Thank you, Mr. Chairman, for inviting us to be here today.
I am Victor Fiume, president of the Canadian Home Builders' Association, and I have with me here today Mr. Vince Laberge, first vice-president. Both Vince and I are new home builders and renovators. My company operates in Oshawa, Ontario, while Vince is based in Edmonton, Alberta.
Let me begin my remarks with a short summary of CHBA's views on market conditions going forward. The last year has certainly shown that our industry contributes significantly to Canada's economic well-being. Looking ahead, we are entering a very uncertain period for our industry. This certainly is reflected in the wide range of new home starts forecast by Canada Mortgage and Housing Corporation of between 146,900 and 210,500 in 2011, with a point forecast of 176,900 starts. At a recent meeting of CHBA's economic research committee, builders estimated there would be 165,000 starts next year, which serves to underline the concerns we have going forward.
While we expected a slowing of the housing activity and view CMHC's point forecast for 2011 as a healthy housing market, we are very concerned about the uncertainty surrounding this forecast. As the Governor of the Bank of Canada has observed, there is the potential for a more pronounced correction.
We cannot be complacent about our industry's performance going forward and its ability to continue to contribute to the economic recovery. A marked downturn in housing activity will have serious ramifications for the economy. It should be noted that our industry's working capital and reserves were seriously depleted last year, and we remain in a weakened state.
On the employment front, while employment levels have increased dramatically and the number of jobs now exceeds pre-recession levels, the jobs recovery has been uneven. Specifically, we are not seeing a recovery in employment for younger workers in the 15-year to 24-year cohort. These are tomorrow's first-time homebuyers, and they continue to face very challenging job prospects, which will impact our industry.
With respect to house prices, a major element in the price increases is the costs imposed by governments through taxes, fees, levies, and other development-related charges. Over time, reduced housing affordability will inevitably lead to lower housing activity and reduced job creation.
Now let me turn to the recommendations contained in the CHBA's pre-budget submission. The CHBA has called upon the federal government to introduce a single threshold, full rebate treatment of GST on new home purchases. In 1991 the full rebate threshold was set at $350,000, with an upper cut-off point of $450,000. At that time the government made a commitment to review these limits over time so they would reflect changes in economic conditions and housing markets. To date this has not been done. As a result, in most urban markets, few new homebuyers are eligible for a full or even partial GST rebate on their new home purchase. Lack of action by the government on this issue continues to undermine housing affordability.
In addition to the need for action on how the GST is applied to new homes, the CHBA has also called upon the federal government to introduce a permanent 2.5% home renovation GST rebate. This measure would return the effective rate of GST on home renovation expenditures to the pre-GST level, restoring fairness to how home renovations are taxed by the federal government.
We saw that Canadians reacted with enthusiasm to the home renovations tax credit. As a result, they demanded proper paperwork from their renovation contractors, seriously hampering the activities of cash operators who rely on undocumented transactions. Properly configured, a permanent 2.5% home renovation GST rebate would build on this experience by supporting the legitimate taxpaying contractor and increasing the government's tax revenues.
The federal government must take firmer and more effective action to combat the underground cash economy. The current contract payment reporting system simply doesn't address this problem--something even the CRA has noted. The CHBA has called on the government to develop more effective measures that directly target cash operators. For example, all businesses, regardless of their annual sales, should be required to register for a business number. The continued growth of the underground cash economy is a threat to legitimate businesses, consumers, and the integrity of our tax system.
I'll talk, in closing, on the next generation of the federal ecoENERGY program. This program was a great success. Over 600,000 homeowners received home energy evaluations, and the majority of them have followed up by carrying out energy-efficient improvements. That amounts to one in twenty households in Canada. We believe it is important to build on this momentum to both improve the performance of Canada's existing housing stock and to address the government's broader environmental goals. The CHBA hopes the next federal budget will contain the next generation of this important initiative.
Thank you.