The unfortunate layoffs this week of over 200 Bell employees have served as a reminder of how large corporations are able to game the system and take windfall profits off the back of taxpayers while small businesses across the country struggle to keep the lights on. This came hours after the conclusion of Bell’s annual Bell Let’s Talk, a corporate social responsibility campaign aimed at increasing the company’s heart-share among Canadians by encouraging conversations about mental health.
Alongside the layoffs, the amount Bell has received in wage subsidies from the federal government – $122,853,243 – was made public, leading to widespread public criticism.
In principle, government should not pick winners and losers or subsidize businesses at all. However, during a situation like this pandemic where businesses are forced by the government to shut, it’s quite justifiable to find ways to support them through the crisis until they can safely re-open. Simply put, the cost of all those businesses closing for good would be higher.
One of the flagship programs Ottawa created in response to COVID-19 was the Canada Emergency Wage Subsidy (CEWS) directly subsidizes businesses to keep workers employed, covering up to 75% of their salaries. The amount provided by government depends on variables like the number of qualifying workers being covered and the drop in revenue which has come during the measurement periods (ostensibly, connected to the economic impacts of COVID-19). To this point, Ottawa has already spent over $85 billion on CEWS funds, with much more to come through 2021.
The premise of the program is, of course, that workers are kept employed on their full salaries to lessen the overall economic impacts to both businesses and the workers who rely on those paycheques. I guess Bell missed that memo.
It’s bad enough that Bell let go hundreds of workers during tough economic times, despite the stated purpose of CEWS, but a look at Bell’s financial statements show that the company seems to be doing fairly well.
Bell had $5.2 billion in available cash at the end of Q3 2020, 10% internet revenue growth and 4% cashflow growth – all leading to a dividend hike in Q4 2020.
Yes, a company who took government money to support it through tough times had it so bad that it could pump out even more money to shareholders.
So when does COVID-19 support become Corporate Welfare?
If indeed Bell legitimately earned and spent this subsidy, it’s quite clear the criteria was incorrect. Perhaps the CRA will audit these outcomes and claw back money, but at this point there’s no indication this will happen.
And we should expect to see more stories like this. A National Post investigation showed that at least 68 publicly traded Canadian companies continued to pump out dividends while taking varying degrees of CEWS money. The study showed that of the over $5 billion in dividends paid out by these companies, they received over $1 billion in CEWS funds.
In effect, Canadian taxpayers just gave $1 billion in corporate welfare to large public corporations. Meanwhile, small businesses across the country – the ones who don’t have legal/lobbyist support, can’t always complete the administrative burden of form filling and certainly can’t afford to get it wrong and get audited – are getting crushed by the COVID-19 lockdowns.
This story is a tragedy on many levels. Hundreds of thousands of jobs lost, tens of thousands of businesses shut, but the well-connected big businesses make out like bandits. It’s unfair, it’s immoral and it’s un-Canadian.