Prime Minister Justin Trudeau announced an $82-billion aid package to limit the economic fallout from the novel coronavirus on the same day that the U.S. and Canada agreed to shut down the border to non-essential travel.
The prime minister spoke from his home in Ottawa, where he is in self-isolation after his wife Sophie Grégoire-Trudeau tested positive for the coronavirus, otherwise known as COVID-19.
"No matter who you are or what you do this is a time for you to focus on your health and that of your neighbours," the prime minister said in unveiling the aid package, urging Canadians to practice social distancing as much as they can and to wash their hands frequently.
Partway through his press conference he went inside his home to put on his peacoat in order to guard against getting sick, calling the day "brisk."
The aid package includes $27 billion in direct funds and $55-billion worth of tax deferrals and liquidity for businesses. The package amounts to 3 per cent of Canada's GDP and compares to a proposed $1-trillion package in the U.S. For more details, check out the federal government's backgrounder on the announcement or read more later in this story.
The prime minister also announced that the border with the U.S. will be shut down to non-essential travel such as tourists and visitors. "I want to be clear that essential travel will continue," Trudeau, added, describing the critical need not to disrupt supply chains.
Premier Doug Ford, who has in the past been quick to criticize the prime minister, expressed his appreciation for the move.
Today’s decision by the federal government to close the border to non-essential travellers is a tough but necessary one. Goods and trade will continue to flow between Ontario and the United States. It’s vitally important we keep our supply chain intact.
— Doug Ford (@fordnation) March 18, 2020
The U.S. has emerged as a significant risk to Canada in the spread of the novel coronavirus. On Tuesday the Chief Medical Officer of Health Dr. David Williams said that 29 per cent of positive cases related to travel came from the United States. On Wednesday, New York state saw a dramatic rise in its caseload, coming close to doubling its total from the previous day to rise to 2,382. Ontario, whose population is about 75 per cent of New York's, saw its cases rise by 23 overnight to 212.
"We will remain vigilant, we will remain strong," said Ford in afternoon remarks. The premier also teased the next stage of the province's coronavirus economic response to come in next week's Spring Economic Update, which was supposed to be the budget announcement until the coronavirus intervened.
"We look forward to standing shoulder to shoulder with the federal government," added Finance Minister Rod Phillips, reiterating a theme from the provincial government. "Things like the injection of stimulus from the federal government are positives," he said.
The federal government prioritized economic measures that could be delivered quickly through existing programs in order to mitigate damage caused by the coronavirus.
"In these extraordinary times our government is taking extraordinary measures," said Trudeau in an effort to sell the plan and reassure Canadians.
The package breaks down as follows:
- $55 billion in tax deferrals for individuals and businesses with an extended tax deadline until September.
- $10 billion through the Business Development Availability Program (BDAP) available through the Business Development Bank of Canada and Export Development Canada. This is meant to largely be targeted toward small- and medium-sized businesses, by ensuring access to credit through private-sector lenders. In order to bolster the supply chain in the agricultural sector, availability to near-term credit will also be increased in that sector through Farm Credit Canada.
- Canada's big-six banks also committed to supporting individuals through the crisis by offering a six-month payment deferral on mortgages.
- $10 billion in an Emergency Care Benefit. This benefit is targeted to individuals who are not eligible to collect employment insurance but need to take time off work for self-isolation, quarantine, or to care for someone in that position. The flat-payment cheque of $900 every two weeks will be administered through the Canada Revenue Agency, with claimants eligible for up to 15 weeks. Parents who lack employment income and need to look after children due to school closures are also eligible, regardless of whether they qualify for EI.
- An additional $5 billion will be made available to workers who become unemployed due to COVID-19 and are not eligible for EI, through the Emergency Support Benefit. Both the Emergency Care Benefit and Emergency Support Benefit will roll out in early April.
- The federal government will double the Goods and Service Tax Credit for low and medium income individuals, worth about $300 for those adults who qualify. That money will flow in May, and is worth $5.5 billion. There's also a corresponding child tax credit that's worth $1.9 billion.
- There is a Temporary Business Wage Subsidy worth $3.8 billion and comes into effect immediately. This measure would see small businesses receive a temporary three-month wage subsidy equal to 10 per cent of salaries, up to a maximum of $1,375 per employee and up to $25,000 per employer. This will be done by businesses reducing remittances on income tax withheld on employee remuneration.
- The federal government also allocated $157.5 million for homelessness initiatives, which can be used in a variety of ways like building more shelters or ensuring that adequate social distancing takes place.
- There's also an additional $50 million available to support women fleeing gender-based violence.
Provincial Opposition Leader Andrea Horwath welcomed the federal funds, but argued they did not go far enough or act quickly enough. "Today’s announcement by the federal government of an $82-billion support package for Canadians is welcome relief. But it took too long to arrive, is too slow to flow, and it’s simply not enough money," she said in a statement.
She urged the provincial government to fill that void. "It’s time for the Ontario government to step up and do its part by providing direct funding to protect families from missing meals or rent and mortgage payments, protect the most vulnerable people and organizations that support them, and prevent small businesses from going under."
Despite the federal aid package markets showed concern about the widespread impact that the coronavirus could have on the economy, with the Toronto Stock Exchange dropping 7.6 per cent on the day.