Government warned of second economic wave of COVID-19
Local leaders team up as Business and Economic Support Team
Make no mistake: Canada is winning the fight against COVID-19.
The “curve” of infections is flattening, certain provinces are reopening, and policy-makers are starting to shift some of their attention toward recovery and reopening.
So we’re winning the war, so to speak. The next task — winning the peace — will be no less challenging.
The quality and character of Canada’s economic recovery depends on how well we continue to administer the emergency supports currently in place and how strategically the reopening is planned, once our public health experts say it’s safe to start lifting restrictions.
This week under the banner of the Business and Economic Support Team for Waterloo Region, or BEST WR, our four organizations sent a letter to Prime Minister Justin Trudeau and Premier Doug Ford to provide advice on how to succeed on both counts.
First: speed
In our first communication with the prime minister and the premier — which we detailed at the end of March in The Record — we urged fast action on wage subsidies, mortgage deferrals, and backstops for Canadian banks among other issues.
Our government partners listened, rolling out policy now totalling over $230 billion — and adjusting it in real time as gaps emerged — at a pace characterized by Blackrock’s Kurt Reiman as “nothing short of aggressive.”
These are fantastic initiatives and all orders of government are performing well. The remaining gap is a difficult one: the government’s policy clock is still ticking slower than the business community’s clock — specifically, the rate at which the latter is burning cash while the economy stands still.
We thank and stand ready to further partner with government policy-makers to get all the announced liquidity into the system as fast as humanly possible.
Second: inclusion
Eligibility criteria for many govern- ment-to-business support programs are complex, leaving some business owners unsure about their ability to take ad- vantage. This has been a huge pain point for Waterloo Region companies, especially small businesses.
It’s equally true that government is listening and adapting thanks to continued communication with the business community. For example, many familyowned businesses in our community pay themselves with dividends rather than payroll. These types of “main street” businesses had been shut out of key programs but, as of this weekend, are now eligible for the Canada Emergency Response Benefit.
And weeks ago, the federal government made changes to help pre-revenue startup companies qualify for emergency wage subsidies. Gaps remain, such as the ineligibility of dividend-income earners from the emergency wage subsidy, and we’re here to help our partners continue to close them.
Third: extension
The emergency supports rolled out by government so far have been designed to manage the immediate economic and health crisis. By and large, they’ve been very successful. Now is the time to plan for an orderly reopening and a strong recovery.
To achieve that strong economic recovery — something our BEST WR team will be increasingly focusing on in coming weeks — we believe that key programs should be extended.
Health experts are saying we need to not rush the reopening, but instead take it slow and even plan for second and third waves of infection. The COVID-19 impact on economic activity will be managed in years rather than months, and our country needs to map our economic plans against that reality.
Companies who might not need the cash right now, but could conceivably need it in, say, September, are fearful that the programs won’t be there later so they’re taking money now. Announcing an extension of key programs now will boost business confidence, ensure as many firms as possible survive, and remove incentives for businesses to leverage tax dollars they might end up not needing.
We have absolute confidence that Canada can win both the war against COVID-19 and the peace of a robust, innovative, and even transformational economic recovery. To achieve these things we have to continue social distancing, keep getting the excellent funding programs out the door, extend the runway of government programs, and focus not on restoring the old economic status quo but on building a smarter, stronger, more advanced economic future.