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  • Writer's pictureMichael Laxer

Forget hypocritical personal trips, the CEWS scandal is far worse

Updated: Jan 4, 2021

While it is perfectly understandable that Canadians are upset at the hypocrisy of individual politicians, the boondoggle that is the CEWS is a far more serious scandal


"Linamar doubles dividend while receiving more than $108 million in government emergency wage subsidies" reads a January 2, 2021 Toronto Star headline.

The article outlines how:

Through the first three quarters of the year, Linamar has collected $108.1 million in the Canada Emergency Wage Subsidy (CEWS), while paying out a total of $15.7 million in dividends.
Moving taxpayer money into shareholders’ pockets is not what CEWS was meant to accomplish. But, say economists and accounting experts, that’s exactly what has happened, both with Linamar and a host of other Canadian corporations.
The program was, according to the federal government, designed to help companies pay their workers during the pandemic.
“That may be what the federal government’s goal is, but it’s not what corporations’ goals are,” said David Macdonald, senior economist of the Canadian Centre for Policy Alternatives.

This, of course is just the latest in a string of such revelations. A wide array of Canadian companies did the exact same thing and many CEOs have personally profited.

At least 68 publicly traded Canadian companies have continued to pay out billions of dollars in dividends to their shareholders while receiving government assistance in the form of the Canada Emergency Wage Subsidy.
A Financial Post analysis found that the 68 companies received at least $1.03 billion in CEWS, a subsidy introduced by the federal government in April to help companies that had seen significant drops in their revenue cover payroll costs and avoid laying off workers. While they were receiving government assistance over the past two quarters, the very same companies paid out more than $5 billion in dividends.

And then, on December 22, the FP broke the news that:

The chief executive officers of 68 Canadian companies that paid out dividends while receiving the pandemic wage subsidy earned an estimated $30 million in dividends themselves during the quarters in which their firms accepted the Canada Emergency Wage Subsidy (CEWS), according to an analysis of share ownership stakes by the Financial Post.

Perhaps the most shocking example was reported in the Star on December 26:

In the first nine months of 2020, as the COVID-19 catastrophe unfolded across Ontario, the three largest publicly traded long-term-care operators in the province made huge payouts to investors while taking millions in government funds, data shows.
A Star analysis of the financial statements of Extendicare, Sienna Senior Living and Chartwell Retirement Residences shows that in the first three quarters of 2020 (ending Sept. 30), these for-profit companies collectively paid out nearly $171 million to shareholders at the same time they received $138.5 million through provincial pandemic pay for front-line workers, the Canada Emergency Wage Subsidy (CEWS) program or other pandemic funding.

The article goes on to note:

The new financial figures come at a time when record numbers of COVID-19 infections in Ontario are sparking fears that community cases will spill over into nursing homes in ever greater numbers. Critics say long-term-care operators who run homes where hundreds of residents have died of the virus should be using money that would otherwise go to shareholders to improve areas related to quality of care, such as staffing levels, wages and training.
During the first three quarters of 2020, all three operators saw disproportionately more deaths among residents than the average in Ontario non-profit or municipally run long-term-care facilities.

The CEWS is a massive corporate handout and transfer of wealth to the already wealthy and the corporations that was backed by Canada's social democratic party, the NDP, and much of the labour movement. This may explain why they have had very little to say about these revelations.

In fact, even after many of the dividends and payouts were uncovered, the NDP and Jagmeet Singh took credit for the program in a December 28, 2020 fundraising email:

One could take issue with the rather fanciful notion that the NDP "delivered" any of these programs, but it is fascinating that they continue to want to be celebrated for their involvement in promoting the largest example of corporate welfare since the 2008 financial crisis.

In light of what we have learned taking credit for this is almost funny, though as usual with the NDP the joke is on the left and Canadian working class.

There has been much outrage in the media and among the Canadian people of late about the hypocritical or poorly timed travels of various individual politicians over the holidays.

Some of these are clearly worthy of the anger they have stirred up, as in the cases of former Ontario Finance Minister Rod Phillips and Alberta Municipal Affairs Minister Tracy Allard:

Philips has since resigned.

Many are also critical of NDP MP Niki Ashton for traveling to Greece to visit her ailing grandmother, though this hardly seems akin to the other examples given that it was not frivolous and no deception was involved. Still, she has been demoted from her critic roles by Singh and many do, rightly, point out the countless people who have not been able to visit with sick or dying loved ones during the pandemic.

Yet it is hard to see how even the most egregious of these scandals compares remotely to the boondoggle that is the CEWS. While there should be palpable public and media outrage about it, there is in fact relatively little. Corporate culture and deference to the private sector and business community is so deeply ingrained that even many progressives have stood by a program that literally lined the pockets of corporate Canada and some CEOs with public cash.

Nadine de Gannes, an assistant professor in managerial accounting at Western University’s Ivey School of Business said in the Star that as "long as there isn’t a sense of public outrage, I don’t think governments will do anything differently." This seems to be indisputably correct.

One of the few politicians to say anything forceful about the CEWS' no strings handouts was Conservative MP Pierre Poilievre:

This is quite cynical, given that the Conservatives were big boosters of the CEWS versus the CERB, but progressives have ceded the ground.

Everything that has happened with the CEWS was 100% predictable. It has been a program to allow the rich to get richer at least partly on the public dime.

All wage compensation to workers should have been paid directly to workers and never to Canada's grifter corporate class. Compensation should not have been dependent on corporations or on workers working during a pandemic. This should have been the left's and labour's position.

So, save a little of the outrage felt about the hypocrisy of individual politicians for the kind of systemic moral and political bankruptcy that the CEWS represents. Perfectly legally many corporations and CEOs have been feathering their nests in a way that would obviously not have happened had it not been for hundreds of millions of dollars in public, government handouts.


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