Thank you, Mr. Chair.
My name is David Campbell, and I chair the government relations committee of the Canadian Retail Building Supply Council. The CRBSC is comprised of the five regional and provincial retail building supply associations across Canada. Their names and addresses are all listed in the letter of transmittal that is bound into our submission.
These five associations collectively represent over 2,000 member companies. Last year, total industry sales were an estimated $36 billion, and total employment was provided to some 50,000 Canadians in communities of all sizes and in all parts of Canada. Companies in our industry are typically family-owned and smaller businesses.
I'm also speaking today on behalf of the Canadian Hardware & Housewares Manufacturers Association, which fully endorses our brief's contents. Taken together, our two sponsoring associations represent almost 2,300 companies employing some 75,000 people engaged in all major aspects of the building materials, hardware, housewares, lawn and garden products industries. The two associations include manufacturers, wholesalers, and retailers in their membership.
I can assure you that our submission fully represents the views of CRBSC's members, as obtained in a pre-budget survey carried out during the summer. CRBSC members were asked to assess growth prospects in Canada, for their own province or territory, their industry, and finally their own companies. The consensus was for medium growth both this year and next, although the trend in expectations is definitely downward. The percentage of survey respondents expecting a high growth rate for the balance of this year and in 2007 is declining, while those with low growth expectations are definitely on the rise.
The housing market is important to our members. Our brief, filed with the standing committee in early September, reported August predictions from Canada Mortgage and Housing that total housing starts will likely increase slightly this year before declining in 2007. CMHC believes that both starts and MLS sales will both be down for next year. Canada's economic performance over the past seven years has been enhanced by a buoyant housing market, measured both in terms of starts and MLS activity. If the industry falters next year, as CMHC forecasts, a decidedly negative impact on the economy is predictable.
The standing committee should recognize that a major reason behind the economic slowdown in the United States is the declining housing market in that country. The May 2006 budget stated clearly, ”A slower U.S. economy would have negative implications for the Canadian economy as well.” The standing committee should regard the nations's economic outlook for the next year cautiously. They should also recognize that a buoyant housing market in 2007 would be an important factor in shielding Canadians against steadily growing concern that a U.S. slowdown will almost inevitably pour over into Canada.
Our submission describes cost-effective measures that the standing committee could support to promote a healthy housing market. Again this year, we urge that Canadians be allowed to borrow from their RRSP savings to finance residential retrofits to meet the needs of senior citizens and to undertake residential repairs and renovations. The model for this initiative already exists in the first-time homebuyers program. Its extension to other uses would be low-cost and would provide an important stimulus to the housing market. This is an idea whose time has come, and it deserves the strong support of the standing committee.
The value of both the first-time homebuyers program and the GST-HST new housing rebate have been progressively eroded over time. We recommend that the maximum amount first-time homebuyers can withdraw be increased from $20,000 to $40,000 in the next budget. When I appeared before you last year, I was asked whether we would favour relating the amount of the GST-HST new housing rebate to the new housing price index. I assured you that we would support this approach.
In an uncertain business environment, the importance of economic stimulation increases, thus we urge that the upcoming budget ensure that tax relief take priority over increased spending. We advocate reductions for both the personal and corporate tax rates, as well as a reduction in the small business rate and a higher threshold at which the rates apply.
Finally, while we do not oppose further percentage point reductions in the GST-HST rate, it should not occur at the expense of other tax reduction priorities that we have described.
Thank you for your attention to our presentation. I look forward to discussing any points we have raised during the question and answer period.