How do you fail at giving away free money? - The Orca
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How do you fail at giving away free money?

Rob Shaw 2
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Rob Shaw: ‘It’s possible Kahlon could save the program with a series of last-minute emergency manoeuvres – but even if he does, it exposes that the NDP government’s initial aid packages in September were extremely poorly designed.’

Only a government can fail at giving away free money. And that’s exactly what’s happening with B.C.’s Small and Medium Sized Business Recovery Grant program.

Economic Recovery Minister Ravi Kahlon admitted this week that in the last four months, only $12 million in grants have actually been paid out to businesses, from a pot of $300 million in available funding.

That leaves $288 million unspent at a time when small businesses are struggling to stay alive, and in many cases closing permanently.

That such an enormous amount of government aid is being wasted must be particularly galling to the tourism sector, which has arguably suffered the worst under the gathering and travel restrictions imposed to curtail the spread of COVID-19.

The program offers non-repayable grants of up to $30,000 for businesses with fewer than 142 employees, and up to $45,000 for tourism-dependent businesses.

Imagine looking at the unused rooms of your bed and breakfast, or the blank booking sheets of your guide outfitter service, or the empty boats of your fishing charters and realizing that the small grant that could keep you from having to lay off staff, sell equipment, or even avoid bankruptcy entirely is tied up in the provincial government’s red tape and byzantine rules.

Even worse, the funding expires March 31.

At this rate, it would take the government eight years to give away all the small business grant money.

Instead, it has fewer than eight weeks before the cash disappears back into general revenue at the end of the fiscal year.

“We’re certainly not going to waste any money,” said Kahlon.

“All the supports we’ve put in for small businesses, the more than $1.5 billion in supports, have gone to a good cause.

“What we’ve seen in the first three months of the small business grant program is just over 1,000 applications. After we made the changes in late December, just this month, we’ve seen well over 4,000 applications come in just over the last few weeks. If that trend line continues we’ll be in a really good place.”

There are 6,500 applications currently in the queue, according to Kahlon’s ministry.

Even if each one received the full $30,000 grant over the next eight weeks, that would still leave $93 million – almost one-third of the total funding – unspent when the program expires.

The prospect of free money being wasted during a crisis in which small business owners are crying out for financial help should deeply worry the governing New Democrats.

Kahlon, to his credit, seems to get it.

One of the NDP’s up-and-coming stars, he inherited this broken mess of a program in late November and immediately set about retooling it.

The rules were so unfairly strict – requiring revenue losses exceeding 70 per cent, excluding seasonal businesses and sole proprietorships, and only applying to businesses in operation for at least three years – virtually no one qualified.

Kahlon changed the criteria, getting it to where it should have been at the start. He’s also appealed to business groups, chambers of commerce, and accountants to help him spread the word.

But applications are still beset by red tape, mountains of paperwork and an extraordinarily long vetting process by civil servants.

It’s possible Kahlon could single-handedly save the Small and Medium Business Recovery Grant program with a series of last-minute emergency manoeuvres.

Even if he does, it exposes some ugly truths about the NDP government’s initial aid packages in September – namely, that they were extremely poorly designed.

Yet they were launched with much fanfare, and after much hype, by Premier John Horgan himself. He then used them as a launching pad for an early election, effectively locking those programs into place. He couldn’t admit any of the rules needed a rethink while out stumping for votes on the campaign trail.

The small business grants program is the centrepiece of Horgan business aid package, and it’s been a broken mess. Just imagine the problems facing other programs we’ve yet to hear about.

Rob Shaw has spent more than 13 years covering BC politics, now reporting for CHEK News and writing for The Orca. He is the co-author of the national best-selling book A Matter of Confidence, and a regular guest on CBC Radio.

rob@robshawnews.com
twitter.com/robshaw_bc

SWIM ON:

  • Even in the early days of March 2020 – before the lockdowns, even – Ada Slivinski saw that it was clear COVID-19 was going to hit business. Hard.
  • In September, Jordan Bateman wrote about small businesses knocked flat by the pandemic, needing help that was still a long ways off.
  • In September, when the curve was still pretty flat, Jock Finlayson reminded BC not to lose sight of the fact the pandemic had devastated the economy.

 

SWIM ON