OTTAWA — Industry groups are calling on Ottawa to tailor its COVID-19 emergency support programs, as a new round of pandemic lockdowns could trigger widespread bankruptcies in hard-hit sectors.
Speaking to the Senate’s national finance committee on Thursday, business representatives warned that hotels, restaurants, retail and tourism services are getting particularly pinched after some provinces re-introduced stricter social distancing requirements.
The lobby groups called for tailor-made supports for those hard-hit sectors, referencing what some economists have called the “k-shaped recovery,” in which the economy is divided between industries that have either almost returned to normal, or who remain badly constrained by lockdowns.
“I’m worried we could lose at least half of this industry,” said Susie Grynol, president and CEO of the Hotel Association of Canada. She cited an internal survey that found 60 per cent of executives fear going out of business by Christmas.
Her comments came hours after Finance Minister Chrystia Freeland testified before the same committee, during which she faced criticism from several senators for her ministry’s failure to provide regular, detailed accounts of emergency spending during the pandemic.
Freeland was discussing Bill C-9, which introduces several new measures to help small businesses withstand the pandemic, including a new rent relief program. Industry has for months expressed appreciation for private sector supports from Ottawa, including the introduction of a wage subsidy program that originally covered 75 per cent of labour costs for firms of various sizes.
But Grynol and others said shrewder programs would be needed in order to stem widespread bankruptcies in hotels and elsewhere.
“Since this summer, our economic circumstances have worsened,” Grynol said. “Yet the wage subsidy rates have declined. Our recommendation is that [the wage subsidy] be raised to 85 per cent for the hardest hit, and that the government stop supporting businesses with minimal revenue loss, whose survival is not at risk.”
She also called on Ottawa to back new lines of debt for hotel owners, saying hotels have been categorically denied any new credit from major banks due to their high-leverage business models.
Supports under Bill C-9 favour companies who lease their properties, she said, because it gives them more avenues to access lines of capital, whereas owners of major assets can only seek supports based on mortgage interest and property taxes.
Other business representatives suggested Ottawa should begin to distinguish between hard-hit industries and those who have already begun the long, slow climb back to health.
“The focus now needs to shift from broad-based support to sector-specific programs,” said Alla Drigola, head of Parliamentary affairs at the Canadian Chamber of Commerce.
“They all have unique needs and these programs need to be tailored to help them.”
The lobby group has been warning for months that bankruptcies in the restaurant, tourism and retail sectors in particular will spike if Ottawa does not introduce its new rent relief program soon.
Also on Thursday, senators questioned Freeland as to why she has not provided regular updates on COVID-19 spending, even as expenditure blow past previous records. Ottawa is set to run a more than $350-billion deficit in 2021, according to the Parliamentary Budget Officer.
“Why doesn’t government just provide this on a monthly basis to senators and to parliamentarians? Right now we have to go through various sources and try to construct and put the financial information together ourselves,” she said.
Those concerns are shared by the PBO, who in a series of reports last week blasted the Liberal government for its “lacking” supply of detailed information on its COVID-19 spending plans.
Unlike some other developed nations, Canada has yet to table a complete budget since the beginning of the pandemic, providing only one fiscal “snapshot” in early summer.
Freeland did not address why Ottawa has declined to provide regular, detailed information about its spending practices, saying only that her office would provide “considerable detail” on its spending in its upcoming fiscal update.
She said the pace of spending under COVID-19 has created a “very fast moving fast changing situation” that has made reporting more difficult.
“I very much understand and appreciate the desire for financial information,” she told senators.
Ottawa during the pandemic has provided only high-level projections for its largest pools of spending. The estimated cost for the Canada Emergency Wage Subsidy (CEWS) by the end of December is currently projected to reach $65 billion.
Total costs thus far for the Canada Emergency Response Benefit (CERB) is currently $81 billion
