Canada government proposes boost to unemployment benefit in move likely to avert election

OTTAWA (Reuters) - Canada’s government on Thursday proposed boosting a weekly payout for the jobless that would replace emergency COVID-19 income support that ends this weekend, a move that looks set to help the ruling Liberals win a parliamentary confidence vote.

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Prime Minister Justin Trudeau is seeking the support of at least one opposition party on a sweeping agenda to battle COVID-19, help those hurt by it, and foster economic growth.

Two of the three other parties in Parliament signaled rejection of the plan. But the left-leaning New Democrats, who demanded the increased payout, indicated they would support Trudeau, thus averting an election.

“We are very optimistic about the outcome of these negotiations,” party leader Jagmeet Singh told reporters, adding he was talking with the government over his demand for paid sick leave. “It was never my goal to plunge the country into an election.”

Canada’s current unemployment rate is 10.2%, up sharply from 5.6% in February, the last full month before the coronavirus outbreak hit.

Employment Minister Carla Qualtrough told a news conference earlier on Thursday that Ottawa was proposing legislation that would make the new unemployment benefit equal to the emergency income support. Those eligible receive C$500 ($374.60) a week.

The government had initially said it would offer C$400 a week for up to 26 weeks.

Trudeau said on Wednesday that “this is not the time for austerity” and promised major new spending on top of the hundreds of billions of dollars he has already unveiled.

“It’s true that this is expensive, but ... it will be even more expensive if we don’t do it,” Finance Minister Chrystia Freeland told the news conference on Thursday.

Pressed on market concerns about the risk posed by soaring deficit and debt levels, she said interest rates were at a 100-year low.

Reporting by David Ljunggren and Julie Gordon; Editing by David Gregorio and Peter Cooney