Finance Committee on May 25th, 2026

[Tim Ross]

Be aware of projects that have funding that's conditional upon delivering a community space or a community amenity that's time-limited. We're still waiting for the housing funding to fall into place.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Ross. We're going to have to end it there.

[Danielle Martin, Liberal, University—Rosedale, ON]

Thank you.

[The Chair, Liberal, Karina Gould]

Mr. Garon, you have the floor for six minutes.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Madam Chair.

I'd like to thank all the witnesses for being here with us.

Mr. Lancastle, your association recently hailed the Team Canada Strong workforce training initiative, which was announced in the economic update. However, in Quebec, Minister Jean Boulet expressed concern that this initiative encroached on Quebec's jurisdiction because Quebec has had an agreement with Ottawa since 1997 that gives it full jurisdiction over workforce training.

As such, I was wondering if you would be in favour of Quebec getting its share of the funding and continuing to take charge of training with existing industry groups. That way, there would be no additional bureaucracy and no duplication. Plus, with the market being what it is these days, it would ensure that training initiatives are rolled out quickly.

[Ken Lancastle]

I will answer in English, if I may.

Thank you very much for the question.

I can't speak to the specific policy. As an association, we're hearing from our members from across the country that the more we have these conversations around the skilled trades, the better things are going to be for our industry and building that workforce capacity. There are a lot of intricacies in terms of the policies that still need to be developed alongside industry and governments at all levels.

[Jean-Denis Garon, Bloc, Mirabel, QC]

I'm going to interrupt you. It's okay if you don't have the answer.

The point of the question is that Quebec is a special province, because it received full jurisdiction over this matter in 1997. That's why it might be appropriate to consider the need to transfer the funding to the Government of Quebec.

I have another question for you about the tax credits you suggested.

You said that some construction workers might not accept new jobs or work on new construction sites because their additional earnings would be taxed at the highest marginal rate. You recommended a targeted tax credit, but such a credit wouldn't be based on the highest marginal rate, so it seems to me that the solution you're proposing would fail to address the problem you're raising from a tax perspective.

Why suggest a tax credit that would probably be granted based on the lowest tax bracket rather than the highest marginal rate?

[Ken Lancastle]

With respect to the tax credit, it's important to understand that in terms of our thinking, the approach was never meant to alter any payroll systems. It was meant to be as straightforward as possible for the CRA to implement. It doesn't alter labour standards or collective agreements.

It's a flat, per-hour credit depending on hours worked. A full-time year is considered to be 1,500 to 2,000 hours, from the CRA's perspective. The credit is applied to the hours worked above and beyond that 2,000 hours. It's not meant to alter any existing CBAs or labour agreements.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you very much.

Mr. Ross, we know that the real estate market has seen significant increases in construction costs, rents and so on in recent years. The market got out of hand. There was high demand and low supply. We are aware of the problem, and all the parties are proposing solutions to address it. Demand is greater than supply. I think we all recognize that.

We're often told that it takes a certain proportion of non-market housing to maintain a degree of affordability. Co-op housing is a type of private sector supply. They're private housing units. The difference is that they're non-market and less susceptible to speculation.

Ultimately, what proportion of non-market housing, such as co-op housing, should there be in, say, Quebec, to ease pressure on the housing market and have a tangible impact on rent prices?

[Tim Ross]

Thank you for the question.

According to a number of studies, 20% of the housing supply should be non-market to regulate housing prices across Canada.

There's a need to develop at least 20% of new homes as non-market, community-based, co-op and affordable housing.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you.

You talked about two things. One was that rental assistance should be renewed, and another was that the co‑operatives didn't have enough money to be able to repair and maintain buildings.

Do I understand correctly that, if rental assistance isn't renewed, co-operatives won't be able to set rents high enough to build a contingency fund and do maintenance? Also, if it's not renewed, you'll be back here at some point to ask for money to maintain these buildings. At the end of the day, if rental assistance isn't renewed, the taxpayer will pay twice.

Is that analysis accurate?

[Tim Ross]

It's true that ongoing rental assistance provided by the federal program increases the ability of co-ops to access commercial financing for their renewal.

However, it is very important to indicate that there are still long-standing and larger capital repair backlogs across the entire non-market housing portfolio due to the policy and programmatic construction of federal and provincial programs. Even if we can increase the revenue capacity of co-operatives, there are still sometimes capital gaps that need to be closed. That's where that more targeted renovation and renewal funding can make a big difference in bringing them into a good state of repair for future generations.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Garon.

We will continue now with Mr. Kelly for five minutes, please.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Thank you, Chair.

I'd like to put my first question to Mr. Lancastle and ask for a little more detail.

Could you supply some more information about your fourth recommendation about holdbacks and prompt payment? Were you referring to projects that are federally funded? Were you also talking about the entire construction industry? I know there's variation among provinces. Could you maybe unpack some of the details about the holdback system?

[Ken Lancastle]

Certainly. With most construction contracts, the law of the place of the work will apply to the construction contract. In a federal context, any federally procured construction project is governed by the Federal Prompt Payment for Construction Work Act. That's the prompt payment legislation that applies on federal projects. In each province, the building or construction act or the lien legislation will typically govern those holdbacks and those holdback releases.

Ontario just conducted a review of the Ontario Construction Act, which was by and large the precursor to the federal prompt payment legislation. In that review, they've now implemented that annual release of holdbacks on multi-year projects.

Again, typically a holdback will be about 10% of the construction contract that is held in trust until the substantial completion of the project. The challenge that the industry runs into, and particularly trade contractors and their supply chain, is that 10% could be millions of dollars sitting there that could be reinvested into either newer projects or new tools and technologies. By implementing that annual release of holdbacks on multi-year projects, we're just freeing up capital within the supply chain.

The owner still has all the lien mechanisms in place as far as the contract is concerned. There's no additional risk to the owner. It just frees up the capital.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Okay.

If the project is financed by market lenders, banks or any other lender, they will have a say on the holdback as well. They would build that into the deal. Is there a difference or something specific to federally procured projects that you want to make recommendations about for this committee?

[Ken Lancastle]

There's no specific difference outside of the fact that we're seeing the leadership happening at some provincial levels on this particular issue. We feel as though if the federal legislation could meet those standards on the prompt payment legislation, it would help to demonstrate across the country some of that leadership on this particular issue.

As I said, Ontario just recently did their review of the Ontario Construction Act. Other provinces are either actively engaged in their own prompt payment regimes or looking at prompt payment legislation. Providing that leadership from the federal level, especially given the number of large federal projects that we anticipate in the years ahead, helps again to free up that capital.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

You're recommending that the federal government adopt the system that Ontario has just undertaken.

[Ken Lancastle]

That's right.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Okay. Thank you.

I'll switch now to Habitat for Humanity.

In your opening remarks, you talked about affordability measures. I think you were talking about some of them in the context of the cost for your organization to build. Do you have anything else that you might want to add about the affordability measures for the end-user of the home?

We've seen a tremendous increase in the price of housing and the price of rental housing. As Canadians increasingly can't afford the rent and can't afford to buy a home, they become driven into non-market housing. They can't afford market housing.

What are some affordability concerns you see that contribute to the high cost of building—of construction—as well as the high costs for the actual consumer, who needs to be able to afford a roof over their head as well as their other necessities?

[The Chair, Liberal, Karina Gould]

You have 30 seconds.

[Alana Lavoie]

I can do it.

Thank you for the question. I appreciate it.

Obviously, our costs as a provider—costs that any other builder of housing is facing right now—are increased construction costs, the challenges around labour costs, which have been highlighted by the person beside me here, the materials and supply chain disruptions and the lending costs as well. The whole suite for how we get things built has increased.

Obviously, as a non-market builder, that has implications. As a private market builder, that would have implications. Also, then, for our families, the prices are going up. Again, the cost of borrowing to buy a home has gone up for them, but incomes frankly have not kept up at the same pace.

[The Chair, Liberal, Karina Gould]

Thank you, Ms. Lavoie.

Thank you, Mr. Kelly.

Mr. Lavoie, you have the floor for five minutes.

[Steeve Lavoie, Liberal, Beauport—Limoilou, QC]

Thank you, Madam Chair.

Thank you to the witnesses for being here.

Housing is such an important issue. I got into politics a year ago, and this really is the issue people talk about the most, week after week, in my riding, Beauport—Limoilou, which is in Quebec City. I'm glad you're here today to discuss it.

Mr. Ross, you talked a lot about predictability. That's the word I've heard the most often in every committee over the past year, especially when we're talking about finance and trade.

Build Canada Homes was launched a little over a year ago, and we're already seeing announcements about things like low-cost loans, long-term financing and a bigger housing supply, among other things. There are several things in the economic update.

Do these initiatives address the needs you listed a little earlier, and if so, how?

Ms. Lavoie can add her comments after your response.