Federal government pressed to extend COVID-19 benefits for small businesses

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A group representing thousands of small businesses says uncertainty over the fate of the federal pandemic support is causing its members to lose confidence in their financial prospects, and prompting liberals to provide more life support for ailing companies. Is.

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The Canadian Federation of Independent Business said its monthly barometer since September saw the biggest one-month drop since the start of the pandemic in March 2020.

The group said short-term expectations for companies in the hospitality and construction industries declined, while retail and agriculture took the deepest dive on its outlook for next year.


Most small businesses still haven’t returned to normal sales levels, with the organization asking the federal government to extend the wage and rent supplements set to expire at the end of the month.

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The federal budget bill, passed in late June, includes a provision that the cabinet can extend benefits until November 20. The Liberals would need to get parliamentary approval for any more weeks of life.

CFIB President Dan Kelly said small business owners are “almost at a panic level” about the imminent end of support, and are looking for a signal from federal liberals.

“I want the subsidy programs to end as well – they are very expensive – but if we do that before the full COVID restrictions are lifted, we will see thousands and thousands of businesses flushed down the toilet,” he said.

Asking to continue those benefits comes with a similar request to reshape “recovery” benefits for out-of-work Canadians testing the federal government. In conversation, Finance Minister Chrystia Freeland has pressed stakeholders on how the government can increase business profits, but not the same for workers.

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Christopher Ragan, director of the Max Bell School of Public Policy at McGill University, said liberals may be in favor of being more liberal, but pandemic relief programs should be allowed to end unless there is a really good economic reason.

“I don’t envy any government that is currently in place, but I think you want to be careful about providing too much relief payment because it’s going to stand in the way of recovery,” he said.

In late July, the Liberals announced an extension of the aid package and called off a planned drop in benefit prices, citing a slower than expected recovery.

Wage subsidies and rent relief programs have paid out about $94 billion and $6.6 billion, respectively, and federal data shows that the number of claims has declined for each during 2021.

Profits are calculated over business losses, and phased out as revenue rebounds; The CFIB survey noted that the share of firms barely making it has fallen to the lowest level since the pandemic began.

Canada Recovery Benefit has seen a similar decline in claims, and paid out nearly $26.4 billion to unemployed workers who do not qualify for employment insurance, with weekly benefits set at $300.

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The drop is also in line with rising job numbers, which kept the country down 0.8 percent from pre-pandemic levels as of August, even though businesses are reporting labor shortages.

An economic outlook from Deloitte Canada noted on Tuesday how this story of two labor markets is playing out: industries with jobs that could easily be done remotely and now facing problems attracting skilled workers. while there is a job shortage in high-contact sectors like housing and. Food services may reflect ongoing health concerns or the impact of income support programs.

Chief economist Craig Alexander said the link between profits and labor shortages is largely real. He added that some industries may also face labor shortages from the decline in immigration.

“The health risks and barriers to the movement of workers combined with the economic narrative are causing so much disruption that the story in the labor market is a complex one,” he said.

As the worst of the pandemic appears to be in the rear-view mirror for the time being, Alexander said policy-makers need to start thinking about how to open up emergency aid programs.

“They have to start thinking about how governments gradually wean the economy away from fiscal stimulus,” he said.

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“But let’s be clear that we are still in crisis, the crisis has not passed, and so the assumption of not implementing fiscal austerity in the near term is absolutely warranted.”

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