Manitoba’s slow response dragging down small businesses By: Tom Brodbeck Posted: 6:09 PM CDT Wednesday, Apr. 15, 2020

Opinion

Hey there, time traveller!
This article was published 14/04/2020 (1620 days ago), so information in it may no longer be current.

The Bank of Canada says a prolonged recession due to the COVID-19 pandemic could result in permanent and widespread business closures, especially in the absence of “decisive and timely policy actions.”

All levels of government should pay close attention: the decisions they make today (or fail to make) on fiscal stimulus programs could have long-term implications.

The central bank, in its April report released Wednesday, laid out two economic scenarios for Canada in the coming months.

One is a steep, but abbreviated economic decline, with physical-distancing measures lifted sooner rather than later, allowing economic growth to return to more normal levels later this year. Under the scenario, many companies would survive the pandemic and still have the cash flow to reopen their doors.

The alternative outlook is far gloomier.

If governments are unable to relax physical-distancing measures in the short term (due to a continued rise in infections) and the pandemic lasts longer than many expect, the economic damage could be catastrophic. Businesses unable to hang on long enough to weather the storm would shutter permanently.

“Together, these effects could cause structural damage to the economy that might not be undone for several years, if ever,” the report says. “In the current environment, decisive and timely policy actions, as well as clear communications, are critical.”

We haven’t had a timely response from the Manitoba government when it comes to support for small- and medium-sized businesses. Many don’t qualify for federal support that has been announced; up to half may be falling through the cracks.

A number of provinces have already stepped in with direct financial aid to help small businesses survive the pandemic. The more companies they can help remain solvent, the quicker the economy can rebound when the pandemic subsides (something closer to the Bank of Canada’s first scenario).

One is a steep, but abbreviated economic decline, with physical-distancing measures lifted sooner rather than later, allowing economic growth to return to more normal levels later this year. Under the scenario, many companies would survive the pandemic and still have the cash flow to reopen their doors.

However, the Pallister government still hasn’t acted.

Premier Brian Pallister said Wednesday there hasn’t been “clarity” on the federal government’s small-business aid package. Manitoba doesn’t want to risk duplicating what Ottawa is already doing, he said.

“In making sure that we have a program that helps people who are potentially falling through the cracks, we have to understand where those cracks are first,” said Pallister. “We’ve been endeavouring to work in partnership with the federal government, not compete with them.

“This isn’t about who gets credit, it’s about who we can help most effectively.”

That’s a cop out.

The federal programs in question may have evolved over the past week or two, but their central features — one being a wage subsidy, the other a loan program — are well-understood.

Business groups have been clear small businesses require help with fixed costs, such as rent; without it, many will go bankrupt. Other provinces, who didn’t have to wait for greater “clarity” from Ottawa, have already acted.

We haven’t had a timely response from the Manitoba government when it comes to support for small- and medium-sized businesses. Many don’t qualify for federal support that has been announced; up to half may be falling through the cracks.

Meanwhile, the Manitoba premier did hint relief may be coming “early next week.” The province has authorized an additional $1 billion in spending: half of which is for health care, $400 million is for COVID-19 related relief, and $100 million is budgeted for additional emergency measures.

Some of those funds may be used for new “small-business protections,” said Pallister, although he refused to say what that may look like. So small-business owners have to wait further.

There are many factors that will determine whether this is a short, severe economic downturn or a more prolonged one. Many of those factors are not government hands, including the extent of the pandemic, but there are actions leaders can take now to assist in a quicker recovery when it ends.

Let’s hope the Pallister government finally sees the light.

tom.brodbeck@freepress.mb.ca

Tom Brodbeck
Columnist

Tom has been covering Manitoba politics since the early 1990s and joined the Winnipeg Free Press news team in 2019.

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