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Canada’s Aging Population Is Creating A Fiscal Crisis

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From the Frontier Centre for Public Policy

By Ian Madsen

Rising OAS and GIS costs outpacing economic growth, straining the federal budget

Canada’s aging population is creating a financial crisis that policymakers cannot afford to ignore. The rising costs of Old Age Security (OAS) and the Guaranteed Income Supplement (GIS) pose a growing risk to federal finances, yet no dedicated funding has been established to ensure their long-term viability.

The numbers are staggering. The 2024 Financial Accounts (Public Accounts of Canada, Volume I, p. 43) show that spending on elderly benefits rose at a compound annual growth rate (CAGR) of 6.24 per cent between 2015 and 2024, climbing from $44.1 billion to $76.04 billion. Over the same period, total federal program spending increased at a CAGR of 7.24 per cent, from $248.7 billion to $466.7 billion.

Although elderly benefits made up 17.7 per cent of total program spending in 2015, they now account for 16.3 per cent. This decline is not due to reduced spending but rather a surge in pandemic-related government expenditures, which temporarily outpaced OAS-GIS growth. Nevertheless, the trajectory is clear: elderly benefits are now the federal government’s third-largest expense, behind only ‘Other Transfer Payments’ and ‘Operating Expenses.’

While these figures already indicate a growing fiscal challenge, government projections suggest the problem will only get worse. According to the federal Fall Economic Statement (Table A1.11, p. 211), economic growth is expected to average four per cent annually until 2029-30. Yet OAS-GIS costs are projected to grow at a compound annual growth rate of 6.5 per cent, outpacing both GDP growth and other program spending. By 2029-30, spending on elderly benefits is expected to reach $104.4 billion, or 18.3 per cent of all program expenditures.

Government projections highlight the rapid growth in elderly benefits over the next six years, as shown in the table below:

Fiscal Year                  Elderly Benefits ($B)                Total Program Expenses ($B)              Percentage of Total Program Expenses
2023-24                       76.0                                          466.7                                                   16.2 per cent
2024-25                       80.9                                          485.7                                                   16.7 per cent
2025-26                       85.5                                          500.3                                                   17.1 per cent
2026-27                       90.1                                          509.3                                                   17.7 per cent
2027-28                       94.6                                          529.7                                                   17.9 per cent
2028-29                       99.5                                          549.7                                                   18.1 per cent
2029-30                       104.4                                        570.3                                                   18.3 per cent

As the table shows, OAS-GIS spending is rising as a proportion of total government expenditures. This mirrors the original crisis in the Canada Pension Plan (CPP), when benefits outpaced contributions as the population aged.

The CPP once faced a similar sustainability crisis, and its reform in 1997 offers a potential model for addressing the challenges of OAS-GIS today. The federal government overhauled the CPP by creating the Canada Pension Plan Investment Board (CPPIB), which now manages $570 billion in assets. At the time, CPP benefits were paid through general government revenues rather than dedicated investments.

The solution involved higher contribution rates and the creation of an independent investment board to manage the fund sustainably.

These changes secured the CPP’s future, but OAS-GIS remains entirely dependent on government revenue, with no financial backing of its own. That makes it even more vulnerable to economic downturns and demographic shifts.

Policymakers must take decisive action to secure its future. One option is to tighten eligibility criteria to curb uncontrolled spending. Cost-of-living adjustments should also be limited to official inflation measures, ensuring sustainability without unfairly burdening low-income seniors.

The federal government must acknowledge the problem before it becomes unmanageable. The next finance minister should seek input from actuaries, investment professionals, economists and the public to explore feasible long-term solutions. A dedicated OAS-GIS Investment Board, similar to the CPPIB, could help ensure the program’s sustainability. The government already expanded CPP in 2019—there is precedent for such an approach.

Since OAS-GIS has no existing assets, the government will need to inject capital into the program. This could be done through annual surpluses deemed excessive for current needs or through long-term debt financing. Issuing 30-, 40- or even 50-year bonds specifically designed to fund OAS-GIS could provide a market-friendly, fiscally responsible path to solvency. If properly structured, such a plan could improve Canada’s credit rating rather than weaken it, ultimately reducing borrowing costs.

Even today, OAS-GIS spending exceeds the annual federal deficit, a clear warning sign that this issue can no longer be ignored. If no action is taken, Canada will face soaring elderly benefits with no sustainable way to fund them.

The time to act is now. Delaying reform will only make the crisis worse, burdening future generations with an unsustainable system. Policymakers have a choice: build a sustainable future for OAS-GIS or allow it to become a fiscal disaster.

Ian Madsen is the Senior Policy Analyst at the Frontier Centre for Public Policy.

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Canadian gov’t spending on DEI programs exceeds $1 billion since 2016

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From LifeSiteNews

By Clare Marie Merkowsky

Some departments failed to provide clear descriptions of how the taxpayer funds were used. For example, Prairies Economic Development Canada spent $190.1 million on projects related to diversity, equity and inclusion ventures but could not provide details.

Federal diversity, equity and inclusion programs have cost Canadian taxpayers more than $1 billion since 2016.

According to information published September 18 by Blacklock’s Reporter, diversity, equity and inclusion (DEI) government grants have totaled $1.049 billion since 2016, including grants for “cultural vegetables.”

A $25 million grant, one of the largest individual grants, was given to the Canadian Gay and Lesbian Chamber of Commerce to “strengthen Canada’s entrepreneurship ecosystem to be more accessible to LGBTQ small businesses.”

The government payouts were distributed among 29 departments, ranging from military to agricultural projects.

The Department of Agriculture spent $90,649 for “harvesting, processing and storage of cultural vegetables to strengthen food security in equity-deserving Black communities” in Ontario.

Some departments failed to provide clear descriptions of how the taxpayer funds were used. For example, Prairies Economic Development Canada spent $190.1 million on projects related to diversity, equity and inclusion ventures but could not provide details.

“PrairiesCan conducted a search in our grants and contributions management system using the keywords ‘equity,’ ‘diversity’ and ‘inclusion,’” the Inquiry said. “Certain projects were included where diversity, equity and inclusion were referenced but may not be the main focus of the project.”

DEI projects are presented as efforts by organizations to promote fair treatment, representation, and access to opportunities for people from varied backgrounds. However, the projects are often little more than LGBT propaganda campaigns funded by the Liberal government.

As LifeSiteNews reported, the University of British Columbia Vancouver campus posted an opening for a research chair position that essentially barred non-homosexual white men from applying for the job.

Canadians have repeatedly appealed to Liberals to end pro-LGBT DEI mandates, particularly within the education system.

As LifeSiteNews previously reported, in June 2024, 40 Canadian university professors appealed to the Liberal government to abandon DEI initiatives in universities, arguing they are both ineffective and harmful to Canadians.

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How the feds blew your money this week

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The Governor General’s closet: A queen’s dream and a taxpayers’ nightmare

Governor General Mary Simon is spending your money like it’s her personal fund for Buckingham Palace’s boutique.

The governor general dipped into her taxpayer piggy bank (a.k.a. your wallet) to fund her shoe collection — six new pairs in 12 months — and is even charging you for her undergarments.

You read that right. Apparently, hundreds of dollars in silk undergarments are now considered essential to public services.

Simon spent $330 of taxpayers’ money on silk camisoles, $1,117 on shoes, $875 on a single blazer, $1,500 on a “sealskin chest piece” and $2,510 on luxury wool suits during the last fiscal year.

Simon spent $144 on a “black dress cardigan.” The “value of the item” according to the expense sheet is half that, listed at only $72. Is there anything the government doesn’t go overbudget on?

It’s very rare for any minister or prime minister to expense clothing. Only two ministers expensed apparel last year — each less than $300 for work boots for an event at a construction site.

Simon billed you for a total of $7,576 on shoes and clothing last year.

Simon’s annual salary is $378,000 a year. Let’s just say she doesn’t need to force you to pay for her clothes.

And that’s not all! Simon’s expansive wardrobe isn’t the only way the governor general’s office is draining the public purse.

Her lavish wardrobe is just the start of the spending spree. Since her appointment, she spent more than $120,000 on speech writers — and don’t get us started on her crazy travel expenses.

Simon has been enjoying mile-high catering — meals on airplanes include beef Wellington, carpaccio, stuffed pork tenderloin and hundreds of dollars on lemons, limes and bottled water. The list goes on.

Simon and her entourage billed you about $100,000 for airplane food during their week-long trip to the Middle East. A separate four-day trip to Germany totaled $103,000 in catering costs. She also spent hundreds of dollars on flowers to go along with the lavish meals.

All on your dime.

Oh, and the cost of those trips totalled $1 million and $700,000, respectively.

Simon also famously spent $71,000 at “Icelimo Luxury Travel” during a four-day trip to Iceland. The total bill for that trip cost taxpayers $298,000.

In fact, the governor general’s travel during her first year in office cost you almost $3 million.

Why is she even going on these far-flung excursions? The governor general’s role is to represent the monarchy here in Canada.

When was the last time you took your family on a vacation? Next time you agonize over fuel or air travel costs, remember you’re already footing the bill for an unelected figurehead’s opulent jet-setting.

The worst part of all this? The governor general’s flamboyant spending is all within rules laid out by the federal government.

Governors general can bill you up to $130,000 on clothes over their five-year term.

And all those posh clothes need cleaning, right? The governor general’s office spent $117,000 on professional dry-cleaning services since 2018, despite having staff dedicated to doing the laundry.

That works out to more than $1,800 per month spent on dry cleaning.

It’s time to close the royal boutique and stop treating taxpayers like an unlimited credit card.

Franco’s note: I just want to give a shout out to the great investigative news outlet, Blacklock’s Reporter. They were the first outlet to report on this spending. And that’s not the only big taxpayer story they uncovered this week. Check this one out: https://www.blacklocks.ca/d-e-i-spending-tops-1-04b/

 

Carney shrinks from pro-active cuts — lets bureaucrats retire themselves

The Canadian Taxpayers Federation called out Prime Minister Mark Carney for his lackadaisical approach to Ottawa’s bureaucracy.

Carney needs to cut staff, not just wait for them to retire.

Here’s the back story:

The federal bureaucracy ballooned disproportionately under the Trudeau Liberals. Carney’s predecessor added nearly 100,000 paper pushers during his decade-long tenure.

The federal bureaucracy cost taxpayers $71.1 billion in 2024-25 — a 77 per cent increase from the $40.2 billion expense in 2016-17.

Enter Mark Carney, armed with a plan … based on inaction and procrastination.

The prime minister said he’s directed federal departments and Crown corporations to cut up to 15 per cent of their budgets over the next few years. He also claimed he would “balance the operating budget by Budget 2028.”

That seemed like a promising start — until Carney announced the cuts would “happen naturally through attrition.”

The bureaucracy now consumes about 55 per cent of the operating budget. And quality of service is decreasing.

Half of Canadians think services are worse than in 2016, according to a Leger poll commissioned by the CTF. Only 11 per cent say they’re better — proving the bureaucracy isn’t shrinking, it’s suffocating.

The poll showed most Canadians want to see the federal bureaucracy cut.

We’ll keep fighting for real cuts — not just a slow march to retirement.

 

Video: Carney clueless about his own gun confiscation

Carney called his gun confiscation “voluntary.”

Except the federal government announced a list of banned guns that many Canadians had stored in their homes.

Those firearms are suddenly illegal.

The Carney government plans to confiscate them in exchange for compensation. The penalty for illegal possession of a prohibited firearm under the Criminal Code is up to five years in jail.

And taxpayers like you are forced to pay those law-abiding Canadians after the government seizes their property.

“We’re not confiscating guns,” Carney said. “[It’s] an opportunity for Canadians to return guns for compensation.”

What does that mean? Taxpayers have questions.

The CTF’s Gage Haubrich and Kris Sims break it down in the video below and offer Carney an easy solution: scrap the gun ban and confiscation scheme.

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