The federal government's move to improve the financial lot of low-income, working Canadians, aged 65 or older, may be cancelled out by oil-driven inflation or by a change of mind.

Statistics Canada reported that consumer prices rose 3.1 percent in the 12-months ending June 2008, compared with the 2.2 percent gain recorded in May. The federal agency attributes this increase to higher gasoline prices.

Beginning July 1, 2008, those receiving the Guaranteed Income Supplement (GIS) are entitled to keep up to an additional $1,500 in annual GIS benefits. However, increased costs for transportation, heating, and almost everything else, may cancel out this maximum C$4.10 daily gain.

The GIS is a monthly benefit provided to low-income Canadians who receive the Old Age Security benefit, provided they are aged 65 or over and meet residency requirements. GIS is reduced by one dollar for every two dollars of income earned. The GIS earnings tax exemption was raised from C$500 to C$3,500 in acknowledgment that costs are continually on the rise. Now, these low-income individuals, who continue work to improve their lives, can earn up to $3,500 a year before they lose benefits.

This is one of many measures designed to bring relief to the diverse aged-65-and-over group historically known as "seniors," which includes some of Canada's poorest citizens. The government's contributions include:

• C$13 million over three years to help seniors and others recognize the signs and symptoms of elder abuse and to provide information on what support is available;

• Funding projects in hundreds of communities across Canada under the New Horizons for Seniors Program, helping seniors to bring their leadership, energy and skills to benefit communities;

• Providing more than C$1 billion in annual tax relief through pension income splitting and enhancements in age and pension income credits; and

• Extending the age limit for building Registered Pension Plans and Registered Retirement Savings Plans for an extra two years until age 71.

These measures may prove to be too little, too late, much like the government's latest "shutting the barn door after the horse has bolted" move with respect to mortgages.

Back in June 28, 2006, the federal housing agency, Canada Mortgage and Housing Corporation (CMHC), announced it was making home ownership more affordable and accessible for Canadians by offering insurance for mortgages with longer amortization and more flexible repayment options.

Karen Kinsley, President of CMHC was quoted: "These innovative financial solutions will allow more Canadians to buy homes, and to do so sooner. By reducing costs and increasing flexibility, CMHC continues to help Canadians realize their dreams of home ownership."

Zero down payment and 40-year amortization periods, which reduce monthly payments by spreading them over longer periods, were among the measures that opened home ownership to those who had not been historically considered able to afford to buy. The fact that these financial delaying tactics can increase the overall cost of borrowing by thousands and thousands of dollars was not considered or mentioned.

Now the federal Department of Finance has decided that Canadians who cannot really afford housing should be kept out of the market. This action is not designed to reduce the overall cost of the mortgage for consumers, but to reduce risks for lenders. The reversal of the maximum amortization period to 35 years and the return to 5 percent down payments will take effect October 15, 2008.

Until then you may be able to slip into home ownership before that door closes.

For those on pensions and fixed incomes, perhaps the government needs your input on solutions to get it right the first time. If the government decides that the slowing economy makes the newly extended benefits too expensive, or ignores the need for additional supplements, then seniors may find themselves short-changed in the same manner as those looking for affordable housing.

Published: July 29, 2008

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Strategist and Futurist is The Catalyst -- intent on "Helping The Best Get Better." An internationally-recognized "new retirement" authority, PJ's research, writing and speaking programs focus on decisions Baby Boomers face to achieve a successful future. Author of 6 books, PJ knows that, since home is headquarters for the "new retirement," professionals and consumers need relevant knowledge and insights, along with solid decision-making skills, to protect and enhance this private oasis. As The Catalyst, PJ provides strategic communication, client appreciation and advanced education services to the financial, tourism, lifestyle and service sectors -- and the clients they serve. A frequently quoted financial and business commentator, PJ is a thought-provoking strategic speaker who offers practical, real-life suggestions on leaving "the box" behind and embracing Forward Thinking -- a talent she regularly demonstrates in this column. For more, visit TheCatalyst.com.