WEEK IN REVIEW
LEEFF DETAILS DISCLOSED
On Wednesday, Prime Minister Trudeau and Finance Minister Morneau revealed details of the Large Employer Emergency Financing Facility (LEEFF) program, the government’s initiative to provide bridge loans to big businesses who are large Canadian employers. Applications are now open and will be handled by the Canada Enterprise Emergency Funding Program, a new subsidiary of the Canada Development Investment Corporation (CDEV), in cooperation with Innovation, Science and Economic Development Canada and Finance Canada.
LEEFF will be open to large Canadian employers who:
- Have a significant impact on Canada’s economy, as demonstrated by having significant operations in Canada or that support a significant workforce in Canada;
- Can generally demonstrate approximately $300 million or more in annual revenues; and
- Require a minimum loan size of $60 million.
Large for-profit enterprises in all sectors but the financial sector, can apply for funding under LEEFF. Certain not-for-profit enterprises, such as airports, may also be eligible. Companies that have been found guilty of tax evasion are not eligible under the program. Applicants will need to provide proof they meet the criteria, as well as protecting jobs and workers, meeting environmental goals and conditions relating to stock options and executive compensation. There is no requirement for the government to take equity in firms, but the government will have the right to assign an observer to the board during the loan period.
CECRA RULES CLARIFIED
The government also announced the start of the long-delayed Canada Emergency Commercial Rent Assistance (CECRA) program for small businesses, which provides relief for small businesses experiencing financial hardship due to the pandemic. The program was announced several weeks ago but its implementation has been delayed by protracted negotiations with the provinces and territories.
In making the announcement, the Prime Minister said that the program application process will open on May 25, and added that the government “really hopes” apprehensive landlords will apply for the program. He pointed out that the program offers landlords a choice between partial coverage of rent versus no rent if tenants go bankrupt due to COVID-19 and create difficult to fill vacancies. The government hopes to have cheques in the hands of commercial landlords by June.
CECRA offers unsecured, forgivable loans to eligible commercial property owners to reduce the rent owed by their impacted small business tenants and help meet operating expenses on commercial properties. The program is designed to assist small business tenants paying less than $50,000 per month in gross rent in a given location, with annual revenues of less than $20 million (at the ultimate parent level), and who have experienced at least a 70 per cent drop in pre-COVID-19 revenues.
In exchange for property owners offering a minimum of a 75 per cent rent reduction for the months of April, May and June 2020, CECRA will provide forgivable loans to qualifying commercial property owners, whether they have a mortgage on their property or not. The loans will cover 50 per cent of rent payments for up to three months, with funds being transferred through the property owner’s financial institution. The small business tenant would cover up to 25 per cent of the rent payment, while the landlord would forgive the remaining portion — no less than25%. The loans will be forgiven if the qualifying property owner agrees to reduce the small business tenant’s rent by at least 75 per cent under a rent reduction agreement, which will include a term not to evict the tenant while the agreement is in place. The deadline to apply for rent assistance through the CECRA program is August 31, 2020.
MORE HELP FOR INDIGENOUS COMMUNITIES
This week, the Prime Minister announced $75 million in new funding for Indigenous organizations providing services to Indigenous peoples in urban centres and off reserve. The additional funding will support more community-based projects that address the critical needs of Indigenous populations during the pandemic, including food security, mental health support services, sanitation and protective equipment. It could also help with other needs, such as support for elders, transportation, and educational materials for Indigenous children and youth. Funding for projects will start rolling out in the coming weeks.
TESTING CONCERNS CONTINUE
As provinces re-open their economies across the country, concerns continue to rise that they do not have in place the test, trace and isolate programs necessary to track the spread of the COVID-19 virus. In Ontario and Quebec, the two provinces hardest hit by the pandemic, cases are plateaued or actually increasing, and Ontario still faces challenges in increasing its testing. Public health officials in both provinces are at a loss to explain why the incidence of the virus is rising and how it is being transmitted.
The state of testing was the principal subject of the weekly First Ministers call last night, in which the Prime Minister and premiers yet again discussed resources needed for “increased testing capacity, timely and complete contact tracing, and data and information sharing” in order to measure and contain future outbreaks. In today’s media briefing, the PM said he had offered federal help to the provinces and territories. 1,700 StatsCan interviewers who can make 20 000 calls per day are available to supplement their contact tracing capacity, as well as a limited number of trained federal employees who could make 3,600 calls per day. So far, only Ontario has requested this assistance. The Prime Minister also emphasized the government’s offer to help fund a national testing and contact tracing framework, and that a soon to be announced joint program between Google and Apple will make contact tracing apps much more efficient and secure.
In a tough lead editorial today, the Globe and Mail wrote that despite all the repeated brave promises from the PM and premiers on enhanced testing capabilities, very little so far has happened: “Instead of transparent test-and-trace plans, and proud reports on their execution, we keep hearing about plans to have a plan, or plans to consider plans….We’re reopening the economy, as we should, while still mulling over the possibility of acquiring the tools to do so safely.”
When the pandemic struck in mid-March, Parliament was adjourned until May 25. It has since returned in amended form with virtual sittings on Tuesdays and Thursdays and with an in-person virtual sitting on Wednesdays in Committee of the Whole. Negotiations among the parties on what Parliament should look like beginning next Monday continued this week. The Liberals and NDP have apparently agreed on an arrangement in which the House of Commons would return for virtual sittings with an expanded presence of MPs and full plenary powers.
The Conservatives are pushing for a return to normal functions on Monday while respecting public health guidelines on physical distancing with a reduced number of MPs. Leader Andrew Scheer said on Friday that “Virtual committee meetings are not a replacement for Parliament, nor are the prime minister’s daily press conferences in front of Rideau cottage. The government should not be allowed to hide information from Canadians or to pick and choose which questions they want to answer and when. But that’s exactly what’s been happening.”
To be continued if an agreement is reached…
NOT COMING TO AN OFFICE NEAR YOU
Ottawa-based Shopify this week became the latest high-tech company to signal that working from home is set to become the way business is done even after the pandemic passes. Shopify CEO Tobi Lutke said its offices will remain closed for the rest of 2020 and most of its 5,000-plus staff would continue to do their jobs from home while it also adjusts its workflow and office-space needs to be a “digital by default” organization. “Office centricity is over,” he wrote.
The company joins Open Text of Waterloo in making the permanent switch to remote work, saying last month that with 95 per cent of its nearly 15,000 employees working remotely over the past two months, it would close half its global offices and restructure its operations. U.S. high tech giants Facebook and Twitter have also said that significant numbers of their employees will continue to work from home indefinitely.
While it is still early days, this growing trend cannot help but impact future of the commercial real estate sector and urban transit use across the country.
CSIS WARNS OF FOREIGN THREATS
Canada’s spy agency, CSIS, issued a warning this week that Canadian academics and corporations are at increased risk of espionage or intellectual property theft as agents of foreign governments target research related to COVID-19. The warning identified a growing threat of stolen technology and data as spending in this country on coronavirus research surges, scientists work from home, and researchers entertain partnership offers from foreign interests.
“The biopharmaceutical and health care sectors are at a significantly high risk at this time as many countries are accelerating their COVID-19 research and development to support the pandemic response,” CISIS said in the document. “CSIS is particularly concerned about this threat in relation to state-sponsored activities of hostile states secretly seeking strategic or competitive advantage.” Other sectors, including quantum computing, “big-data analytics,” manufacturing and start-ups, that are involved in the COVID-19 response are also attractive targets for foreign espionage, the agency said.
UNITED STATES OF AMERICA: UPDATE
This weekend marks the beginning of the American summer with the Memorial Day holiday. Normally a time for beaches, barbeques, and sales, this year it will be marked by the continued economic re-opening of many of the 50 states. The jobless numbers have now crested 38 million and with the moves to re-open the economy, the number is stabilizing. The Federal Reserve has indicated that the “U.S. economy is in a downturn without precedent.” In addition, yet another $3 trillion stimulus bill is stalled out between the House and the Senate in the division over more funding to support out of work Americans.
Long-standing trade in live cattle within North America finds itself in jeopardy yet again. This time the President has stated that he would terminate agreements to import live cattle in order to protect U.S. ranchers suffering due to the disruptions in the supply chain. The shutdowns of meat processing plants due to COVID outbreaks have created bottlenecks throughout North America. Cattle prices have dropped precipitously and ranchers are stuck with cattle ready for slaughter that they must continue to feed and care for while at the same time new calves are born. Canadian cattle have traditionally been sold into the U.S. processing chain, and the threat of that market being blocked has sparked new fears within the Canadian beef sector.
The President is enjoying a bit of a bump in his approval ratings, which continue to be just over 44%. That is up two points from his approval rating on inauguration day. He continues to refuse to wear a mask when in public and claims to have taken a controversial drug regime as a prophylactic measure against infection. His actions are deepening divisions on how government should manage the continuing pandemic and allow for a normalization of interactions. Reports of violent reactions when individuals have been told to wear masks to access services or enter stores have grown over the past week, reflecting the depth of this division.
As the country continues to barrel towards the November 3rd election, another issue divides the political spectrum. The right to vote by mail and the normalization of absentee ballots have been openly challenged by the President. How states manage their processes to ensure that Americans are able to vote safely in November will be a large part of the conversation in the coming months.
In the middle of this pandemic, the President has continued to attempt to remove the United States from multilateral entanglements. In addition to declaring that the United States will no longer fund the World Health Organization, the President announced this week that the United States would no longer be part of the Open Skies agreement. This agreement allows for military surveillance flights to have access to the airspace of signatory countries. The President declared that violations to the agreement by Russia have made the agreement untenable. This further moves the United States into a position of isolation on the world stage. Last year, the United States left the INF (Intermediate-Range Nuclear Forces Treaty) with a similar complaint. More recently, the President has signaled a desire to walk away from START, a nuclear arms treaty that limits the number of deployed nuclear missiles for both Russia and the United States.
BRITISH COLUMBIA UPDATE
The second phase of “BC’s Restart Plan” began on May 19th. B.C. is in a unique position compared to other provinces. Instead of implementing a full lockdown, large portions of the B.C. economy continued to operate through the crisis, including manufacturing, construction, resource sectors, golf courses and more.
Under enhanced safety protocols, restaurants and personal services may now reopen. Safety guidance for all sectors is being provided by WorksafeBC is collaboration with the Public Health Officer, but each business and organization must develop and post their own safety plan. Though positive test numbers are low continue to decline, officials are clear that containment will remain the top priority as the province slowly reopens.
Premier Horgan has been calling for federal support to implement paid sick leave to help fight COVID-19 and has proposed that this be delivered though EI. A letter repeating that call from business associations, including 10 B.C. business associations, was sent to the Prime Minister last week. Horgan said that BC is prepared to develop their own paid sick leave plan if the federal government doesn’t step in.
On recovery spending, early indications are that some of the $1.5 billion set aside for economic recovery will go to the tourism sector. The finance minister has also said acceleration of some of multi-year spend infrastructure investments may be part recovery, but noted that they are waiting to see data come in regarding the economic impacts of pandemic so they can target spending appropriately. Government continues to seek out increased collaboration with, and ideas from, businesses, labour and other organizations on how to adapt to a COVID 19 reality, and the Economic Recovery Task Force will guide government decision making on recovery moving forward.
The B.C. legislature is set to resume June 15 or 22nd. The budget was not passed in February, and this week the Premier said government is considering what needs to be added to the existing budget respond to needs created by the pandemic.
Phase one of Alberta’s economic relaunch strategy began last week with retail businesses, museums, daycares, hair stylists, restaurants, and pubs reopening. In the cities of Calgary and Brooks where cases of COVID continue to emerge at a rate higher than the rest of the province, restaurants and hair styling business will have to wait until May 25 before opening. The province is now allowing groups of up to 50 people to meet (up from 15) outdoors and as long as physical distancing of two meters is ensured.
To assist businesses with safely resuming operations, the province has created an online portal with sector-specific guidelines at www.alberta.ca/bizconnect
The province announced that $30 million in emergency social service funding designed to support agencies responding to COVID-19 had been provided to 460 agencies across the province.
Premier Kenney spent much of the week in discussions with the NHL over a proposal to have Edmonton serve as one of two host cities when and if the league resumes play this season. Citing Edmonton’s low case count of COVID-19 and integrated hospitality and arena infrastructure, Kenney has said “the decision is obvious” for the league.
Phase two of the provincial Site Rehabilitation Plan opened for applications this week. The SRP is administered by the Orphan Well Association and has released an additional $100 million in grants intended to stimulate economic activity through well abandonment.
Premier Kenney announced additional screening measures for international travelers arriving at the Calgary and Edmonton International Airports. Provincial checkpoints will be stationed in the airports where arriving travelers will need to undergo a thermal scan and detail to officials their plan to isolate for the required 14 days. A checkpoint will also be established at a later date at the Coutts border crossing to ensure travelers arriving from the US are aware of Alberta protocols.
The Legislature will resume sitting full time on May 27 and is currently scheduled to meet until July 23.
Very low levels of COVID-19 cases have been reported in the province. While the numbers are encouraging, the Government of Saskatchewan remains concerned about the number of cases in the Far North.
The government announced the following last week:
- $10M additional funding for the livestock industry
- $300M was released this week for highways – new construction and road repair
- Changes were made to the Elections Act giving “clear authority” the Chief Electoral Officer to take “any necessary” to conduct this fall’s election safely
On May 19, Phase 2 of the plan to reopen the province began. This phase includes the opening, with restrictions, of:
- Shopping malls
- Personal select services (hairstylist/barbers, registered massage therapists and acupuncturists)
- Public markets and farmers markets
In Phase 3, restaurants and licensed establishments will be able to open at 50 per cent capacity. Gyms and fitness facilities will also be able to open for business, as will childcare facilities and places of worship – subject to guidelines that are being developed. The Government of Saskatchewan is launching the Accelerated Site Closure Program (ASCP) for the abandonment and reclamation of inactive oil and gas wells and facilities. ASCP will access up to $400 million, over two years, subject to the conclusion of an agreement with the federal government
As the province continued in the first phase of its re-opening for business, the government of Manitoba this week released two documents: Workplace Guidance for Business Owners and General Guidance for Staff and Customers.
Phase two of the province’s re-opening plan will begin on June, to include expanded public gatherings, restaurant dine in service and non-contact children’s sports.
Partial reopening yesterday of the province began on May 20, including construction, certain health and medical services, seasonal/recreational activities, household and animal services, and businesses with a street-entrance. The province has released more than 90 safety guidelines to govern the re-opening.
The government has announced an inquiry into Long-Term Care facilities to begin in September. In addition, the Minister of Education announced this week that Ontario schools will be closed for the rest of the summer.
Still a shortage of 10,000 care workers in provincial long-term care facilities. In addition, the Premier said that the province continues working with the federal government on traceability, attempting to arrive at a balance between public health and privacy protection.
The province made several announcements this week:
- Elementary schools in Montreal will not return until the fall.
- Masks will become necessary for use of public transit and one million masks were to be distributed this week for use the transit system. In addition, $6 million has been allocated to public transit in order to implement public health guidelines.
- The province is accelerating $3 billion in infrastructure spending, including $369 million to go towards improving the road network.
- Health officials continue to work to reduce cases in Montreal and are concentrating on testing long-term care workers.
- After raising an outcry last week, Quebec City is definitively rejecting the scenario of distance education for high school teens this fall and is instead considering a return to the classroom for all students, full-time or part-time.
- Day camps will open on June 22. Many day camps have already announced that they will not be able to open this summer due to the high costs involved in complying with the required sanitary measures.
- A number of 250 000 masks has been distributed for Laval, the second city the most affected after Montreal.
- Gatherings of less than ten people are now permitted. People must come from a maximum of three households, must stay outside as much as possible and maintain social distancing.
- The Minister of Culture and Communications has announced that museums, public libraries and cinemas will be able to reopen to the public everywhere in Quebec as of May 29
- A ” complementary statement ” that will follow the last budget tabled just before the confinement will be presented around June 24. An economic update will follow in the fall.
ATLANTIC CANADA UPDATE
- Has launched a four-stage reopening, presently moving into the “orange” phase of the plan, to include elective surgeries, retail and mall reopening, restaurants, etc.
- The province has yet to release a reopening plan
Prince Edward Island
- Currently in Phase One of four phase re-opening plan: Renew PEI Together.
- The province moves to Phase Two on May 22.
- Phase One relaxed personal gathering and contact restrictions, as well as permitting more recreational activities, and reopens outdoor and construction services.
Newfoundland & Labrador
- Provincial re-opening plan structured as a Five Alert Level Plan.
- Province moved to Alert Level 4 on May 11th, including low-risk activities and low-risk businesses reopening.
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.
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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.
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