CANADA

PM pledges payroll relief, other measures

Small business gets boost from feds

Prime Minister Justin Trudeau dramatically boosted support for small businesses Friday, pledging to have the government cover up to 75 per cent of their payrolls, back interest-free loans and waive GST remittances until June.

Trudeau announced the support outside Rideau Cottage, where he has been in self isolation with his family. The government had previously announced a wage subsidy of 10 per cent for employers as a response to the COVID-19 crisis, but other countries had offered much larger grants.

Collectively small businesses are Canada’s largest private sector employer. Trudeau said the country can’t afford not to have a strong small business sector.

“Canadians are counting on you and I am counting on you to come back strong from this no matter what comes next. You’re going to get the support you need to help rebuild a more resilient and prosperous economy,” he said.

He said he hopes the wage subsidy will allow companies to keep their employees on the payroll and maintain the relationship so they can restart quickly when the crisis comes to an end.

“We will be able to come back to this stronger than before,” he said.

Trudeau, who has already announced $107 billion worth of investments to respond to this crisis, was not able to put a cost on this new program. He said more details on the program would be announced by Monday.

Dan Kelly, president and CEO of the Canadian Federation of Independent Businesses, welcomed the news. He said the previously announced 10 per cent measure barely helped businesses.

“The 10 per cent was not enough to move the dial unfortunately. It was just way, way too small,” he said. “This will not help every business. This will not reverse all the terminations that have already happened.”

Kelly said businesses want to keep their staff, but with their revenues cratering many had no choice before this program was announced.

“They have been taking this day by day, week by week, but each day this has been delayed tens of thousands if not hundreds of thousands of workers hit the unemployment line.”

He said businesses are looking ahead to a recovery and this program will allow them to start back up.

“They want to be able to get their employers back to work, back to full production, back to serving customers the minute the emergency is over.”

There were no details Friday on whether the program would be capped at a certain number of employees or a certain wage. There were also no details on what the program would cost.

The parliamentary budget officer projected Friday that Canada could see a deficit of $112 billion next year. Trudeau said that this crisis called for major investments.

“We recognize these are unprecedented investments in the economy but we also know they are necessary,” he said. “We have to get through these coming months of restricted economic activity where people stay at home and work from home or don’t go to work as much as possible, focusing on keeping their families safe.”

He said the government had given Canada the fiscal room to manage this crisis.

“We also know that Canada’s fundamentals are strong. We have one of the best balance sheets in the G7.”

The interest-free loans will be made available with government backing through commercial banks and can be up to $40,000, if a business repays the loan by the end of 2022, 25 per cent of the loan would be forgiven.

So far, the government has announced $52 billion in spending on a variety of programs, including a new benefit for laid off workers and the self employed. It also announced income tax deferrals until August, which would cost the government $55 billion until August.

The GST deferrals add another $30 billion to that total and the loan programs the government announced will see the government backing as much as $65 billion in loans.

That does not include the wage subsidy program, which does not yet have a price tag.

Finance Minister Bill Morneau said the government is focused on people’s needs right now and there is no limit to what they’re prepared to do.

“We are not going to put a cap on it. We are going to do whatever it takes to support people,” he said. “We have the capacity to deal with this.”

Kelly said he is keenly aware businesses may face a push for higher taxes when the crisis ends, but the need is urgent now.

“That’s a battle for another day. Right now, businesses are in the fight of their lives just to survive.”