Finance Minister Bill Morneau was suppose to hold a news conference on March 31, 2020 to provide details of the subsidy program, but that was cancelled, in an April 1, 2020 story. (Photo by THE CANADIAN PRESS)

Finance Minister Bill Morneau was suppose to hold a news conference on March 31, 2020 to provide details of the subsidy program, but that was cancelled, in an April 1, 2020 story. (Photo by THE CANADIAN PRESS)

Federal wage subsidy payments to flow first week of May, officials tell MPs

Online applications will open April 27 and officials expect to have processed 90 per cent of claims by May 4

The first payments from a $73-billion federal wage subsidy program will flow by the end of the first week of May, acting as a buttress against the economic shock from COVID-19.

The Liberals are hoping the 75-per-cent wage subsidy will prompt companies to rehire vast swaths of the six million Canadian workers who have asked for emergency federal aid since the pandemic brought the global economy to a virtual standstill.

Online applications will open April 27 and officials expect to have processed 90 per cent of claims by May 4 with payments landing later that week, MPs on the House of Commons finance committee were told Thursday.

Canada’s top central banker told the committee the federal fiscal measure would help maintain employer-employee ties to aid in a recovery.

With expectations the freeze on the economy will be lifted before summer, Bank of Canada governor Stephen Poloz warned it might still be some time before the economy is back to its pre-crisis level.

ALSO READ: Trudeau unveils rental assistance for small businesses, loosens loan qualifications

“We’re going to get a V-shaped trajectory, so down very sharply, then of course back up, but not all the way,” Poloz said.

“That’s when it takes another, maybe a year for the economy to get back to the same path that it was on before all this started.”

The longer it takes for economic activity to resume, though, the more likely that businesses will close for good and the longer workers will face unemployment as they look for new jobs.

On Thursday morning, the government announced an expansion to a loan program for small and medium-sized businesses, and promised a new support for companies having trouble paying rent.

The Canadian Emergency Business Account will now provide up to $40,000 in government-guaranteed loans to businesses that had payrolls last year between $20,000 and $1.5 million. It previously offered loans to business with a narrower range of payrolls, between $50,000 and $1 million.

“Our government is here to help you through these challenging times. So when we hear the program is not reaching as many people as it should, we make changes,” Prime Minister Justin Trudeau said, acknowledging the criticism the government faced from companies who had felt left out.

Since the loan program was launched last month, businesses have taken out 220,000 loans worth $8.8 billion, Finance Minister Bill Morneau told the finance committee.

The loans are interest-free until Dec. 31, 2022 and if they’re paid off by then, up to 25 per cent will be forgiven.

Pushed about some small businesses that may still not qualify for the help because they pay in dividends or employ contractors, Morneau suggested those workers would qualify for the $2,000-a-month Canada Emergency Response Benefit.

The federal government is also working on a program to help businesses and commercial landlords cover their rents for at least three months, though the details still need to be worked out with the provinces and territories, Morneau said.

The federal government has upped its spending by over $105 billion to cover fiscal help, with monetary policy playing a supporting role as the economy went into a tailspin from COVID-19.

Adding to the shock has been plummeting oil prices — Alberta’s benchmark price is down 90 per cent from the start of the year due to declining demand and a glut of international supply.

Poloz said the central bank would likely have slashed its key interest rate in response to the oil price drop alone.

The Bank of Canada made three rate cuts — two unscheduled announcements — in March to reduce its target overnight rate from 1.75 per cent to 0.25 per cent, which Poloz said is effectively as low as it can go.

“Just on the basis of the drop in commodity prices alone, I would say we would have cut interest rates by at least 100 basis points, such as what we did in 2015,” he said during his final scheduled appearance before the committee before he leaves his post in June.

“Possibly we would have ended up doing all 150 basis points if that were the only shock we were facing.”

The economic shock from COVID-19 is unlike anything the country has ever seen, Poloz said.

A preliminary estimate by Statistics Canada suggested the economy contracted by nine per cent last month, which would be the worst one-month drop on record.

The central bank on Wednesday announced plans to start buying provincial and corporate bonds on the secondary market to reduce the risk those markets will lock up. Those measures are to inject up to $60 billion into the economy and will last, tentatively, for a year.

The bank is also increasing the quantity of federal treasury bills it’s willing to buy, beyond a $5-billion-a-week purchase, effectively making more low-interest loans to the government.

Jordan Press, The Canadian Press

Like us on Facebook and follow us on Twitter.

Coronavirus

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

(Black Press Media file photo)
Youth in police custody after kitchen knife call

A knife was recovered during the arrest, no injuries reported

Marc Porpaczy said he’s glad he delayed his daily walk with his dog, Juno, after a car crashed just outside his driveway just before 8 p.m. on Tuesday, Jan. 25. (Aaron Guillen/News Staff)
VIDEO: Dramatic crash highlights need for sidewalks, say Colwood residents

‘The residents have gone from frustrated to angry’

(Black Press Media file photo)
VicPD arrest man at gunpoint after firearm call

Man faces charges for breaching condition not to possess replica firearms

Jerry Dyck plans to purchase a new RV to drive across Canada in, once it’s safe to travel again. (Courtesy BCLC)
Victoria man plans post-pandemic cross-Canada RV trip after $2M lottery win

Retired electrician bought the winning ticket in Duncan

Crews with Discovery Channel film as an Aggressive Towing driver moves a Grumman S2F Tracker aircraft around a 90-degree turn from its compound and onto the road on Saturday, Jan. 23, 2021. It was the “most difficult” part of the move for the airplane, one organizer said. (Jenna Hauck/ Chilliwack Progress)
VIDEO: Vintage military plane gets towed from Chilliwack to Greater Victoria

Grumman CP-121 Tracker’s eventual home the British Columbia Aviation Museum on Vancouver Island

Jesse Savidant, 31, is wanted by the RCMP after failing to appear in provincial court in Nanaimo in December. Police warn Savidant should be considered violent. (Photo Submitted)
Warrant out for man accused of stolen property offences across Vancouver Island

Jesse Savidant did not appear for court date in Nanaimo last month, say RCMP

Rolling seven-day average of cases by B.C. health authority to Jan. 21. Fraser Health in purple, Vancouver Coastal red, Interior Health orange, Northern Health green and Vancouver Island blue. (B.C. Centre for Disease Control)
2nd COVID vaccine doses on hold as B.C. delivery delayed again

New COVID-19 cases slowing in Fraser Health region

The Pacific Rim National Park Reserve is urging visitors to stay on designated trails after a hiker became injured in an unsanctioned area last week. (Westerly file photo)
Injured hiker rescued in Pacific Rim National Park Reserve

“Safety is everyone’s responsibility.”

Provincial health officer Dr. Bonnie Henry talk about the next steps in B.C.’s COVID-19 Immunization Plan during a press conference at Legislature in Victoria, B.C., on Friday, January 22, 2021. Two more cases of the COVID-19 strain first identified in South Africa have been diagnosed in British Columbia, bringing the total to three as of Jan. 16.THE CANADIAN PRESS/Chad Hipolito
B.C. now has three cases of South African COVID-19 variant, six of U.K. strain

Both variants are thought to spread faster than earlier strains

Rodney and Ekaterina Baker in an undated photo from social media. The couple has been ticketed and charged under the Yukon’s <em>Civil Emergency Measures Act</em> for breaking isolation requirements in order to sneak into a vaccine clinic and receive Moderna vaccine doses in Beaver Creek. (Facebook/Submitted)
Great Canadian Gaming CEO resigns after being accused of sneaking into Yukon for vaccine

Rod Baker and Ekaterina Baker were charged with two CEMA violations each

Police discovered a makeshift nightclub in a Vancouver apartment on Jan. 23, 2021, and say it wasn’t the first time this month officers have been called to the unit over social gathering concerns. (Phil McLachlan - Capital News)
Doorman of makeshift ‘booze-can’ in Vancouver apartment fined; police look to court order

This marks the fourth complaint about social gatherings inside the apartment in January

Local musician and artist Daisy Melville created a watercolour portrait of U.S. Senator Bernie Sanders from the recent American inauguration, and with help from her mom, is now selling t-shirts and more with funds going to the Comox Valley Food Bank. Image submitted
Island artist turns Sanders inauguration meme into art for good

All proceeds from the sale of shirts, sweaters and more will go to the Comox Valley Food Bank

A Kelowna couple welcomed their Nooner baby in December. (Flytographer)
Kelowna couple welcomes baby girl from Hotel Zed Nooner campaign

Nicole and Alex will now have 18 years of free stays at the hotel

Most Read