under construction

Sharing Canada’s construction priorities with the Federal Government

January 11, 2023

Sharing Canada’s construction priorities with the Federal Government

Synopsis
4 Minute Read

The Canadian Construction Association’s (CCA) annual Hill Day is a time for industry leaders and business owners to come together with government officials and policymakers. They meet to discuss key challenges and opportunities in construction and real estate, at the same table with those who have the power to influence policy.

What’s on the minds of industry leaders in construction and home building right now? Major topics of discussion on Hill Day were:
• Labour challenges
• Cost increases
• Procurement issues
• Educating and training the next generation
• Workforce replenishment through immigration

Partner and Business Advisor
Partner, Taxation Services

The Canadian Construction Association’s (CCA) annual Hill Day took place on November 15. It’s a day set aside for construction industry advocates, business owners, and decision-makers to interact with members of parliament and other government policymakers, and share the priorities of the real estate and construction industry.

To attend Hill Day is to get a rare inside look at what’s on the minds of real estate and construction business leaders and owners — their priorities, concerns, fears, and challenges. Our firm has worked alongside the CCA during Hill Day for several consecutive years, to support their advocacy efforts, and by association support the industry more broadly.

We’d like to offer you a recap of the most important proposals and priorities discussed that day.

Labour challenges

This will not come as a shock to anyone close to the Canadian construction sector: labour challenges are top-of-mind for nearly all real estate, construction, and skilled trades businesses, regardless of size or region. Business leaders and entrepreneurs consistently struggle to attract and retain a talented workforce, a problem which pre-dates COVID but was exacerbated by the pandemic.

The proposals brought forward on Hill Day to help alleviate labour challenges in construction mostly centred around a couple of items: education, immigration and temporary work programs.

Education

While the stigmas around construction and skilled trades are gradually dissipating over time, there are still too many people, including young people, who don’t seriously consider it as a career path. They may see these career options as not challenging enough, not lucrative enough, or lacking in diversity and representation in the workforce.

The industry has recognized the importance of educating and stimulating interest among job seekers while they’re in their formative years and deciding what career they want. Many have made investments in visiting schools as early as grade 8 to show students the benefits of these career paths:

  • They’re more challenging and specialized than ever before
  • There are great opportunities to be your own boss, work on your terms, and have career flexibility
  • You can earn a great living
  • Workplaces are making strides to become more welcoming and inclusive for all

One innovative example of a solution already being implemented is a “mobile course” for high school students, held in a trailer that can travel between school campuses. Students earn credit for taking one of the mobile courses that gives them hands-on experience learning a trade. These types of initiatives run more effectively with the backing of local politicians, which is why they became a talking point on Hill Day.

Immigration

Perhaps the most pressing concern on Hill Day was getting clarity on how immigration would influence construction and housing, both from a labour and a housing supply perspective.

Canada has set fairly ambitious immigration targets over the next few years and indicated a willingness to take in large numbers of refugees fleeing the war in Ukraine. This could prove to be a double-edged sword for construction and the skilled trades; On one hand, newcomers to Canada could increase the labour supply in these fields, which would greatly benefit business owners desperate to hire skilled people. But on the other hand, many industry leaders worry that in the short term we won’t be able to build enough housing supply for new immigrants and refugees to have housing stability.

Another talking point on Hill Day revolved around the current immigration “points system”, which favours immigration applicants who have high educational achievements and experience in white-collar careers. Some MPs heard arguments that this points system needs to be changed in order to bring in more talent from overseas who are trained in construction and skilled trades, otherwise the current imbalance in housing and real estate will only get worse.

Procurement 

Some of the larger construction companies who participated in Hill Day raised procurement as a major area of concern. In fact, for some businesses that bid on sizable public projects, it was their top priority.

The challenge many businesses are facing is that the process of bidding, estimating, and giving quotes on big projects is often a “race to the bottom” in terms of price, and projects are often awarded several years before construction actually begins. In the span of those years, construction companies can see their costs rise dramatically, which means providing cost-friendly quotes early in the process can be immensely risky.

To help alleviate these challenges, MPs and policymakers were asked to help eliminate red tape in the procurement process and create a more integrated approach. This could include more flexibility to revise quotes in the time between making the quote and putting shovels in the ground. Companies also want to have more say in which general contractors and trades will be used on a project.

Business leaders are confident that fostering more agility and collaboration in the public procurement process will ultimately save money for the government and for Canadians.

Cost increases

As inflation heats up and interest rates rise in response, cost increases have been felt by all, but the issue of rising costs is especially salient in materials-heavy businesses like construction. Factors that contribute to rising costs in the industry include:

  • Employees are asking for higher pay
  • Materials costs have risen dramatically, in some cases almost doubled
  • Paying down variable-rate debt is becoming harder with each rate hike
  • Supply chains have yet to normalize post-COVID

When combined, these factors create a perfect storm that has led to input costs for construction businesses that are often 25-30 percent higher than they were even a year or two ago.

Not all cost increases can be passed on to clients and consumers. The ability to re-open conversations with clients depends on the contracts signed at the outset of a project. Some prominent talking points on Hill Day revolved around escalation clauses, which allow contractors and builders to re-negotiate if their input costs rise unexpectedly. MPs and policymakers have the potential to loosen or tighten regulations around the use of those clauses in contracts.

Hill Day recap

Overall, our firm’s experience as advocates on CCA Hill Day was overwhelmingly positive. Elected officials can influence policy which in turn influences businesses, but that doesn’t mean they are necessarily experts in every industry themselves. Hill Day is an opportunity to advocate, but also to educate. Government representatives want to know what’s important and concerning in the construction industry, and business leaders want a chance to collaborate and have their voice heard.

Contact us

Carla Milne, CPA, CA
204.571.7660 
[email protected]

Peter Bangs, CPA, CA 
613.691.4212 
[email protected]

Insights

  • February 08, 2023

    How to optimize costs and reduce risks when integrating your existing systems with the cloud

    While connecting with the cloud can transform your organization, integrating your systems with cloud applications and data can be a complex process. Explore your options to find the solution that works best to get your organization connected with the cloud.

  • Performance

    February 07, 2023

    Underused Housing Tax Act

    The latest on the Underused Housing Tax and the unanticipated impact of filing requirements on Canadian private corporations, partnerships and trusts.

  • Progress

    February 06, 2023

    What’s driving the labour shortage for Canadian business

    Understanding the “what” and the “why” behind the labour shortage in Canada can lead business owners to broaden their thinking on how to manage it.