Liberals extend CERB by one month as part of $37B pandemic relief spending package

OTTAWA — The Liberal government is extending its $2,000 a month CERB benefit for another four weeks as costs for pandemic relief continue to climb.

Ottawa will also tweak its employment insurance program and offer a set of three new benefits to Canadians beginning Sept. 27, which is expected to cost $22 billion, plus another $7 billion in administrative costs.

Extending CERB until the end of September will cost another $8 billion, making the new spending total $37-billion.

The Liberal government has faced criticism over the CERB program, with business groups saying the monthly stipend acted as a major disincentive for people to return to work. Ottawa appeared to acknowledge that problem on Thursday, as it laid out plans to create a new Canada Recovery Benefit that effectively replaces the CERB, but still pays out $1,600 per month.

Some of the new spending plans will need to be approved in the House of Commons, even though they were announced just days after the Liberal government shut down Parliament for over a month.

Announcing the new measures on Thursday, Employment Minister Carla Qualtrough said the decision to delay the new EI program and benefits, and extend CERB, was taken to give voters plenty of time to prepare for the changes.

“We wanted Canadians to have some certainty and continuity,” she said.

Nearly all observers, including the opposition Conservatives, acknowledge that some form of financial aid was necessary given Canada’s immense household debt levels. But many say the CERB program could have been shaved down or otherwise structured to encourage work.

· A guide to the new EI and the government's three new benefits for workers
· Employment minister says millions of Canadians will be 'seamlessly' transitioned from CERB to EI by month's end
· Folding CERB into EI could come at major fiscal cost, burden private sector, businesses say

Dan Albas, Conservative employment critic, said the plans detailed on Thursday would only prolong such disincentives.

“Shuffling Canadians between programs is not a plan,” Albas said in a statement.

He also decried the Liberal decision to introduce the benefit changes days after the government prorogued Parliament.

“It is unacceptable that the Trudeau government announced these changes days after locking out MPs and shutting down Parliament, to block investigations into their WE Scandal,” he said. “Canadians have serious questions about this transition and how it will affect them.”

A survey in July by the Canadian Federation of Independent Business, which represents 110,000 small firms, found that 27 per cent of owners have encountered workers who have refused work, the majority of whom cited CERB as their primary reason.

Qualtrough on Thursday acknowledged that the CERB in its initial form was “clunky,” mainly because government officials introduced it under an extraordinarily tight deadline.

The new spending comes as Ottawa prepares to post a $343 billion deficit in 2021, not including the estimated $37 billion in new spending.

Newly-minted Finance Minster Chrystia Freeland did not respond directly to a question about whether Canada’s credit rating might eventually be downgraded if it continues to amass huge amounts of debt.

“Our government, yes, has taken on more debt, so that Canadians didn’t have to take on more debt, and so that Canadians could survive while doing the right thing,” she said.

Government debts are ultimately paid back with interest by taxpayers, at an annual cost that has hovered around $20 billion per year.

Bank economists are nearly unanimous in their belief that interest rates will remain low in the short term as Canada crawls out of the pandemic downturn, but most agree that those rates will eventually begin to rise and accrue more substantial costs to taxpayers.

The Canadian Chamber of Commerce applauded the decision by Ottawa to limit the relaxed EI rules and new benefits to just one year.

“Making these changes permanent would have seriously strained the government’s fiscal capabilities,” Trevin Stratton, chief economist at the CCC, said in a statement. “We continue to advocate a growth-focused plan that will unlock economic capacity, fuel job creation and promote new business investment.”

More than 8.5 million Canadians have been accepted for CERB as of August 9, costing $68 billion.

Roughly 4.5 million people remain on the benefit today — about three million of whom are expected to enter into the EI system in September. The other one million are expected to receive the new Canada Recovery Benefit that pays $400 a week, for up to 26 weeks, for people not eligible for EI.

As for the one-year changes to EI, eligible applicants will receive the same minimum for at least 26 weeks and will need to have worked 120 hours to qualify. That falls well below current EI requirements, since many Canadians have been unable to work because of the pandemic.

There will also be $500-a-week sickness benefit and caregiving benefit for anyone who has to stay home because they’re ill, or because school or daycare is closed.