As of April 1st, 2020
The federal government announced today that their new wage subsidy program will cost an estimated $71 billion dollars. That is huge money, even by Ottawa standards. According to Finance Minister Bill Morneau, it’s the biggest Canadian financial rescue package ever. Tens of thousands of companies and organizations will benefit by it. But inevitably there will also be thousands of companies and organizations that fall through the cracks. It boils down to whether or not they meet the criteria.
The criteria of course is somewhat arbitrary. The rules says that you need to show that your revenues have fallen 30% from last year in the months of March, April, May etc. Companies will need to apply every month demonstrating that their revenues were still down by 30% or more. This raises questions like, why 30% and not 25% or 35%? Depending on how close to the line a company was operating and how mature the company is, a 10% fall in revenues could be all it takes to turn the lights out on someone’s dream. Why did Finance settle on 30%?
The answer in part is that it was probably a negotiation between business organizations and finance officials. With great respect to the very bright people who work at the Department of Finance, they need input from the people who create jobs.
Recall that the initial proposal from the Department of Finance was for a wage subsidy of just 10% per worker’s paycheck. Business organizations complained loudly and lobbied hard. Finance realized how badly out of step they were and increased it to 75%. That’s what happens when people like you aren’t at the table explaining reality to those excellent public servants.
So then, the answer to the question you were about to ask is, yes, effective government relations can make a big difference. In this case it made a difference of somewhere around $65 billion dollars. The truth is that tens of thousands of businesses will survive this crisis thanks in part to the hard work of government relations professionals. We’re not so bad after all!
There are lessons here.
First, you need to be at the table if you’re going to get what you need for your company or industry. Public servants are often very bright people, but they never understand your business as well as you do. Never cut your government relations spending during a crisis.
Secondly, you should be building relationships in government well before you need them to throw you a lifeline. Smart organizations are on a first name basis with the people who make the decisions that impact their industry.
Third, there is strength in numbers. Especially when timelines are short, make it easier for government by working with a coalition.
If you missed the first wave of government initiatives, no worries, there are more coming. As Premier Kenney said this week, there will be more announcements and stimulus spending once businesses start to re-open. But don’t wait. The time to prepare for that is now.
Monte
-Hon. Monte Solberg, Principal, New West Public Affairs
Federal Response
Prime Minister Justin Trudeau was focused on the economy and jobs this morning as he addressed Canadians and outlined the Government’s 3-point economic plan, “protecting your job, helping people who are laid off, and supporting businesses”.
- The “Canada Emergency Response Benefit” (CERB) will be available to Canadians on April 6 through online applications. Canadians who have already applied for EI will be automatically enrolled into CERB applications.
- If you receive the wage subsidy you are not eligible for the CERB.
- The estimated cost of the CERB is $24 billion.
- 2 million Canadians have applied for EI over the last 2 weeks.
- Minister of Finance Bill Morneau revealed the details of the “Canada Emergency Wage Subsidy” (CEWS) today.
- Businesses who have had revenue decrease by 30% compared to March, April, and May 2019 are eligible to receive the subsidy, which will cover 75% of the first $58,700 of an employee’s salary. It is open to all businesses big and small, non-profits, and charities. Applications will be available online in 6 weeks, and employers will need to attest that they are trying to pay the remaining 25% of the salary.
- The estimated cost of the CEWS is $71 billion.
- CEWS will have gaps for businesses and start-ups that have seen revenue decrease significantly recently, but due to growth or expansion cannot demonstrate a 30% decrease compared to last year. It is unclear if these gaps will be addressed.
- Minister of Health Patty Hajdu announced the launch of the Canada covid-19 app to provide the most up to date information to Canadians and will be announcing mental health initiatives in the coming days.
- Parliament will be recalled in the coming weeks to pass what Justin Trudeau called “the largest and most unprecedented economic package in the history of the Country”. This will include the announced economic benefit programs and may include additional measures.
- Quebec has raised the alarm over their declining stockpile of personal protective equipment (PPE), and anticipates they will run out in 3-5 days. Some hospitals in Ontario have also begun rationing PPE and complaining of shortages. The federal government maintains that the national stockpile can provide necessary equipment to the provinces but has not offered any clarity or details.
