FINANCE MINISTER BILL MORNEAU ANNOUNCED CHANGES TO THE FEDERAL GOVERNMENT’S KEY WAGE SUBSIDY PROGRAM ON FRIDAY. THE LIBERALS WILL INTRODUCE A MORE FLEXIBLE PAYOUT SYSTEM.
Adjustments aim to get Canadians ‘back to work’
OTTAWA • Finance Minister Bill Morneau announced changes to the federal government’s key wage subsidy program on Friday, introducing a more flexible payout system that has long been recommended by industry groups.
The tweaks to the Canada Emergency Wage Subsidy (CEWS) remove a major impediment that business representatives said had excluded many firms from applying for the program. Lobby groups had been calling for the adjustment since late May, arguing that CEWS was too restrictive.
The previous structure of the program excluded any company that could not prove its revenues had fallen by more than 30 per cent due to the COVID-19 pandemic. Changes announced on Friday move toward a more gradual payout structure, in which companies with revenue losses of any size can apply, but will receive subsidies that are commensurate with their losses.
Firms could previously apply for 75 per cent coverage of wage costs. That will now be tied to revenue losses, and gradually trimmed down as the program nears its termination at the end of December, 2020. Firms hardest hit by the pandemic will receive up to 95 per cent wage coverage.
Successfully adjusting the CEWS program, now expected to cost $82 billion, represents one of the larger challenges facing Prime Minister Justin Trudeau this summer, as government seeks to wean Canadians off support programs and usher them back into the workforce.
Industry groups had been calling for months for changes to the wage subsidy, which has seen a much lower than expected uptake. So far, Ottawa has spent just $18 billion out of the $73 billion that it had set aside for the program. That has in turn caused millions of people to instead funnel into the Canada Emergency Response Benefit (CERB), which provides $2,000 per month to the unemployed.
According to legislation that will enact the changes, and obtained by the National Post, companies with revenues that are “equal to or less than” the new sliding threshold will be eligible for the subsidy. Sources say the legislation could be tabled in the House of Commons as early as Monday.
The latest bill would also allow for a one-time payment to people with disabilities to help cover increased costs during the pandemic, and would make some changes for deadlines around legal matters like divorces. Many courts have been closed during the pandemic, leaving some of those deadlines missed.
Lobby groups seemed broadly supportive of Morneau’s changes to CEWS on Friday, reiterating that it was imperative to begin transitioning people away from CERB and into the wage subsidy.
Trevin Stratton, chief economist at the Canadian Chamber of Commerce, said the changes announced Friday would be “instrumental in getting Canadians back to work.” He also called for “swift passage” of the bill that will bring about the changes.
But the alterations also come after months of delay. Lobby groups had been calling on Ottawa to introduce precisely these changes since late May, when the Trudeau government launched widespread consultations on the program.
Speaking to reporters on Friday, Morneau acknowledged delays in adjusting the CEWS program, saying government was working “as rapidly as we can” to broaden accessibility. He said the changes would be “absolutely critical” as the economy reopens.
Ottawa first introduced a 10 per cent wage subsidy on March 18, which was deemed far too stingy by industry. That threshold was later raised to 75 per cent.
Business owners have repeatedly stressed that the 30 per cent revenue threshold had arbitrarily excluded companies from applying, particularly those whose revenues had grown sharply ahead of the COVID-19 pandemic. Firms that had recently undergone a merger or acquisition often didn’t meet the program criteria.
The Canadian Federation of Independent Business, in a June 10 letter to Morneau, said eligibility for the CEWS could be broadened by “introducing a sliding scale, where firms would be able to qualify for a smaller wage subsidy with smaller revenue losses.”