Canada’s wage-subsidy program is not just the most expensive pandemic aid measure, it is the single biggest spending initiative to ever emerge from Ottawa.
Now projected to cost $110.6-billion over two fiscal years, the Canada Emergency Wage Subsidy has provided payments to hundreds of thousands of small, medium and large businesses with the goal of keeping millions of Canadians employed.
The program may well have succeeded in that goal, with labour markets bouncing back faster than most thought possible a year ago in the middle of the coronavirus-induced economic freefall.
But did Ottawa need to spend all of those billions of dollars to safeguard jobs? That’s the broad question that a team of Globe and Mail reporters – myself, Tom Cardoso, David Milstead and Vanmala Subramaniam – has set out to answer in a series of stories that scrutinize the CEWS program.
First up was an in-depth look at how hundreds of public companies tapped CEWS, even those whose quarterly revenue and income were on the rise. Mr. Cardoso also looked at the government’s lack of disclosure on who has received payments, and what those payments are.
Ms. Subramaniam examines the question of why some of the country’s top-performing hedge funds received government wage subsidies.
And watch for more coverage through the week, including from Mr. Milstead, who will examine the hodgepodge of corporate disclosure of CEWS payments.
Taxing questions
Following up on last week’s Tax and Spend coverage on Old Age Security benefits, Frank Mallany of Barry’s Bay, Ont., asks, “If you defer your OAS and CPP until 70 but you die before you reach that age and apply for benefits, is your spouse still eligible for survivor benefits?”
The short answer is: deferral doesn’t have an impact for either the OAS or the CPP.
In an e-mail, the Employment and Social Development department said a surviving spouse or common-law partner is eligible for a survivor’s pension under the CPP, assuming that their deceased partner made sufficient contributions. That’s the determining factor, not whether the benefit was deferred.
However, the survivor’s benefits for the OAS are much more limited, the department noted. Surviving spouses or partners would not actually receive the deceased’s OAS benefits. But there is a benefit called an Allowance for the Survivor, paid to low-income widowed individuals aged 60 to 64. Recipients of that income-tested benefit cannot have remarried or become the common-law partner of someone else, and must have been resident in Canada for at least 10 years.
But, as with the CPP, deferral is not a determinant. That also means that there wouldn’t be a difference in allowance payments if a deceased spouse had deferred, or not.
Line Item
Premium premiums: Unhappy with the size of your property-insurance or auto-insurance bills? Blame government. That’s the thrust of a new analysis from the C.D. Howe Institute, which examines why property and casualty insurance rates are higher in Canada than in many other OECD countries. The paper says the insurance industry is highly competitive, with normal payout ratios for claims, and “significantly lower” returns on equity. None of those factors explain relatively higher prices in Canada. The culprit, the authors conclude, is government. In the case of property insurance, the lack of government programs (prevalent in other countries) to pay for catastrophic events such as earthquakes and flooding mean that consumers bear higher costs. For auto insurance, government monopolies or, in the case of Ontario, overregulation, are to blame, they say.
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