts baffled. Thomas Klassen, a York University political science professor who co-authored a 2010 report on Canada’s pension system, said his own research concluded that the OAS program is sustainable.

“I haven’t heard any academic argue that there’s a crisis with OAS, which is why I was surprised a few days ago when the Prime Minister seemed to say there was a crisis,” he said. “Because I don’t know where that came from.”
Kevin Milligan, a University of British Columbia economics professor who co-authored another of the supporting research papers prepared for Ottawa, is also of the view that there is no OAS crisis. He says the government’s use of statistics showing the cost of OAS will climb from $36.5-billion in 2010 to $108-billion in 2030 is not very meaningful because of the impact of inflation. He notes the rise is less alarming when measured as a percentage of economic growth.

“As an economist, I would never characterize things in terms of nominal dollars in the future because it’s hard to put those in context,” he said. “I don’t know what we’ll be paying for a litre of milk then.”
Ignoring experts on an issue like OAS may not be the run of the mill ignoring-of-the-experts thing that Harper typically does. Making cuts to OAS is not axing the census. Pensions are real pocketbook attention getters of the first order with electoral consequences.

Pensions are an issue that Canadians instinctively understand, an issue that goes to the hearts of Canadians. Our pension programs speak to our national values, what kind of country we are, the things we do indeed value. It's not all logic and numbers. How you go about dealing with changes to such national programs matters.

That is why a smart leader would try to rally the nation and build consensus support for transformational changes to such things as our pension system, including OAS. And not pull a Gordon Campbell no-HST election promise when it comes to pension reform. The HST was nuked, despite its policy advantages, not for the logic of it. It was a pocketbook attention getter of the first order that was nuked mainly because its implementation was viewed as a betrayal to the electorate. You can see that element here in Harper's OAS move as well.