Good morning, Mr. Chair.
My name is Wayne Morsky. I'm the chairman of the Canadian Construction Association, or CCA, the national association representing the non-residential construction sector in Canada. This is a volunteer position. In my other life I'm the president and CEO of Morsky Group of Companies, a family-run business based in Saskatchewan, which has been active in road building and heavy construction for the past 60 years.
The CCA represents more than 16,000 members working in every region of the country and in every aspect of construction, including industrial, commercial, institutional, as well as road, sewer, and water--essentially every type of construction except your standard residential home. But I'm here today in my capacity as chairman of CCA.
To begin, I would like to caution against moving too aggressively to reduce the deficit. Our members witnessed firsthand the devastating impact previous deficit reduction efforts had on our nation's infrastructure, and we recommend Parliament take a more balanced approach. There is no point in paying off your mortgage if you cannot afford to fix the leak in your roof. We appreciate that Canadians are concerned about the growing deficits, but they are equally concerned about the crumbling infrastructure. Even after the investments of the past several years, there are still billions more required to modernize our aging infrastructure. Ultimately, investments in infrastructure must be seen for what they are: critical investments to improve productivity, and not just another line item on a federal budget.
Funding remains a primary concern to CCA members, particularly at the municipal level. According to the Federation of Canadian Municipalities, local governments collect just 8ยข of every tax dollar of revenue raised, but are responsible for more than 55% of the core public infrastructure assets in Canada. As such, no one should be surprised that the most reasonable estimates still peg our national infrastructure deficit at well over $100 billion, and that does not include the billions more that will be needed to comply with the recent federal water regulations over the coming decade.
This challenge requires a coordinated national approach. As a first step, governments must quantify the need, which is why we recommend the council of the federation undertake the appropriate research and development of a long-term financial plan to fairly cost-share the investments required to renew and maintain our core public infrastructure. To that end we believe that new revenue-sharing mechanisms are required between governments.
As an interim step, the federal government should make permanent the GST rebate for municipal purchases, as well as increased transfers under the federal gas tax program from $2 billion to $5 billion annually. Such immediate changes will not only increase the fiscal capacity of municipal governments but provide them with the program certainty they require to make long-term infrastructure investment decisions.
CCA members are also very concerned about labour supply. The construction industry will need 395,000 new workers over the next seven years to keep pace with retirements and demand. Unfortunately, college infrastructure simply cannot meet the growing demand, despite the investment made under the knowledge infrastructure program over the past two years. Many programs still have admission wait lists of more than 18 months, and when apprentices graduate they often cannot find employment because most small construction businesses cannot afford to absorb the costs associated with apprenticeship training. To overcome the college infrastructure crisis, CCA members recommend that the knowledge infrastructure program be funded at $1 billion annually over the life of the Building Canada plan to 2014.
Finally, CCA members feel that the federal government can introduce a number of measures to enhance Canadian competitiveness and improve our environment. The first is to adjust the one-time limited base capital cost allowance rates for heavy equipment purchases over the next few years. New and more expensive T4 engine technologies are being introduced next year. These technologies offer dramatic reductions in harmful emissions, but could add 10% to 20% additional cost to equipment. Therefore, to ensure that Canada's heavy equipment operators, such as the construction, mining, oil and gas, and trucking industries, become early adopters, we recommend increasing the CCA rate of classes 10, 16, and 38 to 50% and make purchases depreciable on a straight-line basis.
Our second recommendation is to permit tax deferral of capital gains on the sale of investment properties for a period of one year if the proceeds are reinvested in new property and utilized to pay for energy improvements. This would help reduce the overall emission produced by older buildings and permit these proceeds to be reinvested, encouraging building owners to make energy-wise investments.
With that, Mr. Chairman, I will conclude. I look forward to your questions.