Prime Minister Justin Trudeau announced an $82 billion support package — equal to 3 per cent of Canada’s GDP — to support the economy and Canadians’ finances during the coronavirus outbreak.
Individuals and businesses get $27 billion and $55 billion is earmarked to “meet liquidity needs of Canadian businesses and households through tax deferrals to help stabilize the economy.”
“The crisis package outlined by Prime Minister Justin Trudeau today will help to cushion the blow from the disruption caused by the coronavirus outbreak,” said Stephen Brown, senior Canada economist, at Capital Economics, in a note.
“That said, while the package reduces the chance that weakness in the coming months will morph into a prolonged slump, we still think the government needs to do more to secure a strong recovery further down the line.”
The Prime Minister says he’s ready to take further action as needed.
After waiving the one-week waiting period to receive employment insurance (EI) payments in the last package, Ottawa is offering aid for affected workers who aren’t covered by EI. They will get up to $900 every 2 weeks for 14 weeks, at an amount comparable to EI.
“No Canadian should have to worry about paying their rent or buying groceries during this difficult time,” said Trudeau.
“That is why we are taking the strong action needed to stabilize our economy and help those impacted by the COVID-19 virus. Together, we will get through this difficult time.”
The deadline for individuals to file their taxes is pushed back to June 1, 2020 and people who owe money will not have to pay until August 31, 2020.
Low and modest-income families will get a top up on their GST credits. Individuals get $400 and couples get $600.
The Canada Childcare Benefit is also being increased by $300 per child.
Students also get relief in the form of a 6 month moratorium on student loan payments.
“The measures seem better targeted than a US plan under discussion that would send a cheque to all, given that income disruptions aren’t evenly spread,” said Avery Shenfeld, chief economist at CIBC Capital Markets.
“Some are designed to help insure against a wave of household and business defaults, including extending benefits to those losing jobs who wouldn’t currently qualify for employment insurance payments, such as part-timers, those in quarantine not able to report to work, those looking after someone who is ill, and the self-employed.”
Small businesses get a 10 per cent wage subsidy for the next 90 days, up to a maximum of $1,375 per employee and $25,000 per employer.
In a joint news news conference with Bank of Canada Governor Stephen Poloz following the Prime Ministers’s announcement, Finance Minister Bill Morneau says he’s prepared to do “whatever it takes to keep the economy strong and stable.”
“We have the fiscal fire power to respond.”
When asked about why the Bank of Canada hasn’t matched the U.S Fed’s latest rate cut to basically zero, Poloz said he was waiting to see what Ottawa would announce today and cautioned that Canada has its own monetary policy.
Poloz hasn’t ruled out further cuts or quantitative easing.
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.