On the gaps that exist in economic supports available to individuals & businesses during the COVID-19 pandemic

Without a doubt, British Columbia has led the way in North America in terms of introducing measures to curb the spread of the COVID-19 virus in our province. We are very fortunate that so many people are following the advice of  Health Minister Adrian Dix and Provincial Health Officer Dr. Bonnie Henry. Thank you to all for staying the course during these difficult times.

Nevertheless, with Canada just over one month into a nationwide lock-down we are beginning to get a better idea of where the gaps are in the existing economic supports and where further relief is needed. Since many of the initial government interventions were broad in scope, needs specific to different industries have been left unaddressed by the existing programs. In BC, a BCC survey found that the current programs were of little use to one third of businesses, with nearly half of businesses with under five employees reporting that they do not find the existing programs to be helpful. Ongoing email exchanges and conversations with British Columbians have also revealed additional gaps in the existing programs. Some of these are highlighted below.

The Tourism Industry is Reeling

Unsurprisingly, sectors dependent on in-person interactions such as the hospitality and tourism industries have been among the hardest hit by the pandemic. For many businesses in the tourism industry, capital expenditures are typically made during the off-season and are offset by revenue generated throughout the summer months. However, the combination of social distancing measures, travel restrictions, and the closure of BC Parks and Natural Reserves has meant that tourism operators have been forced to grapple with hundreds of last-minute cancellations just as their busiest season was about to begin. With many businesses needing to service pre-existing debt loads, the loss of summer revenue has placed them in a precarious position. Exacerbating matters is the fact that many operators have had limited success in negotiations with travel insurance companies around the reimbursement of guests’ travel costs.

Currently, the economic supports introduced by the federal and provincial governments do not adequately address the scale and scope of the challenges that the industry faces, particularly given its seasonality. Assistance offered by the private sector such as deferring loan payments for three months are only stop-gap measures because payments will eventually come due. Additional solutions proposed to address the issues the tourism and hospitality industries are facing have included altering the terms of the existing loan programs to provide longer repayment periods, larger loan guarantees, and determining loan eligibility on a per property basis rather than a per owner basis.

Rent Assistance

One concern common to both individuals and businesses is the ability to pay rent. Even before the current economic crisis began, the high cost of living in urban areas was a pressing issue in federal and provincial politics. Rent prices have been increasing over the last decade and as of November 2019 the average rent in Vancouver was $2,507 per month. In Oak Bay, just under 20% of households fall below the affordability standard, defined as spending 30% or more of income on shelter costs.

Although Ottawa and Victoria have stepped in to provide the Canada Emergency Response Benefit (CERB) and the BC Temporary Rental Supplement Program (BC-TRS) respectively, many individuals have indicated that the existing supports will not be enough to get them through the crisis, particularly given the fact that relief from other recurring expenses such as mortgage payments, property taxes, utility bills, and debt payments are only temporary. If people are unable to make rent payments, hundreds of tenants could be facing eviction when the crisis is over. The impact of missed rental payments would also be acutely felt by landlords, many of whom are reliant upon rental income to make mortgage payments or to support their retirement.

On a commercial level, almost 60 percent of Canadian small businesses have said that they will be unable to pay rent come May 1^st. The situation is particularly urgent in the food service industry where three quarters of respondents to a Restaurant Canada survey reported that that rent was a primary source of business debt.

Solutions floated to the issues facing renters and landlords have included increasing the provincial rent supplement, and federal government intervention to support renters by topping up the CERB payment. The recently announced Canada Emergency Rent Assistance program should provide much needed relief to small businesses but will need to be closely monitored to determine if it is ambitious enough. Many small business owners have expressed their reluctance to take on more debt and may require further support in the weeks ahead.

Ongoing Restrictions to the Canada Emergency Wage Subsidy

While making the criteria for the Canada Emergency Wage Subsidy more flexible has helped more businesses qualify for the program, many firms have indicated that they are still slipping through the cracks. Currently, only one third of businesses in BC are confident that they will qualify for wage subsidy, with 28% of businesses reporting that their revenue has not declined enough to meet the eligibility requirements. This issue is particularly pressing for businesses that have experienced revenue declines but are still trying to stay open to provide services to customers. Without additional support many of these businesses will be forced to close and layoff their employees, making an eventual economic recovery all the more difficult.

Unaffordable Childcare Costs

Both the province and the federal government have taken steps to ensure that essential service workers are able to access child-care throughout the pandemic. At the federal level, the CERB has been extended to those forced to care for their children at home and the Canada Child Care Benefit has been increased by $300 per child. In BC, the provincial government has prioritized spaces in child-care centres for essential service workers and has provided access to child-care services for school aged children through schools themselves. Yet despite these measures, essential service employees with children above the age of five are still struggling to find affordable child-care services. In some school districts, schools no longer have the capacity to offer child-care, forcing parents unable to work from home to resort to private options. For many households, the costs of private child-care are too high to remain a viable long-term solution to the lack of in-school supports.

Throughout the pandemic, essential service employees have been deservingly lauded as heroes for their selfless commitment to others. With some of these workers still struggling to find affordable child-care for their children, Ottawa and Victoria need to address the gaps in the existing support network so that workers in essential industries can continue to provide the services that British Columbians count on. If further support does not come soon, essential services workers may be forced to quit their jobs to care for their children at home.

Possible options here could include extending childcare services to out of district students if there are enough spaces available, distributing additional tax credits to families, or making the criteria for the CERB more flexible to cover a portion of the costs of childcare for essential service workers.

Supporting Individuals and Businesses

At the moment, there is a narrow window of opportunity for governments to act to aid struggling sectors and individuals. Many businesses are dangerously close to being forced to permanently close and cannot wait much longer for further assistance. Going forward, the government might focus on ensuring that as many individuals and businesses as possible can access their programs. Given the consequences of not doing enough, I am of the view that it is is better to do too much than to do too little.