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All businesses that have experienced a drop in revenue would qualify for support
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 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 wages, up to a weekly maximum of $847, for workers at eligible companies and non-profits.
Morneau said the government already has shared the draft legislation with the 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.”
Instead of subsidizing 75 per cent of the wages of workers at companies and non-profits that have experienced a 30 per cent drop in revenue, the proposed legislation 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 by the economic downturn caused by the COVID-19 pandemic — 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 wage subsidy is the centrepiece of the government’s plan to get Canadians back to work following several months of restricted economic activity — but the program’s uptake has not been as robust as the government had hoped.
Morneau said the changes were drafted following extensive consultations with businesses and employers reporting major flaws in the original program.
Dan Kelly, president and CEO of the Canadian Federation of Independent Business, praised the changes.
“Good to hear the wage subsidy (CEWS) will now be accessible to businesses with all levels of revenue losses,” Kelly wrote on Twitter. “Eliminating the 30% cliff is an important change to help pivot the program for an economic recovery.”
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.
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Canadians Should Decide What to do With Their Money – Not Politicians and Bureaucrats