CERB has ended and it cost the Government of Canada almost $80 billion CAD

The Canada Emergency Response Benefit (also known as CERB) came to an end this past weekend, just as the Trudeau government had planned. It was designed to provide quick and direct cash injections ($500 per week) to Canadians impacted by the pandemic and related government measures.

Was it successful? It certainly appears that the program allowed many folks to bridge the gap during the first wave of COVID when many lost jobs and income. Canadian households are the most indebted in the world, and widespread cashflow problems would have spelled disaster for debtors and creditors alike. The most recent insolvency statistics show that many Canadian households have likely emerged out of the first wave fairly unscathed, judging by the historically low insolvency figures.

But while this may be the case, CERB came at a relatively high cost to the federal government.

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As of the last day of the program, total benefits paid out through CERB came in at around $79.3 billion CAD. To put that figure into perspective, we have seen total federal government expenditures come in around $75 to $80 billion CAD each quarter over the last few years. Total tax revenues for the last quarter of 2019 came in less than that. So, CERB was a very expensive program for the Government of Canada, and it more than doubled total social benefit expenses during the first two quarters of the year.

In terms of the magnitude of the program, the government estimates that about 8.83 million people applied. That means CERB cost about $8,980.75 CAD per applicant. The program enrolled a huge amount of people and payed out a relatively large sum of money in the span of less than 6 months.

Unfortunately the pandemic remains in play and recent data show that a second wave may now be underway. As of writing, the Trudeau government along with the help of the NDP in parliament are looking to launch more social benefit programs to help households in the coming months. If CERB is any indication, these new social programs are likely to be expensive. If the second COVID wave is worse than the first, the next round of government social spending may cost even more than CERB.