Measured approach needed on CERB repayment
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It was fully expected that once the federal government began distributing billions of dollars in emergency aid to Canadians at record speed during the height of the COVID-19 pandemic, some of that money would end up in the hands of ineligible recipients.
It would be virtually impossible for government to hand out that much financial assistance — almost $211 billion — to individuals and businesses in such a short period of time without some collateral damage, especially without the normal controls in place to mitigate abuse and fraud.
About $4.6 billion was paid out to ineligible recipients, according to Canada’s auditor general, Karen Hogan, who last week released a report on the costs and benefits of the federal government’s pandemic support programs. Another $27.4 billion in payments require further investigation, her report found.
Ottawa acknowledged from the outset that in order to get money into the hands of Canadians as quickly as possible — beginning in the spring of 2020 — the normal screening process of applicants would be temporarily suspended. The government relied primarily on the attestations of those seeking financial support, with verification to come at a later date.
It was the cost of doing business during one of the worst global public-health crises in modern history.
The social and economic benefits of that quick response were momentous. The widespread support prevented a near-doubling of the poverty rate, according to Ms. Hogan’s report. Groups disproportionately affected by the pandemic, including women, visible minorities, Indigenous people and youth aged 15-24, accessed the programs at higher rates than others.
Almost 3.5 million Canadians who received the Canada Emergency Response Benefit were major income earners in their households; about 1.9 million were the sole income earners. The extraordinary level of financial support and the speed with which it was delivered allowed the economy to rebound faster than it otherwise would have, the auditor general found.
There were downsides: some of that money went to people who were not eligible for benefits. For example, some applicants did not meet the minimum earning threshold of $5,000 over the previous 12 months, but received benefits anyway. The report also found some workers were better off financially after collecting government benefits than they were prior to the pandemic.
That caused a disincentive for many to return to work (which, as an aside, raises serious questions about income inequality in Canada, when such modest government benefits — $500 per week in most cases — caused so many working people to be better off).
The auditor general’s sharpest criticism was directed at the federal government’s failure to follow up with a robust post-payment verification process in a timely manner. Of the $4.6 billion in ineligible payments, $2.3 billion has been repaid (as of July). Ms. Hogan says Ottawa should have done more to recoup that money earlier, and has recommended government officials step up efforts to investigate the additional $27.4 billion in questionable payments.
The auditor general’s sharpest criticism was directed at the federal government’s failure to follow up with a robust post-payment verification process in a timely manner.
However, the auditor general also said, during a news conference following the release of her report, that it would be a “reasonable approach” to forgive some of those payments on compassionate grounds, as long as government is clear and transparent about it.
Considering many of the ineligible recipients are low- to middle-income Canadians, and that payments were made within a limited time period under extraordinary circumstances, spending an excessive amount of time collecting those overpayments would seem an unwise use of government resources.
Striking a balance between reasonable follow-up and payment forgiveness, especially for low-income Canadians and struggling businesses, would be a more sensible course of action.