Canada Emergency Response Benefit (CERB) – Update
Canada Emergency Response Benefit (CERB) is a taxable benefit that would provide $500 a week for up to 16 weeks for workers who lose their income due to reasons related to COVID-19. This includes Canadians who have lost their job, are sick, quarantined, taking care of someone who is sick with COVID-19 as well as working parents who must stay home without pay to care for children who are at home because of school and daycare closures. Workers are defined as anyone who received at least $5,000 in the previous 12 months in employment income, self-employment income, Employment Insurance benefits, or other provincial benefits as outlined in Bill C-13. Workers who earn less than $1,000 in a 4-week period are eligible for the CERB. Individuals who have exhausted their Employment Insurance regular benefits between December 29, 2019 and October 3, 2020 are also eligible for the CERB. PBO estimates the CERB program will have a total cost of $53.4 billion in 2020-2021.
Canada Emergency Response Benefit (CERB) is a taxable benefit that would provide $500 a week for up to 16 weeks for workers who lose their income due to reasons related to COVID-19.[^1] This includes Canadians who have lost their job, are sick, quarantined, taking care of someone who is sick with COVID-19 as well as working parents who must stay home without pay to care for children who are at home because of school and daycare closures.
Workers are defined as anyone who received at least $5,000 in the previous 12 months in employment income, self-employment income, Employment Insurance benefits, or other provincial benefits as outlined in Bill C-13.
Workers who earn less than $1,000 in a 4-week period are eligible for the CERB. Individuals who have exhausted their Employment Insurance regular benefits between December 29, 2019 and October 3, 2020 are also eligible for the CERB.
PBO updated the model used for previous CERB cost estimates to include more recent labour force data and projections.[^3] Assumptions related to CEWS take-up were updated as well.
To incorporate behavioural responses to the CERB program, the PBO used the Labour Force Survey from March and April 2020 and attempted to identify workers who may have adjusted their labour supply in response to incentives created by the CERB program. These identified workers are taken as the basis of the behavioural response to the CERB model.
PBO estimates the CERB program will have a total cost of $53.4 billion in 2020-2021.
The estimate is highly sensitive to the assumed economic outlook and the probability of contracting COVID-19. Due to the unavailability of microdata regarding CERB recipients, any estimates of the behavioural response to the CERB program are highly uncertain and rely on strong assumptions.
Further uncertainty stems from how the proposed measure will be administered (more specifically the extent and intensity of compliance activities) and the actual take up of the CEWS.
- Estimates are presented on an accrual basis as would appear in the budget and public accounts.
- A positive number implies a deterioration in the budgetary balance (lower revenues or higher spending). A negative number implies an improvement in the budgetary balance (higher revenues or lower spending).
- “-“ = PBO does not expect a financial cost