Canada Cuts Costs for Wage Subsidy as Workers Opt for Direct Aid

Canada cut the projected cost of its wage subsidy program while boosting the price tag for direct support to individuals, suggesting a slow return to work in the wake of COVID-19. The federal government’s wage subsidy program, meant to be its flagship measure to buffer the economy from the pandemic, will cost $45 billion, 38% less than a previous estimate, according to an update from the finance department. The cost of the Canada Emergency Response Benefit (CERB) is seen swelling to $60 billion from $35 billion. The CERB pays $2,000 per month to workers who’ve lost their jobs or income due to the pandemic.

The shift indicates Canadians may remain unemployed for longer than the government anticipated. Canada shed two million jobs in April, the highest number since 1982. Prime Minister Justin Trudeau has encouraged companies to rehire their laid-off employees using the wage subsidy, which covers as much as 75% of a worker’s pay with a maximum payment of $847 a week. 

Ottawa’s plan had been to reduce the amount of people receiving CERB while simultaneously increasing the number of companies using the wage subsidy. However, companies have been slow to take up the subsidy. Business leaders have criticized the government for delaying its implementation, which they say forced companies to let go of workers and they can’t afford to hire them back right now.

The cost of total direct measures to support the economy has increased to $152.7 billion, according to the update. Costs are expected to continue to rise as the Finance Ministry has yet to calculate how much extending the two programs will cost, said the update. The government is currently conducting a four-week consultation with businesses and other stakeholders to understand how their programs are working and how to improve them.

Source: The Star

Federal Government to Fast-Track $2.2b to Help Municipalities Hit Hard by Pandemic 

The federal government is accelerating the delivery of infrastructure cash to help struggling municipalities taking a financial hit from COVID-19 — but mayors say they need much more to avoid mass layoffs, property tax hikes and service cuts.  Prime Minister Justin Trudeau said the $2.2 billion in annual infrastructure funding for communities, paid out of the gas tax fund, will be delivered in one payment in June. That gives municipalities earlier access to previously allotted money.  “This is a start,” he said.  Trudeau said the federal government will work with the provinces, which have jurisdiction over municipalities, to provide more emergency aid.  “The fact is we need to do more, and we will do more,” he said.

Communities will have the flexibility to use the funds for capital projects that meet local needs, such as expansion of high-speed internet networks, improvements to water and road systems and construction of new bike and walking paths. But mayors say their cash-strapped cities need operating funds immediately to offset revenue losses from falling transit and service fees.  Vancouver Mayor Kennedy Stewart said his city already has had to lay off 1,800 people and is projecting losses of $300 million this year.

He called today’s announcement a “welcome first step,” but warned that cities need operational funds to get the capital projects off the ground. The whole national economy runs through cities,” he said in an interview with the CBC’s Rosemary Barton. “If we don’t have the staff to approve permits, to do building inspections, to get the engineers and the construction teams going, then the whole economy creeps to a stall.”

Winnipeg Mayor Brian Bowman said cities can’t run deficits because they are restrained by balanced budget legislation. He said officials face “fundamental choices” between raising taxes and cutting services. “These other two levels of governments need to coordinate in a way that is unprecedented and rises to the occasion and the need right now in a pandemic,” he told Barton.

The Federation of Canadian Municipalities (FCM) has said local governments are facing a short-term financial gap of $10-15 billion because of a sharp decline in transit fares and user fees and deferred property taxes.  The FCM has pressed the government for $10 billion in emergency operating funding, with allocations to be based on population and transit ridership.  FCM president Bill Karsten said said the “modest, preliminary step” announced today doesn’t address the stark choices municipalities face, but he is encouraged by Trudeau’s promise to come forward with more supports.  

The NDP’s critic for infrastructure and communities Taylor Bachrach said the government must do more to help municipalities avoid deep cuts to the services on which Canadians rely.  “Not only is the amount insufficient to address the financial crisis Canada’s cities face, today’s announcement is simply an advance on funds municipalities are already scheduled to receive for capital projects. What municipalities need most, and have been calling for, is help with operating shortfalls.”  

Cities also are facing revenue shortfalls related to tourism. Ottawa, for example, could lose out on about $1.4 billion due to the cancellation of festivals, meetings and other events.  On May 31, the government announced millions of dollars in new funding to promote domestic travel and tourism.

Source: CBC

Businesses, Landlords Say Federal Rent Help Falling Short

Both small business owners and their commercial landlords in Ottawa are complaining a federal funding program meant to help them through the COVID-19 crisis is falling short.  

Jo Arbuthnot is getting ready to reopen her boutique, Flamingo Boutique, next to the Parkdale Market, after being closed since March. She had hoped for help from the Canada Emergency Commercial Rent Assistance (CECRA) program, but said her landlord won’t apply.

CECRA offers unsecured, forgivable loans to eligible commercial property owners covering a minimum of 50% of the rent their tenants owe. In exchange, the landlord must reduce the rent they charge their small business tenants by at least 75% for April, May and June.

“I think it should be mandatory. I think that’s the only way to make landlords apply for it,” Arbuthnot said. Because her landlord didn’t apply for CECRA, she’s had to rely on online sales alone to cover her rent. “It just means the bank account is empty, just means every time I’m packing an order online, all I’m doing is covering my rent. I’m working so hard to cover my rent.”

In an email to CBC News, Arbuthnot’s landlord, Doug Edwards, said he would support the federal program if it required others to take a similar financial hit. “I feel that for this program to be equitable, all those involved should also reduce their charges by the same 25%,” he wrote. “This should include landlords, the landlords’ mortgage lenders, the City as it relates to realty tax charges, and utility providers, and I believe participation should be mandatory.”  

The Building Owners and Managers Association of Ottawa is in favour of help for landlords, and has been advocating for tax breaks to help small businesses.  “We’re still concerned about the amount of the arbitrary 25% figure that’s deemed as the profit that landlords make on their building,” said Dean Karakasis, the association’s executive director.  “That number is pretty out of whack for most landlords in terms of the actual profit, so they’re taking a bigger hit than the government seems to think they’re taking.”  

Arbuthonot isn’t the only one worried about how to make ends meet.  “We’ve already lost at least five businesses that we know of, and it usually happens at the end of the month that we find out that someone is pulling the plug,” said Dennis Van Staalduinen, executive director of the Wellington West Business Improvement Area.

The Ottawa Coalition of Business Improvement Areas is hearing from its members that the majority of landlords are not applying for the rent relief program, although some are trying to make alternative plans including postponing rent.  “They’re still accumulating the rent at a time when they’re not not making any money,” said Mark Kaluski, chair of the coalition.  “It’ll be a long and slow recovery process. So even the ones who are making accommodations — it’s still not really going to help businesses in the long term.”

Source: CBC