More help on the way for businesses, Morneau says

Companies big and small will get credit to help them through crisis

The federal government is readying more help for Canadian businesses suffering the impacts of COVID-19, including sectors of the economy such as hospitality, retail and airlines and the country's oilpatch that have taken a severe hit, Finance Minister Bill Morneau says.

With almost $100 billion in direct support pledged so far to assist individuals and businesses, Morneau says the government is confident that it's put in place the broad fiscal measures needed to respond to the health crisis and its "extreme" economic impacts.

But Ottawa recognizes that gaps remain and that parts of the economy need further help, Morneau said.

"There are still what I would call urgent issues that we are working on and will continue to work on over the weekend for things that we will be announcing next week," he told the Star on Friday.

For example, he said the government will continue efforts to secure personal protective equipment for front-line medical staff, a task made more urgent by U.S. President Donald Trump's edict to manufacturer 3M that it can't sell N95 masks to Canada.

Morneau said more help is on the way for cash-strapped businesses that have seen revenue dry up.

"The reality for businesses is that they are going to need, in many cases, credit," he said.

"We've announced some things for credit for businesses, but we do recognize that there will need to be more for businesses large and small to make sure they can get through this challenge."

Saskatchewan Premier Scott Moe on Thursday challenged the government to "come forward with support for our energy industry as it is needed and it is needed very quickly.

"There are levers that the federal government can pull that no other level of government in this nation can pull, levers like they utilized about a decade ago when the auto sector was facing a liquidity crisis. That is our energy sector today," Moe said, referring to the $13.7-billion bailout of the auto sector by the federal and Ontario governments during the 2008 financial crisis.

Morneau said he's heard the calls for help from the oil sector. "We see the challenge for the energy sector is very significant as a result of COVID-19 and the OPEC decisions," Morneau said, referring to the price war between Russia and Saudi Arabia that sent oil prices tumbling before a late-week rebound.

But Morneau said the impacts on other sectors are "equally challenging," citing airlines, the hospitality industry and retailers who have been forced to close their doors.

"We are looking at the issues that Premier Moe talked about, about the broad need for credit in Canadian businesses that are impacted. That will include those sectors that are hit particularly hard," he said, adding that "it's on my radar for next week."

Ottawa's fiscal response to the crisis has ramped up dramatically, from a $1-billion investment targeting health care in early March to this week's sweeping $71-billion wage subsidy program. The first priority in the initial days was shoring up the health-care system, Morneau said. Almost as quickly came the realization that large numbers of Canadians in precarious jobs were going to be without income.

That was the driver for the emergency response benefit, which will pay $500 a week for 16 weeks to those who are going without income because of the impact of the virus.

But even that wasn't going to be enough to keep "connections" between employers and their workers, seen as vital for speeding an economic recovery once the health crisis recedes.

Enter the government's proposal for a wage subsidy. It started small - promising just 10 per cent of wages at small outfits - and grew dramatically. Now Ottawa has pledged to pay 75 per cent of the wages at companies big and small that have suffered a 30 per cent revenue drop.

On the wage subsidy, there are business concerns that the money won't flow for at least another three weeks. Morneau told the Commons' finance committee Thursday that officials are working "as fast as humanly possible" to get the program running.

And an analysis this week by the Canadian Centre for Policy Alternatives showed that more than 800,000 Canadians could be left without assistance from either employment assistance or the emergency benefit.

Morneau told the Star that the government is open to changes to fix gaps. "We're going to have to be willing to be nimble in the face of a dynamic challenge. Our sense is that we have taken the big measures and they are obviously enormous," he said.

Some economists take an optimistic view of the economy once the virus is contained and social restrictions lifted, predicting a so-called V-shaped recovery. Morneau is not making predictions, saying the uncertainty around the severity and duration of the pandemic makes it impossible to know the state of the economy in several months time.

Just what the unprecedented spending means for Ottawa's bottom line isn't known. The measures so far tally more than $100 billion, plus $85 billion in tax deferrals. Morneau said the government will deliver a fiscal update at the "appropriate time."

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This article was written by Bruce Campion-Smith from The Toronto Star and was legally licensed by AdvisorStream through the NewsCred publisher network.