Mr. Chair, the Canadian Construction Association would like to thank you for the opportunity to present here today.
Our organization represents the non-residential sector of the construction industry, so we build everything except single-family dwellings. We build Canada's infrastructure.
Our industry employs close to 1.3 million Canadians. We're one of the largest, if not the largest, industrial employers in the country. One out of every 16 working Canadians earns a living in the construction industry. Construction accounts for about 6% of Canada’s GDP, amounting to more than $150 billion worth of economic activity annually.
About 90% to 95% of the construction firms active in the construction industry are small businesses by anybody's definition. The vast majority of these businesses are Canadian-owned and family businesses.
We have what amounts to a perfect storm challenging our industry. It has to do with labour supply and skills supply. There are two major factors. First, we have unprecedented high demand for construction services, and this is projected to go on for a full decade if not two decades. The Global Construction 2020 report published in March 2011 by Oxford Economics predicts that Canada’s construction market will be the fifth largest in the world by 2020, behind only China, the U.S., India, and Japan. And there are some economists who believe we are going to surpass Japan.
To give you an idea of what that means in output, by 2013 total construction investment in Canada will likely surpass $300 billion, which is double 2004's total in less than 10 years. Projects are becoming larger and more complex. Because of the high demand coming from the resource sector, there is more work in remote areas, where there isn't always the infrastructure to support that kind of development.
To give you some idea of what I'm talking about, the magazine ReNew Canada released its 100 top infrastructure projects in Canada. For the first time, the top 30 of those 100 projects were individually valued at $1 billion or more. The top 61 of those infrastructure projects are valued at over $500,000.
The other part of the perfect storm is what's happening with our demographics. We have an aging workforce. Like most industries in Canada, we're trying to recruit from an ever-shrinking labour pool due to Canada's low fertility rate. Canada's fertility rate is about 1.58, and 2.1 is what the international economists say you need to replace your population on an ongoing basis. Canada's at 1.58; the United States is at 2.06, almost at replacement; and Mexico's at 2.3.
Last year was the first year that the baby boomers started turning 65. It just about threw me off my chair to learn that for the next decade more than 1,000 Canadians are expected to retire or reach retirement age every day for the next 10 years. The equivalent stat in the United States is 10,000 people a day.
The Construction Sector Council, in their latest labour market information report, says that our industry is going to need to attract some 319,000 new workers by 2020 just to keep up with demand and to replace those who are going to retire. It projects that about 163,000 of that 319,000 we can get domestically. Domestically, in the trades they're tracking, we'll find some coming through the apprenticeship system, some coming through the training system, and some from immigration. But the other 156,000 are going to have to come from outside the industry or outside Canada.
Now, this is not an overnight problem. We've been aware that we were facing this tidal wave for some 10 years or so, and we have taken many measures, primarily on a local, regional, and provincial basis, on a number of fronts, to try to attract more people from under-represented groups in our industry: women, first nations, and aboriginal people. Youth has been a huge focus of our marketing in that area.
Labour mobility is another aspect that we felt had to be addressed by looking at apprenticeships and basically the ability to try to provide more incentives to have people go to where the jobs are. Obviously, immigration is a key part of that. So there is no one magic bullet; there is no one magic pill here. As an industry, we focused on four or five different growth areas as a means to try to increase and enhance our future labour pool.
Now, we get to the question of the day: how can government assist or help in that area? Frankly, to a great degree, this committee has the answers. Your very comprehensive report issued in April 2008 called “Employability in Canada: Preparing for the Future” contained a number of excellent recommendations. In fact, many of those recommendations have since been put into place by governments. We would applaud a number of the measures that were recognized in that report.
I know I'm getting close to my time, so I'm going to wrap up, but I'll give you some quick examples.
One of them is providing incentives to have people who are either on EI or simply unemployed go from one region to another where the work is. One of the things that our industry has been calling for, and, indeed, this committee recommended, was to provide either some tax incentives through the Income Tax Act or some support for relocation expenses through the EI system for workers relocating on a temporary basis.
And as I said earlier, a lot of projects that we will be doing in the future in the resource sector are going to be in very remote areas, and we're going to need a workforce for a temporary time in that area. Unfortunately, right now there is not a support network to limit or mitigate the expenses incurred by workers going into areas on a temporary basis, when they still have a principal residence to maintain at home. So that's one area where we think there could be some assistance.
The second one is apprenticeship, which I heard being discussed earlier today. The apprenticeship job creation tax credit is a great initiative, as is the incentive grant. Unfortunately, the apprenticeship job creation tax credit, as recognized by the earlier report by this committee, is restricted to Red Seal trades. Moreover, it has been gutted by Canada Revenue Agency, because it made a ruling almost as soon as this initiative came out that said that if you take the tax credit as an employer, you've got to add it back into taxable income the subsequent year. I had a number of contractor members who were absolutely elated when it was first announced, who indeed engaged a number of first- and second-year apprentices, which the tax credit addresses, only to find out that it wasn't the tax incentive they thought it was. That's truly unfortunate because I think it was a good step in the right direction.
On the immigration front, a number of good announcements and initiatives have been made or put into place recently, and there's probably some more work we can do on that area.
Mr. Chair, I think I'm going to stop there and allow some of the further discussion to come up during the questioning, but I will also say that we certainly supported the work of the committee back in 2008 and a number of the recommendations in your report of that year. We would certainly encourage your resurrecting some of the recommendations that have not been acted on.