We are closing an encouraging week. Business has been given a ‘caution lamp’ to re-establish, not a moment too soon. The cloud of closure is lifting across the country and continent, but there is concern with moving quickly.
There is diverging opinion on the benefits of reopening but given social distancing constraints one thing is certain – it will be a difficult reacquaintance with commerce.
Casual restarts in upcoming phases include retail to restaurants. Clothing retailers were clearing winter inventories when this crisis hit, spring-lines are nearing the end of their run and summer stock is ready to roll out. But will inventory fly off the shelves for our small Island retailers, limited congregation space, no-trying-on and no returns.
Financing current inventory, and next seasons purchases is a challenge for retailers. Auto dealers are still sitting on 2020 models in prime selling season with next year’s models almost within visual range. A lot of working capital is trapped in inventory.
Restaurants are ready to adapt. Models built on maximizing capacity, including decking space. Returning from the dormant winter the summer visitation burst is always a welcome boost. The reality is an understaffed social spaced kitchen, creative operators running food to the curb for grateful patrons. Even if seating operations were to open, 30 to 50 per cent of seats would be removed, representing 30 – 50 per cent loss of operating revenue.
The 2020, and likely 2021, tourism season is obstructed beyond reconciliation. This portrait is bleak, but we don’t have to paint a Francisco Goya. Economic elasticity must be stretched within our boarders; and with Island ingenuity and commitment we can underpin our local economy.
We must collectively self-stimulate our local entrepreneurs. Support local! Don’t shop necessarily on price and don’t default to companies not participating in our economy. Be patient and if inventory is not readily available – order and wait for the arrival. If we allow our economic pillars to collapse; we will lose more than the fabric of our local ecosystem.
We have the opportunity to maintain committed local operators. We can support our merchants and service providers who have done much in commitment to their communities. From fundraisers, hospital donations, sports teams’ contributions and school class supports – these generous offerings by your business community need to be recompensed
Th.e unquantifiable challenge government has is the duration of this disruption. We will have resets and hard stops. We will lurch in attempt to restarting economies around the globe. We will respond to anticipated incidents of outbreak. The most insidious contribution of covid will be the volume of sustainability injections required by debt mired governments.
If a recovery horizon is expected under three-years, it is underestimated; and if the special warrants were thought to be stemmed, there will be disappointment. With optimism I trust we will have rapid testing, effective treatments and a vaccine. But the goat-path traveled to recovery, will be slow.
Government has little choice but to keep fueling and funding the economy. Any investment injected in stabilization will be much less than the cost of economic failure. Business, commerce and employment must be supported. The pain will come later, when the full costs are calculated, and the recognition of lost tax revenue permeates the budgeting process ($159 Million from retail sales tax alone, 7.9% of tax revenue is the anticipated loss in PEI according to the Conference Board of Canada). I ‘hope’ government has the foresight to observe this as a multi-year problem, and not a myopic election position.
Now is the time for bold approaches. Leaders within the framework of government need to emerge, and a medium-term vision must be presented to Islanders. Government will not have the answers, and hopefully they are seeking expertise from outside their walls.
We have endured and emerged from the first phase of our health crisis, and leadership has guided us. Now we seek economic guidance, reassurance and the confidence that there is an understanding and strategy for recovery and prosperity. Extend demand-equation funding, support enhanced production and attract investment to stimulate and catalyse disruptive innovation. Enable business, then get out of their way.