Ottawa predicts 4 million Canadians will need new relief program due to COVID-19
DANIEL LEBLANC, PARLIAMENTARY AFFAIRS REPORTER
ROBERT FIFE, OTTAWA BUREAU CHIEF
Prime Minister Justin Trudeau said the new Canada Emergency Response Benefit will help workers who are financially affected by job losses and social distancing measures to pay rent and groceries for up to four months. He added the government is also looking at boosting wage subsidies to businesses to avoid mass layoffs.
Mr. Trudeau told his daily news conference Wednesday that Ottawa will launch a streamlined application process for the CERB by April 6 to make it easier for people to apply for and receive federal money. The payments will be taxable income, and there will be a $200 income-tax deduction for a monthly total of $1,800.
Canadians will be able to apply online or through an automated telephone system, and should be able to get money within one or two days via electronic transfer, or up to 10 days by mail.
“If you lost your job because of COVID-19 but are full-time, contract or self-employed, this new benefit will be there for you. If you are sick or quarantined or looking after someone sick or taking care of your kids, it’s there for you. If you are still employed but not receiving income because of this crisis, the CERB is there for you,” Mr. Trudeau said.
Revenue Minister Diane Lebouthillier urged applicants to update their direct-deposit information with the Canada Revenue Agency. She added the agency is exploring splitting the application process over two days once the program is launched to avoid clogging the system. One option being considered is that people born from January to June could apply on the first day, and that others could apply the following day.
“I want to reassure the population that yes, we anticipate millions of applications, but that the agency is very well positioned to run this program,” she said in an interview.
Senior officials at the CRA said they are operating on the basis that three million Canadians will apply for the CERB during the first week, and that another million will apply during the second week, for a total of four million applications. The Globe and Mail is not identifying the senior officials because they were not authorized to speak publicly on the matter.
While the Canada Revenue Agency will administer the new benefit program, Service Canada will continue to handle EI claims. The federal agency has redeployed 1,300 workers to help out with about one million recent EI claims, of which about 150,000 have already been processed.
Finance Minister Bill Morneau said the CERB is more generous than the two programs announced last week that it will replace. As a result, the total cost of the government’s coronavirus-related spending measures will increase from the $27-billion announced last week to $52-billion with the expanded programs announced Wednesday. The $52-billion is in addition to the $55-billion in tax deferrals announced last week.
According to a report from RBC Economics, the size of the federal deficit for the fiscal year starting April 1 will be “closer to $110-billion,” compared with the $28-billion deficit projected by the government in December.
Mr. Trudeau and Mr. Morneau said on Wednesday that the CERB could be used as a stopgap in situations where businesses stop paying employees temporarily, but do not proceed to layoffs.
The new benefit was created through Bill C-13, emergency legislation approved by the House of Commons and Senate on Wednesday. The legislation implements new spending and tax-deferral measures announced last week, and also grants new spending powers to cabinet that will expire on Sept. 30, 2020.
According to the legislation, the CERB will be available to anyone who is at least 15 years old and who, in 2019 or in the 12-month period before they applied, had a total employment income of at least $5,000.
The program will be closed to applications as of Dec. 2, 2020. It is open to workers – both employed or self-employed – who ceased working for at least 14 days for reasons related to COVID-19. The program provides income for up to 16 weeks.
"The EI system was not designed to process the unprecedented high volume of applications received in the past week. Given this situation, all Canadians who have ceased working due to COVID-19, whether they are EI-eligible or not, would be able to receive the CERB to ensure they have timely access to the income support they need,” the Finance Department said.
Mr. Trudeau also indicated the government was reviewing the demands of business groups to substantially increase the wage subsidy so employers can keep workers on the payroll even if they are off in self-isolation.
Countries such as Denmark are paying wage subsidies of about 75 per cent as opposed to 10 per cent that Ottawa proposed. Britain is offering wage subsidies of 80 per cent.
“We are absolutely looking at more direct help for businesses,” he said. “We are working with business groups. We are working with small business groups and hearing their concerns, looking very carefully at the models put forward in other parts of the world, like Denmark and Germany, and looking at how we could make that work and make an equivalency here in Canada."
More than 60 business groups called on Ottawa to provide direct funding for employees.
“Other countries have recognized this need and are offering to cover as much as 80 per cent of the incomes of workers who are laid off as a result of the health emergency. We encourage the government to backstop the economy by implementing income supports at similar levels as Denmark and the United Kingdom,” a letter from the business groups said.
Canadian Manufacturers & Exporters president Dennis Darby said direct wage subsidies through employers amidst the COVID-19 crisis would help reduce the strain on the EI system.
“Manufacturers welcome the actions taken by the government so far, but as the crisis intensifies, more supports are desperately needed,” Mr. Darby said. “Direct wage subsidies have shown positive results in several European and Asian countries that have adopted these measures.”
He said more than one million Canadians have been laid off so far as a result of the COVID-19 outbreak. The backlog on the EI system is already eight weeks for application processing and benefit distribution, putting considerable strain on Canadian families, he warned.
The Business Council of Canada and the Canadian Federation of Independent Business also said direct support to businesses is the best policy option.
CFIB president Dan Kelly said he welcomed that the new program could be used for furloughed workers, but cautioned that such a scenario may conflict with provincial labour laws.
“How this will operate in practice remains a question employers will need quickly resolved,” he said.