Prime Minister Justin Trudeau has announced a major increase to the wage subsidy for small- and medium-sized businesses, boosting it to 75 per cent, up from the 10 per cent previously promised.
This decision, to help “qualifying businesses” keep employees on staff, is being back-dated to March 15, with more information coming over the weekend.
The federal government is launching a special emergency business account for small businesses that will see banks offer $40,000 government-guaranteed loans interest-free for the first year. If the company can repay the balance of the loan by the end of 2022, up to $10,000 will be forgiven.
Projected as a $25-billion program, not-for-profit organizations are also able to apply through their banks, “to help cover their operating costs during a period where their revenues have been temporarily reduced, due to the economic impacts of the COVID-19 virus,” according to the government.
Applicants need to show proof that they paid between $50,000 and $1 million in payroll in 2019.
As well, an additional $12.5 billion is being made available through federal programs, to help with “operational cash flow requirements,” and HST and GST payments are being deferred until June, as are customs duties, giving businesses more time to make their payments.
Directing his remarks to small business owners and entrepreneurs, Trudeau said he knows the last few weeks have been “heartbreaking,” and the federal government realized much more help would be needed than initially committed.
“You’ve had to slow down your operations, in some cases you’ve even had to close up shop for the foreseeable future, and because money isn’t coming in, you can’t afford to keep your employees on the payroll. These are really tough decisions,” Trudeau said.
Across Canada, businesses have been rolling with a series of evolving restrictions as each province and territory operates in an emergency state, a “climate of uncertainty” as Trudeau said Friday.
The prime minister said he hopes these measures will allow employers to retain staff through this global pandemic, and help keep businesses afloat.
“I know many Canadians across the country are saddened to see their favourite neighbourhood spots closed, these are the places that make our communities feel like home,” Trudeau said, calling these businesses the “backbone” of the economy, and collectively the largest employer in the country.
“I am counting on you to come back strong from this, no matter what comes next,” he said.
Business, opposition reaction
Reaction quickly poured in to the prime minister’s small business relief announcement, though details remain sparse about the scope and eligibility for these new measures.
Friday morning prior to the announcement, NDP Leader Jagmeet Singh—who had been calling for a wage subsidy increase— sent a letter to Trudeau, cosigned by the Canadian Federation of Independent Businesses (CFIB), and a handful of union representatives.
“By raising this subsidy, there is greater incentive to keep workers on payrolls to avoid layoff. As more workers remain actively employed, the transition back to normal as social distancing ends will be easier,” it read in part.
Dan Kelly, the president and CEO of CFIB, tweeted that their business helpline was getting hundreds of calls looking for more information about the new federal measures.
The CFIB estimates that hundreds of thousands of workers will see their jobs saved by this initiative.
“Ensuring as many workers as possible remain connected to and paid by their employers will reduce the financial and mental stress on workers and ensure that Canada’s economic recovery will begin the day after the health emergency phase ends,” said Kelly in a statement.
President of the Federation of Canadian Municipalities Bill Karsten thanked the federal government for what he called a “bold step” and “necessary lifeline” for local economies.
Questions outstanding include who exactly will qualify for this wage subsidy, whether this is a cap per employer or employee and whether there are other requirements on businesses to be able to claim this assistance.
Speaking to reporters on Friday afternoon, Finance Minister Bill Morneau couldn’t offer any further details on who will qualify but vowed that those details will be made clear by Monday, citing the ongoing fast-paced decision-making being undertaken.
“The details are being worked out as we speak, so there will be more opportunity to talk about that shortly,” Morneau said, citing local restaurants, coffee shops, salons and barber shops as examples of the businesses feeling the crunch right now.
The finance minister also hinted that further news for the airline sector would be forthcoming.
“We know that leaving cash in the hands of businesses is only one part of the solution.”
More help for vulnerable soon
As Canadians round out what for many has been their second week of working from home while self-isolating and heeding physical-distancing advice, Trudeau said additional measures for vulnerable populations will be taken.
Citing youth, marginalized populations, and Canadians in poverty, the prime minister said more help will be rolled out “very soon.”
“In the meantime, let’s keep listening to public health officials. Let’s wash our hands, stay at home as much as possible, and keep a safe distance from each other when we go for a walk or when we have to go to the grocery store.”
In the last two weeks, Canada has shut its border to non-Canadian citizens coming from abroad, with a few exemptions, and has banned all non-essential travel over the Canada-U.S. border, with enhanced screening measures and tough new penalties in place for returning travellers who do not self-isolate.
A $107 billion financial assistance and stimulus package has passed through Parliament, and Service Canada centres have shuttered, with employees still working.
Trudeau said that the government is looking into how to assist people who are unable to use the online portals to apply for key government of Canada services while these offices remain closed to the public.
PM ‘pleased’ with interest rate cut
Friday morning, the Bank of Canada announced an unscheduled interest rate cut, slashing the key interest target by half a percentage point to 0.25 per cent. Global economies have been badly hit by the pandemic which has seen half a million people in Canada alone file for employment insurance in recent weeks.
Trudeau said he is pleased with supporting actions taken by the Bank of Canada.
“Monetary policy is very important but as the Governor of the Bank has repeatedly said, the most important thing we can do to help people and the economy in this crisis is for the government to take strong fiscal action,” Trudeau said.
Following a call with G20 leaders on Thursday, Trudeau emphasized the need for global co-ordination on the COVID-19 pandemic response, including ensuring supplies flow and a vaccine is developed.
Plans to stay in self-isolation
The prime minister has now been in self-isolation for just over two weeks, after his wife Sophie contracted the virus. Trudeau has said she is feeling better and neither he nor his kids have demonstrated any symptoms.
Asked whether he intends to stay in self-isolation, as he continues to address Canadians from outside his front steps at Rideau Cottage, Trudeau said that for now he said he is happy to stay home, given he is asking Canadians to work from home as much as possible.
As of when Trudeau concluded his remarks, there were 4,181 confirmed cases of COVID-19 in Canada, and 39 people had died.