Why Ottawa’s COVID bailout package will fail

Paul Poscente, president and CEO of Backwoods Energy Services, wants Canadians to know that $82 billion is less impressive than it looks. He sat down with IPP&T magazine to explain why the billions earmarked to help businesses and workers simply won’t work:

“Unfortunately, the headline number is more impressive than the impact it will have: the policy as currently designed will fail to help 90 per cent of Canadian companies. It will fail many of our most vulnerable workers.
“Citizens are doing their duty to stay home. They aren’t out spending money. We need to appreciate that digging ourselves out of this crisis will consequently be much harder, especially if we fail to deliver well-targeted fiscal stimulus.”
IPP&T: But surely the $10 billion will make a difference?
“While it depends on the business, many companies will find the $10 billion available in loans lacking. For starters, the BDC has said that $5 billion will be dedicated to those businesses that can prove a “direct impact by COVID.” Many companies won’t be able to prove this. Moreover, even when they can, many may feel uncomfortable with destroying their balance sheets just to kick the can down the road.”
IPP&T: Can the money be better targeted?
“The most economically vulnerable in our population are the people who can’t afford to not work. Yet the current package for businesses is aimed at keeping corporations alive by loading them up with debt, not saving jobs. This is hardly the way to support companies that employ 90 per cent of our private sector workers.
“The current package proposes wage support of 10 per cent up to a maximum per company of $25,000. But anyone who actually runs a business knows $25,000 is symbolism at best. In no way does this package effectively counter job loss.
“As a starting point, the government should be aggressive with job share support (currently maximized at $573 per month). The government should also directly help small and medium enterprises since they employ 90 per cent of our private sector workforce. They need immediate help ensuring viability, and should not be forced to take on unsustainable debt to do so. There are a number of different partnering, backstopping and deferral strategies that the government could undertake on this front.
“The Prime Minister is right that these are extraordinary times that demand extraordinary measures. But the current fiscal package reflects dated thinking. We need to make immediate amends to it. Bold strategies are needed, but not yet given.”
You can also hear more from Paul Poscente in the April issue of IPP&T magazine, in our special coverage of the current COVID-19 pandemic.