Prime Minister Justin Trudeau says the more generous benefits being provided to out-of-work Canadians during the pandemic shouldn’t be seen as permanent changes to the social safety net. Millions of people have received emergency benefits since March, when the first wave of COVID-19 struck Canada and led to widespread lockdowns and historic job losses.A new round of $500-a-week benefits for the unemployed has since been put in place and extended to next summer.
Trudeau suggested the government is watching to see how things play out before deciding on its next move.Speaking at a virtual event hosted by the Financial Times, Trudeau said just because aid programs are helping during the pandemic doesn’t mean they’ll be useful once the crisis passes. He also said the extra benefits likely won’t stick around.
“That’s not a measure that we can automatically continue in a post-pandemic world. I think there are really important reflections to have on how we provide income supports and how we make sure that everyone is given opportunities.”
The Canada Emergency Response Benefit paid out $81.6 billion to about 8.9 million people during its run from March to October. Since then, the three benefit programs that replaced it have paid out nearly $2.3 billion, with the majority going to the more than one million people who have used the Canada Recovery Benefit for those out of work. The number of recipients has steadily risen, and has now exceeded federal estimates for demand. The three “recovery” benefits will be in place until next summer.
At the same time, a slowdown in the number of employment insurance claims suggests demand for those benefits may fall short of the 2.8 million officials previously estimated. All that could change, depending on the path of the pandemic.
Trudeau said in the Financial Times interview that the uncertainty caused by COVID-19 is why the Liberals revamped the aid program over the summer so benefits would rise if the economy turned south, or drop in cost if circumstances improved. He said the benefits, as well as an extension to the wage subsidy program, a new commercial rent relief program, and extra help for companies closed by local lockdowns are all automatic stabilizers to ease conditions through the second wave of COVID-19.
The extension of the wage subsidy program to next summer won’t be official until the Senate approves the necessary legislation. Finance Minister Chrystia Freeland appeared at the Senate finance committee on November 12 to testify on the bill, known as C-9.
The Senate has had some of the loudest voices for the Liberals to adopt another automatic stabilizer in place of myriad benefits: a basic income program. Basic income is essentially a no-strings attached benefit governments provide to citizens that sets a financial floor for individuals and families.
Some proponents of the idea, which Trudeau has not been publicly keen on, point to the existing suite of pandemic benefits as proof the idea works — even if experts have said the CERB and its replacements aren’t exactly a basic income. “What we’re doing now shouldn’t be conflated with things that we might or could do in the future,” Trudeau said when asked about basic income. “I think we have to get through this before we start designing a whole new universe of social supports.”
The parliamentary budget officer recently revised its estimates for providing a basic income for six months to almost all Canadians, projecting a cost of between $30.5 billion and $71.4 billion, down from the $47.5 billion and $98.1 billion outlined in July.
The overall cost would grow annually until it hit between $84.2 billion and $197.2 billion in 2025, depending on how much of the benefit is clawed back from people whose other incomes increase.
Source: Financial Post