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Harper should start with MPs to reform Canadian pensions
It might be understandable if a number of Canadians didn’t appreciate Prime Minister Stephen Harper talking recently about reforming public sector pensions and Old Age Security (OAS) social assistance payments. After all, nobody likes the idea of their retirement plans changing, whether it is by way of a downturn in the market or a change in a government policy.
This is likely especially true recently, with Mr. Harper’s musings coming on the heels of two reports on MP pensions, one by the not-for-profit Canadian Taxpayers Federation and the other from the esteemed C.D. Howe Institute. What these reports made abundantly clear: Prime Minister Harper must reform MPs pensions first, if he has any hope of looking at anyone else’s.
Ultimately, Harper is quite right to tackle Canada’s demographic dilemma: the tsunami of aging baby boomers does indeed threaten to swamp the national safety net. A bit more than $6,000 annually for OAS payments might not seem like a whole lot of money, but multiply it by 4.7 million retired Canadians, add in the guaranteed income supplement, spousal and widow allowances and survivor benefits, and you’re looking at $36 billion of taxpayer cash.
By 2030, if something isn’t done, Old Age Security payments are expected to balloon from $36 billion to $108 billion – that’s quite a chunk of change when you consider that the entire federal budget is about $274 billion this year.
So how does the Prime Minister start tightening the tap on entitlements for the elderly, when taxpayers contributed $23.30 for every dollar put into the parliamentary pension plan by MPs? Taxpayers paid $102.7 million last year, while MPs and senators chipped in $4.4 million. How do you explain to someone scraping for their retirement that Canada can’t afford $508 a month for a 65-year-old, when defeated 60-year-old backbench MP Yasmin Ratansi got $2,758 a month after just seven years on the job? Or the defeated Bloc Quebecois leader, 64-year-old Gilles Duceppe and his $11,730 monthly pension - the gift of a grateful nation for 21 years of devoted service?
Even Mr. Harper himself is in line for an annual pension payout of $223,517 if he packs it in at the end of his current term. Of course, the PM will only be 55 years old by then, and presumably, capable of doing something else to make ends meet. But if Harper were to find himself retired with no other means of support, $223,517 does buy a lot of cat food and kerosene to make it through a chilly Calgary winter. It’s a good thing – having studied piano rather than the guitar or the violin, the PM would face limited options as a street busker.
You can’t defend these payments. And smart politicians are not even trying. Since the Canadian Taxpayers Federation published its report on MP pensions, we’ve heard some promising news from both sides of the House of Commons. It started with the Prime Minister’s own words – Harper said in an interview that the issue of parliamentary pensions “will have to be looked at.” Then Treasury Board President Tony Clement revealed that he was “tasked with putting some options forward” on MP pensions, saying the government needs “to be fair to the taxpayer.”
“I think to have any legitimacy on that file, MPs are going to have to lead by example,” said Alberta Conservative MP Brent Rathgeber, displaying both political savvy and moral fortitude from the government side of the House. Green Party leader Elizabeth May said MP pensions should be reviewed “in order to bring them more into line with norms for other Canadians,” calling it “the fair thing to do.” NDP industry critic Guy Caron said his party is willing to look at proposals to bring the MP pension plan “more in conformity, more realistic in relation to the people they lead.” And Liberal MP Marc Garneau, the former astronaut, said the CTF report was a “fair observation” of the pension landscape.
Canadians have been phoning, writing, and emailing their politicians in huge numbers, letting them know how they feel about platinum-plated MP pensions. With the next federal budget coming soon, taxpayers need to turn up the heat, and make sure the pork-laden MP pension plan is put on the chopping block, front and centre, with a big carving knife close at hand for Mr. Harper. It’s the necessary first step in a long, but ultimately needed, process.
Gregory Thomas is the Federal and Ontario Director, Canadian Taxpayers Federation.