Hugh Mackenzie
Huntsville Doppler
I read something buried in the business section of the Toronto Star yesterday that absolutely boggles my mind.
Almost everyone in Canada is negatively affected by the COVID-19 pandemic. Some of course more than others and often in different ways, but few have escaped completely the consequences of dealing with this virulent global virus. Many thousands of people have been afflicted with the disease and too many families have endured the loss of loved ones. On top of that, almost everyone else has been faced with some of the residual affects of the virus, whether it be loss of income or employment, households turned upside down, friends and extended families not seen, restricted activities, loneliness, depression or just plain COVID fatigue. Everyone, or almost everyone, is paying some sort of price.
But we are a tough lot, we Canadians. Perhaps it is our northern heritage but most of us roll up our sleeves, suck it up, and do what needs to be done to get through this. Sure, there is grumbling here and there. That is natural and to be expected. These are not particularly happy times. But in general, unlike our neighbours to the south, we have avoided civil disobedience and tried hard to show tolerance and empathy to others and make the best of a very difficult and dangerous situation.
That tolerance has been extended to government at all levels in Canada. We know that the pandemic meant that they had to do things differently. We have, especially at the federal level, accepted less accountability, granted more power, and recognized the need for extraordinary public spending.
We tolerate this because we believe it is necessary in order to keep us as safe as possible, and to help those Canadians who are financially or otherwise affected by the COVID-19 pandemic and who need this assistance to survive, recover, and move forward positively. That is who we are.
But what happens to that tolerance when we find we were misled; that not all of the massive public spending went to help those who need it, but rather to line the pockets of those who do not? And that my friends, brings me to the story that was almost hidden in Saturday’s Toronto Star.
The article is written by Amir Barnea, a freelance columnist who contributes to the Star. The headline is innocent enough: “How Leon’s profited off government handouts”. Leon’s is a well-known national chain of furniture and appliance stores. They have two locations in Muskoka ably run by local franchise holders. But wait till you hear what their parent company has been able to pull off with the help of the federal government and with taxpayers’ money as a result of the pandemic.
According to the Toronto Star article, Leon’s net income “suddenly shot up by 88.8 per cent in the second quarter of 2020 (which ended on June 30) to $47.2 million compared to $25 million the year before.” It was the second-largest quarterly profit it had recorded in over a century of operation. It allowed Leon’s to hike their regular dividend to shareholders twice, and also declare a one-time special dividend payment.
How did this happen?
Well, according to Amir Barnea, “Leon’s didn’t discover a gold mine under its North York head office, but it did identify another treasure, courtesy of the federal government: The Canada Emergency Wage Subsidy (CEWS) which generated a $29.8 million windfall for the company.”
He goes on to explain, “The CEWS program provides eligible companies with a 75 per cent subsidy for salaries for both active employees and those laid off and rehired. While firms were encouraged by the government to immediately re-hire employees let go when the pandemic hit, this was not a binding condition for receiving funds. This allowed companies like Leon’s to book record profits by receiving large subsidies for active employees while keeping the company lean for a few months” [by not bringing back laid off employees who were therefore additionally subsidized by $2,000 a month CERB payments].
My understanding is that the CEWS program was intended (or at least was said to be intended) for businesses, especially smaller, privately owned companies, to survive during the pandemic by assisting them with funds to pay employees during that time. It was not (or should not have been) designed to help companies of any size to make more money and profit from the pandemic at taxpayers’ considerable expense.
There are a few points that need to be made here. First, while they appear to have taken advantage of a situation, Leon’s did nothing illegal and they did nothing that the Trudeau Government did not give them the ability to do. They met all eligibility requirements set by the government.
Second, Leon’s is simply an example we are now aware of. Quite likely, we will never know how many other companies in Canada have made a profit from government handouts on the back of the pandemic or how much that has affected our insurmountable national debt, now approaching a trillion dollars.
And finally, we will also probably never know how much this particular structure of the CEWS program was designed to assist friends of the current government. What we do know is that it is all on the backs of current and future generations.
I am angry about all this. I am not prepared to call it corruption but I do believe there is a pattern here of the Trudeau Government not being clear to Canadians where the money is going in relation to the pandemic and who is actually benefitting from it.
Because Parliament was effectively shut down for much of the pandemic by the government, much of the legislation related to COVID-19 did not get the scrutiny required to catch loopholes that allowed companies such as Leon’s to profit from the pandemic. It did not allow oversight of COVID-19 contracts awarded without tender and it was unable to determine how many of these went to friends of the government such as the WE Charity.
In my article last week, I wrote that no government will endure this pandemic without making mistakes and that all we can ask is that they do their best. I stand by that.
However, I see all of this less as a mistake and more as a breach of trust affecting Canadians and letting down all those who have sacrificed during this pandemic and tolerated government actions for what they believed to be the good of the country, when in fact it may not all have been.
That is where Canadians, however patient and tolerant as we are wont to be, should firmly draw the line.
Hugh Mackenzie
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Dear Ms Kear
Newsflash I did not just make this up.
Allowing foreign ownership and mass immigration is creating inflation in our real estate market. Average Canadian households spent more on taxes than living costs in 2018, as reported by the Globe and Mail. When overall taxes exceed the cost of food clothing and shelter it is considered excessive by a large segment of society. The cracks are widening and more people will be under poverties relentless grip. And how pre tell will the powers that be pay for all this largesse we are witnessing currently? Well that’s easy, we will just raise taxes of course.
I truly believe that taxation and inflation in Canada left unchecked will only destroy any opportunities we have to prosper as a nation in the future. Unless you believe our current prime minister who thinks the books will balance themselves. Lol.
First of all, I am surprised Hugh is reading the Star.
He made several derogatory remarks towards the liberal governments handling of distribution of federal funds and their mismanagement of accountability.
Well,I hope Hugh read the Star again today and saw the mismanagement of the handling of money meant for needy people. Oh,except it wasn’t at the federal liberal government but the provincial conservative level.
Mr. Logagianes. Wow! “poverty is a direct result of excessive taxation and inflation”. Prove it; I do not follow your reasoning. That is a simplistic view, in my opinion. The divide between rich and poor is greater. Do you recall Hugh Holland’s article comments, noting the percentage difference in who holds wealth and the poor? He compared Canada with the US, Denmark, and a few other countries, noting that the gap has increased across many countries, with many taxation structures and inflation rates.
We just purchased an item of furniture before Christmas. After reading your article, we did not even go into Leon’s; we purchased at Kelly’s Home Furnishings. I do not wish Leon employees to suffer, but could not even enter the store. A fan of local shopping!
Don, I have to disagree. It is the federal government who created the loophole, not Leon’s and it is the government, allowing public funds to be used in this manner, that should be held both accountable and responsible. . And yes, I WOULD have said the same thing if it was a Tory government that did this.
The Covid-19 pandemic is the worst global crisis in 75 years. The government rightly and admittedly opted for speed over perfection in rolling out a series of programs that ordinarily would have taken years. The provinces and the people were more than happy that they did what they did. It is reprehensible that some businesses would take advantage in ways that may not be illegal but are clearly immoral. If they are indeed found guilty, the CRA should be merciless with them. If guilty, these types of cheating should be well publicized and the guilty should pay a big price in lost market share. If confirmed, I will never again set foot in a Leon’s store.
It is also easy to be a Monday-morning quarterback on unproven allegations. Conservatives have proven themselves to be very good at that. But that too is reprehensible under these circumstances.
Not surprised at all. Also wondering how much money the Liberal gov’t will be collecting when shove comes to kickbacks!
The great reset is coming people.
JT stated it without hiding it.
Buckle up!!
The distribution of handouts was definitely flawed. I have a retired acquaintance who had volunteered to be terminated from his job, and who had gotten a good severance package and then collected EI. He had no intention of ever working again. But his EI expired at just the right time to meet the CERB requirements, and he was able to claim COVID would impact his ability to find subsequent work. Thus, he technically qualified for (and happily collected) CERB payments that he was legally (even if not necessary morally) entitled to.
There is a means test for CERB — you had to not earn more than $1,000 in any four-week period you received the $2,000. Its replacement, the Canada Recovery Benefit, starts to claw back what you made if your total annual income including the benefit exceeds $38,000.
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And CEWS funds were not binding on rehiring employees? That’s ridiculous, and totally unfair.
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It’s not just the Tories who are in the pockets of big business.
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Great reporting on the part of Amir Barnea. Should have been on the front page.
Hugh article sheds a light on another govt subsidy for a profitable business.
The extravagant spending at all levels of government will have a detrimental effect on all Canadians. A new form of modern day slavery is evolving before our eyes. Where will all the money come from to address the challenges facing the nation? The amount of poor people in Canada has increased significantly. Ottawa allows 400,000 newcomers/year currently, how does this address affordable housing? The feds should be building affordable housing and funding all food banks in Canada, things are not going to get easier any time soon. Instead as this article suggests we have given money to profitable businesses. Poverty is a direct result of excessive taxation and inflation.
Justin Trudeau gave a speech recently at the UN in which he describes this Great Reset. Be prepared for more pain and misery. Electing the Federal Liberals during these difficult times may not prove to be prudent.
I was very disappointed to hear this. I think Leons should be ashamed of their actions. Unfortunately we will probably find out soon that many companies especially large ones have taken the Canadian taxpayer for a ride. Last night on the news the story goes a woman on welfare took advantage of the $2000 cerb. The gov’t clawed it back and then the province stopped her welfare and she could soon be spending her winter on the streets. Do you think this will happen to Leons and its investors who are laughing all the way to bank. Somehow I doubt it. I don’t lay the blame totally on the Government, although they should try to make these laws a little clearer. I do blame big business for taking advantage of the situation. Come on. Grow a conscience. I’m sorry I just bought a mattress from them. It will be my last.
Leons probably also benefited from the fact that the CERB benefits were issued without accountability and inflated the disposable income of many resulting in unusually high levels of purchases of furniture, boats, ATVs and other toys.
I find it reprehensible, but not particularly surprising, that a large corporation took advantage of a program intended to help businesses and their employees weather this pandemic. Legal does not equal right. Of course, Hugh, you would see the current government as the culprits here rather than the corporate greed demonstrated. As Joe Biden would say, “Come on, man”. Conservatives are generally regarded as the party of business. Are you not just a little embarrassed by the behavior of one of the businesses Conservatives champion?
Hugh, I understand and agree with your anger. Continue to shine a light on all that requires oversight, by all means. I wonder how the Ford government is doing in monitoring and addressing price gouging for Ontario consumers during the pandemic. I also despair at the novelty with which crime syndicates adapt and turn their profits during these days, always something new for our law enforcement to be challenged.
WOW!! So how many generations will it take to pay down this debt from the pandemic? And did Leon’s and other big business actually pass this on to it’s staff as they were supposed to? We have small businesses going bankrupt all over Canada. This means more on social assistance etc. There seems to be a rich get richer attitude and the poor get poorer.
Perhaps Leon’s should take the opportunity publicly to refute these claims. One recourse, if these accusations are true, is to stop supporting the franchise. In the meantime, keep politics on simmer till we’re through the pandemic.
This news while probably not surprising is really upsetting. Sometimes “legal” is truly not acceptable.
Gee , it’s hard to believe the Star would bury evidence of Federal Government mismanagement and incompetence while they prominently display their disdain for Provincial actions !