COVID-19 Update for April 9

MP Liepert is sending an update to constituents regularly regarding COVID-19.  To receive it, please use the email sign up option at the top of this page. 

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Week four of isolation for the COVID-19 virus has been one of mind-numbing numbers. This was the first week that Canadians could apply for the Canadian Emergency Response Benefit (CERB). In a move to avoid crashing the system the government spread out the applications over 4 days based on one’s birth month. That seemed to be a wise move as almost 1 million applications were received the first day and estimates are 5 million Canadians will access the program by this weekend. This program provides $2,000 per month for 4 months for those persons losing all their income as a result of the government effectively shutting down the economy to deal with the crisis and who don’t qualify for Employment Insurance (EI). If you qualify and haven’t yet applied, click here.

The Finance minister has estimated the cost of this program at $24 billion but it is likely to go much higher based on applications this first week.  The Prime Minister announced this week that modifications to this program will be forthcoming. A point of clarification from the minister who originally said this money was non-taxable. The benefit is taxable – but the government will not be deducting tax from the payment (meaning that income tax won’t be taken off of the $2,000 payments received).  Therefore, if you received CERB, be aware that you will have to pay tax on it at income tax time next year.

The number of applicants for EI since March 15 is close to 3 million. Federal employees processing applications, and the team of technical staff that maintain the 46-year-old computer system that runs the EI Program, should be applauded as close to two and a half million applications have now been processed via a new method which dramatically increases the automation of the process.  EI applications typically range between 7 and 9 thousand per day.  Roughly speaking, the present volume is about 10 times that on a daily basis.  If you pay into the program and were laid off after March 15 the waiting period has been waived. You do not need a Record of Employment (RoE) from your employer.  To apply, click here.

One new announcement that was made this week concerns students and the Canada Summer Jobs Program. These enhancements will include:

  • an increase to the wage subsidy, so that private and public sector employees can receive up to 100 per cent of the provincial or territorial minimum hourly wage for each employee;
  • an extension to the end date for employment to February 28, 2021;
  • allowing employers to adapt their projects and job activities to support essential services;
  • allowing employers to hire staff on a part-time basis.

Financial Assistance for Businesses

Final details for the 75% Business Wage Subsidy Program have still not been released. The program, announced more than a week ago, applies to any business in Canada. The original announcement stated that any business that didn’t receive government funding and its revenue declined by 30% month to month over the past year was eligible. Charities and non-profit organizations were included in this program as well which is retroactive to March 15. This program needs Parliamentary approval. The government announced earlier this week that it had presented opposition parties with the draft legislation however a date for the brief House of Commons sitting to pass the bill has yet to be determined. The Government has placed an embargo on MPs who have been provided the draft bill so I am not able to provide any further details until it is tabled in the house. Despite the embargo the Prime Minister continues to announce modifications and criteria changes from the original announcement.  Click here for full details on the announcement but applications will not be accepted for several weeks.

Small businesses that have expenses that cannot be deferred (such as commercial rent) may have access to the Canada Emergency Business Account, which is a $40,000 interest-free loan backed by the Government of Canada.  Applications for these loans are done through your business banking institution.  Banks are at varying points of rolling these applications out.  Last week I provided links to the information for each of the big five Canadian banks however I have since confirmed the following financial institutions as well as some Credit Unions have also been approved as lenders for the program.

As a result of the federal programs now kicking in the Government of Alberta Emergency Isolation Support – a one-time payment of $1,146 is no longer available.  This was designed as a stop gap measure and paid out over $100 million to Albertans.

Premier Jason Kenney delivered a province wide television address on Tuesday night indicating the Alberta budget deficit will triple this year to as much as $20 billion and that we will likely see an unemployment rate around 25%, not seen since the great depression of the 30’s. If you missed his speech you can view it here.

Support for the Energy Industry & for Energy Workers

On March 25th, Minister of Finance Bill Morneau said that a specific aid package for the energy industry would be coming in “hours, possibly days” when speaking to the Senate.  You can see the commentary here.  More than two weeks have now passed, and no specific aid has been announced.  Premier Kenney announced that the price of our oil may be in the negatives in the coming days.  In addition, many Albertans remain unemployed due to oil and gas layoffs, and have exhausted their EI.  These people have few job prospects in this time, and many do not qualify for any of the newly announced benefits at all.

Commentary

While Premier Kenny was prepared to discuss the projected budget deficit this year, Federal Finance Minister Bill Morneau has not been as forthcoming. So, let’s make some projections of our own. The Parliamentary Budget Officer today projected the deficit at $180 billion. I believe it will be much higher due to substantive revenue losses this year such as GST, personal and business taxes significantly reduced.

The Minister has already estimated the cost of COVID-19 crisis relief packages at $200 billion. I suggest they will be oversubscribed and cost much more. As an example, in last week’s report I stated “Air Canada, which announced it would be laying off 15,000 employees cancels the lay-offs and applies for the 75% wage subsidy the total cost for that one company alone would be close to $150 million.” This week Air Canada announced it would cancel the lay-offs and apply for the wage subsidy for all 16,500 employees it had laid off.  It also may be eligible for the subsidy for employees it has not laid off – with a total workforce of around 32,900 people.  WestJet similarly has announced it will bring back 6,400 laid off employees and applying for the benefit.  These numbers are staggering – with hundreds of millions of dollars being spent between these two companies alone for wage subsidies.

In addition, the government has indicated it will continue to tweak programs and announce assistance for those who “fall through the cracks.”

It is conceivable the federal budget deficit this current year (April 1, 2020 – March 31, 2021), when these massive expenditures are combined with a significant drop in revenue, could equal or exceed the entire $350 billion budget of the just completed fiscal year 2019-20. It is also likely that once this fiscal year has ended Canada’s total federal debt will surpass $1 trillion.

Despite that somewhat gloomy prediction, I want to wish Albertans a safe long Easter weekend and ask that all health regulations are adhered to so we can get past this pandemic and return to some form of normality this summer.