Senators call for changes to COVID-19 aid and more transparency on spending

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This article was published 13/07/2020 (1629 days ago), so information in it may no longer be current.

OTTAWA – The federal government’s key emergency benefit for workers with jobs hit by the pandemic is “not a permanent solution” to ongoing hardships, a Senate committee says in a report that makes an argument for a guaranteed minimum income.

The $500-a-week Canada Emergency Response Benefit has helped millions of workers who have seen their incomes shrink or dry up entirely due to the pandemic.

While touting it as a “vital lifeline,” the Senate’s national finance committee said Tuesday the CERB misses some who lived in poverty prior to the pandemic, and lacks “sufficient flexibility” for others.

Finding adequate employment will be an ongoing challenge for workers as some industries like tourism and air travel will take longer to come back from COVID-19 closures, while some jobs may not come back at all in businesses that go bankrupt, the committee said in a new report.

So senators urged the government to work with provinces, territories and Indigenous governments to “give full, fair and priority consideration” to a basic income, saying that the idea “deserves a more thorough investigation.”

“Why not give it a serious consideration and take a look at what can be done?” said Sen. Tony Loffreda, an Independent who sits on the committee. “The next crisis, if we have a guaranteed basic livable income, I think we can save a lot of aid going forward.”

The idea of a basic income means different things to different people, but it is usually viewed as a no-strings-attached payment governments provide to citizens, replacing multiple programs targeting different needs.

Earlier this month, the parliamentary budget office estimated a six-month basic income starting in October would cost between $47.5 billion and $98.1 billion, depending on how much is clawed back from people whose other incomes increase.

“That is the challenge. How do you integrate that into an annual budget and sustain it going forward?” said Loffreda, an accountant and former bank executive.

“There’s a lot of thought that must go into it and seeing how we can let it work, to make it more sustainable and maybe reduce that gap between the return on capital and the return on labour.”

Federal aid has reached some $230 billion, not counting tens of billions more in tax deferrals and government-backed loans, pushing the deficit to $343.2 billion and the national debt past the $1-trillion mark by the end of the year.

The fiscal response, the committee said, likely averted “financial devastation for millions of Canadians.”

But now the government must address what the committee said was a “lack of accountability and transparency” about spending.

Senators called on the government to provide quarterly economic and fiscal updates for the remainder of the crisis, similar to the one Finance Minister Bill Morneau delivered last week.

And senators said it is time for the Liberals to let Parliament review and approve new measures, rather than rely on sweeping spending and borrowing powers granted as the economic situation rapidly deteriorated in March and April.

The Liberals are expected to make changes soon to the $80-billion CERB and an $82.3-billion wage subsidy program, hoping to prod more people to move from the former to the latter as part of the reopening process.

Amin Mawani, an associate professor at York University’s Schulich School of Business, said proportional subsidies that can wind up or down as circumstances require — such as filling in shortfalls in wages — would be better than an all-or-nothing approach for workers and businesses.

“We have to help businesses get up slowly. They can’t get up fast to 100 per cent capacity. They can only get up as fast as they can get up,” said Mawani, who has written about possible changes to the CERB and wage subsidy.

He said other ideas for officials to consider are incentives like a signing bonus for CERB recipients who take jobs.

The Senate committee called for a graduated system to benefits: clawing back CERB payments as incomes rise rather than cutting them off abruptly, and offering different levels of benefits for different levels of revenue loss as opposition parties have suggested in the House of Commons.

“Allowing for greater flexibility … would help more businesses and lets them plan to bring staff back to work in preparation for their busiest season of the year,” NDP finance critic Peter Julian said in a statement Tuesday about the Liberals’ pledge Monday to extend the wage subsidy until December.

He, like the Senate committee, also called for the Liberals to quickly tell people what they will do for those who max out the CERB in the fall without jobs to go back to.

This report by The Canadian Press was first published July 14, 2020.