Federal budget gradually reduces support for tourism operators
‘I think there is going to be a lot of operators looking to make some pretty tough decisions’
A P.E.I. tourism operator says his industry will have less support this year, compared to last, as a result of Finance Minister Chrystia Freeland's federal budget made public on Monday.
Matthew Jelley, president Maritime Fun Group, which owns Shining Waters Family Fun Park, Sandspit, and 18 other tourism businesses in the Maritimes, said he was pleased to see an extension of the pandemic wage and rent subsidies.
But Jelley said when he drilled down to the details, buried on Page 603 of the budget document, he realized that extension comes with a major catch.
"The way the wage subsidy is going to be structured, when you get into July, August and particularly September businesses that are down 60, 70 per cent could see support in the range of 15 to 20 per cent where previously it was more in that 75 per cent range," Jelley said from Cavendish.
"If we're going to be in a similar position to last summer and down that 60 to 70 per cent, we could be looking at a small fraction of the support we had last year and so that's going to be a difficult haul for tourism. "
'Some certainty moving forward'
The budget does extend the COVID-19 wage subsidy, rent subsidy and lockdown supports to Sept. 25, with plans to start gradually reducing support payments beginning in July. Those subsidies could be further extended to Nov. 20 if pandemic conditions demand it.
The cost of extending the wage subsidy is estimated at $10.1 billion in 2021-22, while the extension of the rent subsidy and lockdown support is expected to cost $1.9 billion.
P.E.I. Finance Minister Darlene Compton said she was pleased to see an extension to the pandemic wage and rent subsidies.
"It's very important for tourism, it gives operators and anyone involved in the industry some certainty moving forward to open this season," said Compton.
The federal budget also includes $1 billion over three years, starting in 2021-22, for tourism.
The federal government promises to establish a $500-million tourism relief fund, which ACOA will administer in this region.
'Discover and explore the country'
A Finance Department background document says the fund will, "support investments by local tourism businesses in adapting their products and services to public health measures and other investments that will help them recover from the pandemic and position themselves for future growth."
The budget also includes $200 million to support local festivals and cultural events, $200-million to support "major festivals", and $100-million for marketing campaigns "...to help Canadians and other visitors discover and explore the country."
The federal government is also introducing a new measure to help businesses hire staff. The Canada Recovery Hiring Program will provide qualifying employers with up to $1,129 per week for employees hired between June 6, 2021 and November 20, 2021.
The program is expected to cost $595 million in 2021/22.
The federal government is also extending the maximum period of employment insurance sickness benefits from 15 weeks to 26 weeks.
'Facing so much uncertainty'
Penny Walsh-McGurie, CEO of the Greater Charlottetown Area Chamber of Commerce, said she too was happy to see wage and rent subsidies extended. But she hopes to see those extended even further should the pandemic continue its grip on the country.
"As we all know, the tourism industry and those that support the tourism industry, other service businesses as well, are facing so much uncertainty in terms of who they will be serving this summer and when border restrictions will be reduced," said Walsh-McGuire.
Jelley said he's not hopeful, given what is happening now in Ontario, and increased border restrictions in P.E.I., that this summer will be much better than last summer. He questions why the federal government would start reducing supports in July, given the current state of the pandemic across Canada.
"The national picture has been getting worse everyday. We know regionally, and on Prince Edward Island, we're looking at more restrictions," said Jelley.
"Operators were really hopeful to get the spring season in and get golf groups over here and just get things moving and right now it looks like everything is on hold and at the same time, the assistance that was there to get us through last summer looks like it's going to start being cutback. That's really challenging and I think there is going to be a lot of operators looking to make some pretty tough decisions."