Feds told to ease EI, use tax credits in spending to ease COVID-19 shock

OTTAWA — The Trudeau Liberals are being urged to ease access to federal sick leave benefits, along with tax credits and other breaks, to help workers and businesses deal with the economic impacts of the novel coronavirus outbreak.

The ideas being floated to the government are intended to help employees who feel they might not be able to afford to stay home from work if they’re ill, as well as small businesses who might not have the cash flow they need to manage the impacts of COVID-19.

The business and labour groups pushing for these measures say federal officials appear open to easing access and potentially waiving the waiting period for employment insurance benefits for workers who need to go under quarantine.

Finance Minister Bill Morneau is set to speak to reporters March 9.

On March 6, he said plans for Ottawa to help with these challenges were on the way.

Morneau has said the federal government can increase spending — an estimated $41 billion by the parliamentary budget officer’s most recent calculations — and keep the debt-to-GDP ratio declining.

Then over the weekend came an oil price war between Saudi Arabia and Russia that lowered the price of crude below budget projections.

The Liberal government’s economic update from late last year projected the price of West Texas Intermediate at US$57 a barrel for this calendar year. On March 9, it was trading around US$30.

The parliamentary budget officer has previously estimated a US$15 decline in crude prices would shave $4 billion off the budget for the fiscal year beginning April 1.

There will be an impact on federal books because Canada is net exporter of oil, said Mostafa Askari, chief economist at the Institute of Fiscal Studies and Democracy — a think tank run by former parliamentary budget officer Kevin Page.

How the government responds to COVID-19 and this new shock to the economy should be assessed by whether the measures are temporary, timely, and targeted, said Askari, a former deputy budget officer.

Waiving the waiting period to receive EI payments would help workers who find themselves suddenly under quarantine, or encourage them to self-isolate to contain the spread of the disease, said Dan Kelly, president of the Canadian Federation of Independent Business.

“It would send the message that a worker could essentially not have to drag themselves to work if they were sick,” said Kelly, whose organization represents over 100,000 small- and medium-sized businesses.

Likewise, reducing the number of hours necessary to qualify for payments would provide benefits to low-income workers who can’t afford to take time off for illness, said Hassan Yussuff, president of the Canadian Labour Congress.

“You’re going to have to find a way to help them get some income because in absence of that, they are going to go to work because they don’t know what else to do. They need the money to pay their bills.”

He added that his group has asked the government to consider having banks and credit card companies relax payment schedules for those whose earnings are affected by COVID-19.

Trevin Stratton, chief economist at the Canadian Chamber of Commerce, said any tax credits and tax-filing extensions for affected businesses could help companies weather the economic storm by giving them short-term cash flow help.

Countries like Italy have already enacted similar measures, while countries like the United States are considering them, he said.