‘No end in sight’: Five industries that may need bailout amid health crisis
When all is said and done, it seems likely the economic damage wrought by the new coronavirus and the money spent to undo it could rival that of the global financial crisis a decade ago.
During that crisis, governments spent hundreds of billions of dollars bailing out the financial industry, as well as billions more to prop up two of the world’s biggest automakers.
“The government will do whatever it takes to support Canadians and we are prepared to take further action as necessary to meet the challenges ahead,” declared Finance Minister Bill Morneau in a news release on Friday.
The feds have so far outlined more than $565 billion in stimulus it is prepared to pump into companies and the financial system. Most of that will come from the slew of measures being deployed to provide “credit and liquidity support.”
There is also a $50-billion mortgage purchase program on tap, with the federal government announcing tweaks Friday that could allow loans previously not insured against borrower default to be insured and bought by Canada Mortgage and Housing Corp.
The measures to date are not necessarily aimed at any one specific company or industry, but industries have begun making noise about needing support. Here are a few of the requests thus far:
OIL AND GAS PRODUCERS
Canada’s energy industry has been hit with the double whammy of the coronavirus and a fast drop in oil prices, both of which are making worse what has already been a challenging environment for domestic firms.
Alberta had begun unveiling its relief plan, which follows Premier Jason Kenney’s previous suggestion of using stricter production limits for oil in the province to boost prices and shield government revenues. Other reports have suggested that the feds are working on a multibillion-dollar bailout for the sector.
RESTAURANTS
Many food-service businesses across the country are already considering closing for good amid the COVID -19 crisis, according to a Restaurants Canada survey.
More than 90 per cent of those surveyed by the industry group said they were concerned about the next three months and most “said they need help from government,” a news release stated.
The type of assistance restaurants are seeking are more flexible financial arrangements, such as “payment-free periods,” as well as assistance to avoid having to lay off staff when revenue dries up.
“Our immediate priority is to maintain liquidity for food service businesses, who employ 1.2 million workers across the country,” said Shanna Munro, Restaurants Canada president and CEO, in the release.
AIRLINES
According to the International Air Transport Association, the estimated amount of assistance required globally by airlines will be up to $200 billion.
At a more local level, the National Airlines Council of Canada has recommended measures “addressing airline liquidity,” as well as relief from various government charges, such as navigational fees.
“The scale of the current industry crisis is much worse and far more widespread than 9-11, SARS or the Global Financial Crisis,” said Alexandre de Juniac, CEO of the IATA, in a news release Thursday.
TOURISM
The Tourism Industry Association of Canada on Friday warned that “without immediate support from the federal government,” the sector would see catastrophe.
An internal analysis done by TIAC found nearly 778,000 jobs could be lost and 70 per cent of tourism revenues could vanish without speedy federal assistance.
Among the requests made by the tourism industry is as much as $6 billion per month in “specialized or fast-tracked liquidity options” to keep companies in business.
“Outside of the health sector, Canada’s tourism and travel industry is the most severely impacted sector in Canada from the ongoing measures enacted to curb the COVID-19 global pandemic — and unfortunately, there is no end in sight,” said Charlotte Bell, CEO of TIAC, in a news release.
TECH
The Council of Canadian Innovators has reportedly called for the federal government to establish a low-interest lending program for small and medium-sized firms that would be worth up to $100 billion.
“We must act now!” tweeted John Ruffolo, vice-chair of the council.
Meanwhile, Technation, which represents the information-technology sector in Canada, has asked that IT services and infrastructure be deemed essential in the event of shelter-in-place orders, as well as for workers in the industry to be exempted from international travel restrictions.