Canada’s 2020 Fiscal Update
Today, the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, released Supporting Canadians and Fighting COVID-19: Fall Economic Statement 2020.
The full statement can be viewed here: https://bit.ly/36nYfpZ
The following is a summary of the fiscal update, with an emphasis on measures that are of significance to Canada’s railway operators:
- To support businesses through the second wave of the COVID-19 pandemic, the federal government will increase the maximum rate of the Canada Emergency Wage Subsidy (CEWS) to 75 per cent for the period beginning December 20, 2020 and extend this rate until March 13, 2021.
- To provide greater certainty to businesses and other organizations, the government is proposing to extend the current subsidy rates of the Canada Emergency Rent Subsidy (CERS) for an additional three periods. This means a base subsidy rate of up to 65 per cent will be available on eligible expenses until March 13, 2021.
- Under the new Lockdown Support program, organizations that are subject to a lockdown and must shut their doors or significantly restrict their activities under a public health order are eligible for an additional 25 per cent top-up, in addition to the Canada Emergency Rent Subsidy base subsidy of up to 65 per cent, until December 19, 2020.
- The Canada Emergency Business Account (CEBA) program will soon be expanded, allowing qualifying businesses to access an additional interest-free $20,000 loan, in situations where there is need. Half of this additional amount, up to $10,000, would be forgivable if the loan is repaid by December 31, 2022. The deadline to apply for a CEBA loan has been extended to March 31, 2021.
- The Highly Affected Sectors Credit Availability Program (HASCAP) will offer 100 per cent government-guaranteed financing for heavily impacted businesses (including those in sectors like tourism and hospitality, hotels, arts and entertainment) and provide low-interest loans of up to $1 million over extended terms, up to ten years. Rates will be lower than those offered in Business Credit Availability Program (BCAP) and beneath typical market rates for hard hit sectors.
- Recognizing the importance of the Regional Relief and Recovery Fund (RRRF) in supporting local tourism businesses, the government is proposing a top-up of up to $500 million, on a cash basis, to Regional Development Agencies and the Community Futures Network of Canada, bringing total funding to over $2.0 billion in this fund. The government will earmark a minimum of 25 per cent of all the Fund’s resources to support local tourism businesses, representing $500 million in program support through June 2021.
- Once the COVID-19 pandemic is under control, the Government of Canada will invest in a growth plan of roughly three to four per cent of GDP, between up to $70 and $100 billion, over three years, to jumpstart Canada’s economic recovery.
- Since May, in preparation for a COVID-19 vaccine roll-out, the government has invested a total of $284.2 million to improve our capacity to distribute COVID-19 vaccines to Canadians. This investment includes $125 million in 2020-21 for the shipping and storage of COVID-19 vaccines and $159.2 million, starting in 2020-21, to procure supplies needed to vaccinate Canadians (e.g. needles, alcohol swabs) and increase vaccine deployment capacity through improved infrastructure, promotion and national guidelines for the delivery of vaccines.
- Since this crisis began, the government has invested nearly $407 billion – nearly 19 per cent of Canada’s GDP – to support our public health care systems, provide direct income benefits to Canadians, and bridge businesses through the crisis and deep into 2021.
Additional information will be provided as more details become available. In the meantime, should you have any questions, please do not hesitate to reach out to me directly.
Executive Vice President and General Counsel