Been thinking more about the interaction of CERB with provincial welfare programs and thought I’d start a short thread before going away and perhaps writing about it.

It’s not as simple as you’d think. 1/n https://twitter.com/JenniferRobson8/status/1249881159355568128?s=20

There are three possible ways to treat CERB under provincial welfare programs (I’m going to use Ontario here, but most provinces are similar).

I. Treat CERB like Employment Insurance Benefits: EI benefits are clawed back dollar for dollar. 2/n

https://www.canada.ca/en/employment-social-development/programs/ei/ei-list/reports/social-assistance.html

II. Treat CERB like employment income: Above certain basic, childcare, payroll exemptions employment income is taxed back at 50 cents on the dollar. (Ontario Disability Support Program is similar with additional deductions for disability expenses). 3/n

https://www.mcss.gov.on.ca/en/mcss/programs/social/directives/ow/5_3_OW_Directives.aspx

III. Treat CERB like a gift: People on social assistance can keep up to $10,000 in gifts from friends or relatives without triggering Asset or Income rules. 4/n

https://www.mcss.gov.on.ca/en/mcss/programs/social/directives/ow/5_7_OW_Directives.aspx

I favour treating CERB as employment income and taxing it partially back. Some reasons why.

I. CERB is replacing earned income for people who lost their jobs due to a health-imposed economic shutdown. So it should be treated like earned income. 5/n

II. Welfare recipients who lose wages will qualify for CERB for those lost wages. Clawing back all of those wages seems overly harsh as they would see a deterioration of their situation. They should be kept whole. Treating CERB like we treated their income would do that. 6/n

III. If we treated CERB like a gift, welfare recipients would be better off than working individuals with income just above welfare thresholds pre-COVID. Should everyone receiving CERB apply for welfare to equalize this difference? If not, why not? 7/n

IV. Shouldn’t CERB should be clawed back dollar for dollar like EI? CERB is a federal program, is functioning like EI for those who don’t (and some who do) qualify for EI.

My response is that the nature of the job loss in this case is different than a normal EI situation. 8/n

Treating CERB as a gift, it would be unfair to low income Canadians who are working vs those on welfare. Treating CERB like EI would be too harsh given the circumstances.

So I think provinces should treat CERB like earned income – which is what it is designed to replace. /fin

Late point. There is a risk that welfare beneficiaries would earn themselves off welfare and then have to reapply post-COVID. Perhaps the province could keep them on a nominal benefit so people wouldn‘t have to reapply. Would also let them keep non-monetary benefits. /fin+1