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Change beckons for Canada

Ottawa will transform the country’s pension system to curtail government costs, but details won’t come until the budget, Prime Minister Stephen Harper said Thursday.
Stephen Harper
Canadian Prime Minister Stephen Harper delivers his address to business leaders at the World Economic Forum in Davos Thursday.

DAVOS, Switzerland — Ottawa will transform the country’s pension system to curtail government costs, but details won’t come until the budget, Prime Minister Stephen Harper said Thursday.

In a major speech to global movers and shakers at the World Economic Forum, Harper also signalled looming reforms in immigration as well as research and development — all in the name of ensuring Canada’s economy is on a strong footing.

The idea, he said, is to position Canada as a more competitive force in the global economy and to confront the pressures of an aging population.

“In the months to come, our government will undertake major transformations to position Canada for growth over the next generation,” Harper said in an address to several dozen of the 2,600 forum delegates.

Despite the immediate audience, the speech was aimed as much at voters back home as it was at international business and political leaders.

The prime minister also reiterated a commitment to streamline environmental approvals for major energy projects and said he would press ahead with developing ways to export energy to Asia.

He chided wealthy countries for being too complacent about ringing up debt that they can’t afford, taking their riches for granted and imperilling the entire global economy.

“I ask whether the creation of economic growth, and therefore jobs, really is the No. 1 policy priority for everyone,” he said.

“Or is it the case that in the developed world, too many of us have, in fact, become complacent about our prosperity, taking our wealth as a given, assuming it is somehow the natural order of things?”

Harper said his government has worked to keep financial disorder out of Canada and is stepping up efforts to set the country on the right track for coming decades.

“We will do more, much more,” he said.

“Under our government, Canada will make the transformations necessary to sustain economic growth, job creation and prosperity now and for the next generation.”

While officials said details on some of the initiatives will come in the spring budget, Harper did shed some light on his plans.

On pensions, the government will move to ensure that demands on the Old Age Security benefit don’t bankrupt the system.

“Our demographics also constitute a threat to the social programs and services that Canadians cherish,” he said. The Canada Pension Plan “does not need to be changed” because it is fully funded, but officials point to an OAS bill that will soar as the population ages.

Current recipients of CPP and OAS won’t be affected by the changes, Harper added.

OAS is a cornerstone of the retirement security system and, together with the Guaranteed Income Supplement, has been the main reason poverty among seniors in Canada is so low.

But since the population is aging and the number of taxpayers is dwindling, the program is seen as unsustainable in its current form.

Officials noted that the cost of OAS is pegged to rise to $108 billion a year in 2030 from $36 billion in 2010. That’s because the number of Canadians over 65 will rise to 9.3 million in 2030 from 4.7 million in 2010.

The government has been contemplating changes to the retirement security system for years. One option could be to raise the age at which people can claim benefits.

NDP finance critic Peter Julian said it would be “completely unacceptable” to ask Canadians to work until 67 rather than 65 before qualifying for OAS — a change that remains purely speculative at this point.

“The announcement today, the ominous words, because we don’t have any details yet, I think are a slap in the face to Canadian seniors,” Julian said at a news conference in Ottawa.

On immigration, Harper said the needs of the Canadian work force will drive reforms.

“We will ensure that, while we respect our humanitarian obligations and family-reunification objectives, we make our economic and labour force needs the central goal of our immigration efforts in the future,” he said.

On investment, Harper said Ottawa will soon act on the recommendations in a recent task force report on how to simplify and improve programs to encourage research and development.