March 19, 2020, Ottawa, Ont. – Prime Minister Justin Trudeau has announced a new set of economic measures to help stabilize the economy and help Canadians affected by the impacts of the COVID-19 outbreak.
Part of that plan includes augmenting credit available to farmers and the agri-food sector through Farm Credit Canada.
The measures, delivered as part of the government’s COVID-19 Economic Response Plan, will provide up to $27 billion in direct support to Canadian workers and businesses, plus $55 billion to meet liquidity needs of Canadian businesses and households through tax deferrals to help stabilize the economy.
Combined, this $82 billion in support represents more than three per cent of Canada’s GDP. The government says the wide-ranging support will help ensure Canadians can pay for rent and groceries, and help businesses continue to pay their employees and their bills during this time of uncertainty.
The plan builds on co-ordinated action taken since the beginning of the outbreak, including the more than $1 billion COVID-19 Response Fund, which provided funding to provinces and territories to strengthen critical health care systems. It represents more than $500 billion in credit and liquidity support for people and businesses through co-operation between financial Crown corporations, the Bank of Canada, the Office of the Superintendent of Financial Institutions, and commercial lenders to ensure businesses can continue to operate.
The government stated in a press release that, as a first step, the plan aims to stabilize the economy through targeted measures to address immediate challenges faced by workers and businesses alike, and help ensure that workers have the money they need while they are sick or in isolation, or due to loss of work or a significant reduction in work income, and also help support people and businesses experiencing financial hardship because of the outbreak.
“Canadians should not make health decisions based on their financial needs,” the statement reads. “As the situation continues to evolve, further measures will be announced to support Canadians, stimulate the economy, and protect peoples’ jobs and livelihoods.”
To support businesses, the government is taking action to:
- Augment credit available to farmers and the agri-food sector through Farm Credit Canada.
- Allow all businesses to defer, until after Aug. 31, 2020, the payment of any income tax amounts that become owing on or after March 18 and before September 2020. This relief would apply to tax balances due, as well as instalments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period. This measure will result in businesses having more money available during this period.
- Increase the credit available to small, medium, and large Canadian businesses. As announced on March 13, a new Business Credit Availability Program will provide more than $10 billion of additional support to businesses experiencing cash flow challenges through the Business Development Bank of Canada and Export Development Canada. The government is ready to provide more capital through these financial Crown corporations.
- Further expand Export Development Canada’s ability to provide support to domestic businesses.
- Provide flexibility on the Canada Account limit, to allow the government to provide additional support to Canadian businesses, when deemed to be in the national interest, to deal with exceptional circumstances.
- Launch an Insured Mortgage Purchase Program to purchase up to $50 billion of insured mortgage pools through the Canada Mortgage and Housing Corporation (CMHC). As announced on March 16, this will provide stable funding to banks and mortgage lenders and support continued lending to Canadian businesses and consumers. CMHC stands ready to further support liquidity and the stability of the financial markets through its mortgage funding programs as necessary. The government will enable these measures by raising CMHC’s legislative limits to guarantee securities and insure mortgages by $150 billion each.
- The six largest financial institutions in Canada have made a commitment to work with personal and small business banking customers on a case-by-case basis to provide flexible solutions to help them manage through challenges, such as pay disruption due to COVID-19, childcare disruption due to school or daycare closures, or those suffering from COVID-19. As a first step, this support will include up to a six-month payment deferral for mortgages, and the opportunity for relief on other credit products.
To support workers, the government is taking action to:
- Provide additional assistance to families with children by temporarily boosting Canada Child Benefit payments. This measure would deliver almost $2 billion in extra support.
- Introduce an Emergency Care Benefit of up to $900 bi-weekly for up to 15 weeks to provide income support to workers who must stay home and do not have access to paid sick leave. This measure could provide up to $10 billion to Canadians, and includes: workers, including the self-employed, who are sick, quarantined, or who have been directed to self-isolate but do not qualify for Employment Insurance (EI) sickness benefits; workers, including the self-employed, who are taking care of a family member who is sick with COVID-19, such as an elderly parent or other dependents who are sick, but do not qualify for EI sickness benefits; EI-eligible and non EI-eligible working parents who must stay home without pay because of children who are sick or who need additional care because of school closures.
- Introduce an Emergency Support Benefit delivered through the Canada Revenue Agency to provide up to $5 billion in support to workers who are not eligible for EI and who are facing unemployment.
- Provide additional assistance to individuals and families with low and modest incomes with a special top-up payment under the Goods and Services Tax (GST) credit. This measure would inject $5.5 billion into the economy.
- Waive, for a minimum of six months, the mandatory one-week waiting period for EI sickness benefits for workers in imposed quarantine or who have been directed to self-isolate, as announced on March 11.
- Waive the requirement for a medical certificate to access EI sickness benefits.
- Extend the tax filing deadline for individuals to June 1, and allow all taxpayers to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after March 18 and before September 2020. This relief would apply to tax balances due, as well as instalments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period. This measure will result in households having more money available during this period.
- Provide eligible small businesses a 10-per-cent wage subsidy for the next 90 days, up to a maximum of $1,375 per employee and $25,000 per employer. Employers benefiting from this measure would include corporations eligible for the small business deduction, as well as not-for-profit organizations and charities. This will help employers keep people on their payroll and help Canadians keep their jobs.
- Provide increased flexibility to lenders to defer mortgage payments on homeowner government-insured mortgage loans to borrowers who may be experiencing financial difficulties related to the outbreak. Insurers will permit lenders to allow payment deferral beginning immediately.
In addition, to provide targeted support for vulnerable groups, the government is investing to:
- Reduce minimum withdrawals from Registered Retirement Income Funds (RRIFs) by 25 per cent for 2020 in recognition of volatile market conditions and their impact on many seniors’ retirement savings.
- Implement a six-month, interest-free, moratorium on Canada Student Loan payments for all individuals who are in the process of repaying these loans.
- Provide $305 million for a new distinctions-based Indigenous Community Support Fund, to address immediate needs in First Nations, Inuit, and Métis Nation communities.
- Support women and children fleeing violence by providing up to $50 million to women’s shelters and sexual assault centres to help with their capacity to manage or prevent an outbreak in their facilities. This includes funding for facilities in Indigenous communities.
- Provide an additional $157.5 million to address the needs of Canadians experiencing homelessness through the Reaching Home program.
The government stated that it will continue to monitor evolving economic conditions and seek greater relief measures should it be necessary.
Click here for more information about Canada’s COVID-19 Economic Response Plan: Support for Canadians and businesses.