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Business  

Federal budget 2021: Program extensions, new hiring subsidy for small business

New hiring subsidy

Ottawa's budget measures for small- and medium-sized businesses include pandemic-related program extensions and funding boosts even as the government rolls out a $15 federal minimum wage.

The federal budget unveiled Monday plans to extend — then gradually wean businesses off — the pandemic-triggered programs while phasing in new measures.

Ottawa is extending rent and wage programs while at the same time phasing in hiring subsidies, microgrants to help companies move online and allowances for capital investment expenditures.

The goal, Finance Minister Chrystia Freeland said in a prepared version of her budget speech, is to “punch our way out of the COVID recession” and ensure small businesses remain the heart of the economy.

“While many big, multinational companies have actually prospered during this low-interest rate COVID year,” the budget reads, “our small businesses have been battered.

“Healing the wounds of COVID requires a rescue plan for them.”

The budget – the first in two years and the first since the onset of the COVID-19 pandemic – comes as small businesses once again contemplate closures, bankruptcies and layoffs as the country struggles with shutdowns related to a more virulent third wave of the virus.

The business wage subsidy, rent subsidy and lockdown top-ups will be extended to Sept. 25. The timeframe will also be expanded for Canadians infected with the virus who take sick leave, are in isolation or care for children and family.

The extension of the wage subsidy and rent subsidy with lockdown top-ups is expected to cost $10.1 billion and $1.9 billion, respectively. The rate of both will gradually be decreased starting in July, as vaccinations become more widespread.

“The wage subsidy extension is prudent, given that there's a lot of uncertainty around the vaccine rollout … but once you start to apply the policy, it just gets very difficult,” said Pedro Antunes, chief economist at the Conference Board of Canada, a non-partisan think tank.

The Canadian Federation of Independent Businesses, which had warned that more than 181,000 businesses risk closing over the next year, welcomed extensions to subsidies, the new hiring program and the government's commitment to try to reduce credit card swipe fees for small businesses.

But the advocacy group was disappointed new businesses were overlooked.

“Today’s budget delivered meaningful support to many, but there are still critical gaps in the federal relief programs that exclude tens of thousands of hard-hit businesses," CFIB President Dan Kelly said in a statement.

The CFIB spent much of the pandemic urging the government to boost its small business supports but asked for a moratorium on new costs for small businesses, forgiveness for more small business debt, longer repayment terms for loans and hiring incentives.

It demanded the government also hold off on introducing consumer incentives to spur spending until small businesses can fully open and benefit.

As the wage subsidy winds down, the government plans to introduce the Canada Recovery Hiring Program to offset the cost of increasing worker hours or hiring additional staff as businesses reopen.

The new program is expected to cost $595 million and will involve a subsidy of up to 50 per cent between June 6 and Nov. 20 for a maximum of $1,129 per employee per week.

Eligible employers will be able to claim either the hiring subsidy or the current wage subsidy for a particular qualifying period, but not both and the hiring subsidy will not apply to furloughed staff.



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