FRANK QUINN -- The recent move by the federal government, though I believe well-intentioned, unfortunately misses the mark

Frank Quinn, Kamloops
lawyer and developer

USED WITH PERMISSION OF THE AUTHOR – this commentary first appeared in Kamloops This Week

The idea of offering a 75 per cent wage subsidy to small business, to be used as a supplement and keep people involved, is a lovely idea in principle. Unfortunately, the devil is in the details and this government has invoked details that effectively make the program mostly useless.

The key problem is the requirement for a business to show a 30 per cent reduction in income from the previous year. That works well for retail business and restaurants, which simply shut down when the virus hit, but it is worthless for the vast majority of other small businesses.

Take, for example, a plumbing contractor employing 10 people. At the end of each month, the contractor bills their work. Most would have worked on existing projects through to the end of March. By the end of the month, it would have been clear the bulk of their work was at an end.

For the month of March, however, they would bill the work they did in February. In April, they would bill the work they did in March. Their income for March and April would not likely decline from the previous year at all. In fact, it may even be more.

However, that employer would know, at the end of March, that their future work had dried up as residential and commercial construction has ground to a halt throughout the province. By the end of April, they would have nothing to bill.

The federal government passed laws three years ago that destroyed the ability of small businesses to save money for a rainy day. The legislation took away small businesses’ ability to save for retirement and equipment replacement.

The laws were part of the federal government’s focused attack on “the rich” — which, by government’s definition, includes every small business owner, in reality the backbone of our middle class.

The plumbing contractor has no savings in their corporation and no income at the end of April.

Their only choice, if they want to survive, is to fire all employees at the end of March — and, in fact, they did.

They cannot collect on the government program until May. They have no choice.

They can’t pay employees who have no work to do. The employees are gone. 

They are collecting employment insurance and are two months in arrears on their mortgages, rents or other bills.

If the government had a basic understanding of these practices (which are uniform to just about every business that operates, other than retail), it would have designed a program that really worked, instead of one that pays political lip service.

Either the federal government designed the system purposefully so most companies can’t take advantage or it simply lacks a basic understanding of how businesses operate and is poorly advised by a political staff who know even less.

I suspect it is the latter.

What should the federal government have done?

It could have sent any employer who was going to lay off employees 75 per cent of the wage on the condition the funds are paid to the employee who would have been laid off (without the 30 per cent income-reduction requirement) and follow up with Canada Revenue Agency (CRA) audit procedures already in effect — and with strict penalties for those who try to abuse the system.

In substance, this would be a very efficient way of distributing employment insurance. Instead of hundreds of thousands of men and women grinding through the already over stressed employment insurance (EI) process, a simple application by one-tenth the number of employers would have made for a simple, streamlined system, with money in hand in a quarter of the time.

Better still, instead of the government collecting our money and paying it back to us — and wasting million of dollars in the process — it could simply leave the money in the hands of employers and stimulate the economy at the same time.

Give each employer a tax credit equal to 75 per cent of the wages paid for four months, until we get through this (COVID-19) pandemic. Give all small businesses a 20 per cent tax cut, provided the business uses that money to buy equipment or inventory or invest in research.

Thousands and thousands of jobs would immediately be created, our small businesses would be fully retooled when the crisis ends and our research and technology sectors would be fully thriving throughout.

What opportunity — and what a shame it has been squandered.

Frank Quinn, Kamloops

Frank Quinn is a local Kamloops lawyer and developer, with over 30 years’ experience. He has helped guide and govern several provincial, regional and local business, community, health and educational organizations.