Why can’t they just cut us all a cheque?
Earlier today, the Government of Canada unveiled some updates and improvements to its emergency income supports for workers who have lost income and work because of COVID-19. It simplified the benefits into one system and made it clear that more workers, including people on unpaid leave but not laid-off, are going to be covered. But to get it, eligible Canadians will still have to apply (the online portal is coming soon and I hope there will be alternatives for those without a computer and internet at home).
So, why doesn’t the Government just cut us all a cheque — whether as cash to families the way the U.S. promises to do or as a big wage subsidy the way the U.K. promises to? Here’s a slightly edited version of a Twitter thread I posted, just before details of the new benefits were announced. TLDR: Applications are, for better or worse, the fastest way that the Government of Canada has to get you money. What’s more, it’s not at all clear that the U.S. or U.K. will have any more success in quickly rolling out anything that isn’t application-driven. An analysis of by the Congressional Budget Office in 2017 found that nearly 24 million American households don’t file a tax return so they won’t show up when the Internal Revenue Service goes looking for names and addresses to send the promised cheques to. Canada faces a similar problem (click the link to see some data from me and my co-author Saul Schwartz) that not everyone who will need income support right now also files a tax return. But there’s a bigger public administration challenge that we are now living with.
Getting money out the door to help businesses, non-governmental organizations and, above all, households get over the bridge of the COVID-19 crisis is one of the top priorities in governments right now. Should governments use existing systems that weren’t designed for this level of crisis or try to build from scratch? Let’s talk this through.
Existing systems for income support in Canada have known problems. The Auditor General’s report just last Spring pointed out long-standing problems in federal call centres. Namely phone systems quickly get overwhelmed, even at regular call volumes, and Canadians can’t get through to a person. Gaps in Employment Insurance (E.I.) coverage for workers and the share of Canadians that are left out are also well-known. On top of these problems, there are also one in ten working-age Canadians who don’t file a personal income tax return will be missing out on credits like Canada Child Benefit and the GST credit that they would otherwise receive (see link above to my work with Saul Schwarts, a longer academic article is coming out soon).
When you make people apply for a benefit, it is a slower process and you have more eligible non-participation (people you want to get money not getting money). Applicants make mistakes, rules meant for accountability on spending in normal times can make it harder to approve and send out the money.
According to the latest Employment Insurance Monitoring Report, the biggest source of error in claims is from applicants themselves. NO, I AM NOT BLAMING APPLICANTS. If it’s not your full-time job to know the E.I. rules, how could you NOT make a mistake? But, that same report also shows some reasons for optimism:
Before the crisis, 3/4 of EI claims were handled (in part or fully) by an automated system. This is far more efficient than even the 1,300 extra public servants (per Minister Qualtrough’s statement in the House of Commons in the wee hours of March 24 or maybe 25, it’s all a bit fuzzy), processing applications manually. The Canada Revenue Agency (CRA) has been far ahead of many government departments in using automation to speed up the work they do in review tax returns and paying out benefits.
Again before the crisis, 98% of applications for E.I. are usually sent online meaning that many Canadians are getting used to accessing government programs in a way that is still compatible with social-distancing and self-isolation. Online applications are also much faster as a way to just input application information into even partially-automated income support systems.
In short, we have something — both in E.I. and in our CRA systems for paying tax refunds and refundable credits like the Canada Child Benefit — of an existing system of plumbing for moving money from the Government of Canada to individual Canadians. I do still worry very much about the 2% or more who can't apply online for any number of reasons. And I worry about the 10% of people who don't file a return and are missing key benefits that are about to get topped up. Our system has had known challenges for a long time and we’re seeing those magnified right now.
What would happen if we just said “forget it, no applications, just send out cheques/direct deposit right now”? That’s what the U.S. is claiming it will do, pending congressional approval, but it will take the Internal Revenue Service some four months before checks can flow. Here in Canada, we’d first need another legislative change to make the payment legal, causing another delay while Parliament is recalled and parties renegotiate again.
But it’s more than that and the expected delay in the U.S. proposal is instructive. First, CRA can cut cheques and send money to bank accounts that it has on file. But it doesn’t have everyone on file. There are people who don’t file, people who have moved away, died and been born all since the last round of tax info was collected. The U.S. plan is also to adjust payments according to household size. If your household is the same shape and size as your last tax return, CRA info is probably adequate. But it turns out that a lot of people marry, separate, and get or lose child custody in between tax returns. CRA can’t see any of that until they file or update their tax information again.
You see, the Government of Canada as a whole does not know where you all are right now, or who you live with, or where you bank, and it certainly does not know whether you have stopped working and need money, unless you say so. Even the various bits of official information about you (your Social Insurance Number, birth or immigration registration, banking information, tax information) are not all in some easy to access super-database.
Why not? Because the last few times that governments have tried to build a super-database people got scared and angry and called it “big-brother”. More recently, when Statistics Canada (an arm’s length agency that is hermetically sealed off from any role in taxing you or paying you benefits) asked to see anonymized information on bank accounts, people got scared and angry and called it a violation of privacy. At the time, those concerns seemed understandable because those were normal times.
Even in those normal times, setting up new programs, with websites and 1–800 numbers and plans to handle questions takes a lot of time.
So here we are folks. We have the pipelines (old and creaky as they are) to move money that we have. We have benefits that can be stacked one on top of the other so people who need more help can get more from different touch- points.
We have the government information management and information technology systems that we have (old and creaky as they are) to handle sensitive citizen information and dispatch calls to 1–800 numbers made by members of the public that need help. There has been no public or political will to see government spend money on itself to modernize the back-end systems that make government programs go.
I dearly hope that will emerges once we get through this public health crisis. I also hope that, in the time that comes next, we give real thought to moving away from programs that need applications and that we find a new balance to reconcile privacy and efficiency. There will be a time to rebuild our systems for a better future. We’re not there yet.
Now go wash your hands. Stay at home. Stay well.
Jennifer Robson is an Associate Professor of Political Management at Carleton University.
