MNI INTERVIEW: Canada May Need to Lengthen Business Relief

By Greg Quinn

     OTTAWA (MNI) - Stimulus money has barely started reaching cash-starved

Canadian firms and the government must look at longer-term relief to help them

survive a staggered re-opening after Covid-19 shutdowns, says a business group

advising political leaders.

     Forty-two percent of firms jointly surveyed by the Canadian Chamber of

Commerce and Statistics Canada said their cash buffers will run out after 60

days, according to a first-of-its-kind study published Wednesday. That deadline

is coming up soon for many firms based on when local governments started

imposing stay-at-home orders as the virus moved from China to Europe and North

America. 

     Prime Minister Justin Trudeau on Tuesday announced an agreement on

principles the country's provincial governments will use as they re-open,

heading off some of the confusion seen in the U.S. Those rules suggest at least

weeks more of major shutdowns by requiring businesses to enforce distancing

measures, and demanding local health authorities have the capacity to shut down

new outbreaks and carry out regular tasks.

     "We are still going to be dealing with a very bad moving situation when it

comes to the recovery and the health impact, even as the economy re-opens,"

Trevin Stratton, Chief Economist at the Canadian Chamber, told MNI in a phone

interview.

     "We are encouraging governments to start thinking about these medium- to

longer-term issues," he said. The Chamber is advising officials on the record

stimulus package worth more than CAD100 billion, as well as working with

StatsCan on data collection. 

     --CRUCIAL WEEKS

     "The data really speaks to how crucial the next two to six weeks will be,

when we look at the data on the cash buffers, whether they can remain partially

or fully open when it comes to the social distancing measures. We are very close

to hitting that threshold" where many firms run out of cash, he said.

     One-third of the 12,600 companies who responded to the web survey said the

pandemic had slashed their revenue by at least 40% in the first quarter from a

year earlier. Another one in five said revenues were down at least 20%. 

     About one in five companies say they had to shut as soon as social

distancing measures were imposed, and another one in five say they will need to

at least partially close if those rules are in place for three months. 

     --FUNDING GAPS

     The survey also suggested that getting workers back online may not be

smooth. About 18% of companies laid off at least 80% of their workers last

month. 

     The government must fill gaps in business funding, such as payroll programs

that have left out firms who rely on contractors, Stratton said. While many

smaller companies can restart in about a month, larger firms may need as long as

three months to get back, and government relief programs must take that timing

into account. Restarting broken supply chains will also be a slower job than

restoring demand, he said.

     Stratton praised the government's focus so far on using agencies like the

BOC and government-owned development banks to stabilize credit markets and offer

short-term loans. "Liquidity is a huge concern for businesses now," he said.

     The Chamber wants the government to set up a more permanent working group

that includes business, labor and government to monitor how the aid is

distributed, he said. "It's not just the government's reaction to the crisis

that determines how we come out of it, it's how business and civil society

reacts."

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

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