DAVOS, Switzerland ? Prime Minister Stephen Harper signalled his government will bring forward "major transformations" to the country in the coming months ? in areas such as the retirement pension system, immigration, science and technology investment and the energy sector.
Of those reforms, Harper said, getting a grip on slowing the rising costs of the country's pension system is particularly critical.
In the wake of Harper's speech, it now appears the Conservative government could be poised to gradually change the Old Age Security system so that the age of eligibility is raised to 67 from 65.
The opposition NDP and Liberals said that such a move would financially cripple millions of Canadians, and that at a time when world leaders were talking about addressing income inequality, the prime minister's words indicated the opposite may happen in Canada.
Harper made the revelations in a major keynote speech Thursday at the World Economic Forum, the annual gathering of the world's political and business elite.
As expected, the prime minister was critical of Europe and the United States for not adequately dealing with the economic problems that have gripped them in recent months and years.
But it was Harper's assessment of the major changes that lie ahead for Canada that stood out in the speech.
"In the months to come, our government will undertake major transformations to position Canada for growth over the next generation," said Harper.
The Conservative government will table a budget in the coming weeks that is expected to set the stage for years of deficit-slashing and government reform.
"Under our government, Canada will make the transformations necessary to sustain economic growth, job creation and prosperity now and for the next generation," said Harper.
He said that means two things: "Making better economic choices now. And preparing ourselves now for the demographic pressures the Canadian economy faces."
Harper said the country's aging population has become a backdrop for his concern about how to keep the country strong over the long term.
"If not addressed promptly, this has the capacity to undermine Canada's economic position and, for that matter, that of all western nations well beyond the current economic crises."
Indeed, Harper said the country's demographics ? an aging population and a dwindling workforce ? constitute "a threat to the social programs and services that Canadians cherish."
For that reason, he said his government will "be taking measures in the coming months."
Harper did not specify what those measures will be, but he said they are necessary ? not just to bring the government's finances back to a balanced budget in the medium term, "but also to ensure the sustainability of our social programs and fiscal position over the next generation."
"We have already taken steps to limit the growth of our health-care spending over that period," said Harper. "We must do the same for our retirement income system."
Harper said the centrepiece of the public pension system ? the Canada Pension Plan ? is fully funded, actuarially sound and does not need to be changed.
But he added: "For those elements of the system that are not funded, we will make the changes necessary to ensure sustainability for the next generation while not affecting current recipients."
So far, the government has come forward with a plan to create a private pooled pension system to encourage Canadians to prepare for their retirement.
Still, there are concerns that as baby boomers approach retirement, the cost to government of providing public pensions will skyrocket.
In December, the National Post reported that there was internal debate within the government about increasing the age of eligibility for the other major element of the public pension scheme ? Old Age Security ? to 67 from 65.
Internal government documents project the cost of the OAS system will climb from $36.5 billion in 2010 to $48 billion in 2015. By 2030 ? when the number of seniors is expected to climb to 9.3 million from 4.7 million now ? the cost of the program could reach $108 billion.
NDP finance critic Peter Julian, speaking to reporters in Ottawa, called Harper's speech "ominous words because we don't have any details yet."
Julian said the NDP wants to see the government increase spending on the OAS by $700 million per year, which the NDP says would make the system sustainable, rather than tell seniors they have to work for two more years before they can retire.
"That's completely unacceptable. If he had run on that platform last May, he wouldn't have the numbers he has in the House he has today," Julian said.
The NDP and the Liberals said that increasing funding to the OAS could be financed by reigning in spending on prisons and the F-35 fighter jet, which could cost anywhere between $16 billion and $30 billion, depending on who you ask.
"If he's serious about the demographic shift, he should listen to evidence and invest in hospital beds, not prison beds," said Liberal critic Scott Brison.
Brison said the government should make tax credits refundable for those in the lowest income brackets to help address income inequality in Canada.
"It would be a very regressive step to cut or restrict OAS at a time when income inequality is growing issue," Brison told Postmedia News.
"Harper isn't addressing income inequality. He's proposing changes that would make it worse."
The challenge to the government will now be selling whatever changes it plans to the pension system, something which has dogged previous prime ministers, said Errol Mendes, a politics experts from the University of Ottawa.
Brian Mulroney, months into his mandate, controversially decided to de-index pensions. After a senior confronted him, Mulroney backed away from the plan.
"I bet you (Harper) won't talk about the OAS over here because there will be pictures of that woman saying 'Goodbye Charlie' to Brian Mulroney," said Mendes, referring to the famous 1986 encounter.
Harper issued a scathing criticism of countries in the developed world, which he suggested had forgotten about the importance of creating economic growth.
"Is it the case that, in the developed world, too many of us have in fact become complacent about our prosperity?" Harper asked.
He suggested that developed countries had taken wealth "as a given . . . assuming it is somehow the natural order of things."
As a result, he said, countries in the western world had become focused primarily "on our services and entitlements."
As a result, he said, it's not surprising that, in addition to banks facing debt, countries themselves were also facing sovereign debt crises.
The problem, he suggested, could be "too much general willingness to have standards and benefits beyond our ability, or even willingness, to pay for them."
Harper warned that the wealth of western economies "is no more inevitable than the poverty of emerging ones."
He said the problems afflicting Europe and the U.S. threaten to become even more serious in future.
"Each nation has a choice to make. Western nations, in particular, face a choice of whether to create the conditions for growth and prosperity, or to risk long-term economic decline."
The solution, he said, is for countries to make the sometimes tough, but correct, decisions now.
"Easy choices now mean fewer choices later."
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Among the other priorities Prime Minister Stephen Harper signalled where change is coming:
- Energy
The Conservative government will make it a "national priority" to ensure the country has the "capacity to export our energy products beyond the United States, and specifically to Asia."
"In this regard, we will soon take action to ensure that major energy and mining projects are not subject to unnecessary regulatory delays ? that is, delay merely for the sake of delay."
Harper did not explain what he has planned, although he and Natural Resources Minister Joe Oliver have complained that foreign-backed "radical" opponents of the $5.5-billion Northern Gateway project have threatened to slow down hearings by the National Energy Board.
- Immigration
"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."
- Science
The government will continue to make "key investments in science and technology" that are necessary to sustain a "modern competitive economy."
"But we believe that Canada's less-than-optimal results for those investments is a significant problem for our country."
- Trade
Harper expects to complete negotiations on a Canada-European Union free-trade agreement this year.
Furthermore, he said, his government is also committed to completing negotiations for a free-trade deal with India by the end of 2013.
And Canada will begin talks to become a member of the Trans-Pacific Partnership while also pursuing opportunities to trade in the emerging market of Asia.
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Source: http://feeds.canada.com/~r/canwest/F229/~3/oz4a1qGmtno/story.html
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