Finance Minister Bill Morneau rhymed off massive sums at a press conference on Wednesday. $71-billion for wage subsidies, $24-billion for emergency benefits, $85-billion in tax deferrals, $25-billion in small-business loans. Details of those measures get drafted after they are announced. Now the rush is to get the money out.
Next up: making more credit available to struggling industries like airlines, tourism, and oil and gas.
“The next big thing is part of what we’ve already done, in the sense that we’ve already said that there’s credit support for businesses,” Mr. Morneau said in an interview Friday. “But we know that it has to be more significant in order to deal with the problems facing firms in a whole host of sectors, that are real.
“If we don’t have a way to help those businesses then there just won’t be jobs for people when this is over, in hopefully the relatively-near future,” he said.
The Finance Minister is at the centre of a run-and-gun process for building economic supports on a scale never seen before in a matter of weeks. And he holds vast powers through emergency legislation – even after the opposition forced the government to scale them back extensively.
Among them is the power to buy so-called “distressed” assets, which could, in theory, could see Ottawa buy a portfolio of troubled companies. Mr. Morneau won’t say if he will use it.
“First and foremost, we want the assets not to be distressed. So we will be introducing – and I expect we will get to it next week – some more expansive credit possibilities for firms, small and large," Mr. Morneau said. "And we are obviously contemplating the larger challenges that some individual businesses face, and have to wrestle those issues to the ground pretty rapidly.”
“You’ve got oil and gas, you’ve got airlines, you’ve got the hospitality sector, which includes hotels, you’ve got the [non-essential] retail sector – all of these parts of our economy are severely challenged in the current environment.”
The big pieces already announced, like a 75-per-cent wage subsidy, aren’t being implemented fast enough for many companies. The application portal for that wage subsidy won’t be ready for three to six weeks. The government is funding small-business loans of up to $40,000, but the banks aren’t yet ready to deliver them. Mr. Morneau said the banks have indicated they will be ready in less than two weeks.
There have been calls for the government to find other ways to deliver the wage subsidy instead of the Canada Revenue Agency. But Mr. Morneau said officials talked to banks and other departments as they tried to design fast-moving programs, and found the tax agency had key advantages: systems that couldn’t handle the heavy load of transactions, and direct-deposit links to a lot of individuals and businesses.
Certainly, this economic crisis has time demands never faced before. In past emergencies, like the 2008-09 financial crisis, governments pumped out spending, or sent tax cuts or benefits to individuals, over months.
This is a medically-mandated freeze that has meant hundreds of thousands of businesses lost revenue almost immediately, and the government had to flow cash to them.
Mr. Morneau might have moved 10 days sooner to offer that 75-per-cent wage subsidy for businesses hit with revenue declines of 30 per cent or more. Instead, the government announced a 10-per-cent wage subsidy of all small businesses.
The Finance Minister insists the two measures are not the same, and both are useful. But there was a delay of days as the government moved to other initiatives first.
“Our approach has been to try and get the very big things done as soon as possible and then move to the next big thing immediately,” Mr. Morneau said.
First it was health funding, he said. Next was providing benefits for people who aren’t salaried employees, and broad-based emergency benefits.
Then, Mr. Morneau said, “we recognized that we needed to go broader to people that in many cases would still be working, but wouldn’t be necessarily working if we didn’t support their employer to get through this.”
Now, in his view, the big pieces of “probably the most comprehensive” economic response in the world are in place. But Mr. Morneau concedes there are still gaps, and details of already-announced policies to be hammered out over the weekend. Then it is credit for struggling business.
And, the Finance Minister said, there will be the prospect that rapid change will mean something else is needed.