We submitted the following recommendations on February 11, 2021 as part of the Federal Budget Consultation process.
Small and medium sized enterprises have been among the hardest hit from the pandemic. The government’s continued willingness to support businesses and adapt programs has been exceptional. Our local business surveys clearly indicate that programs such as the Canada Emergency Wage Subsidy, the Canada Emergency Business Account and the Canada Emergency Relief Benefit have been well subscribed and are keeping many struggling local businesses afloat in these rough waters.
Unfortunately, some gaps remain in support programs and opportunities exist to improve how employers keep employees on the payroll.
Start-ups and seasonal businesses remain generally unable to qualify for CEWS as they are still growing and therefore do not meet revenue loss criteria. We recommend that businesses less than 5 years old be allowed to measure their 2020 growth against pre-COVID growth for a typical business of the same size and in the same industry.
Seasonal operators generate the majority of their revenue during peak seasons, generally over the May to September period. Given the baseline calculation method used in CEWS, seasonal operators will have insufficient cashflow in their off season, which means difficulties paying workers year-round and an inability to undertake offseason maintenance work. We recommend that the CEWS baseline formula be adjusted to account for seasonal businesses.
Small business owners face unique challenges in the provision of childcare since there is not a large pool of employees to disperse workloads onto when childcare needs arise. To support SMEs, particularly female-owned businesses, the federal government make can make targeted investments. We recommend allowing small business owners who work from home to claim childcare as a business expense and that CEWS be expanded to include hiring in-home childcare so that business owners can return to work.
The pandemic has affected all businesses, but its economic impact has been uneven across different sectors. Some industries have adapted seamlessly to working remotely and engaging customers online. However, other sectors of economy that depend on interacting face-to-face with customers are having an exceptionally rough go. The latter’s revenue decline and recovery have been greater and slower than others. They have had difficulty accessing financial programs to help with costs, such as covering commercial rent. They will likely be the last to recover.
To help support these sectors, we recommend that Budget 2021:
- Not raise taxes on these most impacted sectors. This includes repealing the automatic escalator on excise duty rates applied to beer, wine and spirits; and,
- Ensure that critical support programs like CEWS and CERS are not terminated before all Canadians have access to vaccinations.
Another way that the Federal Government can manage labour market disruptions over the long-term is through the implementation of basic income pilot projects through existing funding within employment and social development Canada with an aim to develop a report and strategy that thoroughly assesses the results, along with a cost-benefit analysis, outcomes and program trade-offs of a nationwide basic income strategy. We also recommend that the government assess the costs, benefits and outcomes of all government assistance programs on an ongoing basis and publicly report the results.