Justin Trudeau hints at boosting Canada’s military spending

I'll believe it when I see it.

 

[dapaterson]

Incidentally, CPP should actually be much higher. It isn't. And that's part of the problem. Today's generation of seniors didn't make CPP substantial enough. So now they want generous OAS top ups. What was meant to ensure that seniors weren't homeless and eating cat food is now vacation money for those with defined benefit pensions.

The decision for CPP and for pensions for those employed by the GoC was to pay into the funds on a go forward basis, with the legacy amounts owed kept as liabilities in the public accounts.

The good (?) news is that the combination of markets outperforming expectations and premature deaths during the pandemic have contributed to surpluses in the funds...

 

[ytz]

The decision for CPP and for pensions for those employed by the GoC was to pay into the funds on a go forward basis, with the legacy amounts owed kept as liabilities in the public accounts.

Indeed. And CPP contributions should actually be far higher to overcome the lack of Defined Benefit pension plans these days.

The good (?) news is that the combination of markets outperforming expectations and premature deaths during the pandemic have contributed to surpluses in the funds...

That doesn't really help that much. Reduces stress on CPP actuarially. But doesn't stop that OAS bill from growing. And now we don't just have OAS. We give them dental care too.

 

[SeaKingTacco]

Indeed. And CPP contributions should actually be far higher to overcome the lack of Defined Benefit pension plans these days.



That doesn't really help that much. Reduces stress on CPP actuarially. But doesn't stop that OAS bill from growing. And now we don't just have OAS. We give them dental care too.

I like this new “YTZ mean streak”

For the record, I am getting close to OAS and think that it is ridiculous that I am in line for some that.

OAS needs trimming and refocusing.

 

[ytz]

I like this new “YTZ mean streak”

For the record, I am getting close to OAS and think that it is ridiculous that I am in line for some that.

OAS needs trimming and refocusing.

I am in my mid 40s. I am watching the consequences of our reliance on legacy stock from the 80s and 90s finally manifest. And this isn't just a thing at work (the CAF). I see those consequences across society. We don't have enough daycares, hospitals, transit, etc. Mostly because we underinvested for the last 30 years. Now the bill is coming due and most people don't even seen to understand what the underlying problem is.

 

[Czech_pivo]

OAS is on track to hit $100B by 2030. It's at $70B right now. Current projections are for $181B in 2045. If we're aren't going to raise the GST, we need to have honest conversations about OAS.

I always think of my personal situation. With my CAF pension ($60k) and CPP ($17k), why would I need the extra almost $9k per year at 65? It's ridiculous that OAS doesn't begin to get clawed back till you make $86k. And doesn't phase out till $140k. Nobody making more than $70k as a senior really needs OAS in my opinion. And that would include me.

It's even crazier cause these folks are getting pogey they don't need at a point in their lives when they don't have childcare expenses and are most likely to have fully paid off homes.

If we don't fix OAS, it will eat the entire budget and kill literally every other priority this country has. We're debating whether $50B on a train is worthwhile. Or $30B on a pipeline. And those are one time costs. Meanwhile $70B goes to seniors every year.

The OAS is the ultimate Canadian, ‘thanks for coming out and sticking with us’ award given to all of us that are still here at age 65. It’s just crazy.

 

[FJAG]

For the record, I am getting close to OAS and think that it is ridiculous that I am in line for some that.

OAS needs trimming and refocusing.

The OAS is the ultimate Canadian, ‘thanks for coming out and sticking with us’ award given to all of us that are still here at age 65. It’s just crazy.

You do know that there is a means test and an OAS pension recovery tax if you exceed the recovery threshold amount.

Many decades ago I took on some pro bono cases for former employees of Eaton's who had put in a full lifetime of working for them and seeing the pittance of a pension that they earned, I was quite glad that there was a bit of a safety net in CPP and OAS that looked after those folks.

 

[GK .Dundas]

Those people got totally and royally screwed by Eaton's. There are no words strong enough to convey my utter contempt for both the corporation and the family.

 

[Czech_pivo]

You do know that there is a means test and an OAS pension recovery tax if you exceed the recovery threshold amount.

Many decades ago I took on some pro bono cases for former employees of Eaton's who had put in a full lifetime of working for them and seeing the pittance of a pension that they earned, I was quite glad that there was a bit of a safety net in CPP and OAS that looked after those folks.

I’m aware that there is a means test, but the threshold is much to high - 140k income before it’s reduced to 0$?!?.
The OAS should be joined up with the GIS, where the years in Canada criteria should be mated with the low end over 65 income levels. A retiree earning over 75k shouldn’t be getting OAS.
A person over 65 earning 20k should be receiving the GIS, in addition to OAS with its number of years in Canada criteria.
As others have pointed out earlier,
OAS represents a future financial millstone around our neck.

 

[SeaKingTacco]

You do know that there is a means test and an OAS pension recovery tax if you exceed the recovery threshold amount.

Many decades ago I took on some pro bono cases for former employees of Eaton's who had put in a full lifetime of working for them and seeing the pittance of a pension that they earned, I was quite glad that there was a bit of a safety net in CPP and OAS that looked after those folks.

But that is not who we are talking about.

We are talking about people like us with really good pensions, getting at least some OAS until we hit $140K/ annum.

Why?

 

[daftandbarmy]

But that is not who we are talking about.

We are talking about people like us with really good pensions, getting at least some OAS until we hit $140K/ annum.

Why?

Guess who votes Liberal most reliably and repeatedly?

Data mining helps these people make their policy decisions, for political reasons, all the time.

 

[ytz]

You do know that there is a means test and an OAS pension recovery tax if you exceed the recovery threshold amount.

Clawback doesn't start till $86k. Doesn't fully phase out till $140k.

At 65, with a lifetime of earnings behind you, all kinds of provincial and federal programs from energy rebates to subsidized pharmacare and now dental care, why do you need another ~$10k on top?

Meanwhile, do you know that child benefits start getting clawed back at a family income of $36.5k? This at a time is record housing prices. And people wonder why young people are mad and Canada's fertility rate is on par with South Korea and Japan. And this:

In 2021, 8% of children (0-14) and 10.8% of youth (15-24) were living in poverty. At the same time, seniors reported the lowest poverty rate, with only 4.2% living in poverty.

Poverty in Canada — Canadian Poverty Institute

Poverty in Canada

www.povertyinstitute.ca

It is very revealing that this country will accept its babies living in poverty at twice the rate of its wrinkled generation.

What's more ridiculous though is that GIS isn't actually that generous either. It's just a few hundred dollars on top. Somebody qualifying for GIS is making $18k per year. So even the seniors who actually need help don't get it.

But more relevant to this topic. In the federal budget, literally every other program has to fight for scraps, while OAS simply grows by $5-6B per year. And for what? To give the silver hair landed gentry vacation money?

 

[Halifax Tar]

Clawback doesn't start till $86k. Doesn't fully phase out till $140k.

At 65, with a lifetime of earnings behind you, all kinds of provincial and federal programs from energy rebates to subsidized pharmacare and now dental care, why do you need another ~$10k on top?

Meanwhile, do you know that child benefits start getting clawed back at a family income of $36.5k? This at a time is record housing prices. And people wonder why young people are mad and Canada's fertility rate is on par with South Korea and Japan. And this:

Poverty in Canada — Canadian Poverty Institute

Poverty in Canada

www.povertyinstitute.ca

It is very revealing that this country will accept its babies living in poverty at twice the rate of its wrinkled generation.

What's more ridiculous though is that GIS isn't actually that generous either. It's just a few hundred dollars on top. Somebody qualifying for GIS is making $18k per year. So even the seniors who actually need help don't get it.

But more relevant to this topic. In the federal budget, literally every other program has to fight for scraps, while OAS simply grows by $5-6B per year. And for what? To give the silver hair landed gentry vacation money?

Big fan @ytz keep up the good work.

 

[Good2Golf]

But more relevant to this topic. In the federal budget, literally every other program has to fight for scraps, while OAS simply grows by $5-6B per year. And for what? To give the silver hair landed gentry vacation money?

This. As others note as well, CPP is established through real principal growing through investment, so it is for all intents and purposes self-supporting. That OAS is drawn form the Government’s operating budget where increased demand is drawn directly against revenues is just as bad as ballooning debt, where there too, the cost of debt-financing comes directly from operating revenues, not a positively-compounded source.

 

[IKnowNothing]

Clawback doesn't start till $86k. Doesn't fully phase out till $140k.

At 65, with a lifetime of earnings behind you, all kinds of provincial and federal programs from energy rebates to subsidized pharmacare and now dental care, why do you need another ~$10k on top?

Agree with everything you're saying, but in the interests of accuracy your numbers are a little out of date. For 2025 the clawback doesn't start until 93,454, and doesn't hit zero until 150k.

It's indefensible.

 

[ytz]

If you want to see the country change course, it's really important to understand what the priorities are. And literally everything we squabble over here, from defence spending to the choo choo I think would benefit us is a tiny portion of discretionary spending in a massive budget that is mostly social transfers. Here's the 2024 budget:

When you understand that the government has only $123B at its discretion out of a $538B budget, you start to understand why raising $20B for defence is so hard for politicians. If we're honest, taxes have to rise or social programs have to be cut, or both.

 

[ytz]

Agree with everything you're saying, but in the interests of accuracy your numbers are a little out of date. For 2025 the clawback doesn't start until 93,454, and doesn't hit zero until 150k.

It's indefensible.

Wasn't tracking the latest threshold. Gross. This is literally robbing the next generation to give a bunch of middle class seniors vacation money. Terrible.

I give a few thousand per year to charity right now. I hope to give away that whole OAS at that age to veterans and children's charities. I would feel guilty living it up off that money while kids starve.

 

[Good2Golf]

And $60B of that $123B pays for the bloated public service…so double hit impact of the last 9/10 years of debt and public service bloat….

 

[ytz]

And $60B of that $123B pays for the bloated public service…so double hit impact of the last 9/10 years of debt and public service bloat….
View attachment 91606

$240B is not public service. Of that, $117B is returned. People who work for the government, including those of us in uniform, are part of that $123B Operating Expense. But you are right that the growth of public debt charges also sucks.

 

[Czech_pivo]

If you want to see the country change course, it's really important to understand what the priorities are. And literally everything we squabble over here, from defence spending to the choo choo I think would benefit us is a tiny portion of discretionary spending in a massive budget that is mostly social transfers. Here's the 2024 budget:

When you understand that the government has only $123B at its discretion out of a $538B budget, you start to understand why raising $20B for defence is so hard for politicians. If we're honest, taxes have to rise or social programs have to be cut, or both.

What's in the bucket called 'Other Transfer Payments' - that is the 2nd largest expense - what is it and what can be done about it.

Interesting that 'equalization' payments is roughly 50% of the health benefits transfer.

Does CPP fall under 'Elderly benefits' or is that a separate funding source coming directly out of the CPPIB?

The 'easy' solution is to bump up GST to 6% and legislatively ensure that the extra 10$ billon/yr goes directly to the CAF - above and beyond its existing budget. Could use the 10$ billion/yr in instant revenue in a number of ways;
1) proactive 'pay future costs' for large ticket expenses immediately, for example the upcoming 12 sub purchase, the replacement of the Kingstons, Griffons, etc.
2) or, gradually increase the 1% GST over so 5yrs - 2026, GST is 5.20%, 2027 its 5.40%, etc until it hits 6%. That's a 2$ billion instant bump to the CAF budget per year, beyond what the normal increase would be. Use that extra 2$ billion to again frontend pay for large ticket expenses.

 

[ytz]

What's in the bucket called 'Other Transfer Payments' - that is the 2nd largest expense - what is it and what can be done about it.

Interesting that 'equalization' payments is roughly 50% of the health benefits transfer.

Does CPP fall under 'Elderly benefits' or is that a separate funding source coming directly out of the CPPIB?

CPP is probably part of "Elderly benefits" while things like military and PS pensions probably fall under "other transfer payments", along with things like grants for various things. I have included a source link from the Hill Times in the original post if you want to go down the rabbit hole.