The auditor general report on government pandemic spending has fueled a frenzy against Canada Emergency Response Benefit (CERB) recipients. The National Post wailed, “Canada may have just experienced the greatest fraud in its entire history”. In actuality, the real fraud is the fact that this audit makes no mention of $686 billion gifted to corporations. The only corporate funding program mentioned is the Canada Emergency Wage Subsidy (CEWS) but the auditors distort and hide the widespread abuse of this program. In contrast, the audit scrutinizes CERB down to the last penny and lambasts it for supposed abuse. The total cost of CERB and the Canada Response Benefit was $103 billion, which means the working class received a meager 15 per cent of the total pandemic funds. With skyrocketing living costs, rising interest rates, and an impending recession, this audit is yet another attempt to place the blame for the crisis onto the shoulders of the working class. But to answer the question of who must pay for this crisis, we need to ask: where did the money go?
They got bailed out
During the pandemic, the federal government created more than 100 programs that funneled money into corporations. Only one of these is mentioned in the audit: CEWS. This was one of the most expensive programs delivered by the federal government in Canadian history, costing $101 billion. The government claimed the program was a job-saving measure. The exact opposite happened.
The corrupt nature of CEWS can be seen by its biggest recipient, Air Canada, which received $554 million. After receiving these funds, it laid off 4,000 staff. At the same time, Air Canada executives scandalously gave themselves an $11-million bonus. This was not an anomaly; in fact, it was the norm among CEWS recipients. For example, Bell Canada received $122.8 million and proceeded to lay off hundreds of employees while paying $3 billion in dividends to shareholders. Similarly, Cineplex laid off 6,000 employees in 2020 while taking $60 million from CEWS. Imperial Oil Ltd. was given $120 million and went on to gift $324 million to shareholders. Linamar, an automotive manufacturer in Guelph, Ont., collected more than $108 million. They then doubled their dividends to $8 million each quarter. CEO Linda Hasenfratz celebrated this, saying, “It feels great to be profitable again, with earnings actually up from last year, and to see such an outstanding quarter for free cash flow despite the challenges we are facing”.
A Globe and Mail investigation revealed that many CEWS recipients were companies who were about to go bankrupt, or went bankrupt after receiving the funding. It found 32 companies among the wage subsidy recipients that had already initiated steps to file for bankruptcy between January 2019 and the start of the lockdown in March 2020. Another 130 businesses received the subsidy only to file for bankruptcy throughout the remainder of 2020. So the subsidy, which was supposed to “protect” jobs, went to zombie corporations that were preparing to get rid of those jobs anyway. The same story is repeated over and over. Far from saving jobs, CEWS went towards saving profits.
It is not an accident that corporations were able to line their pockets with CEWS. The funding went directly to the bosses based upon their own estimates of decreased profit margins. The impact on workers from lost incomes or jobs was never a consideration. Even the initial requirement of decreased profits was wiped away so that any corporation could get a top-up on their profits! This explains how the capitalist class doubled and even tripled their profits in the first few months of the pandemic. The auditor general’s report distorts the reality of how CEWS was used and instead celebrates it as a program that “saved the economy”. It is clear that from the very beginning, CEWS was designed to benefit the rich, and this is why the pro-capitalist auditors were not concerned about this corruption.
CEWS is the tip of the iceberg
Alongside CEWS, the capitalists were offered interest-free loans or credit through various different programs. The Large Employer Emergency Financing Facility (LEEFF) handed out at least $7.4 billion. Yet again, the biggest recipient was Air Canada. After the first CEWS bailout, Air Canada received another $5.9 billion through LEEFF and proceeded to lay off another 1,700 employees. Finance Minister Chrystia Freeland characterized it as a “good and fair deal for Canada and Canadians.” A “good and fair deal” for the Air Canada executives came at the expense of good jobs and fair wages for the average Canadian.
The most expensive credit program was the Canada Emergency Business Account (CEBA), which gave out $49 billion. Another $3.6 billion was given out through the Highly Affected Sectors Credit Availability Program (HASCAP). The Business Credit Availability Program (BCAP) dished out another $1.1 billion. Auditor General Karen Hogan stated: “I think one of the greatest things about our country is that you can expect fairness and transparency”. This statement is laughably false given that the names and details of who received funding from these various credit programs remain hidden. The use of CEWS for dividends and executive bonuses gives us some idea of how these funds might have been used. A Toronto Star article traced the long history of bailouts for corporations and where those funds went. One popular use was “leveraged stock buybacks”, where corporations buy back their own shares on the stock market. This artificially drives up the demand for the corporation’s stock, thus inflating the stock price. In effect, public funds were gambled away on the stock market.
Where did the $686 billion go?
Surpassing all of these programs was a $686-billion package given out for “liquidity support and capital relief”. Despite being the biggest pool of cash for corporations, it is also the program with the least amount of publicly disclosed details. The distribution of the funding was left in the hands of bankers at the Business Development Bank of Canada (BDC) and Export Development Canada (EDC). The federal government has refused to name which corporations received funds and how they were used. Then finance minister Bill Morneau claimed that corporations were “drowning in debt” and could not survive without support. Why are they drowning in debt? It is impossible to answer this question when no financial details are provided. If corporations need public funds to keep them afloat, then we have every right to open up their financial books and track how the funds are used. It also begs the question, why are these corporations remaining in private hands if they cannot survive without public funding?
It is absolutely scandalous that billions of taxpayer dollars have been quietly given away through backroom deals with the capitalist class. Equally scandalous is the active omission of this corporate handout by the auditor general’s report. The complete lack of any details means we cannot know exactly how much was truly given out to the capitalist class; it could be far higher for all we know. The archived report which mentions the $686 billion was published in July 2020 when it underestimated the cost of CEWS at $84 billion, well below its final $101-billion price tag. The various programs offered to corporations, from CEWS to the mysterious “liquidity support and capital relief” program, add up to approximately $786 billion. Instead of investigating this massive corporate handout, mainstream media “journalists” have picked up their pitchforks and gone after CERB recipients.
We got sold out
There has been an avalanche of articles blaming CERB for everything from making poor people lazy to supporting international crime! Federal Conservative Leader Pierre Poilievre joined the chorus and stated: “190,000 people quit their job and received CERB even though they weren’t supposed to; 1500 prisoners even received it.” What we see is a clear right-wing and corporate media project to demonize CERB recipients while ignoring billions in corporate welfare.
Millions of Canadians lost their wages, jobs, and loved ones in the early months of the pandemic. Faced with a potentially explosive social crisis, the federal Liberal government launched CERB in March 2020. While it became a vital lifeline for millions of people, the reality is that most people barely survived on CERB. The program provided a maximum of $2,000 per month. Considering that rent alone in major cities such as Toronto is well above $2,000, CERB only just kept people afloat. Even then, most of the funds went straight into the pockets of landlords. However, even this minimal support was quickly clawed back.
By September 2020, the Canada Revenue Agency (CRA) began demanding repayment. Their claim of “CERB fraudsters” was contradicted by their own admission that eligibility requirements were confusing and had changed. Hundreds of thousands of people across the country were threatened with punishments ranging from enormous fines to jail time if they did not repay. All the while, the pandemic raged on and millions of people were left with no support. Rather than asking who should not have received CERB, the real question to ask is, why were millions of people left without support in the midst of an unprecedented crisis?
While the CRA was leading a witch hunt against CERB recipients, they were actively covering up the names of hundreds of companies who had received CEWS abuse complaints. This clearly exposes the class bias of the CRA, who apply one set of rules for the working class and another for the bosses. The auditor general report is only the latest attempt by the capitalist class and their apologists in the government and media to blame the working class and make them pay for the crisis.
Make the bosses pay
Throughout the pandemic, the overwhelming majority of resources and money was said to have gone into “saving the economy.” In reality, this meant saving the capitalists’ profits at the expense of the workers. Workers faced mass layoffs, terrible working conditions, and illness, all while public money was given away to the capitalists. These massive corporate bailouts have since fueled an inflationary crisis. Now, the Bank of Canada is demanding the working class once again pay for the crisis through mass unemployment and debt.
Poilievre has said he would fire Tiff Macklem, the governor of the Bank of Canada, but what is his solution to the crisis? He wants to “cap spending with a law requiring that ministers find a dollar of savings for each new dollar of spending.” In other words: austerity. Cuts to social services and public-sector jobs is Poilievre’s solution. This is no solution at all! It is not a coincidence that Poilievre condemns CERB recipients while remaining mute on CEWS-funded executive bonuses. Despite Poilievre’s rhetoric against Macklem, in the end they both agree on the capitalist solution to the crisis: make the working class pay. But we must respond: make the bosses pay!
There is an urgent need to end wage erosion, and that starts with workers refusing to accept wage increases below inflation. The labour movement must use militant, class-struggle methods such as strikes to fight for cost-of-living adjustments (COLA) and catch-up pay for all the past erosion in real wages. The British working class is proving the effectiveness of labour militancy in practice with strikes winning 14 per cent wage increases. We must follow their lead and fight for labour militancy here in Canada. The potential for class struggle was shown recently by the Ontario education workers who defeated back-to-work legislation, a first in Canadian labour history, through mass mobilization of the union.
There are still many details missing on exactly how much public funding was given to corporations, who took it, and how it was used. These details must be made public. We cannot rely on the capitalist state to eventually reveal these details. After all, it was organs of the capitalist state such as the auditor general’s office that have actively covered up the corporate bailout details. The worker class must get organized and demand an opening up of the financial books. But once we have the information, how can we ensure accountability? The truth is, so long as the capitalist class retains ownership of the economy, they control how the funds are used. They will only continue enriching themselves at the expense of good jobs and wages. We cannot control what we do not own. Opening up the financial books must be a stepping stone towards expropriation and nationalization of the economy under workers’ democratic control.
All the corporations who have parasitically lived off public funds must be immediately expropriated and nationalized. The Canadian working class has already effectively paid for the ownership of these companies, given the massive public bailouts they have received. Not a dime in compensation must be given to the capitalists. In fact, if there are any funds still unaccounted for after expropriation, we must demand repayment from CEOs and executives. Then the working class will be able to democratically manage production and provide high-quality jobs to the millions who are struggling to get by. We agree with Poilievre that Tiff Macklem must be fired, but not to simply be replaced with another capitalist apologist. The Bank of Canada and all the major private banks must be nationalized and placed under democratic workers’ control. This will pave the way for society to rationally plan its wealth for social need.
The pandemic spending package was nothing more than a corporate welfare package. It funneled a massive transfer of wealth from the poor to the rich. Instead of funding the crippled health-care system, or free education or any other basic need in society, the tremendous wealth in society was wasted on bailing out the bosses. This is a condemnation of the entire capitalist system. To finally end this wasteful system, we must fight for a revolutionary transformation of society. We must fight for socialism.