Federal spending on Old Age Security will outpace child care, housing, and postsecondary education combined

The federal government plans to increase spending on Old Age Security (OAS) more than what it intends to up spending on housing, postsecondary education, employment insurance, child care, and Canada Child Benefit (CCB) combined by 2029. Compared to the projected $28.3 billion increase in OAS spending from 2023 to 2029, Prime Minister Mark Carney’s first budget projects increasing spending for employment insurance by $9.5 billion, Canada Child Benefit by $7.1 billion, child care spending by $2.9 billion, postsecondary education by $1.9 billion, and housing by $1.6 billion. The combined $23 billion in spending is still $5.3 billion less than the $28.3 billion to be spent on OAS. The only federal expenditure that will surpass OAS in growth for the same time period is interest on the federal debt, which will go up by $28.8 billion (reaching $76.1 billion). Paul Kershaw, founder of Generation Squeeze, a research and advocacy organization focused on generational fairness, shared the surprising statistics in a recent Hub interview. “The biggest pressure point is OAS. It has consumed more new spending than any other program over the past decade—and will take even more in the years ahead,” the Generation Squeeze website reads. “OAS cost $76 billion in 2023, and is on track to hit $104 billion by 2029. That $28 billion increase looms over every other line in the budget.” Ottawa’s increasing OAS spending dedicates scarce public resources on the by-and-large much more well-off older generations. Canadians aged 65 and older have a median net worth now above $1 million, compared to Canadians under 35 having a median net worth of only $48,000, according to research conducted by CEO of Ipsos Public Affairs Darrell Bricker. Missing Middle Initiative founding director and Hub contributor Mike Moffatt calculated that, on average, the income of men older than 65 now surpasses the average income of men aged 25 to 34, with seniors making more than $60,000. The Carney government maintains that budget 2025 is making major investments in the younger generations. “To the youth, this budget was made for you,” Finance Minister François-Philippe Champagne announced before tabling the budget. When it comes to youth-specific programs in Budget 2025, the government plans to spend $594.7 million over two years to fund 100,000 summer jobs, $307.9 million on a Youth Employment and Skills Strategy, and $40 million on a Youth Climate Corps to provide training to young Canadians to respond to environmental emergencies. However, Kershaw’s analysis shows approximately 80 percent of new transfers to Canadian individuals in the budget flow to OAS. OAS spending on seniors far outpaces spending on young Canadians Critics of OAS’s growth like Kershaw have pointed out that claw backs to the program for Canadian seniors do not start until much higher income thresholds are met, compared to programs like the Canada Child Benefit (CCB). Canadians between the ages of 65 to 74 receive a maximum monthly income of $740 in OAS if their net income does not surpass $93,454. OAS reductions do not apply to combined household income, so a couple with a combined income of $186,908 or less would still receive $1,480 a month in OAS. For Canadians over 75, OAS jumps up to $814 per month and allows a clawed back eligibility up to $157,923. In contrast to generous OAS payments, CCB payments to parents with a child under six years of age is $666 per month. They begin to get clawed back for combined family income above $37,487. A combined family income greater than $81,222 gets $3,061 reduced from their CCB payment and an additional 3.2 percent of every dollar of income above the threshold. The clawbacks to OAS are far less punitive, with 15 percent of every dollar over the threshold of $93,454 getting taken off the OAS payments. OAS, to no surprise, is popular with older voters. None of the federal parties have voiced any criticism of OAS, or suggested reducing it for wealthier seniors. On the contrary, increasing OAS payments for seniors aged 65 to 74 by 10 percent was one of the Bloc Quebecois’ non-negotiable demands for the party’s MPs to vote for budget 2025. Even the federal Conservatives, despite the party’s leader Pierre Poilievre blasting Prime Minister Mark Carney for using the federal coffers as a “credit card” for doubling the planned deficit spending of predecessor Justin Trudeau’s government, have not called for curtailing OAS payments.