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Trudeau: Ottawa does not want wage subsidy to become 'brake on growth and rehiring'

The wage subsidy program is meant to keep people stay connected to their jobs, not incentive to keep businesses from re-hiring staff
Justin Trudeau - May 1, 2020
Prime Minister Justin Trudeau. Photo: Government of Canada

Canadian Prime Minister Justin Trudeau said today that Ottawa is worried about the federal wage subsidy program becoming a “brake on growth and rehiring” as the economy reopens, noting that will be the focus of an ongoing retooling of the program.

Trudeau, responding to questions that the 30 per cent-revenue-loss threshold that makes companies eligible for the wage subsidy leaving businesses barely missing the mark on the outside looking in, said the federal government “hopes to have more to say soon” as it tweaks the program for better uptake.

But he also reiterated that the wage subsidy program is meant to keep people stay connected to their jobs as their places of employment experience severe revenue downturns due to COVID-19, and officials do not want companies to intentionally aim to hit the 30 per cent mark to receive or maintain their eligibility for the subsidy.

“We saw the wage subsidy as an essential tool in helping people through a very tough time,” Trudeau said. “As the economy starts to pick up, though, we don’t want people to resist growth or resist hiring new people because they don’t want to cross a threshold that will remove that wage subsidy. So we are very much looking at ways to ensure that this wage subsidy won’t be a discouragement to grow and hire new people.

“… That’s why we are looking at ways of modifying [the program] to make sure people can continue to benefit from the wage subsidy even as their businesses grow - in the right way, recognizing that we are not in normal times right now,” he noted.

The wage subsidy program originally carried an estimated cost of more than $70 billion, but uptake from businesses has not met expectations - which meant Ottawa has revised the program’s budget down to $45 billion. About 224,000 businesses have applied and received payroll help through the program for a total of more than $13 billion as of June 15.

Meanwhile, the Canada Emergency Response Benefit program rolled out at the same time has seen its budget jump to $60 billion on higher-than-expected uptake, with 8.4 million Canadians receiving aid totaling $43.5 billion so far.

In recent weeks, Trudeau has promoted the wage subsidy program during his daily COVID press conferences in a push for more uptake of the program - which covers 75 per cent of a company’s employee wages - among Canadian businesses.

Some business owners, however, said they’ve fallen through the cracks. Included in this group are the owners of new businesses who cannot use the company’s previous-year financial results (while under previous ownership) for the comparison needed to meet the 70 per cent-revenue-loss criteria for eligibility.

Other complainants have noted they’ve just missed the 30 per cent requirement with revenue losses in the high 20 per cent range.