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Trudeau to extend flagship emergency wage subsidy to next summer as biggest provinces hit second wave of COVID-19

Governor General Julie Payette leaves with Prime Minister Justin Trudeau after the throne speech in the Senate chamber in Ottawa, September 23, 2020.
Governor General Julie Payette leaves with Prime Minister Justin Trudeau after the throne speech in the Senate chamber in Ottawa, September 23, 2020.

OTTAWA – The Trudeau government will extend its flagship and costly emergency wage subsidy program for nearly another year as it promises to restore employment in Canada to pre-pandemic levels.

“The economic impact of COVID-19 on Canadians has already been worse than the 2008 financial crisis. These consequences will not be short-lived. This is not the time for austerity,” said the throne speech, delivered a month after Prime Minister Justin Trudeau prorogued Parliament.

One of the main promises made by the government to Canadian workers and business was to launch a campaign to “create” over one million jobs in the hopes of restoring employment numbers to pre-pandemic levels.

And one of the key levers is extending the Canada Emergency Wage Subsidy (CEWS) well past its planned December deadline (which was already a nearly six-month stretch from the original deadline when the program was first launched in May).

Originally, CEWS promised to pay 75 per cent of an eligible employee’s salary if their employer could show that their revenues had dropped at least 30 per cent over a particular month due to the pandemic.

In July, the program was extended until December, and the eligibility criteria was changed to make it easier to access the subsidies, which become less generous over the months.

This time, the throne speech was extremely scarce on details about the CEWS extension, going only so far as saying that it would be extended “right through to next summer.”

“The government will work with businesses and labour to ensure the program meets the needs of the health and economic situation as it evolves,” said Canada’s Gov. Gen. Julie Payette in the throne speech.

To date, CEWS has paid out over $35.3 billion to just over 312,000 unique corporate applicants since it was formally launched last May. According to the government’s data, at least 3.5 million employees’ wages have been supported up to date.

Despite the lack of information regarding the extension, the Canadian business community breathed a significant sigh of relief on Wednesday.

But industry groups warn that the devil is in the details when it comes to predicting if CEWS will be more successful in the future than it has to date. The government had originally planned for CEWS to dole out over $80 billion in aid over the first four months, as opposed to the current $35 billion over half a year.

“This is really good news. This is what we need,” said Leah Nord, senior director at the Canadian Chamber of Commerce. “The wage subsidy is going to allow our businesses to get over this hump, then to remain open, and then thrive afterward.”

For Dan Kelly, president and CEO of the Canadian Federation of Independent Business (CFIB), keeping the wage subsidy around for longer means that many businesses won’t be forced to lay off their employees again if the current second wave of COVID-19 leads to more forced closures.

“But just announcing it is one part of it, the other part is ensuring that it’s actually delivering meaningful support. The existing expansion of the wage subsidy that was announced in July has the subsidy decline really sharply and become almost trivial towards the end. I’m hoping they review that trajectory and the reduction,” Kelly said.

Another significant promise to Canadian workers made by the Trudeau government was to significantly overhaul the country’s Employment Insurance program, which has been described as “obsolete” and “insufficient” for years.

In doing so, the government promised that it would be amended to include workers who would usually not be eligible.

“Over the coming months, the EI system will become the sole delivery mechanism for employment benefits, including for Canadians who did not qualify for EI before the pandemic. This pandemic has shown that Canada needs an EI system for the 21st century, including for the self-employed and those in the gig economy,” Payette said.

But Kelly also said he wondered about the government’s ability to pay for costly aid programs such as CEWS, a concern echoed by the Canadian Taxpayers’ Federation.

“Regrettably, this government appears to want to exploit this health crisis as a pretext to splurge on big-ticket items that we could not even afford before the pandemic,” said CTF Federal Director Aaron Wudrick. ”Ottawa has a massive deficit so now is the time to focus spending on the highest priorities instead of shopping around for nice-to-haves that simply add to the credit card bill.”

But for the government, that concern seems minor.

“Canadians should not have to choose between health and their job, just like Canadians should not have to take on debt that their government can better shoulder,” said the throne speech.

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Copyright Postmedia Network Inc., 2020

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