Trudeau Liberals extend aid programs in lead to expected federal election

The federal government decided to extend pandemic aid programs an additional month at current benefit levels.

The decision expanded wage and rent subsidies for businesses, income support for workers out of a job and those who took time off to care for family or stay home sick until October 23, according to Cochrane Today.

That means the recovery benefit will pay $300 per week, adding four more weeks of eligibility to the 54-week maximum. The four extra weeks will also be afforded to workers who exhausted their employment insurance benefits as well.

The recovery caregiving benefit will be available at $500 a week, but with no change to the 42 week maximum per household. Meanwhile, the recovery sickness benefit will be available at $500 a week, but with no change to the four-week maximum.

The federal government estimated $3.3 billion in additional costs owing to the expanded aid package. Two-thirds will go to recovery benefits, and the remaining one-third to support businesses. As of July 18, $87.1 billion in taxpayer-funded wage subsidies and $5.24 billion more in rent relief have been paid since the programs launched. As of July 25, the three recovery benefits paid $26.9 billion to eligible recipients.

The finance department predicted a more robust post-pandemic recovery and based its promise of phasing out pandemic aid programs on that. On Friday, Finance Minister Chrystia Freeland said too many businesses and workers "are not fully back on their feet yet," citing the country is taking a little longer to beat the third covid-19 wave than the government expected.

"And I know all of us are watching the Delta variant carefully and are concerned about that," she said. "From the government's perspective, it is essential to do everything we can to be sure the country's economic recovery is fast and robust and that no one is left behind."

Statistics Canada made preliminary estimates Friday on the fiscal health of the country. They said the economy grew by 0.7 percent in June following two successive months of declines and that real gross domestic product grew at an annualized rate of 2.5 percent in the second fiscal quarter of 2021.

However, the country employed two percent less or 340,000 fewer people compared to February 2020. Currently, total economic activity is about one percent below pre-pandemic levels.

The Canadian Taxpayers Federation (CTF) called on the federal government to set a concrete end date for COVID-19 spending. CTF said Freeland failed to present a long-term plan to balance or cut spending but instead is focused on ensuring federal stimulus dollars aid an economic recovery.

"Taxpayers can’t afford a repeat of 2020, so we need Finance Minister Chrystia Freeland to set an end date on all the COVID subsidies," said Franco Terrazzano, Federal Director with the CTF. "This temporary spending was always supposed to remain temporary, and with the feds already more than $1 trillion in debt, Canadian families and businesses can’t afford any more permanent red ink."

The federal government projected another $2.7 trillion in debt before balancing the budget in 2070. This is in addition to the current $1 trillion in existing federal debt. Interest charges will cost taxpayers about $3.8 trillion by 2070.

"The federal government needs to focus on its debt problem," said Terrazzano, "but Freeland’s 2021 budget is using the cloud of COVID-19 to go on a debt-fueled spending binge and increase permanent government spending by $100 billion by 2026."

By extending benefits until October and maintaining wage and rent subsidies rates until September, the federal government locked in changes before an expected election call next month that would cease policy-making decisions.

However, following the results of an expected election, benefits could be extended further. Budget measures approved by Parliament in June allow the government to extend pandemic aid by another month to the end of November.

NDP leader Jagmeet Singh welcomed the possibility of an extra month of aid but argued the threat of a fourth wave would hit hard-hit sectors further. Tourism especially may not see a rebound until 2022.

In a statement, he said: "The Liberals are more focused on plunging the country into an election in a pandemic. Canadian families and small businesses don’t need an election now. They need help for as long as we are in a pandemic."

On Friday, Freeland also pleaded for people to get vaccinated if they are eligible and have not already done so. "The single most important economic policy in Canada today is for everyone who can get vaccinated to go out and get vaccinated," she said. "We have done tremendously well, but there's still that last mile to go."