OTTAWA — The federal government’s latest lifeline to cash-strapped businesses landed with a swirl of anxiety as companies face an uncertain future that may become clearer next week when the Liberals table a long-awaited economic update.
The duelling announcements Monday — applications opening for a new commercial rent-relief program and an update on the health of federal finances to come Nov. 30 — marked government efforts to provide some certainty in the face of what Finance Minister Chrystia Freeland described as a tough season on the way.
The government has not tabled a budget for this fiscal year, but in July delivered what it called a “fiscal snapshot” that estimated the deficit was heading for a record of $343.2 billion.
That figure doesn’t include added spending since July, nor many of the promises the government has made since, such as the first steps toward a national child-care program that should be included in next week’s update.
The Liberals have also said the update will provide the government’s outlook for the economy, and spending guidelines to avoid deficits from spiralling out of control since the pandemic has narrowed the government’s budgetary wiggle room.
Expectations are that the economy will take until at least 2022 to get back to pre-pandemic levels, with some scarring from closed businesses and unemployed workers taking even longer to heal. Freeland is faced with providing plan for managing both the near-term impacts of the pandemic and mitigating longer-term effects.
“A healthy economy requires a healthy population,” said Goldy Hyder, president of the Business Council of Canada.
“It’s time for a co-ordinated approach.”
In the near term, the government plans to start flowing rent assistance to eligible businesses by Dec. 4, replacing an earlier rent-support program from the spring that saw little pickup because it relied on landlords to apply for help.
The new program covers up to 65 per cent of rent or commercial mortgage interest on a sliding scale based on revenue declines, with an extra 25 per cent available to the hardest-hit firms.
Freeland said the measure, among others, should prevent viable businesses that have survived this far into the pandemic from faltering now that an end is in sight — a nod to encouraging news recently about vaccine development.
Still, she said, companies and Canadians are heading into “what we all know will be a difficult winter,” calling the support crucial to making it to next spring.
“We want to keep as much of our economy going as possible,” Freeland said.
The government is only setting the rules until Dec. 19, after which the Liberals are promising to adapt and target the aid as needed.
The program also only covers eligible expenses to Sept. 27, despite calls for help to companies that would have qualified for the previous rent-relief program had their landlords chosen to apply.
“Their plan still doesn’t help businesses that had to shut down in the spring,” NDP Leader Jagmeet Singh said. “So our solution is simple: We’re asking this government to make that help retroactive to April, the way small businesses are asking for.”
Even as the economy picked up in the third quarter, many businesses continued to report lower revenue compared with pre-pandemic levels, Bank of Canada deputy governor Toni Gravelle said in a Monday speech. Still, commercial rents nationally went up by 0.7 per cent, Statistics Canada reported last week.
Gravelle said federal measures, such as the new rent program and the extension of the wage subsidy program to next summer, should help companies and their workers.
But he warned that ongoing localized lockdowns and restrictions will make for a long and bumpy recovery, and the bank expects “an increasing number of businesses will need financing in the coming quarters to get by.”
Laura Jones, executive vice-president at the Canadian Federation of Independent Business, said small businesses remain anxious, including over how to cover their rent. She said that won’t subside until the aid is in the bank.
Many businesses still don’t know about the new program or how it works, or believe they’re not eligible because revenue losses aren’t as steep as what the previous version required, Jones said Monday.
“Businesses are paying attention to so many things,” she said. “It’s like drinking from a firehose all the time, on top of trying to keep your business afloat.”
The legislation that created the subsidy requires entrepreneurs to pay their rent before applying for aid, but the CRA won’t enforce that requirement. The Liberals have promised to quickly introduce legislation to formalize the directive.
The CRA said any rent expenses that haven’t been paid when a company applies will have to be paid within 60 days of receiving the subsidy.
Conservative small business critic Pat Kelly said the government had months to get the legislation right, “and they blew it.”
“This is the first day that small businesses have been able to apply for the rent subsidy,” he said. “Most didn’t even qualify for the old subsidy, but even for those that did, that program expired in September, and December’s rent is a little over a week away.”
The CRA said its online application and automated verification system should process claims on Nov. 30 and issue payments within three to five business days.
The CRA also promised little red tape for applicants for whom the agency doesn’t have information already on file to verify a claim. In those cases, applicants or third parties like landlords might be contacted for information on lease agreements and mortgage payments.
This report by The Canadian Press was first published Nov. 23, 2020.
Jordan Press, The Canadian Press
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