The government has just weeks to decide if it will meet the $16-billion demand from the Bloc Québécois to stave off an election for a few more months, but the stipulation may be at odds with the political and fiscal plans of the Liberals.
The Liberals have taken great pains in the last year to mould their political strategy around a sense of injustice among millennials and generation-Z Canadians who feel their work isn’t paying off like it did for previous generations.
While Prime Minister Justin Trudeau has been touting policies aimed at “fairness for every generation,” the Bloc has given him until Oct. 29 to green light spending for its private member’s bill to increase old age security for seniors under the age of 75.
If the government doesn’t support the bill by then, Bloc Leader Yves-François Blanchet says he will enter talks with other parties to bring down the Liberal minority government before the new year.
“I don’t see clearly what the political upside is for the Trudeau Liberals to spend more on seniors,” said Andrew Perez, a Liberal strategist with Perez Strategies.
That does appear to be the only demographic the Liberals are still competitive with, Perez said.
The younger voters who helped Trudeau soar to popularity in 2015 seem, according to the polls, to have drifted to the right to support Conservative Leader Pierre Poilievre.
“Liberals historically are always ahead of Conservatives among younger generations. So it’s quite an anathema to the Liberal brand, it’s quite shocking to see these numbers,” he said.
It will be difficult for any party to stand up in the House of Commons and oppose more money for seniors, said Tyler Meredith, the former lead economic adviser for Trudeau and two finance ministers and a founding partner of the policy advising firm Meredith Boessenkool & Phillips.
“The challenge is in the implementation and the cost,” he said.
The Liberal government increased old age security payments for people over the age of 75 in 2022, with the intention of targeting the most vulnerable seniors.
The parliamentary budget officer estimated that increasing old age security for those under 75 would cost an additional $16 billion over five years.
For the Liberals, that’s another $16 billion of deficit spending.
Adding that to the budget, on top of money for housing and other issues the government wants to tackle ahead of the next election, would be difficult, Meredith said.
“I’m not sure that it is necessarily intergenerationally unfair. I’m just saying I’m not sure it’s the most effective use of money,” he said.
Finance Minister Chrystia Freeland pledged new fiscal guardrails last year aimed at limiting spending and deficits. The move came as there was mounting pressure to ensure federal spending doesn’t hinder the Bank of Canada’s ability to control inflation.
“When it comes to further support for seniors, we are having good conversations about all possible economic measures with both the Bloc and the NDP,” Freeland said last week.
Seniors’ benefits are a major expense for the federal government, and one that has grown significantly over the last year as the population ages: Ottawa spent nearly $70 billion on old age security payments, the guaranteed income supplement and spousal allowance in 2022.
The Bloc has argued that the decision to increase old age security payments only for people 75 and older was discriminatory.
But Laval University economics professor Stephen Gordon disagrees, noting older seniors are typically more in need.
“People who are older than 75, they’re much less likely to be able to work if they need to increase their income,” Gordon said, adding that older seniors are also more likely to have depleted their savings.
Gordon said of all the federal government’s priorities, giving more money to seniors likely isn’t high on the list. He also noted that seniors have lower poverty rates than other age groups.
“Think of all the other priorities: housing, education, health — my God, health. This is like very, very low in the priorities and federal government finances are getting more and more dodgy,” Gordon said.
According to Statistics Canada, the poverty rate in 2022 for people aged 65 and older was six per cent — lower than the country’s overall poverty rate of 9.9 per cent.
The Liberals don’t have long to think about their options. In addition to the Bloc’s deadline, they must table a fall economic statement that lays out their spending plans and economic outlook before the end of the year.
In the meantime, the House of Commons is expected to vote on more confidence motions that could topple the government in the weeks ahead.