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Canada cancelling wage subsidy, announces $7.4B in new COVID-19 supports

WATCH: Freeland announces new COVID-19 financial supports as current ones set to expire Oct. 23 – Oct 21, 2021

The federal government is spending $7.4 billion to extend and create new COVID-19 supports for hard-hit businesses and workers that will carry into the spring.

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Deputy Prime Minister and Finance Minister Chrystia Freeland said on Thursday that as of Oct. 23, new measures will be put in place to replace the broad Canada Emergency Wage Subsidy (CEWS) and the Canada Emergency Rent Subsidy (CERS), which expire on Saturday.

The government said it has paid out more than $95 billion to date to help employers re-hire workers and avoid layoffs through the wage subsidy.

The rent subsidy and Lockdown Support have helped more than 210,600 organizations with more than $6.8 billion in support for rent, mortgage, and other expense, the government said.

The new Tourism and Hospitality Recovery Program and Hardest Hit Business Recovery Program will take effect Sunday, Freeland said during a news conference.

“Today, our support needs to be more narrow, more targeted and less expensive and we need to look forward to the day, now not too far off, when we will be able to bring it to an end entirely,” she said.

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The Tourism and Hospitality Recovery Program will provide help through a wage and rent subsidy programs for hotels, tour operators, travel agencies and restaurants with a subsidy rate of up to 75 per cent, the government said in a news release.

The Hardest-Hit Business Recovery Program will provide support through the wage and rent subsidy programs for other businesses that have faced deep losses, with a subsidy rate of up to 50 per cent.

For those two programs, eligibility will be a two-key system, Freeland said. First, the government will consider whether an employer has faced significant revenue loss over the course of 12 months during the pandemic. The second key is revenue loss in the current month of application.

In documents provided after the news conference, the government said these current programs will run until Nov. 20, and it will propose legislation to extend these programs until May 7, 2022. It will also seek authority to make further amendments to the programs through July 2.

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The government also announced a lockdown support initiative to help businesses that are subject to further shutdowns across the country.

For those businesses that face lockdowns, the federal government will make the wage and rent subsidy available up to the maximum amount for the duration of the closure.

The proposed subsidy rates for these programs will be available through to March 13, and will then decrease by half until expiry on May 7.

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Furthermore, the government plans to introduce regulations to create the Canada Worker Lockdown Benefit to provide $300 a week to workers who are subject to a lockdown, including those ineligible for employment insurance. The program will be available until May 7, with retroactive applications starting Sunday.

Freeland also said the government is extending the Canada Recovery Sickness Benefit and Canada Recovery Caregiving Benefit until May 7 and will increase the maximum duration of each benefit by two additional weeks.

Finally, the government is extending the Canada Recovery Hiring Program until Nov. 20 and will increase the subsidy rate to 50 per cent. The government also plans to extend the program to May 7 through legislation. It will also seek authority to make further amendments to the programs through July 2.

“Our unrelenting objective is to protect and create jobs and to drive economic growth,” Freeland said. “It is to ensure the strongest possible recovery for everyone.”

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According to David Macdonald, a senior economist for the Canadian Centre for Policy Alternatives, as many as 1.5 million workers are set to be directly affected once those programs end — most of whom won’t have another source of income or support.

Of those one and a half million workers, about 900,000 would be set to lose support from the CRB being cut according to Macdonald. He said that the newly announced programs “don’t look like they will cover them anytime soon.”

As for the CERS and CEWS cuts, Macdonald estimates more than 640,000 workers’ jobs could be in jeopardy, though they would still be eligible for EI despite its lack of a $500-a-week floor.

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