Existing COVID-19 income support programs will expire as scheduled on Saturday and will be replaced by a more “targeted” approach until early May, at a cost of $7.4-billion, Finance Minister Chrystia Freeland said Thursday.
Among the expired programs will be the government’s main pandemic subsidy for individuals, the Canada Recovery Benefit (CRB). At the same time, Ottawa is revising and extending rent and wage supports for businesses – but the funds will only be available to those in fields related to tourism or other hard-hit sectors.
Speaking at a news conference with Prime Minister Justin Trudeau, Ms. Freeland announced what she said will hopefully be the “final pivot” for Canada’s direct pandemic support programs.
“Our support needs to be more narrow, more targeted and less expensive. And we need to look forward to the day, now not too far off, when we will be able to bring it to an end entirely,” she said.
Along with the CRB, several other major federal pandemic-related income support programs, which give aid directly to individuals who are unable to work, will expire on Oct. 23. Those include the Canada Recovery Caregiving Benefit and the Canada Recovery Sickness Benefit.
Also set to expire on Saturday are programs that benefit employers, including the Canada Emergency Rent Subsidy (CERS) and the Canada Emergency Wage Subsidy (CEWS) – though companies will be able to continue making retroactive claims. At an estimated cost of over $111-billion, CEWS has been the most expensive by far of Ottawa’s more than $289-billion in direct support measures announced during the pandemic.
The government said on Thursday that it would be replacing those employer subsidies with two new programs for businesses. One is a wage and rent support program aimed at the tourism sector called the Tourism and Hospitality Recovery Program. Ms. Freeland said this would apply to hotels, restaurants and travel agencies that are still facing public-health restrictions. Access to the program would be limited to businesses whose revenue has decreased by 40 per cent or more in a four-week claim period, compared to a prior reference period.
The second measure is called the Hardest-Hit Business Recovery Program. It is aimed at employers that can show they have faced “deep and enduring losses” because of COVID-19, the minister said, and it will provide wage and rent supports to those that have experienced four-week revenue drops of 50 per cent or higher. These two programs will run until May 7, with support levels decreasing after March 13.
Any business that applies to either program will also be required to demonstrate that it lost revenue over the first 12 months of the pandemic, rather than just the four-week period for which it is making a claim. That would eliminate one of the biggest flaws in CEWS, detailed in a Globe investigation this spring: Large numbers of businesses received millions of dollars in payments even though their revenue and profits increased during the full year of operations.
The minister also announced a new lockdown support program, the Canada Worker Lockdown Benefit, which would come into effect in the event that the pandemic leads to new restrictions on businesses. Anyone unable to work as a result of a lockdown would receive $300 a week in income support.
Existing pandemic-related sickness and caregiver benefits will be extended until May 7, and the maximum duration of those benefits will be increased by two weeks.
The government announced its decision to shut down the CRB one day after NDP Leader Jagmeet Singh urged Mr. Trudeau in a private meeting to continue the program.
“During the election campaign, Justin Trudeau said that he would have Canadians’ back in this difficult time – for as long as needed. But today he has broken that promise,” Mr. Singh said Thursday in a statement.
Conservative Leader Erin O’Toole said earlier this week that the CRB should not continue beyond November. The party claimed victory on Thursday.
“The Prime Minister followed Mr. O’Toole’s fiscal plan and announced that the CRB would be ending,” Conservative MP Ed Fast said in a statement. “If the Prime Minister wants to get serious about tackling Canada’s inflation crisis, he must halt his out-of-control spending, present a plan to balance the budget, and reduce Canada’s debt.”
Beth Potter, president of the Tourism Industry Association of Canada, said her sector welcomes both the subsidies and a separate Thursday announcement that Canada would establish a national vaccine passport system. Tourism and hospitality companies have faced some of the strictest public-health restrictions during the pandemic, and until now have had to navigate a patchwork of provincial systems to check each customer’s vaccine status.
“I think it’s going to help a lot of businesses make sure they’re around by the time we get back to regular travel patterns next year,” Ms. Potter said.
Todd Barclay, president of Restaurants Canada, said that while he appreciates the hospitality sector’s inclusion in the extended subsidies, he is concerned that restaurants will receive no help if they are below the 40-per-cent loss threshold.
“What kind of business can survive with a 39-per-cent reduction in revenue?” he said.
Dan Kelly, president of the Canadian Federation of Independent Business, said the challenge with a targeted approach for subsidies is that many businesses that have faced constraints similar to those endured by the hospitality industry, such as gyms, will not get the same level of help.
He said he expected that the end of a broad-based wage subsidy would mean many businesses would switch to the Canada Recovery Hiring Program, an incentive launched earlier this year that offsets some of the costs to employers of making new hires.
Mark Agnew, senior vice-president of policy and government relations at the Canadian Chamber of Commerce, said continued support for businesses that still face capacity limits is appropriate, but that Ottawa was right to begin dialling back programs because of their mounting costs.
The National Council of Unemployed Workers criticized the government’s approach to ending the CRB, noting that the program was aimed at gig workers and self-employed people, who do not have access to employment insurance.
“Starting next week, self-employed workers will no longer have a social safety net,” spokesperson Pierre Céré said in a statement.
Canadian Labour Congress president Bea Bruske said her organization is also “very concerned” about the decision to end the CRB.
“Many workers are still just as impacted now as they were six months or a year ago,” she said.
With a report from Patrick Brethour
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