The NDP is calling on the federal government to claw back pandemic wage subsidies handed to companies that took advantage of the cash to boost executive compensation. THE CANADIAN PRESS/Justin Tang

The NDP is calling on the federal government to claw back pandemic wage subsidies handed to companies that took advantage of the cash to boost executive compensation. THE CANADIAN PRESS/Justin Tang

NDP demands federal wage-subsidy clawbacks, but critics question feasibility

Last month’s federal budget extended the wage subsidy through September

The NDP is calling on the federal government to claw back pandemic wage subsidies handed to companies that took advantage of the cash to boost executive compensation, but economists say other paths to worker support may mark a more feasible route.

In a May 13 letter to Finance Minister Chrystia Freeland, New Democrat Peter Julian said all publicly traded companies that received the Canada Emergency Wage Subsidy (CEWS) should repay any bumps in salaries and bonuses for senior management.

“The wage subsidy was clearly supposed to go to workers and toward protecting Canadians’ jobs — not bonuses for top corporate brass,” the letter states.

“In a case where there’s a clear violation of what the clearly stated goals of the program were, it is absolutely appropriate to ask for that money back,” Julian said in an interview.

Though Freeland has repeatedly said the subsidy can only be used to pay employees, nowhere does it bar beefier executive compensation as a condition of that support.

Julian also criticized Ottawa for failing to add caveats restricting share buybacks and higher dividends.

Last year, hundreds of chief executives and senior managers enjoyed millions in dividends paid out by publicly listed firms that also gobbled up hundreds of millions from the CEWS program, which provides a subsidy of up to 75 per cent for payroll expenses and is estimated to cost $110.6 billion.

The NDP finance critic slammed the government for its “aggressive” moves to crack down on abuse of the Canada Emergency Response Benefit, intended to help Canadians who lost work during the COVID-19 pandemic.

“They’ve been putting pressure on people who received CERB, even when they were the victims of fraudulent behaviour by other people. But they have not stepped up and given any indication at all on the wage subsidy. And that’s simply wrong,” he said.

Freeland’s spokeswoman, Katherine Cuplinskas, stressed that the program aims to protect jobs, saying it has helped more than 5.3 million workers stay on payroll or get rehired.

CEWS, which she noted received unanimous approval in the House last July, “applies to businesses of all sizes and across all sectors to ensure that no worker falls through the cracks,” she said in an email.

Smaller retailers and the entertainment, tourism and aviation sectors reeled amid lockdowns over the past 14 months, but big-box stores, tech companies and transport firms fared well as remote work and online delivery ramped up.

Many countries introduced bans on dividend payments and other rewards within months of the first wave. Spain demanded full reimbursement of job-retention funding for companies that paid any dividends. The Netherlands imposed a ban on dividend payments, share buybacks and bonuses for executives at companies that took advantage of wage relief in the same year.

Last month’s federal budget extended the wage subsidy through September, but with a new clawback system for jacked-up executive compensation at publicly traded companies — a step the NDP now wants applied retroactively.

David Macdonald, a senior economist at the Canadian Centre for Policy Alternatives, says a tax rule effectively forcing reimbursement from companies that declared profits while receiving the subsidy might offer a simpler, if blunter, solution.

“The federal government can certainly change the tax rules. And they can do it retroactively if they want to,” he said.

Ottawa could also tighten the new clawback measures by including dividend boosts and share buybacks among the repay items. “There’s $25 billion that’s going to be paid out in this fiscal year, starting April 1. So there’s still time, the program’s not over.”

University of Toronto economist Michael Smart says a future program overhaul makes more sense than retroactive clawbacks, and suggests the federal government limit the subsidy to small businesses and battered sectors or apply it only to at-risk jobs.

“Any company that issues stock on the Toronto Stock Exchange does not need the government to step in,” he said. “We’ve got to get back to a focus on workers and Canadians who are experiencing income losses.”

Smart called it a “mistake” to zero in on clawbacks, highlighting potential loopholes.

“If the government were to pass a rule that CEWS gets clawed back from any company that increases dividends this year, then as the CFO of a company I would know exactly what to do: Don’t pay out a special dividend this year; pay out a special dividend next year,” he said.

“All it does is it takes the heat off of Ottawa.”

While Canadians may be “surprised or shocked” that emergency funds landed at companies that promptly lined the pockets of their C-suite staff, “that’s a tiny fraction of the overall issue of this program,” he added.

Starting in June, the revised CEWS program will raise the eligibility threshold to 10 per cent revenue loss relative to the same four-week period in 2019. A progressively lower subsidy rate as September approaches is also part of the plan.

“This money should be going to people who actually need it, businesses that actually need it, to try to stay afloat for hopefully what’s just the last few months of the pandemic,” Macdonald said.

Like us on Facebook and follow us on Twitter.

Want to support local journalism? Make a donation here.

NDP Leadership

Just Posted

Jacqueline Pearce and Jean-Pierre Antonio received the BC Historical Federation Best Article Award on Saturday for their story about translating haiku written in the Tashme internment camp.
Article chronicling haiku in Japanese internment camp near Hope wins award

Tashme Haiku Club’s work was preserved and recently translated, authors write

Kindergarten kids from Evans elementary school in Chilliwack painted rocks with orange hearts and delivered them to Sto:lo Elders Lodge recently after learning about residential schools. (Laura Bridge photo)
Kindergarten class paints rocks with orange hearts in Chilliwack for local elders

‘Compassion and empathy’ being shown by kids learning about residential schools

Chilliwack potter Cathy Terepocki (left) and Indigenous enhancement teachers Val Tosoff (striped top) and Christine Seymour (fuchsia coat), along with students at Vedder middle school, look at some of the 500-plus pinch pots on Thursday, June 10 made by the kids to honour the 215 children found at Kamloops Indian Residential School. (Jenna Hauck/ Chilliwack Progress)
Chilliwack students make hundreds of tiny clay pots in honour of 215 Indigenous children

‘I think the healing process has begun,’ says teacher about Vedder middle school project

Image by Free-Photos from Pixabay
Webinar looks at sexual abuse prevention among adolescents

Vancouver/Fraser Valley CoSA hosts free online session on June 15

Emergency services were on the scene of an apparent stabbing Friday afternoon (June 11) in the 2400 block of Countess Street in Abbotsford. (Photo: Kaytlin Harrison)
Two suspects arrested after apparent stabbing in Abbotsford

Incident occurs Friday afternoon in 2400 block of Countess Street

At an outdoor drive-in convocation ceremony, Mount Royal University bestows an honorary Doctor of Laws on Blackfoot Elder and residential school survivor Clarence Wolfleg in Calgary on Tuesday, June 8, 2021. THE CANADIAN PRESS/Jeff McIntosh
‘You didn’t get the best of me’: Residential school survivor gets honorary doctorate

Clarence Wolfleg receives honorary doctorate from Mount Royal University, the highest honour the school gives out

Canadian Prime Minister Justin Trudeau participates in a plenary session at the G7 Summit in Carbis Bay, England on Friday June 11, 2021. THE CANADIAN PRESS/Adrian Wyld
Canada donating 13M surplus COVID-19 vaccine doses to poor countries

Trudeau says the government will pay for 87 million shots to be distributed to poor countries

Indigenous Services Minister Marc Miller is seen during a news conference, Wednesday May 19, 2021 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Indigenous child-welfare battle heads to court despite calls for Ottawa to drop cases

Feds are poised to argue against two Canadian Human Rights Tribunal rulings

The Great Ogopogo Bathtub Race has been held in Summerland as a fundraising event. Do you know which Canadian city introduced this sport? (Black Press file photo)
QUIZ: A summer’s day at the water

How much do you know about boats, lakes and water?

Two-year-old Ivy McLeod laughs while playing with Lucky the puppy outside their Chilliwack home on Thursday, June 10, 2021. (Jenna Hauck/ Chilliwack Progress)
VIDEO: B.C. family finds ‘perfect’ puppy with limb difference for 2-year-old Ivy

Ivy has special bond with Lucky the puppy who was also born with limb difference

A million-dollar ticket was sold to an individual in Vernon from the Lotto Max draw Friday, June 11, 2021. (Photo courtesy of BCLC)
Lottery ticket worth $1 million sold in Vernon

One lucky individual holds one of 20 tickets worth $1 million from Friday’s Lotto Max draw

“65 years, I’ve carried the stories in my mind and live it every day,” says Jack Kruger. (Athena Bonneau)
‘Maybe this time they will listen’: Survivor shares stories from B.C. residential school

Jack Kruger, living in Syilx territory, wasn’t surprised by news of 215 children’s remains found on the grounds of the former Kamloops Indian Residential School

A logging truck carries its load down the Elaho Valley near in Squamish, B.C. in this file photo. THE CANADIAN PRESS/Chuck Stoody
Squamish Nation calls for old-growth logging moratorium in its territory

The nation says 44% of old-growth forests in its 6,900-square kilometre territory are protected while the rest remain at risk

Most Read