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Increased wage subsidies, Buy Canadian initiatives, a national social procurement strategy: these are some of the suggestions Canada’s innovators have to help the country weather COVID-19. 

The Logic asked more than three-dozen business executives, entrepreneurs, academics and economists for ideas on what the government can do now to help the innovation economy get through the health and economic crisis. Of those who responded, many urged substantial wage subsidies, well beyond the conditional 10 per cent Ottawa announced last week; some suggested expediting tax credits for programs like for scientific, research and experimental development (SR&ED); others suggested rent forgiveness for startup tenants.

How the government deploys its aid funding in the coming days and weeks could determine whether companies make it through the crisis or go bankrupt. With so much at stake, here’s some advice for government from the Canadians shaping the country’s future. 

These responses have been edited for length and clarity.

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Chris Aylward, national president of the Public Service Alliance of Canada: “The federal government needs to get additional resources and protective equipment to our frontline public service workers to ensure Canadians can get the services they need to weather this storm. Tens of thousands of workers across the country need sufficient support and protection in order to keep receiving and processing [employment insurance (EI)] claims, delivering pensions to seniors, protecting our borders, helping Canadians who are still stranded abroad, and delivering child benefit cheques, just to name a few. Taking care of these workers means taking care of our entire economy.” 

Sheila Block, senior economist with the Canadian Centre for Policy Alternatives: “We need to find ways to very efficiently get money out to lots of people quickly when many of our systems aren’t working in ways that we are used to. That is why it is important to rely on existing systems like EI. EI has work-sharing provisions that can support businesses to keep people employed with reduced hours, and they were expanded as part of the federal package of support. These provisions could be broadened further.”

Dan Breznitz, co-director of the Innovation Policy Lab at the University of Toronto’s Munk School of Global Affairs & Public Policy: “Small- and mid-sized companies need support for at least six months, and at the level that allows them to keep as many people employed as possible. That could come in the form of interest-free conditional grants. Government needs to be willing to take a risk that let’s say 20 to 40 per cent of companies will not ever be able to repay them. Say 60 per cent of companies survive and create jobs—this is a much more positive way of spending our stimulus than giving our money to all those unemployed people.”

Philip Cross, senior fellow at the Macdonald-Laurier Institute: “We need to start thinking big. The U.S. is talking about a wartime-footing deficit on the order of 10 per cent of GDP. The equivalent of that in Canada would be a $200-billion deficit; we’re talking about $27 billion. That isn’t going to do the job if every non-essential business in the country shuts down as it just did in Ontario and Quebec.” 

Kim Furlong, CEO of the Canadian Venture Capital and Private Equity Association: “We’ll be asking the federal government to expedite SR&ED payments directly to companies that rely on them already. A number of our high-innovative companies rely on SR&ED credits and in order to get your payments, you have to be audited and there are a number of steps that need to be taken. For any company that is currently accessing SR&ED and has been audited in the past, government should agree to come and audit them in the future retroactively, but just flow those dollars to those companies right now so they can continue to operate.” 

Roham Gharegozlou, CEO of Dapper Labs, maker of CryptoKitties: “A few ideas that come to mind [include] support for landlords to provide forbearance for leases to young companies [and] support for banks to provide venture debt to VC-backed startups affected by the capital markets environment. At the end of the day, tech startups are lucky in that our customers can still reach us and our work can be done just as effectively remote—but younger companies are still dependent on capital markets [and] VC fundraising to continue growing.” 

Andrew Graham, co-founder and CEO of Borrowell: “We need direct wage subsidies so that companies can avoid layoffs. Other countries are doing it, and we need it here.”

Joanna Griffiths, CEO of Knix Wear: “Order PPE [personal protective equipment] supplies. We need to worry about our businesses and the economy, of course, but first, we need to make sure that we have the resources to help those that are [on] the front line.”

Trish Hennessy, executive director of Upstream: “Income is a major social determinant of health, so at a time like this I say go big and make it something that could be done tomorrow. That means cash, right now: a universal $5,000 cheque per household to tide people over until other mechanisms come into place, like EI. It could be taxed back at 100 per cent next year for everyone past a $30,000 annual income threshold. Ultimately, the majority of this one-time infusion into household economies will get recovered at tax time next year. In the meantime, you’re helping households in many income brackets absorb the shock of sudden job loss with bills that still need to be paid. You’d be preventing starvation, eviction and bankruptcy in the short term.”

Carol Anne Hilton, founder and CEO of the Indigenomics Institute: “Establishing a national social procurement strategy would be an important measure to adopt to help the economy get through this crisis.”

Nura Jabagi, PhD candidate in business technology management at Concordia University: “There is not much that can be done to stimulate demand with most people staying at home. However, the government could pass legislation to limit credit-card interest rates to 10 per cent, which is still a handsome return for credit-card companies. Credit-card rates have not dropped in conjunction with the falling Bank of Canada benchmark interest rate. Rather, they have remained stubbornly high, and could legitimately be called usurious. Legislation could be passed to significantly reduce those rates, at least until the lingering economic effects of the coronavirus dissipate. However, such legislation is far from a silver bullet for addressing the economic woes of the country. Canada is in store for a painful period of deleveraging if the economy is to be put on a firm economic footing.”

Jordan Jacobs, co-founder and managing partner at Radical Ventures: “Companies will see sales stop over the coming months. Governments should immediately ramp up procurement from startups and scale-ups to help fill their revenue gap, and to add a marquee customer that helps build momentum as sales channels open again.”

James Keirstead, CEO of Levven Electronics: “More capital investment into businesses to prop up their balance sheets, so that when demand returns they have sufficient cash flow to buy more inventory, hire more people and generate revenue quickly. The problem with adding liquidity to banks and [the Business Development Bank of Canada] is that none of those organizations are capable of rethinking how they see risk, so my guess is they will struggle to deploy it efficiently. It will also add cash to company balance sheets, but increase debt load and, therefore, risk. The packages [governments] are implementing so far are going at least some of the way to protect workers, and they should probably protect them with further support.” 

Iain Klugman, CEO of Communitech: “Businesses are looking for support in the form of wage subsidies and access to either zero- or low-interest loans, among others. With this in mind, government support will need to focus on bridging this fundamentally strong and healthy sector for a period of time so that companies have the room that they need to adjust to the new disruption to their environments.”

Sarah Kaplan, director of the Institute for Gender and the Economy at the University of Toronto’s Rotman School of Management: “The most important intervention the government can do is make broad testing available to prevent the spread of the coronavirus. When it comes to helping the economy recover from the [COVID-19] crisis, the [measure] that might have the broadest impact would be wage subsidies to employers to keep people employed coupled with parallel supports (through EI) for self-employed people. This solution would both keep Canadian citizens financially afloat while at the same time helping companies maintain continuity with employees so they are ready with the skills they need when the economy restarts.”

Pat Kramer, CEO of BDO Canada: “Small- to mid-sized businesses specifically may not have the resources required to weather the storm. I believe the government’s primary focus from a relief-effort perspective should be offering these companies and their employees as much fiscal support as possible and immediately. They’re vital to the Canadian economy. Additional stimulus is required beyond what is planned.” 

Jodi Kovitz, CEO and founder of #movethedial: “The one measure the government should implement immediately is the provision of significant employee salary subsidies. The Canadian government can learn from Denmark, which has taken the lead in this area and committed to providing as much as 75 per cent of wages for private-sector employees who are at risk of losing their jobs due to the economic impact of the coronavirus.”

Stewart Lyons, CEO of Bird Canada: “Right now, a reasonable wage subsidy to avoid layoffs. The 10 per cent they’ve offered to date—up to $25,000—is woefully inadequate and pales in comparison to Britain (80 per cent) and Denmark (75 per cent). Ultimately, EI rolls will increase dramatically if they don’t offer an increased subsidy, and we’d all rather see people employed than unemployed. Either that, or earmark the $5 billion they would spend on the economy on PPE gear and therapies, because the economy won’t get better until we get a handle on the virus!”

John Manley, former deputy prime minister; senior business adviser to Bennett Jones: “In my view, the single most useful thing would be to address the need for cash. Deferring payment of income tax, HST and source deductions would be the most direct and impactful immediate measure.” 

Andy Mauro, founder and CEO of Automat: “For seed and Series A companies, provide a VC-matching program and make it retroactive—the companies that have just raised are not the ones that need it, it’s the one that have raised in the last three years that are going to be in trouble in this period. Let governments get on the cap table for high-potential startups, and let them share in the benefits of the eventual rebound.” 

Kurtis McBride, co-founder and CEO of Miovision: “Beyond these initial measures, the best thing the government can do is step in and replace the demand that has virtually dried up in huge parts of the economy. We urgently need programs that provide incentives for customers to buy things from vendors. All the liquidity in the world won’t help if we cannot solve the accelerating demand crisis.” 

Adrian Montgomery, CEO of Enthusiast Gaming: “Two things: 1) rent forgiveness and deferral with landlords 2) incentives not to lay people off. Basically something that will mirror whatever will come from the U.S. Congress in terms of legislation that would enable companies to retain staff.”

Sean Mullin, executive director of the Brookfield Institute: “I think the wage subsidy is good in principle, but it isn’t big enough to have an impact on a lot of firms. It’s not going to help that scaling company that has a couple hundred people and is on the verge of going big or going bankrupt. We need a much higher dollar amount across the economy than the broad-based 10 per cent subsidy that was announced, and they should be linked to payroll—how many people a firm continues to employ during that period.” 

Peggy Nash, former NDP MP: “Bills are not being deferred, so either there are assurances given that no one’s debt is going to be collected, or we do what is easier: get money into people’s hands before the end of the month. Either just give people money or make it a one-stop application that’s super easy that everybody can get access to, and automatically, if they don’t qualify for one thing, you give them something else. Whatever the actual shape the economy takes, whatever we are producing in a post-pandemic economy, we need to do a much better job of balancing labour and capital in that environment, because right now, there’s too many people on the labour side that are falling far behind. EI needs to be refashioned, or some completely new program needs to be created, to fit the economy we’re going in.”

Lisa Raitt, vice-chair of global investment banking at CIBC and former Conservative MP: “I believe the government should support workers and families in Canada by increasing the wage subsidy to 75 per cent. We should be focused on job retention, preventing the situation where 900,000 people are applying for EI in one week, because we know that Service Canada will not be able to keep up with demand. It’s an unnecessary insertion of the state between an employer and an employee.”

Nobina Robinson, senior fellow at the C.D. Howe Institute; executive fellow at the University of Calgary’s School of Public Policy: “The one measure that needs to be taken is pandemic preparedness for the second wave of the virus, on the assumption that vaccines are not available for the population by that time. The country needs an industrial strategy of at least $1 billion, to develop companies better positioned to respond to the next wave of coronavirus. (This would be in addition to the continued, sustained and robust new funding for science and research into the disease.) Part of these funds would go to doubling the budget of Innovation Solutions Canada with a mandate to make awards by July 1, 2020.”

Bill Robson, CEO of the C.D. Howe Institute: “I think it’s important for governments to announce a wage subsidy for the same period for which they’re locking everyone down. You can afford to be very generous on your wage subsidy if it’s for a shorter period of time.

Jeremy Shaki, co-founder and CEO of Lighthouse Labs: “What we at Lighthouse Labs have seen—both as owners of a co-working space and tenants in spaces—is a need for commercial-lease forgiveness for small businesses, as seen in France. The physical-space cost is one of the bigger ones for many companies, and the most useless at the moment. If rent was forgiven, a much higher rate of businesses could weather this storm. Canada has been talking for years about its astronomically high rent and property costs, and now more than ever, businesses need support in this area to help them survive.”

Saad Siddiqui, co-founder and CEO of Bonsai: “BDC should be providing loans to companies based on headcount with existing venture dollars, and the government should be guaranteeing these loans. Six months of no HST or payroll tax payables, which can be reconciled when the dust settles. The federal government should cover 75 per cent of payroll expenses up to a maximum of $75,000 per employee (i.e. a $100,000 salary cap) for three months.”

Abdullah Snobar, executive director of Ryerson University’s DMZ: “One measure the government could adopt is a ‘buy Canadian’ policy. Our country has a vast number of innovation-economy businesses that are ready to support our government on an economic or social level, so it’s time we procure services by made-in-Canada companies first.” 

Sean Speer, assistant professor at the Munk School of Global Affairs and Public Policy; former senior economic adviser to Prime Minister Stephen Harper: “Governments could pre-pay suppliers one or two years in advance. Firms could use the cash flow to cover expenses during this uncertain period. The cash flow could basically keep them afloat.”

Jeff Waldman, an adviser for First 30: “Increase the wage subsidy so we can keep Canadians working instead of overloading the EI system. The current subsidy of 10 per cent will have zero impact on decisions to lay people off.”

Wei Wang, associate professor and RBC finance fellow at Queen’s University’s Smith School of Business: “A large funding package to support the health-care system and build additional capacity—number of ICU beds—right away…. Otherwise, no matter how much money the governments will inject into the economy, it can only help temporarily.”

Sharon Zohar, founder and CEO of the Big Push: “Other than one hiring grant available to Albertans, there is no funding to hire experienced people—but a disproportionately high number of grants to hire youth. For startups, hiring experienced staff is more helpful in growth than hiring young people. Plus, if there is incentive to hire experienced women, we can hope to see more women providing leadership during growth stages, when the culture is really being developed.”

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