Beware the fair-weather friend of small business
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Hey there, time traveller!
This article was published 14/04/2020 (904 days ago), so information in it may no longer be current.
For a politician who claims to be a friend of small business, Manitoba Premier Brian Pallister isn’t doing much to help the hundreds — perhaps thousands — of companies that may not make it through the COVID-19 crisis.
The premier appears to be doing everything he can to avoid providing small business with any meaningful financial assistance, even though thousands have been ordered by the province to close their doors.
Pallister continued to give lip service Monday to the importance of small business in Manitoba, describing the sector as “the backbone” of the economy.
During normal economic times, small business pays a large portion of the taxes governments use to fund front-line services, such as health care and education. Now, that sector is hurting. Government needs to step up and help small businesses remain solvent so they can bounce back once social-distancing measures are lifted, Pallister said.
It sounded like he was about to unveil a significant provincial aid package; instead, Pallister announced Manitoba plans to set up an information network to help businesses access federal government dollars.
What a disappointment — and a major fail for a premier who doesn’t appear to understand the ramifications of allowing scores of small businesses to go bankrupt due to the novel coronavirus pandemic. Trying to take credit for a federal program will not help this sector avoid insolvency.
This isn’t a normal economic downturn, where survival of the fittest rules the day. In many cases, businesses — including restaurants, bars, shoe stores and musical instrument stores — are forbidden, under provincial law, from opening their doors. The best many can do is sell products online, or through curbside pickup.
The province has issued a schedule that identifies which categories of companies can stay open. It’s an arbitrary list to some degree. It allows, for example, travel agencies and car rental companies to open (hardly “critical” services), but not clothing or flower shops.
Deciding which businesses can operate during a pandemic is no easy feat (especially when government has to make hundreds of critical decisions every week). We can cut policy makers some slack when assessing the quality of their decisions during this extraordinary period.
Pallister’s failure to provide small business with any meaningful financial assistance, however, is a gargantuan public policy error.
Governments have no choice but to enforce social-distancing measures. It’s a matter of life and death. We can’t have people congregating in bars and restaurants, or hanging out in large numbers anywhere. Only the most essential services should be open to the public.
Those measures are paying off: Manitoba’s infection levels are relatively low and the number of COVID-19 patients requiring hospitalization has remained below 12 most days. There has been tremendous buy-in from Manitobans.
Meanwhile, small businesses, particularly those forced by law to close, are paying a disproportionate price.
There is financial aid for most individuals who lose their jobs, including the Canada Emergency Response Benefit (which provides $2,000 a month to people who can no longer work), but government help for small business is spotty.
The federal wage subsidy will help some companies; however, it’s been documented a large percentage either don’t qualify or won’t benefit because they have almost no revenue.
A Canadian Federation of Independent Business member survey shows 32 per cent of small businesses in Manitoba say they won’t benefit from the wage subsidy. Another 24 per cent said they don’t know if the subsidy will help. Many don’t qualify because they don’t meet the revenue-drop criteria. Others have already shut their doors.
When a company has zero revenue, a wage subsidy doesn’t help. Businesses still have to pay rent, utilities, insurance and other fixed costs. Many won’t survive an extended, government-mandated shutdown.
If government is going to force companies to close, it has a moral obligation to compensate them. Provinces such as Saskatchewan are providing at least some cash support.
The Manitoba premier’s failure to do so is negligent and shows extremely poor judgement.
Tom has been covering Manitoba politics since the early 1990s and joined the Winnipeg Free Press news team in 2019.