Changes urged to federal aid package

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This article was published 02/04/2020 (1484 days ago), so information in it may no longer be current.

When it kicks in, the federal government’s $71-billion emergency wage subsidy will provide crucial support to our society when it finally emerges from the COVID-19 crisis.

But even before the formal application is available, and weeks before any money would flow, there are some who worry they may not qualify, but believe they should.

The subsidy will be available to employers who experience a drop of at least 30 per cent in revenue during certain eligibility periods.

Like any of these programs, the devil is in the details. The fact that this one has been released on the fly, the devilish small print has not even been produced yet.

Phil Mikulec, operations manager of Peg City Car Co-op, is worried.

After building up its operations slowly since it opened with just a handful of cars in 2011, revenue started to shoot up, averaging 57 per cent annual growth for the past two years.

Because of that dramatic growth, even though Peg City’s revenue is declining, it might not fall enough for Peg City to be eligible.

Revenue for March 2020 was almost the same as March 2019. However revenue for the final two weeks of the month was down 27 per cent compared with February 2020.

Mikulec believes the comparison should be month over month rather than year over year as the government’s early documentation on the program indicates.

Mikulec figures the new normal for Peg City will be that revenue in April will be off by 40 per cent compared with February 2020.

He wants the program to compare the months affected by the stay-at-home environment to the months immediately before that.

“If you are a startup or a fast-growing small business, in effect, you could get locked out,” he said.

Joelle Foster, the CEO of North Forge, has flagged that potential flaw in the system.

Many of the companies that work with North Forge raise money, hire people and make investments before they earn revenue.

“We work with a lot of companies who are low revenue or pre-revenue and they would not qualify, but they should,” she said.

Federal officials have noticed the potential crack in eligibility.

Melanie Joly, the federal minister of economic development, participated in a virtual town hall with members of the Winnipeg and Manitoba chambers of commerce on Thursday. She said her government is aware elements of the program must be addressed.

“We came up with the most important economic measures in our history,” she said in an interview.

“But we are very much aware that we need to understand how it is landing.”

She said after the applications and regulations are finalized, companies that believe they may not qualify, should make their case to Western Economic Diversification.

In a paper that came out late this week, RBC’s economics office said: “While the measures will help mature firms retain their employees, those with lumpy revenues or short revenue histories may have difficulty accessing the program.”

RBC said senior federal government officials have said alternative revenue measures will be available on a case-by-case basis.

martin.cash@freepress.mb.ca