The federal government is promising a 75 per cent wage subsidy for qualifying small and medium-sized businesses to help them survive the COVID-19 crisis and keep their workers on the payroll.
Prime Minister Justin Trudeau announced the measure Friday at a press conference outside his Ottawa residence, saying his government recognizes that it needs to go much further in the “climate of uncertainty” than its original plan for a 10 per cent wage subsidy for smaller businesses.
“This means that people will continue to be paid even though their employer has had to slow down or stop operations because of COVID-19,” he said. “We’re helping companies keep people on the payroll so that workers are supported and the economy is positioned to recover from this. That is our priority.”
The prime minister had few details to share about which businesses will qualify or about the total cost, suggesting more information will come early next week. But he said the measure will be retroactive to March 15.
Trudeau also urged businesses that may have recently laid off employees to hire them back.
“We are demonstrating that we are there for you to help us through this moment, so we can come back once we are all safer, stronger than ever before,” Trudeau said.
The Canadian Federation of Independent Business (CFIB), the NDP, and the Green Party all called earlier this week for a 75 per cent wage subsidy for businesses, arguing that the relationship between employers and employees needs to be maintained so staff and businesses are still there when the economy rebounds.
Dan Kelly, the president and CEO of the CFIB, tweeted that the new plan looks “solid.”
“I’ve already heard from some small businesses who report they will rehire laid-off workers to keep them on payroll. This is significant,” he added.
The prime minister also unveiled a new measure — the Canada Emergency Business Account — that will see banks offer $40,000 loans, which will be guaranteed by the government, to qualifying businesses.
“The loan will be interest-free for the first year, and if you meet certain conditions, $10,000 of it will be forgivable,” he said.
The feds are also freeing up an additional $12.5 billion through Export Development Canada and the Business Development Bank of Canada to help small and medium-sized businesses with cash flow needs, he said.
GST and HST payments will be deferred until June, as will duties and taxes owed on imports. These moves are equivalent to giving $30 billion in interest-free loans to businesses, Trudeau said, allowing companies to keep the money they would have sent to the government and use it instead for immediate needs.
The measures were announced on the same day that the Parliamentary Budget Officer projected the federal deficit could soar to more than $112 billion in the coming fiscal year because of increased government spending.
Trudeau said Canada remains in a “good fiscal position” to respond to exceptional times with exceptional measures.
Morneau: Wage subsidy would apply for up to 3 months
Finance Minister Bill Morneau told reporters in Ottawa Friday that the wage subsidy will apply for up to three months. The government is focused on “preserving” the connection between employers and employees until matters return to normal, he said.
Asked what it will take for businesses to qualify for the benefit and if there is a cap on how much money they can get, Morneau conceded that the plan is still being ironed out.
“I think what the prime minister said this morning — and it is important for us to recognize — is that we do have to provide more details on this,” Morenau said. “We will be working over the course of the weekend to make sure those details are available. We appreciate it’s an urgent and important issue for so many businesses.”
He would not say if the measures could be extended beyond three months, because “nobody can really predict the depth of the duration of this challenge.”
At a separate press conference in Ottawa, Deputy Prime Minister Chrystia Freeland said small and medium-sized businesses should not be “penalized” because of the pandemic.
“We understand … that the health situation is likely to get worse before it gets better, and we understand that the economic impact is serious,” Freeland said. “So, we know that the government has a duty to do whatever it takes to allow our economy to weather the storm.”
Treasury Board President Jean-Yves Duclos added: “We have never seen a Canadian government in the history of the country, certainly not since the Second World War, put in place these kinds of emergency measures.”
Friday morning, the federal government reported 4,443 cases of COVID-19 and 39 deaths. More than 165,000 people had been tested.
With a file from The Canadian Press