Think twice about campaign promise of seniors’ price index, docs urge Liberals

The idea of a so-called “seniors’ price index” arises from a 2005 Statistics Canada study that showed the cost of goods purchased by older Canadians growing faster than the rate of inflation as captured by the traditional consumer price index. (Photo: Fran Urbano/ Flickr)

OTTAWA –The Trudeau government should tread carefully on a Liberal promise to find a new way of making sure elderly benefits keep pace with rising costs, newly released documents suggest.

The idea of a so-called “seniors’ price index” arises from a 2005 Statistics Canada study that showed the cost of goods purchased by older Canadians growing faster than the rate of inflation as captured by the traditional consumer price index.

Currently, increases in seniors’ benefits like old age security are tied to the consumer price index so the benefit doesn’t lose value over time.

In the intervening years, however, the government has spent $45 million to improve the accuracy of the index, including using a larger sample of goods and prices to account for local populations.

Those changes mean the “conclusions of the study with respect to inflation for seniors-only households relative to all households may no longer be valid,” according to a July briefing note to Social Development Minister Jean-Yves Duclos.

The Canadian Press obtained a copy of the note under the Access to Information Act.

Mathieu Filion, a spokesman for Duclos, said talks are ongoing with Statistics Canada about the proposed measurement for seniors, with more analysis needed to see if the 12-year old study still holds true.

“What matters for this government is to protect the standard of living of senior Canadians. Our seniors deserve a quiet retirement, protected from pressures of the increasing cost of living,” Filion said.

The Liberals first made the promise of a new index during the 2015 election campaign, and referenced it again in their maiden budget last year.

Reaction at the time was harsh. Critics accused the Liberals of making policy that contradicted available evidence, and warned that other segments of the population, such as families and students, would demand similar special treatment.

The 2017 budget tabled last month made no mention of the idea.

It did project an increase in seniors’ benefits –from $48.3 billion this year to $63.7 billion five years from now –because of inflation and a growing number of Canadians eligible for old age security and the guaranteed income supplement.

Making sure the value of the benefits doesn’t decline as prices rise was a key concern for members of the Canadian Association of Retired Persons ahead of last year’s budget, said Wanda Morris, the association’s vice-president of advocacy.

The existing system, while improved, doesn’t account for variations in elderly spending habits in different parts of the country or at different income levels, or provide any additional help for poor seniors, Morris said.

The growing number of Canadian seniors is expected to put a strain on government finances and services, posing a conundrum for bureaucrats.

Last year, Employment and Social Development Canada officials proposed a crowdsourcing study in order to bring in experts who might provide a new and different perspective on the issues facing seniors.

Crowdsourcing has been found to produce more accurate predictions, as well as forecasting alternative future outcomes, said one briefing note to an ESDC official.

In the end, however, the study never happened; the government decided last spring to convene an expert roundtable instead.