As the Canadian government carves out an economic path forward beyond the COVID-19 pandemic, Manitoba business leaders and stakeholders have mixed feelings about Ottawa’s fiscal blueprint for the country.
Finance Minister Chrystia Freeland unveiled the first federal budget in more than two years on Monday, touting it as a "lifeline" for workers and struggling businesses, with a pandemic-sized asterisk that things could still change drastically if vaccine supplies are delayed or if they prove inefficient against emerging variants of the coronavirus.
"We are all tired, and frustrated, and even afraid. But we will get through this. We will do it together," Freeland told the House of Commons, tabling the nearly 700-page budget, with more than $100 billion in new spending over the next three years amid a record-breaking net debt of over $1 trillion.
"This budget is about finishing the fight against COVID. It’s about healing the economic wounds left by the COVID recession. And it’s about creating more jobs and prosperity for Canadians in the days — and decades — to come."
Budget 2021 is proffering a lineup of numerous new programs and aid package extensions — designed particularly for small and medium-sized businesses, and to pull more Canadians into, or back into, the middle class.
It includes incentives to help businesses adapt and expand e-commerce, provides avenues for access to capital and skilled training, and increases funding to boost and recover hard-hit sectors like tourism and the arts.
But the Manitoba business community says while Ottawa is hitting some of the right notes, there’s many that are sour as well.
"We’re definitely a little mixed about it and certainly think it might have done better with more balance," said Bram Strain, president of the Business Council of Manitoba.
"It’s a lot of focus on the middle class, and that’s OK. But, on top of that, the devil’s in the details — there’s pages and pages about certain programs, while others are just mentioned without much of an idea about how exactly that would work."
The Liberal government is extending the Canada Emergency Wage Subsidy (CEWS) and the Canada Emergency Rent Subsidy (CERS) programs for businesses until Sept. 25. Both were previously set to expire July 4, and are projected to cost $10.1 billion and $1.8 billion, respectively.
However, Freeland said Monday CEWS and CERS packages would gradually decrease starting July 4.
In June, a new subsidy — the Canada Recovery Hiring Program — will be made available to businesses in the hopes of shifting them off payroll support and into hiring new employees or increasing the hours of existing employees.
That new program, projected to dole out about $1,100 in pay per employee every four weeks, is being slated to span from June to November. Employers would claim either the hiring subsidy or the CEWS, whichever of the two provides more funding.
The Canadian Federation of Independent Business is pleased with Ottawa’s extension of the pre-existing subsidies and the new hiring program, but is disappointed that new businesses are still shut out of accessing any support.
CFIB is worried about the lack of measures put in place to help address the $180,000 in new pandemic-related debt the average small firm in Manitoba has taken on.
"It’s certainly concerning that these supports are starting to focus quite a bit on hiring needs versus financially supporting a business overall," Jonathan Alward, Manitoba director for CFIB, told the Free Press. "I mean, it’s great that businesses can start hiring people again, but that can only happen when they’re back to a good enough position to do so.
"I’m not sure it’s a good idea to decrease the main support subsidies for ones focusing on hiring incentives for businesses across the board, just yet."
Although the new hiring program will be available for any company, it’s expected to be most beneficial to sectors that are struggling to rebound: accommodation, tourism, retail and other industries focused on in-person activities.
For tourism, in particular, the budget is tabling $1 billion over three years to jump-start the industry — including support for festivals or events and creating jobs within the sector — starting this fiscal year.
Up to $500 million will be administered by the regional development agencies under the new Tourism Relief Fund, which will help local tourism businesses in adapting their products and services to public-health measures and recover from the pandemic.
Dayna Spiring, president of Economic Development Winnipeg, said that’s great news for Manitoba’s struggling events and tourism sites.
"We’ve had to cancel basically every single event throughout 2020, and now already cancelled all of 2021’s events, too," she said. "This assures confidence and allows us to bring back the sector which is such an important life to our communities."
But Kate Fenske, CEO of Downtown Winnipeg BIZ, said not much is being done directly for city centres by the federal government.
"I searched for any mention of ‘downtown’ in the budget and the only one we saw was reallocating $300 million from the Rental Construction Financing Initiative to support the conversion to affordable housing of the empty office space that’s appeared in downtowns," Fenske said Monday.
"Given how important downtowns are to our nation’s economy and Canada’s identity, and how much we’ve seen them struggle, we’re disappointed there are no targeted supports for our city centres."
Loren Remillard, president and CEO of the Winnipeg Chamber of Commerce, said he’s particularly pleased with the renewed Venture Capital Catalyst Initiative that would make up to $450 million available over five years for entrepreneurs, starting in 2021-22.
"We’re definitely looking forward to the details with that one," he said. "A healthy venture capital network allows businesses to scale up and create jobs, invest in innovation, and be globally competitive in a market that really needs to grow right now."
The budget also proposes a new tax on luxury goods such as yachts (over $250,000), personal aircraft and cars (over $100,000) — in effect in January, 2022. This would boost federal revenues by $604 million over five years.
"It’s not like they’re being Robin Hood," said Strain. "But again, that very clearly shows this is a budget for the middle class.
"And if that’s what the aim was — to help businesses and people that are part of that or need to part of that class — then definitely, this is a successful budget in lots of ways."
Temur Durrani reports on the economic impact of the coronavirus pandemic for the Winnipeg Free Press.