Does the Canadian Federal Government’s Policy Responses to the COVID-19 Crisis Get a Passing Grade So Far?
Article by: Alexandra Holtom, from www.policypress.ca
Full article here: https://policypress.ca/2020/05/25/canadian-federal-governments-policy-responses-to-covid-19/
Canadian Prime Minister Justin Trudeau and his Liberal Party have been scrambling since the beginning of March to respond to the COVID-19 pandemic. Not only is it a global public health emergency, it has also set the stage for an economic crisis that has already begun to profoundly affect billions of people around the world. But does the federal government’s economic and social policy responses to the COVID-19 crisis get a passing grade so far?
To date, the federal government has already projected it will spend at least $145.6 billion dollars in direct support programs to help Canadians weather the COVID-19 economic crisis. However these direct supports are only approximately 20% of the overall measures that will be required to address the consequences of the pandemic. The federal government estimates that the overall total cost will be more than $817 billion when accounting for health and safety measures, business and tax liquidity supports, and direct support for individuals, businesses, and various industries.
Billions of dollars have been committed to direct emergency financial relief benefits to individuals like the Canada Emergency Relief Benefit (CERB) and the Canada Emergency Student Benefit (CESB). Over $35 billion has been committed to CERB, which provides $2,000 a month for up to 16 weeks to eligible people who have lost their jobs due to the COVID-19 shutdown or for those who are working, but whose income has dropped below $1,000 a month. The federal government has also committed over $9 billion to the CESB, which provides students with $1,250 per month from May until August. Students with disabilities and students who are caregivers are eligible for a top-up to receive $1,750 per month.
Early on in the pandemic response, the Trudeau government also announced it would commit $5.5 billion to provide enhanced GST credit payments to low-income people. And more recently, the government also announced that it will spend roughly $2.5 billion in one-time payments of up to $500 each to support seniors through the economic crisis.
These emergency financial relief benefits and credits only amount to roughly $52 billion dollars in the estimated $817 billion dollars of total federal spending needed to address the consequences of the COVID-19 pandemic. The federal government has committed an estimated $300 billion to free up capital for banking institutions, not to mention a projected $200 billion in credit and liquidity supports through the Bank of Canada and the Canada Mortgage and Housing Corporation (CMHC). Income and sales tax deferrals are projected to cost $85 billion and $286 billion will be spent on liquidity support for businesses, homeowners, and the agricultural sector.
The Trudeau government has committed $73 billion to the Canada Emergency Wage Subsidy (CEWS), which is covering up to 75% of wages for businesses that would otherwise have to lay off their employees. To date, $15.3 billion has also been promised to the Canada Emergency Business Account (CEBA), which provides, through banks, interest free loans of up to $40,000 to eligible businesses. Trudeau has also announced that the federal government will provide a $2.45 billion stimulus package to prop up workers in the energy sector including oil and gas. $1.7 billion of this money has been directed to cleaning up orphan wells (former oil and gas wells) in Canada.
Most recently, the government announced the new Large Employer Emergency Financing Facility (LEEFF). This program is committing at least $60 million dollars to large, non-financial for-profit businesses that have significant operations in Canada and have revenues of $300 million or more each year. There is fear that LEEFF will have the same results as the bailouts seen during the 2008 global economic crisis. These bailouts distributed wealth to shareholders and financed lucrative stock option packings for senior corporate managers and CEOs, while taxpayers bore the brunt of the economic crisis. If the LEEFF program is not consistently monitored and audited, independent large businesses that are in desperate need of the money will be left behind in bankruptcy, leaving hundreds, if not thousands of people, without jobs, all while shareholders and CEOs are profiting from the crisis.
So does the federal government deserve a passing grade for their economic and social policy responses to the COVID-19 crisis so far? Well, the Trudeau government’s response does pass, but it only scrapes by with a D+ along with many areas for improvement. The good news is that the government has not hesitated in investing money into COVID-19 emergency economic and financial relief programs. The bad news is that the money is not necessarily being allocated to where it is most needed. There are many other policies needed to address the underlying issues of economic and social injustice being made visible by the COVID-19 pandemic.
There are troubling discrepancies between the amounts of money committed to bailing out banks and providing liquidity supports in comparison to what has been committed to direct support programs. These supports have also neglected to help those who are disproportionately impacted by the COVID-19 pandemic and the subsequent economic crisis. Impoverished communities, unhoused people, Indigenous Peoples living on and off reserve, racialized and immigrant communities, and people with disabilities have been particularly hard-hit throughout this crisis. Yet no substantial and meaningful financial relief has been offered in the form of targeted social benefits, services, and programs to these groups of people.
For the individuals who are eligible and able to navigate the application process, benefits like the CERB and CESB have made it possible for them to pay their bills and feed their families. But for many living in expensive and high-rent cities like Toronto, Vancouver, Victoria, and Montréal, these amounts may not even be enough to cover one month’s worth of rent and groceries. It is also important to remember that the CERB is not a universal program available to all, leaving so many people to fall and continue falling through the cracks. People who left their jobs voluntarily, people with precarious migration status, and people who earned less than $5,000 in the last 12 months or in 2019 are not eligible for the CERB. Plus tens of thousands of international students and recent graduates who graduated before December 2019 are not eligible for the CESB.
By vastly expanding the eligibility criteria and providing more sufficient amounts of money to cover the cost of living expenses, the CERB, CESB, and new seniors benefits could be significantly enhanced. However, it will take more than just a few policy amendments to address the underlying injustices and disparities amongst all people and communities living in Canada.
In fact, this economic crisis calls into question the entire capitalist, market-driven financial system that dominates Canada and the Global North. If our society was already providing economic and social supports to all people, regardless of their identity and migration status, the worst of the human impacts of the economic crisis could have been avoided and thousands of lives could have been saved. The Canadian government could be doing so much more to take care of its citizens and needs to start considering bolder, more significant policy changes.
The idea of a Guaranteed Annual Income (GAI) has been receiving renewed attention as the COVID-19 pandemic has drawn back the curtains on the social and economic disparities in our society. This would provide a basic minimum income to everyone living in Canada, ensuring all people have a sufficient income to live on. Providing a GAI would reduce poverty and increase the quality of life and wellbeing of citizens, while simultaneously helping people escape the poverty trap of traditional welfare programs. GAI payments would also help stabilize the economy during the crisis and decrease government administration costs and unnecessary bureaucracy.
Of course the GAI will not address all of the social and economic disparities present in Canadian society, but it is a good place to start. By making substantial investments in more robust social benefits, services, and programs for people and their communities, thousands, if not millions, of lives could be transformed. With this, there will also be a need for more substantial targeted programs in order to support communities that are disproportionately impacted, not just by the COVID-19 pandemic, but also by poverty, systemic discrimination, and colonialism.
It is the responsibility of the federal government to step up and start taking responsibility in caring for its citizens, not just those who are housed, able-bodied, and more financially secure than others. As the months go on, we will see if this crisis will change the federal government’s approach to social and economic policy and if any substantial changes will take shape.
