Unintended consequences as homeless collect emergency benefit, anti-poverty advocates warn

By | May 4, 2020

Anti-poverty advocates warn the federal government’s emergency COVID-19 benefit is so easy to access, cheques are being sent to people in homeless shelters who don’t qualify for the financial aid — and the unintended consequences include more drugs on the street, and may ultimately mean less money for Manitoba’s most vulnerable. 

The Canada emergency response benefit was designed to immediately get money to Canadians who have stopped working because of COVID-19. It provides $500 a week for up to 16 weeks.

But those who work with homeless people and other low-income Winnipeggers say there is a major flaw in the program’s design.

“It’s sort of a double-edged sword, right? The compliment is the government did an amazing job of getting something out to Canadians quickly, easily,” said Rick Lees, executive director of the Main Street Project.

But “there’s very little gateway in — a social insurance number and an online registry and you’ve got $2,000,” he said.

All they see is an easy 2,000 bucks.”

Main Street Project’s Rick Lees says the federal government should add a few more checks and balances before giving out its COVID-19 benefit. (Angela Johnston/CBC)

Lees says his staff at the shelter were first alerted to Main Street clients getting the benefit when they saw cheques coming in to their 28-room transitional residence on Martha Street.

He estimates about 10 to 15 per cent of Main Street’s clients have applied, but thinks that figure will increase.

“And we’re trying to get ahead of that,” said Lees.

“We’re not supporting it. We’re not condoning it. And we’re trying to prevent it where we can, because there are other means by which people should access social supports.”

While he says some of the extra money has been put to good use, such as new tents or a new swing set at a nearby encampment, he also warned some of the money is being used on drugs. 

“There’s a bunch of money floating around … so we’re seeing a lot more drug use.”

‘Vast majority’ are honest: minister

The federal government estimates it will spend $35 billion on the emergency benefit program. More than seven million people have already applied

In order to qualify for CERB, a work stoppage must be related to the COVID-19 pandemic. The applicant also must have earned a minimum of $5,000 over the last 12 months, and can’t make more than $1,000 a month while collecting the benefit.

To ensure quick access to the funds, the feds opted to approve everyone, with a pledge they will check on eligibility later. The process to apply takes less than five minutes.

Employment Minister Carla Qualtrough said she has heard anecdotes about people applying for the CERB who do not qualify, but thinks the ‘vast majority’ of Canadians are honest. (Adrian Wyld/Canadian Press)

The federal government did not respond to CBC’s questions about homeless people accessing the benefit. However, Employment and Workplace Development Minister Carla Qualtrough told a CBC reporter on Friday that she has heard anecdotally that some people are applying who are ineligible.

“But I kind of reject that. I really think that the vast majority of Canadians are honest,” said Qualtrough.

She acknowledged that because the benefit is easy to access, it increases the risk of fraud.

“We also knew we had to get the money to Canadians. So we took the risk and we’re going to work really hard at the back end to minimize what that’s going to mean for the government purse.”

‘People will have to pay the piper’

Harold Dyck has worked with the Low Income Intermediary Project in Winnipeg for over 20 years, helping clients navigate and access various social assistance programs. He is concerned by what he is hearing about how people are accessing the COVID-19 emergency benefit.

“The word has somehow gotten around in some sectors of the community of folks living in poverty that … it is easy money,” said Dyck.

“People have then been acting on that without really fully understanding what the full implications for that could be.

Harold Dyck is the co-coordinator of the Low Income Intermediary Project. He says people who do not qualify for CERB need to think twice before collecting the federal benefit. (Submitted by Harold Dyck)

Dyck wants to get this message across: don’t apply for the benefit if you are ineligible, and if you have already received it and shouldn’t have, send it back.

“If there’s something that sounds too good to be true … check it out,” he said. 

He says few people realize that they have to pay taxes on the benefit and the Canada Revenue Agency can claw back other federal benefits if a person is found to be ineligible for the CERB.

“Ultimately, people will have to pay the piper.”

‘Double-dipping’ will cause problems

He is also concerned about people “double-dipping” by getting the federal benefit and collecting provincial welfare at the same time.

Any Manitoban collecting CERB must report it to the provincial government to be counted as income, effectively putting a portion of their employment and income assistance program benefits on hold while they collect CERB.

However, Dyck says some people aren’t doing that and are in for a “double whammy,” starting with tax time next year. The benefit is considered taxable income, which means a smaller tax return, or possibly having to pay tax.

The second hit will come for those who double-dip. 

“The province will charge them with what is called an ‘overpayment,’ and as long as the person is on social assistance, they would be taking a certain amount off their [income assistance] cheque every month, reducing already inadequate benefits until the amount is paid back,” he said.

The clawback will hurt low-income households that rely on every dollar they get from benefits, he said.

Rick Lees estimates about 10 to 15 per cent of Main Street Project’s clients have applied for the federal benefit. (Main Street Project)

“You don’t have enough already just to feed yourself, for transportation — you throw this on top, that’s going to create tremendous hardship,” he said.

Dyck recently spoke to a government official who works in social assistance, who told him this is on their radar.

“They are very aware it’s happening … and I fully expect their investigations branch is going to be very, very busy after the shutdown, going after people for failing to report moneys that they received.”

Checks and balances

Lees is calling on the federal government to add a few more checks and balances to help stop people from applying who don’t qualify.

“If somebody puts their addresses as 75 Martha St. for delivery of their cheque, that might be something that would be a flag, you know — because that’s a shelter,” Lees said.

He also says the feds will have to accept that some people will never be able to pay back the money they shouldn’t have received, and should consider not penalizing those who can’t afford it.

“The ability of clients who are living in homelessness, or dealing with mental health and addiction, to pay taxes on this money is is probably not going to happen,” said Lees.

“The best way is to really just recognize that there should be an allowance for write-off on this particular fund so that there isn’t a penalty.”

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