Jenny Kwan, MP

Member of Parliament, Vancouver East

Expanding the Canada Emergency Wage Subsidy to Include Non-Profits, Charities, Municipal and Local Governments and Municipal Entities, and Health Research Institutes

April 21, 2020

Sent to: The Hon. Chrystia Freeland, Deputy Prime Minister

The Hon. Bill Morneau, Minister of Finance

The Hon. Patty Hajdu, Minister of Health

The Hon. Diane Lebouthilier, Minister of National Revenue

 

OPEN LETTER RE: EXPANDING THE CANADA EMERGENCY WAGE SUBSIDY TO INCLUDE NON-PROFITS, CHARITIES, MUNICIPAL AND LOCLA GOVERNMENTS AND MUNICIPAL ENTITIES, AND HEALTH RESEARCH INSTITUTES

Ministers,

As workers, businesses and organizations await the full rollout of the Canada Emergency Wage Subsidy Program (CEWS), I am hearing from organizations and entities who seeking assistance to retain employees, meet urgent funding shortfalls and prevent suspension or closure of operations as a result of the COVID-19 pandemic. These organizations and entities have been excluded from eligibility for the CEWS, and appeal for an expansion of the criteria in order to prevent negative fallout ranging from shutdown of projects to loss of staff to permanent closure, all of which will have cascading consequences for our community.

The eligibility criteria specifically exclude public bodies, including “municipalities and local governments, Crown corporations, wholly owned municipal corporations, public universities, colleges, schools and hospitals”.

However, these exclusionary criteria will have a serious impact on Vancouver East. For example, the Pacific National Exhibition (PNE) is a not-for-profit organization owned by the City of Vancouver, but which operates at arms-length and is financially independent from the City of Vancouver. Governed by a City Council-appointed independent Board of Directors, the PNE does not receive government funding; it is funded by surplus revenues generated by activities on its home sits of Hastings Park that are then invested back into the Hastings Park site and community programs. The PNE is a historic, 110-year-old institution and is a sizeable employer in my constituency. I have been advised that, at present, the PNE has 1600 part time staff not working, and that approximately 125 full-time union and management staff have been laid off; and, their annual hiring of about 2500 seasonal and part time summer staff will likely not materialize given Playland and PNE fair will not proceed due to COVID-19. At its peak operating time, the PNE employs some 4300 people. However, in her April 18 2020 daily update, Dr. Bonnie Henry advised that summer festivals, weddings, large community gatherings and things “like the PNE are not likely to happen this year”; and that "…realistically we will not be having those big events where people gather together this summer” as “we do not have enough herd immunity or community immunity to protect everybody and allow that type of event to happen.”

All remaining management staff have taken a salary cut by at least 20% to help offset the PNE’s financial losses. In a letter from the President and CEO, Shelley Frost, she advises the following:

“Since March 15th the PNE had 249 event cancellations totaling over $8.2 M in revenue. The loss of a summer operating season (Playland and PNE Fair) will result in another $42 million in revenue losses by November 2020.

“The PNE‘s only financial safety net is a $15 million credit line. With COVID shutting down the economy at the start of our spring revenue season, the PNE goes deeper into that credit line daily. We have minimized expenses, shut down services to various buildings on site and conducted maximum level layoffs to maintain as much room as we can within that credit line for the coming months. But once that credit line is maxed out, we have no options.

“We know the country will recover, but for the PNE it’s a matter of when. We understand social distancing will remain in effect for weeks and months to come. The new normal will look very different. This will negatively affect our ability to host the 2020 PNE Fair or open Playland at all this year. Without these major revenue sources – and without the 75% wage subsidy program to support a small group of staff to plan for recovery in 2021 - we will have maxed our credit line and be unable to sustain the organization after 2020.”

Without access to the CEWS, in order to support keeping at least a minimum staff on hand to bridge until such time as the pandemic and measures to control it are fully lifted, municipal entities such as the PNE face the threat of permanent shutdown. Including municipalities, local governments, and public entities under local government ownership as eligible for CEWS will go a long way to protecting workers and to preventing municipalities from catastrophic losses.

Also specifically excluded from these criteria are hospitals, hospital-based research institutes, and health authorities and their related health research institutes. This is also greatly concerning as the work of local health research institutes is critical to addressing and bettering public health outcomes; in Vancouver East, many residents receive direct health care service from these institutions, aside from the overall benefit from the research and clinical trials. Many are also employed within these life science institutes.

In raising the concerns of this sector to my attention, Paul-Emile Cloutier, President and CEO of HealthCareCan, advised as follows:

“As I write this note, all research and clinical trials not related to COVID-19 have recently been either suspended or cancelled. If trends hold, the pandemic will cannibalize Canada’s overall research capacity, generating mass layoffs of critical research staff. A rapid census of a selection of 17 Canadian health research institutes indicated that they expect to lose $326 M for the next 6 months – a considerable underestimate, given the small number or institutes captured in that survey.

“The categories of staff most under threat of layoffs are clinical research associates and coordinators, research nurses, laboratory technicians, biostatisticians, data mangers, graduate students, and postdoctoral fellows numbering in the thousands. Their knowledge and talent will be wasted in this crisis if the health sector cannot employ them, an outcome that would also pose a dire threat to morale across the health sector, which is already at a nadir in Canada. Clinical studies involving real researchers and real patients have already been shelved and Canadian researchers have already lost their jobs. This process is happening now. Yet I ask that you consider what Canada’s health research ecosystem will look like after this crisis if a significant fraction of its workforce is laid off.

“Canada hosts unsurpassed talent and potential in the life sciences sector; if that workforce is not put to productive use now, then Canada will be asking a generation of its health scientists to germinate in a vacuum. Canada’s life sciences community has no end of gratitude for the measures already taken by this government, notably its $275M investment in research to support the COVID-19 response. As things stand; however, very few institutes can make employment decisions on the basis of those dollars. The process of assigning those moneys while the health workforce fires, rehires, and/or reallocates its talent will impose a harsh administrative burden when the sector can least afford it.”

Further, Dr Ellen Chesney, Chief Administrative Officer of the Provincial Health Services Authority (PHSA) has written me to raise these concerns as well:

“The financial and economic implications of COVID-19 paint a bleak picture for Canada’s health and hospital-based research ecosystem, and I am concerned that the sector itself will become a casualty of this pandemic in the absence of government support. As I write this note, the vast majority of research and clinical trials not related to COVID-19 have either been suspended or cancelled.

“If trends hold, the pandemic will dismantle Canada’s overall research capacity, generating mass layoffs of critical research staff. A rapid census of Canadian health research institutes indicates that, of the 25 who responded, they expect to lose $500 Million over the next six months – a considerable underestimate, given the small number of institutes captured in that survey.

“My organization, the Provincial Health Services Authority in British Columbia, expects to lose $9.4 million over the next three months as a result of research curtailment, and a further $13.6 million in lost grant revenue as a result of the cancellation of the CIHR Spring 2020 project grant and cuts made by cancer research funders. Based on data collected jointly with our primary academic partner, the University of British Columbia, we estimate 33% of research personnel are unable to work and are at risk of being laid off because their non-COVID research projects have been suspended.

“Healthcare organizations and research institutes across Canada are doing everything possible to mitigate job losses in these conditions but they have very limited options. Charitable organizations, foundations and, biotech or pharmaceutical companies typically provide funding, but their own circumstances now prevent them from supporting research or staff. Layoffs will be inevitable if the health research community is denied access to workforce supports from the federal government.”

I am therefore greatly concerned about not just the short-term but the long-term implications for our public health system if CEWS eligibility criteria is not expanded to include health research institutes. 

The criteria also include only those non-profit or registered charitable organizations that can demonstrate “Those that see a drop of at least 15% of their revenue in March 2020 and 30% for the following months”. However, these criteria are not reflective of the way that many non-profit organizations and registered charitable organizations are funded. Many non-profits and charities rely on a wide range of funding mechanisms and therefore previously announced choice to “include or exclude government funding” in order to prove eligibility for CEWS does not do enough to capture the need in this sector. Similarly, the requirements to prove a 15% to 30% revenue loss is not reflective of organizational funding cycles.

In Vancouver East, one such charitable organization is Environmental Youth Alliance (EYA), a registered Canadian charity since 1991 which provides free land-based employment training for youth facing barriers in Vancouver's Downtown Eastside. In raising this concern to my attention, EYA Executive Director Emily Keller has advised that:

“The requirement to prove 15-30% revenue loss works for charities with a fee-for-service funding model, or those who hold a large spring fundraiser that has now been cancelled. “However, for charities like EYA that rely on grants from foundations and corporate donors, this requirement poses a huge barrier to accessing much-needed support for the following reasons:

“1) We receive grant revenue at varying times throughout the year. Unlike businesses with steady month-to-month revenue, EYA often receives $6000 one month and $100,000 the next month, depending on when grants are approved. Asking a charity to demonstrate revenue loss during a period is not an accurate indicator of our need for financial support.

“2) Funding received in March was often applied for last year, well before COVID-19 happened. Again, asking a charity to demonstrate revenue loss during March is not an accurate indicator of our need for financial support.

“3) Nearly all our grant revenue (including revenue received in March) is restricted for specific projects that are now suspended due to COVID-19. Therefore, we are unable to spend this funding on employee salaries because it must be saved for the time when the projects resume. “As a result, we are currently drawing down our very limited financial reserve to pay our staff - but that will soon run out. We need government support now to bridge this gap - immediate support to keep employees on payroll so that we can quickly resume these projects when safe to do so.”

I have heard likewise from many constituents who have raised their concerns about the exclusion of many registered charities and non-profit organizations from the CEWS eligibility criteria. Van East is home to a high number of non-profit and charitable organizations – many of them serve urgent or essential needs in this community, and I am concerned that the CEWS funding criteria does not consider the socio-economic status, the demographics, or the number of charities and non-profits based in and serving the people our community.  In other words, there is little consideration to the needs of the riding. Vancouver East is one of the poorest ridings in the country and has the third largest urban Indigenous community in the country. Many are on the front lines of the COVID-19 response, providing a wide range of health and social services. They work directly with the most vulnerable and marginalized members of our communities, including seniors, people with disabilities, those living in poverty or experiencing homelessness or hunger, women and children dealing with violence and people struggling with mental health issues or addictions—to name just a few.

Vancouver East is also home to one of the largest arts and creative communities in Canada. While individual artists and creators whose income has been impacted may now be eligible for the CERB, there are also the organisations – theatres, festival organizations, galleries, artist-run centres and myriad other organizations. Their revenues typically arrive at various key points in the year in response to fundraising appeals and events, membership fees, grants from institutional funders (including governments and foundations), and business sponsorships. Requiring them to show a 15% -30% per cent drop in gross revenues compared to a year ago or even to January or February of this year in order to access the wage subsidy is not reflective of many groups’ funding models. These are also often small group who do not carry significant cash reserves nor have real property, and whose work may already be very reliant on the hard work of volunteers and therefore difficult to maintain in times of social distancing. Many of these organizations don’t have access to untapped lines of credit. Given the realities facing these groups, it is inappropriate to subject these organizations to the same eligibility test as corporations.

Finally, the City of Vancouver, like other municipalities across the country, are faced with mounting financial difficulties.  Last week Vancouver Mayor Kennedy Stewart raised concerns about the yet untold impacts on city finances of the COVID-19 pandemic.  Local governments are very cognizant of the fact that many residents will be unable to pay their property taxes in July due to COVID-19.  Mayor Stewart has pointed how this will only add to the already heavy costs that the City is bearing.  To date, the City of Vancouver has already laid off 1,500 workers.  Without assistance from senior levels of government, municipalities across Canada will have little choice but to begin cutting vital services that communities depend on.  Urgent action is needed to ensure Canadians continue to receive vital local services through the duration of this pandemic.

Therefore, given the realities facing organizations in these sectors and the many people that they employ, I urge you to further expand the eligibility criteria of the CEWS to include municipalities, local governments and their entities; hospital-based and health research institutes; and non-profit and registered charitable organizations. I thank you in advance for your consideration and look forward to a prompt response,

Sincerely,

Jenny Kwan, MP for Vancouver East

 

Cc: 

The Hon. Jean-Yves Duclos

The Hon. Navdeep Singh Bains

The Hon. William Sterling Blair

The Hon. Mélanie Joly

The Hon. Carla Qualtrough

The Hon. Kirsty Duncan

The Hon. Catherine McKenna