COVID-19 benefits kept in place, but set to taper off
Supports in place through the summer
With the third wave of COVID-19 hitting Canada, leading to record case counts, swamped hospitals and new lockdowns, the federal government is keeping emergency supports in place through the summer.
Canada recorded nearly 8,000 new cases of COVID-19 on Monday, more than half of them in hard-hit Ontario, where ICU beds are becoming increasingly scarce and the province is under a tight stay-at-home order.
In the federal budget released Monday, Finance Minister Chrystia Freeland, said the government needs to offer support so businesses can weather the storm and emerge from it when COVID is finally beaten.
“It means providing Canadians and Canadian businesses with the support they need to get through these tough, third-wave lockdowns, and to come roaring back when the economy fully reopens,” she said in her budget speech.
The government is keeping the Canada Recovery Benefit in place. The program was a replacement for the initial $2,000 a month program for people out of work due to the pandemic, who were not covered by employment insurance.
While the benefits will continue, they will be made less generous come July, dropping to $300 per week from $500 now. Extending the CRB, and a similar benefit for people who had to leave their job to care for someone, will cost $2.5 billion.
The government will extend both the wage subsidy and the rent subsidy until the end of September; the deadline the Liberals have given for when they expect all Canadians to be fully vaccinated.
The wage and rent subsidies will be extended under the same terms they have operated under since last overhauled, gradually tapering off as businesses get more of their revenue back. But the government is also adding a time component, gradually phasing out the benefits through the summer months.
By September, even if a business was still seeing revenue reductions of 70 per cent it could only receive 20 per cent of its wage and rent in subsidies.
The budget also takes indirect aim at companies that paid out higher executive compensation this year, but still took the wage subsidy. Any company that takes the wage subsidy after June and pays higher executive compensation in 2021 than it did in 2019 will have to give the money back.
“This is in recognition that the program is meant to serve workers and that, during recovery, businesses boosting top executive pay have clearly demonstrated that they have the resources to support workers,” reads the budget document.
The total cost of extending these two programs is estimated at $12.1 billion and the government is leaving the option to extend them into November.
The government is also adding a hiring benefit that will give businesses the ability to get similar benefit to the wage subsidy for new employees or people they hire back from previous layoffs, having the government cover part of those new employees into November.
In a press conference, before the budget was released, Freeland said it was about making sure Canada exited the recession quickly.
“We need to punch our way out of the COVID recession that means making sure lost jobs are brought back as quickly as possible.”
Trevin Stratton, the chief economist and senior vice president of policy at the Canadian Chamber of Commerce, said extending these relief programs for business like restaurants and tourist attractions is going to be key.
“They’re going to provide a vital lifeline for businesses, particularly small businesses, those in those hardship sectors, as they struggle right now through a third wave,” he said.
Stratton said he is confident consumers are ready to help these firms get back on their feet, but with so many still suffering in lockdowns they need a bridge.
“There is pent up demand that will be released once we get the pandemic under control. What we need are supports until we get to that point,” he said.
Canada’s vaccine rollout has lagged many countries in the world in large part because it doesn’t have domestic manufacturing capacity, which the government is pledging to address in the budget with $2.2 billion over the next seven years to rebuild Canada’s manufacturing capacity.
The money is spread across support for new research and clinical trial programs, but also to help build manufacturing capacity across the country.