Ideas

May 7, 2020

Letter to the Prime Minister on response and recovery after COVID-19

Right Honourable Justin Trudeau
Prime Minister of Canada

House of Commons
Ottawa, ON K1A 0A6

Dear Prime Minister Trudeau,

On behalf of the Business Council of Alberta, thank you for your leadership in these difficult and uncertain times. We recognize that you and your cabinet colleagues, as well as thousands of public servants and health care professionals, are working tirelessly on behalf of Canadians to address the COVID-19 public health crisis and its economic consequence.

Since we last wrote to you, many programs have been launched and we applaud the ways in which your government is protecting people and business. We appreciate the opportunity to provide initial and ongoing input into these programs. Today, we write to ask that the Government of Canada continue its efforts to protect people, business and the economy by further enhancing the response efforts particularly in terms of facilitating liquidity for Canada’s largest companies, addressing gaps in current programs, and enabling entrepreneurs to survive the crisis.

In addition to addressing immediate measures, this is about more than weathering the storm – this is about creating a vision for our future where all Canadians can grow and prosper. Now is the time to think bolder than our peer nations, and to act courageously in this pursuit. Our member companies, which collectively represent the jobs of over 100,000 Canadians and the majority of Alberta’s private sector employment, pledge our support to developing a vision of this kind. Specifically, we recommend taking the following actions to endure the COVID crisis and create a more resilient, inclusive, and inventive future for Canada:

1. RESPONSE – Position Individuals and Businesses of All Sizes for Success Post-Crisis

Companies across Canada are doing what they can to protect the health of their workers and keep as many people employed as possible, while doing their best to survive financially. Many programs have been rolled out to support Canadian businesses in this effort. However, significant gaps still exist. We request that the Government of Canada:

  • Implement a large corporation liquidity program for heavily-impacted sectors such as energy and aviation. The viability of large corporations is critical to our long-term economic future because these businesses are significant purchasers of goods and services from Canada’s small and mid-sized companies. Their failure would cause a ripple effect throughout the Canadian economy.
  • Expand existing agricultural supports – Maintaining the integrity and viability of Canada’s food supply should be one of the country’s top priorities. Farmers are facing an unprecedented confluence of challenges during the present crisis, including rising operating costs, reduced capacity at processing plants, labour shortages, and falling demand from the food service industry. The recently-announced $252 million aid package for agriculture and agri-food businesses is an important first step towards addressing these issues, but falls well short of what is needed in the sector. We recommend that financial support for the sector be significantly increased by orders of magnitude.
  • Provide a financial backstop for property tax deferral – Working with the provincial governments, we encourage the federal government to enable local and regional governments to suspend residential and non-residential property tax collection for 90 days by providing financial backstop/revenue streams to facilitate continued delivery of essential public services by the local and regional governments.
  • Increase innovation funding support by expanding the IRAP Innovation Assistance Program. Many of Canada’s innovators and entrepreneurs have fallen through the cracks of existing programs. We applaud the government’s response to this with the $250 million-dollar IRAP support however we anticipate that this amount will fall short to support the breadth of Canada’s innovation community. We recommend that this program be significantly increased by orders of magnitude.
  • Extend the Canadian Emergency Wage Subsidy (CEWS) for 4 -5 additional months to support industries that experience a lagged or sustained effect from current economic restrictions. We believe many businesses may not feel the full extent of the impact until after the program’s June 6th end date.
  • Transition the Canadian Emergency Response Benefit (CERB) to a restricted-eligibility program for continued support of individuals who must quarantine or who struggle to find employment beyond October 3rd but do not qualify for EI. This will limit the risk of another outbreak and provide much-needed certainty for financially unstable families to meet basic needs.
  • Close gaps in the Business Credit Availability Program (BCAP) to ensure that all businesses have access to the loans they need. CEBA eligibility remains limited and available loans are too small for many companies. Meanwhile, the 80% loan guarantee program offered by EDC still requires that businesses meet banks’ loan adjudication criteria, including forward-looking revenue projections which are next to impossible to make in the present environment. Businesses report that financial institutions are using the EDC program primarily to lend to larger companies. The gap between $40,000 CEBA loans and other loan programs needs to be closed so that small businesses have the means to survive the shutdown.

We note that as provinces begin to re-open their economies, the response will very likely be gradual. Canadians may not yet feel comfortable returning to work, or their favourite restaurant. Therefore, much like the re-open has been characterized as a “dimmer switch” by many premiers, we encourage government programs to respond accordingly. The re-opening of a restaurant or business does not necessarily mean they realize much revenue or are even profitable. We therefore ask the government to continue necessary support programs at varying levels in a “dimmer switch” fashion to enable businesses to survive the slow recovery after restrictions have been eased.

2. RECOVERY – Bolster Economic Recovery through Emphasis of Canada’s Future Vision and Goals 

We cannot expect to go back to the old normal post-crisis and we should not aspire to do so. This crisis presents an opportunity to bring about recovery through a bold economic and industrial strategy that positions Canada to win in areas of natural strength and strategic importance: resource development and value added; innovation and technology; high value manufacturing; and tourism. This strategy should be underpinned by principles of competitiveness and high value, innovation, talent and prosperity. Future goals and specific actions should include:

  • Accelerating domestic competitiveness and investment attraction in order to make Canada the place for investment and people. Canada’s competitive framework must address the fundamentals of capital formation, the realities of capital allocation and mobility, and the reality of the importance of regulatory certainty within a business-friendly environment. We do this by 1) removing regulatory impediments to business, especially for investment in the resource sector and scale-up testing of new innovations; 2) creating a globally-competitive tax environment, including additional incentives for R&D spending and capital investment; and 3) working with all levels of government to greatly accelerate major project approvals and provide greater certainty to investors. 
  • Enabling business ingenuity to assist in re-opening the economy by providing additional incentives for efforts in: 1) virtual and revised, safe shopping experiences for consumers 2) new ways of working from home and improvements in related technologies 3) digitization of learning for students in K-12 and post secondary-level.
  • Creating capacity for greater prosperity in Canada by working with provinces to evaluate and redevelop an outdated educational model, supporting educational programs aligned to the innovation economy, addressing mental health and addiction issues, and improving the educational and employment outcomes of Indigenous and immigrant Canadians.
  • Revitalize the natural resource sector by improving federal regulation and policy that would enable improved competitiveness of the sector, increasing funding for research and innovation through the Clean Resource Innovation Network and similar agricultural and resource entities to unlock yield potential and develop sustainability solutions, and by supporting the development and deployment of clean innovations and technology, including carbon capture and sequestration, hydrogen fuels, small modular reactors and others.

We recognize the importance, and challenges, of addressing both the immediate response and the longer term rebuild. The Business Council of Alberta is ready and willing to support you and the Government of Canada in its efforts to help Canadians and Canadian businesses weather this storm and be prepared to emerge from it as strong as possible. Thank you for your consideration of these proposals and we are happy to discuss them with you further.

Sincerely,

Adam Legge
President

cc:
Honourable Chrystia Freeland, Deputy Prime Minister
Honourable Bill Morneau, Minister of Finance
Honourable Seamus O’Regan, Minister of Natural Resources
Honourable Navdeep Bains, Minister of Innovation, Science and Industry  
Mr. Ian Shugart, Clerk of the Privy Council and Secretary to Cabinet

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