“Achingly Close”: A tale of policy intransigence, hubris and a half hour of paid work

There is a Canadian woman named Amanda Coscarelli who should be a household name. She has singlehandedly demonstrated the excruciating unfairness of an important element in the design of the Canada Recovery Benefit (CRB).

But her ultimate rewards were equal measures of frustration, ineligibility and hardship.

I don’t know her personally and I could not find her online so I only know Amanda through a Federal Court decision named Coscarelli v. Canada (Attorney General) from December 1, 2022 – Mr. Justice Diner presiding.

You can read it here: https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/522550/index.do

Her case is public.

She represented herself while the Canadian Government was represented by the Attorney General of Canada.

And she lost.

The bottom line in the case is that Amanda applied for $14,000 in Canada Recovery Benefits (CRB) in good faith believing that her employment income combined with some workers’ compensation benefits reached the $5,000 eligibility threshold for the CRB. Her workers’ compensation benefits were not – as it turned out – a qualifying income source.

After much review, many calculations and clarifications, Amanda’s qualifying earnings for the CRB turned out to be $4,992,74. She was $7.26 short of qualifying for the CRB. The Federal Court ruled that she was ineligible for the $14,000 she would have legally received had she managed to work just an extra half hour in all of 2019.

Amanda had no employment income of any sort in 2020 during the worst days of the Covid-19, just her workers’ compensation.

As you read the ruling, the frustration of Judge Diner is almost palpable. He notes:

“Despite being achingly close at $7.26 short of the qualifying mark of $5000 based on 2019 income from her employer at the time, the CRA’s decision to deny her CRB was … the only decision.”

He goes on to say something important about the CRB legislation:

“I empathise with Ms. Coscarelli’s situation. CRA officers also recognized the fact that she ended up approximately $7 shy of the $5000 CRB eligibility requirement. However, neither those officers, nor I, can reconstruct the law. There is no fairness or relief provision in the CRB Act as there is in other legislation (including in the Income Tax Act) that might have otherwise provided a concession for the applicant … in these circumstances where there has been no allegation of any constitutional violations or other flaw alleged in the legislation, the Court is only able to interpret the CRB Act, not rewrite it.”

Finally, Justice Diner notes:

Ms. Coscarelli has been an exemplary self-represented litigant, displaying all the best qualities of integrity, honesty, and helpfulness to the Court. Despite these admirable qualities and conduct, there is no reviewable error in her decision and thus no basis for this Court to overturn the finding of CRB ineligibility.

Analyzing this case, it is hard to know where to begin. Let’s start with marginal effective tax rates (METRs).  The METRs on the extra $7.26 that Amanda did not earn in 2019 is about 1,928%. And please remember that the well-to-do in Canada complain about METRs of just over 50%.

For want of a half hour’s pay in 2019, Amanda lost $14,000 in CRB.

This is what’s known in policy design circles as ‘bad design’ and almost everyone admits that the CERB and CRB were badly designed. They almost had to be given the tiny snippet of time in which Canada’s largest income security programs were rolled out the door.

Federal officials have noted time and again how little time they had to put together the CERB and CRB and in pursuit of program simplicity, they continue even now to excuse the ‘all or nothing’ approach of the $5,000 income threshold.

And they also changed the composition and rules surrounding the $5000 threshold several times. First, they reinterpreted Honourariums to count as eligible income followed by allowing gross self employment earnings and then followed that again by exempting CERB and CRB income from the federal Guaranteed Income Supplement (GIS) clawback.

The list of changes is long and even to this day, archived federal websites provide differing and contradicting eligibility standards.  

But with all the changes, there was no relief for Amanda.

But here’s the thing – actually two things.

The first is that two wrongs don’t make a right.

Just because you design a program quickly to get it out the door – warts and all – does not mean that you have to persist in bad design on the rebound. It would be ever so easy to have what Justice Diner called “wiggle room” in the design to cut some slack for the applicants who came “achingly close” to qualifying.  Justice Diner notes ruefully that such “wiggle room” is already part of the Income Tax Act but somehow wiggle room language does not apply to the CRB.

The second is that the pandemic programs are now ‘over’ as Chrystia Freeland is fond of saying.  If the CRB was an ongoing program, we could at least understand how extending wiggle room would lever current and new expenditures for newly eligible applicants and ongoing recipients.

But there are no more current CRB recipients and there will be no new ones. So what’s the problem?

It looks like the real problems are policy intransigence on the one hand and hubris on the other.

Even if we were to concede that the pandemic is over (it isn’t), the obvious correct thing to do is to wind up most program-related debts to the Crown and extend retrospective eligibility to the Amanda Coscarellis of the world.

The Federal government still has the opportunity to make things right as many ‘achingly close’ threshold eligibility cases continue to needlessly clog the time and resources of the Federal Court.

Let’s hope someone is listening.

And let’s hope that Amanda gets some justice.

Js- Jan13/23