Prime Minister Justin Trudeau, seen here delivering a news conference at Rideau Cottage in Ottawa on March 17, 2020, and Finance Minister Bill Morneau will announce immediate financial assistance to Canadians who have been left without a job because of business closings.
BLAIR GABLE/Reuters
The federal government will unveil nearly $30-billion of emergency financial aid on Wednesday to help struggling Canadians and businesses cope with the economic fallout from the new coronavirus crisis, sources say.
Prime Minister Justin Trudeau and Finance Minister Bill Morneau will announce immediate financial assistance to Canadians who have been left without a job because of business closings, including self-employed and part-time workers unable to collect regular employment-insurance benefits, according to the sources.
In addition, late Tuesday, Canada’s six largest banks announced that hard-hit customers will be allowed to defer mortgage payments by up to six months, as part of a co-ordinated relief effort by the banking sector.
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The Department of Finance had asked the banks to commit to up to six months of breathing room on mortgages, according to financial industry sources. Ottawa also advised that it was important for the banks to collectively announce the measures, which include relief for other unsecured credit products. Conversations between Ottawa and the highest levels of Bay Street have intensified over the past week, as the Bank of Canada, federal government and banking regulators moved to shore up the financial system.
In a joint statement Tuesday evening, all of the Big Six banks said they would provide “flexible solutions,” on a case-by-case basis, for people facing pay loss, additional child-care burdens or illness due to COVID-19.
The federal stimulus package will include quick financial relief, but part of the almost $30-billion will be set aside to boost the economy toward the end of the crisis, the sources say. Further measures, they say, are also planned to target hard-hit sectors of the economy in the coming weeks.
The Globe and Mail is keeping the names of the sources confidential because they were not allowed to speak publicly about the stimulus measures.
Many Canadian economic forecasters expect a steep second-quarter contraction that could rival or outpace the worst of the financial crisis of 2008-09, making the road to recovery more difficult.
Governments around the world have announced or are working on massive stimulus measures. The Trump administration is negotiating a legislative package with Congress of up to US$1-trillion that could include direct cash payments to Americans. In Britain, the government announced a £330-billion ($567-billion) package of loan guarantees and direct financial assistance to businesses.
In Europe, France and Germany are each offering €500-billion worth of loan guarantees and financial support for companies and employees; Spain a €200-billion package; and Italy €340-billion.
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In this country, Canadian Manufacturers & Exporters, one of Canada’s largest industry groups, is calling for temporary cuts to payroll taxes and other government fees; direct grants to manufacturers in financial distress; and elimination of red tape to apply for and use government support programs. Other industry groups, such as tourism, are also pleading with the government for direct financial assistance.
On the proposed federal stimulus package, the sources say Ottawa will use existing programs to help Canadians, such as lowering qualifying rules for Employment Insurance, increasing GST rebates and the child-tax credit and boosting the guaranteed income supplement for seniors. A new temporary program is also expected to be announced to provide income to self-employed and part-time workers who aren’t eligible for EI.
The Prime Minister said at a news conference Tuesday that Parliament will be recalled to pass legislation to help jobless Canadians.
“We are talking about recalling Parliament briefly to pass legislation measures that will allow us to do things around employment insurance, do things around a number of measures to get money into the pockets of Canadians,” he said.
The government has previously signalled that a small number of MPs could return to Parliament during the break in order to pass urgent legislation. Quorum for the House of Commons requires the attendance of just 20 of the 338 MPs.
Mr. Morneau will also announce that Ottawa is pushing back the deadline for individuals and small businesses filing taxes and giving them additional time to finalize their payments without facing penalties or interest payments on money due, the sources said.
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“We are looking to give people more flexibility to make payments and businesses to have more liquidity during this time,” Mr. Trudeau said. “Whether it’s making sure small businesses can remain viable through this difficult time, whether it’s so families can take take care of their loved ones and put food on the table.”
Other measures in Wednesday’s emergency package will include additional help for small and medium-sized business that are facing cash-flow problems.
“Where the government owes money to businesses, expedite the payments to address the cash flow,” Canadian Chamber of Commerce president Perrin Beatty said. “If money is owed, give them some flexibility so they are not demanding the money from them.”
Wednesday’s measures are in addition to a series of recent announcements to support health-care services and the Canadian economy. On Friday, Canada’s banking regulator, the Office of the Superintendent of Financial Institutions, approved more than $300-billion in increased lending capacity by easing capital requirements.
Canada Mortgage and Housing Corp. has agreed to purchase up to $50-billion of insured mortgage pools and the Bank of Canada has announced measures to support liquidity and the availability of credit as businesses deal with the coronavirus fallout.
Canadian Labour Congress president Hassan Yussuff, who was consulted on the economic package, said the government is using a combination of existing and new income-support measures to get money to people in need.
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“A lot of low-income people are the ones that are going to be in a crisis if they don’t get money because they are one paycheque from bankruptcy and some of them are two paycheques from bankruptcy,” Mr. Yussuff said.
Mr. Trudeau warned that the COVID-19 crisis could go on for months, but stressed that Ottawa has the financial firepower to help hard-hit businesses and families.
“We are the G7 country with the lowest debt-to-GDP ratio,” he said. “And that allows us to invest significantly in Canadians, in businesses to make sure we’re able to make it through this difficult time.”
Some economists say that while expanding EI is a clear choice, the current structure of the program has issues that limit its effectiveness.
For instance, qualifying rules and the size of benefits vary by economic region based on a three-month moving average of the local unemployment rate. That means the program will be slow to capture the sharp and immediate spike in unemployment triggered by the coronavirus.
Further, the percentage of unemployed workers who qualify for benefits is generally less than 60 per cent. The eligibility rate for young workers is usually lower.
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“The more important thing with EI is just how few people are eligible for it,” said Miles Corak, an economics professor with the Graduate Center of the City University of New York who served as economist in residence in 2017 with the Canadian federal department responsible for EI and social policy.
Because the EI system can be slow to adjust to an economic shock, Prof. Corak said Ottawa should consider the idea of “helicopter” payments, in which money is sent directly to all or many Canadians.
He said the tradeoff in terms of failing to target the money to those most in need is worth the benefit of speed in this case.
“I think that’s a very good idea because the issues of targeting aren’t so important. It’s a quick response and it gets money into the pockets of people and they can spend or save as they feel is appropriate,” he said.
The Conference Board of Canada warned Tuesday that the added shock of COVID-19, the rail blockades and a collapse in oil prices is putting the country on the brink of recession.
“We expect business investment and exports to post substantial declines and consumer spending to ease. As a result, economic growth will contract by a projected 2.7 per cent in the second quarter,” said Matthew Stewart, the director of national forecast at the Conference Board of Canada. “However, due to the unpredictability of the coronavirus, there are still huge downside risks to the outlook.”
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OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.
Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.
The change is scheduled to come into force on Nov. 8.
As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.
The program has also come under fire for allegations of mistreatment of workers.
A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.
In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.
The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.
According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.
The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.
Temporary foreign workers in the agriculture sector are not affected by past rule changes.
This report by The Canadian Press was first published Oct. 21, 2024.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
