The Canadian Construction Association (CCA) has released its written submission for pre-budget consultation in advance of the 2019 federal budget.
The CCA grouped six recommendations into two key themes — accelerating community benefits by removing barriers and encouraging productivity through innovation funding and tax reform.
“A strong construction industry requires a sufficient labour force and cutting-edge technology, as well as access to consistent infrastructure investment spending and a business-friendly environment,” states the submission.
Under the accelerating community benefits umbrella, one of the recommendations is to provide funding administered by the CCA for STEM (Science, Technology, Engineering and Math) Work Integrated Learning programs and recruitment and retention campaigns targeting underrepresented groups such as women, Indigenous people, veterans, people with disabilities and youth.
The CCA is requesting the government provide funding to place 1,000 students in the next four years.
“One of the challenges with the construction image is that we are not seen as innovative, so one of our asks is to fund work placements, particularly from the STEM sector, because this is the resource we need to drive home our innovation and productivity,” said Mary Van Buren, president of the CCA.
“That will help the industry also advance the government’s desire to have more inclusive and underrepresented segments, which is something that the industry wants as well.”
“We are looking at a looming shortage of workers, so this is one opportunity for us to be aligned with the government and also to attract those innovative and highly tech savvy students into the industry and hopefully keep them over their careers.”
The CCA also wants the government to ensure the procurement process is fair, transparent and productive. Van Buren said the association wanted to acknowledge and reinforce the importance the construction industry already plays in generating community benefits.
“CCA’s primary concern with the government’s framework linking infrastructure spending to incremental ‘community benefits’ is that this will lead to an unpredictable, unfair and opaque procurement process,” states the submission.
“If the government wants community benefits in its projects, then the industry requests that these be clearly laid out in the tender documents and each contractor have equal opportunity to price the work required. Should these additional benefits fall outside the scope of the document, contractors would be in blind competition with each other without knowing how their proposed benefits would impact the overall evaluation.”
The association also asked the government to increase the annual value of the Apprenticeship Job Creation Tax Credit and broaden its application to all years of study in all recognized provincial apprenticeship programs, not just the first and second years. This includes increasing the value of the current credit from 10 per cent of eligible wages up to a maximum of $2,000 to 25 per cent of eligible wages up to a maximum of $5,000 annually.
In terms of productivity through innovation funding and tax reform, the CCA is asking that Industry, Science and Economic Development Canada dedicate specific funding for construction innovation and research and development.
According to the submission, the CCA is recommending an increase in the permissible depreciation rate for Class 38 assets from 30 to 50 per cent which will better align depreciation policy with the productive life of assets, improve overall construction sector productivity and potentially lower infrastructure development costs for governments across Canada.
“One reason for lower investment rates in Canada is the way governments permit businesses to depreciate their capital investments,” the submission indicates.
“In Canada, equipment and machinery purchases are depreciated using the capital cost allowance rates established to reflect the residual value of an asset as it depreciates over the period of ownership, whereas in the U.S., the depreciation period is more in line with the productive service life of the asset.
“Consequently, in Canada, it takes 13 years to reach 99 per cent depreciation, where as in the U.S. it takes only six years to achieve full depreciation.”
Price flexibility in government procurement due to increases in project costs was also among the CCA recommendations, especially because of the recent steel and aluminum tariffs, which is part of the ongoing dispute between Canada and the U.S.
The government should structure contracts to allow for a price escalation for cost increases that are caused by government action such as retaliatory tariffs, adds the submission.
“There is a lot of uncertainty being created which means there is a lot more risk. How do you price that and what does this all mean?” asked Van Buren.
“We are asking owners and the government to consider using our standard documents which have provisions for tax increases and if those provisions have not been included in the contract that they would be open minded towards discussing what would be fair given that the costs are extraordinary.”