Feds to subsidize wages through the summer, PM says
OTTAWA -- Prime Minister Justin Trudeau says the 75 per cent federal wage subsidy program is being expanded by three months, to the end of August to assist employers as they look to reopen their businesses.
The federal government is also expanding the eligibility for the financial aid program, and is committing $450 million towards temporary wage assistance for medical researchers whose work is unrelated to COVID-19 but has been impacted by the pandemic.
A week ago, shortly after the latest national jobs numbers showed Canada had experienced record-high job losses for two months running, Trudeau said the subsidy program would be extended past June 6, but no further details had been provided.
Now, Trudeau says that the situation has changed from a benefit needed because many businesses were closed or making little income, to now businesses that are looking to reopen and need to be able to bring back workers or hire additional staff to accommodate the changed reality COVID-19 and the public health prevention measures require.
“Business owners: please take confidence from this announcement. You have some runway to catch your breath as you get restarted, so please, bring back your workers,” he said.
The subsidy—implemented to incentivize employers to keep staff on the payroll or bring back those who were laid off—was initially projected to cost $73 billion, but as so far, a fraction of those funds had been rolled out with the latest figures indicating $3.4 billion has been spent on wage subsidies to slightly more than 120,000 companies.
To date the vast majority of the applications have been for subsidy amounts less than $100,000. An estimated 5,500 applications have come in seeking between $100,000 and $1 million in federal assistance, 115 employers are seeking between $1 million and $5 million in federal help, while 13 applicants are asking for more than $5 million in wage subsidies.
Asked about the number of businesses seeking subsidies so far being less than the government anticipated, Trudeau said businesses have been “busy trying to juggle a whole bunch of different factors,” while facing the uncertainty of when they could reopen, and what that would look like.
The subsidy is on the first $58,700 of an employee’s salary, providing up to $847 a week per employee. As it was initially implemented, the subsidy was set to be in place for 12 weeks, retroactive to March 15, for businesses and charities. It has now been extended by an additional 12 weeks to August 29.
CHANGES TO ELIGIBILITY
Finance Minister Bill Morneau announced Friday expansions to the eligibility criteria, aimed at helping get more people back on the job, including those who work for private schools and for sports associations.
Changes to the regulations include extending the eligibility to:
- Partnerships that are up to 50-per-cent owned by non-eligible members;
- Indigenous government-owned corporations that have a business;
- Registered Canadian amateur athletic associations;
- Registered journalism organizations; and
- Non-public colleges and schools such as arts, language, driving and flight schools.
Further, the government is looking to make further legislative changes to “provide flexibility” for employers of seasonal workers; ensure the program applies accurately to corporations that have amalgamated; and to make changes related to how trusts are treated.
When asked, Morneau said there is not an updated estimate available yet as to the new cost of this massive program given the extension and expansion of eligibility.
Trudeau also said the 30 per cent revenue decline threshold is among aspects the government is reconsidering, as showing that level of losses shouldn’t become a barrier to growth. He said this aspect of the program will be one explored during talks with business and labour stakeholders in the weeks ahead.
“We wouldn't want people who are getting back their business going to feel like they have to hold back on their growth on their expansion on their rehiring in order to be able to continue benefiting from the wage subsidy,” Trudeau told reporters on Friday.
The federal government has signalled that there’s hope, with more businesses using the wage subsidy, many of the millions of Canadians receiving the Canada Emergency Response Benefit would come off of that $2,000 per month program and be back on the job.
In a statement, Conservative small business critic James Cumming said that while his caucus supports the wage subsidy, which they encouraged being increased to 75 per cent up from the initial 10 per cent, more needs to be done to loosen “unnecessarily rigid programs that are leaving hundreds of thousands of people without help.”
Similarly, The Canadian Chamber of Commerce said that while it’s glad to see the wage subsidy expansion and extension, more could be done to make the aid available to more companies.
“Many businesses have closed or are not operating at full capacity, limiting applications, but many more do not qualify for reasons including they do not meet the current revenue loss thresholds, use non-T4 employees or engage third-party payroll providers,” said the business group in a statement.
BENEFIT, TAX GRACE PERIOD
In addition to this, Trudeau announced that an added grace period is coming for parents who receive the Canada Child Benefit and people who claim the GST/HST credit.
He said that while everyone should still try to file their taxes by the extended date of June 1, those who don’t get their paperwork in by then won’t automatically see their benefits cut off.
Both of those benefit programs will be continued until the end of September.
$450M FOR RESEARCHER WAGES
And in an effort to avoid further layoffs, the prime minister has announced $450 million to help research institutions that have seen their labs close or are having to lay off staff as donations and other funds have been diverted to the COVID-19 fight.
This money will be going to universities and affiliated research institutes that have been affected by the pandemic, to provide temporary support on wages through federal granting agencies, Trudeau said.
“Science and research is our door to a brighter future, and that has never been clearer,” Trudeau said.
Industry Minister Navdeep Bains said this will help tens of thousands of researchers and lab technicians at hospitals and medical institutes across the country who have seen their work halted as it’s not COVID-19 related, and are facing funding pressures as the nation prioritizes the pandemic.