Justin Trudeau is responding to the call for help from provinces and municipalities worried about the impact of the pandemic on their finances. Ottawa will pay the provinces $ 14 billion, which will have to be injected into specific sectors to be agreed collectively over the next few days, but which could go from the coffers of urban transit systems to the health system and infrastructure .
Following his weekly call with his provincial counterparts on Thursday evening, Prime Minister Justin Trudeau agreed that the provinces should be helped to tackle the recovery in a consistent and concerted manner.
“The federal government is ready to provide $ 14 billion to relaunch the country in a safe and sensible manner,” said Justin Trudeau in his press briefing. It is money that will be used to buy personal protective equipment for workers, including those working in the health care field. These funds will be used to pay for childcare, to provide more funding to municipalities, to pay for sick leave and to support the most vulnerable, such as the seniors living in CHSLDs. Certainly the situation is different from one province to another. And our plan will take it into account. “
Behind the scenes, it says that this amount could only be a first step. Quebec’s share has not been released, as details of the transfer have not been worked out. But roughly speaking, Quebec generally obtains 23% of the federal envelopes, which would be equivalent to a sum of 3.2 billion.
Trudeau said that the purpose of this money will be dictated by Ottawa, after agreement with the provinces. “Yes, these would be targeted transfers. Canadians across the country must have the same tools and the same confidence to face a potential second wave in order to successfully reopen the economy. We have a very clear and shared idea of the elements that are essential to this security reopening. “
The provinces have been hosting funding requests in Ottawa for weeks. In particular, they demand that transfers for health be increased. Already in December, they reiterated their desire for the annual growth rate of the federal transfer to drop from the minimum rate of 3% (which may be higher in certain years depending on the economic growth rate) to 5.2%. According to an estimate by the Canadian Institute for Health Information, the provinces spent 2019 $ 172 billion on health in 2019. The federal health transfer that year was $ 40 billion, or about 23% of the total, plus a lump sum of $ 11.5 billion over 10 years for home care and mental health.
Again in April, Prime Minister François Legault recalled that when public health care coverage was created in Canada, the federal government had committed to assume 50% of the costs.
Municipalities complain about the decrease in their tax revenues (in particular those from transfer taxes and access fees to cultural and sports facilities), the collapse of revenues from their public transport networks and the increase in their expenses made necessary because of the pandemic. Municipalities were asking Ottawa for help and were disappointed with Monday’s announcement that Ottawa was ahead of the $ 2.2 billion payment from the Gas Tax Fund but did not offer new money. Justin Trudeau then said that he had to get along first with the provinces that oversee the cities.
The Federation of Canadian Municipalities has estimated the shortfall in Canadian cities at between $ 10 billion and $ 15 billion. If the amount announced by Mr. Trudeau corresponds to this figure, there is no guarantee that the provinces that receive it will choose to transfer it entirely to their cities.
François Legault’s government also announced in mid-May that it intends to pre-empt $ 2.9 billion worth of infrastructure projects to boost the economy. On this occasion, he called on the federal government to allow more flexibility in the use of federal funds so that it could be used for projects that are currently ineligible, such as the construction of schools and hospitals. Ottawa could allow the non-dedicated transfer to be used for these types of projects.
Neither Quebec nor Ottawa has yet made an economic update to take into account the impact of the pandemic, but Quebec estimated last week that its budget surplus could turn into a deficit of 12 to 15 billion. Ottawa, which is already running deficits of about $ 20 billion a year, is heading for a record year with a shortfall estimated by the Parliamentary Budget Officer at $ 252 billion so far.
Help for disabled people
Trudeau also announced that people with disabilities will receive a one-time lump sum payment of $ 600 “to help them pay for their extra expenses during the crisis.” However, if these people are elderly and already receive supplements of $ 300 or $ 500 depending on whether they are receiving Old Age Security (OAS) or OAS combined with the Guaranteed Income Supplement, the check announced Friday will be reduced by as much so that the total remains $ 600.
People with disabilities will not have to claim the supplement. It will be paid to them automatically. It will also be non-taxable.