Calling it the “largest economic program in Canada’s history,” Prime Minister Justin Trudeau said today Parliament will be recalled to pass new legislation to deliver enhanced COVID-19 emergency aid measures.
The government is reaching out to opposition parties to recall Parliament to pass legislation for the expanded measures, which include an expanded income support program and a boost in wage subsidies for all businesses, Trudeau said Wednesday at his daily briefing.
“This must be a Team Canada effort. Governments of all orders across the country are stepping up to fulfil their responsibilities to Canadians,” he said.
“Canada hasn’t seen this type of civic mobilization since the Second World War.”
Trudeau asked Canadians to do their “service” by following public health guidelines on physical distancing, self-isolation and personal hygiene. He could not provide any firm details on how long those disruptive practices will be required, saying only that it will be weeks or months.
He also declined to say how many Canadians could die from infection, saying there are various scenarios.
A senior government official said a time has not yet been set to reconvene Parliament but it’s likely to happen early next week. While there are conflicting views on whether legislation is needed, the numbers are so large that the government thought it was right to put it before Parliament, the official said.
Deputy Prime Minister Chrystia Freeland said recalling Parliament recognizes the role of the opposition in Canada’s parliamentary democracy, as well as the “magnitude” of the proposed measures.
The federal government initially pledged a package worth $82 billion, including income supports, wage subsidies and tax deferrals.
But that figure quickly swelled as the government expanded the Canada Emergency Response Benefit (CERB) and increased the proposed wage subsidy, previously set at 10 per cent. The enhanced 75 per cent wage subsidy program will be offered to businesses of all sizes, non-profits and charities, rather than just small and medium-sized companies, as originally proposed.
Wage subsidies expected to cost $71B
Providing more details on that program today, Finance Minister Bill Morneau said it will cost an estimated $71 billion but will reduce the anticipated cost of the CERB to $24 billion.
Calling the measures “very significant expenditures,” Morneau said the income supports are in addition to billions of dollars in tax deferrals and other measures meant to ensure an economic rebound occurs as quickly as possible after the pandemic subsides.
“My message to Canada’s employers is this: get ready to rehire people,” he said.
Morneau said employers will be eligible if they see a reduction of at least 30 per cent in revenues, compared to the same month last year. It will cover 75 per cent for the first $58,700 of salary, equalling about $847 per week per employee.
The program will be available to all businesses big and small that are not publicly funded, as well as non-profits. Morneau said it will help the hard-hit hospitality and charitable sectors.
“We know non-profits and charities are facing similar difficulties. Canadians’ needs for your services are going up, but your donations are going down. It feels like an impossible dilemma,” he said.
Morneau also warned of “severe consequences” for any bad actor who attempts to defraud the program.
“This is a high trust system we’re putting in place. We will take decisive action against anyone who breaks that trust,” he said.
Morneau said the online application portal for the program should be up and running in about three to six weeks.
The Canadian Chamber of Commerce warned that wait could mean more businesses shutting down and more people thrown out of work.
“We know that many smaller businesses do not have enough cash reserves to wait another six weeks,” the organization said in a statement. “Those affected will likely now place greater demand on the Canada Emergency Response Benefit. We urgently need to get these funds into the hands of employers.”
The Chamber of Commerce also raised concerns that the requirement to show a revenue drop of 30 per cent will be difficult to comply with for many businesses, including those that rely on invoicing with uncertain payment schedules.
During a news conference in Regina earlier Wednesday morning, Conservative Leader Andrew Scheer had said the measures announced by the government don’t match the legislation passed to facilitate them.
“We’re pointing out the discrepancy between what the prime minister announced yesterday and what the legislation actually says. So it’s up to the government to decide how they want to proceed,” he said.
“But if they want to provide Canadians with the program that they made in their announcement, they would have to amend their own legislation.”
Scheer again criticized the Liberals’ failed attempt to pass legislation giving the government spending powers without parliamentary approval through to 2021, saying the government spent more time staging a “power grab” than it did on giving Canadians “certainty and competency.”
“They should have made sure they were getting it right when it comes to helping Canadians instead of just helping themselves,” he said.
Conservative finance critic Pierre Poilievre also said the legislation passed in Parliament last week does not allow for the enhanced benefits.
Recalling Parliament to ‘salvage’ promises
“Parliament will need to be recalled to salvage the government’s wage subsidy promise,” he tweeted late Tuesday. “Trudeau’s announcement is not legal under the law his government wrote last week.”
Poilievre said that requirement for a 30 per cent reduction in revenue is not written into the legislation.
Canadians can begin applying for CERB on April 6 through the Canada Revenue Agency (CRA) website, and the funds are expected to flow in about 10 days. Jobless Canadians will need to check in once a month to confirm they’re still not working.
People who already have applied for employment insurance (EI) do not have to reapply for CERB. Employment Minister Carla Qualtrough said there has been an “unprecedented wave” of applications for EI benefits, with 2.1 million applications in the last two weeks. In 2018-2019, there were 2.1 million EI recipients for the entire year.
Qualtrough said CERB is targeting people with no sources of income, but the government is also looking for ways to fill the gaps that remain for others — such as people who are self-employed and face a reduction in income.
The online portal to apply for benefits will work on a system ordered by birth date. People born in January through March can apply on April 6, those born in April through June on April 7, those born in July through September on April 8, and those born October through December on April 9.
Businesses receiving the wage subsidy are expected to top up the remaining 25 per cent of employees’ wages if they are able.
Small business has praise, concerns
The Canadian Federation of Independent Business (CFIB) welcomed the confirmation that businesses will still qualify if they aren’t able to cover that remaining amount, and called the wage subsidy an “incredibly important tool” that will help protect jobs.
But the group shares the Chamber of Commerce’s concern that funds won’t be available for up to six weeks, since many are facing immediate cash flow emergencies.
In a statement, the CFIB said the requirement to show a 30-per-cent reduction in revenue in the last year will also prove challenging for many firms, including seasonal businesses and those with tight profit margins.
“The goal of this unprecedented and positive move is to give employers the means and confidence to retain their staff during the COVID-19 pandemic,” said CFIB President Dan Kelly. “If employers are not able to know with certainty whether they will qualify for the subsidy, many will be forced to lay off workers.
“Wages are so significant an expense that getting it wrong, or having your documentation of the revenue drop rejected on audit, would put small businesses [at] risk of bankruptcy.”