AG confirms billions in COVID spending was poorly targeted—continuing a troubling trend
According to Canada’s auditor general, which released a report last week on federal spending during the pandemic, COVID programs were delivered quickly but were poorly targeted. Unfortunately, wasteful and poorly targeted spending has been a habit for the federal government in recent years.
The report identified 51,049 businesses that unnecessarily received wage subsidies from Ottawa during COVID mainly through Canada Emergency Wage Subsidy (CEWS), which was designed to give employers who suffered revenue declines a subsidy of up to 75 per cent on their payroll costs.
Specifically, the tax filings of these employers “did not demonstrate a sufficient revenue drop to be eligible for the subsidy.” Put differently, Ottawa apparently gave nearly $10 billion to businesses that did not need the money. This raises serious questions about waste, transparency, and execution of the spending.
Moreover, the analysis also found that the federal government paid $4.6 billion in other COVID supports including Canada Emergency Response Benefit (CERB) payments to ineligible Canadians, and recommended that the government further investigate the nature of at least $27.4 billion in additional COVID-related spending.
Again, though speed was needed during the early months of the pandemic to deliver payments to struggling families, particularly lower-income Canadians, a significant chunk of federal spending was clearly wasteful, poorly targeted, and gave support to those who did not need it.
While the scope of waste may shock many Canadians, it shouldn’t come as a surprise.
According to a 2020 study published by the Fraser Institute, an estimated 27.4 per cent of COVID-related spending (or $22 billion) was poorly targeted to households and individuals. And nearly $12 billion of total CERB spending was given to young people aged 15 to 24 living as dependents in households with incomes above $100,000.
Put simply, the Trudeau government repeatedly gave money to those who had little need for financial support during COVID because it failed to properly target the programs and was not sufficiently transparent or accountable during and after the spending took place.
But again, poor targeting is not something that only happened during COVID. Wasteful spending has become a feature rather than an anomaly in Ottawa.
Recently, the federal government doubled the GST credit for six months, to purportedly help Canadian families deal with high inflation. Eligible Canadians receive the credit each quarter to ostensibly offset the effects of the Goods and Services Tax (GST). But the program is poorly targeted, raising costs higher than they otherwise would be, and provides money to those who don’t necessarily need it.
For instance, according to a recent analysis, the federal government spent an estimated $340 million in 2021 providing the GST credit to young people who work part-time, go to school and live in high-income households. Providing more assistance to Canadians who are not in genuine need is a poor use of taxpayer dollars.
The auditor general report reveals some glaring problems with federal assistance during the pandemic, to the tune of billions of dollars of wasteful spending. But poor targeting and wasteful spending have become a common theme for Ottawa. Throwing money in every direction is not an effective strategy to help those in need.