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COVID benefits should be sector-specific, says economist

COVID-19 benefits, which expire on Oct. 23, should be reconfigured to target only industries heavily affected by the pandemic, says an economist.

On Oct. 6, Prime Minister Justin Trudeau and Finance Minister Chrystia Freeland told reporters in Ottawa that the government would continue to support Canadians. But they didn’t say whether the current benefits — such as the popular wage and rent subsidies — would continue after Oct. 23.

On Sunday, Intergovernmental Affairs Minister Dominic LeBlanc told CTV’s Evan Solomon that Freeland “is actively looking at a series of options.”

“I don’t believe a final decision (has been) taken, but I’ve (heard Freeland) publicly say the government is certainly sensitive that some sectors in the economy, (such as) the arts and culture sector (and) travel and tourism, (won’t) return to some of the pre-COVID levels of activity before next season,” LeBlanc said.

Targeting industries still struggling because of the pandemic is a good idea, said Benjamin Tal, CIBC’s deputy chief economist.

“We put together programs that (normally would) take five years, (but the government did it) in five minutes,” he told iPolitics on Tuesday.

“The programs must be much more targeted, and provide assistance where it is needed.”

Many businesses have come to rely on government programs to cover shortfalls created by the pandemic. As of Oct. 3, the federal wage subsidy had paid $94.4 billion to 4.4 million applicants, according to government data. The rent subsidy, which provides up to $75,000 per four-week claim period to cover a business’s rent, paid $6.6 billion to 1.6 million applicants, also as of Oct. 3.

Nearly 20 per cent of wage-subsidy claims were from accommodation and food services, which include hotels and restaurants, according to Statistics Canada.

Restaurants Canada wants Ottawa to continue the wage and rent subsidies until 2022.

“The fate of Canada’s 90,000-plus restaurants is still uncertain,” Todd Barclay, the advocacy organization’s president and CEO, said Tuesday.

“Most have been losing money or barely breaking even since coming out of initial lockdown last year, and at least 10,000 establishments have already closed,” Barclay said in a statement. “The rest need government support to help them survive the fall and winter, so they can continue feeding our recovery.”

Many manufacturers have begun reducing their dependence on the subsidies. During the second wave of the pandemic last year, more than 802,000 manufacturing employees were supported by the wage subsidy. Just 93,000 are receiving it now.

The federal government should allow companies to wean themselves off the benefits programs before it ends them completely, said Dennis Darby, president and CEO of Canadian Manufacturers and Exporters.

“It’s going to be a bumpy recovery, ” he told iPolitics on Tuesday, but “there’s no basis for (the programs) to go on indefinitely, especially in our sector.”

This story was copy-edited after publication.

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