Beware of the fend-for-yourself aspect of federal economic response to COVID-19

Our Security Lies in the Fight to Defend the Rights of All | TML Weekly

This past week the federal government made a series of announcements which it says are aimed at coping with the consequences of the COVID-19 pandemic. Government ministers have repeatedly stated that their aim is not perfection but speed and asked for the cooperation of the public, if implementation does not go smoothly. Overall, an impression is created that the government has everything under control and Canadians can rest assured they are being looked after.

What criteria should Canadians use to draw warranted conclusions about the government’s measures? Clearly, a neo-liberal government is not going to change its spots and suddenly solve problems in any manner that is not advantageous to the narrow private interests which have long-since seized control of all state institutions, including the political parties that form a cartel party system that keeps the broad masses of the people disempowered.

This issue of TML Weekly is organized to inform Canadians about the government’s measures so that they can draw warranted conclusions about these measures and make sure they do not hand over the initiative for their own well-being to anyone but themselves. It is urgent this crisis be resolved in their favour, not in favour of the rich and powerful. In this regard, the government’s economic response to COVID-19 falls into two broad areas: stopgap social programs directed at the working class, and small and medium-sized businesses, which on first inspection appear inadequate. Besides which, everyone is forced to fend for themselves to access these things. The second category is the pay-the-rich schemes to help the financial oligarchy weather the storm. Within this, are the measures that offer those companies able to provide the goods and services required to fight the virus with incentives to do so.

The stopgap measures are said to give workers, including those not covered under Employment Insurance, some financial assistance during the crisis. They also offer a small amount of one-time additional funds to families under the GST rebate program for low income workers and child benefit payments, temporary tax relief for individuals and businesses, and a capped rebate to small enterprises for ten per cent of workers’ wages. The measures to extend Employment Insurance to those not normally covered are not permanent and not adequate either. Some consider all these measures a cruel joke played on those in need. Besides the amounts being insufficient to meet the need, they are far from a guaranteed livelihood for many who, even when there is no coronavirus epidemic, are already in dire need.

Despite the appearance that the government is stepping up to the plate, the refusal of the ruling elite to increase investments in social programs to meet the needs of the people under all conditions has created many of the problems Canadians now face, including those of a health care system and public service ill-equipped to meet the current challenges.

The pay-the-rich schemes to protect the big financial institutions from losses arising from defaults, bankruptcies and other problems during the pandemic are similar to those during the economic crisis of 2008. They are meant to preserve the private wealth, privilege and power of the ruling imperialist elite.

The federal government ignores the two greatest strengths of the modern economy of industrial mass production: the modern educated working class and the socialized interrelated nature of the productive forces.

Not only is production socialized as a matter of fact but the modern educated working class is more than willing to be mobilized on a mass scale to deal with the crisis. A lot is said by government ministers to praise the front-line workers in all sectors of the economy but in the absence of a spirit and atmosphere of equilibrium and mutual respect and control, needless suffering is the rule, not the exception. The ruling class is, of course, not inclined to permit the unleashing of the power of the working class. Its entire system is kept in place by preserving an oppressed reserve army of unemployed and underemployed captured within an imperialist labour market. This outlook comes to the ruling class naturally, coronavirus crisis or no coronavirus crisis. One would not rationally expect them to resolve a coronavirus crisis in any manner other than the one which shores up their own narrow private interests. If this protects the population as well, all the better. If not, too bad. The outlook and modus operandi of those who own and control the productive forces is to buy workers’ capacity to work and use it to preserve and enlarge their private fortunes even during periods of crisis. The ruling elite see no utility in mobilizing the working class to work if that work does not preserve or enlarge their private wealth and power.

A conclusion that will once again emerge from this crisis, as it does in all the recurring crises of the imperialist system, is that private ownership and control of the socialized economy of industrial mass production in fewer and fewer hands blocks the economy from unleashing its latent and complete power of extended reproduction on a mass scale to meet the needs of the people and humanize the social and natural environment.

The pay-the-rich schemes to funnel state funds into the coffers of the private institutions of the financial oligarchy are the refusal of the ruling elite to change the direction of the economy to one that favours the working people, the interrelated socialized economy, and society. This reveals that the people must empower themselves. An immediate demand should be that all the state public funds that have been and are being doled out to the big banks and other monopolies of the imperialists should be used instead to establish public financial and other enterprises to eliminate serving private interests as a consideration and aim. Public banks should become the primary source of borrowing for Canadian individuals, businesses and even governments, eliminating public debts to private lenders and their onerous and parasitical interest payments.

The billions of dollars to respond to the COVID-19 crisis should be used to mobilize the working class to greatly increase the public service, to establish dedicated supply chains of goods and services, expand the health care system and long-term care for seniors, and to look after those in quarantine or otherwise in need of help such as the homeless. Funds should also flow to the Indigenous nations to further their economic development and improve their social programs under their control and direction and strengthen their defence against the pandemic. The production of health care supplies, especially those needed during the emergency, and pharmaceuticals and their necessary related scientific research, should be put in the hands of public, not private, enterprises. It is made to appear that putting all aspects of health care production, supply and delivery into private hands with even the army mobilized, is a responsible way to go. It is in fact self-serving, as well as socially irresponsible and irrational, to use the resources of the state to advance private interests.

The current crisis reveals that the Canadian economy needs internal strength and local control that does not depend on trade from abroad for basic goods other than what cannot be produced in Canada, such as certain food. An economy under the control of Canadians would also manage the distribution of goods and services at the wholesale level and the retail level as well, if the current big grocery enterprises, for example, continue to prove incompetent and often more interested in real estate, land speculation and development than distributing food. Prices at the wholesale and retail levels should closely match their prices of production and not those dictated by the global financial oligarchy. Much can be done now to deal with the emergency in ways that favour the people and a new pro-social direction for the economy.

This article was published in

Volume 50 Number 9 – March 21, 2020

Article Link:
Our Security Lies in the Fight to Defend the Rights of All: Beware of the Fend-for-Yourself Aspect of Federal Economic Response to COVID-19

Government of Canada’s COVID-19 Economic Response Plan

The federal government has announced $27 billion in payments to Canadian workers and businesses. The Prime Minister has recalled Parliament, as most of these measures require Parliamentary approval and royal assent.

Other measures announced March 18 or earlier, include deferrals in paying taxes and direct support for the biggest financial institutions.

Below are extracts from the government’s website

Temporary Income Support for Workers and Parents

For Canadians without paid sick leave (or similar workplace accommodation) who are sick, quarantined or forced to stay home to care for children, the Government will waive the one-week waiting period for those individuals in imposed quarantine that claim Employment Insurance (EI) sickness benefits.

Workers will no longer be required to provide a medical certificate to access EI sickness benefits.

Emergency Support Benefit

For Canadians who lose their jobs or face reduced hours as a result of COVID’s impact, the Government is introducing an Emergency Support Benefit delivered through the CRA to provide up to $5 billion in support to workers who are not eligible for EI and who are facing unemployment.

Emergency Care Benefit

The Canada Revenue Agency will provide up to $900 bi-weekly for up to 15 weeks. The payment will go to workers who do not qualify for EI sickness benefits, including those classified as self-employed.

The criteria to qualify:

– quarantined or sick with COVID-19;
– taking care of a family member who is sick with COVID-19, such as an elderly parent; and
– parents with children who require care or supervision due to school closures, and are unable to earn employment income.

Applications will become available in April 2020, and require Canadians to attest that they meet the eligibility requirements. They will need to re-attest every two weeks to reconfirm their eligibility.

Three channels to apply for the benefit:

– by accessing it on their Canada Revenue Agency MyAccount secure portal;
– by accessing it from their secure My Service Canada Account; and
– by calling a toll free number equipped with an automated application process not yet available.

Additional Measures

The government will extend to 76 weeks the EI Work Sharing Program, which provides EI benefits to workers who agree to reduce their normal working hours as a result of developments beyond the control of their employers. No further information is available at this time.

The government will pay, by early May 2020, an average of $400 for eligible individuals and $600 for couples through a one-time doubling of the Goods and Services Tax credit. Around 12 million families will receive the benefit based on their 2018 tax return.

For over 3.5 million eligible families with children, the Government will increase the maximum annual Canada Child Benefit by $300 per child to be paid in May and only for the 2019-20 benefit year.

The government will provide $305 million for a new distinctions-based Indigenous Community Support Fund to address immediate needs in First Nations, Inuit, and Métis Nation communities.

The government has placed a six-month interest-free moratorium on the repayment of Canada Student Loans for all individuals currently in the process of repaying these loans.

The government will reduce the required minimum withdrawals from Registered Retirement Income Funds by 25 per cent for 2020 for seniors who have reached pension age. Similar rules will apply to individuals receiving variable benefit payments under a defined contribution Registered Pension Plan.

The Reaching Home program dealing with homelessness will be given $157.5 million. These funds are earmarked for shelters to help them reduce overcrowding and allow for social distancing.

Women’s shelters and sexual assault centres will receive up to $50 million to help prevent an outbreak of COVID-19 in their facilities.

Tax Payment and Filing Deferrals

The Canada Revenue Agency will defer the filing due date for the 2019 tax returns of individuals (other than trusts) until June 1, 2020. A later filing could delay payment under the Goods and Services Tax Credit or the Canada Child Benefit.

For trusts having a taxation year ending on December 31, 2019, the return filing due date will be deferred until May 1, 2020.

The Canada Revenue Agency will allow all taxpayers (individual and corporate) to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after [March 18] and before September 2020. This relief would apply to tax balances due, as well as instalments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period.

Effective immediately the Canada Revenue Agency will recognize electronic signatures as having met the signature requirements of the Income Tax Act, as a temporary administrative measure. This provision applies to authorization forms T183 or T183CORP, which are forms that are signed in person by millions of Canadians every year to authorize tax preparers to file taxes.

Role of Financial Institutions

Canada’s large banks have confirmed support for those having financial difficulties will include up to a six-month payment deferral for mortgages, and the opportunity for relief on other credit products. [The support is on a case-by-case basis, and conditional and vague – TML Ed. Note.]

Mortgage Default Management Tools

The Government, through  the Canada Mortgage and Housing Corporation (CMHC), is providing increased flexibility for homeowners facing financial difficulties to defer mortgage payments on homeowner CMHC-insured mortgage loans. CMHC will permit lenders to allow payment deferral beginning immediately. [This measure is also vague and conditional – TML Ed. Note.]

Support to Businesses

The government announced measures to support businesses that are in addition to those presented on March 13, by Minister of Finance Bill Morneau, Governor of the Bank of Canada Stephen Poloz, and Superintendent of Financial Institutions Jeremy Rudin.

Supporting Canadian Business through the Canada Account

The government is changing the Canada Account so that the Minister of Finance will be able to determine the limit of the Canada Account in order to deal with exceptional circumstances. The Canada Account is administered by Export Development Canada and is used by the government to support exporters when deemed to be in the national interest. This will allow the government to provide additional support to Canadian companies through loans, guarantees or insurance policies.

Helping Businesses Keep Their Workers

The government is proposing to provide eligible small employers a temporary wage subsidy for a period of three months. The subsidy will be equal to 10 per cent of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.

Businesses will be able to benefit immediately from this support by reducing their remittances of income tax withheld on their employees’ remuneration. Employers benefiting from this measure will include corporations eligible for the small business deduction, as well as non-profit organizations and charities.

Flexibility for Businesses Filing Taxes

The Canada Revenue Agency will allow all businesses to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after [March 18] and before September 2020. This relief would apply to tax balances due, as well as instalments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period.

The Canada Revenue Agency will not contact any small or medium businesses to initiate any post assessment GST/HST or Income Tax audits for the next four weeks. For the vast majority of businesses, the Canada Revenue Agency will temporarily suspend audit interaction with taxpayers and representatives.

Ensuring Businesses Have Access to Credit

The Business Credit Availability Program will allow the Business Development Bank of Canada and Export Development Canada to provide more than $10 billion of additional support.

The Office of the Superintendent of Financial Institutions announced it is lowering the Domestic Stability Buffer by 1.25 per cent of risk-weighted assets, effective immediately. This action will allow Canada’s large banks to inject $300 billion of additional lending into the economy.

The Bank of Canada has cut its interest rate to 0.75 per cent.

Supporting Financial Market Liquidity

The government has announced an Insured Mortgage Purchase Program. The government will purchase up to $50 billion of insured mortgage pools through the CMHC. This is intended to provide long-term stable funding to banks and mortgage lenders.

The Bank of Canada will broaden eligible collateral for its term repo facility to include the full range of collateral eligible under the Standing Liquidity Facility, with the exception of the non-mortgage loan portfolio. This expansion of eligible collateral will provide support to funding conditions for financial institutions by providing a backstop to regular private funding.

The Bank also announced that it stands ready, as a proactive measure, to provide support to the Canada Mortgage Bond (CMB) market. This would include, as required, purchases of CMBs in the secondary market. Similar to the increase in Government of Canada bond buybacks, this will support market liquidity and price discovery.

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