Helping Canadians Pay for Essentials During COVID-19

In response to the COVID-19 crisis, Canada’s federal, provincial and municipal governments have adopted sweeping measures to limit the spread of the virus.

These actions are necessary to protect our health. But they will also deeply disrupt our economy. Already, economic activity has plunged more severely and swiftly than has been seen in our lifetimes. This disruption threatens people’s jobs, their incomes, and their ability to pay essential expenses.

Furthermore, this is happening during an era when Canadians have the highest levels of debt on record, making it impossible to “borrow our way through” the crisis.

The government of Canada has announced an $82B package of economic measures, but this package is being delivered through existing programs like the Canada Child Benefit and EI. These programs don’t cover the whole population, so many people will fall through the cracks unless we take further action.

We need to accept that the rules have changed. COVID-19 is an unprecedented situation, and rather than relying on past programs, we need to enact new measures designed specifically for the crisis.

With that in mind, here are five bold actions the government should take to help Canadians pay the bills during COVID-19.

1: A Wage Subsidy

The most logical first priority is to keep people employed and paid during the crisis. Although there are some businesses that are physically unable to operate because of social distancing restrictions, there are others that could potentially operate at a reduced level, but face severe cash flow problems and are being forced to lay off workers to remain solvent.

If would be better for everyone if those workers could remain in their jobs. The government should enact a short-term wage subsidy, paying 80% of workers’ salaries during the crisis, to make this possible. Not only does this ensure more people have an income, it reduces the damage to the economy and allows it to restart more quickly when the crisis has passed.

2: An Interest Holiday

With income secured for as many people as possible, we should look at people’s main expenses. One of the biggest expenses is debt, including mortgages, loans, and credit cards.

In the 2019 fiscal year, the “big six” banks had a total net profit of more than $45B. They are in a position to help, and should be asked to accept their share of the burden.

The Government should require banks and credit card providers to forgive all interest due from April through June (and longer if necessary) on consumer loans, small business loans, residential mortgages, and personal credit card balances.

3: A Rent Holiday

Another major expense for most people is housing. Large landlords, like big banks, are in a position to help people by accepting lower profits temporarily. The government should enact a national rent holiday, from April through June, for all residential and small business tenants who rent from large landlords.

Why not just defer those payments? Because the income that people are losing during COVID-19 is lost forever. Most people will not be in a position to make double payments later in the year, so a deferral is not a complete solution.

4: Cutting Utility Bills

Another expense that is unavoidable for most Canadians is their utility bills. The Federal government should provide immediate funds to provincial and municipal governments that agree to reduce bills from publicly operated utilities.  Rather than a flat reduction, the reduction should be equal to each household’s average bill over the past year, so that people in varying circumstances (especially those with in-home medical devices or special needs) are all properly protected.

5: Basic Income

We will overcome the COVID-19 crisis, but other crises will arise in the future. On a long-term basis, we need a comprehensive “safety net” that ensures all Canadians can continue to afford the essentials of life during times of crisis.

A Basic Income—regular payments made directly to all citizens with no qualification needed—is the best way to solve this final problem. The strength of a Basic Income is that there are no cracks to fall through, no delay in receiving payments, and no favouritism or mistargeting. This makes it perfectly suited to a crisis where circumstances are changing rapidly and in unpredictable ways.

A Basic Income comes with other benefits that are relevant to the COVID-19 crisis: it will reduce the burden on our health system, freeing up more resources for the pandemic, and it creates economic stimulus, which will help fight the recession created by the virus.


Together, these five measures will make sure that all people—employed, unemployed, sick, and caregivers—are able to meet their expenses and obligations during the crisis. We have the ability to protect the vulnerable, but to do it, we need to be bold.


Background: Comparing Canada’s Response to Other Wealthy Countries

It’s informative to compare the Canadian government’s economic package to the actions taken by the governments of other wealthy nations.

The Canadian government has announced an $82B package of economic measures. Of that amount, $27B comes in the form of direct support to workers and businesses, while $55B comes in the form of tax deferrals. The direct support includes a temporary boost to Canada Child Benefit payments, plus an Emergency Care Benefit of up to $900 bi-weekly for up to 15 weeks to support workers who must stay home and do not have access to paid sick leave.

The British government just announced that it will pay a wage subsidy of 80%. According to Capital Economics, without this wage subsidy, British unemployment could have doubled, with more than 1.5M people joining the unemployed.

The British wage subsidy is expected to cost £78 billion ($135 billion), and comes on top of a business support package of £350 billion ($606 billion) to help firms cope with the lockdown of large parts of the British economy. Together, these two packages amount to about 19% of Britain’s GDP. 

The Danish government has also announced a wage subsidy covering 75% of employees’ salaries. The Danish plan could require the government to spend as much as 13% of Denmark’s GDP in just three months. (Thirteen percent of Canadian GDP would amount to $257 billion.)

The Spanish government has announced a relief package of €200 billion ($310 billion), equivalent to about 20% of Spanish GDP. The measures adopted in Spain include delaying mortgage payments, easing social security contributions, and allowing employees who need to care for relatives to reduce their workday by up to 100%.

In summary, these three other governments have committed to measures amounting to 13-20% of their countries’ respective GDP. By comparison, Canada’s measures announced so far total only 3% of Canadian GDP.

Canada’s debt-to-GDP ratio (its ability to take on new debt) is comparable to Britain’s, and significantly better than Spain’s. In addition, Canada continues to borrow funds at rock-bottom interest rates and could, if it chose, borrow funds interest-free from the Bank of Canada.

This comparison shows, then, that the Federal government has ample capacity to take much bolder action to protect Canadian workers and small businesses.

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