People dine at a temporary patio space on the street outside a restaurant as cyclists ride past in Vancouver, on Sunday, July 12, 2020.DARRYL DYCK/The Canadian Press
A Senate review of the massive emergency federal spending in response to COVID-19 concludes the effort saved millions of Canadians from financial disaster, but calls on the government to target its key income-support programs on the economic recovery.
In an interim report called COVID-19, Relief in Times of Crisis, released Tuesday, the Senate national finance committee said Ottawa and the provinces should consider a universal basic income as a longer-term option and that emergency spending powers the government gave itself in March should not be extended when they expire in September.
The Senate report comes on the heels of last week’s fiscal “snapshot” from Finance Minister Bill Morneau, which revealed direct support pledges on pandemic measures have climbed to $227.9-billion. As a result, Ottawa now expects a federal deficit of $343.2-billion this year, which would push the size of the federal debt over the $1-trillion threshold for the first time in Canadian history.
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“The emergency supports put in place by the federal government in response to the economic crisis brought on by the COVID-19 pandemic have helped millions of Canadians who would have otherwise suffered financial disaster,” the Senate report states, praising the public service for moving quickly and effectively.
“However, many Canadians have fallen through the cracks, and they face an uncertain future,” the report adds. “They need to have predictable and reliable financial support. In the meantime, the government also needs to be fully accountable to Parliament for its spending and borrowing decisions and transparent about its fiscal situation.”
The report assesses the major federal emergency programs one by one and concludes that some have been more effective than others.
To date, the largest single program has been the Canada Emergency Response Benefit, which provides taxable payments of $2,000 a month for up to 24 weeks for individuals who have lost nearly all of their income for reasons related to COVID-19.
The report says the CERB “has been a vital lifeline for many Canadians” and that Food Banks Canada told the committee that without the CERB, food banks would have been overwhelmed.
But Senators warn that as the program expires in the fall, Ottawa needs a plan for helping Canadians who will remain unemployed. The committee recommends a program that provides declining benefits based on income and that Ottawa and the provinces “give full, fair and priority consideration to a basic income guarantee.”
The Parliamentary Budget Officer reported this month that a six-month basic income program of $16,989 for individuals and $24,027 for couples would cost between $47.5-billion and $98.1-billion, depending on the program rules.
The committee also recommends that the Canada Emergency Wage Subsidy should be adjusted so that the benefits are progressive, meaning the size is proportional to the degree of revenue decline.
The wage subsidy flows from Ottawa to employers and is meant to cover 75 per cent of employee wages, up to $847 a week for each employee.
However, Ottawa has only paid out $18-billion under the program – far less than originally expected – as employers said the rules were overly rigid and some of the criteria unclear. Last week, the government said it will be revising the terms of the wage subsidy and that it is now expected to cost $82-billion. Those details are expected this week.
Committee member Tony Loffreda, a member of the Independent Senators Group and a former banking executive, said the new federal debt is manageable and that more spending may be required.
“Some stimulus has to be put into the economy. We can’t stop here,” he said in an interview. “My concern is let’s gets our economy back to where it was. … Let’s do it as quickly as possible. Let’s help our entrepreneurs. Let’s put in post-COVID stimulus to help the small businesses with tax incentives, with tax credits, with research.”
Conservative Senator Beth Marshall, a former auditor-general of Newfoundland and Labrador, said in an interview that the verdict is still out on the effectiveness of the emergency measures.
She said the emergency spending powers that grant cabinet “all money required to do anything” must come to an end and that the government must be far more transparent.
“It is a real challenge to figure out what is going on ... you just can’t get a complete picture,” she said. “I’m really concerned that the government might look to extend those powers.”
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Bill Curry