Politics

Finance minister proposes expanding eligibility of federal wage subsidy

Finance Minister Bill Morneau is proposing sweeping changes to the federal wage subsidy that would extend the program until the end of the year and open the program to more businesses.

All businesses that have experienced a drop in revenue would qualify for support

Minister of Finance Bill Morneau rises in the House of Commons after delivering deliver a fiscal snapshot July 8, 2020. (Adrian Wyld/The Canadian Press)

Finance Minister Bill Morneau is proposing sweeping changes to the federal pandemic wage subsidy that would extend the program until the end of the year and open it up to more businesses.

The changes to the subsidy would do away with the requirement that businesses prove a 30 per cent decrease in revenue in order to qualify — allowing all Canadian companies that have experienced pandemic-driven revenue declines to access the program.

That 30 per cent benchmark was a key sticking point for many business groups, which complained that the requirement excluded many companies and discouraged those receiving the subsidy from growing because of the risk of losing federal aid.

Speaking to reporters at a Toronto restaurant today, Morneau said the new program would tie the amount a company receives to the amount of revenue it has lost because of the economic downturn caused by the COVID-19 pandemic.

Previously, the wage subsidy covered 75 per cent of the wages of workers at companies and non-profits that had experienced a 30 per cent drop in revenue.

Morneau said the draft legislation — which was drafted in response to extensive consultations with businesses and employers reporting major flaws in the original program — has been shared with opposition parties.

The legislation would extend the program until December 19 and would be retroactive to July 5.

"Over the last couple of months, we've talked to experts and business leaders and labour leaders about how we could make sure that the wage subsidy would give us the ability to allow businesses to safely restart in the economy," Morneau said.

"[The proposed legislation] broadens the number of organizations and helps them to safely restart to get their employees back at a time where their revenues are reduced."

WATCH: Finance minister announces changes to wage subsidy program

The federal wage subsidy is already supporting hundreds of thousands of Canadian businesses during the pandemic and the government announced it's getting bigger, detailing a major overhaul. 1:59

The new program would offer qualifying businesses a base subsidy that would vary according to how much revenue they lost.

Harder-hit companies would receive larger subsidies and the amount would be calculated by comparing a company's monthly revenue to the same period in the previous year.

The businesses that have been hit hardest — those that have experienced drops in revenue of at least 50 per cent — would be eligible for the highest level of subsidy and would receive additional top-up subsidies of up to 25 per cent.

The legislation also contains a "safe harbour provision" that would allow any company that would have been better off under the previous program design to continue receiving the same level of support until the end of August.

Industry groups welcome changes

Dan Kelly, president and CEO of the Canadian Federation of Independent Business, said in a statement that the changes will give businesses the certainty they need to make staffing plans for the rest of the year.

Kelly warned, however, that the new system is complicated and small businesses will need help in determining how much aid they can claim.

"Small firms look forward to the day that subsidies can be replaced by sales," Kelly said.

"While today's announcement will help smooth this transition for many, quick action on retooling all programs to aid during the recovery is urgently needed."

The wage subsidy is the centrepiece of the government's plan to get Canadians back to work following months of restricted economic activity — but the program's uptake has not been as robust as the government had hoped.

As of July 13, the wage subsidy had paid out $20.3 billion to 262,200 companies.

In a "fiscal snapshot" released last week, Morneau revealed the amount budgeted for the wage subsidy program has increased to $82.3 billion from $45 billion.

Brian DePratto, senior economist at TD Economics, said he expects the changes will deliver a boost to employment and will help support household incomes — particularly for those people who will lose access to the Canada emergency response benefit (CERB) when it runs out at the end of the summer.

Draft bill includes aid for people with disabilities

The legislation altering the wage subsidy also includes a new one-time disability payment that was part of a bill that failed to pass the Commons in June.

In an interview on CBC's Power and Politics, Employment Minister Carla Qualtrough said the disability payment — which originally was only going to benefit Canadians who qualify for the federal disability tax credit — will now also go to those receiving disability benefits from the Canada Pension Plan, the Quebec Pension Plan and Veterans Affairs Canada.

Qualtrough said that change would increase the number of people eligible for the $600 tax-free payment from 1.2 million to 1.7 million.

Canadians with disabilities who haven't applied for the disability tax credit before would have 60 days in which to do so to qualify for the payment, she said.

"A lot of people with disabilities don't make enough income to make it worth their while to even apply for the [disability tax credit]," Qualtrough said.

"So we are giving people 60 days to apply. If they are deemed eligible, they will be able to get this support."

With files from David Cochrane and the Canadian Press

Add some “good” to your morning and evening.

A variety of newsletters you'll love, delivered straight to you.

Sign up now

Comments

To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.

now