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The issue: Outbreak economics
We say: Keep businesses afloat

The federal government’s wage subsidy program, a response to the coronavirus outbreak, has grown like a projection of its shadow on a wall since it was first announced March 18.

Related coverage:

Mixed responses from YK businesses to federal wage subsidy scheme

Small NWT businesses welcome 75 per cent federal wage subsidy

Version 1.0 of the subsidy covered only 10 per cent of the wages of employees of small businesses, and would have ended after 90 days, at a total cost of $3.9 billion. The upgraded version applies to businesses of all sizes, non-profits and charities and is worth 75 per cent of the first $58,700 of an employee’s salary, or $847 per week. Employers are encouraged to top up the other 25 per cent if they’re able.

The news was welcomed by the business community, but tempered with the added condition that the recipient must demonstrate a 30 per cent drop in revenue. And there was a sobering reminder from Prime Minister Justin Trudeau that the money was not to be sluiced away to the company’s coffers while people are being laid off.

“If you think this is a system you can take advantage of and game, don’t,” he said. “There will be serious consequences for those who do.”

Capitol Theatre general manager Chris Wood pumps his fist in tribute to The Breakfast Club in front of the closed cinema March 27.
Nick Pearce/NNSL photo

The expansion means the projected cost has increased to as much as $6.9 billion every single week, a daunting, even gut-wrenching, figure to wrap your head around. It must give even the most tepid fiscal conservative pause.

But in the NWT, there are no strangers to a government-fuelled economy. The largest employer in the territory is the GNWT. If you accord to their public sector data from 2018-19, which includes Aurora College, the business development and housing corporations, and the school councils outside of Yellowknife, there are 5,279 people on the taxpayer’s payroll. Almost 2,800 of them live here in the capital; neither of those figures include municipal employees. 

The GNWT has already added a position, appointing Russ Neudorf to a six-month term responsible for spearheading the response to COVID-19. It’s an assistant deputy minister-level job, which won’t come cheap.

When that contract is up at the end of September, the challenges faced by people working in the private sector and those working in the public sector could be very different. While businesses fret over making payroll and as of today, rent or mortgage payments for April, to say nothing of May, June or July, government employees are sitting relatively pretty working from home and earning the same amount of money.

The risk of creating another divide between two groups of citizens in the city is real, and the fact is that putting the income of one group in peril puts the income of everyone at risk. 

The federal government’s $2,000 per month benefit for individuals who have lost income is also welcome, but the importance of keeping cash flowing through normal channels, in other words, paycheques from employers, can’t be understated.

It is critical that as many people as possible remain employed, that businesses continue to provide essential services – and some non-essential services, by the way, let’s not forget how much we enjoyed them – and that everyone continues to pay their taxes. 

The more that are able to do so, the faster the economy will be able to restart once some degree of normalcy returns to everyday life, or as we did after the Second World War and after 9/11, we find our new normal.

Mr. Trudeau acknowledged there is a risk that the new program could be misused, but urged business leaders to show “good faith” and ensure every dollar of the new program goes to workers.

There will always be bad actors, but if the level of good faith we’ve come to expect from Canadians, and from Northerners, comes through, residents of Yellowknife and communities across the NWT will find their feet once COVID-19 is in the rearview mirror.

 

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