Federal Economic Response Plan: Longer-Term Income Support announced March 18, 2020
1) Emergency Support Benefit which will amount to $5 billion to support workers not eligible for EI and are facing unemployment. Details will be forthcoming.
2) Implementing changes to the EI Work Sharing Program. This will provide EI benefits to workers who agree to reduce their normal working hours and also extending this programs length to 76 weeks. They will also ease eligibility requirements and streamline the application process.
3) Support for Low/Modest Income individuals. Including:
a. A one-time payment in early May 2020 through the GST credit. This will double the maximum annual amount to resulting in a benefit of $400 to individuals and $600 for couples.
b. An $300 increase in the Canada Child Benefit maximum for the 2019-2020 year thereby adding funds starting in May.
4) Canadians Abroad. Emergency Loan Program for Canadians to return home or require immediate assistance. This will be a repayable loan.
5) Students. A six-month interest free moratorium on the repayment of Canada Student Loans.
6) Minimum RRIF Withdrawals.
7) Financial Assistance. Canada’s large banks have confirmed that they will support Canadians with a 6-month payment deferral for mortgages and the opportunity for relief on other credit products.
Our Comments: By announcing both short term and long-term measures, the federal government is clearly signalling that the economic recession that we will endure over the next several months will be deep and protracted.
The Emergency Support Benefit is lacking details and clarity. It is entirely possible that this ESB ends up being significantly larger once implemented. Further details will be provided as the path forward develops.
The EI Work Sharing Program is likely to be used more frequently as the economy contracts and we have a similar number of workers but less work to be done. The intention of this program is to help employers and employee avoid layoffs during temporary economic slowdowns. This measure provides income support to employees eligible for EI benefits when they work a temporarily reduced work week while their employer recovers to a more normal level of business activity. The length of this program has been extended from 38 weeks to 76 weeks as the forthcoming economic recover may take longer than many expect.
Financial Assistance. Some if not all Canadian banks have had mortgage deferral plans for some time. The big banks have clearly indicated their willingness to work with Canadians on a case by case basis. What this would look like depends on your circumstances and your bank. At least one bank already has a ‘Financial Assistance Form on their website.