The federal government’s newly revised 75% wage subsidy now has a price tag attached to it: $71 billion.
Finance Minister Bill Morneau confirmed the cost Wednesday (April 1), while clarifying part of the sum will be buffered by reduced costs associated with the Canada Emergency Response Benefit (CERB).
The CERB offers $2,000 monthly payments to Canadians who find themselves out of work or with reduced hours because of the pandemic.
The goal of the Canada Emergency Wage Subsidy program is to help companies keep more workers on the payroll, meaning those workers would not have to apply for EI or the CERB.
Morneau estimated the CERB would now cost $24 billion with the revisions to the wage subsidy, which were boosted from 10% to 75% on March 27.
“We recognize as a result of this the deficit will go up,” Morneau said during a media briefing in Ottawa.
Changes to the subsidy will be backdated to March 15, while the program will run 12 weeks until June 6.
The finance minister said the government hasn’t determined yet if the program will be extended beyond 12 weeks.
The subsidy will cover 75% of a worker’s salary up to $58,700.
After that, Morneau said it will be on employers to “attest” they are doing everything they can to pay the remaining 25%, but he acknowledged the government is only “asking” companies to do pay the remainder.
The finance minister also clarified some of the eligibility requirements of the wage subsidy program, which is open to small businesses, large businesses, non-profits and charitable organizations.
Those groups will have to show a 30% decrease in revenue compared with the same month one year earlier.
As for new businesses that can’t show revenue numbers from a year prior, Morneau said “we’re working on how to deal with that.”
One possibility is that businesses submit financials that show 30% losses from a month prior, rather than a year prior.
A new portal will be opening up on the Canada Revenue Agency’s website in the coming weeks for applications to the subsidy program.
Funds are expected to be available within six weeks.
Morneau joined in with Prime Minister Justin Trudeau’s earlier pleas for businesses not to try to cheat the system, with the finance minister warning of “severe” consequences for those who do.
The government is also offering a 10% wage for businesses of up to 18 employees that cannot prove 30% in loss of revenue but have still been having financial difficulty as a result of the pandemic.
Earlier in the day, Trudeau urged for parties to be recalled to Parliament to deal with what he called “the largest economic program in Canada’s history.”
A small group of parliamentarians was recalled March 25-25 to pass a $107-billion COVID-19 relief package.
Trudeau also dropped new information about the CERB, confirming applications will be online at Canada.ca beginning April 6 for those who haven’t already applied for employment insurance.