COVID-19: Earnscliffe Update #10

COVID-19: Earnscliffe Update #10

75% WAGE SUBSIDY DETAILS

The federal government announced on March 27 that it would be significantly increasing the wage subsidy announced earlier. On Monday, the Prime Minister released details on how the Canada Emergency Wage Subsidy would assist Canadian businesses struggling financially due to the COVID-19 crisis will work. The coverage of the program was expanded to provide a 75% wage subsidy for businesses experiencing a revenue decrease of 30% or more. As eligibility will not be tied to number of employees, big corporations, SMEs, not-for-profit organizations and charities alike will qualify for the subsidy.

The subsidy will cover up to 75% of the first $58,700 of an employee’s annual salary (up to $847 per week, backdated to March 15, 2020) whether a business is currently open or not. Businesses in a position to top up the remaining 25% of the wage for employees are encouraged to do so. The federal government is advising businesses still in a position to pay employees a full wage to continue to do so and has stated that any abuse of the wage subsidy program will be penalized. The money will flow through employers to individual employees.

Today, Finance Minister Morneau provided additional details of the program as well as the application procedures.  In calculating the 30 per cent drop in revenues, businesses will compare year-over-year monthly revenue, ie income for March, April or May this year to last year’s income in the corresponding month.  Employers who use this subsidy must do everything they can to pay the remaining 25% of wages to employees, and businesses should get ready to re-hire former employees who have already been laid off.

Applicant organizations will have to attest that they meet the criteria and that their wage claims are accurate. They are urged to retain documentation for later compliance audits. Applications will be available soon through the Canada Revenue Agency portal and funds are expected to flow in about three to six weeks. Once on the program, businesses will be required to reapply each month.

The Minister confirmed that the wage subsidy program will apply to the hospitality sector (restaurants and bars) as well as to not-for-profit and charitable organizations. Although non-profits and charities will be subject to the same 30% revenue drop requirement, deciding on how to calculate that is much more complicated because of the varied funding sources and timelines these organizations have to manage. The government has committed to further discussions with this sector. As well, it promised more aid to the sector.

Government expects money to flow from the CRA through direct deposit 3-6 weeks after application.

In total, Finance estimates the cost of the wage subsidy program to be $71B. It will subsume some of the new CERB costs which will now drop to an estimated $24B. In total government estimates that its direct payments to individuals and businesses now total about 5% of GDP.

MORE DETAILS ON THE CANADA EMERGENCY RESPONSE BENEFIT

Starting on April 6, Canadians who have lost their jobs and have not yet applied for EI, will be able to apply online for the CERB.  Applications for both the CERB and the wage subsidy can be made beginning April 6th here. Individuals are asked to apply in the following order based on birth date to prevent surges in applications:

  • January to March – apply on April 6
  • April – June – apply on April 7
  • July – September – apply on April 8
  • October – December – apply on April 9

Recipients should receive payment within 3-5 days (if signed up for direct deposit) and within 10 days (if they are receiving a cheque by mail.)  For people who have applied already for EI, there is no need to apply separately to CERB. Individuals must choose between the CERB and the wage subsidy.  Going forward, recipients will need to confirm they are still without a job each month.

FEDERAL GOVERNMENT ORDERS SUPPLIES

On Tuesday, the Prime Minister announced a major national push to manufacture supplies necessary to combat COVID-19. The initiative is funded by an allocation of $2 billion to cover public health and medical-related equipment to protect and treat Canadians.  The government has signed three supply contracts with Canadian companies.  Thornhill Medical, Medicom and SpartanBio will manufacture portable ventilators, surgical masks, and rapid testing kits. The government has ordered millions of supplies to ease the pressure on health care facilities and the public health system.

In addition, the government has also signed letters of intent with five companies — Precision Biomonitoring, Fluid Energy Group Ltd., Irving Oil, Calko Group, and Stanfield’s — to produce additional test kits, hand sanitizer, and protective apparel including masks and gowns.  The supplies will begin to flow in the coming weeks as they become available.

PARLIAMENT TO RETURN

The Prime Minister said that the government will consult with opposition parties to discuss recalling Parliament to pass legislation for the expanded measures to combat COVID-19. The principal reason to recall the House is that there is no legislative authority to implement the 75% wage subsidy, since it was not included in Bill C-13 which the House and Senate passed last week.

Conservative Party Leader Andrew Scheer said today that the government needs to hold off on increasing the price on carbon and refund GST payments collected in the last six months, to ease the strain on small businesses and the Canadian public. The carbon tax rose by $10 a tonne today.

UNITED STATES OF AMERICA

In the face of an ever-deepening economic crisis, the United States is considering an infrastructure program of historic proportions. American infrastructure has long been in need of investment, and this may be the moment. In the vein of FDR’s New Deal, President Trump has asked Congress to consider how the United States can build its way out of the economic carnage left behind by COVID-19.

The good news is that investing in infrastructure is one thing both Democrats and Republicans agree on. The bad news is that the devil, as always, is in the details. How this package gets drawn up and if it can meet the demands of the Democrat-controlled House and Republican-controlled Senate will require a level of bipartisanship Washington has not seen since the days of Tip O’Neill.

After some recovery late last week, the markets are down again in the wake of the President and his COVID-19 response team’s long and somber briefing on Tuesday night. The President has clearly come to accept that the United States will need to remain shut down for a significant period of time. Dr. Fauci and Ambassador Birx provided a disturbing prognosis for America with the best-case scenario being that hundreds of thousands of Americans will succumb to COVID-19 and the worst case being millions. The next two weeks will be especially difficult, by all accounts.

Meanwhile, 35 states, 79 counties, 28 cities, the District of Columbia and Puerto Rico have all issued stay-at-home orders, meaning that more than 8 out of 10 of all Americans are living under some sort of containment order. While Navy ships crewed by civilian medical personnel are supporting New York City and Los Angeles, the calls for medical supplies and more hospital beds echo across America with more cities finding their hospitals over-taxed and under-resourced.

Another casualty of the pandemic looks to be the political conventions scheduled for mid-summer. As states push back their primary contests, the presumptive Democratic nominee, Joe Biden, has publicly stated that he doesn’t see how the convention can occur and is advocating for a virtual alternative. States are racing to determine the feasibility of voting by mail for the November 3rd general election, with #votebymail and #novemberiscoming being driven by campaigns launched from PACs across America.

BRITISH COLUMBIA

Premier Horgan extended BC’s State of Emergency and citizens to recommit to support primary health care workers, stating that “we have hope that the steps that we are taking are working” and the government is “optimistic about the recovery.” He also noted the unprecedented cooperation happening between governments across the country. BC is working to take steps to secure its supply chain and announced a partnership between government, business and BC’s tech sector to ensure that essential resources are there to support those who need it most.

ALBERTA

At a joint news conference yesterday with TC Energy’s CEO Russ Girling, Premier Kenney announced a huge vote of confidence in the energy future of Alberta, which has been plagued by limited pipeline capacity, the oil price war between Saudi Arabia and Russia and plunging oil demand due to COVID-19.  In a move that parallels Ottawa’s purchase of Kinder Morgan’s TMX pipeline in 2018, Alberta is making a $1.5 billion equity investment in TC Energy’s Keystone XL pipeline to the gulf coast and will also provide a $6 billion loan guarantee for the project next year.

The deal is the culmination of six months of conversations between TC Energy, the Alberta Petroleum Marketing Commission and the Premier’s Office.  Aiming for completing by the summer of 2023, the project will increase crude exports by 830,000 barrels per day, and the pipeline’s future is backed by shipper deals that have been signed for 2023 to 2037.  The Premier said that “starting tomorrow” shovels will be in the ground, creating 1,400 jobs in Alberta, 1,200 in Saskatchewan and 12,000 indirect jobs nation-wide, including 5,400 in Alberta over the life of the construction.

The Premier said that after the completion of the project, the Government of Alberta plans to sell its shares at a profit and generate additional revenues. The Premier also reiterated his resolve to refuse further Saudi/OPEC interference in North American energy markets.

The Alberta government also announced three new pieces of legislation to cope with the COVID-19 pandemic:

  • Bill 10, the Public Health (Emergency Powers) Amendment Act, 2020 would provide law enforcement agencies full authority to enforce public health orders during a pandemic.
  • Bill 11, the Tenancies Statutes (Emergency Provisions) Amendment Act, 2020, would ensure no one will be retroactively charged for residential rent increases or late fees while the state of public health emergency is in effect.

In addition to debating these bills, the government is proposing Bill 12, the Liabilities Management Statutes Amendment Act, 2020, which would enable the government to clarify and enable expanded and delegated authority for the Orphan Well Association to maintain and manage orphan sites.

MANITOBA

By order of the Pallister government under the Public Health Act, non-essential services in the province are now closed between April 1 and April 14th. A list of business permitted to continue operations can be found under Schedule I of the order available here. Broadly the list mirror other provinces, permitting food and consumer good retails and wholesalers, gas stations and other necessarily businesses to continue operating. Education Minister Kelvin Goertzen has announced that the provinces schools will be suspended indefinitely, although teachers will continue to work remotely and prepare report cards.

ONTARIO

Today, the Ontario Government announced a new $50 million Ontario Together Fund to help businesses provide innovative solutions or retool their operations in order to manufacture essential medical supplies and equipment, including gowns, coveralls, masks, face shields, testing equipment and ventilators. This new Fund will support the development of proposals submitted by businesses and individuals through the earlier announced Ontario Together web portal.

For the balance of the week, the Ontario government’s focus was on gradually intensifying measures to help directly combat the spread of COVID-19. On Monday, the province’s chief medical officer released a slightly more restrictive list of criteria deemed “acceptable” for people to leave their homes including, accessing health care services; shopping for groceries; picking-up medication at the pharmacy; walking pets when required; and supporting vulnerable community members with meeting the above needs.

With reported outbreaks starting to spread in long-term care homes and one reported at a Toronto construction site, the province has implemented a new emergency order to ensure staffing and resources are available to help care for and protect long-term care residents during the COVID-19 crisis  New regulations have been issued for the construction industry to ensure the safe operation of work sites.

There continues to be no relief in sight for parents and kids this week as both schools and daycares are to remain closed until at least the 1st of May, putting further strain on Ontario’s working parents who must continue to juggle increasing work and home demands during this difficult time.

To combat reported price gouging, the province has issued an emergency order that retail businesses and individuals in Ontario cannot charge unfair prices for necessary goods. Individual offenders can face a ticket of $750, or, if summoned to court and convicted, could face a maximum penalty of a $100,000 fine and one year in jail. If convicted, a company director or officer could face a fine of up to $500,000 and up to a year in jail, and a corporation could face a fine of up to $10 million.

QUÉBEC

Premier Legault reminded people that Quebec was the first jurisdiction in North America to shut down non-essential services and has tested the most citizens. Taking a step further this week, Quebec moved to close essential businesses on Sundays, except for gas stations, convenience stores, and take-out orders in grocery stores and restaurants. Regional and provincial travel is now prohibited and controlled by police officers.

The government released $133 million in emergency assistance to institutions that house or accommodate seniors or clienteles with specific needs. There are 2,000 residences for seniors in Quebec, and there is at least one case in 519 of them.

The Caisse de dépôt et de placement du Québec (CDPQ) released $4 billion in loans of more than $5 million to businesses that were profitable before the COVID-19 crisis and that have promising growth prospects in their sector. The CDPQ has also extended $300,000 in donations to five key not-for-profit organizations: Centraide, the Red Cross, Les Petits Frères, Tel-jeunes and Alloprof.

ATLANTIC CANADA

Across Atlantic Canada, governments continue to detail response measures. In Prince Edward Island, the government has established the PEI Recovery Council drawing in a group of community leaders to advise. In New Brunswick, an enhanced pandemic operational plan is anticipated as early as Thursday, and Premier Higgs announced his government would be extending the province’s state of emergency by another two weeks, the provincial legislation requires the state of emergency be renewed in two week increments. In Newfoundland and Labrador, media reports have brought to light that the province’s financial health has severely impacted its ability to respond to the crisis, with estimates that the province might have run out of funds by mid-April. In response to these concerns, the Bank of Canada stepped in on March 24 to backstop their borrowing and bolstering its response to the crisis.

REACH OUT. WE’RE IN THIS TOGETHER

We know there is much uncertainty in a rapidly evolving and complex landscape. It’s times like these where we know how important it is to make the right decisions in order to help mitigate the impact of this global crisis on your organization, your employees and respond to a shifting public policy environment. We are tracking funding at all levels of government so please reach out if we can help you navigate the new reality.

As one of Canada’s most experienced teams of government relations, public opinion research and strategic communications advisors, we’re acutely aware you are navigating rapidly changing circumstances and we want you to know, we’re here to help. We can act as a sounding board, help you design specific strategies and adapt to new ways of doing business and emerging public policy.

Consistent, accurate and regular communication is essential. The team at Earnscliffe regularly works with our clients on how best to engage with their communities – whether in business as usual circumstances, in community engagement and community-building processes, or in crisis scenarios. If you have emerging needs in any of these areas, please don’t hesitate to reach out.

The current situation presents a strikingly more complex crisis environment than we have seen in our lifetimes.   Earnscliffe has the tools to safely, responsibly, respectfully and reliably conduct opinion research and give you a sense of the public mood. At this time, there is no reason to make decisions in the dark if opinion research can shed valuable light to develop strategies and test tactics.

Reach out. We’re in this together.

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