In the recent budget presented by Finance Minister François-Philippe Champagne, significant changes were proposed, but one area notably absent from reform discussions was Old Age Security (OAS). Prime Minister Mark Carney's administration appears hesitant to tackle this issue, despite ongoing debates about its sustainability.

OAS is a government program that provides financial support to Canadians aged 65 and older who have lived in the country for a portion of their lives. Currently, the maximum annual payout is approximately $8,900, which increases to about $9,800 for those aged 75 and older. However, individuals with incomes exceeding $91,000 see their benefits reduced.

The program has come under scrutiny due to its rising costs. A report from 2020 projected that OAS expenditures would increase from $46 billion in 2020 to $94 billion by 2035, and could reach $195 billion by 2060. Critics argue that these figures highlight the need for reform. Paul Kershaw, a professor at the University of British Columbia, suggests that the clawback threshold should be lowered, stating, "OAS costs $42 billion more than a decade ago and adds more to red ink than child care, than PharmaCare, than dental care, or defence."

While OAS is a significant expense for the government, it is not designed to benefit the wealthy. High-income earners, such as Edward Rogers and Mark Carney, do not receive OAS payments due to their income levels and work history outside Canada. The program is structured to provide support to individuals rather than couples, which complicates discussions about income thresholds.

The debate over OAS reform raises questions about the definition of a couple and how income is assessed. Critics argue that the current system may not accurately reflect the financial realities of many seniors.

The public sector plays a significant role in the discussion, as a large percentage of public employees have access to defined benefit pension plans, contrasting sharply with the private sector. According to Benefits Canada, 87% of public employees have a registered pension plan, compared to only 22% in the private sector. This disparity raises concerns about the long-term sustainability of OAS and the overall financial health of the welfare state.

Champagne's recent budget aims to address these issues by proposing a reduction in the size of the public payroll, which he believes is necessary for sustainability. However, critics warn that simply shifting funds from OAS to other programs will not resolve the underlying budgetary challenges.

One potential solution to the OAS funding issue could be to gradually raise the eligibility age, a reform initially proposed by former Prime Minister Stephen Harper in 2012. This plan was set to be phased in over six years, starting in 2023, allowing Canadians ample time to adjust. However, the current Liberal government reversed these reforms, leaving many to wonder if similar changes will be considered in the future.

As discussions about OAS continue, it is clear that any reforms will have significant implications for many Canadians who rely on this program for financial support in their retirement years. The challenge remains to balance the needs of current and future seniors with the fiscal realities facing the government.