The Prime Minister opted for speed over perfection as he approved new programs to send billions of dollars in financial support to self-employed and part-time Canadian workers, federal officials said.
Developed in less than two weeks, the $15-billion Emergency Care Benefit and Emergency Support Benefit are designed to offer financial relief to Canadian workers who are affected by the new coronavirus crisis but are in situations where Employment Insurance would not apply.
At a news conference on Wednesday, Justin Trudeau emphasized the need to “quickly” help all Canadians who have seen their income “dry up” in recent days.
Explaining how the programs were developed, federal officials said Mr. Trudeau approved the fact that the money will be delivered with relatively few bureaucratic controls to ensure it flows more rapidly. The officials said Mr. Trudeau decided the benefits of a quick response outweighed the strong possibility of “leakage” of funds to claimants who may not meet the programs’ requirements.
One official said the programs were developed under the principle that perfection is the enemy of the good, while another one said desperate times call for desperate measures. The Globe and Mail is keeping the names of the officials confidential because they were not authorized to speak publicly on the matter.
The Canadian government has been monitoring the effects of the coronavirus on the world economy since the start of the outbreak in China. The Prime Minister and Finance Minister Bill Morneau were drawn more deeply into the discussions when the crisis hit Italy and Spain in early March, officials said.
On March 11, Ottawa announced a $1-billion COVID-19 Response Fund. The package included $500-million in new health-care funding to the provinces, as well as relaxed rules for sickness benefits under EI for quarantined or self-isolated workers.
The government was already aware that without new programs, about 30 per cent of workers who do not qualify for EI were at risk of either losing income or going to work despite being sick.
From that point on, federal officials explored existing programs to see which ones could be used to help all workers and stabilize the economy. The option of sending uniform payments to all citizens – as is being contemplated in the United States – was considered at one point, according to officials. That option was rejected because it would spread funds too thinly.
Instead, Wednesday’s announcement included increased payments under existing programs, including $2-billion under the Canada Child Benefit and $5.5-billion in increased GST credits.
To develop other elements of their response, Mr. Trudeau and Mr. Morneau held a series of talks with the heads of Canada’s major banks, corporate CEOs in vulnerable sectors, premiers and world leaders, seeking their advice on what to do and when to take action.
Officials credit Canadian Labour Congress Leader Hassan Yussuff for proposals on helping workers with a new benefit program and Canadian Chamber of Commerce President Perrin Beatty on a massive tax-deferral measure that will help businesses facing cash-flow shortages.
One official said ministers such as Treasury Board President Jean-Yves Duclos, Employment Minister Carla Qualtrough and Digital Minister Joyce Murray were given the task of making sure the government could deliver the money to Canadians and that the IT system would not fail.
Officials said attention is now being turned to measures to help sectors such as airlines and oil and gas that need assistance to survive the economic slowdown. Over all, the Canadian government is seeking to reassure companies that the economy will be supported until the end of the outbreak, with additional stimulus spending slated down the road.
Under the $10-billion Emergency Care Benefit unveiled on Wednesday, applicants will need to “attest that they meet the eligibility requirements” to obtain bi-weekly payments of up to $900. The fund will be open to workers who are quarantined because of COVID-19, those taking care of sick family members and parents who are not working to take care of their children.
The exact wording of the attestation has yet to be released, but it is expected to include a statement that the individual has had recent income. The claim would be made through an individual’s online account at the Canada Revenue Agency, meaning it could be verified. Once approved, money would be transferred quickly through direct deposit.
Payments under the new emergency program were aligned with the average payment for EI. Officials are aware this creates an issue in which workers who qualify for less-than-average EI benefits would be better off using the new benefit.
University of British Columbia economist Kevin Milligan – who discussed potential measures with Mr. Morneau’s office as the package was being developed – has calculated that the government expects about 1.5 million Canadians to access the funding.
In an interview, he said the fact Canadians may misrepresent their situation would still help the government achieve its goal of injecting short-term support into the economy.
“Normally in program design, you’d be worried that people would get a benefit who don’t qualify for it. In this case, that’s a feature rather than a bug because we want people socially distancing and to not go to work if they’re sick," Dr. Milligan said.