Few ideas have gained more traction in Canadian public policy circles than intergenerational equity.
The argument is familiar. Younger Canadians face soaring housing costs, delayed family formation, stagnant productivity growth, and declining economic security. Meanwhile, older Canadians are portrayed as a protected class receiving public pensions, benefiting from rising home values, and consuming an increasing share of public resources.
There is truth in some of these observations.
But there is a profound problem with the policy response that often follows.
Wealth vs income
Canada keeps debating seniors’ income while largely ignoring wealth. As a result, much of the discussion about intergenerational fairness ends up missing the issue almost entirely.
Consider a simple fact. Almost every major income security program in Canada reaches some wealthy recipients.
- Millionaires receive CPP.
- Millionaires receive Employment Insurance if they qualify through employment.
- Millionaires can receive workers’ compensation benefits.
- Millionaires receive the Canada Child Benefit if their incomes are low enough in a particular year.
- Millionaires can receive OAS unless their income exceeds the clawback threshold.
This is not a design flaw. It reflects the fact that most Canadian social programs are based primarily on income rather than wealth.
Yet there is one major exception.
When governments provide income support to the poorest Canadians, they frequently impose asset tests. Social assistance programs do it. Disability income programs often do it.
Recipients are expected to liquidate savings, exhaust assets, draw down inheritances, and prove financial desperation before assistance becomes available. In effect, Canada applies its most intrusive wealth tests to its poorest citizens while largely avoiding wealth tests elsewhere.
Measuring income is easier
This should immediately raise a question.
If intergenerational inequity is fundamentally about wealth concentration, why is so much political energy devoted to programs based on income?
The answer is that income is easier to measure, easier to discuss, and politically safer to target. Wealth is harder.
A retired schoolteacher with $40,000 in annual income and a mortgage-free Toronto house worth $1.8 million may appear modestly situated under an income test. A younger professional earning $120,000 while renting may appear affluent under the same test.
The income numbers tell one story. The wealth numbers tell another.
The generation divide is driven by assets
This distinction matters because most of the economic divide between generations is increasingly driven by assets rather than income:
- Housing wealth
- Inheritances
- Investment portfolios
- Private and public corporations
- Tax-preferred capital gains
- Intergenerational transfers
These are the mechanisms through which advantage increasingly accumulates and reproduces itself. Yet they are remarkably absent from many intergenerational equity discussions.
Instead, public debate repeatedly returns to Old Age Security. The implication is often that reducing benefits for higher-income seniors would somehow restore or even address generational fairness.
OAS and taxes
But even if one accepts that premise, the arithmetic is surprisingly weak.
The OAS recovery tax already removes benefits from the highest-income seniors and partially claws back benefits from many others. OAS is also taxable income. Many recipients return a portion of their benefits through the tax system.
More importantly, reducing OAS for a retired senior with modest income but substantial housing wealth does little to address the underlying drivers of intergenerational inequality.
- The wealth remains untouched.
- The housing gains remain untouched.
- The inheritance remains untouched.
- The principal residence exemption remains untouched.
- The intergenerational transfer remains untouched.
The policy debate becomes disconnected from the problem it claims to solve.
This is why attacks on OAS often feel strangely unsatisfying. They identify a real concern—growing inequality between generations—but then focus on one of the few major programs that helped reduce poverty rather than on the mechanisms through which wealth actually accumulates.
Addressing intergenerational equity means addressing wealth
If Canada were serious about addressing intergenerational equity, the discussion would look very different.
We would be talking about the taxation of inherited wealth. We would be debating the treatment of large capital gains on principal residences. We would be examining taxes on financial transactions. We would be discussing wealth concentration itself.
These conversations are politically difficult because wealth is concentrated among powerful constituencies and because many middle-class Canadians have benefited from rising housing values.
But difficulty does not make the issue disappear.
Indeed, one of the peculiar features of the current debate is that it often presents OAS as though it were the central obstacle to fairness between generations when, in reality, it is largely peripheral to the wealth dynamics driving that inequity.
The result is a form of policy displacement. We focus on seniors’ benefits because they are visible. We avoid wealth because it is politically uncomfortable.
The danger is that we end up pursuing indiscriminate cuts rather than meaningful reform. A policy can reduce spending without reducing inequality.
A policy can reduce benefits without improving opportunity. A policy can weaken income security while leaving wealth concentration entirely intact.
That is precisely the risk with many contemporary proposals aimed at seniors’ benefits.
The choice is not between defending every aspect of OAS and ignoring intergenerational inequity. The choice is whether we want to address the actual sources of inequality or merely the most convenient targets.
Canada’s greatest intergenerational challenge is not that some affluent seniors receive public benefits. It is that wealth itself increasingly shapes life chances while remaining lightly taxed, lightly measured, and often absent from public debate.
Until that changes, arguments about OAS will continue to generate heat while producing very little progress on intergenerational fairness. We will be arguing about income while the real story is wealth.
More: Before we reduce OAS: A policy to-do list