The long wait for rent reduction and what is wrong with Ottawa ’s business rescue plan

Two weeks after Prime Minister Justin Trudeau launched a rent relief program aimed at bailing out small businesses in Canada, he still did n’t apply for a portal, and some provinces provided a little information about the status of their agreement with Ottawa Different stories.

Trudeau ’s announcement was released on April 24. As of May 8th, a source in the PEI government who knew about the negotiations told Maclean & # 39; s that the province was waiting for the federal government to submit the final agreement to the cabinet. In Charlottetown. A spokesman for Alberta ’s Minister of Economic Development Tanya Fir said he could not comment because “negotiations are in progress”. An official in New Brunswick said the details were "still being finalized." At the same time, senior government sources on the Ontario side said on May 9 that they hope that the plan, which has been approved by the Cabinet at Queens Park, will start within a week.

There was a lack of consensus on when the plan would be launched, and the speed at which Minister of Finance Bill Mornau and his Treasury Department developed and developed the Canadian Emergency Commercial Rental Assistance Program in Ottawa. Because the plan violated the provincial jurisdiction, this process involved unusual obedience in the provinces and real-time policy changes. Commercial tenants have been asking for landlords for mercy, and in some cases will be permanently closed before they can receive any relief.

In mid-May, a senior financial official told Maclean & # 39; s ] that the Canadian Mortgage and Housing Corporation of the plan would open the door to landlords willing to make transactions : If the landlord agrees that the tenant pays the same share, the landlord will pay 25% of the rent of the tenant, and the two levels of government will allocate the rest. (A few days after the conversation, the FBI changed the launch date to "late May".)

The program initially seemed to produce more enemies than friends when it came together. Some landlords say they are confused about what they provide. Tenants complain that they are qualified, but their landlords are unwilling to sign. Small business advocacy groups continue to issue warnings about the crisis of closed stores that may not save in time. Where Canada ’s emergency response benefits are praised for their rapid and effective floating in Canadian bank accounts, the rent waiver program exposes the dangers of pandemic policy making, especially when the federal government usually treats landlords and tenants When mixed

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It was less than two weeks before thousands of small businesses in Canada owed landlords rent in April, and many people were forced to close stores because of the coronavirus pandemic that caused provinces Enter lock mode. Ottawa only launched the first batch of emergency support services a week before April 1st: monthly salary of $ 2,000 to unemployed Canadians, 10% salary subsidy and loan of $ 40,000 to eligible businesses.

Major streets across Canada are wandering in balance, and countless business owners are disappointed with what they see. Canadian emergency relief funds help laid-off workers, but wage subsidies (eventually increased to 75%) do not help them stay open. The Canadian emergency business account, the government name of the new loan program, cannot be selected. They simply cannot afford more debt, even if the debt is interest-free for one year and can be partially forgiven.

The rent in April was not repayable.

Business advocacy groups have sprung up. action. The Canadian Independent Business Federation (CFIB) and the Canadian Retail Council issued alerts on behalf of its tens of thousands of members. At the same time, a grassroots alliance of the smallest and most vulnerable entrepreneurs appeared overnight. They call themselves "saving small businesses."

Jon Shell, the co-founder and spokesperson of the newly formed coalition, said that none of the leaders of the organization are experienced in defending themselves in Ottawa. Lobbyists are not. But they have an advantage in quantity. Just 24 hours after launching a website that asked small business owners to tell their emergency stories, the database was filled with 2,500 question entries. By April 1, this number had surged to 23,000. Their needs are: to provide rental relief. right now.

On March 30, Maclean & # 39; s asked Trudeau outside Rideau Cottage if his government considered reducing rent for small businesses. The Prime Minister reiterated the support plan he had announced, but opened the door. "We always have to watch: do we need to do more? Are there other ways we can and must help people through this difficult period?" Behind the scenes, federal officials are already looking for rent relief.

Congress Housing Minister Adam Vaughan constantly heard the voices of businesses in his community. He often makes phone calls with BIAs, which include companies as large as Maple Leaf Sports and Entertainment, which owns most professional sports clubs in Toronto, as well as small shops that are not large in scale.

The first step of the Liberal Party in most emergencies is to broadly design and gradually increase qualifications. He said: "We drew a big circle around this problem and started to solve some important common points." "Then we started to see where the cracks and gaps were, and then we plugged it."

Restaurant owner Vaughan Vaughan has been for several years, he said that his gathering was not blind, but started from his core group. He said: "You don't have to go too far to find someone who has opened a company." "I know the feeling of going to bed and I don't know if you are going to payroll, I hope you have a good Friday and Saturday night for Monday Cheques don't bounce. "Vaughan also summoned daily technical briefings of MPs and senators chaired by the Public Health Agency of Canada, and regularly feeds back ideas to decision makers.

Other members of Congress listened to these appeals "providing a good understanding of Canadian thought", "he said." Now, there is no good idea that can be tested. "Vaughan has been in contact with opposition critics." If they have any questions or ideas, I will listen to them all day long. "

However, when April 1 arrived and no federal government took action to reduce rents, lobbying groups continued to express serious concerns.

CFIB was plugged into its small business network. On the afternoon of March 13, the same day, The Prime Minister isolates himself at Rideau Cottage and the lobbying team sends a questionnaire to its members. More than 8,700 companies responded, and 40% of them reported that their income fell by more than 25%. [19659003] Two weeks later, 86% of the respondents came from a community that was “not happy about getting this kind of help,” said Laura Jones, CFIB ’s executive vice president, who supports emergency funding to cover fixed costs .

CFIB conducts another survey on the field every Friday and collects the results on the weekend. The organization invites city, provincial and federal government officials to brief every Monday. Sometimes, such conference calls have increased to 175 participants, including the deputy minister. The next day, CFIB usually publishes its latest results online.

"Interestingly, through some leaks on the sieve, we knew that the document was passing and entering the cabinet submission, and our findings played a very important role. Jones said.

Canadian Retail Council (RCC) The proposal was made as early as possible, claiming that its large retailer may be too large to be regarded as a “small business”, but is still struggling to pay a fixed cost. Karl Littler, senior vice president of public affairs at RCC, said that the receiving end ’s Government officials "usually return with considerable caution."

The Save the Small Business Alliance, which eventually developed into 37,000 members, distributed petitions and letter-writing activities to illustrate the scale of the crisis. The organization eventually proposed A rent-reduction strategy that requires the federal government to repay two-thirds of commercial rent exempted by landlords, up to $ 10,000 in three months. Any business with an annual income of less than $ 5 million is eligible. To attract decision makers The attention is not easy. Jon Shell said: "We have never done advocacy.

At the same time, the policy lunatics of the Ministry of Finance only turned their attention to rent relief after making final changes to workers ’emergency benefits and wage subsidies. By early April, they began designing what would become CECRA. [19659003] When Ottawa is under pressure to act, the federal system is the elephant in the conference room. The relationship between the landlord and the tenant is governed by the provinces. Critics of pressure groups lobbying the Fed claim that their fight is not in the Canadian capital, It ’s in all other places in the Canadian government. If anyone can provide a lifeline for commercial renters, it ’s them.

Ideas are circulating in provincial capital cities. Several provinces temporarily banned evictions. BC provided $ 500 to tenants "Rent Subsidy". On April 5, the Ontario New Democracy Party pushed Prime Minister Doug Ford's government to no avail and adopted a commercial rent subsidy that can pay up to $ 10,000 per month for three months.

Federal Government Knowing that they need quick intergovernmental approval to get the money. They want to provide ready-made plans to the provinces. The plan can be managed by Ottawa, shared by two levels of government, and implemented by the provinces. By mid-April, they had consulted lobbying groups about their ideas and submitted their plans to their provincial counterparts.

According to one A senior government source said that the subsequent dialogue was quick. All participants felt a sense of urgency, and the main sticking point was cost sharing.

A statement from the British Columbia Ministry of Finance said the province "participated in early discussions" , Other provinces also welcome a weekly phone call with Mornau, but in the end there is no doubt who hosted the show. CECRA is a "Federal Design and Management" program.

to April 16, Tru Mostly in front of Ottawa ’s house. He is ready to announce temporary good news to the commercial tenants who are worried about the first day of May. Help is coming, but not yet. He said: "I hope there will be more details to share soon.

Carla Qualtrough, Minister of Employment, Workforce Development and Persons with Disabilities, said that Trudeau and the Prime Minister, as well as all the ministers who reported to them, have been speeding up their work recently. Their cooperation has reached an "extraordinary" The degree. Qualtrough said that generally speaking, the dialogue between the federal and the province is a "long process, there are many agreements and many levels." "We must solve all problems thoroughly.

A normal year includes meetings with colleagues in her province. Qualtrough told Maclean ’s that they are chatting every 7 to 10 days now. She said: “I doubt we are working in this area The way will be very different, I will suggest better. "I will not say that we always agree."

Moreno ’s press secretary Maéva Proteau praised the “historical coordination” between the country ’s finance ministers. Eight days after Trudeau initially announced, the Prime Minister had more good news.

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The CECRA plan was reviewed almost immediately after Trudeau outlined the qualification profile on April 24. The plan is voluntary, which means that the landlord who chose to quit is unfortunate. Small businesses are only eligible if they see a 70% drop in revenue. Advocacy groups have criticized this threshold as a way of excluding too many tenants who are still suffering from a catastrophic recession. The federal-provincial transaction only covers businesses with monthly rents of up to $ 50,000. The Canadian Retail Council welcomes larger tenants, but puts forward a requirement for this cap and calls for relief for companies with annual income of more than $ 20 million.

There is also some confusion about which landlords can apply for CECRA. The federal press release seems to say that only people with mortgaged property can be exempted from their loans, and this obvious oversight has never been corrected in the press release. Ontario ’s own announcement also contained the same requirements, but it was later updated to indicate that it would implement an “alternative mechanism” for unsecured landlords.

There was also initial confusion as to which fees could be waived. The Ontario website initially claimed that the relief only covered the landlord ’s “before profit costs” and not the total rent, but the notice has been updated to meet the requirements finally listed on the Canadian Mortgage and Housing Company website.

Conservative MPs called for adjustments, including “decreasing the size of companies with a loss of income of less than 70%, so that those with a substantial decline in income can be relieved.” Conservative MP James Cumming also urged The government gives homeowners greater flexibility to "negotiate half of the rent with the tenant, in the form of subsidies." However, the plan designed by Ottawa seems to have been developed after some tinkering. Senior sources in Queen ’s Park praised the province for marking certain deficiencies. For example, the stupidity in rent calculations indicates that "the misunderstanding of how rents work, we explained to them." But the source gave Ottawa a "flexible credibility" to modify CECRA.

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The threshold for loss of income will disqualify some businesses that do not bleed but do not have enough funds to make money to remain floating. No one can force the landlord to apply, and wherever eviction is not prohibited (Alberta ’s moratorium expired on May 1), there will be eager tenants asking for mercy.

Jon Shell of the Small Business Alliance said that this is a voluntary implementation of the plan and Canada ’s non-suspending of the eviction order has led to an imbalance of power, which to a large extent forced the insistence on demanding the full amount The paying landlord, not the 75% sum they received from the government and its tenants. He said: "The landlord can keep the extension agreement because they can get all the rent over time." "I think more landlords will say that if I can't expel for six months, it's not worth fighting for the extension, So fine, I will take 75%. "

Policy makers hope that CECRA can and will continue to operate as soon as it is proposed, and will attract enough good-will landlords, so that as Canada slowly reopens the economy, it will do its best. May avoid bankruptcy. After all, the federal government, already facing a historic deficit, only has so much financial capacity. The logic of the Ministry of Finance seems simple: every sign of "opening" helps avoid the next crisis.

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