NL CERB Clawbacks Push People into Poverty: Advocates

Newfoundland & Labrador will be clawing back income support from anyone who received CERB. Advocates fear this will increase poverty and homelessness.

It was around the beginning of June when the phone really started ringing, said Michelle Gushue. “Women are calling me and they’re crying,” she told the Independent. “And all I can do is call their case worker. And I’m being told, well… they’ve been cut off.”

Gushue works with the Safe Harbour Outreach Project (SHOP), a St. John’s-based organization supporting sex workers in the province. The frantic calls are coming from women who’ve had their income support cut off after they received the Canadian Emergency Response Benefit (CERB), she said. 

Against the request of the federal government, Newfoundland and Labrador is one of six provinces and territories in Canada clawing back income support for clients who got the CERB. 

Gushue says the decision will likely push people further into poverty and lead to a spike in homelessness—and she’s not alone. 

“I think we’re going to see financial hardship for the most vulnerable people for a while to come, for a long time to come,” said Sarah Mills, program manager at Stella’s Circle Employment Services in St. John’s.

Many clients on income support have part-time jobs and rightfully qualified for the CERB, Mills said. She worries many of her clients will wind up in the shelter system due to clawbacks.

A Rocky, Confusing Rollout

Both Gushue and Mills say they were glued to Prime Minister Justin Trudeau’s daily updates about the CERB after it was announced in late March. They followed the frequent changes to the regulations, sorting through them so they could answer the deluge of questions from their organizations’ clients about who qualified for the benefit and how to apply. 

For a while, it wasn’t clear at all how the CERB would impact workers on income support. On April 2, British Columbia announced workers could receive both without punishment. On April 9, Newfoundland and Labrador said it would claw back income support dollar for dollar from anyone who got the CERB, and that any who had received the benefit would have their income support “suspended immediately.

If someone got both during the same time period, their income support file would be flagged with an overpayment notice.

A few days later, the federal government spoke up, asking provinces to treat the CERB like the Canada Child Benefit, rather than count it as earnings to be clawed back against income support.

So far, Newfoundland and Labrador hasn’t changed its stance. The Atlantic provinces, Saskatchewan and Nunavut have followed suit with dollar-for-dollar clawbacks. Ontario, Quebec, Alberta and Manitoba are exempting a portion of the CERB. The Yukon and Northwest Territories followed B.C. and exempted it completely.

Still Not Enough Information

More than three months after Trudeau first announced CERB, Mills is still scrambling to get the information she needs for her clients.

Many of her clients on income support have part-time jobs and rightfully qualified for the CERB, she said. Some provinces will let income support resume automatically for workers on the CERB, but in Newfoundland and Labrador, they’ll start from zero and must apply all over again. That means they’ll go through a waiting period and the $2,000-a-month CERB—easily double what anyone would receive on income support—could mean it takes much longer to qualify, she said.  

Mills worries many of her clients won’t have the cash to wait it out and will wind up in the shelter system.

After paying rent, many on income support are left with little for food and essentials, and get meals at the Gathering Place, said Mills.

If income support users got the CERB without qualifying, for whatever reason, they could get hit twice with penalties, she said: first by losing income support and racking up an overpayment, then when the federal government comes looking for a payback.

“With all the things that people deal with in poverty, it’s really hard to have judgement around them collecting that money. If you have nothing and this is something you might be eligible for, of course you’re going to apply,” she said. “Most people who got that CERB in error have no hope of paying it back.”

In response to a request for an interview with Christopher Mitchelmore, N.L. Minister of Advanced Education, Skills and Labour, a spokesperson emailed a statement saying the CERB would be “deducted from income support benefits dollar for dollar.” When the benefit ends, people must reapply for income support. “All efforts will be made to process benefit payments in a timely manner,” the email said.

“Overpayments resulting from an overlap of income support and CERB may be reversed if confirmation of repayment to the federal government is provided.”

Thanks to advocacy from local organizations, people who lose income support because they got the CERB will be able to keep their drug plan.

A Missed Opportunity for a Fighting Chance

So what does $2,000 a month—or even once—mean for someone on income support?

According to this study from the Maytree Foundation, a Toronto-based anti-poverty group, a single person in Newfoundland and Labrador in 2018 would have cleared about $11,300 through social assistance benefits, including income support and tax credits.

That’s more than $8,000 below the poverty threshold, according to the market basket measure.

Low-income people are more likely to have health issues that make public transit and big grocery stores riskier—meaning folks stayed close to home and got their food at their local corner store, where quality is low and prices are high.

“Nobody pulled themselves out of poverty with that [CERB] money,” Mills said. “They’re still living in poverty.”

Both Gushue and Mills say the government missed an opportunity to give vulnerable people a fighting chance. 

“I think this could have been an opportunity for a lot of these people to fill their fridge with food for themselves and their children,” Gushue said. “To pay off some debts. To actually better themselves so that when they’re able to, they could go out and get a job.”

And both say the pandemic hit their clients hard. It took away supports like rides from friends to the store and even closed the food banks for a brief time. Local prices for many food staples have spiked, according to a report from Food First NL

Low-income people are also more likely to have health issues that make public transit and big grocery stores riskier, they said. That meant folks stayed close to home and got their food at their local corner store, where quality is low and prices are high.

Mills describes a client who had exactly enough money to get to the grocery store once and get what he needed. But when he showed up, it was closed—reduced hours because of the pandemic. He didn’t have a phone or an internet connection and had no idea stores had changed their hours.

“As someone who works in poverty, I thought that I had a handle on what people’s barriers were but they were more profound than I ever realized,” Mills said.

‘Giant, well-oiled confiscation machines’

The extra costs of keeping at-risk people safe at home are precisely what the CERB was meant to cover, says John Stapleton, a social policy consultant tracking provinces’ responses to the CERB for the Maytree Foundation. Though he doesn’t think it was the right move, Stapleton sympathizes with Newfoundland and Labrador’s decision to claw back, pointing out that the federal government messed it up from the beginning by introducing the benefit as a taxable income, like employment insurance, and then—weeks later—asking provinces to treat it differently.

Provinces that didn’t claw back considered the purpose of the CERB. Provinces that did considered the pedigree, he said.

Besides, a small province with floundering finances like Newfoundland and Labrador could hardly be expected to turn away immediate savings, he said.

“Government programs, their social service programs, are giant well-oiled confiscation machines, and that’s exactly what happened here,” Stapleton said. 

And that’s exactly what needs to change, say Mills and Gushue. This problem, and the staggering difference between the income support amount given to the poor and the CERB amount given to everyone else, shows that rather than lift them out of poverty, our social systems dig people into ever-deepening holes.

“Our income support systems needed to be revamped long before COVID-19, and long before Snowmaggedon,” said Gushue, clearly emotional. “They need to do a complete review and overhaul of our social assistance programs and actually go out and speak to the people and … actually do the frontline work, the investigative work and speak to these people and see what the needs are.”

All photos by author.

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