Wednesday, 4 April 2012
Harper's deforming of OAS
Changes to the OAS/GIS are completely unnecessary. There’s a lot of fearmongering around how OAS/GIS payments will increase, but spending will only increase from 2.3% of GDP in 2010 to 3.1% in 2030. After 2030, the ratio will go back down to 2.6%. This small, temporary increase is very manageable.
Harper's "reforming" of OAS is more an irrational deforming of it. Working class youth who will be the seniors of tomorrow are the most affected by this policy - as shown here. While in nominal dollars, rather than adjusted for some hypothetical future level of inflation - it's still a heavy cut and amounts to a mix of class and intergenerational warfare.
Canada’s greatest success story on the poverty front has been the reduction of seniors’ poverty. Changing OAS/GIS access will begin to reverse that significant gain. This move will see healthcare costs increase: low-income seniors who have to choose between buying medicine or food will end up using the healthcare system more.
The whole "unsustainablility of state pension systems" is a scare tactic that's heavily used by rightwing government-wrecking crews in various English speaking countries. It is fundamentally unsound, as economist Dean Baker makes clear:
The debate over the demographic trends in the United States and other wealthy countries can be described a debate between those who care about our children and those who want more of them. This is apparent once a little logic is applied to the tales of demographic disaster being hawked by those concerned about declining birth rates and greater longevity.
The basic story is that we are seeing a declining ratio of workers to retirees. This is supposed to mean that our children and our grandchildren will have an unbearable burden supporting us in our old age. In the United States, the story is that we now have about three workers for each retiree. In 20 years' time, this ratio is supposed to drop to 2:1. In countries like Germany and Japan, the decline is somewhat greater, since they have lower birth rates, and in the case of Japan, less immigration. They also have somewhat more rapid gains in longevity.