Pandemic Benefits are Punishing those with the Lowest Incomes

Within the first few weeks of the pandemic, the federal government moved quickly to provide income support to people across the country. A new program, the Canadian Emergency Response Benefit (CERB), was created because it became quickly apparent that the existing system, Employment Insurance, was inadequate to deal with the scale of unemployment. However, the fallout from design flaws and lack of policy adjustments over time has resulted in significant hardship for individuals and families with low income who received the CERB.

We have heard time and time again that the pandemic has negatively impacted marginalized communities disproportionately, and the consequences of receiving federal income pandemic benefits are no different. The CERB rolled out quickly, in the first few weeks of the pandemic. Eligibility criteria was kept to a minimum in order to speed up the process, with applicants providing an attestation that they were eligible. Its purpose was to deliver $2000 per month to individuals who lost work due to pandemic restrictions.

From the outset, however, there were challenges. Confusion for some around changing eligibility requirements led to people applying for the benefit even though they did not meet the criteria. In some cases, people were encouraged to apply by the Canada Revenue Agency, by social service workers, by community workers, and by the government’s promise to leave no one behind in their pandemic response. Others met the criteria but did not have access to the documentation required later on, for example, those who receive honoraria for their services and others whose employers would not issue records of employment. Some who were receiving social and disability assistance were told they must apply for the CERB because legislation mandates that one must exhaust all sources of income. And still others with very low or no incomes and who lost their community support as organizations closed overnight, applied out of sheer desperation.

Anyone earning even one dollar less than the $5000 minimum requirement in the previous twelve months was deemed ineligible. Those who received the CERB and were later deemed ineligible have now been saddled with thousands of dollars of federal debt—even those with low incomes who used the benefit to stay safe at home.

The CERB triggered clawbacks to crucial income benefits for low and moderate-income individuals and families. It was clawed back almost immediately from social and disability assistance programs, despite the federal Minister of Employment, Workforce Development, and Disability Inclusion encouraging the provinces and territories not to. At the same time, those living in rent-geared-to-income (RGI) housing where income is reported monthly (for example, in Toronto), rents increased by 30% of the benefit amount.

During tax filing the following year, the CERB was included in calculations for federal benefits including the Guaranteed Income Supplement (GIS) and Canada Child Benefits (CCB). The GIS is a benefit to support seniors who have to work beyond the age of 65, and who make less than $19,464 as a single or $25,728 in a couple. The $5,000 earnings exemption was not applied in this case even though CERB was replacing income. 183,420 of the lowest income seniors had their GIS reduced or completely clawed back as a result of accessing the CERB.

Many seniors shared their stories of losing their housing, their small businesses, taking loans from family, lines of credit, and predatory payday lenders, and how they went without food, medications and basic necessities. After months of hardships experienced by seniors, the federal government has promised to fast-track a one-time repayment and introduced new legislation to ensure pandemic benefits do not get calculated into future GIS payments. At the time of writing, this legislation is still being debated in the House of Commons and the repayment process is not fully clear.

There has been no announcement to address clawbacks from other income benefit programs or repayment amnesty. If the federal government truly wants a recovery that leaves no one behind, they must learn from the good and the bad impacts of the CERB and apply them immediately to people with low incomes.