As the COVID-19 caseload shows every sign of surging in Canada, the delivery of promised financial relief for people who’ve lost their jobs or closed their businesses remains maddeningly slow.
The federal government’s emergency wage subsidy is at least three weeks away from being available. It could take even longer. The emergency response benefit for those who already have lost their jobs begins phased-in registration for the program on Monday.
Small businesses, which still have to pay rent and other bills, continue to wait for promised $40,000 interest-free loans as the Department of Finance continues to negotiate its delivery with the country’s banks.
Waiting for the banks to step up
Finance Minister Bill Morneau said this week that his department has been working every day with the banks. He told members of the Commons finance committee that the “intense negotiations” are going well and that banks are “close to offering” the interest-free loans, perhaps as early as next week.
“We are going as fast as humanly possible,” he told opposition MPs on the committee.
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But the pace remains too slow for many, even as political leaders grapple with a bewildering array of new challenges on a daily basis.
Today alone, the prime minister was forced to respond to U.S. President Donald Trump’s directive to Minnesota-based 3M to stop shipping N95 masks to Canada. Ontario released projections saying there could be 80,000 cases of COVID-19 in the province by the end of the month, and that the pandemic’s effects could last as long as two years.
“These numbers are stark and they are sobering,” said Premier Doug Ford as he announced more mandatory closures of workplaces, including construction projects.
“We have to make difficult choices and extreme sacrifices.”
The sheer scale of the pandemic — the possibility that tens of thousands of Canadians could die, the prospect of self-isolation and business closures lasting for many months — simply adds to the stress felt by Canadians worried about their immediate future.
The Canadian Federation of Independent Business released a survey this week suggesting that up to a third of small businesses that have closed because of COVID-19 will never re-open. Another 23 per cent of the 9,000 members who responded to the CFIB survey indicated they would not make their April rent payments.
It’s led many to question why Canadian banks aren’t doing more to help.
‘Business as usual’
Former Conservative leadership candidate Rick Peterson wrote an op-ed piece this week criticizing the banks for failing to be proactive and for continuing to charge high fees and credit card interest rates.
“It’s basically business as usual,” he wrote in The Edmonton Journal. “Sure, the banks have deferred payments for up to six months on mortgages and some loans — but the interest charges continue to accrue. Credit card payments have been deferred as well, but interest charges and transaction fees stay the same.”
New Democrat MP Peter Julian issued his own public appeal to the banks earlier this week.
“All Canadians are making sacrifices to get our country through this crisis,” he wrote in an open letter. “Financial institutions, particularly Canada’s six big banks, can play their part by waiving interest fees and charges on bank loans, line of credits and mortgages for the next two payment cycles.”
Government balks at using the Bank Act
New Democrats urged the Trudeau government to use its authority under the Bank Act to reduce interest rates, and to work with the provinces to freeze any rent increases and utility payments.
Government officials, who spoke on background, said banks are cooperating and using the hammer of the Bank Act would be counterproductive.
“We get that people want relief,” said one official. “To be fair here, the banks are very aware that they are a critical piece of keeping the economy healthy.”
The Canadian Bankers Association says it is working with both governments and customers to help them weather the pandemic.
Spokesman Mathieu Labrèche replied to written questions from CBC News on Friday to say nearly a half a million requests for mortgage deferrals were either completed or were in the process of being completed over the past two weeks — about 10 per cent off the mortgages held by the country’s six largest banks.
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Over that same period, the banks have dealt with about 100,000 credit card deferral requests.
“Canada’s banks assembled quickly and made a commitment to work with their customers to provide flexible solutions to help them manage through financial hardship,” Labrèche wrote. “Many banks have programs in place to help … make debt more manageable and structure the right solution, for example rolling in credit card debt into term products with lower interest rates.”
Short-term relief, long-term burdens
But that relief is temporary. And for many people, the cost of servicing those debts will actually increase in the long run.
CIBC announced Friday that any clients with personal credit cards who want to skip a payment will receive a temporary lower rate of 10.99 per cent retroactive to March 15. But the accrued interest over the deferral period is going to be added to the cardholder’s outstanding balance. “Once your payments resume,” the bank acknowledges, “your minimum payment may be higher as a result of a higher outstanding balance.”
A letter from TD Bank to one of its mortgage customers outlines the consequences of deferrals:
“It’s important that by deferring mortgage payments you’re not paying the mortgage principal, and interest will be capitalized, (that is, it will be added to the outstanding mortgage balance so your balance will increase),” the letter said. “We want to ensure you understand the impact.”
It’s a fair bet that Canadians do understand the impact. They also understand why it’s up to the government to ensure the banks’ interests don’t run counter to those of their customers — the ones obeying the government directives to stay at home at great personal cost.
NWT says its economy is weathering Covid-19 better than others – Cabin Radio
The NWT’s economy will come out of Covid-19’s initial months damaged but in better shape than other parts of Canada, the territory said on Friday.
The territorial government is forecasting a 3.3-percent contraction in its economy this year, which it says is “significantly less than the national average of 8.2 percent forecast by the Conference Board of Canada,” an economic think-tank.
Despite steep declines in the tourism and transportation industries, the territory said “steps taken to keep the diamond mines and the public sector active” had softened the pandemic’s blow.
Mining and government are by far the territory’s largest employers. The Ekati mine has suspended activities but the Gahcho Kué and Diavik mines remain fully operational.
The private sector is in worse shape. A GNWT-commissioned survey of businesses showed that 81 percent of NWT companies had experienced a “significant decrease” in revenues.
Tourism and transportation industries were the hardest-hit, telling the government they saw revenues drop by an average of 71 percent.
On the other hand, more than 90 percent of businesses surveyed by the territory in April and May reported they expected to make it through the pandemic.
Consumer spending and small business spending has rebounded since May, the territory said, and 71 percent of NWT residents surveyed were planning to travel within the territory in the next six months.
The Department of Industry, Tourism, and Investment said the results of third survey – carried out in June to examine the impact on consumer demand – is coming soon.
According to the territory, the various surveys are “part of … ongoing work to better understand the effects of Covid-19 on the NWT and how best to respond to them.”
Saskatchewan economy adds 30,000 jobs in June as businesses open up again: Statistics Canada – CBC.ca
Saskatchewan added more than 30,000 new jobs in June as businesses began to open back up from the COVID-19 pandemic.
Saskatchewan’s unemployment rate dipped to 11.6 per cent in June from a high in May of 12.5 per cent, according to a Statistics Canada report on Friday.
At the national level Canada added almost one million jobs in June.
The national jobless rate fell to 12.3 per cent, down from the record-high of 13.7 in May. There are still 1.8 million fewer jobs in Canada today than there were in February.
Jason Childs, an associate professor of economics at the U of R, said he was pleasantly surprised by the employment gains.
“To be gaining 30,000 jobs provincially and nearly a million jobs nationally is some unexpected good news, which is nice for a change,” he said.
The growth in Saskatchewan was split between 22,000 full-time jobs and 10,000 part-time jobs.
Childs cautioned that the jobless rate in the province is still more than six per cent higher than it was at this time last year, when it was 5.2 per cent, and there still about 40,0000 fewer jobs than before the pandemic.
“[Some people] don’t appreciate how deep the hole we’re in is and this is not a hole we’re going to get out of quickly,” Childs said. “[Unemployment] has more than doubled from this time last year.”
All those job losses have not been evenly distributed throughout the population.
Young workers are taking the brunt of the job losses in the province.
One in five people 15 to 24 years old are without a job, compared to 8.6 per cent of workers over the age of 25.
Unemployment among First Nations is 18.4 per cent and the Métis jobless rate is 17.3 per cent.
Childs said both those groups already have higher unemployment and they will have a harder time getting back in the workforce.
“People looking for that first job are going to have a really tough time right now because anything that opens up you’re probably going to be competing with somebody who’s got a lot more experience,” he said.
The one sector hit hardest by the pandemic is food and accommodation, where an estimated 400,000 workers across the country are still without a job.
Childs said those jobs are dependent on consumer spending and tourism, and that people’s financial habits have changed during the pandemic.
“I still think we’re going to see a drag [on the economy] as we get what’s called the Paradox of Thrift,” Childs said.
“As people begin to save for their own protection we may see that drag on economic activity as consumption falls off.”
He said people are beginning to cut back on ‘luxuries’ like going out to eat or grabbing a cup of coffee.
“That’s a place where you can cut back fairly easy,” he said.
“People are dealing with a massive amount of uncertainty right now and uncertainty breeds caution and doesn’t breed spending.”
Childs said no amount of fiscal stimulus is going to solve this crisis without consumer confidence.
“You need to get people back to a place where they feel comfortable and safe spending in order to return to the previous level of economic activity,” he said. “Or we’re just gonna have to get used to this.”
Jason Kenney sees supply shortage in oil and gas when global economy rebounds from COVID-19 – Edmonton Journal
COVID-19 has put Canada in a “deep fiscal hole,” and the only way to get out of it is to spark the oil and gas sector, Premier Jason Kenney said Friday.
Noting the federal government’s announcement Wednesday it expected to post a $343-billion deficit, Kenney expressed optimism that demand for oil would bolster Alberta’s recovery.
“When the global economy comes back from COVID, when demand returns for oil and gas, we are going to see something of a supply shortage, because of the upstream exploration that has been cancelled,” he said at a Friday news conference.
“So we’ll see prices go up, and that will be a great opportunity for Alberta especially as we make progress on pipelines,” Kenney said.
At Friday’s market close, West Texas Intermediate crude was priced at just over US$40.
TC Energy’s Keystone XL pipeline, which the government of Alberta has committed $7 billion in financial support, faced a legal hurdle this week when the U.S. Supreme Court refused to let construction begin on the project.
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