02/01/2012 06:57 EST | Updated 04/02/2012 05:12 EDT

Old Age Security Benefits: Federal Budget Won't Bring Changes, Says Flaherty


OTTAWA - The upcoming federal budget will not include changes to the Old Age Security program for seniors but changes are coming, Finance Minister Jim Flaherty said Wednesday.

The minister said in a CBC interview from Israel that nothing in the coming budget will affect Canadians receiving benefits this year.

Flaherty is expected to release his next budget in March. He and his officials have been holding pre-budget consultations for months as the government looks for ways to reign in spending and reduce the federal deficit.

Recent reports suggest the government is preparing to grapple with the financial needs of Canada's aging population and a growing number of people at or near retirement age.

"We need to look at all the issues relating to retirement income, but not for this year's budget procedure so we can have some kind of savings this year," Flaherty said Wednesday.

"But we are looking at long term sustainability," he added. "We could in the budget say, 'All right, these are some of the things that could be done in the future in order to make sure these programs are sustainable in the long term.' "

The comments suggest Flaherty may lay out options to cut the cost of the OAS program, which goes to all Canadians upon turning 65, rather than lay out specific changes that come into effect sometime in the future.

Some reports have said the government wants to increase the age of eligibility by two years to 67 to encourage Canadians to work longer, and reduce the number of years they would collect benefits.

Flaherty would not say whether that is being considered.

With the baby boom bulge in the population now entering retirement, the cost of OAS is estimated to triple to about $108 billion by 2030. That still represents only 3.1 per cent of anticipated size of the economy in that year, however.

Flaherty also brushed aside criticism from opposition parties that he is planning to cut the discretionary spending portion of the budget by between $4 billion and $8 billion a year, which one report said could result more than 60,000 jobs.

Liberal and NDP parliamentary critics say it's the wrong time to cut spending, citing the 0.1 per cent contraction in economic output in November.

But the finance minister said he was not concerned about the performance of one or two months. He said he believes the Canadian economy will continue to grow modestly in 2012.

Flaherty admitted, however, that he is concerned about the European debt crisis and the possible impact it will have in Canada.

He said he hasn't set a budget date yet for that reason.

"We're watching Europe. We want to make sure we do not have any fiscal crisis or banking crisis coming out of Europe that might affect the American market or our market."

Expectations in Ottawa are that the budget will be handed down in early March.

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