The federal government is facing calls from business and labour leaders to extend emergency COVID-19 benefits before they expire on Oct. 23, a move that was not explicitly promised in the Liberal Party’s election platform.
Those who support extensions, including the federal NDP, note that the Canadian economy has not yet fully recovered from the pandemic, and that some parts of the country are currently experiencing an alarming fourth wave of the virus.
The most popular pandemic-relief programs for business – the government’s wage and rent subsidies – are scheduled to end Oct. 23, along with a suite of programs for individuals who lost work because of COVID-19, including the Canada Recovery Benefit, the Canada Recovery Sickness Benefit and the Canada Recovery Caregiving Benefit.
Perrin Beatty, the president of the Canadian Chamber of Commerce, said too many businesses are still coping with public-health limits that prevent them from being self-sustaining.
“It’s critical [the subsidies] continue,” Mr. Beatty said. “Having brought them this far, we can’t allow people to drown 50 feet from shore.”
Many businesses have relied on federal funds to make up pandemic-related shortfalls. According to government data, the wage subsidy, which is intended to help employers make payroll, has so far sent $93.4-billion to 4.4 million applicants, while the rent subsidy, which covers a percentage of a business’s rent, has paid $6.5-billion to 1.7 million applicants.
The massive subsidies to workers and businesses during the pandemic are the main drivers of the large federal deficit, which was an estimated $354.2-billion in 2020-21, according to the April federal budget. The budget projected this year’s deficit would be $154.7-billion, while the Liberal Party platform estimated that it would be $156.9-billion.
Earlier this year, the federal government unveiled an alternative to the wage subsidy, called the Canada Recovery Hiring Program, which covers some of the cost of taking on new employees. The Finance Department and Canada Revenue Agency declined to provide statistics for that program.
During the recent election campaign, the Liberals did not promise to extend all COVID-19 benefits. Instead, the party’s platform included $405-million to extend the Canada Recovery Hiring Program. The party also promised $689-million to provide temporary wage and rent supports to the tourism sector only. The platform said those temporary supports would provide eligible businesses with reimbursement for up to 75 per cent of their expenses.
Business groups that spoke to The Globe and Mail, including the Canadian Chamber of Commerce, the Canadian Federation of Independent Business, the Retail Council of Canada, Restaurants Canada and the Tourism Industry Association of Canada, all suggested most of their members preferred to access the wage subsidy instead of the hiring benefit.
Beth Potter, president of the Tourism Industry Association of Canada, said she was pleased to see the help for her industry, because so much travel is still restricted.
“We’re looking at how we get these businesses through to next summer,” she said.
However, other sectors have also been slow to recover. Karl Littler, senior vice-president of public affairs at the Retail Council of Canada, said the retail industry has been uneven: Some stores have seen record sales, while others, such as apparel retailers or shops that rely on foot traffic from office buildings, have slumped as a result of the shift to working from home.
Mr. Littler said the Retail Council favours extending the wage and rent subsidies for as long as some segments still need them. And he said the organization supports extensions to the government’s personal support programs, despite warnings from some business groups earlier in the pandemic that they could lead to people turning down work.
“We think it is simplistic for people to lay the blame for a tight labour market on those programs,” Mr. Littler said. He cited other factors, such as workers leaving industries that faced lockdowns.
Canadian Labour Congress president Bea Bruske likewise said the personal support programs should be extended.
“There’s definitely still a need. There are still many people who are unable to return to the work force for a variety of reasons,” she said, adding that subsidies should be complemented with new training programs.
Asked about the government’s plans for its COVID-19 supports, Alex Lawrence, a spokesperson for Finance Minister Chrystia Freeland, pointed to the specific promises in the Liberal platform to extend the hiring program and to provide wage and rent subsidies “for the hardest hit businesses.” He did not specifically address how the government will handle the looming expirations of the other existing programs.
“Our government is always looking carefully at the COVID situation to determine the best way forward,” he said in a statement. “We know that the fourth wave is hitting some parts of the country very hard and, as we have throughout the crisis, we will do whatever it takes to support people and businesses.”
The Liberals were re-elected last month with a minority of seats in the House of Commons and will require the help of at least one other party to pass legislation.
The Conservative Party declined to provide a specific comment about extending the programs.
“Conservatives have continually supported measures to ensure those struggling the most in the pandemic have the supports they need,” Conservative MP Michael Barrett said in a statement. “We want to see an economic recovery for Canadians in all regions and all sectors.”
The Conservative campaign platform did not promise to extend the existing COVID-19 support programs, but it did propose several new programs aimed at helping hard-hit sectors and workers. These included a temporary “super EI” to provide more generous Employment Insurance benefits during a recession, and a doubling of the Canada Workers Benefit.
The NDP platform promised $3.2-billion to extend the Canada Recovery Benefit and $1.8-billion to extend the Canada Emergency Wage Subsidy and the Canada Emergency Rent Subsidy.
“We believe that COVID is not over and the supports are needed. And that’s why we explicitly referenced that in our platform,” NDP MP and finance critic Peter Julian said. “The idea [that] in a few weeks time the wage subsidy should be eliminated is simply wrong-headed.”
A document explaining the federal government’s pre-election decision to extend the expiry deadline for recovery benefits for individuals from Sept. 25 to Oct. 23 said doing so would cost $2.1-billion. The explanation, published in the Canada Gazette on Sept. 1, acknowledged that the extension could have some negative consequences for economic productivity.
Statistics Canada reported on Friday that real gross domestic product edged down 0.1 per cent in July and remained 2 per cent below prepandemic levels. The pandemic’s economic damage has varied widely between sectors. For example, spending on food services and accommodation rose in July as a result of loosened restrictions, but overall activity in that sector was still 21 per cent lower than in February, 2020.