Talk to almost any program design expert and they will tell you that the Canada Emergency Response Benefit (CERB) is an incredibly badly designed program. They will also tell you that at the beginning of a pandemic crisis with little information, an economic lockdown and no vaccine, it is exactly what we needed.
The CERB is incredibly simple; a few rules, a flat amount of $2000 a month, an internet connection and a social insurance number and Bingo! The program is out the door. It’s like tying a jet engine to a VW Beetle and opening the engine at full throttle.
It’s going to fly off the launch pad and go wherever it goes and it did.
Step right up! Click the ‘submit’ button and away we go!
You lost your job due to COVID19; you made $5,000 last year and you make no more than $1,000 a month. You win the CERB lottery of $2000 a month.
Make slightly less than $5,000 last year or make slightly more than $1,000 a month now and you get nothing.
And if you receive social assistance in Ontario, you lose $900 a month in clawbacks. If you are a poor senior receiving the federal Guaranteed Income Supplement, you lose up to 75% on the dollar in CERB clawbacks. And if you’re in rent geared to income (RGI) housing, your rent goes up by as much as $600 a month (30% of income is the rule for RGI).
Feel sorry for the social assistance recipient, a person with disabilities who really needs to self-isolate – in RGI housing – whose social assistance goes to zero and whose rent shoots up by over 400% because of a complex set of rules designed to confiscate income wherever the rules may find it. Feel just as sorry for the poor senior in RGI housing whose nominal clawback rate soars to 105%, a nickel more on the dollar in clawbacks than the CERB that they received in the first place.
You can just imagine the board game that a clever gamester could invent. Instead of calling it ‘Snakes and Ladders’, you could call it ‘Cliffs and Clawbacks’. You would roll the dice and advance to a square that tells you that your T4 for last year came in at $4,900 and you lose the CERB – tumble 10 spaces.
The next player lands on a square that says “Good news – your employer is giving you a bonus in May and your employment income is $1,100. You are ineligible for the CERB; go back 8 spaces.
Player 3 lands on a square that says: “The job you lost is not a real job. The ‘employer’ has disappeared and you didn’t get an ROE (record of employment); you lose the CERB; go back 12 spaces”.
Player 4 is leading and almost home when landing on a square that says “you’re a senior on GIS in RGI housing – 105% of your CERB is clawed back; go back to the beginning and start again”.
Player 5 lives in an upscale neighbourhood and has an independent income and owns their own home. No rent increases, no clawbacks, no confusion about work or pay. Just pay your taxes –much lower because you lost your job.
Player 5 wins the game.
OK! – Sorry. There is no new board game called ‘Cliffs and Clawbacks’.
And for very many people, the CERB extension is welcome news. The financial abyss they face is postponed for another 8 weeks and hopefully, it will help them stay on their feet.
But the reality for many of Canada’s poorest residents, cliffs and clawbacks are going to be in place longer than we thought. Six provinces and territories deduct the CERB in its entirety from social assistance. Most RGI housing authorities are charging rent on the CERB. Federal programs like the GIS are heading towards major CERB clawbacks.
At the community level, COVID19 infection and CERB eligibility is highest in poor mostly racialized neighbourhoods. CERB that is clawed back is confiscated by governments before it can go into local businesses whose community members are their customers.
This means that the community inequality we saw before the pandemic will be greatly deepened for 8 more weeks.
And now, the CERB is expected to spend more than $64 billion in 2020 eclipsing the Canada Pension Plan as Canada’s largest income security program. Who would have thought just six months ago that a new program could become Canada’s largest investment in income security in the history of our nation?
This is why it is all the more important to stop kicking the can down the road. We can’t afford a badly designed asymmetrically delivered program replete with cliffs and clawbacks to remain on the books after the current extension. We must immediately sharpen our pencils and move toward a much improved design.
We must always remember that fair isn’t simple and that simple isn’t fair.*
Let’s get to work and ensure that the apocryphal game of Cliffs and Clawbacks is the joke that it’s meant to be.
* Aphorism attributed to Ottawa economist Russ Robinson.