Thank you, Mr. Chair.
Thank you, committee members, for providing the Canadian Construction Association this opportunity to present before you.
Our association represents the non-residential side of the construction industry. I believe you heard this morning or sometime this afternoon from the Canadian Home Builders. They are basically our sister organization. We build the infrastructure, the industrial facilities, and the commercial government buildings across the country. We essentially build everything that they don't.
The focus of my presentation today will be on areas of government policy that we believe will make Canada more globally competitive and an attractive destination for investment for years to come. If indeed we are at the dawn of the fourth industrial revolution, as many economists now believe, the process of adaptation by both private industry and governments alike must begin immediately.
In essence, the new industrial revolution, built on digital connectivity, robotics, and big data, will significantly change the traditional definitions of work forever. Most of us are aware of the impact this revolution has already had on manufacturing. The next phase of it will target primarily services, the service economy, which is where the bulk of Canadians are now employed.
The shift is already under way in many parts of the world, but it's still in its infancy in Canada. The ramifications for government could be significant. Skilled workers, as well as capital, will become more mobile, making tax policy and quality-of-life conditions critical to their retention. A modern and efficient system of infrastructure—I bet you're wondering how I'd get that in—is one of the greatest contributors to quality of life, which is why we're so pleased with the government's commitment to essentially double the annual investment in infrastructure.
Furthermore, it's also an effective way of stimulating the economy, which is critically important right now. A recent study by the Centre for Spatial Economics concluded that, in the short term, GDP rises $1.43 for every dollar invested, 9.4 jobs are generated per every million dollars invested, and the return for government is about 44¢ for every dollar invested. From our perspective, that's a win-win, not only for Canadians and taxpayers but for governments alike.
Our recommendation to the committee would be to ensure that the government follows through with its platform commitment on infrastructure; ensure that the additional funding is available for the 2016 construction season, which is critical; ensure that the application process is simple, straightforward, and not loaded with a lot of additional red tape that will delay project approvals; and finally, work with the provinces and municipalities to ensure there's no confusion around the application process.
CCA members are also very concerned about the growth of “dead money”, as Mark Carney described it. I think this was raised earlier. Many businesses are holding off on making important investment decisions over concerns regarding the health of the global economy. That should come as no surprise, given the number of times businesses have heard economists talk about “green shoots” only to be later disappointed when they saw very little economic growth.
To help pull this money back into the economy, we believe that government should consider a more aggressive use of depreciation rates to help businesses essentially invest in their assets. Such a policy has been beneficial for the manufacturing sector. We saw this with the previous policy that increased depreciation rates to 50% straight-line. We think that has certainly helped manufacturing turn around. Even though the change has been made and now is on a declining balance, we certainly believe that this is something government should consider for other sectors of the economy.
In the United States, depreciation rates are far more generous than they are here in Canada. We believe that this explains some of the productivity gap between our two economies. Simply put, U.S. depreciation policy encourages companies to put more money quickly into turning over their equipment, whereas Canadian policy does not. For example, in the United States, construction equipment can be fully depreciated within six years, while in Canada it would take you about 13 years to get down to about 1%.
Closing the productivity gap is important for Canada's economic future, and the adoption of more aggressive depreciation rates is one way to help us achieve that goal. With this in mind, our second recommendation would be to adjust depreciation rates for mobile equipment purchases to a 50% declining balance, which would bring us in line with the current state, essentially, for fixed machinery and equipment.
But investments in infrastructure and better depreciation rates will only get us so far. We also need to improve our educational and training infrastructure. In this regard, this is where we believe the federal government has some real influence.
We believe the EI system should be looked at to help lead that process. The LMDA and LMA programs need to be steered away from training just for the sake of training, and geared instead to support employer labour force needs. For example our partner association in British Columbia, the B.C. Construction Association, developed a very successful program, funded by EI, to help unemployed workers who were EI ineligible to get into the workforce. Despite the strong record of success—they managed to transition about 15,000 trainees into long-term jobs in the construction industry—funding for the program has been decreased over the past two years by 50%. Clearly this is not the right direction. Government-funded training and retraining must be demand focused and should include private sector delivery partners in not just the educational community.
We applaud the previous government for its efforts in this regard, which brings me to my next recommendation. Build on the efforts of the previous government to reform EI and non-EI supported training programs by ensuring that employers are given a more meaningful and substantive voice, not only in the design but also in the delivery of training programs across Canada.
We believe government should take a look at the EI system to find a better way to support labour mobility. For many unemployed, expanding a job search outside their home labour market is very difficult because finances are tight. CCA supports a proposal that I believe has already been put forward by Canada's Building Trades Unions. I think they are appearing on Thursday and they'll probably expand on this. We would like to see a grant provided to the unemployed to help them offset some of the costs they will incur as a result of looking for work outside their home region. That's not to say they can go off and buy a $10,000 first-class ticket from Halifax to Vancouver. What we're talking about is a minimal amount of money that will help them offset costs that are not going to be reimbursed by any potential employer.