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Tags: canada | retirement | age

Canada Raises Retirement Age to Try to Balance Budget

Friday, 30 March 2012 08:32 AM EDT

Canada’s center-right government called for the retirement age to be raised and for major public service cuts Thursday, in an austerity budget that aims to balance the books by 2016.
Tackling unpopular measures that many industrialized countries are being forced to consider as their populations age, the Canadian government said its budget would help the country move a step ahead.

“Other Western countries face the risk of long-term economic decline. We have a rare opportunity to position our country for sustainable, long-term growth,” Finance Minister Jim Flaherty said in the House of Commons.

“Looking ahead, Canadians have every reason to be confident,” he said presenting what was dubbed a budget for “the next generation.”

Under the plan, Canada will cut its deficit this year through “moderate” spending cuts, as the economy grows by 2.1 percent, Flaherty announced.

But much deeper cuts, including the laying off of 19,200 government staff, or 4.8 percent of the federal workforce, are planned for the coming years.

Flaherty said old-age security and guaranteed income supplement benefits worth up to a total of Can$15,000 and now paid out at age 65 would be offered only at age 67, starting in 2023.

He also announced the withdrawal of the Canadian penny from circulation later this year, saying it costs more to produce than its face value. The move will save the government Can$11 million annually.

The deficit was projected in the budget to fall to Can$21.1 billion (US$21.1 billion) or 1.2 percent of the gross domestic product (GDP) for the fiscal year ending March 31, 2013, down from a revised Can$24.9 billion last fiscal year.
“The savings we have identified are moderate,” amounting to only Can$1.5 billion across all government ministries this year, Flaherty said.

But the plan was panned by the center-left opposition, which accused the government of reneging on its election promises.

While Canada’s economy weathered the worst of the global economic crisis well, it has not been immune to the tumult that has circled the globe, particularly when it comes to public finances.

Ottawa’s debt-to-GDP ratio remains the lowest in the Group of Seven industrialized nations. Canada is one of only two G7 nations to have recouped all the jobs lost during the global recession, Flaherty noted.

According to Statistics Canada, the Canadian economy has created more than 610,000 jobs since mid-2009, but employment was flat in the first two months of this year.

Going forward, the Canadian economy is forecast to grow by a modest 2.4 percent annually, from 2013 to 2015.

Looking to the longer term, the minister outlined immigration reforms to attract more foreigners with skills and money to “strengthen Canada's economy,” and a streamlining of the review process for major resource projects.

He said Ottawa would post more government documents online to reduce its printing costs and ask bureaucrats to hold more videoconferences to cut expenses for travel across the world's largest country by land mass.

About Can$5.2 billion was earmarked to renew Canada’s aging coast guard fleet, and a small business hiring tax credit was extended to spur public sector job creation.

Flaherty also said the government would step up efforts to diversify Canada's export markets.

The United States is currently Canada’s largest trading partner, but Washington’s recent rejection of an oil pipeline from the Alberta oil sands to refineries in Texas and ports on the U.S. Gulf Coast strained the relationship.

Since 2006, Canada has signed nine free-trade deals and is now negotiating pacts with the European Union and India, as well as trying to grow its trade ties with China.

Prime Minister Stephen Harper during a trip this week launched free-trade negotiations with Thailand and Japan.

© AFP 2023

Friday, 30 March 2012 08:32 AM
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