Thank you, Mr. Chair and members of the finance committee, for inviting me to present to you this morning on behalf of the Manitoba Home Builders' Association.
Since 1937, the MHBA has been the voice of Manitoba's residential construction industry. Representing one of Manitoba's largest economic sectors, our membership includes home builders, renovators, land developers, trade contractors, building product and material manufacturers, building suppliers, warranty and insurance providers and related services. All members of the MHBA are also members of the Canadian Home Builders' Association, our industry's national voice on federal issues.
Residential construction directly accounts for over 51,000 jobs in Manitoba—jobs in every single community—and represents $3.4 billion in wages and $6.3 billion in economic activity. In budget 2022, the government stated that Canada will need an additional 3.5 million homes built over the next decade, over and above the 2.3 million the sector would normally build. The CHBA concurs with this assessment. To achieve this goal, there needs to be a doubling of housing starts to about 400,000 units per year nationally. However, housing starts are slowing at a time when they need to be increasing and increasing significantly.
Increased interest rates have impacted our industry and have reduced housing starts in Manitoba, negatively impacting housing supply. Housing starts have declined in Manitoba by 6% year to date to the end of September, according to the CMHC. This trend is the exact opposite of what the federal government is aiming for. It is vital that monetary policy, fiscal policy and mortgage rules and regulations all work together to create stable financial conditions that support more housing supply.
Instead, we currently have government processes and regulations, local government inefficiencies and a lack of capacity all working together to delay projects, slow down development and significantly increase costs. At the same time, labour and construction material costs continue to rise for our members and their customers. Significant government action is needed now to help reverse this trend and will continue to be needed once interest rates return to more normal levels if housing starts are to double.
There are many ways the federal government can help address these issues and help unlock the door to home ownership. Today we would like to focus on four keys areas.
One is to develop policies to assist the well-qualified first-time buyer. To help first-time buyers, we recommend a return to 30-year amortization periods for insured mortgages for new construction only, which would encourage new home construction while not impacting the prices of resale homes. We recommend that the federal government modify the stress test for both insured and uninsured mortgages to reduce the test rate on a declining basis for seven- and 10-year mortgage terms. We recommend that the federal government update and index the thresholds for the GST new housing rebate. The GST new housing rebate thresholds have remained unchanged since the GST was introduced in 1991. House prices have increased dramatically since then, and adjustments are long overdue.
The second area is to address the skilled trades shortage. The construction industry continues to face chronic labour and skills shortages. Manitoba is no exception. We recommend that the government continue all actions to promote careers in skilled trades, support training and provide financial supports to companies and individuals with respect to skilled workers.
Number three is avoiding adding costs through codes and regulations. The government should focus on innovation to bring down costs and scale up use first before regulating policy-driven code changes. We recommend that the government adopt affordability as a core objective of the national building code and all related standards to ensure that we are building better, more efficient homes for the same price or less.
Four is that net-zero ready renovations should qualify for the GST/HST new housing rebate. Renovating a home to a net-zero or net-zero ready level of certified performance should be considered a substantial renovation and qualify for the GST new housing rebate. As such, we recommend that net-zero and net-zero ready renovations qualify for the new housing rebate.
I want to add that I'm glad my counterparts at KAP raised the underused housing tax. This is a significant issue for our members as well. Builders and developers are required to file for each housing unit they own, even though no tax is payable. It costs our members in Manitoba thousands and our members across Canada millions in administrative costs to file for a tax they don't need to pay.
One of our key signature events in Manitoba is our Parade of Homes. It is a showcase unlike any other across Canada, with over 120 new homes on display for new homebuyers to see and visit so they can make their own purchasing decisions based on seeing an actual home. Needless to say, filing for each of those is an added cost.
Thank you for considering our recommendations. On behalf of Manitoba's residential construction industry, we thank you for this opportunity.