The federal government is under increasing pressure to expand Old Age Security (OAS) benefits for seniors aged 65 to 74. With the Bloc Québécois pushing Bill C-319—a proposal to raise OAS payments for this age group by 10%—and a recent motion in Parliament supporting the bill, the Trudeau government faces mounting political and public expectations. However, while the idea enjoys widespread popularity, Canadians should carefully consider the financial implications of this change before endorsing it.
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What is Bill C-319, and Why Does it Matter?
Bill C-319 proposes a 10% increase in OAS payments for seniors aged 65 to 74, effectively extending benefits currently provided to seniors aged 75 and older. The Bloc Québécois is adamant about passing the legislation, even threatening to force a federal election if the government fails to approve it before October 29.
According to a recent poll, 79% of Canadians support or somewhat support this increase. However, the poll omitted a critical piece of information: the cost of this proposal. Without understanding the fiscal impact, many Canadians may not realize what such a policy means for their wallets and Canada’s economy.
The Cost of Expanding OAS Benefits
The Parliamentary Budget Officer (PBO), Yves Giroux, has estimated that implementing a 10% OAS increase for seniors aged 65 to 74 would cost:
- $3 billion annually
- $16.1 billion over five years
This significant financial commitment comes at a time when the federal government is already struggling with deficits and mounting debt. In its most recent budget, the government projected deficits of at least $20 billion annually over the next five years, with more than $400 billion in new debt expected by 2028/29.
If the government borrows money to fund this expanded OAS program, the national debt will grow even larger, increasing the burden on taxpayers.
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Canadians Will Ultimately Pay the Price
Expanding OAS benefits will not come without consequences. Canadians will bear the cost of this policy in several ways:
1. Higher Taxes in the Future
Government debt does not disappear—it must be repaid with interest. This fiscal year alone (2024/25), the federal government expects to spend $54.1 billion on debt interest payments. That amount is equivalent to the entire revenue generated by the Goods and Services Tax (GST).
As the government borrows more to fund programs like expanded OAS, interest costs will rise, leaving less room in the federal budget for essential services. Ultimately, taxpayers will face higher taxes or reduced services to cover these growing expenses.
2. Reduced Economic Flexibility
Rising debt limits the government’s ability to respond to future crises, such as economic recessions or global emergencies. With a significant portion of the budget allocated to interest payments, the government’s flexibility to invest in new initiatives will be constrained.
Is the Expansion Well-Targeted?
One of the most contentious aspects of Bill C-319 is its lack of targeted support. Unlike the Guaranteed Income Supplement (GIS), which helps low-income seniors, OAS benefits are available to a broad range of seniors, including those with significant incomes.
- Current Eligibility: Individual seniors earning up to $148,451 annually are eligible for OAS benefits, though those earning more than $90,997 receive a reduced amount.
- Impact of Bill C-319: A senior couple with a combined income nearing $300,000 could still receive an increase in OAS payments under the proposed law.
This means that billions of taxpayer dollars would go to supplement the incomes of seniors who may not need financial assistance, diluting the program’s effectiveness in addressing senior poverty.
Lessons from Other Government Programs
Past polling has shown that Canadians are generally supportive of new government programs—until they understand the costs. For example, when respondents were informed about potential tax increases required to fund national dental care, $10-a-day daycare, and pharmacare, support for these programs dropped below 50%.
Similarly, while expanding OAS may sound appealing at first, Canadians should consider whether they are willing to pay higher taxes or take on additional debt to fund this program, especially when its benefits are not focused on those in greatest need.
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While supporting seniors is a noble goal, it’s essential to weigh the costs and ensure that taxpayer dollars are used efficiently. Expanding OAS benefits indiscriminately risks creating additional fiscal pressure without significantly addressing the financial challenges faced by low-income seniors.
A more targeted approach, such as enhancing the GIS for those in greatest need, may provide more effective support while minimizing costs. Canadians should also demand greater transparency and accountability in how government funds are spent, particularly when large-scale programs like OAS are being debated.
Bill C-319 represents a pivotal moment in Canada’s approach to supporting seniors. While the proposed 10% increase in OAS benefits for those aged 65 to 74 may seem like a simple solution, the associated costs—$3 billion annually and $16.1 billion over five years—are far from trivial.
At a time when federal debt is already high and interest costs are consuming a growing share of the budget, Canadians should carefully evaluate whether this policy is the best use of public funds. By understanding the true costs and considering more targeted alternatives, Canadians can make informed decisions about how to support seniors without compromising the country’s long-term fiscal health.
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