Government of Canada Releases COVID-19 Economic Response Plan

The following is excerpted from a communication issued by Global Public Affairs.

Image: The Canadian Press/Adrian Wyld.

On March 18, Prime Minister Trudeau and Finance Minister Bill Morneau unveiled the federal government’s economic response plan to address the increasing and rapid financial impacts of COVID-19. The package includes $27 billion in direct support to Canadians and businesses, and a further $55 billion to meet liquidity needs for businesses and households through tax deferrals.

In total, the announcement encompasses an $84-billion package representing 3% of Canada’s GDP.

It must be granted that these new economic measures will take some time to take effect and roll out.  Major economic disruptions are taking place now and these may continue to emerge in additional phases as the pandemic’s effects ripple across provinces and key sectors. Stakeholders and provincial governments have been very vocal in their requests to Ottawa over the course of the last two weeks as economic challenges have gained speed across the country. In terms of sector-specific measures, Finance Minister Bill Morneau did mention in his comments immediately following the Prime Minister’s announcement that more measures to shore up the energy sector would be forthcoming.

It must also be highlighted that today’s announcement represents a major re-wiring of Canada’s social support architecture, by providing more direct funding to Canadians and bypassing traditional jurisdictional channels and areas of responsibility.

Economic Stimulus Measures Announced

The following measures were announced as part of the economic response plan and can largely be broken down into four categories: (1) support for workers; (2) support for business; (3) supportive tax measures; and, (4) support for vulnerable groups.

A link to all measures can be found here. 

1. Support for Workers

• Provide additional assistance to families with children by temporarily boosting Canada Child Benefit payments. This measure would deliver almost $2 billion in extra support.

• Introduce an Emergency Care Benefit of up to $900 bi-weekly for up to 15 weeks to provide income support to workers who must stay home and do not have access to paid sick leave. This measure could provide up to $10 billion to Canadians, and includes:

  • Workers, including the self-employed, who are sick, quarantined, or who have been directed to self-isolate but do not qualify for Employment Insurance (EI) sickness benefits.

  • Workers, including the self-employed, who are taking care of a family member who is sick with COVID-19, such as an elderly parent or other dependents who are sick, but do not qualify for EI sickness benefits.

  • EI-eligible and non EI-eligible working parents who must stay home without pay because of children who are sick or who need additional care because of school closures.

• Introduce an Emergency Support Benefit delivered through the Canada Revenue Agency to provide up to $5 billion in support to workers who are not eligible for EI and who are facing unemployment.

• Provide additional assistance to individuals and families with low and modest incomes with a special top-up payment under the Goods and Services Tax (GST) credit. 

• Waive, for a minimum of six months, the mandatory one-week waiting period for EI sickness benefits for workers in imposed quarantine or who have been directed to self-isolate, as announced on March 11.

• Waive the requirement for a medical certificate to access EI sickness benefits.

• Provide eligible small businesses a 10 per cent wage subsidy for the next 90 days, up to a maximum of $1,375 per employee and $25,000 per employer. Employers benefiting from this measure would include corporations eligible for the small business deduction, as well as not-for-profit organisations and charities.  This will help employers keep people on their payroll and help Canadians keep their jobs.

• Provide increased flexibility to lenders to defer mortgage payments on homeowner government-insured mortgage loans to borrowers who may be experiencing financial difficulties related to the outbreak. Insurers will permit lenders to allow payment deferral beginning immediately.

2. Support for Business

• Allow all businesses to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020. This relief would apply to tax balances due, as well as installments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period. 

• Increase the credit available to small, medium, and large Canadian businesses. As announced on March 13, a new Business Credit Availability Program will provide more than $10 billion of additional support to businesses experiencing cash flow challenges through the Business Development Bank of Canada and Export Development Canada. The Government is ready to provide more capital through these financial Crown corporations.

• Further expand Export Development Canada’s ability to provide support to domestic businesses.

• Provide flexibility on the Canada Account limit, to allow the Government to provide additional support to Canadian businesses, when deemed to be in the national interest, to deal with exceptional circumstances.

• Augment credit available to farmers and the agri-food sector through Farm Credit Canada.

• Launch an Insured Mortgage Purchase Program to purchase up to $50 billion of insured mortgage pools through the Canada Mortgage and Housing Corporation (CMHC). As announced on March 16, this will provide stable funding to banks and mortgage lenders and support continued lending to Canadian businesses and consumers. The Government will enable these measures by raising CMHC’s legislative limits to guarantee securities and insure mortgages by $150 billion each.

The six largest financial institutions in Canada have made a commitment to work with personal and small business banking customers on a case-by-case basis. As a first step, this support will include up to a six-month payment deferral for mortgages, and the opportunity for relief on other credit products.

3. Supportive Tax Measures

• Extend the tax filing deadline for individuals to June 1, and allow all taxpayers to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020. This relief would apply to tax balances due, as well as instalments, under Part I of the Income Tax Act.  No interest or penalties will accumulate on these amounts during this period. This measure will result in households having more money available during this period.

4. Other (Vulnerable Groups)

• Reduce the minimum withdrawals from RRIFs by 25% for 2020.

• Implement a six-month, interest-free, moratorium on Canada Student Loan payments.

• Provide $305 million for a new distinctions-based Indigenous Community Support Fund, to address immediate needs in First Nations, Inuit and Métis communities.

• $50 million to women’s shelters and sexual assault centres.

Additional Restrictions at Canada-U.S. Border

Before the announcement of today’s financial relief measures by PM Trudeau, the President of the United States broke news on Twitter that Canada and the U.S. had reached an unprecedented deal to temporarily close the shared border to non-essential travel. The deal was finalized late last night by both government and was confirmed by the Prime Minister in his announcement this morning.

The new deal does the following:

• Closes the border for recreational purposes. This means no tourists or shoppers will be able to cross the border;

• Allows Canadians (i.e. snowbirds) to still enter the country; and,

• Keeps essential travel open. For instance, essential travel that is critical to supply chains (food, fuel, and life saving medicines); trucking will not be affected.

No timelines were given for when the border would re-open for non-essential travel.