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Ottawa to replace wage, rent subsidy programs with targeted supports

Ottawa is introducing new benefits for businesses and sectors hit hardest by the COVID-19 pandemic, allowing the current wage and rent subsidy programs introduced last year to expire on Oct. 23.

Deputy Prime Minister and Finance Minister Chrystia Freeland announced on Thursday that the government will introduce two new support programs that will target sectors hit hardest by COVID-19, including the tourism industry.

"We are moving from the very broad-based support that was appropriate at the height of lockdowns, to more targeted measures that will provide help where it is needed while prudently managing government finances," Freeland said.

"Our supports need to be more narrow, more targeted and less expensive. We need to look forward to the day, not too far off, when we will be able to bring it to an end entirely."

Freeland unveiled two new programs on Thursday. One is the Tourism and Hospitality Recovery Program, which would provide support through wage and rent subsidies to hotels, tour operators, travel agencies and restaurants with a subsidy rate of up to 75 per cent. The second program, the Hardest-hit Business Recovery Program, would provide support through wage and rent subsidies for "other businesses that have faced deep losses." The government said applicants to these programs would have to "demonstrate significant revenue losses over the course of 12 months of the pandemic, as well as revenue losses in the current month."

At the same time, the government will extend the Canada Recovery Hiring Program, which subsidizes a portion of additional salaries or wages with the aim of making it easier to hire new workers. It will also replace the Canada Recovery Benefit (CRB) with a new program called the Canada Worker Lockdown Benefit, which can come into effect in the event of local temporary lockdowns.

The cost of the new programs, which will run from Oct. 24 to May 7, will be $7.4 billion. The government spent $289 billion on income and business supports since the start of the pandemic.

Business groups had called on the federal government to extend the Canada Emergency Wage Subsidy (CEWS) as well as the Canada Emergency Rent Subsidy (CERS), warning that allowing them to expire could lead to closures.

The Canadian Federation of Independent Business (CFIB) said it was relieved that businesses will still receive support from the government, but concerned that eligibility rules will leave many behind.

"Restaurants and tourism businesses will need to see a revenue drop of 40 per cent and all other businesses a 50 per cent drop in order to access these critical programs. This means small businesses that see revenues lower by one-third will not be able to access the previous wage and rent subsidies – potentially signing them up to lose money every single day they are open and putting them at risk of permanent closure," CFIB president Dan Kelly said in a statement.

Kelly also said the CFIB will push Ottawa to be flexible in how it defines businesses for its tourism program, arguing that other businesses such as gyms and recreation facilities should be eligible for higher levels of support.

Canadian Chamber of Commerce senior vice-president of policy Mark Agnew said in a statement that the retooled programs will allow businesses that have been impacted by public health restriction to survive until they can recover.

"This is the fair thing to do for businesses that are playing their part to protect public health," Agnew said.

Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.

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