|CCA Brief: Government’s economic response plan to COVID-19
Dear colleagues and members,
As part of our ongoing efforts to keep the industry informed, we have put together this briefing on the latest Government of Canada announcement.
CCA has also added a central information hub on our website with updates and resources regarding the COVID-19 outbreak for circulation and use amongst all members and companies. This hub can be found at cca-acc.com/covid-19-resources.
Government of Canada announces $82 billion relief and stimulus package amid COVID-19 outbreak
March 19, 2020 – Ottawa, ON – Yesterday in Ottawa, Prime Minister Justin Trudeau and Finance Minister Bill Morneau outlined in separate announcements the federal government’s financial package to assist businesses and individual Canadians throughout the ongoing uncertainty around the COVID-19 outbreak. The stimulus package includes $27 billion in direct support to Canadians as well as $55 billion in measures through tax deferrals totalling $82 billion dollars, the equivalent of 3 per cent of Canada’s total GDP.
These measures are a follow-up to the $1 billlion the federal government announced last week for its COVID-19 response fund that largely consisted of money for federal and provincial public health agencies to support research and equipment purchases as well as the $10 billion announced for small and medium enterprises (SMEs) through the Business Development Bank of Canada.
The measures in yesterday’s announcement were divided into two categories by the government and included:
Supports and measures specific for individuals
- Provision of additional assistance to families with children by temporarily boosting Canada Child Benefit payments. This measure provides an extra $300 per child to deliver almost $2 billion total in extra support.
- Introduction of an Emergency Care Benefit up to $900 bi-weekly for up to 15 weeks to provide income support to workers who must stay home and do not have access to paid sick leave. This measure could provide up to $10 billion to Canadians, and includes the following:
- Workers, including the self-employed, who are sick, quarantined, or who have been directed to self-isolate but do not qualify for Employment Insurance (EI) sickness benefits.
- Workers, including the self-employed, who are taking care of a family member who is sick with COVID-19, such as an elderly parent or other dependents who are sick, but do not qualify for EI sickness benefits.
- EI-eligible and non EI-eligible working parents who must stay home without pay because of children who are sick or who need additional care because of school closures.
- Contractors are included if they cannot work due to being quarantined or for other reasons associated with COVID-19. It is possible to apply online, and receive payment via direct deposit. Simple attestation to be filled (no need for medical documentation). Benefits are slated to start in early April.
- Creation of the Emergency Support Benefit delivered through the Canada Revenue Agency to provide up to $5 billion in support to workers who are not eligible for EI and who are facing unemployment as a result of the outbreak.
- Provision of additional assistance to individuals and families with low and modest incomes with a special top-up payment under the Goods and Services Tax (GST) credit. This would increase by $300 per eligible adult and $150 per eligible child.
- As announced on March 11, waiving for a minimum of six months, the mandatory one-week waiting period for EI sickness benefits for workers in imposed quarantine or who have been directed to self-isolate. Also included in this is the waiving of the requirement for a medical certificate to access EI sickness benefits.
- An extension of the tax filing deadline for individuals to June 1, and allow all taxpayers to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after March 18 and before September 2020. This relief would apply to tax balances due, as well as instalments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period. This measure will result in households having more money available during this period.
- Implementation of a six-month, interest-free, moratorium on Canada Student Loan payments for all individuals who are in the process of repaying these loans.
- $305 million for a new distinctions-based Indigenous Community Support Fund, to address immediate needs in First Nations, Inuit, and Métis Nation communities. Details on how this fund will be allocated, be it geographically or by need, were not immediately available.
- Provide an additional $157.5 million to double the Reaching Home Program, which seeks to address the needs of Canadians experiencing homelessness.
Supports specific for businesses
- Providing eligible small businesses a 10 per cent wage subsidy for the next 90 days, up to a maximum of $1,375 per employee and $25,000 per employer. Employers benefiting from this measure would include corporations eligible for the small business deduction, as well as not-for-profit organizations and charities. It is CCA’s understanding that this would be applicable for member associations.
- Allowing all businesses to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after March 18 and before September 2020. This relief would apply to tax balances due, as well as instalments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period. This measure will result in businesses having more money available during this period.
- Increasing the credit available to small, medium, and large Canadian businesses. As announced on March 13, a new Business Credit Availability Program will provide more than $10 billion of additional support to companies experiencing cash flow challenges through the Business Development Bank of Canada and Export Development Canada.
- Providing flexibility on the Canada Account limit in order to allow the government to provide additional support to Canadian businesses, when deemed to be in the national interest, to deal with exceptional circumstances.
- Augmenting credit available to farmers and the agri-food sector through Farm Credit Canada.
- The launch of an Insured Mortgage Purchase Program to purchase up to $50 billion of insured mortgage pools through the Canada Mortgage and Housing Corporation (CMHC). As announced on March 16, this will provide stable funding to banks and mortgage lenders as well as support continued lending to Canadian businesses and consumers. The government says it will enable these measures by raising CMHC’s legislative limits to guarantee securities and insure mortgages by $150 billion each.
- The Government of Canada and provincial Government of Alberta are working together on individual aid for the oil and gas sectors. Details about this program will follow at a later date.
Joint announcement of Canada’s big six banks
In addition to the steps announced by the federal government, the Canadian Banking Association also released a statement on March 18 that effective immediately Canada’s Big Six: the Bank of Montreal, CIBC, National Bank, Royal Bank of Canada, Scotiabank and Toronto Dominion will all be deferring payments on mortgages and other personal credit products for a period of six months. Individuals are encouraged to get in touch with their own personal banks for further details.
Next steps and follow-up
Taking questions from the press, Minister Morneau stated the goal would be to have all measures announced operational and available within the next three weeks pending parliamentary approval. He stated that internal communications with other party leaders had been productive and passage would not be an issue. Government House Leader Pablo Rodriguez confirmed in a separate news conference that an emergency session of parliament that only requires 20 MPs present for quorum is likely to be called for next week to pass the necessary legislation to roll out the funding.
Bank of Canada Governor Stephen Poloz was also present with Morneau and stated the central bank, which cut its benchmark interest rate by 50 basis points to 0.75 per cent last week, will give its next full economic outlook and update on interest rates on April 15. Though Poloz emphasized they would reserve the right to move that up in the event of mitigating circumstances.
CCA is continuing to monitor the roll-out of all relevant programs announced as part of today’s stimulus package and is happy to provide additional information or assist members in accessing proper funding channels upon request.
For greater detail regarding yesterday’s announcements:
If you have any questions please don’t hesitate to contact Rod Gilbert, Vice-President of Public Affairs, at email@example.com or 613-236-9455, ext. 432.
Mary Van Buren, MBA, CAE
Canadian Construction Association
1900-275 Slater Street Ottawa ON K1P 5H9
613-236-9455, ext. 414