The Liberal government spent the past week fixing programs, adjusting timelines, and defending its open ended spending policies. Here are a few brief highlights that I will discuss in more detail in this email.
• New guidelines were introduced allowing more small business owners to qualify for the Canada Emergency Business Account, which is a $40,000 interest free loan.
• The government is also extending the Canada Emergency Wage Subsidy program (CEWS) until the end of August.
• Several reports this week indicate that 200,000 Canadians, that were not eligible, have received money from the Canadian Emergency Response program (CERB).
Premier Kenney Announces Calgary Restaurants/Cafes/Hair Salons Can Reopen May 25
Before we get into the various federal announcements, it is worth noting that Premier Kenney announced this morning that Calgary businesses such as restaurants can reopen at 50% capacity on May 25th. Hair salons and cafes can also reopen. For many of you, I know this will come as great news as hopefully life will go a little more back to normal. We must remain cautious, but this is definitely a positive step.
Canada Emergency Business Account (CEBA)
When this program was first introduced the stipulations were that any business with a 2019 payroll between $50,000 and $1 million would be eligible for a $40,000 interest free loan backed by the government of Canada. This loan did not have to be paid back until the end of 2022 and if paid in full 25% of the loan would be forgiven. Later the payroll limits were changed to a minimum $20,000 and a maximum $1.5 million.
We have been making the point for weeks now that by using payroll as the qualifier many small businesses were not eligible, including many sole proprietors who paid themselves in dividends. Now the government is allowing these small businesses to qualify for loans if their non-deferred expenses exceed $40,000. While this will be welcome news for many, the fear is that after being shut down for almost two months a number of businesses have already folded and will no longer be in a position to take advantage of these changes. For more information click here.
Canada Emergency Wage Subsidy Program (CEWS)
At the beginning of April the government announced the Canada Emergency Wage Subsidy Program (CEWS) which would provide a 75% wage subsidy to employers in an effort to get laid off workers rehired. The government’s objective was to transition Canadians from collecting the $2,000 a month CERB benefit back into the workforce. Any company that had revenue declines by 30% over the past year was eligible. Announced in early April, the program was retroactive to March 15 but it took six weeks for applications for the program were even accepted. In hearing from business owners, the requirements to prove eligibility have been exceptionally challenging.
As a result the take-up on (CEWS) has been very poor. Many employers were simply not in a position to pay the extra 25% with nothing for employees to do. To provide employers with some additional assurance, government has extended this program until the end of August. Click herefor more details.
Canada Emergency Response Program (CERB)
One of the first programs announced by the government to cushion Canadians after governments effectively shut down the economy near the end of March was (CERB). This program was designed to cover Canadians who did not qualify for Employment Insurance (EI). Even though EI is funded by employers and employees through monthly payroll deductions, the EI fund does not operate independently like the Canada Pension Plan. EI funds sit in the general revenue of the government.
Almost 3 million Canadians immediately filed for EI and another 5 million for CERB in the first week. Both systems had difficulty processing that many applications. Many of the EI claimants simply got kicked over to CERB and as a result 6.7 million cheques for $2000 each have been deposited in bank accounts. This is a million people more than Statistics Canada unemployment numbers.
According to media reports this week, as many as 200,000 fraudulent claims may have been paid out. Memos from Senior Cabinet Ministers instructed the bureaucracy to pay out any and all claims and not launch any investigations at this time. Originally estimated at a total price tag of $23 billion for the four month program, $19.8 billion has already been paid out by mid April. While every applicant won’t collect for the full four months clearly the cost of this initiative will double or triple.
Large Employer Emergency Financing Facility program (LEEFF)
This program was announced 10 days ago and is aimed at companies with at least $300-million in annual revenues. (LEEFF) is a lender of last resort for companies that are unable to obtain private financing and would be at risk of falling into bankruptcy due to the economic impact of the coronavirus pandemic.
Finance Minister Bill Morneau announced further details this week.
• unsecured loans will be offered at 5 per cent per annum, rising to 8 per cent in the second year and increasing a further 2 per cent per year thereafter;
• the minimum loan size will be $60-million, and there is no explicit maximum loan size;
• the federal government will have the option to purchase common shares in companies totalling 15 per cent of the principal amount;
• companies will be required to publish plans for addressing climate change risks, will have strict prohibitions on dividends, capital distributions and share repurchases, and a cap on all executive compensation at $1-million.
Government of Alberta Implementing Additional Screening at Airports
I have shared my concerns with the seemingly lack lustre approach being taken by the federal government in terms of screening incoming travellers at airports, particularly as Calgary is one of the airports still accepting international flights. We continue to raise this matter in Parliament. The Government of Alberta has stepped in and is implementing a much more strict screening regime at airports, in addition to the work being done by CBSA. Click here for more details.
Many constituents have asked when we expect the Canada-US border to reopen to non-essential crossings, and what “non-essential” constitutes. I am not expecting the border situation to change anytime soon as the US Government and Government of Canada recently announced an agreement to keep the border closed for another 30 days.
As for what is and is not essential, border officers have been given a lot of latitude to make this determination on a case by case basis. Based upon reports I have heard, they are tending to take a very restricted view of what is essential.
What is Parliament Doing?
Many constituents have contacted our office with questions they want asked of the government. Others are wondering “when will the Prime Minister leave his cottage and show up for work?” I will attempt to address some of those questions and concerns. Typically Parliament is in session for about 26 weeks. The other half year MPs are in their ridings meeting constituents and attending events. Parliamentary sessions typically begin mid-September, break in mid-December for six weeks and then resume in late January until mid-June. When it became obvious the pandemic was going to require a nation-wide lockdown Parliament adjourned for five weeks on March 13. Parliament was scheduled to resume April 20 however with provincial emergency orders in place prohibiting large gatherings that was not going to happen for 338 MPs.
While Conservatives felt Parliament could resume for 4 days per week with a limited number of MPs in attendance to meet health regulations, all other parties voted to have a special House of Commons committee on COVID-19 sit one day per week (Wednesday) with a limited number of members in attendance and meet two days per week (Tuesday and Thursday) virtually. That agreement ended yesterday and so now discussions are occurring as to what happens on Monday when Parliament is scheduled to resume with all MPs in attendance.
Large gatherings are still prohibited in Ontario so Conservatives are proposing that Parliament (not a special committee) reconvene on Monday with limited MPs attending and sit five days per week until the house is due to adjourn in mid-June. Conservatives are also proposing special Parliamentary sessions be held over the summer months. Indications are the other parties will not agree and will vote to opt for the status quo. If this ends up being the case many of the questions constituents want answered will not be allowed since only urgent questions relating to the pandemic are permitted during the special committee sitting.
Nevertheless, we are working to use the time we have as effectively as possible, and are posing the questions of common concern we are hearing to the Ministers in charge of our response to the pandemic. I encourage you to visit www.parl.ca or watch CPAC if you want to see the exchanges that are happening.