$22.3 billion of Ottawa’s COVID spending potentially wasted due to a lack of targeting assistance

Federal Government Wasting Billions on Poorly Targeted Assistance

Summary

• The federal government has introduced a number of new programs and ad hoc additions to existing programs in response to the COVID recession. Unfortunately, much of this spending appears to have been poorly targeted towards those in genuine need, resulting in the waste of billions of dollars of taxpayer resources.
• A review of the Canada Emergency Response Benefit (CERB) and Canada Emergency Student Benefit (CESB) for students plus the ad hoc, one-time payments linked to Old Age Security (OAS), the Guaranteed Income Supplement (GIS), and the Canada Child Benefit (CCB) result in a conservative estimate of $22.3 billion in poorly targeted assistance.
• This represents 27.4 percent—more than one in every four dollars—of the total $81.6 billion estimated to be spent on these programs.
• These potential poorly targeted income transfers include:
  • $11.8 billion in CERB for young people ages 15 to 24 with 2019 earnings between $5,000 and $24,000 deemed to be dependents living with parents in households with at least $100,000 in household income in 2019.
  • $7.0 billion in CERB for spouses (Census definition) with earnings between $5,000 and $23,999 in 2019 in families with at least $100,000 in household income in 2019.
  • $1.6 billion in CESB for Canadians ages 18 to 24 who are eligible students and with earnings below $5,000 in 2019 deemed dependents by the Census and living in families with more than $100,000 in household income.
  • $1.4 billion in one-time payments to seniors not eligible for the GIS, which is specifically geared to low-income seniors. The payment’s cost would have declined from $2.5 billion to $1.1 billion had it relied on the existing GIS program.
  • $503.5 million for CCB payments made to families with over $100,000 in household income in 2019. This is slightly more than 25 percent of the total cost of the program.