Feds work to revise wage subsidy, but Canadian tech reaction is mixed

On Wednesday, Prime Minister Justin Trudeau confirmed the federal government is “relaxing” the criteria for the Canada Emergency Wage Subsidy (CEWS) in an attempt to make it easier for “fast-growing companies” to access the program.

“Government listened – readjusted and mostly met the ecosystems’ needs.”

News that the criteria for the 75 percent wage subsidy had seen changes broke Tuesday night, with The Globe and Mail obtaining a draft bill of the legislation, which has been shared with Opposition parties.
 

The program has reduced the 30 percent year-over-year revenue decline to just 15 percent for the month of March. The 30 percent reduction will still be required to receive the subsidy in April and May. Companies will now also have the option to compare their sales decline to January and February 2020 rather than a year-over-year monthly decline.

Trudeau noted the idea behind the changes is to include as many businesses as possible, re-emphasizing his hope that companies will use the program to rehire and continue to keep employees on the payroll.

Some in the tech community are welcoming the new qualifications, while others are still calling for the government to do more.

Ben Bergen told BetaKit that the Council of Canadian Innovators (CCI) appreciated the effort, but noted that the provisions “are not turned to the innovation economy and leave so many Canadian technology firms in the lurch.”

The executive director added, “We preferred that Canada omit the revenue test like the UK and US have done, which would support more domestic high-growth companies. We still need more targeted measures from Minister Bains’ department to help Canada’s tech sector weather the current storm and capitalize on the rebound thereafter.”

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Communitech president and CEO Iain Klugman took a different approach, noting that the Kitchener-Waterloo organization was pleased with the changes to the wage subsidy. “The changes address some key concerns expressed by Communitech’s member companies,” he told BetaKit. “This will help Canadian tech firms to keep more talented employees on board, keeping our sector strong, and ready to lean into a strong economic recovery in the months to come.”

“Unfortunately, for the innovation economy, most businesses will be left out due to the unique nature of their businesses.”
– John Ruffolo
 

Matt Roberts, partner at ScaleUP Ventures, who has been vocal about the government measures, told BetaKit, “They’ve met all the requirements we asked for after giving feedback on the announcement last Wednesday. Where I didn’t hear on movement was on pre-revenue companies.”

“Government listened – readjusted and mostly met the ecosystems’ needs,” he added. “The only complaint I have is that we had to go through it again last week after we had voiced these concerns in the weeks before.”

A source familiar with government processes that spoke to BetaKit on background noted that government strategy has been to ensure that measures meet the needs of large swaths of businesses, and will likely turn to specific measures for the innovation sector in the coming months.

CCI chair John Ruffolo, who has been in talks with federal ministers about the measures and how they affect the tech sector, acknowledged that the crafting of the wage subsidy is “very complicated.” He told BetaKit that he appreciates the government listening to the concerns of the tech community and called the recent changes “a step in the right direction,” noting they look positive for SMBs.

“Unfortunately, for the innovation economy, most businesses will be left out due to the unique nature of their businesses, and we hope to look to Ottawa for direct, targeted support to this sector,” he added.

The Canadian Federation of Independent Businesses (CFIB) also commented on the changes, noting that they will “still not help all small firms in need of help.” The organization added that its preferred option is still that the government drop the 30 percent revenue test altogether for small and medium-sized firms.

The CFIB said its plans to continue to lobby all parties to ensure this change happens and added that the expanded criteria does “not address the concerns of many [businesses, which] cannot afford to wait three to six weeks before receiving any support for their wage bills.”

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Trudeau addressed the delay of implementation of the CEWS, which is expected to be available within the next three to six weeks. He noted that the Department of Finance is working to shorten that timeline to just three weeks, adding that the department has been focused on the $2,000 Canada Emergency Response Benefit (CERB) and will so turn to the CEWS.

He also highlighted the need to recall Parliament as soon as possible in order to pass legislation on the new subsidy, which is needed to implement the program. On Tuesday, Trudeau noted that CEWS will be embedded in the Income Tax Act and therefore it is necessary to pass legislation. On Wednesday, the prime minister again called on Opposition parties to come together to pass the legislation as soon as possible.

The Liberals’ Leader of the Government Pablo Rodriguez noted in a Tweet earlier this week that in an “unprecedented move” the party sent the draft bill to the opposition parties “in order to get Canadians the help they need as quickly as possible.”

Parliament is now expected to be recalled during the upcoming Easter Weekend, with iPolitics reporting that the hope is all parties can agree on the draft version of the bill before a request is made to recall the House of Commons, which needs 48 hours’ notice.

Conservative opposition has been asking for more scrutiny on the program, calling for use of videoconferencing and other measures in order to do so. On Wednesday, Trudeau again pointed to potential plans to recall Parliament virtually, in order to enable more MPs to participate. He noted that he has been in talks with the Speaker of the House in an attempt to make this possible.

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The prime minister also addressed questions about the speed at which the emergency COVID-19 measures have been implemented. He said his government initially focused on getting the two big programs – CEWS and CERB – up and running, knowing that there would be the need to refine them later on. He noted that the programs are the largest in Canadian history and emphasized the need to get them out quickly, as well as done properly.

“Any time you put out large measures quickly and that are solid enough to be certain to work through the machine, there are going to be gaps,” said Trudeau.

Deputy Prime Minister Chrystia Freeland added on Wednesday that House Leaders from all the parties are currently in negations on how Parliament can come back to debate the new legislation.

The recent expansion of the 75 percent wage subsidy also made changes for charities, offering more flexibility for them. The changes will now expand the cost of the CEWS program. Last week, Minister of Finance Bill Morneau announced the program was expected to cost $71 billion. In a news briefing on Wednesday, MP Jean-Yves Duclos, president of the Treasury Board, noted that this will now change, though did not provide details. He said that prior estimations will now be reviewed by Morneau.

Meagan Simpson

Meagan Simpson

Meagan is the Associate Editor for BetaKit. A tech writer that is super proud to showcase the Canadian tech scene. Background in almost every type of journalism from sports to politics. Podcast and Harry Potter nerd, photographer and crazy cat lady.