Ottawa expects 4 million Canadians to apply for emergency job loss fund due to COVID-19

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Ottawa is bracing for an influx of four million applications under a new relief fund that will pay $2,000 a month to workers who have lost income because of the COVID-19 pandemic, even as the existing employment insurance program is struggling to cope with a recent surge of applications.

Prime Minister Justin Trudeau said the new Canada Emergency Response Benefit (CERB) will help workers who are financially affected by job losses and social distancing measures to pay rent and groceries for up to four months. He added the government is also looking at boosting wage subsidies to businesses to avoid mass layoffs.

Mr. Trudeau told his daily news conference Wednesday that Ottawa will launch a streamlined application process for the CERB by April 6 to make it easier for people to apply for and receive federal money. The payments will be taxable income, and there will be a $200 income-tax deduction for a monthly total of $1,800.

Canadians will be able to apply online or through an automated telephone system, and should be able to get money within one or two days through electronic transfer, or up to 10 days by mail.

Senior officials at the Canada Revenue Agency said they are operating on the basis that three million Canadians will apply for the CERB during the first week, and that another million will apply during the second week, for a total of four million applications. The Globe and Mail is not identifying the senior officials because they were not authorized to speak publicly on the matter.

Revenue Minister Diane Lebouthillier urged applicants to update their direct-deposit information with the CRA. She added the agency is exploring splitting the application process over two days once the program is launched to avoid clogging the system. One option being considered is that people born from January to June could apply on the first day, and that others could apply the following day.

“I want to reassure the population that yes, we anticipate millions of applications, but that the agency is very well positioned to run this program,” she said in an interview.

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While the Canada Revenue Agency will administer the new benefit program, Service Canada will continue to handle EI claims. The federal agency has redeployed 1,300 workers to help out with about one million recent EI claims, of which about 150,000 have already been processed.

Finance Minister Bill Morneau said the CERB is more generous than the two programs announced last week that it will replace. As a result, the total cost of the government’s coronavirus-related spending measures will increase from the $27-billion announced last week to $52-billion with the expanded programs announced Wednesday. The $52-billion is in addition to the $55-billion in tax deferrals announced last week.

According to a report from RBC Economics, the size of the federal deficit for the fiscal year starting April 1 will be “closer to $110-billion,” compared with the $28-billion deficit projected by the government in December.​

Mr. Trudeau and Mr. Morneau said on Wednesday that the CERB could be used as a stopgap in situations where businesses stop paying employees temporarily, but do not proceed to layoffs.​

“If you lost your job because of COVID-19 but are full-time, contract or self-employed, this new benefit will be there for you," Mr. Trudeau said. "If you are sick or quarantined or looking after someone sick or taking care of your kids, it’s there for you. If you are still employed but not receiving income because of this crisis, the CERB is there for you.”

The new benefit was created through Bill C-13, emergency legislation approved by the House of Commons and Senate on Wednesday. The legislation implements new spending and tax-deferral measures announced last week, and also grants new spending powers to cabinet that will expire on Sept. 30, 2020.

According to the legislation, the CERB will be available to anyone who is at least 15 years old and who, in 2019 or in the 12-month period before they applied, had a total employment income of at least $5,000.

The program will be closed to applications as of Dec. 2, 2020. It is open to workers – both employed or self-employed – who ceased working for at least 14 days for reasons related to COVID-19. The program provides income for up to 16 weeks.​

"The EI system was not designed to process the unprecedented high volume of applications received in the past week. Given this situation, all Canadians who have ceased working due to COVID-19, whether they are EI-eligible or not, would be able to receive the CERB to ensure they have timely access to the income support they need,” the Finance Department said.

Mr. Trudeau also indicated the government was reviewing the demands of business groups to substantially increase the wage subsidy so employers can keep workers on the payroll even if they are off in self-isolation.

Countries such as Denmark are paying wage subsidies of about 75 per cent as opposed to 10 per cent that Ottawa proposed. Britain is offering wage subsidies of 80 per cent.

“We are absolutely looking at more direct help for businesses,” he said. “We are working with business groups. We are working with small-business groups and hearing their concerns, looking very carefully at the models put forward in other parts of the world, like Denmark and Germany, and looking at how we could make that work and make an equivalency here in Canada."

More than 60 business groups called on Ottawa to provide direct funding for employees.

ESTIMATED revenue impact

of covid-19 outbreak

Change in revenue since the 2019 budget, billions $

$3

$2.6

Higher base

New tax

relief

2

1

0

$5.8-billion

impact due

to revised

economic

outlook

-1

-2

-3

-$3.5

-4

2019-20

2020-21

borrowing program

Deficit, in billions of dollars

2019 budget

$10.3

Interim 2019-20

$9.2

Plan 2020-21

$20.5

JOHN SOPINSKI/THE GLOBE AND MAIL

SOURCE: government of ontario

ESTIMATED revenue impact

of covid-19 outbreak

Change in revenue since the 2019 budget, in billions of dollars

$3

$2.6

Higher base

New tax

relief

2

1

0

$5.8-billion

impact due

to revised

economic

outlook

-1

-2

-3

-$3.5

-4

2019-20

2020-21

borrowing program

Deficit, in billions of dollars

2019 budget

$10.3

Interim 2019-20

$9.2

Plan 2020-21

$20.5

JOHN SOPINSKI/THE GLOBE AND MAIL

SOURCE: government of ontario

ESTIMATED revenue impact of covid-19 outbreak

Change in revenue since the 2019 budget, in billions of dollars

$3

$2.6

Higher base

New tax relief

2

1

0

$5.8-billion

impact due

to revised

economic

outlook

-1

-2

-3

-$3.5

-4

2019-20

2020-21

borrowing program

Deficit, in billions of dollars

2019 budget

$10.3

Interim 2019-20

$9.2

Plan 2020-21

$20.5

JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: government of ontario

“We encourage the government to backstop the economy by implementing income supports at similar levels as Denmark and the United Kingdom,” a letter from the business groups said.

Canadian Manufacturers & Exporters president Dennis Darby said direct wage subsidies through employers amidst the COVID-19 crisis would help reduce the strain on the EI system.

“Manufacturers welcome the actions taken by the government so far, but as the crisis intensifies, more supports are desperately needed,” Mr. Darby said.

The Business Council of Canada and the Canadian Federation of Independent Business also said direct support to businesses is the best policy option.

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