Finance Minister Bill Morneau was suppose to hold a news conference on March 31, 2020 to provide details of the subsidy program, but that was cancelled, in an April 1, 2020 story. (Photo by THE CANADIAN PRESS)

Federal wage subsidy payments to flow first week of May, officials tell MPs

Online applications will open April 27 and officials expect to have processed 90 per cent of claims by May 4

The first payments from a $73-billion federal wage subsidy program will flow by the end of the first week of May, acting as a buttress against the economic shock from COVID-19.

The Liberals are hoping the 75-per-cent wage subsidy will prompt companies to rehire vast swaths of the six million Canadian workers who have asked for emergency federal aid since the pandemic brought the global economy to a virtual standstill.

Online applications will open April 27 and officials expect to have processed 90 per cent of claims by May 4 with payments landing later that week, MPs on the House of Commons finance committee were told Thursday.

Canada’s top central banker told the committee the federal fiscal measure would help maintain employer-employee ties to aid in a recovery.

With expectations the freeze on the economy will be lifted before summer, Bank of Canada governor Stephen Poloz warned it might still be some time before the economy is back to its pre-crisis level.

ALSO READ: Trudeau unveils rental assistance for small businesses, loosens loan qualifications

“We’re going to get a V-shaped trajectory, so down very sharply, then of course back up, but not all the way,” Poloz said.

“That’s when it takes another, maybe a year for the economy to get back to the same path that it was on before all this started.”

The longer it takes for economic activity to resume, though, the more likely that businesses will close for good and the longer workers will face unemployment as they look for new jobs.

On Thursday morning, the government announced an expansion to a loan program for small and medium-sized businesses, and promised a new support for companies having trouble paying rent.

The Canadian Emergency Business Account will now provide up to $40,000 in government-guaranteed loans to businesses that had payrolls last year between $20,000 and $1.5 million. It previously offered loans to business with a narrower range of payrolls, between $50,000 and $1 million.

“Our government is here to help you through these challenging times. So when we hear the program is not reaching as many people as it should, we make changes,” Prime Minister Justin Trudeau said, acknowledging the criticism the government faced from companies who had felt left out.

Since the loan program was launched last month, businesses have taken out 220,000 loans worth $8.8 billion, Finance Minister Bill Morneau told the finance committee.

The loans are interest-free until Dec. 31, 2022 and if they’re paid off by then, up to 25 per cent will be forgiven.

Pushed about some small businesses that may still not qualify for the help because they pay in dividends or employ contractors, Morneau suggested those workers would qualify for the $2,000-a-month Canada Emergency Response Benefit.

The federal government is also working on a program to help businesses and commercial landlords cover their rents for at least three months, though the details still need to be worked out with the provinces and territories, Morneau said.

The federal government has upped its spending by over $105 billion to cover fiscal help, with monetary policy playing a supporting role as the economy went into a tailspin from COVID-19.

Adding to the shock has been plummeting oil prices — Alberta’s benchmark price is down 90 per cent from the start of the year due to declining demand and a glut of international supply.

Poloz said the central bank would likely have slashed its key interest rate in response to the oil price drop alone.

The Bank of Canada made three rate cuts — two unscheduled announcements — in March to reduce its target overnight rate from 1.75 per cent to 0.25 per cent, which Poloz said is effectively as low as it can go.

“Just on the basis of the drop in commodity prices alone, I would say we would have cut interest rates by at least 100 basis points, such as what we did in 2015,” he said during his final scheduled appearance before the committee before he leaves his post in June.

“Possibly we would have ended up doing all 150 basis points if that were the only shock we were facing.”

The economic shock from COVID-19 is unlike anything the country has ever seen, Poloz said.

A preliminary estimate by Statistics Canada suggested the economy contracted by nine per cent last month, which would be the worst one-month drop on record.

The central bank on Wednesday announced plans to start buying provincial and corporate bonds on the secondary market to reduce the risk those markets will lock up. Those measures are to inject up to $60 billion into the economy and will last, tentatively, for a year.

The bank is also increasing the quantity of federal treasury bills it’s willing to buy, beyond a $5-billion-a-week purchase, effectively making more low-interest loans to the government.

Jordan Press, The Canadian Press

Like us on Facebook and follow us on Twitter.

Coronavirus

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Houseboat company partly owned by Shuswap MLA withdraws controversial ad

The ad welcomed houseboaters from other provinces, contradicting anti COVID-19 measures.

Squabble between campers in North Shuswap leads to bear spraying

An argument over late night partying escalated into a fight which led to one person being sprayed

RCMP report a violent attack on a woman in the North Shuswap

Woman beat up on side of road in Scotch Creek, perpetrator fled

Recycling depot at Salmon Arm landfill back in operation

Full bins and a lack of bags led to two service disruptions in the month of May

Public workers step up for Shuswap non-profits

$5,000 donation to be divided among Salmon Arm, Sicamous, Enderby support groups

B.C. legislature coming back June 22 as COVID-19 emergency hits record

Pandemic restrictions now longer than 2017 wildfire emergency

Central Okanagan schools ready to welcome students back

Students are set to go back to school next Monday, June 1

B.C.’s essential grocery, hardware store employees should get pandemic pay: retail group

Only B.C.’s social, health and corrections workers are eligible for top-ups

Edmonton, Vancouver and Toronto vying to be NHL hubs, but there’s a catch

The NHL unveiled a return-to-play plan that would feature 24 teams

B.C. sees 9 new COVID-19 cases, one death as officials watch for new cases amid Phase Two

Number of confirmed active cases is at 244, with 37 people in hospital

Penticton may soon allow drinking alcohol in some public places

Trying to inconspicuously drink on the beach could become a thing of the past

VIDEO: Flowers stolen from Vernon distillery

Okanagan Spirits Craft Distillery captured surveillance footage of the thief in a black car

Fundraiser launched for North Okanagan drive-in

Vernon resident seeks to raise $20K to save Starlight Drive-In

Unique ‘the Wedge’ development makes way back to Kelowna council

Council initially deferred its decision on the project in March

Most Read