Thursday, September 22, 2016

Wealth and seniors two views

Two different views on wealth amongst seniors, one from an academic, right view, drawing on stats and information that is current to 2006. The past ten years have changed the landscape but this is ignored in the first report. The second is from the BC Senior’s Advocate which highlights the reality of seniors in BC.

There is a tendency to view seniors as a vulnerable population”, write Lee and Speer. “The facts tell a different story”. Ian Lee teaches strategic management at Carleton University’s Sprott School of Business, and Sean Speer is a Senior Fellow at the Macdonald-Laurier Institute.

Of course, the authors aren’t actually proposing a Seniors Tax. Instead they are attempting to highlight the contradictions of federal policy by taking arbitrary and vague concepts like fairness to their logical conclusion.

Not only are seniors wealthier than younger Canadians, they are the disproportionate beneficiaries of government programs and spending. A Seniors Tax would therefore go a long way to offset the “reverse ageism” – that is, a bias in favour of older rather than younger Canadians – inherent in government spending and taxation policy.

It was only a few decades ago that Canadian seniors fared poorly relative to seniors in other countries according to key indicators such as income replacement, accumulated wealth and poverty rates. But that is not the case now. Consider that:
  • Canadian seniors’ wealth has grown much faster than younger Canadians', nearly quadrupling since 198
  •  Incidence of low income among seniors fell from 21.3 percent to 5.4 percent between 1980 and 2006.
  • The federal government is increasing spending on seniors at a rate of $12 billion per year.
  •  Canada has been ranked as one of the least “intergenerational just” jurisdictions in the world.
  • The evidence would thus suggest that the government’s redistributionism should have focused on transferring income and wealth from seniors to younger Canadians.

Instead, Ottawa doubled down on helping out seniors in its most recent budget! Returning the Old Age Security eligibility age to 65 will add significant cost over the long term for a group that barely needs it.

Another point of view:

There is no denying that many seniors in this country are thoroughly enjoying life on middle or high incomes, but this is true in the population at large as well.  

In fact, looking at the objective data of Statistics Canada, the median household income for seniors is in fact the lowest of any age cohort over the age of 25.  In Canada, single people over 65 have a median income of $26,000 (StatsCan 2013 Canadian Income Survey).  

This means that fully half of single Canadian seniors are living on less than $26,000 a year.

These are 26% of single seniors in British Columbia who are living in poverty. These are people who have no expectation of increases in income with new jobs, no mobility to move to more affordable rental markets (20% of seniors in BC are renters) and 35% do not live in urban areas where house values provide potential significant equity to access. Some may question entitlements offered to seniors based solely on their age with no consideration of income.  However, in fact, almost all government subsidized entitlements for seniors are income tested.

The social spending bias against seniors continues to be expressed by other media and some academics who cherry-pick data and offer gross generalizations that take the economic conditions of some seniors and apply it to all seniors. Perhaps the most offensive part of these often hyperbole laced arguments is when medical costs are considered.  The argument above advance is that we should be counting the money we spend on fixing hips, knees and hearts as part of looking at government expenditures on seniors, and lump it in with OAS and cinema discounts to conclude that we spend disproportionately more on seniors than the population under 65 on a per capita basis. 

Not to let facts get in the way of a good story, but we could slice out any number of discrete populations and show similar healthcare dollar disparities. Conveniently missing from the conversation on health care costs for seniors is the value of the contribution that seniors make to caring for their spouses. 

Before we go blaming seniors for the fact they need a new hip or bypass surgery, we should first thank them for the billions, yes billions of dollars they save the health care system by taking care of each other. 

Indeed I find it hard to believe that those who support these arguments have spent any time with seniors living in residential care or receiving home care – the flip side of seniors on the tennis courts and golf courses of Toronto.

It will be very difficult to have a rational adult conversation if we keep trying to whip up generational warfare with incendiary statements such as one generation is “robbing” the other of their future. 

Currently seniors represent about 17% of Canada’s population and this is expected to rise to about 24% by the year 2031 at which point it will stabilize.  By any estimation 24% is a minority of the population. Please let us give the respect to this minority that we would give to any other when we are discussing needs and entitlements, in other words, let us remain Canadian in our discourse.

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