New home builders say budget will support housing stability

OTTAWA, March 29, 2012 /CNW/ - The Canadian Home Builders' Association (CHBA) today congratulated Finance Minister Jim Flaherty for a budget that supports stability in housing markets and sets out a strategic approach to investment in Canada's economic competitiveness.

The budget points out that the home building industry plays a significant role in the economy and the well-being of Canadians. Thanks in part to federal policy, the industry creates hundreds of thousands of jobs and more than $100 billion in economic activity annually.

"This is a practical budget that sets the stage for future economic renewal, while delivering worthwhile measures today," said CHBA President Ron Olson of Saskatoon. "We're pleased that Minister Flaherty resisted calls to tighten amortization and down payment rules. This type of intervention would have prevented thousands of first-time buyers pursuing their dream of homeownership. Market stability is essential, and more regulation could threaten every Canadian who owns a home."

Mr. Olson applauded the budget plans for immigration reform and training for skilled jobs. "We have urged the government to address the growing shortage of skilled people required to build and renovate homes. We're pleased that the budget tackles this issue."

The commitment to support training for skilled people is far-sighted. It will help young people to take up careers and participate fully in Canada's economic renewal, Mr. Olson said.

He commended the government for its actions to direct federal research and development investments towards areas of innovation and commercial application.  The CHBA has worked closely with the federal government on applying research to new homes, making Canada a world leader in energy efficiency.  The recently announced next generation of the R-2000 Standard, ENERGY STAR for Homes and the new EnerGuide Rating System are all examples of collaboration between the industry and the federal government to bring the benefits of research to home owners.

"There is much more to be accomplished, particularly in relation to improving the environmental performance of existing homes," he said.

While welcoming the government's commitment to pension reform, Mr. Olson noted that many Canadians have seen their retirement savings eroded, some drastically, through no fault of their own. As a result, their housing choices for retirement have been jeopardized.  "We support plans to accelerate enhanced pension options."

The federal government's commitment to work with the provinces towards a strategic, long-term infrastructure plan is very important, Mr. Olson said. Federal leadership and initiative is encouraging.  At present, many municipalities are financing community infrastructure by transferring the costs into the mortgages of new home buyers, amounting to more than $5 billion a year. "This is not only unfair, but irresponsible."

While low interest rates mean mortgages have become cheaper, escalating government-imposed costs continue to push up the price of a new home. "In some communities single-family homes are becoming the exclusive domain of upper income earners. Yet research shows a strong majority still aspires to owning a single-family home, particularly young families just starting out."

"It will be critical to ensure that federal investment actually improves housing affordability and choice, as one of its objectives.  It's an opportunity to restore fiscal integrity at the municipal level and fairness for younger generations."

The budget passed up an opportunity to crack down on the underground economy, Mr. Olson said. "Illegal contracting creates problems for consumers, costs jobs and income, undermines our efforts to support a professional industry and costs governments billions of dollars annually in lost revenue. The government must work with us more aggressively on this front."

The CHBA President said he looked forward to the government building on the measures outlined in the budget for regulatory reform.  Red tape and costs are imposed on housing in a silo-like fashion by all levels of government. "We need to get rid of the territorial ambitions and insularity of government departments, and eliminate those regulations that have unintended consequences and increase housing costs unnecessarily. We welcome federal leadership to date on regulatory reform."

Mr. Olson expressed regret that the federal government has not addressed measures to restore fairness in the application of the GST to new homes.  "While we didn't expect housing tax measures in this budget," he said, "the GST treatment of new homes and home renovations is long overdue and must be addressed."

He said changing the GST new home buyer rebate thresholds - never adjusted since the tax was introduced in 1991 - and implementing a permanent 2.5 per cent home renovation tax rebate "are the single most important steps that the government could take to protect housing affordability and choice."

The Canadian Home Builders' Association (CHBA) is the national voice of the residential construction industry, representing more than 8,000 member firms across the country. Membership comprises new home builders, renovators, developers, trade contractors, building material manufacturers and suppliers, lenders and other professionals in the housing sector.

John Kenward
[email protected]
613.230.3060