Former Blackberry CEO Jim Balsillie, seen here in Toronto on June 26, 2019, chairs the Council of Canadian Innovators, which is urging federal officials to revise the conditions for the government’s emergency wage subsidy.
Glenn Lowson/The Globe and Mail
Business leaders and social policy analysts are warning that conditions imposed by the federal government’s multibillion-dollar package of income support measures will leave out many people and employers.
Canada’s community of tech startups is particularly disappointed with the terms announced this week for the federal government’s new Canada Emergency Wage Subsidy to help businesses hit hard by COVID-19, which would give employers funds to cover 75 per cent of wage costs up to $58,700 – or $847 a week.
Finance Minister Bill Morneau announced on Wednesday that employers will have to demonstrate a reduction in revenue of 30 per cent each month in comparison to the same month a year earlier.
Business groups say a company’s monthly income can fluctuate considerably, especially if it is relatively new.
Jim Balsillie, a former chairman and co-CEO of Research in Motion and the current chair of the Council of Canadian Innovators, said many small and medium-sized companies don’t generate monthly income statements.
Mr. Balsillie’s group advocates on behalf of Canadian technology firms and is urging federal officials to revise the rules when legislation to implement the program is tabled in Parliament, likely next week. Mr. Balsillie said many tech entrepreneurs are also concerned that errors in applications could trigger the program’s harsh compliance penalties.
“There’s enormous anxiety,” he said in an interview. His organization is calling for the penalties to be eased, a focus on faster processing, possibly by contracting some of the work out to Canadian tech companies, and changes to the 30-per-cent rule.
“That’s not the right metric,” Mr. Balsillie said, noting that companies are more likely to track activities such as bookings, new subscribers, units shipped or billable hours.
Other business owners and advocacy organizations have also criticized the 30-per-cent rule.
Goldy Hyder, president of the Business Council of Canada, which represents the country’s largest corporations, expressed frustration that the federal government chose to offer a complicated wage-subsidy program.
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“We need to act with some urgency, and we need to keep it simple and not complicate it in a crisis,” he said.
Mr. Morneau responded generally to some of the concerns on Thursday before the House of Commons finance committee, saying the government aims for simplicity and speed.
“We are going as fast as humanly possible,” he said, after the three main opposition parties accused the government of creating delays and confusion. “It’s not as easy as just pressing a button. … I can assure you if we can do it faster, we will in fact get there.”
The government will need the support of opposition parties to pass the legislation quickly.
Bloc Québécois Leader Yves-François Blanchet said in a statement on Thursday that his party is calling for adjustments to the 30-per-cent rule and for Ottawa to cover some of businesses’ operational costs.
John Ruffolo, vice-chair of the Canadian Council of Innovators and former CEO of OMERS Ventures, said the finance department has miscalculated by having the Canada Revenue Agency manage the program.
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“It is going to be doomed to fail,” he said. “They are going to try to build this on the fly. It’s likely there will be massive gridlock on people submitting applications, and they are not designed to understand the needs of different businesses.”
He urged Ottawa to run the wage subsidy program through the banks, which he said could get the money out within 48 hours.
The government has also introduced a program called the Canada Emergency Response Benefit (CERB) to provide up to $500 per week for 16 weeks to people who have lost all income due to COVID-19.
Critics have noted that the CERB leaves out individuals such as contractors who may have lost most, but not all, of their income.
Also on Thursday, the Canadian Centre for Policy Alternatives released a report that said one third of unemployed Canadians will not qualify for Employment Insurance or the CERB. Some of the reasons include the fact that they are among the long-term unemployed or haven’t met the threshold of earning $5,000 over the past year to qualify for the CERB.
In his daily news conference, Prime Minister Justin Trudeau responded to the report by saying the two income support programs will help millions of Canadians, but acknowledged the government has more to do.
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“We know that there are many vulnerable people who won’t be able to access this support who will need extra help,” he said. “We’re making sure that we’re flowing funds through shelters, through non-profits and charitable organizations as well, but there will always be more to do.”
The federal government is widening its promise to subsidize wages for employers affected by COVID-19 to big businesses, non-profits and charities, if they’ve lost 30 per cent or more of their revenues. But he’s warning them not to take advantage of the multibillion-dollar program, and to see that the money goes to workers, not owners.The Canadian Press
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MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
