Changes to Pandemic Business Supports As Wage Support Ends

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CANADIAN MONEY

OTTAWA – BUSINESS – The federal government is cancelling some of the supports in place during the pandemic.

Chrystia Freeland, Deputy Prime Minister and Minister of Finance, announced that the government is taking targeted action to create jobs and spur economic growth. This includes moving from the very broad-based support that was appropriate at the height of lockdowns to more targeted measures that will provide help where it is needed, while prudently managing government spending.

The government is proposing the following changes to business support programs:

  • Extend the Canada Recovery Hiring Program until May 7, 2022, for eligible employers with current revenue losses above 10 per cent and increase the subsidy rate to 50 per cent. The extension would help businesses continue to hire back workers and to create the additional jobs Canada needs for a full recovery.
  • Deliver targeted support to businesses that are still facing significant pandemic-related challenges. Support would be available through two streams:
    • Tourism and Hospitality Recovery Program, which would provide support through the wage and rent subsidy programs, to hotels, tour operators, travel agencies, and restaurants, with a subsidy rate of up to 75 per cent.
    • Hardest-Hit Business Recovery Program, which would provide support through the wage and rent subsidy programs, would support other businesses that have faced deep losses, with a subsidy rate of up to 50 per cent.
    • Applicants for these programs will use a new “two-key” eligibility system whereby they will need to demonstrate significant revenue losses over the course of 12 months of the pandemic, as well as revenue losses in the current month.
    • Businesses that face temporary new local lockdowns will be eligible for up to the maximum amount of the wage and rent subsidy programs, during the local lockdown, regardless of losses over the course of the pandemic.
    • These programs will be available until May 7, 2022, with the proposed subsidy rates available through to March 13, 2022. From March 13, 2022, to May 7, 2022, the subsidy rates will decrease by half.

The Canadian Federation of Independent Business (CFIB) says that their members are relieved that some broad-based business supports will remain in place following today’s federal announcement on wage and rent subsidies for businesses affected by COVID-19, but concerned that the eligibility rules and thresholds will put them out of reach for many.

Business Commentary on Changes

Dan Kelly, President, Canadian Federation of Independent Business (CFIB) says, “Restaurants and tourism businesses will need to see a revenue drop of 40 per cent and all other businesses a 50 per cent drop in order to access these critical programs. This means small businesses that see revenues lower by one-third will not be able to access the previous wage and rent subsidies – potentially signing them up to lose money every single day they are open and putting them at risk of permanent closure”.

Kelly says that the CFIB will be pushing the federal government to be flexible in how it defines businesses in the tourism, restaurant and hospitality sectors for its targeted programs. Gyms, recreation facilities like bowling alleys, dance studios, drycleaners all continue to suffer massive COVID-related losses but may be ineligible for the higher levels of support.

The CFIB will be lobbying to see that new businesses that started after March 2020 be included in any new government support programs if they meet the eligibility criteria. As it stands, they have not been able to access any of the government support programs, despite facing the same challenges and restrictions as other businesses.

The extension of the Canada Recovery Hiring Program to May 2022 and its return to 50 per cent is more welcome news for small businesses that are in a position to hire back staff. CFIB is also pleased that the government is pivoting to supporting workers affected by lockdowns, as many businesses are facing a major labour shortage, which is throttling their recovery. The new support program for businesses facing local lockdowns will also restore some much needed certainty for businesses heading into the winter months.

CFIB appreciates that the government has shown willingness to listen to the needs of small business owners and is counting on the Deputy Prime Minister to make important changes to ensure the programs will continue to do their job.