Liberals could pay off federal debt seven years earlier

By Andrew Rickard | April 21 2016 11:31AM

In the budget last month, the federal government made a commitment to balancing the budget and lowering the federal debt-to-GDP ratio by 2020. A report from the Parliamentary Budget Officer (PBO) suggests that the Liberals could balance the books sooner if they left the Old Age Security (OAS) eligibility age at 67.

In 2012, Stephen Harper's Conservative government announced plans to eventually increase the age at which one is able to collect the OAS from 65 to 67. In the election, Trudeau's Liberals pledged to reverse the measure, claiming that it would take about $13,000 out of seniors’ pockets. In his Economic and Fiscal Outlook for April 2016, which was published earlier this week, PBO Jean-Denis Fréchette has calculated the financial implications of that decision.

Sustainable over the long term

The PBO's projections show the federal debt-to-GDP ratio will decline steadily and eliminate debt within the next 50 years, and the report says that fiscal structure underlying the Liberal's 2016 budget is sustainable over the long term. However, the report suggests parliamentarians assess the ramifications of cancelling the increase to the OAS age of eligibility in 2023.

"Had the age of eligibility change not been reversed, federal debt would be eliminated by 2057-58— seven years earlier than under current policy," reads the report.