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Business groups applaud newly relaxed wage subsidy rules
Published Wednesday, April 8, 2020 5:34PM EDT
Business groups applauded the federal government's decision to loosen requirements for its wage subsidy program for employers hit by COVID-19, even as they emphasized the need for money to quickly flow to struggling Canadian enterprises.
After speaking with stakeholders and workers, Prime Minister Justin Trudeau said his government will refine some of the emergency aid programs announced in recent days and weeks.
"We want to make these emergency measures as inclusive as we can so we're listening and making adjustments along the way," he said Wednesday.
Rather than having to show a 30-per-cent decline in revenues, businesses can instead show a 15-per-cent decline in March, and can compare their revenues to previous months rather than the previous year, Trudeau announced.
Charities and non-profits can also choose whether to include revenues from governments, such as grants, in their calculations when they apply.
Businesses need to survive and workers need to get paid if the economy is to "come roaring back after this crisis," Trudeau said.
Employment Minister Carla Qualtrough said 4.26 million people, or nearly one quarter of the country's workforce, has applied for benefits since March 15.
The changes from Ottawa should help many of the country's companies to retain or recall thousands of employees, several business groups say.
Increasing the flexibility makes sense since many companies didn't experience the impact of the pandemic until later in March, said Brian Kingston, vice-president of fiscal and international for the Business Council of Canada.
He said the government is designing costly programs quickly, comparing it to building an airplane as it's flying.
"There is no playbook here. And the key is that the government is showing flexibility in terms of how they design this program to make sure it's of maximum use to the most companies possible," he said in an interview.
The changes are reasonable as long as the money can get to companies who are trying to hang on, added Dennis Darby, president of Canadian Manufacturers and Exporters.
"We really hope that no company has to end up going out of business because of the COVID-19. Hopefully, this money will flow sooner rather than later," he said.
Even before the changes were announced, Air Canada said it would take advantage of the program to rehire 16,500 laid-off workers, although the vast majority will remain at home amid the collapse of global travel triggered by the COVID-19 pandemic.
Flair Airlines and Transat AT Inc., other companies in the hard-hit travel sector, said it they would use the program to recall all their employees.
While thousands of companies will likely benefit from the change, it doesn't go far enough, said Dan Kelly, president and chief executive of the Canadian Federation of Independent Business.
"This isn't the ultimate fix that I think small businesses want and need, but it is significant progress," he said.
The group wants the 30 per cent threshold that will remain for April and May to be scrapped altogether.
Kelly said Canada should adopt a program similar to England, which will provide an 80 per cent subsidy for all businesses.
"So whether you've seen your sales flat, increase or decrease, government picks up 80 per cent of the wages with the assumption that the vast majority of businesses are going to be negatively affected or severely negatively affected," he said in an interview.
The existing provisions won't help the innovation economy and leave many Canadian technology firms in a lurch, said Benjamin Bergen, executive director of the Council of Canadian Innovators.
He said Industry Canada needs targeted measures to help high-growth companies weather the storm and capitalize on the rebound.
In a survey of 651 technology CEOs, 96 per cent said their company would be ineligible for the program because of its revenue test. That's because most use metrics other than revenue to measure a decrease in business activity.
Trudeau also announced Wednesday that the federal government will cover 100 per cent of wages for students hired under the Canada Summer Jobs Program. The government will also extend the time period for job placements to the winter, in recognition that many jobs will start later than usual due to the pandemic, and companies will be permitted to hire students part-time.
The hope is this will encourage businesses to hire students to allow them to get the work experience they need and earn incomes during the downturn, Trudeau said.
"Today we're taking a step in the right direction to help young people find work during this difficult time, but I want to be clear, we will be doing more," he said.
Earlier Wednesday, Conservative finance critic Pierre Poilievre said relief from the federal government for small businesses suffering losses due to COVID-19 is not rolling out fast enough.
He noted the United States has already delivered $66 billion in forgivable loans to businesses in America while Canadian companies are still waiting for promised emergency financial help.
"If these businesses go bankrupt during this crisis, many will never reopen and these millions of workers will be without jobs and opportunity. This will be a social catastrophe for our country," Poilievre said in Ottawa.
Conservatives are calling for the Liberal government to use faster measures, including reimbursing GST payments remitted by small businesses for the 12 months prior to the start of the COVID-19 crisis -- a move that Poilievre says would put $13 billion back into the bank accounts of business owners.
The Conservatives also say the Canada Emergency Business Account, which will provide interest-free loans of $40,000 for qualifying businesses, should be delivered by credit unions, not just banks.
Poilievre also wants the government to widen eligibility criteria for the Liberals' wage subsidy program beyond lost revenues to allow employers who have seen lost profits or subscriptions to also apply to this program.
This report by The Canadian Press was first published April 8, 2020.