TIABC Submission to the Government of Canada on CEWS and CRHP

Extension and Proposed Changes to the Canada Emergency Wage Subsidy (CEWS) and the Introduction of the Canada Recovery Hiring Program (CRHP)

About the Tourism Industry Association of BC
The Tourism Industry Association of BC (TIABC) advocates for the interests of British Columbia’s $21+ billion visitor economy (pre-pandemic). As a not-for-profit industry association, TIABC works collaboratively with its members – private sector tourism and hospitality businesses, other industry associations and destination marketing organizations – to ensure the best working environment for a competitive tourism and hospitality industry.

TIABC’s vision is for the tourism and hospitality industry to be recognized as one of British Columbia’s leading and sustainable industries. As the primary advocate for BC’s visitor economy, TIABC unites operators, sectors, DMOs, government and residents to support and be passionate about making this province a great place for tourism.

On behalf of its members and stakeholders, TIABC is submitting this brief with recommendations on proposed changes to the Canada Emergency Wage Subsidy Program (CEWS) and the introduction of the Canada Recovery Hiring Program (CRHP).

Background and Recommendations
Tourism and hospitality is a critical industry within BC’s economy. In 2019, the tourism and hospitality industry generated over $8.7 billion in provincial GDP – some 3.4 percent of total provincial GDP, which was greater than any of BC’s primary resource industries. The more than 19,000 BC tourism and hospitality businesses were estimated to have directed employed almost 150,000 people and paid over $6.1 billion in wages and salaries.

The recently announced federal government budget (“Budget 2021”) proposed a set of changes to federal business support programs that will have severe consequences for BC’s tourism and hospitality businesses. While many other industries are already rebounding from the effects of the COVID-19 pandemic and are therefore able to reduce their reliance on federal support programs, the tourism and hospitality industry continues to be hard hit and is projected to be so through at least mid-2022. As a result, tourism and hospitality businesses need continued access to new and existing government programs that are maintained at the present levels of support.

On behalf of the BC tourism and hospitality industry, TIABC recommends:

1. The federal government extend the CEWS Business Support Program for tourism and
   hospitality businesses through mid-2022.
2. The federal government maintain the 75% maximum level of the CEWS program for tourism
   and hospitality businesses through mid-2022.
3. The federal government grant an exemption for tourism and hospitality businesses to allow
   them to claim under both the CEWS program and the new CRHP.

Proposed Changes to the CEWS program announced in Budget 2021

Budget 2021 extended the CEWS program to September 25,2021 with possible legislative room to further extend the program through regulations until November 20, 2021 should the COVID situation warrant. At the same time Budget 2021 proposed a series of reductions in the maximum available rate beginning in July and continuing though August. Under the proposed reductions the maximum available rate will decrease from 75% to 60% on July 4, from 60% to 40% on August 1, and from 40% to 20% on August 29. These changes are summarized in Table 1.

Many industries in BC are already rebounding successfully from the effects of the pandemic, and many more will begin to recover once domestic vaccinations reach acceptable levels. However, that is not the case for tourism and hospitality businesses, which are dependent not only on a return to travel by Canadian residents, but also on a return to travel by visitors from around the globe. As can be seen from Table 2 which compares employment in March 2019 with that in March 2021, employment in many BC economic sectors is already at or near pre-pandemic levels. Such sectors include forestry, fishing, mining, quarrying, oil and gas, wholesale and retail trade, finance, insurance, real estate, rental and leasing, and professional, scientific and technical services.

For sectors that have rebounded from the pandemic, the CEWS program has achieved its main objectives, and a scaling back or elimination of government support is now appropriate. However, the tourism and hospitality industry has not yet participated in the economic recovery as is demonstrated by the continuing decline in employment in the accommodation and food services subsector, one of the main tourism and hospitality subsectors.

Statistics published by the federal government for the CEWS program through Period 12 (through February 13, 2021) show that the lion’s share of funding has gone to businesses in sectors other than tourism and hospitality. In fact, to date, the accommodation and food service subsector has received 11.9% of the total support provided to BC businesses, while substantial amounts of support have been provided to other industries including construction, manufacturing, and professional, scientific & technical services, which together have received over 33% of all funds.

Moreover, as can be seen from Table 3, the support for accommodation and food service subsector has been used effectively and has supported more workers per dollar received than any other sector. The support per period per employee in the accommodation and food subsector has been $899, or about half the level of workers in most other sectors.

Summary & Recommendations
The Tourism Industry Association of BC recommends:

1. The federal government extend the CEWS Business Support Program for tourism and
   hospitality businesses through mid-2022. While it is appropriate to end the program for
   sectors that are rebounding from the pandemic, the tourism and hospitality industry’s
   circumstances are far different and will therefore need an extended time frame for recovery.
   Tourism and hospitality businesses have accounted for less than 12% of total funding through
   CEWS in BC. As a result, extending the program for tourism and hospitality businesses while
   phasing out the program for better-off sectors will still achieve substantial reductions in
   government spending.
2. The federal government maintain the 75% maximum level of the CEWS program for tourism
   and hospitality businesses through mid-2022. Tourism and hospitality businesses continue to
   be hit harder than virtually all other businesses. Moreover, CEWS support received by tourism
   and hospitality businesses supports more workers per dollar than in other sectors. Maintaining
   the 75% maximum will allow tourism and hospitality business to survive and be ready to again
   become important contributors to Canada’s economy as they too recover from the effects of
   the pandemic.
3. The federal government grant an exemption for tourism and hospitality businesses allowing
   them to claim under both the CEWS and CRHP programs. Tourism and hospitality businesses
   need such an exemption to enable them to hire new workers in anticipation of improving
   business conditions during the summer months. The exemption would increase certainty for
   tourism and hospitality businesses thereby allowing them to respond to increased visitor activity
   should pandemic conditions allow.

Conclusion
The BC tourism and hospitality industry is appreciative of the support provided to date by the federal government to tourism and hospitality businesses during the pandemic. We believe these recommendations will greatly help the industry recover and return as a strong contributor to BC and Canada’s economy post-pandemic. We look forward to hearing from you to discuss our recommendations in further detail.