MNI INTERVIEW:Canada Fiscal Plan To Focus on Worker Incentives

By Greg Quinn

     OTTAWA (MNI) - The leader of one of Canada's largest business groups told

MNI the government's July 8 fiscal snapshot will focus on transitioning people

from relief checks into paid work, which will help address business reports of

worker shortages. 

     Canadian Federation of Independent Business President Dan Kelly also urged

the government to help firms survive several more months of health restrictions

and lost orders linked to Covid-19 by extending the wage subsidy and avoiding a

surge in business taxes.

     Kelly said members who have re-opened report struggling to recall workers

despite record unemployment and 42% of firms still partly or fully closed,

according to the group's weekly tracking. The CAD2,000-a-month government

payouts known as CERB were recently extended without firm rules requiring people

to return to work when available, and "for some, staying on the CERB is a really

good deal," he said. 

     "What would be most helpful, and I think the feds are largely interested in

doing this anyway, is moving people from CERB to the wage subsidy," he said,

referring to a separate program that subsidizes keeping workers on the payroll.

"And then secondly from wage subsidy to unsubsidized employment. That's the best

transition that we can expect at this stage."

     "About a third of small businesses are telling us that they are short of

labor right now, and we believe we are going to experience several months where

we have both a giant unemployment rate and a growing shortage of labor at the

same time," he said.

     The government has delayed presenting a budget for the fiscal year that

began April 1 and have given few details on what the update will cover. Prime

Minister Justin Trudeau has said he wants to make sure the relief programs

aren't subject to abuse while deferring detailed plans on tapering relief

payouts as the economy starts to recover. The government could end the CERB

program, offer reduced payments, or allow people to keep getting part of those

checks even after returning to work.

     --LOW ON CASH

     With many firms running low on cash to fund payroll and afraid to borrow in

case they fall into bankruptcy, the government also needs to extend the 75% wage

subsidy by several months, Kelly said. The all-or-nothing rule where the subsidy

kicks in only for firms where revenue has fallen by 30% should also be relaxed,

he said.

     CFIB represents 110,000 small firms and has already used calls with the

prime minister's office, officials and civil servants to press for the wage

subsidy and other business supports. The government should also firm up earlier

commitments to avoid a surge in business taxes to stem the deficit, he said.

     Finance Minister Bill Morneau has promised a fiscal and economic snapshot

on July 8 and has said he doesn't plan any jump in taxes, even as Parliament's

independent budget office sees a record CAD256 billion deficit for the year that

began April 1.

     --CORE VALUES

     "We need to know what the plan is to bring down the size and scope of the

deficit," Kelly said. "I don't think the government has a death with by jacking

up taxes immediately. I think everybody would acknowledge the economy will be

very fragile in the next couple of months, but what the economy looks like in

the next year or two is anyone's guess, and that's what we are bracing ourselves

for" on taxes, he said.

     Canada should keep its focus on restoring the economy rather than taking on

other social policies, Kelly said. Using the pandemic to address other issues --

some leaders have mentioned climate change or gig employment -- is something

Kelly said "would be a mistake."

     "Governments deciding which businesses to try to keep alive and which ones

to die would be a really unhelpful thing and unhealthy thing for the country." 

--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com

--MNI Washington Bureau; +1 202-371-2121; email: jean.yung@marketnews.com

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