Finance Minister Says Wage Subsidy Program Could Cost $71-Billion
OTTAWA – The new 75 percent wage subsidy program will cost an estimated $71-billion, but the funds won’t begin to flow for several weeks, said federal finance minister Bill Morneau in a press conference Wednesday.
“The government knows that taking action to protect a strong economy includes taking action to protect Canadian jobs,” said Morneau. “That’s why a wage subsidy matters.”
As the weeks have passed and the coronavirus crisis deepened, the government has realized the subsidy has to be higher than it originally thought and open to a broader range of businesses and organizations.
The subsidy was originally 10 percent and has since grown to 75 percent. It was initially designed for small- and medium-sized businesses and has now been broadened to include businesses of all sizes, and non-profit and charitable organizations as well.
“The number of employees you have will not determine whether or not you get the support,” said Prime Minister Trudeau Monday. “It will apply to non-profit organizations and charities, as well as companies both big and small. This is about making sure that people are still getting paid whether they work for a business that employs 10 people or 1,000 people.”
Morneau said Wednesday that the government will cover 75 percent of the first $58,700 of an employee’s salary, up to $847 per week. The program will be backdated to March 15.
He says the subsidy will be provided to a business that has seen at least a 30 percent drop in revenues in the last year, due to the effects of COVID-19 on their business.
“The decline of 30 percent or more will be determined by comparing your revenues, if you’re a business, to the same month last year for March, April, or May and you will need to re-apply each month,” said Morneau.
The finance minister adds the program is also open to non-profit groups and charities which have seen a similar drop in revenues.
Morneau says there is an expectation, but not a requirement, that an employer will pay the balance of the employee’s salary.
“As an employer, you’ll need to attest that you are doing everything you can to pay the remaining 25 percent of your worker’s income,” said Morneau.
“We know this may not always be possible. The system will be flexible because what’s most important is that Canadians can come back to work. My message to Canadian employers is this: get ready to rehire people.”
Eligible businesses and organizations will be able to apply through a Canada Revenue Agency portal that will be launched soon, says Morneau, and the funds will be available in approximately six weeks.