Liberals Introduce New Targeted Pandemic Aid Bill for Businesses, Workers

The Liberal government introduced a new pandemic aid bill that would maintain some financial supports for businesses and workers until at least the spring of 2022. Bill C-2, if passed, would deliver several new targeted programs, re-created from pre-existing benefits introduced at the start of the pandemic.

As previously announced, the Tourism and Hospitality Recovery Program and the Hardest-Hit Business Recovery Program would provide aid through wage and rent subsidies. The Tourism and Hospitality Recovery Program would apply to hotels, tour operators, travel agencies and restaurants with a subsidy rate of up to 75%, while the Hardest-Hit Business Recovery Program would apply to other businesses that have faced “deep losses” with a subsidy rate of up to 50%.

Notably, in order to qualify for the former, businesses would have to show a 12-month revenue loss of at least 40% and a current-month revenue decline of the same amount. For the latter, businesses would have to show a 12-month revenue loss of at least 50% and a current-month revenue decline of the same amount.

The government is also proposing a Local Lockdown Program to assist businesses impacted by government-imposed lockdowns. These companies would be eligible to receive the maximum subsidy amount.

For workers, the bill details a new Canada Worker Lockdown Benefit, replacing the popular Canada Response Benefit. It’s also geared towards those whose work is directly impacted by lockdowns. It’s available to workers ineligible and eligible for Employment Insurance (EI), as long as they aren’t paid benefits through EI during the same period.

The Liberals are proposing to extend and boost the eligible duration of the Canada Recovery Caregiving Benefit and the Canada Recovery Sickness Benefit. The former would move from 42 to 44 weeks, and the latter would move from four to six weeks.

Lastly, the Canada Recovery Hiring Program would be prolonged for employers with revenue losses above 10% The subsidy rate for this benefit would increase to 50%. All programs would be extended until May, 7, 2022.

In October, Deputy Prime Minister and Finance Minister Chrystia Freeland announced that a number of COVID-19 supports were expiring and being replaced with more “targeted” programs with a price tag of $7.4 billion.

The minister said that she hopes this is the last round of pandemic aid extensions. “I see this legislation as very much the last step in our COVID-19 support programs. It is what I really hope and truly believe is the final pivot,” she said.

Business Response

The Canadian Chamber of Commerce weighed in, stating that they’re pleased the Liberals made the proposed legislation a priority. However, Dan Kelly, president and CEO of the Canadian Federation of Independent Business (CFIB), whose been a vocal advocate for an extension of business aid, had mixed reviews, namely as it relates to the eligibility criteria for business supports.

“The Canadian Federation of Independent Business is disappointed the federal government has not changed the 40% to 50% minimum revenue loss requirement to access small business support programs which means most small businesses will be cut off from accessing them,” a statement reads. “CFIB is pleased that the government has added many sectors to its list of those that can access the more generous Tourism and Hospitality Recovery Program, such as gyms, arts and recreation and wedding/events.”

Source: CTV News

Stock Markets Rattled by Fears About Emerging COVID Variant

Global stock markets and oil prices tumbled on November 26 after South Africa identified a new, potentially fast-spreading coronavirus variant and the European Union proposed suspending air travel from the region. Britain promptly banned flights from South Africa and five nearby countries. Austria imposed a 10-day lockdown while Italy restricted activity by unvaccinated people. Americans were advised by their government to avoid Germany and Denmark. Belgium and Israel have already reported a handful of people who have tested positive to the new variant, and the slew of data points has added up to a flurry of uncertainty.

In New York, the Dow Jones Industrial Average lost more than 2.5%, its biggest decline in more than a year, to close at 34,899. In Toronto, the TSX Composite Index lost almost 500 points or, 2.25%, to finish the day at 21,125. 

“This news has completely overshadowed early anecdotal reports of strong in-person and online traffic for Black Friday sales,” said Colin Cieszynski with SIA Wealth Management in Toronto. November 26 would typically have been a quiet day on U.S. stock markets because of the Thanksgiving holiday on November 25, as stock markets in New York are scheduled to close at 1 p.m.

Oil and travel companies hit hardest

That thin trading could potentially make market anxieties worse as there is a smaller pool of buyers and sellers available to offset outliers. “What you’re seeing is the absence of a lot of active managers in the U.S. and a lot of concerned panic selling … around the world,” said Dennis Mitchell, CEO of Starlight Capital, in an interview.

The VIX — which is known as Wall Street’s “fear index” because it measures volatility — spiked by more than 40% to above 26 points. That’s its highest level since January 2021, before vaccination campaigns started to ramp up.

Anything related to energy or travel and tourism is being hit especially hard as investors digest the prospect of another round of limitations on international travel. The North American benchmark oil price known as West Texas Intermediate lost more than $10 US to close at just over $68 a barrel. That’s the worst one-day performance for oil since the price briefly plummeted below zero in April 2020.

Jeremy McCrea, managing director at Raymond James Energy Research, says while the anxiety is real, some of the oil selling is coming from traders just locking in profits from the recent run while they can. “Given how much oil prices have moved up … there’s a lot of profit taking, a lot of speculators saying, ‘I’m not quite sure what this really means,’ ” he said in an interview.

“These announcements have sparked a sell-off in travel-related stocks (airlines, cruise lines, hotels etc.) and has sparked a rally in stay-at-home and vaccine stocks,” Cieszynski said. Pfizer shares rose nearly seven per cent while Moderna shares jumped more than 22 per cent.

Lisa Kramer, a professor of finance at the Rotman School of Management in Toronto, says investors are reacting with a fear similar to what happened at the start of the pandemic. “It isn’t uncommon when we have dramatic news come out for some people to overreact,” she said in an interview. “And it doesn’t take a lot of people panicking for markets to react strongly.”

Cryptocurrencies sold off heavily as investors ran toward things like gold, bonds and the U.S. dollar that are perceived to be safer stores of value. “In times like this, we get a true sense of what investors consider to be real, reliable safe havens and bitcoin is off eight per cent today, which has delivered a fatal blow to its safe-haven credentials, putting an end to another crypto myth that has surfaced over the years despite there being zero evidence to back it up,” analyst Craig Erlam with foreign exchange firm Oanda said.

Source: CBC