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Federal government looks to expand employer wage subsidy

Friday, July 17, 2020 @ 5:03 PM | By Terry Davidson

Last Updated: Friday, July 17, 2020 @ 5:17 PM

Canada’s government is proposing expansive changes to its emergency wage subsidy to include any employer experiencing a revenue decline due to the pandemic and make it so a “top-up” is given to those hit the hardest.

On July 17, federal Finance Minister Bill Morneau made the announcement of the proposed changes at a restaurant in Toronto.

According to a news release, the government intends to introduce the changes to Parliament and has already shared draft proposals.

Finance Minister Bill Morneau

The Canada Emergency Wage Subsidy (CEWS) was put in place in March as part of the government’s COVID-19 Economic Response Plan. It provides a 75 per cent wage subsidy to eligible employers in a bid by the government to reduce layoffs caused by widespread economic shutdowns.

One change would address calls that the government include employers that have seen revenue drops of less than a 30 per cent minimum threshold that had been set.  

According to a news release, the changes would make the subsidy accessible to those “with a revenue decline of less than 30 per cent and [provide] a gradually decreasing base subsidy” to eligible employers.

The changes would also include a “top-up subsidy of up to an additional 25 per cent for employers that have been most adversely affected by the pandemic.”

During his announcement, Morneau said this would apply to businesses that have suffered a revenue drop of over 50 per cent. 

According to the release, the changes would also “[p]rovide certainty to employers that have already made business decisions for July and August by ensuring they would not receive a subsidy rate lower than they would have had under the previous rules.”

“Over last couple of months, we’ve talked to experts and business leaders and labour leaders about how we could make sure that the wage subsidy would give us the ability to allow businesses to safely restart in the economy, to hire back employees, to protect employees that they already have,” Morneau said. “They gave us some good advice and we’ve now got to a stage where we’re proposing some important changes to this program.”

Morneau talked about the change to include those who have seen less severe drops in revenue.

“We know that it’s also critical that we have businesses able to continue to hire people, even after they get into the restart, and we know that the requirement that businesses have a 30 per cent reduction in revenue is not helpful in that regard. So, what we’re saying is that businesses will get the wage subsidy if they’ve had any reduction in revenue. So, it’s going to go all way down to businesses [that] even have a small amount of revenue reduction, they’ll get the subsidy as well, and it will be in proportion to the amount of their revenue reduction.”

On July 13, Prime Minister Justin Trudeau announced that the wage subsidy would be extended until the end of the year.

Last week, Morneau, as part of a fiscal update, reportedly said that the program’s budget would now be $82.3 billion, up from $45 billion.

During the press conference, Morneau faced inevitable questions about his involvement in the most recent controversy to rip through the Liberal government.

On July 16 it was announced that the Office of the Conflict of Interest and Ethics Commissioner would launch an investigation into Morneau’s role in the current scandal involving WE Charity.

Both Morneau and Trudeau are being investigated by the ethics watchdog for failing to recuse themselves from a cabinet decision to award a $900-million summer student grants contract to WE, even though both men had family members who had paid involvement with the organization. 

The investigation into Morneau came following news reports that one of his daughters works in the charity’s travel department. 

The investigation into Trudeau came when it was discovered that his mother and brother have been paid for speaking appearances within the last four years, and that his wife had been hired to speak at a single event in 2012, when Trudeau was an MP and the Conservatives were in power.

Morneau was asked if his daughter’s employment with WE did not immediately raise red flags for him and if he was warned of a possible conflict of interest.  

“Again, we were working to make sure we could deliver for Canadians at a rapid pace,” he said. “I think that’s the right approach here. I absolutely can see that I should have recused myself, that there was a perception that was real and that I needed to deal with that. I didn’t do it, and I can just say that I have to apologize, and I sincerely apologize for not having recused myself; it’s made this discussion more difficult and … if I went back I would change it because I think that would’ve been the right course of action.”

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