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Morneau’s message to employers: ‘Get ready to rehire people’ with subsidy

The federal government’s wage subsidy program to help employers is expected to cost $71 billion and the money should start flowing to employers in six weeks, said Finance Minister Bill Morneau today in Toronto.

“My message to Canadian employers is this: Get ready to rehire people,” he said. “You can apply online through a Canada Revenue Agency portal that will launch soon.”

The Canada Emergency Wage Subsidy (CEWS) provides 75 per cent of a worker’s wages for the first $58,700 of regular salary up to a maximum of $847 a week per employee. The criteria is that revenue has to have declined my 30 per cent or more.

Defining the revenue decline

Morneau said the criteria is simple — eligibility will be determined by comparing the revenue for the month in 2020 with the same month in 2019.

So if revenue dipped 30 per cent in March 2020 versus March 2019, the employer would be eligible for the CEWS.

Companies will have to reassess revenue each month and apply for the subsidy.

As long as the decline remains 30 per cent or more, the benefit would be available to that organization, said Morneau.

All organizations, regardless of size, are eligible for the subsidy — with the exception of publicly funded ones, he said.

Don’t game the system

Morneau repeated a warning issued by Prime Minister Justin Trudeau earlier that there would be harsh penalties for any organization or individual who tries to game the system.

“There will be severe consequences for any bad actor,” said Morneau, calling the CEWS a “high trust system” with penalties for anyone who breaks that trust.

He also said employers should attest they’re doing everything they can to pay the remaining 25 per cent of a worker’s income.

“We know that this may not always be possible,” said Morneau. “The system will be flexible.”

Eye-popping price tag

The program is expected to cost taxpayers $71 billion, though Morneau pointed out there will be a decline of about $24 billion in costs related to the Canada Emergency Response Benefit (CERB). The CERB was announced earlier and provides a benefit of $2,000 per month for people who have lost work but are not eligible for employment insurance.

That’s far higher than some initial estimates from Canada’s banking sector, which pegged the cost more in the $25 billion to $28 billion range.

“This is the largest economic program in Canada’s history,” he said. “We have to take this measure to protect Canadian jobs.”

Hospitality sector eligible

The finance minister underscored the point that the wage subsidy is available to the hospitality sector. It has been one of the hardest hit by COVID-19.

“I know restaurants and bars have been particularly hard hit by this pandemic,” he said, adding that non-profits and charities are also eligible.

Morneau called the various programs launched by the government a “boost to the confidence that we all need in this challenging time.”