Up to $22 billion in COVID aid may have gone to high-income Canadians: Fraser Institute study

'There's a whole lot of people, who don't need assistance or whose need is much less, who are not only getting assistance, but they're actually being made better off'

Early on, the federal government said candidly that the focus was on getting the COVID relief money out the door as quickly as possible. Peter J. Thompson/National Post

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OTTAWA – Up to a quarter of the payments that went to Canadians during this pandemic could have gone to people in families with six-figure incomes, says a study from the Fraser Institute.

The study estimates that as much as $22.3 billion may have gone to people who didn’t need it.

During the height of the pandemic the government unveiled several programs designed to help Canadians faced with sharp drops in their incomes.

Money went out to students, parents and seniors as well as people who suddenly found themselves out of work as stores, restaurants and other businesses were forced to close due to COVID-19.

The government’s largest program was the Canada Emergency Response Benefit (CERB.) Early on, the government said candidly that the focus was on getting the money out the door as quickly as possible.

Jason Clemens, executive vice president of the Fraser Institute and a co-author of the report, said that might have been justifiable when the program first launched in April, but with two extensions having happened there is no reason new eligibility rules couldn’t have been put in place.

“We’re now sitting in August. We’ve had two extensions of CERB with no change in eligibility. So if we’re making that argument in April, I think it’s a very different dynamic than five months later.”

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Clemens analysis used Statistics Canada information to determine the number of people in Canada who were either dependent children or spouses in families with incomes greater than $100,000.

If those people made at least $5,000 in 2019, and lost their incomes this year, they qualified for CERB and Clemens said that potentially gave them more income in 2020 than they saw before the pandemic.

“There’s a whole lot of people, who don’t need assistance or whose need is much less, who are not only getting assistance, but they’re actually being made better off than they were last year,” he said.

While it is not known if people in those income brackets claimed the benefit, they certainly would have been eligible for it.

The study estimates that a maximum of $11.8 billion in CERB payments could have gone to young people with part-time jobs who are dependents in families with more than $100,000 in annual income.

I don't know the rationale to send money to seniors who have household income of up to $260,000

That figure assumes that they had a part-time income in 2019, lost it or saw reduced hours in 2020 and then applied for CERB. A further $7 billion could have gone to spouses in similar circumstances in families making more than $100,000.

Clemens said the government could have made relatively simple changes to the application form to weed out people who were dependents and didn’t see a drop in their family income. He said he is confident Finance department officials were aware of this problem, but believes the issues were likely brushed aside.

“We have a world class Department of Finance and I just have to believe that they were raising some concerns about the degree to which the approach we were using, on so many of these new programs, was actually going to get money to people who needed it.”

The study also looked at payments made to seniors, which the government implemented to cover the increased costs of the pandemic.

Prime Minister Justin Trudeau announced the top-up payments in June for seniors who receive the Old Age Security (OAS) pension and the Guaranteed Income Supplement (GIS).

“We know that the last few weeks have been difficult for seniors and their families across the country, especially those most vulnerable,” Trudeau said when he announced the $500 top-up payment.

Clemens said the government should have sent the money only to GIS recipients, because the benefit is specifically geared to low-income seniors, instead of also including OAS pensioners. A senior couple can have an income of nearly $260,000 a year and still partially qualify for OAS.

“I don’t know the rationale to send money to seniors who have household income of up to $260,000,” he said.

The study also targeted the increase to the Canada Child benefit, where they found more than $500 million went to families making more than $100,000.

Clemens said replacing people’s incomes during the pandemic was an astute policy move, but by not targeting it the government was limited in what it could give to the people who really needed it.

“We’re not getting enough money to that single mom or single dad, who is in extraordinarily difficult circumstances. At the same time, we’re giving money to people who again, I just think at best, their need is questionable.”

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