As P.E.I. businesses continue to face COVID-19 economic uncertainty, they got some encouraging news in the federal government's Fall Economic Statement on Monday about programs that can help them in the months ahead.
Even so, business groups are keeping a close eye on the details of those programs and what we'll ultimately see in the next federal budget.
"Definitely the fall economic statement provided some positive signals for what's to come in the budget and beyond in terms of stimulus funding. But with a statement like this, the devil is in the details and we're really digging in and chatting with our members about any gaps that still exist," said Penny Walsh-McGuire, CEO of the Greater Charlottetown Area Chamber of Commerce.
"We wanted to see targeted and tailored programs for the hardest hit industries, and we did see some of that. As we look to the future, we will need to move from a subsidy-focused economy to a private-sector driven economy. (I'm) interested to learn more about the $100 billion, three-year stimulus package, and how that will target growth in our economy as we move to the future. But there's still a lot of unknowns. Of course, everyone is waiting on details of the vaccine rollout. But it's pretty unlikely that we're going to see recovery in those hardest hit industries in 2021 in the way we would hope. It will more likely be 2022 that we'll start seeing the recovery that we need to happen."
In the fall economic statement (called "Supporting Canadians and Fighting COVID-19"), the federal government indicated that it is planning to spend $70 billion to $100 billion over three years, or three to four per cent of GDP.
Some programs have already been in place, and modified and extended into 2021, such as the Canada Emergency Wage Subsidy and the Canada Emergency Rent Subsidy (and Lockdown Support), the Canada Emergency Business Account (CEBA) loan program (expanded from $40,000 to $60,000 for eligible businesses) and the Regional Relief and Recovery Fund (RRRF) program.
A new program — the Highly Affected Sector Credit Availability Program — involves a low-interest loan of up to $1 million for impacted businesses in sectors like tourism and hospitality and arts and entertainment.
In particular, the wage subsidy program's extension to June and increase to 75 per cent of wages is a positive, said Walsh-McGuire, since it helps both business owners stay open and workers stay employed.
"It's pretty important, so good to see that extended," she said. "Hopefully, we'll have more updates as budget time comes in the new year on maybe how that might support the uncertainty for the tourism season in the spring and summer of 2021."
Rent Subsidy
Another important program to local businesses is the Canada Emergency Rent Subsidy, which is an improvement over its predecessor — the Canada Emergency Commercial Rent Assistance (CECRA), says Louis-Philippe Gauthier, director of provincial affairs for New Brunswick and P.E.I. for the Canadian Federation of Independent Businesses.
Some of the biggest changes between the programs is that the newer version no longer requires the involvement of landlords in the application process, which was a major issue for some businesses, and a lower revenue loss requirement.
The previous program required businesses to show at least a 70-per-cent revenue loss compared to before the pandemic whereas the newer program has no minimum revenue loss requirement.
Instead, commercial rent or property expenses for eligible Canadian businesses, non-profit organizations, or charities can receive 65 per cent of costs for 70 per cent or more revenue loss while amounts below 70 per cent are calculated on a sliding scale using a couple of different methods.
Gauthier said the CFIB is encouraging members who didn't see the previous rent assistance program as a fit to take a look at the new version, and if it makes sense, take advantage of it.
The CFIB also supports the program updates in Monday's announcement, but there were a couple of areas that weren't addressed that are a concern.
For instance, the CFIB was looking for the federal government to delay Canada Pension Plan contribution increases from business owners for a year, similar to how employment insurance contributions were frozen for the next couple of years.
Gauthier notes that delaying CPP contributions won't be easy since it requires the agreement of the provinces and potentially involves legislation changes.
Gauthier also wanted to see provisions to help newly opened businesses that are equally struggling during the pandemic, but unlike other businesses, don't have annual revenue loss numbers that some programs are looking for as an eligibility requirement.
"That's something that we're still continuing our advocacy on because the reality is those businesses should have access as well," he said.
Terrence MacEachern is The Guardian's business reporter.