$1.5B recovery fund will see B.C. through crisis: James
The B.C. government is counting on its $1.5-billion economic recovery fund to get the province through the turmoil of the COVID-19 pandemic, says Finance Minister Carole James.
James said she knows people are hurting as their finances are battered by the novel coronavirus, evident by the 16,000 people who applied for B.C.’s $1,000 tax-free emergency benefit in the first 45 minutes of the program going online on Friday.
“We all know that many British Columbians have lost their jobs or have had their ability to be able to work severely affected by COVID-19,” James said at a news conference. “Businesses, large and small, are also struggling, wondering what the future is going to bring for their business or their industry.”
The C.D. Howe Institute’s Business Cycle Council reported Friday that Canada has entered a recession due to the economic devastation caused by the COVID-19 pandemic.
Premier John Horgan said this week the indicators for B.C.’s economy “are dark for the foreseeable future.” He is looking to provincial and federal relief measures to help B.C. endure the pandemic in the short-term.
Provincial health officer Dr. Bonnie Henry reported 33 new COVID-19 infections on Friday for a total of 2,145 cases. One more person died, increasing the number of deaths to 112 people.
Henry said 1,357 people have now recovered from COVID-19.
James said the government introduced a $5-billion plan to help people, businesses and organizations affected by the pandemic. Part of that plan includes the $1.5 billion to help with recovery efforts.
“It is not going to be an easy process to look at coming out of the kind of challenges we faced with COVID-19,” said James. “We need to make sure the return is done carefully. We’re as eager to rebuild as you are.”
She expected the premier to announce initial stages of B.C.’s economic recovery strategy next week. Discussions have been underway between government, industry, business and labour officials about how best to target the billion recovery dollars, she said.
Bryan Yu, deputy chief economist at Central 1 credit union, said the fund will play an important role in B.C.’s economic recovery. “With the current downturn, it’s not going to be an immediate rebound or return to anything normal,” he said.
James said the $1,000 relief benefit is available to people in B.C. who are also receiving the federal Canada Emergency Response Benefit of $2,000 a month. To get the B.C. benefit, people must have been a resident of the province on March 15, be eligible and approved to receive the federal benefit, be at least 15 years old on the application date, and have filed or agreed to file a 2019 tax return.
Those receiving provincial income or disability assistance are not eligible for the benefit.
The COVID-19 infection rate isn’t the only curve that’s likely to be flattened. The potential economic recovery curve also looks like it will follow a low trajectory.
The best possible scenario after the pandemic hit would have run along these lines: A drastic curtailment of all economic activity leads to success in curbing the spread. A massive outpouring of support from all governments eases the initial financial shock for people. Then a big bounce back to something like normal.
It likely won’t happen like that.
B.C. has managed to slow the spread, and suffered the resulting economic damage. It’s also tried to ease some of the pain.
But the recovery game plan devised on the medical side stresses a “slow, methodical and gradual” relaxation of health restrictions.
It’s safe to assume the economic recovery curve will take the same shape that medical experts wanted to see the infection rate take.
The problem is that much of the government support is “temporary” and is either one-time outlays or time-limited for up to three months.
There’s a potential gap ahead, depending on how long “gradual” turns out to be. If people slowly dribble back to work, governments might be pressed to be almost as generous with aid programs in mid-summer and beyond as they were with the first rush of support when the pandemic hit.
That initial burst was badly needed, judging from how B.C.’s emergency benefit fund opened for business.
B.C. started taking online applications for the $1,000 emergency benefit for affected workers on Friday morning. The system got almost 17,000 applications in the first 45 minutes. By 4 p.m. there were 214,260 applications in the system.
That demand will be funded from the $5-billion recovery plan announced in March.
It was only 10 weeks ago that B.C. Finance Minister Carole James delivered a budget speech full of rampant optimism.
“Life in B.C. is getting better every day . ... Our economy is stronger … we have the lowest unemployment rate in the country.”
Friday, she talked about how many people had lost jobs, are having a hard time making ends meet and how businesses large and small “are struggling to stay afloat.”
That sense of desperation would obviously be eased when people return to full employment.
But restoring employment depends entirely on the daily case counts. Upticks could restore restrictions, as could a serious second wave in the fall.
The framework of cautious protocols for resumption of services will be released next week. The devastated hospitality sector will be watching them as closely as anyone. Restaurants might eventually resume serving food on premises. But the two-metre distance rule will likely stay in place. That would reduce capacity by 50 per cent or more, which would reduce employment and activity.
Resuming service doesn’t automatically mean demand will be there. There’s a psychological block to get over for some people.
The emergency grant is one of several response measures. There’s a $500 a month rent subsidy, significant commercial tax relief, a $300 boost to income assistance for the next three months and some tax credit and tax reductions taking effect.
“It’s important to remember again on the timeline ... they are put in place as temporary benefits,” James said. “The hope is that as the economy starts opening up you will see people able to go back to work, pay their rent and pay the taxes.”
All the benefits currently limited to three month will be reviewed “based on how much opening of the economy we’ll be seeing,” said James. Tax deferrals now pushed to Oct. 1 will also be reviewed.
If the economy has to slowly and cautiously tip-toe back into gear, those reviews are going to conclude with two words: More needed.
JUST SO YOU KNOW: The emergency grant application is available at gov.bc.ca/workerbenefit and it’s open to people who meet conditions. They have to qualify for the similar federal program and be filing a 2019 B.C. income tax return.
The federal Canada Emergency Response Benefit is open generally to people who made at least $5,000 in 2019 and stopped work due to the pandemic, or are eligible for EI or whose EI is exhausted.