Program hydraulics 101: Top ten questions on poverty and Canada’s new transitional benefit and new EI program

On the very last day of an eventful July 2020, Prime Minister Justin Trudeau gave us some hints as to what will happen when the largest single income security program in Canadian history closes its doors at the beginning of October.

I was getting nervous as that was only 2 months away.

This is how the press reported the PM’s announcement.

“The Canadian government has announced it will create a new transitional benefit for workers who have exhausted their CERB and don’t qualify for EI, including gig and contract workers.

Meanwhile, Canadians who are eligible for EI will be transitioned to that platform as the CERB approaches its scheduled expiry on September 26.

Prime Minister Justin Trudeau said the new benefit will operate similarly to EI, and will include access to training and reduced clawbacks for hours worked.

“It will include access to training, and being able to work more hours and earn more money while receiving the benefit,” Trudeau said.

“We intend to cover every Canadian who is looking for work with a better, 21st-century EI system.””

 Sounds pretty vague at first blush but there is a lot here to chew on; six things actually.

  1. The CERB will be gone
  2. Those eligible for EI will move back to EI
  3. There will be a new benefit that works similar to EI.
  4. There will be new provisions for training
  5. Clawbacks will be reduced for hours worked; and
  6. There will be a new EI system that will cover every Canadian looking for work.

All of these six things are really important for people living in poverty and especially for people receiving social assistance, living in subsidized housing, and for low income seniors who receive the Guaranteed Income Supplement (GIS).

The reason for this is ‘clawbacks’.

There are six COVID19 in come security benefits that were announced by the government over the past few months. Two are taxable and four are not:

  1. CERB (taxable)
  2. CESB (taxable)
  3. GST credit extension (non-taxable)
  4. OAS special extension (non-taxable)
  5. GIS special extension (non-taxable) and
  6. The special disability benefit (non-taxable)

It turned out that ‘pedigree’ largely  trumps ‘purpose’ in the COVID19 benefit world and benefits that are taxable largely get clawed back (except when they don’t), rents are charged (except where they aren’t) and non-taxable benefits generally don’t get rent charged on them (except when they do).*

So here are my questions for the federal as well as provincial and territorial governments:

  1. Assuming that EI will remain taxable, will the new transitional benefit be taxable as personal income?  
  2. If it is taxable, will provinces and territories treat it like the CERB (exempt it, apply earning exemptions, or claw back in full).  
  3. If it is taxable, will Minister Qualtrough ask provinces and territories to exempt it?
  4. If it is taxable, will Minister Hussen ask provinces and territories to be flexible with charging RGI rents and will Minister Schulte exempt it for GIS purposes?
  5. If it is non-taxable, will provinces and territories exempt it for social assistance  and subsidized housing rent?
  6. If non-taxable will Ministers Hussen ask provinces to exempt it for RGI rents and will Minister Schulte exempt it as income for GIS purposes.
  7. When CERB recipients move back to EI, will CERB exemptions apply for EI recipients who are receiving social assistance  or those who are forced to apply for social assistance (in provinces and territories that fully or partially exempt) .
  8. Will provinces and territories re-evaluate their exemption and clawback policies since almost every possibility actually occurred in relation  to the CERB when it comes to social assistance and RGI rents?
  9. Will the federal government give consistent guidance to provinces and territories as to how provincial and territorial programs should treat federal benefits under provincial and territorial programs? and
  10. Will the federal government convene provinces and territories for discussions on a possible uniform treatment of the new transitional benefit (and EI) under provincial and territorial programs?

I have  a million more questions but I thought these might be a good start.

Js/Aug 2, 2020

* I am going to assume that knowledgeable readers have read the Maytree CERB policy backgrounder document for all the details. I would also point readers to my past 10 blogs on the CERB.