Letter to Minister McKenna

October 28, 2020

The Honourable Catherine McKenna, M.P.
Minister of Infrastructure and Communities

Dear Minister,

On behalf of Canada’s Building Trades Unions (“CBTU”), the Canadian Construction Association (CCA) and our combined 1.5 million highly trained and skilled Canadian workers, who generate seven per cent of Canada’s GDP, we want to thank you and the Government of Canada for your ongoing efforts to address the needs of our members during the COVID-19 pandemic. We are pleased with the communication and responsiveness of the government and offer our continued support and assistance to address the critical infrastructure needs of our country from coast to coast to coast.

The construction industry, early on, was deemed essential in most areas in Canada and contractors and tradespeople have adapted extremely well to ensure the health and safety of all workers while continuing to build and maintain vital infrastructure. Due to a robust backlog of projects, our industry has weathered the pandemic storm better than most and thus far, has remained busy.

However, with the uncertainty of the effects and duration of the pandemic, the economy has taken a hit, lowering confidence, causing private sector investments to decrease, and shrinking work opportunities for contractors and tradespeople alike. Project backlogs are diminishing as project tendering dries up or is delayed. While our industry has kept working, it is troubling to note that current construction employment remains 8.1 per cent lower than its level pre-COVID-19.[i] We are deeply concerned that this downward trend in unemployment will accelerate through 2021 without infrastructure stimulus. And, it would be a missed opportunity to hire those who have been displaced from other harder hit industries.

According to Statistics Canada, the COVID-19 pandemic has resulted in a considerable slowdown in economic activity in Canada and altered the capital investment intentions of Canadian companies. Capital expenditures on non-residential construction and machinery and equipment are expected to decrease 9.5 per cent from 2019 to $242.6 billion in 2020.[ii]

Private sector investment is decreasing, budgets at the municipal level are being cut as revenue continues to take a hit and uncertainty remains. Together, Canadians have a big job ahead to get the economy back on track, and federal investments in infrastructure have proven historically to get the economy moving, putting Canadians in well-paying, rewarding careers and strengthening our country’s global competitiveness.

Investment Intentions Decline

In a brief on the Canadian construction industry prepared by the Ontario Construction Secretariat, titled Non-Residential Capital Investment Intentions in Canada it found that for the first time in over a decade, private sector spending was outweighed by public sector spending as investors look to the economic uncertainty caused by the pandemic and delay or cancel spending. Private sector Construction Capital Expenditures is at its lowest share since 2006 and currently stands at 51 per cent.[iii]

Further, looking at capital construction intentions, in February, companies reported $275.5 billion in capital investment intentions for 2020. By August of this year, those intentions had declined by $32.9 billion and currently stand at $242.6 billion. The decline in non-residential investment is expected to impact both capital construction (-10.1% to $160.7 billion) and in machinery and equipment (-15.4% to $82 billion).

 

 

Private Sector Intentions Falling

The private sector has retracted their 2020 non-residential capital expenditures by 17 per cent ($30.7 billion) from $177.6 to $146.8 billion. This is the largest shock to construction private sector investment since the great recession of 2009.

The private sector expects to invest $82 billion in bricks and mortar in 2020, the lowest capital construction investment in a decade.

Canada’s Building Trades Unions and the Canadian Construction Association commend the Government for their commitment to addressing the infrastructure gap, and the funding of the Investing in Canada Plan. Despite the signing of bilateral agreements there continues to be delays and barriers with approvals for projects. While some 65,000 projects have been approved since 2016, only 47,000 have actually started.[vii]We understand the Government of Canada has identified key investment priority areas, however a more innovative and collaborative approach must be taken to work in partnership with contractors and the provincial and municipal governments to utilize those funds that have already been approved and allocated so that they actually translate into real projects, to create real jobs for Canadians. Construction projects must get started or we run the risk of losing the 2021 construction season.

We also know that different areas of Canada have been harder hit by the pandemic. All provinces and territories with the exception of the Northwest Territories (+3.7%), will see their private and public expenditures in non-residential construction and machinery and equipment decrease over 2019. Newfoundland and Labrador (-22.9%) and Alberta (-19.1%) are expected to see the largest decreases, due primarily to the weakening of investments in the oil and gas extraction subsectors.[viii]

In the face of the COVID-19 pandemic, building strong community infrastructure is more important than ever. Meaningful collaboration and partnership are key to getting the most out of every infrastructure investment, and fostering a pandemic recovery that is sustainable, and as equitable as possible across the country.

As you can clearly see from the data presented, the construction industry requires immediate government action. On behalf of CBTU and CCA, we are requesting and urge your Government to take the following steps:

  • Remove the barriers that exist between the federal government and certain provinces to flow existing infrastructure money;
  • Declutter the administration and approval process so that projects that are approved can get started quicker;
  • Consider increased investments in infrastructure until the economy is firmly on its way to economic recovery.

Together, we can help hundreds of thousands of people get back to work, we can strengthen our communities and build a better Canada. We look forward to discussing this with you, at your earliest convenience.

Sincerely,

 

Sean W. Strickland

Executive Director

Canada’s Building Trades Unions

 

 

Mary Van Buren

President

Canadian Construction Association

 

C.C.:

Justin Trudeau, Prime Minister

Chrystia Freeland, Deputy Prime Minister/Minister of Finance

Dominic LeBlanc, President of the Queen’s Privy Council for Canada and Minister of Intergovernmental Affairs

Carla Qualtrough, Minister of Employment, Workforce Development and Disabilities Inclusion

Filomena Tassi, Minister of Labour

Seamus O’Regan, Minister of Natural Resources

[i] https://www.theglobeandmail.com/business/economy/article-canadian-economy-creates-378000-jobs-in-september-blowing-past/

[ii] Non-Residential Capital Investment Intentions in Canada, Ontario Construction Secretariat Brief, Katherine Jacobs

[iii] Statistics Canada. Table 34-10-0037-01 Capital and repair expenditures, non-residential tangible assets, by industry and type of ownership (x 1,000,000) https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3410003701

[iv] Statistics Canada. Table 34-10-0278-01 Historical (real time) releases of capital and repair expenditures, non-residential tangible assets, by industry and geography (x 1,000,000)
https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3410027801

[v] Statistics Canada. Table 34-10-0037-01 Capital and repair expenditures, non-residential tangible assets, by industry and type of ownership (x 1,000,000)
https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3410003701

[vi] Statistics Canada. Table 34-10-0278-01 Historical (real time) releases of capital and repair expenditures, non-residential tangible assets, by industry and geography (x 1,000,000)
https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3410027801

[vii] https://www.infrastructure.gc.ca/plan/funding-financement-eng.html

[viii] Statistics Canada. Table 34-10-0278-01 Historical (real time) releases of capital and repair expenditures, non-residential tangible assets, by industry and geography (x 1,000,000)
https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3410027801