Priorities

Canada’s pre-pandemic welfare system was too restrictive to offer support to everyone effected by COVID-19. In Canada, as in many other countries in the developed capitalist world, there was a shift in the 1990s away from universal welfare entitlements toward a regime based on strict means-testing.

Canada’s income support programs are largely under provincial jurisdiction. Before this shift began, the federal government gave them significant support under the rubric of the Canada Assistance Plan. When the Liberal government led by Jean Chrétien dismantled that plan in 1995, they removed the federal mandate that ensured people would receive social assistance on the basis of “need.”

Federal support for “workfare schemes” followed the removal of this standard and came with massive funding cuts. Even before Bill Clinton had started attacking the New Deal welfare system south of the border in 1996, Canada’s Liberals were doing their best to push the unemployed off social assistance and compel them to accept any job, at any wage, to survive. Across Canada, provincial governments did just that.

A 2005 government research paper notes that throughout the 1990s, social assistance dropped across Canada:

Virtually all provinces, with varying degrees of intensity, instituted changes aimed at reducing social assistance dependency. Eligibility rules were tightened (especially for new entrants), benefit levels were cut, “snitch” lines were introduced, and other rule and procedural changes were adopted.

Several decades later, Canada’s social assistance programs remain threadbare. The country’s system is one of the least redistributive in the OECD.

This neoliberal transformation meant that when the pandemic struck, many in need of additional support would have been left in the cold were it not for the emergency unemployment measures introduced by the Liberals. In March 2020, the federal Liberals introduced the $500-per-week Canada Emergency Response Benefit (CERB) as a stop-gap measure, breaking, at least temporarily, with the neoliberal approach to welfare.

CERB provided support for up to sixteen weeks. It was available for those who didn’t meet employment insurance (EI) requirements but who had lost their income as a result of the pandemic. The government budgeted $24 billion for the program. It ended up costing around $74 billion. COVID-19 threw many more than anticipated into unemployment, at one point wiping out all of Canada’s job gains since the late 1980s.

CERB may not have been cheap, but $500 per week, in a country where the average wage is almost double this amount, was hardly generous. To put the emergency support in context, in the same period the Canadian government handed out $700 billion to corporations, almost ten times the amount given to the unemployed. These handouts included the $85.6 billion Canada Emergency Wage Subsidy (CEWS), which covered as much as three-quarters of payroll costs for employers, and over $100 billion for Canada’s banks.

Despite the relatively small size of the emergency support scheme, it still had a significant impact. In February 2021, the federal government’s own National Advisory Council of Poverty declared that the $2,000 monthly rate provided by the program was enough “to keep most individuals and families from falling below Canada’s Official Poverty Line.”

“Too Generous”

While many workers struggled on the $500-per-week benefit, the unemployed were the target of a humiliating anti-welfare campaign. Dehumanizing op-eds and comment pieces tore into victims of the unstable job market. The Sun complained that CERB was “overly generous.” The Globe worried that it didn’t provide minimum-wage workers with enough “incentive” to return to dangerous work.

One Financial Post columnist even suggested that employers and government should treat employees who refused to be called back to work as if they had resigned. Business think tanks like the C. D. Howe Institute made similar claims.

Unlike the EI program, there was no requirement to remain available to work and be actively looking for a job (and) the amount of benefit was relatively generous for low-income earners and was not linked to pre-pandemic income.

Right-wing criticisms of endemic welfare fraud became common place. The Canadian Taxpayers Federation even suggested that some claimants weren’t human at all but were in fact horses, whose identities had been stolen by their cunning owners in an elaborate ploy to get hold of government handouts.

Canada’s business owners also demanded cuts. Members of the Business Council of Canada authored a joint op-ed for the Globe titled “We Have Flattened the Curve, Now What?” It included the following:

CERB is extremely expensive, and companies across industries are finding it difficult to restart if employees lack incentives to return. Adjusting CERB and other programs to be more targeted and provide greater incentives to work is crucial.

The high rate at which CERB recipients were cut off led conservatives to characterize the benefit package as a work “disincentive.” The government could cut off claimants if their non-CERB related income exceeds $1,000 per month. The collective opinion of the business class, as articulated by its media functionaries, was unanimous: workers needed to be driven back to work.

In summer 2020, Liberal advisors took up this call and argued that CERB benefits should be reduced. In August 2020, Serge Dupont, an advisor to Trudeau’s Privy Council until December 2020, and Kevin Lynch, previously Paul Martin’s deputy finance minister, warned that CERB came with “moral hazards.”

Lynch and Dupont claimed that CERB was “slightly more generous than full-time employment at the minimum wage.” Although the income support program didn’t do much more than keep the wolves from the door, the Right determined them to be a step too far. The Liberal duo claimed that “many Canadians personally have no strong economic incentive to return to work … realistically, the level of benefits has to be reduced.”

Around the same time, MPs asked the federal employment minister Carla Qualtrough what the government was doing to ensure precarious workers were not too comfortable on $500 a week. Assistant Deputy Finance Minister Suzy McDonald offered them the following assurance:

We’re looking into that situation. As far as the CERB is concerned, we’re hearing about what’s working and what isn’t working so well. We’re always reviewing the programs in order to improve them.

In late 2020, the government replaced CERB with an extended Employment Insurance coverage and split the new EI into a variety of different means-tested programs. The new EI now required that recipients must be “actively looking for work” and that they did not “decline reasonable work opportunities.”

In September 2020, Minister Carla Qualtrough told the House of Commons:

We have put a lot of effort into ensuring that there are no disincentives to work. These new benefits really work like employment insurance: People must be looking for work, be available for work, accept a reasonable job offer and be present in the country. They really need to be actively looking for work.

Liberal MP Wayne Easter likewise sought praise for introducing requirements that claimants look for work. These requirements, Easter argued, provided workers with all the encouragement they need to find a job. Reveling in his sense of achievement as he addressed the Canadian parliament, he remarked that “the member opposite said that with CERB there needs to be employment incentives, and there are. There is the encouragement to go back to work.”

In the 2021 budget, the Trudeau government pledged to cut payments to $300 per week for new applicants until September, when the program is supposed to be eliminated. Canada’s welfare state may be in the midst of a transformation, but it won’t be one that interferes with the demand of employers for badly paid labor. The Liberal government and the business class are doing everything they can to make sure that whatever assistance is given to the working class won’t disrupt the regressive, low-wage capitalism on which the Canadian economic model relies.