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Fiscal update would boost child benefit and wage subsidy, calls for airline refunds

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Finance Minister Chrystia Freeland’s plan to prop up the Canadian economy through the second wave of the novel coronavirus pandemic includes a temporary top-up to the Canada Child Benefit (CCB), a boost to the wage subsidy and targeted aid for industries that have been especially hard-hit by the pandemic.

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The Liberals’ fiscal update — the first spending roadmap the government has provided since the last federal budget in March 2019 — also reiterates that financial assistance to major airlines would come with refunds for cancelled flights, a commitment Transport Minister Marc Garneau made earlier this month.

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Supporting the economy until a self-sustaining recovery takes hold will require more spending on aid to individuals and businesses as well as targeted industry and regional help, the government said in its fiscal blueprint on Monday.

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Canada Child Benefit top-up and help for veterans

The most significant new aid the Liberals are proposing for individuals would go to families with young children.

The government is pitching a $2.4-billion top-up to the CCB that would provide households with up to $1,200 per child under six in 2021.

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The additional support would come in the form of four tax-free payments of $300 for families with a net income of up to $120,000, the government said. Those with incomes above that threshold would receive half as much, or four payments of $150 totalling an extra $600 in aid.

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The first installment would come “shortly after the enabling legislation is passed,” according to the documents, with subsequent payments following in April, July and October 2021.

Currently, households with children under the age of six can receive up to $6,765 a year — or $563.75 per month — through the CCB. The additional $300 payments for 2021 would represent an increase of almost 20 per cent over the maximum annual benefit.

READ MORE: National childcare system would ‘pay for itself,’ report says

Economic data suggests mothers of children under six have been disproportionately affected by the pandemic, having to scale back their work hours or leave their jobs entirely amid child-care and school closures. A recent RBC study, for example, found that more than 20,000 women left the workforce between February and October, with mothers of young children making up two-thirds of that exodus.

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Read more: Mothers of kids under age 6 make up majority of workforce exodus amid coronavirus, RBC study says

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The government is also proposing temporary quarterly payments of $300 per child to federal, provincial, territorial and First Nation child protection agencies that care for vulnerable children.

Another initiative to increase support for individuals would see the government giving an additional $600,000 to the Veterans Emergency Fund, which helps veterans, their families and survivors whose well-being is at risk due to an urgent and unexpected situation.

Wage and rent subsidies

The Liberals also envision bringing the rate for the Canada Emergency Wage Subsidy (CEWS), back up to 75 per cent of employee wages for eligible businesses, up from the current maximum rate of 65 per cent.

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The additional support is necessary because of “the ferocity of the second wave and its expected economic impact,” the government argued in its fiscal update.

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The proposed CEWS increase would kick in on Dec. 20 and extend until March 13, 2021.

But the government is holding off on a similar hike for the federal rent subsidy for businesses. Current rates for the Canada Emergency Rent Subsidy (CERS) will stand until March 13, the documents show.

READ MORE: Want to apply for the new coronavirus rent subsidy program? Here’s what to know

Ottawa’s revamped version of the commercial rent subsidy currently covers up to 90 per cent of rent and eligible property expenses for businesses that have seen a significant revenue drop due to COVID-19.

Both the wage and the rent subsidy will run until June 2021, the government reiterated.

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Support for hard-hit industries and airline refunds

In addition to broad-based cash injections for struggling businesses, the government is also ready to ramp up industry-specific aid to sectors that have proven especially vulnerable to the economic impacts of the pandemic.

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One idea is to create a new facility — dubbed the Highly Affected Sectors Credit Availability Program (HASCAP) — to provide cheap, government-backed funding to industries like hospitality, arts and culture and the air sector. The program would give out low-interest loans of up to $1 million over terms of up to 10 years.

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There would also be hundreds of millions of dollars in direct and indirect support for anything such as tourism businesses, local TV and radio stations, the arts, regional air transportation and airports.

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There was little mention of what the Liberals have in mind to help major Canadian airlines, but the fiscal update did say the government will “ensure” Canadians are refunded for cancelled flights as part of any process to channel financial aid to the biggest carriers.

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The Liberals are working on a long-awaited bailout package for the airline industry, which has seen revenues plunge due to travel restrictions and customer anxieties about contagion on planes.

Garneau said in early November that airlines would have to refund the cost of flights cancelled due to COVID-19 in order to access the aid.

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