subsidies

Federal government extends wage and rent subsidies

The federal government is extending its existing wage and rent subsidies until late October in a move that should boost the recovery prospects of small businesses and restaurants.

The Government of Canada announced on July 30 that supports including the Canada Emergency Wage Subsidy (CEWS), Canada Emergency Rent Subsidy (CERS), and Lockdown Support will be continued until October 23, 2021.

Those supports had been set to expire in June but were extended until September 25 in the 2021 Federal Budget. Now, the government is stretching those measures for another month amid continued economic and public health uncertainty.

Canada has also increased the wage and rent subsidy rates for the period from August 29 to September 25.  Now, the maximum rate for the wage and rent subsidies will be set at 40 per cent for that period instead of being reduced to 20 per cent, as had been previously announced in the Budget. That 20 per cent rate will be in place for the new extended period of September 26 to October 23.

The government’s release says it is extending the programs “in recognition that uneven economic reopening across regions and sectors means workers and businesses continue to need support.”

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Industry response

Various industry advocacy groups have praised the extension as an empathetic move that recognizes that foodservice, hospitality, and tourism face a continued battle.

The Ontario Restaurant, Hotel, and Motel Association (ORHMA) said it is “pleased” to see an extension of financial support programs and credited the advocacy of itself and other organizations for helping to make the extension happen.

“Through our involvement with the Coalition of Hardest Hit Businesses, ORHMA has been advocating with other like-minded business associations and industry leaders within the hospitality and tourism sectors for an extension of these support programs,” added ORHMA’s statement. “We continue to advocate for tailored financial support for our sector to ensure we make it to the other side of recovery.”

Meanwhile, Restaurants Canada noted that the extension has come after “months of aggressive lobbying” and stressed how crucial the government supports are for small foodservice businesses.

“A tremendous win for our hardest-hit sector, this announcement represents an important first step towards securing a sustainable recovery for the foodservice industry,” added Restaurants Canada.

Restaurants Canada had previously warned that half of Canadian restaurants may not survive summer 2021 if the current level of supports had been cut.

The Canadian Federation of Independent Business (CFIB) said the extensions will come as a relief to businesses struggling with capacity limits and other public health restrictions.

“With only 35 per cent of businesses back to making normal levels of sales, any additional runway on these crucial federal support programs is welcome news,” Dan Kelly, CFIB president and CEO, said in a news release.

“With a growing shortage of skilled workers in many sectors, CFIB cautions the government to ensure [these] measures do not disincentivize people from returning to work by ensuring part-time worker benefits are not higher than they earned pre-pandemic,” he said.

The organization’s VP of national affairs, Jasmin Guenette, stressed that it is important financial programs like the CEWS remain available for small businesses until the economy has fully reopened.

“A lot of businesses are struggling and it’s not through any fault of their own. It’s because there are these restrictions,” she told CBC. “We will continue to ask the government to make sure that those programs are available.” Guenette added that only 35 per cent of small businesses across the country are back to their normal sales levels.

Beth Potter, president and CEO of the Tourism Industry Association of Canada, called the extensions of CEWS and CERS a “positive step in supporting the tourism industry.”

However, we know that this will not be enough to keep thousands of businesses from closing their doors permanently and losing important tourism infrastructure,” she said in a media statement. “Without business survival programming that targets our sector, many tourism businesses will not survive.”