COVID assistance funds potentially 'wasted', study claims

For every $4 allocated to crisis response, more than a dollar ends up in the wrong hands this report has alleged

COVID assistance funds potentially 'wasted', study claims

More than $22bn in COVID-19 crisis response funding is potentially lost due to a failure in targeting the right sectors in most need of assistance, analysis from the Fraser Institute has alleged.

The federal government is allocating $81.6bn towards an expansive social safety net for Canadians, which includes the emergency response benefit, student benefit and other ad hoc payouts, during the global pandemic and its ensuing recession.

However, an estimated $22.3bn appears to have been “poorly targeted towards those in genuine need,” and this lack of proper alignment in government spending has resulted in taxpayer resources being wasted, the Fraser Institute reported.

“Our research shows that billions are being borrowed to finance transfers to people whose need is at least questionable, and this at a time when Ottawa is running historic deficits,” said Jason Clemens, executive vice president at the institute and co-author of the report.

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The amount being lost represents 27.4% of the government’s total COVID-19 recession spending. For every $4 allocated to crisis response, more than a dollar ends up potentially in the wrong hands.

Among those with purportedly “questionable” needs are individuals and their dependents with a household income of at least $100,000 in the previous year. 

The Fraser Institute identified the following loopholes where taxpayer money is likely wasted:

Canadian Emergency Response Benefit (CERB): “Up to $11.8bn for young people ages 15 to 24 with 2019 earnings between $5,000 and $24,000 living with their parents as dependents in households with at least $100,000 in household income. In almost every case, the benefits provided to these young people – almost 1 million of them – under CERB exceeds their monthly earnings in 2019.”

Spouses eligible for CERB: “$7bn for an estimated 581,000 spouses eligible for CERB who earned between $5,000 and $23,999 in 2019 and are living in families with at least $100,000 in household income.”

Canadian Emergency Student Benefit (CESB): “$1.6bn for an estimated 324,900 students aged 18 to 24 who are eligible for CESB while living with their parents in households with at least $100,000 income.”

One-time payment to seniors: “$1.4bn was sent to seniors not eligible for the Guaranteed Income Supplement, which is a program specifically targeted to low-income seniors.”

One-time top-up to the Canada Child Benefit: “$503.5m, or one-in-four dollars of the CCB top-up, is estimated to have gone to families with household incomes of at least $100,000 in 2019.”

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Exercising prudence
The institute called on the government to “mitigate Canada’s deteriorating finances” by exercising “greater prudence” when allocating taxpayer resources to programs that are specifically designed to assist individuals and households in genuine need of coverage.

“Stabilizing peoples’ income during a recession is sound economic policy, but the money should go to people who are actually in need, and it should replace lost income, not make people better off than they were before the recession,” Clemens explained.

Prime Minister Justin Trudeau has been advocating for the Canada Emergency Response Benefit to be more inclusive, promising CERB recipients in late July: “No one will be left behind.”

With CERB extended until the end of September, the government is now looking to transition beneficiaries to a revamped Employment Insurance program, HRD reported.

The enhanced insurance benefits will be “more flexible and generous,” adding more than 400,000 new recipients, the government said.

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