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$71B wage subsidy 'appropriate' to keep economy afloat: Morneau – BNNBloomberg.ca
Finance Minister Bill Morneau said the ballooning cost of federal measures being promised to workers impacted by COVID-19 is essential to keeping the Canadian economy afloat.
“I’m worried about the size of the investment, always,” Morneau told BNN Bloomberg in an interview on Wednesday. “I’m also worried about not only the numerator, but the denominator: The size of the economy. That economy is what we’re focused on at the end.”
“These are some of the biggest expenditures that have ever been done in Canadian history. We recognize that. But it’s the appropriate thing to do at this time, and once we’re through this, we will have to make sure that we get ourselves back on an appropriate track.”
Morneau unveiled some crucial details about the federal government’s emergency wage subsidy on Wednesday, pegging the cost of the program that’s meant to cushion the blow from COVID-19 at $71 billion.
In a press conference earlier on Wednesday, Morneau said he expects funds will begin to flow in approximately six weeks, and that employers that apply will have to show their revenue fell at least 30 per cent compared to the same month last year. He confirmed that funds will be sent to employers via direct deposit from the Canada Revenue Agency.
A senior government official said during a technical briefing call that the funds could be delivered as early as three weeks, but it depends on how quick the CRA can launch the system for businesses to apply for the subsidy.
The official added that the CRA will offer some “flexibility” to high-growth businesses that don’t have a full year of operations in place to compare a year’s worth of revenue, suggesting prior monthly sales figures could be used instead.
Morneau said the government’s focus now has to be offering a lifeline to Canadians and Canadian businesses as soon as possible.
“I have been very focused during my time as finance minister to manage our fiscal position, to make sure we reduce our debt as a function of our economy. Well, that’s not where we are today,” he said.
“Where we are today is: I am focused on making sure people have enough money to pay for their groceries and their rent. I’m trying to make sure that we have a process that will get that money out to people rapidly.”
The revised wage subsidy program was unveiled by Prime Minister Justin Trudeau on Mar. 27 and will subsidize 75 per cent of wages for qualifying businesses up to a period of three months. It will be retroactive to March 15 and will cover the first $58,700 of salary up to a maximum of $847 per week.
The federal government had initially planned a subsidy of 10 per cent, which was quickly panned by small business leaders as insufficient. Nonetheless, the government confirmed Wednesday that the 10 per cent subsidy will still be available to employers that don’t qualify for the 75 per cent subsidy.
Morneau added that there will be “severe penalties” for anyone who seeks to use the funds fraudulently. However, specifics on how businesses will be penalized were not announced on Wednesday.
China's economy may not grow at all in 2020. That hasn't happened in 44 years – CNN
More help needed
Tens of millions of jobs at risk
‘There could be a rapid bounce back’: Experts believe economy can recover fast after pandemic – CityNews Vancouver
VANCOUVER (NEWS 1130) – While there’s a lot of financial uncertainty for many people in the fallout from the COVID-19 pandemic, there may be reason for optimism.
At least two economists believe Canada’s economy can bounce back quickly, once the pandemic ends.
“The good news is that if the coronavirus public health issue gets resolved, I think there will be a fast recovery,” says James Brander, Professor at the Sauder School of Business at UBC. “I think the governments are doing the right things to keep in place the possibility of a fast recovery, so there’s no reason why we can’t bounce back quickly.”
The main question, of course, is when that will happen.
“There’s some reason for optimism that there could be a sharp expansion but that depends very much on the public health situation and that of course is very uncertain,” adds Brander.
Mark Thompson, professor emeritus of Industrial Relations at the Sauder School of Business at UBC agrees a fast recovery is possible.
“I mean, the economy was in pretty good shape when this all happened and I think the demand is still there and the industries that have been forced to close can reopen,” he says. “In the past, recessions we’ve had tended to be sharp but not long lasting and I think that’s what’s going to happen here.”
However, despite the glimmer of hope, both economists admit the current situation is bleak, and there will still be struggles ahead before we’re able to bounce back.
“We’re seeing a sharper downturn than we’ve seen probably since the 1930s,” says Brander. “For the past week there will be in Canada approximately 1 million jobless claims. That’s approximately double the previous record.”
Brander adds financial help coming from the federal government will help people stay afloat.
“There’s enough in place for people to survive. Not feel good, but survive for a few months and we hope that things are looking better after two or three months,” he says.
Thompson also believes help coming from some provinces and Ottawa is a good start, but thinks more will be necessary depending on how long the pandemic lasts.
“The government, I think, is acting fairly vigorously and the focus on the employees who are losing their jobs and the small businesses who may collapse if this goes on is all very good,” he says. “I don’t think anybody believes that these measures are sufficient or that there won’t be more measures required in the future.”
Thompson adds a lot of what happens in the next few months will depend on the length and severity of the crisis.
“I guess if I knew that, I would make a lot of money in the stock market or something, if I could predict the future,” Thompson says.
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