Federal COVID relief programs flood New Brunswick households with money

Federal COVID relief spending in New Brunswick of more than $300 million per month since March, has been so large it boosted household incomes in the province to record levels in the middle of the pandemic even as the economy contracted and thousands of people lost their jobs.

It is likely part of the reason New Brunswick Liberals had such a difficult time making the Higgs government's limited spending on COVID relief an issue with voters in last month's provincial election according to political analyst Katie Davey.

"Most people don't make the differentiation. They feel good and they see that government is intervening but they don't really make the differentiation," said Davey on why voters seemed unconcerned New Brunswick was spending the least among provinces on pandemic relief.

"They didn't really have to because the federal government was plugging a lot of those gaps," said Davey.

Specific figures for New Brunswick are still emerging but in Canada as a whole figures show direct government spending on COVID relief in April, May and June overwhelmed what those thrown out of work by COVID-19 lost in wages and other earned income.  

That has left most Canadian households, including those in New Brunswick, better off financially during the pandemic than before it began.

"Compensation to employees in Canada fell 8.9 per cent, the steepest drop ever recorded but this was more than offset by an increase in government transfers to households," said Statistics Canada's Matthew Hoffarth Wednesday about the effect government spending, mostly federal, had during the spring.

Disposable income increases

On average, according to Hoffarth, government transfers to individuals were so much greater than lost wages, household disposable income between April and June increased nearly 11 per cent despite the contracting economy.

In New Brunswick, where job losses were fewer than the national average and rebounded more quickly, the effect may have been more pronounced. Earned wages in the province were down nearly $600 million in March through July, but figures show that was a fraction of relief funding that flooded the province during the same period.

Over one third of federal COVID economic relief so far has been provided through the Canada Emergency Response Benefit (CERB) which as of September 27 has paid about $1.5 billion to 165,660 New Brunswick applicants.

In addition automatic transfers to individuals at the beginning of the pandemic included more than $100 million in special payments made to the 250,000 New Brunswick adults who regularly receive GST rebates and $37 million sent to 76,000 New Brunswick families in enhanced Canada Child Benefit payments.

More than $60 million was also paid automatically to 170,000 New Brunswick seniors who receive Old Age Security.  

Multiple programs

Other programs designed for persons with disabilities, students, people who fish for a living, care givers and others have also paid out multi million dollar amounts in New Brunswick.

In addition, the federal government has provided hundreds of millions of dollars to thousands of New Brunswick businesses to try and keep people working with loans, rent relief and wage assistance.

New Brunswick firms have so far used the largest program, the Canadian Emergency Wage Subsidy, to access $528 million in grants to help pay employees as of Aug. 29. 

In total at least 30 COVID relief programs have been launched by the federal government with New Brunswick's share of spending likely to exceed $3 billion by next spring if not sooner.

Evidence of how well New Brunswick residents have fared financially from the spending appeared to show itself in June and July when retail sales in the province hit a two month record $2.55 billion, $193 million more than was spent during the same period last year, long before the pandemic.

Omar Youssouf, a senior analyst in Statistics Canada's Retail and Service Industries Division said it's not possible to know how much of that record spending is due to people accessing their federal covid relief money but it is obviously adding to the totals. 

"There is no direct evidence of it being the cause of the growth rate we're seeing in New Brunswick but one thing is for sure to a certain degree it positively impacts the figures," said Youssouf.

"People have more money to spend as a result of some of these programs so this kind of serves as a cushion for the retail sector."