July 14, 2020

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Wage subsidy the cost of doing business

Editorial

For people who test positive for the novel coronavirus, the last thing on their minds is the long-term economic future of Manitoba and Canada. It’s understandable — more than that, it’s essential — that the primary priority be physical health.

But the economic health of our province and our country is also a critical matter. While health-care professionals push the upper limits of their high calling to minimize human suffering and deaths, politicians are charged with applying critical care to the economy. The goal is to deliver appropriate treatment now so the economy returns to fiscal health as quickly as possible when the wretched virus finally retreats.

Adrian Wyld / The Canadian Press</p><p>Federal Minister of Finance Bill Morneau </p>

Adrian Wyld / The Canadian Press

Federal Minister of Finance Bill Morneau

The massive federal wage subsidy detailed on Monday by Prime Minister Justin Trudeau is a level of government intervention that, until three weeks ago, would have been considered unthinkable.

The federal package is particularly welcome in Manitoba, where substantial economic support has not been forthcoming from the province for people devastated by business closures and layoffs. The Pallister government has made regular announcements of support that is narrowly focused: free online mental health care, freezing rent increases and evictions, subsidizing daycare for health workers and delaying the planned cut to the provincial sales tax.

But when it comes to repeated demands for direct economic relief, Premier Brian Pallister has argued the federal government should be the primary source of financial support for economic victims of the virus.

All business, charities eligible for wage subsidy

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Prime Minister Justin Trudeau leaves following his address to Canadians on the COVID-19 pandemic from Rideau Cottage in Ottawa on Monday, March 30, 2020. THE CANADIAN PRESS/Sean Kilpatrick
Prime Minister Justin Trudeau leaves following his address to Canadians on the COVID-19 pandemic from Rideau Cottage in Ottawa on Monday, March 30, 2020. THE CANADIAN PRESS/Sean Kilpatrick

Posted: 30/03/2020 4:52 PM

OTTAWA - Businesses of any size that have seen sharp and sudden drops in revenues due to COVID-19 will be eligible for a new federal wage subsidy program, the federal government said Monday, just as it signalled more help for some of the country's major employers.

The 75-per-cent subsidy on wages meant to cushion the blow from the pandemic will be available to employers that can show their revenues have fallen by at least 30 per cent due to COVID-19. It will be capped at $847 a week, backdated to March 15, and the number of workers a company or other organization employs won't be a factor.

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Wage subsidy details to arrive Wednesday

Prime Minister Justin Trudeau addresses Canadians on the COVID-19 pandemic from Rideau Cottage in Ottawa on Tuesday, March 31, 2020. THE CANADIAN PRESS/Sean Kilpatrick
Prime Minister Justin Trudeau addresses Canadians on the COVID-19 pandemic from Rideau Cottage in Ottawa on Tuesday, March 31, 2020. THE CANADIAN PRESS/Sean Kilpatrick

Posted: 31/03/2020 9:29 PM

OTTAWA - Canadian businesses desperate for details about the federal government's promised wage subsidy program will have to wait a little longer for answers.

A news conference planned for Tuesday, at which Finance Minister Bill Morneau and Small Business Minister Mary Ng were to lay out the fine print, has been delayed until Wednesday.

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Ottawa finally acted, and in a big way, offering a 75 per cent subsidy on wages for any Canadian company, charity or non-profit that has seen its revenues drop by at least 30 per cent due to COVID-19. Mr. Trudeau asked companies that get the subsidy to rehire workers laid off over the last two weeks, and to ensure that all the money through the program goes to employees.

Wages covered by the subsidy will be capped at $847 a week. The extensive package came after Mr. Trudeau’s original proposal of a 10 per cent subsidy was dismissed by business and labour groups as puny to the point of being inconsequential.

Responding to the pandemic has shredded Ottawa’s previous priorities. As recently as March 7, federal Finance Minister Bill Morneau maintained that lowering the federal debt-to-GDP ratio was the goal. The Liberal government was then being criticized because the forecast $19.8-billion deficit had grown to $26.6 billion. That now seems minuscule compared to the federal bailout package currently valued at more than $200 billion.

If it’s any reassurance, a survey shows Canada’s spend-heavy reaction is in line with measures in other countries. The U.K. is supporting its businesses with about C$600 billion in loans and grants. France has pledged a C$70-billion aid package for businesses and will guarantee C$300 billion in loans. The United States passed a US$2-trillion stimulus package.

Taxpayers who feel alarmed about being saddled with such a sharp increase in government spending should consider the alternative. Without the massive financial injection, thousands of more businesses would close, millions more workers would be unemployed and the resulting economic devastation could be deeper and last longer.

COVID-19 has shaken the economic foundations of this country, but the virus will run its course. The current intervention in the economy, although extreme, is a government’s attempt to build an emergency bridge to return the country to previous prosperity.

In this case, the cost of doing business — or, more particularly, the cost of being able to continue doing business — is $200 billion.

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