Third Time’s a Charm for Cutbacks to Pensions?

Get ready for the Great Pension Debate of 2012

Ipsos Reid pollster Darrell Bricker says Canadians could be on the verge of rising up in anger at the government because they have not been “conditioned” to accept the need for OAS cutbacks.

“The government hasn’t found their message or their voice in this debate yet. It’s the one that could really blow up.”

Results of a recent Ipsos Reid poll found more that 68 per cent of Canadians oppose increasing the retirement age to 67 from 65.

Political analysts have a phrase for such issues. It’s the “third rail” of politics. Just as a subway system has an electrified third rail that no one should touch, issues occasionally emerge that no politician dares even brush by.This year, in Canada, it could be pension cutbacks.

“It’s pretty close to the third rail,” says Bricker. “You’re feeling the current through your foot.”

Others have tried it — Brian Mulroney in 1985 and Jean Chretien in 1996 — and stepped back once they saw the grey wave of protest about to drown them.

Mulroney had proposed to partially de-index OAS but backed off after a little old lady — Solange Denis — confronted him on Parliament Hill, wagging her finger and complaining that he had broken an election promise.

“You lied to us,” she said. “You made us vote for you, then goodbye Charlie Brown.”

A decade later, Paul Martin, then the Liberal finance minister, announced plans to replace the OAS with a new “Seniors Benefit” that would affect future pensioners.

Under the Liberals’ proposed change, low-income seniors would have received higher benefits than under OAS, while those with a higher income would either get reduced pensions or no benefits at all. The overall costs of the system would have been slashed by about 10 per cent within 35 years. Chretien grew wary of the public backlash and the plan was left to wither and die.

But Harper has publicly staked his own reputation as an economic manager on his plan — declaring at a summit in the Swiss Alps two months ago that Canada’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,” said Harper.

In a later interview with Postmedia News, Harper was emphatic.

“We are going to have a lower and lower percentage of our population that is working. This is going to be a significant economic problem. And obviously, one of the things that many countries have been looking at is trying to have the incentives to keep people in the labour force and contributing.”

And so, the cost of Canada’s pension system will be cut.

Today’s seniors will be left untouched. But many others — possibly anyone under the age of about 50 — will receive a stark message: The public pension plan now in place for seniors won’t be so generous by the time you hit 65.

Experts say that could leave middle-aged, and younger, taxpayers furious that their generation is being shortchanged.