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Businesses unlikely to survive latest lockdowns, say experts

Debt-ridden businesses are unlikely to survive the latest round of lockdowns, say industry experts.

On Monday, Ontario became the latest province to announce stricter public-health measures to curb the spike in COVID-19 cases driven by the Omicron variant. Theatres, cinemas, museums, galleries, gyms, and zoos must close, and indoor dining at restaurants is prohibited.

Also clamping down are provinces like Quebec, which brought back a nightly curfew, and B.C., which banned indoor gatherings.

Except for Saskatchewan, all provinces and territories have imposed a 50 per cent capacity limit on businesses.

This latest round of restrictions will spell the end of many businesses, said Dan Kelly, president of the Canadian Federation of Independent Business.

“Business owners are so deep in debt that there’s really nothing left,” Kelly said. “There are thousands of zombie businesses out there that are essentially dead. This is the time where we start to see businesses fall in large numbers.”

On average, Canadian businesses have taken on an extra $170,000 in debt since the pandemic began, he added.

With Bill C-2’s royal assent in December, the federal government approved $7.4 billion in additional subsidies for businesses and Canadians. The new benefits replaced those that expired in October, including the Canada Emergency Response Benefit (CERB).

Two of the new benefit programs — the Local Lockdown, and the Canada Worker Lockdown — are available to businesses, and their staff, that had to reduce their capacity by at least half. Previously, a lockdown had to be stricter before businesses could apply for the benefit.

Until Feb. 12, Ottawa is also lowering the revenue-loss threshold for businesses from 40 to 25 per cent, with payments retroactive to Dec. 19.

But Kelly said the threshold is still too high, and should be removed.

The Local Lockdown program subsidizes 25 to 75 per cent of wages and rents, depending on revenue loss, while the Canada Worker Lockdown program pays $300 a week to employees whose income has been cut by at least half because of restrictions.

Workers and businesses in every province will qualify, except in Saskatchewan.

Ottawa is also prolonging three benefits until May 7: the Canada Recovery Caregiving Benefit, the Canada Recovery Sickness Benefit, and the Canada Recovery Hiring Program.

In its fall economic update, the government set aside $4.5 billion specifically to fight the Omicron variant of COVID, which is less virulent but more contagious than previous strains.

Ottawa is also offering $60,000 loans to small businesses and non-profits, with up to $20,000 of it forgiven. Kelly said it would be great if the government increased them to $80,000 and forgave half.

The head of Restaurants Canada said the latest round of restrictions will be a serious blow.

“Reopening allowed for some resurgence, (but) nowhere near enough to offset the (significant debt restaurants have accrued) over the past 22 months,” said Todd Barclay. “It’s going to take years for this industry to rebuild.”

Nor has he seen any government data to justify so much restriction of restaurant operations, especially since the industry has prioritized the safety of its employees and customers, Barclay added.

NDP Finance critic Daniel Blaikie said Bill C-2 isn’t up to the job of supporting Canadians through this latest wave, and Ottawa should bring back the CERB.

“In the four weeks that Parliament sat, we knew that a lot of Canadians were still experiencing economic hardship from the previous waves,” he said.

“(We knew) that mutation was a serious threat, and we felt strongly — and continue to feel strongly — that the economic supports can’t be pulled back.”

The NDP has asked Prime Minister Justin Trudeau to recall Parliament sooner than its scheduled return on Jan. 31 to deal with the spike in cases.

Blaikie said that shouldn’t be difficult, because MPs don’t have to attend in person.

Trudeau is expected to deliver an update of COVID in Canada on Wednesday. He’ll be joined by Finance Minister Chrystia Freeland, Health Minister Jean-Yves Duclos, and various health officials.

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