A coalition from the travel and tourism, hospitality, the Canadian Live Music Association and event sectors, now known as the Hardest Hit Coalition (HHC), is pressing the federal government for aid as the pandemic threatens to flatten their businesses or at the very least to flatline revenues for 15 months or more.
The Deputy Prime Minister and Minister of Finance, the Honourable Chrystia Freeland, will present the Fall Economic Statement 2020 in the House of Commons on November 30. Senior sector executives are saying that catastrophic consequences will result without further federal support and are urging stakeholders to call and write MPs to lobby for action in the economic statement that is to be tabled this coming Monday.
In a formal letter, the HHC states that the government’s current covid measures that “broadly support businesses and employment are adequate for most, but they are insufficient to ensure the survival of those in the hardest-hit category.”
As follows, the coalition is asking for support in three key areas:
1. Increased wage subsidy support;
2. Relief from fixed costs; and,
3. Access to liquidity.
The Canada Emergency Wage Subsidy (CEWS) top-up for the hardest-hit businesses in July/August delivered a total subsidy rate of 85%. Since then, the economic position of businesses in the tourism and hospitality sectors has deteriorated, yet the subsidy rate has declined. We are grateful that the Government held the rate at 65% instead of dropping it down to 45% this fall.
However, given that many businesses in our sectors are seasonal in nature, restoring the maximum 85% rate for the hardest hit would allow us the flexibility we need to bring back more workers, maintain them until the Summer, and position us for recovery. Without this support, we will continue to see mass terminations of the very employees we will need again in a few months’ time.
Our employees are predominantly women, new Canadians, immigrants, and visible minorities. These Canadians are at risk of socio-economic devastation and will be supported by Government one way or the other. It would be far better to allow them to maintain employment, and in many cases, continue to receive employee benefits and health coverage.
We appreciate the recent changes to the Canada Emergency Rent Subsidy, including the inclusion of property owners for the first time. This program will provide meaningful support to our smaller businesses, but some critical gaps remain.
The legislation includes a top-up “lockdown support” of 25% for businesses subject to a temporary regional shut-down order by public health authorities. However, hard-hit businesses like ours have been sitting empty since March because of ongoing restrictions like the ban on mass gatherings. This ban has almost the same net effect as a complete shut-down, yet we do not qualify for the top-up.
Second, the per-property cap of $75,000 diminishes the value of the relief for many mid-size businesses. Similarly, the overall cap of $300,000 limits a multi-facility owner (for example, an owner with four hotels or more) from gaining full access to support.
This cap is penalizing the many Canadian-owned, mid-sized, family-run success stories that have expanded their operations and have become successful in regions across the country. They should not be punished or restricted from accessing a program because of modest growth.
Finally, there is a fundamental inequity in the legislation that favours renters over
property owners. Property owners have a higher fixed cost amount (approximately 25% of normal revenue) but only 10% of these costs are eligible. Comparably, most of a renter’s fixed costs are eligible, including utilities which are not covered for property owners.
A modified fixed cost relief program, with proportional support directed to the hardest-hit sectors and without caps, is urgently needed.
The Business Credit Availability Program has not and will not work for hard-hit businesses.
Banks are simply unwilling to lend to sectors facing high risk even if they are responsible for only 20 percent of credit losses. These liquidity challenges need to be addressed without delay.
Even with the wage subsidy and some fixed cost support, hard-hit businesses will still face a liquidity crisis. Hard hit businesses are willing to take on added debt, but it is simply not available without a full government guarantee.
We need readily-accessible debt on reasonable terms and without personal guarantees.
The CEBA program has been a great success story but it only meets the needs of the smallest businesses.
Canadians want to and will travel again. But without targeted relief measures, many hard-hit businesses like ours will fail, resulting in long-term unemployment and lost capacity to support tourism, conventions, and events in the years to come.
We hope the Government will fulfill its commitments in the Speech from the Throne by further tailoring these broad-based support programs to meet the needs of the hardest-hit sectors.