Analysts say a significant portion of federal assistance over the last few months has gone to well-off households
A notable fraction of federal financial aid disbursements goes to Canadians who do not actually need this assistance, according to Fraser Institute economists Jason Clemens, Milagros Palacios, and Nathaniel Li.
The trio wrote in a recent opinion column for The Financial Post that the lack of due diligence in the distribution aspect has been wasting billions of dollars.
“Despite a near-$350-billion federal deficit and national debt exceeding $1 trillion, the Trudeau government continues to borrow billions of dollars to finance cash transfers to Canadians whose need is at the very least questionable,” the economists said. “During a recession, income stabilization – where income transfer programs aim to ‘stabilize’ the level of spending in the economy by ‘stabilizing’ the incomes of Canadians – is sound economic policy. But cash benefits should replace the lost income of people in need, not make non-needy people better off than they were before the recession.”
In their July market analysis, the economists found that spouses who earned between $5,000 and $23,999 last year, and who are currently living in households with at least $100,000 in aggregate income in 2019, are actually earning higher monthly incomes under CERB when compared to their regular employment.
“Not all households with $100,000 or more in income in 2019 will have sustained such earnings through the pandemic, of course. But many will have,” the economists said. “Had the government simply asked CERB applicants for their household’s income and whether or not its primary earner or earners had been adversely affected by the recession, it could have avoided paying these potentially large transfers to Canadians whose need is questionable.”
Combined with other drivers of wastage like poorly targeted senior citizen emergency payments and Canada Child Benefit cheques, around $22.3 billion has been wasted on households with 2019 incomes of at least $100,000, the economists said. They said that this represented 27.4% of the $81.6 billion the federal government has spent so far in its various aid programs.
“To better target assistance to Canadians in genuine need, the federal government clearly has to exercise greater prudence, particularly in light of Canada’s rapidly deteriorating finances,” the economists said.
