Canada: $ 71 billion in business assistance for three months
The 75% wage subsidy that Ottawa intends to pay to companies to avoid mass layoffs will cost $ 71 billion, the Canadian government estimated Wednesday, as the coronavirus epidemic accelerated in the country.
C ette with a three-month retroactive to March 15, is open to all companies who have had a “down 30% or more of their income” compared to the same period last year, said Finance Minister Bill Morneau.
Ottawa will subsidize 75% of the first $ 58,700 of each salary and employers will have to do “everything in their power” to pay the remaining 25%. The federal government could thus insure up to $ 847 per week, per employee. The measure is retroactive to March 15.
The program alone will cost the state $ 71 billion.
To be eligible, a business must have lost at least 30% of its gross revenue compared to the same period last year. “The drop in income will be calculated by comparing the month in question with the same month last year for March, April and May,” said Morneau.
Each business will have to submit a new application each month through an online portal on the Canada Revenue Agency. The portal will be unveiled in “between three and six weeks,” according to the state’s grand financier.
“It is the largest economic program in Canadian history”
– Prime Minister of Canada Justin Trudeau
With this program, the federal government hopes to maintain the employment link between employees and their employers so that they can resume their economic activities quickly after the crisis has ended.
“My message to employers in Canada is this: Prepare to rehire people,” said Mr. Morneau.
With billions of dollars available to individuals and businesses, the federal government warns that anyone who abuses government benefits will face severe consequences.
These consequences are not yet known at this point.
Prime Minister Justin Trudeau has warned Canadians that they will not be able to take advantage of both this wage subsidy and the Canadian Emergency Benefit (CHP) of $ 2,000 a month.
Mr. Morneau hopes that companies will continue to pay or re-hire their employees with the assurance that the wage subsidy will come in a few weeks.
But he conceded at the same time that all those who have lost their jobs or who have no more income can therefore submit a request for the PKU while waiting to receive their salary.
Like the PKU, the wage subsidy will have to be renewed every month.
Morneau said he trusts that both leaders and workers will be of good faith in this crisis.
“We have to (make sure) that the money that is going to come to businesses is for the employees. That is why we are going to have an approach where they will have to make sure that they have already paid their employees and in this way, we will know that this money is for their employees. That’s very important, ”said Morneau.
DETAILS TO BE PAINTED
Despite the Minister’s clarification and the technical briefing that followed, many questions remain unanswered.
The Federation of Quebec Chambers of Commerce (FCCQ) believes that many companies will fall between the cracks of this program, since it does not take into account expanding businesses or even higher expenses in times of pandemic.
The FCCQ also deplores the delays in seeing the color of this money.
“We understand that the situation is exceptional and that setting up such a system can be a challenge, but companies need liquidity faster than six weeks if they want to be able to maintain the employment link with their skilled workers, ”said its president and chief executive officer, Charles Milliard.
But according to Professor Geneviève Tellier of the School of Political Studies at the University of Ottawa, “it’s normal that we don’t have all the details” given the size of the federal government and the complexity of the operation.
The federal emergency plan, which was $ 82 billion last week, is now valued at more than $ 200 billion. It’s “the equivalent of two, three budgets,” says Tellier.
“By announcing quickly, people know a little about what to expect. Yes, there is the anxiety of not having the money today, […] but at the same time, we can say that the money is coming. We are not in the unknown, ”she argues.
PKU is expected to be available next week for all Canadians who are no longer in income due to COVID-19.