Federal budget 2021: Small-business boost key to economic recovery: Liberals

Home In the NewsFederal budget 2021: Small-business boost key to economic recovery: Liberals

The federal government is extending the wage and rent subsidies through the summer, keeping program eligibility unchanged and introducing a new incentive for small businesses to hire back workers.

By Chris Hannay – Independent Business Reporter* – April, 2021 

In the federal budget tabled on Monday, the Liberal government said getting small- and medium-sized enterprises back on their feet after many have struggled because of public-health restrictions is key for economic recovery. Small businesses contribute about half of Canada’s private sector economy and about two-thirds of its employment.
The budget said the wage and rent programs would be extended until Sept. 25, and to Nov. 20 if needed. The rates of both programs, which provide support prorated to revenue decline, will diminish until they end.
Companies that opened after February, 2020, are still ineligible for the subsidies, despite calls for help from businesses that were partway through renovations preparing to open when the pandemic began.
The wage subsidy has so far dispersed about $74-billion to companies, and the rent subsidy has provided nearly $3-billion. The budget provides an additional $10-billion for the wage subsidy and another $1.9-billion for the rent subsidy.
It also outlined a new subsidy, called the Canada Recovery Hiring Program, which will fund a portion of the additional payroll costs for companies that increase employment between June and November. The subsidy begins at 50 per cent of new salary costs and declines over time. It can be used to hire new staff, recall laid-off workers or increase hours for existing employees. The cost is estimated at $595-million this fiscal year. Eligible businesses can access the hiring incentive or the wage subsidy, but not both.
The most popular pandemic support for small businesses over the past year has been the Canada Emergency Business Account, which has provided $46-billion in partly forgivable loans of up to $60,000 each. The federal government recently extended the deadline to apply, but the budget indicated the government would not address the eligibility gaps, extend the repayment deadline or make more of the loans forgivable.
Dan Kelly, president of the Canadian Federation of Independent Business, said the extension of the wage and rent subsidies — and the new hiring incentive — would be a lifeline for many small businesses.
However, he said he was disappointed eligibility criteria were not expanded.
“This is making a bad problem worse for tens of thousands of businesses that haven’t received a nickel of federal support since the pandemic started,” he said.
The budget recognized that the economic damage from the pandemic has not been felt evenly. For example, tourism companies, which have been devastated by travel restrictions, will be the beneficiaries of some targeted aid, including a $500-million tourism relief fund.
Restaurants Canada president Todd Barclay said he was disappointed that the food-services industry did not receive targeted support, given that restaurants are among the businesses hardest hit by lockdown measures.
The budget also announced a Canadian digital-adoption program for small- and medium-sized businesses that want to use new technology and increase their e-commerce practices. The program includes training and employment for up to 28,000 young people who would work with companies moving online. The budget provides $1.4-billion to the innovation department and $2.6-billion to the Business Development Bank of Canada for this purpose over four years.
Karl Littler, senior vice-president of public affairs for the Retail Council of Canada, said small retailers will welcome more support to embrace e-commerce.
“It’s been a pretty crying need in our space,” Mr. Littler said.
He said that although the Liberal government appears to have abandoned a 2019 campaign promise to stop charging sales tax on fees for credit-card transactions, he was glad to see a promise in the budget to address credit-card merchant fees in the fall economic statement.
The government also announced a $43.9-million investment to develop an e-payroll system for small businesses to streamline their payroll filing.
The budget also includes additional funding of about $365-million in total for programs aimed at supporting female, Black and Indigenous entrepreneurs.

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About the Author

*Chris Hannay is The Globe’s independent business reporter, based in Toronto. Before that, he was the assignment editor in the Ottawa bureau, where he helped direct coverage of federal politics. He launched the Politics Briefing newsletter in 2015 and wrote it every morning for more than five years. In addition to business and politics, he has also written features and won the National Newspaper Award for arts reporting in 2018. He started at The Globe as a summer staffer in 2010.

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