COVID-19 roundup: Federal government announces $82-billion aid package

Mar 18, 2020

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Turning on the taps: The federal government announced a sweeping and rapidly assembled $82 billion aid package on Wednesday that includes targeted financial benefits and deferring tax collection for workers and businesses, in an attempt to mitigate the growing economic impact of the COVID-19 pandemic. The measures are equal to over three per cent of Canada’s GDP and include employment insurance for the self-employed and the self-quarantined, a wage subsidy, deferred taxes and money for exporters. Experts and analysts told The Logic the measures were welcome, but that the relief is mainly for individuals, not businesses, and may not be immediate enough. The central bank will take them into account as it gets ready to set rates on April 15. Prime Minister Justin Trudeau hinted that more relief could come, saying the federal government still has space on its balance sheet to “ensure that we bounce back strongly.” At the time of the announcement, every province has had at least one presumed or confirmed COVID-19 case, with 648 confirmed or probable cases in Canada and nine dead.

It’s day eight since Canada’s 100th case. On its day eight, the U.K. had 590 cases; Italy had 1,701.

A rising tide: Ottawa’s relief package follows those launched by countries around the world to counter the pandemic-fuelled global slowdown. Britain will spend £330 billion, about 15 per cent of its GDP, on business loan guarantees, as the Bank of England gets ready to lend over US$15 billion to banks—the most since the financial crisis. London is also planning a massive airline bailout, lifting the £12-billion cap on the amount of financial support it can give the industry. Portugal announced a €9.2-billion aid package, 4.3 per cent of GDP, for workers and businesses affected by the pandemic; the country has spent 17.3 per cent of its quarterly GDP combating the crisis so far. Poland announced a 212-billion zł relief package to businesses, workers and infrastructure projects, among others. In Denmark, companies that have lost at least 40 per cent revenue—30 per cent for smaller firms—will be eligible for aid from the country’s $8.4-billion-plus relief fund. Spain has earmarked €200 billion for loans, credit guarantees and direct aid, about 20 per cent of the country’s GDP. And New Zealand’s NZ$12.1-billion stimulus package, about four per cent of its GDP, will help workers, businesses, those on social welfare and the health-care sector weather the pandemic.

Talk to your banker: Canada’s Big Six banks have announced they will provide up to six-month payment deferrals for mortgages, and the opportunity for relief on other credit products. The deferment would be treated on a case-by-case basis. BMO, Scotiabank, CIBC, National Bank, RBC and TD Bank customers are being asked to reach out to their banks to see what assistance is there for them.

Circuits broken: Canadian stock markets did not respond positively to Ottawa’s aid package, tumbling and triggering the circuit breakers yet again. The S&P/TSX Composite fell 10 per cent, its biggest drop since July 2012. U.S. stock exchanges went back in the red today, despite the Federal Reserve unveiling the latest in its series of support measures overnight. The S&P 500 dropped 8.5 per cent in afternoon trading, triggering a 15-minute halt. The Dow Jones fell 10.2 per cent and the Nasdaq by 8.1 per cent.

An unhappy dollar: As if a pandemic wasn’t enough, the Canadian dollar has continued its downward spiral, at 69.3 cents against the U.S. dollar, closing below 70 cents for the first time since 2016. The dollar’s plummet can be blamed on the price of oil falling below the US$23-per-barrel mark, its lowest level in 17 years. Crude oil began the year at a little over US$60 a barrel. A Deutsche Bank analyst thinks that it could stay in the US$20-per-barrel range, and that the Canadian dollar could fall to 50 cents by year’s end, predicting an oil shock “both deep and persistent enough to result in a major oil industry downturn.”

ICYMI: “Please don’t get scared. Let me just explain why we are sitting behind a glass wall,” said the host of Germany’s “Big Brother” to the 14 cast members who, until last night, did not know of the ongoing pandemic.

Meanwhile in Canada: Ontario, which saw 23 new cases of the virus today, will have an emergency legislative sitting tomorrow to pass two pieces of legislation for relief during the province’s state of emergency. The country’s consumer confidence is at an all time low, according to the Conference Board of Canada, whose index measuring this fell 32 points this month, the largest monthly decline ever. Immigration could take a major hit in the wake of business and border closures. Ottawa had proposed to admit 341,000 permanent residents in 2020, but travel restrictions could delay reaching this number and impact population numbers as a result. Ottawa is asking manufacturers to step up to fill critical shortages in medical supplies. Kids Help Phone, a 24/7 youth support telephone line, reported an 81 per cent increase in texting conversations about COVID-19. And amid a pandemic, the City of Toronto just fired its top emergency official.

End of the road: Trudeau and President Donald Trump agreed “by mutual consent” to close the two countries’ land border—the longest undefended frontier in the world—to non-essential traffic. The decision comes after Ottawa announced sweeping travel restrictions on Tuesday. Americans stuck abroad in the wake of the news have been told not to expect any assistance to bring them home. One of the last international flights to arrive in Canada carried six temporary foreign workers from Montego Bay, Jamaica, headed to Norfolk County, Ont. to pick blueberries on Dusty Zamecnik’s farms. It’s peak farming season for Ontario, and foreign-worker programs are crucial to keeping Canada’s agricultural industry afloat while also supporting the economies of the workers’ home countries, Zamecnik, the chair of the county’s Agriculture Advisory Board, told The Logic. The flight was delayed for two weeks in the wake of the pandemic, and only one was rescheduled in time before the border was closed. Zamecnik said he was concerned the country is heading for “a major disruption of the agricultural industry as we know it” amid the closures and economic instability, with produce not being moved or pruned. Many others in the agriculture sector agree. The government may need to consider “extreme measures if this goes on for the long haul,” he said. For now, Zemecnik will work with the six men who have arrived, who are in self-isolation. “We have set them up with money ourselves, fully stocked fridges, fresh sheets and a home.”

From Bay Street to Main Street: Air Canada stock was down more than 40 per cent in late afternoon trading in the wake of the closure of the U.S.-Canada border. Air Transat announced temporary layoffs as it starts reducing its flights, focusing on repatriating Canadians abroad. Toronto-based Porter Airlines will also suspend flights. U.K.-based Cineworld’s takeover of Cineplex may collapse, one of several mergers and acquisitions under threat. Shopify, however, has a good chance of coming through the economic crisis relatively unscathed, according to a number of analysts who spoke to The Logic. The CBC is suspending almost all local TV newscasts. Kitchener, Ont.-based Vidyard is introducing a new tool for internal video communications and making it free to use during the crisis. As working from home becomes the (temporary) new normal, The Logic rounded up how 22 of Canada’s leading internet service providers are dealing with the crunch. A statement from SSi Micro, which primarily serves Canada’s North, casts the country’s digital divide into sharp relief: “Some internet service providers in southern Canada have recently announced short-term measures to allow unlimited data usage for those working at home. However, these same companies have access to a fibre backbone where capacity is less of an issue. In Nunavut’s 25 satellite-served communities, such initiatives are simply not advisable.” Meanwhile, an effort to crowdsource opportunities for startup workers who’ve lost jobs during the crisis has moved from Google Docs to Airtable, and now contains contact information for over 400 members of the community. Co-organizer Marianne Bulger told The Logic they are adding 25 to 30 people every working hour: “The numbers of candidates are growing fast, which is both exciting and concerning.”

Postcard from Y Combinator: Jordan Latourelle is on day three of virtually pitching his concrete-delivery startup Brokrete to investors. On Saturday, the CEO flew back to Toronto from San Francisco after Y Combinator, the marquee Bay Area startup accelerator, cancelled its in-person Demo Day because of the virus. A cohort of promising founders—11 of whom are Canadian—was meant to present to prospective investors on Monday; instead, they posted profiles to a website where investors could peruse their ideas and potential and hit “like” if they wanted to meet. It was like an online dating service, said Latourelle, speaking with The Logic from his home office, where he’s taken care to get the lighting just right—“not too yellow.” Good lighting is about the only thing he’s borrowed from the theatrics of speed-pitching on stage at Y Combinator. The one-on-one video calls let him take his time with investors. “It’s more of a conversation,” he said. “On stage, we just have two minutes, where now I can have a 45-minute conversation with a VC or angel.” While the virtual setup feels less like pitching than he’s used to, Latourelle has the added challenge of convincing investors why they should give him money at a time where nothing about the economy seems certain.

Drinking from the firehose: The Tesla factory in Fremont, Calif. has kept running, despite the county-ordered shelter-in-place policy to curb the spread of the virus. CEO Elon Musk had sent an email to the facility’s 15,000 workers Monday night, telling them, “I’d like to be super clear that if you feel the slightest bit ill or even uncomfortable, please do not feel obligated to come to work. I will personally be at work, but that’s just me. Totally OK if you want to stay home for any reason.” Nonetheless, the Alameda County sheriff had to reiterate to the company it is not an essential service and should be closed. The home-state treatment strikes a different tone than in China, whose government ensured Tesla employees had no shortage of coveted masks so it could keep operating throughout the outbreak. Meanwhile, Facebook is the latest Big Tech company to announce COVID-19 aid funding for affected businesses, with US$100 million in grants, including ad credits for as many as 30,000 small businesses across more than more than 30 countries.The U.S. hotel industry is seeking a US$250-billion bailout. Airbnb wants tax breaks for its hosts amid a rush of cancellations and a drop-off in bookings. Airlines in the U.S. are appealing for over US$50 billion in bailout money, as the global industry continues to suspend services. And the International Labour Organization warned that, worldwide, the coronavirus could put 25 million people out of a job, and that workers could lose up to up to US$3.4 trillion in income this year alone.

Pandemic privacy: Facebook, Google and other tech heavyweights are in talks with Washington and health experts on how they can tap users’ location data to stem the spread of disease. U.S. data-mining firm Palantir is already working with the Centers for Disease Control and Prevention to glean insights into the outbreak, and controversial facial recognition firm Clearview AI is reportedly in talks with state agencies about monitoring COVID-19 patients. Meanwhile, Israel has started digitally tracking patients and police are making arrests for Health Ministry violations.

Love in the time of quarantine: Through some creative use of Instagram and Google Sheets, two people in Brooklyn have started a social-distancing edition of the popular Netflix show “Love Is Blind.” The rules are similar: you are randomly assigned on a phone date with a mysterious stranger, and you’re encouraged to film your reactions before, during and after each date. According to one contestant: “Being in a house is boring and this is different.”

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