The Morning Brief – 06.10.20

By Bruce Carson


Economy—Revising and Changing the Canada Emergency Response Benefit

Liberals may now realize this is a Minority Parliament

Finding Support if the NDP won’t support Bill C-17

Later today the Trudeau government will table a bill in the House of Commons which is intended to make changes to the CERB program in an effort to wean the over 8 million Canadians off this program. While it has been an effective program, filling an income gap when the government shut down the economy, it is also an expensive one coming in at $3.6 billion per week.

The theory behind CERB and then the Wage Subsidy program as noted here numerous times was to provide a bridge for Canadians as the economy reopened and they went back to work.

The CERB program was to last for four months backdated to March 15. The wage subsidy program which had a rocky start when the government was only going to cover 10% of wages has now been extended until the end of August.

The problem the government now faces is that while the CERB program was popular and oversubscribed, the wage subsidy program for which initially $72 billion had been allocated has only seen $10 billion accessed by employers.

There could be many reasons for the wage subsidy being undersubscribed, one of the main being that the economy has revived at a slower pace than the government originally envisaged. There also could be a human element involved which has not been much discussed in that businesses don’t know if they are going to be able to open and the big question being when? So if one doesn’t know the answers to ‘if ‘and ‘when’ one doesn’t know the kind of staffing that will be necessary so why start bring back employees only to send them home again. There is also the perennial aversion of businesses, particularly small business, to getting tied up in more government red tape.

The other part of this human element is that people sent home from work fearing for their lives are reluctant to emerge when the virus is still active in order to search for work. Also workplaces may not have adjusted appropriately in order to make employees feel safe. People will be doing their own risk assessments.

And daycares in the provinces, which are essential to support a movement back to work seem to be the last entity allowed to open and even then there is no guarantee that they will actually open.

Into this situation comes Bill C17 which one could argue is to provide some impetus for Canadians to move off CERB and get a job, presumably one supported by the wage subsidy program.

So the eligibility criteria for CERB have been narrowed and there won’t be CERB support if workers fail to report to work “when it is ‘reasonable’ to do so.” Also those who decline a “reasonable” job offer will be ineligible. But who will be defining what is ‘reasonable’?

John Ivison, one of the first to write about this bill on Sunday, notes that the periods of eligibility have been shortened down to two weeks from four and the amount earned will be $500.00 without claw back. He also sets out that the bill also contains no requirement

to look for work, a matter one might have thought should be included, if the government is going to move CERB closer to the EI system.

The bill also contains clauses which make it a criminal offence to claim CERB under false pretenses. The penalty sections have drawn the ire of NDP leader Jagmeet Singh. Yesterday he was unequivocal on Power and Politics that if the penalty section stays in, the NDP will not be supporting the bill. He stated that the penalty section “has to be completely removed.”

Presumably that would include the sections which make some of the penalties retroactive raising questions as to fairness and constitutionality. Keep in mind that when this program was introduced Canadians were encouraged to apply for it and if subsequently found to be ineligible; CRA would claw back any overpayment.

Yesterday Trudeau argued in favour of this bill saying only those who are deliberately gaming the system would be caught by the penalty section. He contrasted this with those who make understandable mistakes when applying. One wonders which member of the Trudeau cabinet will be assigned to sit with prosecutors to help them determine where the difference lies.

The NDP wants the period of CERB extended regardless of cost. Singh equates the penalty sections to “scaring people into work just when we are talking about over incarceration of racialize people” He added that “these types of penalties are going to hurt the people that are most desperate.”

The problem facing the Liberal government is one they should have known was coming; how to support Canadians who are not eligible for EI, CERB expires, the wage subsidy program doesn’t apply and the person has no job.

Surely the Trudeau government which has continually said it will have Canadians’ backs does not want to be accused of forcing those who fall through the support cracks onto welfare or becoming participants in the underground economy.

Jennifer Robson, professor in the Political Management Department at Carleton University estimates the size of this group falling through these support cracks to be as large as 2 million “unless there is a dramatic turnaround in the labour market.”

The C.D. Howe Institute has looked at a couple of alternatives such as phasing out CERB with some notification or expanding EI by redefining eligibility criteria to take on the role of CERB. There are arguments that the whole EI program designed decades ago, should be modernized.

The 2 million or so Canadians who may soon be ineligible for support would basically know who they are. So the answer as to when the cracks will be addressed by Treasury Board President Duclos that changes are coming “very soon” to address those cracks is an unsatisfactory answer. It should remind people of that scary phrase “we’re from the government and we’re here to help.”

Given the uncertainty within government as to what the next support steps should be, there is a good argument that C17 not be introduced but held in abeyance until the government has decided where it is going with the CERB and the wage subsidy program. Then combine the changes to both programs into a single bill which provides some certainty both to workers, potential workers and business.

However, if the government proceeds today it could remove the penalty sections as these matters are covered by existing provisions in the criminal code.

When the government looks around for support for this legislation, it would seem that its only bargaining chip is the fact the bill deals with persons with disabilities.

Presumably the price for Conservative support would be having the House of Commons sit, not as the COVID-19 committee, but as the House of Commons with all of the attendant rules in place that benefit the opposition.

The Bloc wants to see a fiscal update in June, a First Ministers Meeting on health transfers, continuation of CERB and the Liberal party return the funds it has accessed through the wage subsidy program.

The government must recognize that the bill to be tabled today is a money bill, and therefore a confidence matter, so support from at least one other party is necessary.

To Come

  • The Parliamentary Budget Officer will release a report entitled “Proposed Changes and Extension to the CERB”
  • U.S. Fed meeting concludes
June 11
  • First Ministers Meeting
June 15
  • Monthly survey of manufacturing for April to be released
June 17
  • CPI numbers for May to be released
  • Possible date for UN vote on Security Council seat
June 19
  • Retail trade numbers for April to be released