Prime Minister Justin Trudeau says Canadians without access to Employment Insurance will get money to feed their families and pay rent in an emergency economic stimulus package that is expected to be unveiled as early as Tuesday.
Ottawa announced more flexible Employment Insurance measures last week, including shortening wait times, but many Canadians working in the gig economy or service industries are not entitled to EI.
With so many service businesses being shut down and employees sent home, Mr. Trudeau said the government will offer temporary financial help for workers who are not eligible for regular EI benefits.
“Our focus is now on ensuring that Canadians who are staying home from work have enough money to be able to buy groceries and pay their rent,” Mr. Trudeau told reporters in announcing that Canada is closing its borders to non-Canadians, except U.S. citizens. “These are measures we will be moving forward in the coming days to ensure Canadians can keep themselves and their loved one safe and healthy.”
The Prime Minister said Canada and the United States are keeping the border open as a crucial economic link, both in terms of supply chains and food supplies.
Finance Minister Bill Morneau is putting the finishing touches on a massive, short-term economic stimulus package that will aim to reassure the business community and allow Canadians to isolate themselves without fearing the economic consequences.
While EI is a key part of the response, the government says the program can help about 70 per cent of workers affected by the current crisis. In order to reach other affected workers and families, the government is also looking to boost transfers under existing programs such as the Canada Child Benefit and the GST/HST credit, said a federal official who was granted anonymity because the person was not authorized to speak publicly.
The financial package will start to be unveiled on Tuesday. Government officials said a 30-day delay in tax filings for individuals is still under consideration.
Kevin Page, former parliamentary budget officer and now an economist at the University of Ottawa, said he expects a stimulus package of at least $20-billion – a suggestion put forward by Alberta Premier Jason Kenney and several bank economist last week.
“We should expect the federal government to outline a timely – temporary – targeted fiscal stimulus package in the range of $25-billion to $50-billion (one to two percentage points of gross domestic product)," Mr. Page wrote in a Globe and Mail opinion piece co-authored by economics students Kyra Carmichael and Nicholas Liban Dahir. “… Given the fact that many provinces are not fiscally sustainable, the federal government must lead with a co-ordinated stimulus package.”
Former Bank of Canada governor David Dodge told The Globe and Mail that Mr. Morneau needs to make more credit available for small businesses and provide significant money to help the provinces cope with the health crisis.
“First off we need to try to make sure that we can deliver health services that need to be delivered over this period. That’s a provincial responsibility but not all provinces, including Ontario, are in all that good shape,” Mr. Dodge said. “It is far more important for the government of Canada to borrow the money to finance some expansion in those services.”
Mr. Dodge, who also served as federal deputy finance minister, said he expects the global economy will be virtually idled until the summer, with no sign of an economic uptick likely until the fall.
“We need a bridge from where the economy was in January to where we know it will be next August or September, having passed the valley of death along the way,” he said in an interview. “You are not trying to stimulate demand in the normal sense. … The issue here is supply and services."
Mr. Dodge was also supportive of the Bank of Canada’s move on Friday to lower interest rates to 0.75 per cent and Ottawa’s move to make $10-billion of additional credit available to businesses through Export Development Canada and the Business Development Bank of Canada.
The Office of the Superintendent of Financial Institutions also made changes to required capital buffers to generate an estimated $300-billion of additional lending capacity.
But more needs to be done by Mr. Morneau to provide credit for small businesses, Mr. Dodge said.
“What I am really expecting is some further extension of what they have already done. For small businesses, the main thing is that they are going to need credit. That’s fundamental. And for major suppliers, the government may have to go in and be either a direct lender or more importantly a direct guarantor,” Mr. Dodge said.
Canadians must brace for a permanent loss of output for months, he said, adding that it is difficult to predict the long-term damage.
“In real terms we are just going to be poorer in the end and the real question is, ‘How to do you spread the burden of that real loss around?’ ”
Meanwhile, the Canadian Labour Congress is calling on Ottawa to make it easier for workers to qualify for Employment Insurance, to boost the payments awarded under the program and create a new “emergency benefit” for workers who are not eligible for regular benefits.
The Globe and Mail
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