Recommending against clawbacks: Why is the federal government so reluctant to tell other governments how its money should be spent?

It took federal Minister Carla Qualtrough an agonizing 19 days to inform the public that she wanted Canada’s Emergency Response Benefit (CERB) to be exempt from clawbacks under provincial and territorial social assistance and disability support programs. The CERB was introduced on March 25, 2020, and her public admonition came on April 13 in a statement through her spokesperson to the Toronto Star.

She did not make the announcement on television. She did not make the announcement at all. 

“Our government believes the CERB needs to be considered exempt by provinces and territories in the same way as the Canada Child Benefit to ensure vulnerable Canadians do not fall behind,” said Marielle Hossack in an emailed statement.

Some of us had been asking for this for over two weeks and now it’s time to start asking the hard questions:

Why the wait? Why did they not say this at the time? Why the silence from the Prime Minister? And why did the minister not make the statement herself?

After all, this is federal money meant to go to the people who are eligible for it. It is not being made available to help provinces and territories balance their books on the backs of Canada’s poorest people.

So how are we to understand the lack of moral suasion with their provincial and territorial counterparts?

The first place to look is the pedigree of the CERB payment itself. It is an offshoot of Employment Insurance and an earnings replacement program. Traditionally such programs are deducted dollar for dollar from social assistance programs.

But on April 2, just eight days after the CERB announcement, the BC government stepped away from these traditional clawback polices as they correctly determined that the purpose of CERB was to help people stay safe, not just to replace earnings.

BC went it alone but the expected gush of congratulation from Ottawa simply did not follow. 

The silence was deafening.  And then another week passed – an eternity in politics – until the government of Newfoundland and Labrador made a public announcement that the CERB would be clawed back:

It is important to note, individuals cannot receive both provincial Income Support and the CERB at the same time. Should Income Support clients receive the CERB, they will no longer qualify for Income Support, and benefits will be suspended immediately.

Then the floodgates opened. News reports and government announcements from Manitoba, the Yukon, the NWT, Nova Scotia, PEI, and Alberta followed suit. It seemed that the die had been cast.

But Ontario had yet to make a move by the time Qualtrough’s office issued their statement.

And then everything changed.

The Ontario Minister, Todd Smith, wanted to talk to Qualtrough to understand her position better. Just a week later on April 20, Smith announced that the CERB would be treated in the same way as earnings with a generous exemption that would allow recipients to receive more than half of the CERB without clawback.

For good measure, he announced that clawed back funds would be reinvested in social assistance and that no one would be cut off.

Then something curious began to happen late in the week of April 20. Both Alberta and Manitoba announced that they would adopt the same policy as Ontario and apply their earnings exemptions to the CERB allowing people to keep some of the CERB. Manitoba even announced that they would not cut anyone off of assistance during the crisis.

Both Manitoba and Alberta appeared to be cancelling earlier clawback policies but they are not talking about that. For advocates, it’s time to let them have their version of recent history. 

Now the pressure is on the other provinces and don’t think for a moment they are not feeling the pressure mount when three conservative and one NDP province representing over two thirds of Canada’s population are fully or partially exempting the CERB.

But what turned the tide?

It’s crystal clear that it was Qualtrough’s statement.

For many, this answer will be inadequate but for those who believe that moral suasion and direction on the part of federal Ministers does not work, there is irrefutable and overwhelming evidence that it does. And especially when it comes to social assistance clawbacks.

Liberal Minister Monique Begin used it twice on child benefits and seniors’ benefits in the 1970’s and 1980’s. Another Liberal, Ken Dryden used it three times with the Canada Learning Bond, education grants and RESP’s in 2004 and 2005.  Conservative Jim Flaherty used it twice with the Working Income Tax Benefit and the Registered Disability Savings Plan in 2007 and 2008.

Seven instances of federal moral suasion resulted in seven successes.

Minister Qualtrough is in the process of making it number eight.

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