A group of local and national building associations have just released a 20-point plan to stimulate economic growth and job creation in Ontario’s post COVID-19 economy.
The plan, prepared by the Canadian and Ontario Home Builders’ Associations (CHBA and OHBA) and the Building Industry and Land Development Association (BILD), was presented to the Ontario Jobs and Recovery Committee with specific measures to boost Ontario’s economy.
Undoubtedly, COVID-19 has had a profound impact not only on the GTA, but also on the Ontario and Canadian economy as a whole. In order to limit further economic downturn in the residential and commercial construction industry, the building association’s proposed liquidity and recovery measures are designed to help ensure rapid economic recovery.
And although the proposed measures are to be deployed by all levels of government, the mandate is primarily a GTA-focused recovery plan because this region is considered to be Canada’s economic engine contributing approximately 20% towards Canada’s GDP.
The report also highlights that for every 1,000 housing units in the GTA, the city generates 72 million in HST, $80 million in development charges, $11 million in land transfer tax, and $5 million in education development charges.
In addition, companies across the GTA deliver on average approximately 35,000 to 40,000 new homes each year from all home types, which helps provide a clear estimation of both the direct and indirect effects of industry activity and contributions in tax revenues.
Nevertheless, between 2006 and 2019, home completions in the GTA have fallen over 100,000 units short compared to demand projected by the 2006 Provincial Growth Plan. Since 2006, there has been a total unmet demand of 115,400 units with an annual average of 8,240 units. Typically, in a healthy market, the GTA’s inventory would sit at eight month’s supply or greater. The current supply inventory for all home types has dipped under four month’s supply. This data is quite alarming and highlights the importance of immigration to the GTA.
GTA & Simcoe, 2006-2019
There are a total of three mandates, which are focused on creating a recovery plan, providing economic stimulus, and generating new job growth.
Creating a Recovery Plan
At the request of Premier Ford, the Ontario Jobs and Recovery Committee is convening to prepare for the next phase of Ontario’s Action Plan, which will come into force once COVID-19 is contained. Ontario’s Action Plan includes a number of liquidity measures to create an impact on consumers and businesses such as:
- Revising the Canadian Mortgage Stress Test for both insured and uninsured mortgages
- Introducing 30-year amortizations for insured mortgages
- Transferring mortgage tenancy to the date of occupancy for new condominiums
- Eliminating security deposits for Ontario Land Transfer Tax on affiliated transfers, and
- Freezing municipal increasing to Property Tax Reassessment and development charges
Providing Economic Stimulus
Another important aspect of any economic recovery requires the provision of appropriate stimulus to incentivize businesses and consumers. Providing economic stimulus through financial relief to the industry and consumer include the following proposed measures:
- Removing GST and HST from new home purchases and affiliated rebates
- Permitting interest deductions on a current basis as opposed to being capitalized to land inventory
- Suspending or even eliminating the application of certain taxes such as the Ontario Land Transfer Tax, Municipal Land Transfer Tax, HST, and
- Removing GST from construction costs of new rental housing, as well as costs for renovating rental housing
Generating New Job Growth
The third category emphasizes the importance of generating new job growth. The specific liquidity measures required to generate employment opportunities to replace lost jobs while maintaining the current tax rate include:
- Developing an Ontario infrastructure fund to repair and build new roads, bridges, potholes, and schools to create jobs that can benefit the community at large
- Introducing a home renovation tax credit for 2020 and 2021
- Creating a refundable tax credit for expenses related to upgrading buildings in Ontario and for repurposing facilities in Ontario due to COVID-19, and
- Enhancing municipal service delivery efficiencies
The aforementioned measures from the building associations are designed to prevent further liquidity challenges and economic downturn in the residential and commercial construction industry.
BILD represents the home building, land development and professional renovation industry in the GTA. The building and renovation industry provides $34 billion in investment value and employs 270,000 people in the region. For more information on the proposed measures and to read the full report please click here.