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Federal aid during the COVID-19 pandemic in Canada

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This article is about federal social security and financial aid programs. For the deployment of military resources in response to the pandemic, see Operation LASER.

The Government of Canada introduced multiple temporary social security and financial aid programs in response to the economic impacts of the COVID-19 pandemic in Canada. The initial $82-billion aid package was announced on March 18, 2020 by Justin Trudeau,[1] who was then in self-isolation at 24 Sussex.[2] Normally announcements of this sort are made in Parliamentary budgets, but having agreed unanimously to shut its doors for five weeks (pursuant to Standing Order 28) because of COVID-19, Parliament was unable to fulfill its duties.[3][failed verification] The first measures were implemented upon the COVID-19 Emergency Response Act which received royal assent from Governor General Julie Payette on March 25, 2020.[4]

Modifications to existing programs

Existing social security programs were modified to provide additional financial support to their recipients. Canada Child Benefit payments were given a one-time increase of $300 per child,[5] the Goods and Services Tax (GST) credit was doubled,[6] and personal income tax deadlines for 2019 were extended.[1]

Catherine McKenna, the Minister of Infrastructure and Communities, also announced on April 16 that the federal government was seeking "shovel-ready" infrastructure projects to receive stimulus funding.[7]

Canada Emergency Response Benefit

The Canada Emergency Response Benefit (CERB; French: Prestation canadienne d'urgence) is a program which provides a taxable benefit of up to CA$2,000 per month, to a maximum of four months, for Canadian residents facing unemployment due to the COVID-19 pandemic.[8][9][10]

The program was established by Part 2 of the COVID-19 Emergency Response Act,[11] and was launched on April 6, 2020. Within one week, nearly 3.5 million Canadians applied for this benefit;[12] this grew to 7.12 million by April 24.[13] On April 15, its eligibility was expanded to include seasonal workers, those who had run out of Employment Insurance, and people who make less than CA$1,000 per month due to reduced hours.[14]

The program is jointly administered by Employment and Social Development Canada and the Canada Revenue Agency, with eligible persons either applying through ESDC's Service Canada online portal or through the CRA online portal. To be eligible, applicants must attest they: did not quit their job voluntarily, earned at least CA$5,000 in the 2019 tax year or the preceding 12 months, have stopped working or are working reduced hours due to COVID-19, and are earning less than CA$1,000 in employment or self-employment income.[15]

On June 2, 2020, the CRA announced a tip line that allows Canadians to report suspected fraudulent CERB recipients.[16] As of June 3, the CRA announced it had received 600 tips and had received 190,000 voluntary repayments of CERB from Canadians who were not entitled to receive them.[17]

On June 8, legislation was proposed by the Liberal government that would allow persons found to have received CERB payments fraudulently be subject to fines or imprisonment.[18] The proposed legislation was not supported by any of the opposition parties in the minority Parliament and did not move ahead to second reading.[19]

On June 16, Trudeau announced the extension of the CERB by eight weeks.[20]

Canada Emergency Business Account

The Canada Emergency Business Account (CEBA; French: Compte d'urgence pour les entreprises canadiennes) is provides emergency interest-free loans to small businesses and nonprofit organizations during the COVID-19 pandemic.[21] The aim of this program is to ensure that these businesses have access to sufficient capital to remain solvent during the pandemic. CEBA was implemented in the COVID-19 Emergency Response Act, No. 2 which was introduced by Finance Minister Bill Morneau and passed in Parliament on April 11, 2020.[22]

The budget for the program was set for CA$25 billion, offering loans of CA$40,000 financed by Export Development Canada.[21] Businesses apply for CEBA loans through their current financial institution, which administer the loan and submit required information to EDC.[23][24] Businesses that repay at least 75% of the loan balance (CA$30,000) by December 31, 2022 will have any remaining balance forgiven.[21] The size of the loans could be increased, along with the amount forgivable.[21] The due date could also be moved into 2024 if need be.[21]

Canada Emergency Student Benefit

The Canada Emergency Student Benefit (CESB; French: Prestation canadienne d'urgence pour les étudiants) is a counterpart to CERB introduced to help students that are unable to find summer employment.[25]

On May 1, 2020, royal assent was granted to Bill C-15, establishing the CESB.[26] Students who cannot find employment or are unable to work due to the COVID-19 pandemic are eligible for CA$1,250 per month from May through August 2020.[27] CESB applicants with a disability or caring for dependents receive an additional $750, increasing their monthly amount to the equivalent of a CERB payment.[27]

Canada Emergency Wage Subsidy

The Canada Emergency Wage Subsidy (CEWS; French: Subvention salariale d'urgence du Canada) is a program created by the Government of Canada to provide financial support for businesses during the COVID-19 pandemic and prevent large layoffs.[21] CEWS allows eligible employers to receive a 75% subsidy on each of their employees' wages (up to their first $58,700) for 12 weeks retroactive to March 15.[28] The CEWS is targeted "at businesses with revenue declines of at least 15 per cent in March, and 30 per cent in May and June."[21]

The program was announced on 1 April 2020, as an expanded version of a previously proposed temporary wage subsidy. The Parliament of Canada reconvened on 11 April 2020 to pass the COVID-19 Emergency Response Act, No. 2 on division.[28] Several large employers which had laid off employees due to the economic effects of the pandemic announced they would re-hire workers in response to CEWS. Air Canada announced because of the CEWS it would re-hire (backdated to 15 March) 16,000 airline staff that were laid off due to the pandemic.[21]

Business Credit Availability Program

This programme, which was announced on 11 May 2020,[29] consists of guaranteed loans at commercial rates of between $6-80 million. It had seen as of mid-June 2020 only 400 applications.[30] It is administered by Export Development Canada[31][32] and the Business Development Bank of Canada,[29] Mary Ng, the Minister of Small Business, Export Promotion and International Trade is responsible for this programme.[29]

Large Employer Emergency Financing Facility

The Large Employer Emergency Financing Facility (LEEFF; French: Crédit d’urgence pour les grands employeurs) provides government-backed bridge financing to large Canadian employers through the Canada Development Investment Corporation (CDEV).

On 11 May 2020, Trudeau, Morneau and Bains in a press conference said that "a bridge financing facility for large employers that need help to get through the economic downturn caused by the coronavirus." One stated goal was "to avoid bankruptcies of otherwise viable firms wherever possible... Companies that use the lending facility will have to commit to respect collective bargaining agreements, protecting workers’ pensions, and support national climate goals. Rules on access to the money will place limits on dividends, share buy-backs and executive pay."[33][34] The LEEFF will only target companies with annual revenues in excess of $300 million, and only if they request $60 million or more from the LEEFF.[34]

Under the LEEFF companies must also: limit executive salaries to $1 million per annum; provide a share in their business to CDEV through stock warrants; and prohibit dividends and share buybacks until they pay back their LEEFF.[35]

Financial impacts of aid programs

On April 30, Parliamentary Budget Officer Yves Giroux issued a report projecting the federal deficit for fiscal year 2020 could be in excess of $252 billion, based on nearly $146 billion in spending on federal aid measures.[36]

References

  1. ^ a b Harris, Kathleen (March 19, 2020). "Trudeau unveils $82B COVID-19 emergency response package for Canadians, businesses". CBC News. Retrieved June 13, 2020.
  2. ^ Harris, Kathleen (March 12, 2020). "Trudeau, wife Sophie in self-isolation awaiting COVID-19 test as premiers conference is called off". CBC News. Archived from the original on March 13, 2020. Retrieved March 12, 2020.
  3. ^ Pinkerton, Charlie (March 13, 2020). "Parliament shuts doors for five weeks because of COVID-19". iPolitics.
  4. ^ Connoly, Amanda (March 25, 2020). "Trudeau's $82B coronavirus support package gets royal assent, officially passes". Global News.
  5. ^ Lum, Zi-Ann (May 4, 2020). "Canada Child Benefit Increases $300 Per Child For May". HuffPost Canada. Retrieved June 13, 2020.
  6. ^ Golombek, Jamie (April 17, 2020). "The GST/HST credit has been boosted due to COVID-19 — here's what you need to know". Financial Post. Postmedia Network. Retrieved June 13, 2020.
  7. ^ "Morning Brief: Feds seek 'shovel-ready' projects for post-COVID-19 stimulus". iPolitics. Torstar. April 16, 2020.
  8. ^ "Government introduces Canada Emergency Response Benefit to help workers and businesses". Department of Finance Canada. Government of Canada. March 25, 2020.
  9. ^ "Canada's COVID-19 Economic Response Plan". Department of Finance Canada. Government of Canada.
  10. ^ Harris, Kathleen (March 25, 2020). "What you need to know about the new COVID-19 benefits program". CBC News.
  11. ^ "Government Bill (House of Commons) C-13 (43-1) - Royal Assent - COVID-19 Emergency Response Act - Parliament of Canada". www.parl.ca. Retrieved 2020-05-04.
  12. ^ "Nearly 5.4 million receiving emergency federal aid". CTV News. April 13, 2020.
  13. ^ Press, Jordan (2020-04-24). "Expectant mothers left out of key COVID-19 emergency-aid program will receive financial help, Qualtrough says". The Globe and Mail. The Canadian Press. Retrieved 2020-04-25.{{cite news}}: CS1 maint: url-status (link)
  14. ^ Harris, Kathleen (2020-04-15). "Part-time, contract and seasonal workers now qualify for COVID-19 emergency benefits". CBC News. Retrieved 2020-04-15.{{cite news}}: CS1 maint: url-status (link)
  15. ^ "Who can apply: Applying for CERB with CRA". Canada Revenue Agency. 2020-05-04. Retrieved 2020-05-04.{{cite web}}: CS1 maint: url-status (link)
  16. ^ Forani, Jonathan (June 2, 2020). "CRA snitch line now open to report fraudulent CERB claims". CTV News.
  17. ^ Harris, Kathleen (June 10, 2020). "Canadians have made 190,000 repayments on CERB claims, says CRA". CBC News.
  18. ^ Aiello, Rachel (June 8, 2020). "CERB fraudsters could face fines or jail time, draft bill shows". CTV News.
  19. ^ Tumilty, Ryan (June 10, 2020). "CERB bill stalls as Liberals find no opposition support for moving legislation through House". National Post. Archived from the original on June 12, 2020.
  20. ^ "'Long journey ahead': PM extends CERB by 8 weeks". ctvnews.ca. June 16, 2020.
  21. ^ a b c d e f g h "The three bridges Canada needs to get us across the economic chasm". The Globe and Mail. 13 April 2020.
  22. ^ Canada, Department of Finance (2020-04-11). "Government Introduces COVID-19 Emergency Response Act, No. 2 to Help Businesses Keep Canadians in their Jobs". gcnws. Retrieved 2020-04-29.
  23. ^ "CEBA Term Loan Agreement" (PDF). TD Canada Trust. Toronto-Dominion Bank. Retrieved June 13, 2020. You acknowledge that... the Loan is made in accordance with the Canada Emergency Business Account Program (the "Program") and is being instituted and administered by the Bank at the request of and on behalf of Export Development Canada, on behalf of Her Majesty in Right of Canada
  24. ^ Burke, Ashley (April 24, 2020). "Small businesses fear banks are freezing them out of a government-backed pandemic loan program". CBC News. Retrieved June 13, 2020.
  25. ^ Nardi, Christopher (May 8, 2020). "'Why would he pick a fight with us?' COVID-19 raises tensions between Trudeau government and Quebec". National Post. Postmedia Network.
  26. ^ "Government Bill (House of Commons) C-15 (43-1) – Royal Assent – Canada Emergency Student Benefit Act – Parliament of Canada". www.parl.ca. Retrieved 2020-05-04.
  27. ^ a b "Support for Students and Recent Graduates Impacted by COVID-19". Department of Finance Canada. Government of Canada. 2020-04-22. Retrieved 2020-05-04.{{cite web}}: CS1 maint: url-status (link)
  28. ^ a b "Coronavirus: Parliament adopts COVID-19 wage subsidy bill". Global News. Retrieved April 20, 2020.
  29. ^ a b c "BDC to provide new support for medium-sized companies to help navigate COVID-19 as part of Government of Canada's Business Credit Availability Program (BCAP)". Business Development Bank of Canada. newswire.ca. 11 May 2020.
  30. ^ Ivison, John (15 June 2020). "Was the government's large employer emergency package designed to fail?". National Post, a division of Postmedia Network Inc.
  31. ^ "EDC Business Credit Availability Program (BCAP) Guarantee". Export Development Canada. Retrieved 16 June 2020.
  32. ^ "Export Development Canada (EDC) Business Credit Availability Program (BCAP)". Scotiabank. Retrieved 16 June 2020.
  33. ^ Scherer, Steve (May 11, 2020). "Ottawa to create bridge financing for big companies, including airlines and energy, that need help in crisis". Financial Post. Postmedia Network. Reuters.
  34. ^ a b Harris, Kathleen (May 11, 2020). "Federal government offers bridge loans – not 'bailouts' – for big businesses hit by COVID-19". CBC News.
  35. ^ Jackson, Emily (February 21, 2020). "Air Canada to stop emergency wage subsidy; thousands of job cuts will leave workers out in the cold: union". Financial Post. Postmedia Network.
  36. ^ Press, Jordan (April 30, 2020). "Federal deficit could top $252 billion, says budget officer". CBC News. The Canadian Press.
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