Taxpayers on the hook for more than $110 billion due to Ottawa’s COVID waste

During the pandemic, the federal government spent a massive amount of taxpayer money in an effort to support the economy, with hundred billion dollar programs such as the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Response Benefit (CERB).

Unfortunately, a significant portion of this money was mismanaged, poorly targeted, wasteful or simply excessive. And Canadians will continue to pay the cost for this fiscal waste.

According to estimates, of nearly $82 billion in COVID spending, 27 per cent—more than one in four dollars—was poorly targeted, equivalent to $22.3 billion in wasted taxpayer money. This included up to $11.8 billion in CERB payments that went to eligible dependent young people (ages 15 to 24) living with parents in households with at least $100,000 in household income. And up to $7.0 billion in additional CERB payments that went to eligible spouses in families with at least $100,000 in household income.

Similarly, a report by the auditor general (AG) found significant fiscal waste during the pandemic. According to the AG, ineligible individuals were paid $4.6 billion in CERB payments and other benefits, and the government should investigate the nature of another $27.4 billion in COVID spending. Overpayment recipients included 1,522 prisoners, 391 dead people and 434 children too young to be eligible—in addition to 51,049 employers who received $9.9 billion in CEWS payments but did not demonstrate a sufficient revenue drop to be eligible for the subsidy.

Not only were programs poorly targeted, but income support payments exceeded what was needed to restore the income of many individuals. The AG found that the lowest-income Canada Recovery Benefit (CRB) recipients could earn more from receiving benefits than from working, and concluded the program “represented a disincentive to work, which impacted some labour markets at a crucial time when the need for employees was trending upwards.” In fact, due to government spending during COVID, after-tax income actually increased across all income groups, ranging from less than 2 per cent for those making up to $162,000 annually to 16 per cent for those making $25,000 or less.

Now, as the full scope of government waste comes into focus, the cost to taxpayers continues to grow. According to a new analysis published by the Fraser Institute, of an estimated $359.7 billion of total federal COVID spending, at least 25 per cent ($89.9 billion) was wasted. As this spending was financed entirely through borrowing, Canadians will pay higher debt interest costs on Ottawa’s debt—an estimated $21.1 billion in interest costs directly attributable to COVID fiscal waste over the next 10 years. In total, the cost of the federal government’s COVID fiscal waste will reach an estimated $111.0 billion by the end of 2032/33.

Put simply, Canada wasted billions in taxpayer money during its COVID response, and Canadian taxpayers will continue to pay for this waste for years to come. In the future, governments must do a better job to ensure that spending is effective, targeted and carefully managed.