A breach of security?

The Harper government's determination to rein in the cost of Old Age Security pensions could suck hundreds of millions of dollars from the Manitoba economy while dealing a body blow to the province's poorest seniors.

The OAS, which pays $500 a month on average to Canadians at age 65, is a key social program for low-income seniors. Those who receive it can also qualify for hundreds more dollars a month -- depending on income -- from a sister program, the Guaranteed Income Supplement (GIS). The two programs keep millions of Canadian seniors from falling below the poverty line each year.

One proposal Ottawa is floating to hold the line on pension costs -- as an increasing number of baby boomers enter their retirement years -- is to require Canadians to wait until they're 67 before receiving their first OAS cheque.

The federal government has made it clear no current seniors nor those close to retirement age would be affected by such a measure. But once implemented, its impacts would ripple throughout the Manitoba economy.

Those on social assistance as they approached age 65 would remain on provincial welfare rolls for another two years instead of moving on to more generous federal retirement benefits. That would cost the Manitoba government an extra $10 million a year alone, Finance Minister Stan Struthers told the Free Press this week.

But delaying the payment of OAS to individuals by two years would also take a significant bite out of the Manitoba economy. Ottawa shelled out about $1 billion in OAS payments to Manitoban seniors in the past year. And delaying thousands of Manitobans from partaking in the program each year will take a toll on the whole economy, as these seniors would have less money to spend.

Winnipeg Centre MP Pat Martin said a big reduction in federal assistance benefits is felt in the local economy. In the mid-1990s, when Ottawa cut employment insurance benefits, there was a $20-million hit in his riding alone, he said.

"That would be like losing two Palliser Furnitures in terms of payroll," Martin said. "It's a huge impact."

University of Manitoba economist John McCallum agreed that requiring Manitobans to wait until age 67 to receive their OAS pension would cause a significant reduction of federal transfers to Manitoba. But he said there could also be repercussions if pension benefits aren't reined in.

"In absence of doing something about this OAS thing, at some point somebody is going to have to pay more in taxes to pay for the larger transfers," he said. "And some of that will come (from) Manitobans who used to spend it and are now shipping it to Ottawa."

So the issue seems to boil down to a matter of priorities -- the kind of decision governments make all the time: who will pay the freight and who will receive the benefits?

Who will benefit from cutbacks to the OAS? Certainly not seniors who are barely making ends meet, the government's critics have been shouting since Prime Minister Stephen Harper told Canadians for the first time that he was looking at tinkering with their pensions during a speech in Davos, Switzerland.

"I find it hard to believe that our federal Conservative government is taking a swipe at the very people who built this country," an angry Struthers said this week. "There was no discussion about this (beforehand). It was simply just throwing it out there."

Dennis Lewycky, executive director of the Social Planning Council of Winnipeg, said the OAS change would hurt the poorest seniors, people who are already "living pretty close to the edge."

For some it could make the difference between staying at home constantly or being able to visit their children. For others it's going to be the difference "between an adequate diet and using Winnipeg Harvest." More than 7,000 seniors already frequent food banks in Manitoba.

"Elderly women, statistics show, are in desperate conditions in this country because of their family responsibilities," Lewycky said. "They've not been able to work and earn the same CPP (Canada Pension Plan) benefits. They rely on OAS and the supplements (such as the Guaranteed Income Supplement and other allowances that are tied to OAS)," he said.

While Canadians are living longer, not all -- especially those who have had physically demanding jobs -- are able to work beyond age 65. Many seniors remain in paid jobs, but on a part-time basis. Without OAS, many people will be forced to keep working full-time until age 67, perhaps at the risk to their health, critics say.

Low-income workers would be hit hard by an increase in the eligibility age for OAS, said Monica Townson, a Toronto-based economic and social policy consultant. "They are unlikely to be eligible to retire until they're eligible for OAS; whereas people who earn more are more likely to have other sources of retirement income so they wouldn't be as limited as to when they could retire."

Winnipeg-area Members of Parliament of all political stripes have fielded numerous calls on the issue -- some organized by seniors groups. Petitions have been launched demanding the federal Conservatives leave the OAS alone.

"It's caused a great deal of concern and anxiety out there," said Liberal Winnipeg North MP Kevin Lamoureux, who had a clutch of seniors buttonhole him on the issue at his regular Saturday meeting with constituents at the McDonald's on Keewatin Street last week.

Conservative MP Lawrence Toet (Elmwood-Transcona) has been getting "quite a stream of calls" on the issue, a staffer said Friday, although the number was slowing by the end of the week. "The majority of the people that are calling are definitely expressing their concern about the lack of information that they're receiving, hoping that they can get some more clarity on the issue."

That clarity is expected when federal Finance Minister Jim Flaherty unveils his budget, likely in March. Flaherty said Thursday changes were coming to OAS and he would outline the government's thinking on the program at that time.

larry.kusch@freepress.mb.ca

Republished from the Winnipeg Free Press print edition February 4, 2012 A6