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Snatching defeat from the jaws of victory

29 November 2021
The overnight creation and rapid rollout of the Canada Emergency Response Benefit (CERB) at the outset of the pandemic has been one of the great unalloyed successes of this federal government. Not because CERB was perfect, but because it was a swift and effective response to an urgent and widespread need, it kept our economy afloat, and it showed that when the government said “we have your backs” to Canadians, they truly meant it. 

Why then, is the government now so determined to turn a lifeline for so many Canadians into a millstone that’s dragging 83,000 of Canada’s lowest-income seniors to the financial bottom?

When it comes to Canada’s poorest seniors, those eligible to receive the Guaranteed Income Supplement (GIS), the government’s treatment of CERB income has been perverse from the start.   

GIS recipients are single seniors with incomes below $18,984 and couples with combined incomes below $25,440 if one partner receives the full Old Age Security (OAS) Pension, or $46,128 if the partner does not receive an OAS pension.

When CERB was rolled out, Minister Carla Qualtrough was quick to instruct provincial governments to treat CERB as a refundable tax credit and to exempt it completely when calculating eligibility and rates for provincial income benefits, subsidies and supports.  

Some provinces took this admonishment to heart, others less so, but the federal government’s message was clear – do not claw back this money. Its purpose is to help individuals offset lost earnings, not to help provincial governments upload program costs to the federal government.

When it came to the federal government’s own GIS program, however, the government sang a very different tune.  

While CERB was intended to replace lost earned income from employment, the GIS program would instead treat CERB payments as unearned income. This meant that seniors receiving GIS could expect to see their CERB income clawed back from their GIS at a rate of $1 for every $2 of CERB income. 

CERB income would also be exempt from the normal GIS exemption on the first $5,000 of earned income from employment. This meant that if you were a GIS recipient with $7,500 in employment income over the past year, you could keep the first $5,000 without any impact on your GIS. After that, $1 of GIS would be clawed back for every $2 of employment income. For GIS recipients who received CERB though, there was no $5,000 exemption – every dollar of CERB income would trigger the claw back of $50 of GIS, thereby halving the net benefit of CERB.

Thanks to this inscrutable logic, 183,417 of Canada’s lowest income seniors saw their GIS payments reduced this year by an average of $3,500 while 83,000 seniors lost their GIS benefits entirely, according to internal Employment and Social Development Canada documents. More recent estimates provided by the Parliamentary Budget Officer put the average GIS claw back for CERB/CRB recipients at $4,977, according to income security expert John Stapleton

Because these seniors are no longer receiving any pandemic benefit – CERB or its successor the CRB – the notion that cutting their GIS benefits now is somehow business as usual and a good idea would be laughable if the consequences were not so tragic.  

However, this appears to be the view of newly minted Senior’s Minister Kamal Khera, whose office could only say – “Every year thousands of seniors’ GIS is adjusted to reflect changes in their net income so that it targets those who need it most … We appreciate that the adjustment has been difficult for some seniors. We continue to look at how to support those trying to make ends meet.” 

The seniors who have lost GIS income due to CERB are those who needed it most before the pandemic and those who need it most now. The only difference is that, for a little while, they had an income boost to help them make it through the worst of the pandemic when they were laid off, when services they relied on to make ends meet were shut down, and when steps to protect their health increased their living costs. 

Community agencies are reporting growing numbers of seniors in financial distress calling for help as they struggle to stave off eviction and hunger. Few of these seniors had any idea that taking CERB when they needed it so badly would lead to GIS cuts now that would plunge them into financial crisis.

GIS recipients can petition the government to calculate their benefits based on their current year income, rather than the previous year which is the norm. According to the media, 5,000 applications had already come in by early July and officials had advised the Minister’s Office to expect “the volume of requests will significantly increase.” Minister Khera’s spokesperson, however, indicated petitions are handled on a case-by-case basis and are approved "in limited circumstances." 

The solution to a crisis on this scale, one that affects so many vulnerable citizens, is not to wait for each of them to petition the government to change its mind – one person at a time. This would be complete madness and cruel.

Unless this government wants to be the only one in living memory to intentionally impoverish seniors, it needs to admit it has made a mistake, apologize to the seniors it has harmed, and reinstate their missing GIS benefits immediately. 

According to the Parliamentary Budget Officer, this would cost the government $438 million or 0.12% of the $323.3B in federal pandemic benefits spending to date – not negligible, but definitely manageable for a life changing solution for over 183,000 vulnerable seniors. The opposition parties are on board and the price of inaction for impacted seniors is unthinkable. 

So why is the federal government not fixing this problem? 

Until it does, it can continue to tell Canadians “we have your backs,” but all low-income seniors are going to hear is “let them eat cake” – and they are right. 

Readers are encouraged to contact their MPs today to ask them what they are doing to reinstate GIS benefits for seniors with low incomes who have been impacted by CERB clawbacks. 

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