Some industries still waiting for federal aid
Hey, prime minister, remember when you promised to help segments of the Canadian economy hit hardest by the COVID-19 crisis, such as tourism operators, airlines and the oilpatch?
That was weeks ago. And people in those industries are still waiting.
Now would be a really swell time to roll out a comprehensive assistance package, given the huge jump in unemployment reported on Friday — almost two million Canadians joined the jobless ranks in April — and the acute pain these key sectors are now enduring.
“We definitely need to know whether the money is coming so that we can make the required decisions,” said Jim Scott, CEO of Edmonton-based Flair Airlines.
“It’s really now or never. Securing the funding that comes in 30 or 45 days is not going to matter. I think there will be companies that won’t be around in 30 to 45 days to provide service.”
The latest jobs report paints a bleak picture of the challenges facing Canada as stay-at-home orders sidelined large chunks of the economy in April.
Nationally, the jobless rate jumped to 13 per cent last month and hit 13.4 per cent in Alberta.
Workers in some sectors have been particularly vulnerable. Between February and April, employment in the accommodation and food services sector in Canada was cut in half.
Prime Minister Justin Trudeau said Friday the federal government will extend its emergency wage subsidy program beyond June 6, a wise decision that many business leaders welcomed.
Yet, with provincial economies now beginning to reopen, it’s vital a federal package arrives in time to help the airlines, oilpatch and tourism industries in the coming weeks.
You don’t have to be an aviation expert to see the sector has been grounded and pounded by the coronavirus. Air Canada posted a net loss of $1.05 billion in the first quarter.
At Westjet Airlines, more than half of its employees have been temporarily laid off, taken voluntary retirement or resigned, affecting about 9,000 people.
CEO Ed Sims told Postmedia’s Amanda Stephenson this week he doesn’t expect to see a recovery in demand for air travel until the final three months of this year.
On Friday, the Calgary-based company applauded the extension of the emergency wage subsidy.
It has also been seeking some type of federally backed credit support to “give us the peace of mind to know that if this goes on for another three months, six months, 12 months, that we can continue to operate,” Sims said.
The tourism sector is facing a bumpy outlook as the summer season approaches.
Consider the town of Banff, where 90 per cent of the economy is based on tourism, directly and indirectly. Banff’s lure as a tourist attraction generates $3.2 billion of economic activity in both the town and the rest of Alberta.
Mayor Karen Sorensen said Banff’s economy has been decimated. The unemployment rate soared to an estimated 80 per cent when efforts to contain the coronavirus were announced earlier this year.
“We have really lost our entire economy through this process in the last seven weeks,” she said.
A gradual reopening of business in the town is expected to occur in the coming weeks. However, many companies are anticipating only 20 to 40 per cent of their normal business returning quickly as international travellers remain on the sidelines.
Sorensen appreciates the provincial and federal governments have their hands full, but the tourism sector will need special assistance soon.
“This is a long-term hurt for our sector and there is going to be a long climb back,” added Trevor Long, manager of the Rimrock Resort Hotel and president of the Banff & Lake Louise Hospitality Association.
“We need the federal government to understand a package will be required for an extensive period of time.”
Finally, there’s the oil industry. On March 25, Finance Minister Bill Morneau said an assistance package for the sector was “hours, possibly days” away from being unveiled.
As I write this, it’s been 44 days, or more than 1,000 hours, since those comments.
A liquidity package to assist small and mid-sized energy firms was announced on April 17. It included money to help clean up inactive and orphan wells in Western Canada.
For larger companies facing distressed balance sheets, more help will be required.
First-quarter losses of more than $15 billion have already been reported over the past month from Canada’s largest petroleum producers.
Suncor Energy CEO Mark Little said the federal program to clean up old wells is helpful and will create jobs in the oilfield services sector. But he believes energy companies, such as small and medium-sized firms, will need access to more liquidity.
“There’s enormous urgency to get this done because many of the companies are just running out of cash,” Little said in an interview.
On Friday, Trudeau said federal Industry Minister Navdeep Bains will head a new strategy council to understand how the pandemic is affecting specific sectors.
“We will, over the coming days, start looking at specific sectoral supports for various industries that have been hit particularly hard by COVID -19,” the prime minister added.
“But even then, our focus will be on the workers, on the supply chains … not on the corporate well-being of an industry or of a sector.”
Let’s hope the work has already started.
In Alberta, Premier Jason Kenney said Friday that we “cannot risk losing” the oilpatch, the largest subsector of the nation’s economy, and Canada can’t operate a modern economy without the airline industry.
Tourism companies will also need help.
“I will express disappointment in the slowness of the federal government to respond to the most heavily hit sectors of the Canadian economy,” Kenney said. “We’re a month further and we still have seen no progress.”
It’s important to get any multibillion-dollar aid program right. But at this point, perfection can’t be the enemy of the good.
The clock is still ticking.