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Concerns Despite Announced Federal Government Extension of Wage and Rent Subsidies for Retailers and Businesses in Canada [Interview]

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The Canadian Federation of Independent Business is relieved that some broad-based business supports will remain in place following Thursday’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.

Dan Kelly

“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,” said Dan Kelly, President and CEO of the CFIB, Canada’s largest association of small and medium-sized businesses with 95,000 members across every industry and region.

“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, dry cleaners all continue to suffer massive COVID-related losses but may be ineligible for the higher levels of support.

“New businesses that started after March 2020 must 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.”

Kelly said 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. 

Hiring Sign on Queen Street – Photo by Dustin Fuhs

“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,” he said.

“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” 

Mark Agnew, the Canadian Chamber of Commerce’s Senior Vice President, Policy and Government Relations, said businesses in the hardest-hit sectors continue to face capacity restrictions that prevent them from operating at full capacity. 

“No business operator opens with a viable model based on half capacity, and these companies need continued support before the 2022 tourism season to ensure they do not permanently close their doors. The new retooled government support programs announced today will allow businesses who continue to be impacted by public health restrictions to survive until they can recover.  This is the fair thing to do for businesses that are playing their part to protect public health,” he said.

“We look forward to seeing further details of these newly announced programs and urge Parliamentarians to expeditiously consider legislation once Parliament resumes.”

In a blog on its website, the Chamber said ongoing public health measures and travel restrictions have significantly reduced the capacities of many businesses, whose operations will once again be viable after the pandemic.

Facing these continued public health restrictions and a highly volatile and uncertain outlook, support should continue for the hardest hit sectors that still face situations far worse than those experienced for other sectors during the depths of the Global Financial Crisis in 2008-09. Ending government support programs prematurely would be self-defeating, leading to waves of job loss and unnecessary hardship that would hamper the ability of Canada’s economy to fully recover after public health measures are lifted.

“The on-the-ground reality is that we are still far from normal business operations, and the majority of businesses continue to struggle. In Statistics Canada’s 2021Q3 Canadian Survey on Business Conditions (undertaken in July and August 2021), almost one-in-five businesses (19 per cent) reported that they cannot take on any more debt, primarily due to concerns about cash flow and elevated uncertainty about future sales. Perhaps not surprisingly, corporate debt constraints for companies are highest in the hardest hit sectors including: accommodation and food services (27 per cent); and arts, entertainment and recreation (26 per cent),” said the Chamber.

SHOP LOCAL SANDWICH BOARD OUTSIDE STORE.

“According to the Canadian Federation of Independent Business, most small businesses (60 per cent) continue to operate below pre-pandemic sales levels, while 55 per cent are not fully staffed, and one-in-four are not even fully open for business. We are seeing this pain acutely in the hardest-hit sectors, where employment and real GDP remain well below pre-pandemic levels . . . The situation remains dire indeed with employment still more than 10 per cent below pre-pandemic levels in sectors that are difficult to physically distance, such as accommodation and food service (-15 per cent, or 180,300 jobs); and “other services” (-12 per cent or 95,500 jobs). During the depths of the Global Financial Crisis in 2008-09, the worst comparable sectoral employment declines were less severe than those currently impacting these sectors.”

In a statement, Restaurants Canada said the fact that restaurants are being included in the new targeted approach to the rent and wage subsidy programs is a positive sign, reflecting how the organization has been at the table with the federal government throughout the pandemic, ensuring the needs of the uniquely hard-hit sector have been heard by key decision-makers.

“However there is still work to do so that the eligibility requirements reflect the realities of our industry. It’s critically important that businesses who desperately need this support don’t lose access to it if they have been operating at 39 per cent revenue loss for months on end and not 40 per cent,” said the organization. “Restaurant operators are innovative and resourceful, but the COVID-19 crisis has stretched their resiliency to the limits. 

According to survey data from Restaurants Canada:

  • Eight out of 10 restaurants have been operating at a loss or barely scraping by with a profit margin of two per cent or less throughout the pandemic; nearly half of all foodservice businesses have been consistently losing money ever since the first wave of lockdowns ended last year;
  • Seven out of 10 restaurant operators are still receiving the federal wage and/or rent subsidy, and if they lose access to these critical sources of support nearly 80 per cent said they will struggle to keep paying existing staff/have to cut staff hours. More than half said they will struggle with hiring back staff/hiring new staff;
  • Eight out of 10 respondents to the latest Restaurants Canada survey said their establishments were still experiencing less traffic from July to September compared to before the pandemic;
  • 52 per cent said their guest counts were more than 30 per cent lower in Q3 2021 compared to Q3 2019;
  • 18 per cent said their guest counts were more than 50 per cent lower in Q3 2021 compared to Q3 2019.

“With colder weather coming, the fate of Canada’s 90,000+ restaurants is still uncertain. At least 10,000 establishments have already closed. The rest need government support to help them survive the fall and winter so they can continue feeding our recovery,” said Restaurants Canada.

The Canadian Taxpayers Federation, however, applauded the federal government’s announcement that temporary COVID subsidies are ending.

“Reining in the COVID-19 spending is a good first step towards taking the $1-trillion federal debt seriously,” said Franco Terrazzano, Federal Director with the CTF. “Taxpayers need to see more details, but Finance Minister Chrystia Freeland deserves credit for acknowledging these subsidies were always supposed to be temporary.

“This extra spending was always sold to Canadians as temporary supports and taxpayers can’t afford for these programs to become permanent red ink. Reining in the temporary COVID-19 borrowing and making sure this spending is more targeted and less expensive is a good first step.”

The CTF cited the Parliamentary Budget Officer’s estimate that COVIDspending cost $271 billion in 2020. It said the federal government is more than $1 trillion in debt – meaning that each Canadian’s average share of the debt is about $30,000. 

The wage subsidy, rent subsidy and Lockdown Support programs were set to expire on October 23..

On Thursday, Chrystia Freeland, Deputy Prime Minister and Minister of Finance, announced that the government is taking targeted action to create jobs and spur economic growth by “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.”

Dine on 3 at Yorkdale Shopping Centre – Photo by Dustin Fuhs

The government said it 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.

To ensure that workers continue to have support and that no one is left behind, the government said it is proposing to: 

  • Extend the Canada Recovery Caregiving Benefit and the Canada Recovery Sickness Benefit until May 7, 2022, and increase the maximum duration of benefits by two weeks. This would extend the caregiving benefit from 42 to 44 weeks and the sickness benefit from four to six weeks.
  • Establish the Canada Worker Lockdown Benefit which would provide $300 a week in income support to eligible workers should they be unable to work due to a local lockdown anytime between October 24, 2021 and May 7, 2022.

“Our economy is rebounding and we are winning the fight against COVID. It is also true, though, that the recovery is uneven and the health measures that are saving lives continue to restrict some economic activity,” said Freeland.

“That is why today we are announcing what we very much hope and believe is the final pivot in delivering the support needed to ensure a robust recovery – for everyone. Our focus is to protect and create jobs. And ensure the strongest possible recovery for everyone. And we will continue to deliver on this promise we have made to Canadians.”

The government said the Canada Emergency Wage Subsidy has helped more than 5.3 million Canadians keep their jobs, with over $95 billion in support already paid out through the program to help employers rehire workers and avoid layoffs. 

The Canada Emergency Rent Subsidy and Lockdown Support have helped more than 210,600 organizations with over $6.8 billion in support for rent, mortgage, and other expenses, it said.

Details of the programs can be found here

Article Author

Mario Toneguzzi
Mario Toneguzzi, based in Calgary, has more than 40 years experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald covering sports, crime, politics, health, faith, city and breaking news, and business. He is the Senior National Business Journalist with Retail Insider in addition to working on his own as a freelance writer and consultant in communications and media relations/training.

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