Canada’s Parliamentary Budget Officer (PBO) says that the Ottawa’s emergency commercial rent assistance will cost the government approximately $520 million this year.
In a costing note released Wednesday, budget officer Yves Giroux noted that the estimate “(relies) heavily on judgement” as there is a lack of historical precedent for the program.
The Canada Emergency Commercial Rent Assistance (CECRA) program opened up to commercial landlords on Monday. The rent relief program, which was initially unveiled in April, will see the government provide forgivable loans covering 50 per cent of rent to property owners if they reduce rent by at least 75 per cent in April, May and June. Landlords and tenants will be on the hook for 25 per cent of the rent each.
Laura Jones, executive vice president at the Canadian Federation of Business, said it is unclear how many landlords will sign up for the program, leaving many small business owners concerned about paying rent in June.
“I think the assumption was that this would be a no-brainer for landlords. And that assumption was clearly proven to not be correct,” Jones said in an interview. In a recent survey of CFIB members, approximately one third of landlords said they were not sure if they will apply for the CECRA program.
“I still think ($520 million) is probably an over-estimate,” Jones said.
According to the CFIB’s most recent survey of its members, half of small businesses will not be able to pay rent in June without additional help from the government. More than half of the survey respondents said that rent relief could make the difference when it comes to ensuring the business survives through the COVID-19 pandemic.
The CFIB, which represents 110,000 members with small and medium-sized businesses across Canada, has been pushing the government to allow tenants to access the CECRA program in situations where landlords choose not to apply. They also recommend the government expand the Canada Emergency Business Account program, which currently provides $40,000 interest-free loans to qualifying businesses, part of which is forgivable.
“The simplest fix is to make CEBA more generous so people can get that money quickly,” Jones said.
“It’s a beyond desperate situation for some business owners now. They can’t hold on much longer, so it’s critical that the government do something fast.”
Jones said that approximately 12 per cent of CFIB’s members are currently considering filing for bankruptcy or winding down their business entirely as a result of the pandemic.
“Is CECRA better than nothing? Absolutely. It’s going to help some landlords and it’s going to help some tenants survive this,” Jones said.
“The problem is there are too many gaps for too many people who need help.”
According to the Canadian Press, the total value of benefits paid by the government in response to the COVID-19 pandemic now stands at $7.9 billion.