In 1996, Minister of Finance and later Canadian Prime Minister Paul Martin proposed in his budget something called the Seniors Benefit. No apostrophe; a benefit “for” does not involve the possessive, though this in some respects was the essence of public misunderstanding. Are government programs for when I get old “my” benefits, or benefits “for” me? People seemed to get agitated, based on the “me” sense.
I thought this budget provision made a lot of sense and was quite forward-looking, in terms of the post-World War II age cohort–the ones who were going to start turning 65…well, just about now, or a few years thereafter.
At the time, the Canadian government gave a cheque to anyone who turned 65. It still does. A monthly cheque, for the balance of one’s life, irrespective of one’s income. This was, and is, called OAS, for Old Age Security. It’s like a survival reward. If one is also old and poor, one gets an additional monthly cheque, called GIS, or Guaranteed Income Supplement.
What Paul Martin wanted to do in 1996 was to stop paying people simply because they turned 65, and to instead redirect at least some of these funds to helping those older people who were most in need. In addition, he wanted to assess “need” based on total family income. No more cheques to spouses of millionaires. No more cheques to the millionaires as well. There had to be a demonstrated need, as referenced to older single seniors and couples.
Seemed to make a lot of sense, and to be quite prescient. All of these post-World War II babies growing old. All of these cheques going out to people who didn’t need them, financed by younger and future generations.
In addition, Paul Martin seemed to have thought through the potentially negative impact of having this change immediately in effect. People who were 60 at the time that the changes were in place would not be affected by them. They would still get a monthly cheque for turning 65. They would also have five years to consider saving more, or end up with the Guaranteed Income Supplement if they didn’t. Everyone else would have to plan retirement funding without reference to the “alive at 65” reward.
Didn’t work. I thought it would fit within the basic worldview of my party, the Reform Party, in terms of fiscal responsibility and providing assistance to those truly in need. Instead, my party mounted an opposition campaign, referrring to the proposals as the largest tax grab in Canadian history, supported by supposedly independent organizations representing seniors, such as the Canadian Association of Retired Persons. Also supported by the Council of Canadians, so that both The Left and The Right end up both opposed.
The Seniors Benefit turned to dust. What seemed to be happening was that people regarded this monthly cheque at 65 as an earned entitlement, rather than a discretionary government payment of tax dollars. They confused Canada Pension Plan benefits, which were earned based on employment, with Old Age Security, which was paid solely based on age. There also seemed to be an undercurrent of resentment that one who had lived frugally and in a fiscally responsible manner was suddenly cut off from a “benefit”; much like being punished for saving, courtesy of all those bad people who had frittered away their finances in earlier years.
Investment advisors started to develop strategies to ensure that people could maintain their old age “benefits” by cashing out registered retirement savings plans earlier. Much like impoverishing oneself to go on welfare, from what I could see.
The Seniors Benefit didn’t work. Lots of public outrage, fueled by my party, among others. Paul Martin gave up.
Now, fifteen years later, would Canadian government finances be better or worse off, in terms of the increasing number of “alive at 65” rewards, irrespective of need?