Thank you very much for having me today. I really appreciate it.
As you said, I’m president of the Canadian Construction Association. I’m here today to represent our 20,000 member firms from across Canada. These are general, trade and civil contractors and suppliers and other professionals working in, or with, Canada’s institutional, commercial and industrial construction industry.
On behalf of our members, thank you so much. We do appreciate all the steps that have been taken to date by Parliament to help Canadians and businesses in this crisis.
Since the pandemic hit Canada, the industry has really come together to do its part to protect its workers, their families and their communities. Safety has been and remains our number one priority.
We developed a national health protocol in collaboration with our members, PSPC and Health Canada, and we have created links and resources on our website to promote the provincial standardized health and safety protocols to help minimize the spread of coronavirus so that work could be continued safely. These stringent protocols have been put in place by our members from across Canada, and at times these practices were changing daily. We're very proud of our role as essential service providers.
At the same time, our local companies and associations have also been supporting their communities and health care workers with donations of PPE, free hot lunches, funding for urgent care clinics, food drives—you name it. We're very proud of the work that they're doing for their communities.
This culture around caring for our communities and giving back is based on the foundation of the small and medium-sized family-run businesses that make up 70% of our industry. It is these businesses that are still struggling, despite some of the emergency measures implemented by the federal government. Not only are there unbudgeted costs for sanitation and leasing equipment over a longer period of time, but there are also significant productivity costs as firms implement physical distancing. There are staffing shortages, and of course extra time is spent in cleaning.
The industry is eager to step up and support the federal government in its efforts, but for this we do need these firms in the supply chain to survive. This means that our firms need access to working capital now and during the recovery phase. That is why we've asked for, and are urgently seeking, cost relief on current federal projects, in the form of an emergency COVID-19 cost reimbursement program. They need this support now, not at the end of the projects, which could take months or even years to settle.
CCA is recommending that these eligible costs be reimbursed by up to 5% of the contract value as a starting point, subject to the program being adjusted as the duration and full impact of COVID-19 becomes clearer over time. We believe that extensions of time and fair compensation for reasonable costs incurred for federal construction projects, supported by sufficient documentation from the contractor, would alleviate some of the financial pressure on construction businesses.
We have briefed you in the past on issues of payment in the chain and we thank you for your support on prompt payment. You are aware of the timelines from when a project has started to when the general trades and subtrades get paid, and as you know, this can take several months. When we combine the slowdown that started in March with the increased costs, the balance sheets of the mom-and-pop firms are likely not to be in good shape come August and September. They may not be able to afford to complete the projects they've already committed to and also have the working capital necessary to finance the start-up of new projects. They cannot incur further delays of payment due to potential litigation because of contract issues related to COVID-19. This access to working capital now and as we move to recovery must be considered with any stimulus spending on infrastructure.
Speaking to the recovery phase, we are starting to see glimmers of hope in flattening the curve, and this is certainly thanks to the leadership of all levels of government and to Canadians.
As you know, the industry employs 1.5 million Canadians and contributes about 7% of Canada's GDP. Investing in infrastructure is a proven economic recovery tool that also yields social benefits, creates jobs, provides training for apprentices and helps to build and maintain important public services. There are hundreds of critical projects that are already in progress or need to be maintained. Many of these are essential to the well-being of our citizens and support the delivery of essential services like water, energy, transportation and health care. Again, it's the smaller firms—the manufacturers, the suppliers, the trades—that finance the materials, fabrication and labour as projects ramp up.
Moving into recovery, we believe that extended federal government backstopping may be required over a longer period of time.
In any economic stimulus, we believe some principles should be followed hand in hand with any liquidity support. One is that federal departments need to continue to work together with provinces and municipalities to eliminate red tape and make the project money flow as quickly as possible to get people back to work. Another is to look for balance across sectors and across the regions of Canada, as well as in the size of firms, so that we don't have just one or two $5-billion projects but instead projects for people to participate in at all levels over an 18-month period. Another is to have clear and consistent rules for COVID-19 and for access to PPE that does not detract from front-line workers. Finally, as I said, we need flexibility in dealing with COVID-19 federal project costs and delays and the kinds of projects that would qualify under the investing in Canada plan.
A cost reimbursement program for the current federal programs today, combined with a well-considered recovery plan for the future, will ensure the construction industry can play its full role in supporting a strong economic recovery. It will allow us to absorb some of the displaced workers from other industries, get them to work and provide well-paying jobs for millions of Canadians already in the industry.
An investment in infrastructure is an investment in Canada and our communities, and we're willing and able to partner with the government.
Thank you for the opportunity to address the committee on these important issues. I would be happy to answer any further questions on behalf of the Canadian Construction Association.