EXTENSION COULD COST ANOTHER $57 BILLION

Tory plan to modify program priced at $63B

OTTAWA • Extending the Liberal government’s key COVID-19 employment insurance program could cost taxpayers another $57 billion, more than doubling its current price tag, according to a new report.

Such an extension would bring the total cost of the Canadian Emergency Response Benefit (CERB) to $100 billion, up from an original estimate of $35 billion, according to new estimates from the Parliamentary Budget Office.

However, extending CERB in its current form until 2021 would still be cheaper than a rival plan by the Conservatives to modify the program, which would cost taxpayers $63 billion, the report said.

The report, published on Wednesday, underscores the highly complex question facing Ottawa as the country comes out of the first wave of the pandemic and seeks to unwind some of its massive social support programs.

Prime Minister Justin Trudeau has already spent $43 billion on CERB, which provides $2,000 per month to people who have lost their jobs due to the COVID-19 pandemic. That price tag is well above original estimates, as soaring unemployment has so far caused 8.41 million people to tap into the weekly benefit.

Meanwhile, just $10 billion out of an estimated $73 billion has been spent on the Liberal’s wage subsidy program, which was structured in an effort to keep Canadians employed through the downturn, and thereby hastening an economic recovery. Industry groups have claimed the program was hugely undersubscribed due to a tardiness by Ottawa to get the program up and running.

Now officials in Ottawa must determine how best to roll back CERB and hopefully ease its eight million applicants back into employment. That will require a deft hand, said Parliamentary Budget Officer Yves Giroux, as the government will likely have to reduce weekly payments under the program while also expanding eligibility, as more workers are forced into part-time working situations that might fail to cover living expenses.

“That’s the big conundrum the government will have to face as it phases out these programs,” he said.

“It’s always a trade-off between costs and the number of people you want to cover and any potential disincentives to work.”

The PBO compared two scenarios in its report. Expanding CERB in its current form to January 2021 would cost $57 billion, according to its estimates. It also reviewed a proposal put forward by Conservative MP Dan Albas, which would phase out the program by providing applicants with 50¢ for every $1 they earn at their jobs.

The Conservative proposal is slightly costlier at $63 billion, according to the report, as it would allow people who earn over $1,000 to access the benefit, substantially increasing the number of people eligible to apply. The current CERB, by comparison, is inaccessible for anyone earning over $1,000 per month.

Political parties have been locked in debate in recent days over how to tweak or expand CERB, as they seek an agreement ahead of Parliament’s suspension this week.

NDP Leader Jagmeet Singh on Tuesday called on the Liberal government to expand CERB for another four months, saying there was “uncertainty about going back to work” for many families.

“At a minimum, let’s give families some confidence that they will have some supports until the time comes when the economy really reopens,” he said in an interview with CBC on Tuesday.

Bloc Québécois Leader Yves-françois Blanchet has opposed an automatic extension of spending programs, accusing the Liberal government of seeking a “rubber stamp” for its programs as Parliament nears its suspension for the summer. He said the Trudeau government has been acting “as if it was a majority government led by some kind of a prince, which is not the case.”

Trudeau in recent days has sought to quell concerns over rising costs of CERB, toughening his stance against people who misuse it, and saying Ottawa would “make sure that we are punishing people who try to take advantage of this situation.”

The Liberal government is currently poised to run a roughly $260 billion deficit in 2021, according to the PBO, after unveiling more than $150 billion in financial aid programs during the COVID-19 pandemic.