Finance Minister Chrystia Freeland’s $4 billion increase in the Canada Workers Benefit will go mostly to Canadians no longer eligible for the program, according to a new report by parliamentary budget officer Yves Giroux that raises serious concerns about the government’s latest economic plan. A boost to the Canada Workers Benefit (CWB) was billed as one of the main new measures in the fall budget update to help Canadians who need financial help the most in a time of soaring inflation and rising interest rates. The update announced that instead of paying the benefit after low-income Canadians file their taxes for the year, the government will begin providing three advance payments to people who qualified the previous year. An example provided in the update — Jesse working at a grocery store and making $25,000 a year — showed that the person would still receive the same $1,200 a year, but it would be distributed through advances. The update did not explain why the government was spending an extra $4 billion to provide the same level of benefits. The PBO report says most of the $4 billion will go toward providing CWB advances to people who qualified last year but would not have qualified under the previous system because their income had risen above the program’s threshold. The report states that “not requiring federal benefits to be returned to ineligible individuals is a stark departure” from existing rules related to income-based benefits. “I think a more accurate description would be that the government will provide $4 billion to previously low-income workers,” Mr. Giroux said in an interview. “It seems to go far beyond what was originally understood by most people. … In fact, it seems like it’s not just a down payment but almost a year’s free pass.” If the goal is to provide more support to low-income workers, Mr. Giroux said, this policy falls short. “The preliminary part? Yes. But the down payment, regardless of your income? That makes no sense,” he said. “Because it provides money to those who are not targeted by the benefit design itself.” The allowance provides up to $1,395 per year for individuals. The amount gradually decreases as net income exceeds $22,944. Not available to people with income over $32,244. Higher amounts are available for families. Canadian Labor Congress president Bea Bruske said she was not previously aware that most of the $4 billion would go to ineligible recipients, but still supports the measure. He said most people in this situation are probably just over the limit and still need help with living costs. He doubts many in that group would have seen a significant rise in income. “Unless you won the lottery, I’d say it’s highly unlikely,” he said, describing CWB recipients as some of the lowest-paid and most vulnerable workers in the country. “This is a time of high inflation, when people are falling further and further behind, and so we support these changes.” Adrienne Vaupshas, a spokeswoman for Ms. Freeland, said in a statement that the government is committed to being prudent and transparent about its finances. He said the CWB change would mean the benefit could reach nearly 4.2 million low-income Canadian workers, up from the current three million. “In an inflationary context, it is even more important to support the most vulnerable working Canadians,” he said. The PBO report, released on Tuesday, provides an analysis of several aspects of Ms. Freeland’s Nov. 3 fall economic statement. At a high level, the report notes several instances in which the government has committed billions in new spending with little or no detail about what the money is for. The report also disputes the government’s claim that it has exceeded its announced target of finding $3 billion in domestic savings, noting that it relies on unspent funds for pandemic relief measures during the previous financial year and not – as promised in April budget – reduction of planned spending “that has not yet happened”. “I think, at least, it’s misleading,” Mr. Giroux said. On the broader issue of financial transparency, the report notes that the government briefing mentions $14.2 billion in new spending measures without providing specific details. The report says this represents 27 percent of all new measures in the update. The administration’s briefing projected the federal deficit for this fiscal year to be $36.4 billion, an improvement over the $52.8 billion deficit forecast in April’s budget. The update also said the government could return to surplus by 2027-28. Tuesday’s PBO report projects budget deficits will be $4.3 billion higher, on average, than the update forecasts. The PBO says this difference is because the bureau expects personal and corporate tax revenues to be lower. “The government had shown they wanted to keep their dust dry. But I don’t see that much dust left,” he said. Conservative finance critic Jasraj Singh Hallan said in a statement that the PBO report showed the government “intends to add even more fuel to the inflationary fire” and that the report’s claim to find domestic savings “has nothing to do with fiscal restraint”.
