Natural Resources Committee on Nov. 6th, 2017

[The Chair, Liberal, James Maloney]

I call the meeting to order.

Good afternoon, everybody. Welcome to our Monday meeting. Thank you for joining us.

We offer apologies to our witnesses. We're starting a bit late. Today is a celebration of the 150th anniversary of the Parliament of Canada, and there were four former prime ministers in the House of Commons. For reasons that aren't clear to everybody, some of the committee members thought it was more important to stay there with them than to come here. Nonetheless, here we are. Richard was here at 3:30 sharp.

We thank the three of you for joining us today. I'm going to dispense with lengthy formal introductions because we're running short on time, but the process is as follows: each of you will be given up to 10 minutes to make your presentation. Following that, there will be a round of questions. You can deliver your remarks or answers in either official language. There are devices available should you need something to be interpreted.

On that note, I will say welcome again.

Mr. Foster, since I'm looking at you, why don't you start us off?

[David Foster, Director of Communications, Canadian Home Builders' Association]

Thank you, Mr. Chair.

The Canadian Home Builders' Association appreciates the opportunity to present to the standing committee with information and perspectives on the evolving and critical role of wood and wood products in our industry and in the homes of Canadians. My comments this afternoon will focus on the overall dimensions of our industry and the role that wood products play in the homes that our members both make and renovate across the country.

I also want to highlight a number of important and innovative trends that may support the increased future use of value-added wood components, including both engineered wood and secondary wood products.

Home building and renovation are obviously an important source of demand for Canada's forest sector and a major end market for a wide range of Canadian-produced wood products. Based on Statistics Canada input-output data, our industry's consumption of forest products amounts to over $8 billion annually, providing a major domestic base for the forest products industry.

The residential home construction industy consists of two primary segments, new home construction and home renovation. In totality, it represents one of the largest industrial sectors of our economy. Last year, our industry generated some $138 billion in economic activity, $67 billion in new construction and $71 billion on the renovation side of things. In 2016, residential construction supported just over one million jobs across Canada, both directly and indirectly, and this employment generated just under $60 billion in wages.

In relation to new homes, we're seeing a significant shift in the product mix that our members are building. Simply put, the traditional Canadian home is changing as our cities become more densely developed and absorb an ever-growing number of Canadians per square kilometre.

In 1996, 60% of all the housing units in Canada were single detached homes. By 2016, single detached homes represented only 32% of all the new homes we built in a year, while about 50% of new homes were apartments of all types, whether condominiums or for rent. The remainder were made up of low-rise multi-family units like townhomes and row homes.

The way we build homes is also evolving and will continue to do so in the coming years. This will have a direct bearing on the products and the materials used in construction, including a wide range of wood-based products. The environmental performance of homes, particularly their energy efficiency, has evolved tremendously over the past few decades. This evolution will continue and in fact accelerate in the years ahead.

A new home built today uses a fraction of the heating energy required in an older home. Half of the homes in Canada today were built before 1985, and that older half of the housing stock uses twice as much energy as the homes built since 1985. As well, a new home built right today here in Ottawa would use 20% or 30% less energy than one built just five years ago.

This trend towards improved energy efficiency is far from over. Based on the policy direction set by government for future building codes, by 2030 all new homes will require an additional improvement of more than 50% in energy performance, reaching “Net Zero Ready” standards.

This is an ambitious goal and one that will challenge our industry. It will also challenge society unless affordable means for reaching these levels of energy efficiency can be found, and as an association we continue to be concerned about affordability for younger Canadians looking to become homeowners.

Changes in how we build homes will impact the role that wood products and other materials play in the construction process. Today a typical 2,400-square-foot single detached home requires about 16,000 board feet of dimensional framing lumber. Its construction also consumes about 14,000 square feet of other wood products, including plywood, oriented strand board, glulam beams, and laminated veneer lumber.

Each new home also requires a range of secondary wood products, including flooring, cabinetry, siding, decking, and millwork. As well, wood components are incorporated into windows and doors.

To put this in value terms, dimensional framing lumber represents only about 14% of the value of all wood products used by our industry. Secondary wood products, including millwork, windows, doors, and prefabricated wood assemblies, represent about 60% of the total value of wood we consume each year. As we look to the future, secondary wood component use is less likely to be impacted by changing codes; however, the structural elements certainly will be affected.

There is a long-standing trend in residential construction towards ever-greater use of value-added engineered structural components. In the future, this may tend to blur the lines between engineered and secondary wood products. We're seeing this happen in some markets, where traditional site-building home builders are switching over to the use of factory-built wall systems, traditionally viewed as a secondary product. It's also reflected in the structure of our association. The two national organizations representing factory-built home builders merged with CHBA last year, creating our new factory-built Modular Construction Council. This simply reflected the increasing integration of building practices across all segments of our industry.

In addition to this trend of increased industrialization, we're seeing engineered wood products leading the way towards new forms of wood construction. Six-storey wood frame buildings are now referenced in the National Building Code and are being constructed in a number of provinces. We're also watching, with great interest, research and demonstration of wood structures of between six and 12 storeys based on innovative technology like cross-laminated timber.

Our industry's interest in such emerging and innovative technologies is very straightforward: we need to provide Canadians with great homes that meet ever-higher performance requirements and consumer expectations. At the same time, housing affordability is a central preoccupation, as it directly impacts the capacity of younger Canadians, new Canadians, and those with young families to become homeowners.

As an association, we feel it's incumbent on all of us, including government, to ensure that more demanding codes don't impact affordability, which means we need to find technologies and techniques to do this at the same cost or less. This is a real challenge.

From our industry's perspective, a key aspect of any new building technology, whether wood-based or not, is its capacity to help us address the affordability challenge. Diminished affordability serves as a growing barrier to home ownership, and we're seeing the effects of this problem. The latest census data, released quite recently, showed that for the first time in our history, Canada's overall home ownership rate has declined, from a peak of 69% in 2011 down to 67.8% in 2016.

Perhaps more significantly, the ownership rate has declined for all age groups under 65, but especially for younger Canadians. As we move forward, knowing that future building codes are going to demand performance that currently means much higher house prices, we're looking at new, innovative technologies and materials to help us preserve and enhance affordability. Innovative wood products can and should be part of this mix. Most importantly, as Canadians, we know how to make this happen.

Over the last 70 years, there has been tremendous collaboration between our industry, the forest products industry, and the federal government to advance the science of home building. This has led to a wide range of innovations, from roof trusses in the 1950s to the 12-storey cross-laminated timber buildings being pioneered today. It has allowed us to build net-zero energy homes and to begin to find ways to reduce the cost premium involved. While we still have a distance to go in getting these costs down far enough, we are on the right path.

We therefore need to see more of this research and development activity, and we need to ensure that it's focused in areas that can enhance both the quality of housing and its affordability. Our association works with Natural Resources Canada, the National Research Council, and Canada Mortgage and Housing Corporation on a wide range of housing-related research. Such collaboration is what gave Canada housing technology like R-2000, which put us at the leading edge internationally, and our voluntary CHBA net-zero home labelling program, which is reasserting our international leadership today.

The homes our industry will build in 2030 must deliver the high levels of comfort, quality, and value that Canadians demand at a price they can afford. They must also contribute to more sustainable and resilient communities that provide housing options for all Canadians. These future homes must also make more efficient use of our natural resources. This is a tall order and a real challenge, but the potential rewards are significant: a stronger residential construction industry; stronger resource industries, including the forest products sector; great homes for Canadians; financial well-being for a new generation of homeowners; and enhanced opportunities to share our innovations and products with the world.

These are outcomes worth working hard to get. Our industry looks forward to partnering with the forest products sector and government to make it happen.

Thank you.

[The Chair, Liberal, James Maloney]

Thank you, Mr. Foster.

Next is Mr. Atkinson, from the BC First Nations Forestry Council.

[Keith Atkinson, Chief Executive Officer, BC First Nations Forestry Council]

Good afternoon.

Can you hear me all right?

[The Chair, Liberal, James Maloney]

Yes.

[Keith Atkinson]

Thank you very much for the invitation to contribute to your hearings regarding the secondary supply chain products in the forest sector in Canada. It is my pleasure to speak to you today on behalf of the BC First Nations Forestry Council. We are a non-profit society here in B.C. supporting 203 first nations communities—approximately 200,000 first nations citizens—in this part of the country.

We also understand your interest to consider more specifically the employment and economic impacts, the environmental aspects of these industries, and the development of energy-efficient technologies. You will hear aspects of all three themes in our presentation to you today.

Our first reaction to this important work is that it is extremely timely, and we are keen to see participation by first nations. The forest sector is moving through tremendous transition, as you know, and we feel that recent efforts towards revitalization and innovation have missed the mark. Instead of innovation, we seem to be on a continued path of liquidating timber resources for primary manufacturing only, and in some cases, in the west here, we are now even seeing a move backwards, towards increased export of raw logs.

With regard to employment and economic impacts, we wish to express to you that the opportunity of aboriginal participation in the forest sector is an urgent opportunity. We are very aware of the changing demographic for the existing forest sector. As you are aware, hopefully, there is a significant aboriginal youth demographic in our communities. Utilizing and maximizing aboriginal people in the forest sector represents a great opportunity to access local labour resources, to bridge socio-economic challenges in first nations communities, and to build political and corporate relationships, including cultural awareness. Tremendous benefits can be gained, now and in the future, from such strategies being implemented by Canada, regional governments, and forest sector partners.

In our efforts to collaborate and work with B.C. and Canada on transitions in the forest sector, including adapting to climate change conditions, we've maintained that the value-added sector or secondary manufacturing is required. Raw resource extraction and primary manufacturing will not provide enough employment and benefit to Canada as the change in the sector unfolds; secondary and value-added manufacturing are going to be required.

First nations communities were very active in prioritizing the mitigation of the mountain pine beetle epidemic that began 15 years ago in B.C. One of the top three priority goals was participation in the new bioenergy or other bioeconomy business that would utilize the dead pine trees. Bioenergy became a buzzword for B.C. and a mitigation strategy for the pine beetle infestation. Although there were some pellet plants and multiple bioenergy proposals and pilots, the full implementation and utilization are yet to be developed.

One area of focus we looked into was bioenergy solutions for the replacement of diesel-generated power. An obvious business model exists to convert over 65 first nations communities in British Columbia from diesel generators to bioenergy plants. However, jurisdictional power supply issues and policies have challenged this type of investment.

An important part of the transition we are facing in the west is that the mid-term and long-term supply of timber resources is diminishing. As a result of well-known long-term timber supply analysis and recent shorter-term climate change impacts, we've known for some time that we must learn to do more with less. The annual harvest levels in British Columbia are expected to drop from 75 million to 55 million cubic metres per year, and we will have significant challenges in that transition as a result of climate change impacts, the pine beetle, and wildfires.

Unfortunately, from our perspective we see an economic and corporate tragedy unfolding in the common situation. Various forest sector components are fighting to hold on to previous economic opportunities and continue to seek increased revenue and new markets for the same primary supply chain products, seeking reduced costs of production, although it is well known that we are at the most expensive part of the timber harvesting cycle in the west as we move from old-growth to second-growth stands.

When it comes to piloting new value-added products or manufacturing, we wish to raise to your attention that we have seen examples of new business being granted support for pilot projects with inadequate environmental standards to ensure health and safety in communities. We are very aware of the opportunities; however, we wish to raise the concern that rigorous environmental frameworks need to be in place for the protection of the environment and communities. Although we believe in and support the development of a value-added forest sector and the development of new and innovative forest products, we wish to emphasize this point.

We can't move too quickly into this space without ensuring.... In our case, as first nations, working towards having our title and rights recognized is important at the local community level. We wish to remind the committee that the rights and title of first nations people are at the forefront of natural resource management decisions and projects in Canada, and that first nations should be priority partners and decision-makers in the process of considering investment in secondary supply chain products.

First nations communities are largely in poverty and continue to have to fight for the recognition of their title and rights, including recognition of pre-existing title rights. With this in mind, I bring to the committee's attention the Supreme Court of Canada decision on the Tsilhqot'in in 2014. This most recent decision has been discussed as a game-changer, in that it has brought clear definition of title as it relates to first nations lands. How it relates to first nations lands is clearly important to a renewed forest sector and the balance between investment in some of these new manufacturing regimes and with first nations.

In addition, the Truth and Reconciliation Commission has recently completed its work and published its calls to action, providing guidance for all in terms of implementing reconciliation. The committee should also be reminded that Canada is now implementing the United Nations Declaration on the Rights of Indigenous Peoples.

These high-level mandates towards reconciliation and your committee's work towards innovation in the forest sector represent tremendous advancement potential for previous federal commitments towards reconciliation, policy transformation, and meaningful transformation of the relationship with Canada's aboriginal peoples. However, after 10 years of commitments to this high-level engagement and participation, and clearly good intentions being described on paper, we are suffering a shortfall on the realization of these goals. We suffer the same risk of all talk and no investment for aboriginal engagement and participation going forward.

As we have previously described, a renewed manufacturing sector or a stimulated value-added sector is almost out of reach for first nations communities due to lack of access to capital and jurisdictional or policy barriers. For those of us who wish to see a renewed forest sector for Canada—and we are certainly part of this group—a forest sector that is inclusive and respectful of aboriginal peoples in Canada is imperative. Strong relationships with first nations can lead to globally certified wood products or other value-added products that make our sector stronger. We want to emphasize the interest in partnership in moving forward in this type of work.

First nations are eager to be part of a new forest sector. It requires investment in these communities for stewardship and planning; operational and management support; targeted workforce programs; access to capital for local investment in the new manufacturing and value-added facilities, including bioenergy; and of course a policy framework that will accommodate this work.

Let's move past denying the title and rights that aboriginal peoples hold, and past the shallow commitments that look nice in reports but have inadequate scale when financial resources are called for. We feel that a strong and healthy relationship with our communities will bring prosperity for all in a renewed forest sector for Canada, so I wanted to share those priority mandates of our organization, our chiefs and leaders in the west, in support of your committee's work moving forward.

Thank you very much.

[The Chair, Liberal, James Maloney]

Thank you very much, Mr. Atkinson.

Now we have Mr. Verreault, from Chantiers Chibougamau.

[Frédéric Verreault, Director, Corporate Affairs and Communication, Chantiers Chibougamau]

Thank you, Mr. Chair.

My thanks also go to the members and the parliamentary secretary for their invitation to appear before the committee. Today, we open the dialogue to fuel your work and your thoughts. I especially look forward to hearing your questions about our activities. I hope my comments will inspire your own work.

Chantiers Chibougamau is a family business that began operations in 1961 in Chibougamau, in northern Quebec. Chibougamau is approximately 700 kilometres north of Montreal, Quebec. Right now, our company operates two main plants, one in Landrienne, near Amos in Abitibi, and the other in Chibougamau, in northern Quebec. In total, Chantiers Chibougamau processes about 8% of Quebec's public forests. We have a major engineering wood production complex that French Professor Pascal Triboulot describes as the world's largest glulam production complex. He has visited almost all existing complexes, and he thinks ours is the one with the largest installed capacity.

In total, almost 900 people work in the company, with about 800 in all the forestry and plant processing operations, and more than 50 in technical development, the development of construction projects, and administration.

We are here to talk about wood processing, wood construction, and the impact on jobs and climate change. In that sense, there are a few things that motivate us on a daily basis.

Here is the first one. Today, beyond the beneficial effect of diversifying our business, softwood continues to form a major part of our revenue—we are still active in the traditional softwood markets. The fact is that diversification allows us to grow. The family business's sales exceed $250 million, which is largely due to the wide range of wood construction products we have developed.

When it comes to strictly solid wood used in the construction of non-residential buildings, such as institutional, commercial or multi-unit buildings using wood, about 150 jobs in our company depend on those activities, which started 15 years ago.

So it is all about energy and environmental performance. A number of key aspects related to those wood construction products must be considered in order to be recognized for their proper value. Of course, our products use a renewable resource. From the outset, this gives us a guarantee of indisputable sustainability and differentiation.

In addition, manufacturing our products requires very little energy. Throughout the assembly process, we consume significantly less energy than we produce for equivalent products and even for equivalent products elsewhere in the world.

Let me give you a concrete example of the importance of wood in buildings, in France or in Europe, for example. In light of the life-cycle analysis of our products from more than seven years ago now, we were surprised to see that our products had a carbon balance that was twice as satisfactory as the equivalent solid wood products and glulam products manufactured in Europe. This is a result of our processing procedures being integrated from the forest to the plant. It is also a result of the use of hydroelectricity and, of course, of very energy-efficient processes to assemble columns that will be a substitute for equivalent columns made out of other materials, such as steel and concrete.

From the forest to the delivery on site, the process uses an incomparable amount of energy. Of course, all of this means significant benefits that contribute to environmentally-friendly buildings. It is also important to point out the intrinsic properties of the materials, such as heat conduction in the energy performance of the buildings. We rarely hear that wood conducts 350 times less energy than steel. Wood conducts 30 times less energy than concrete. As a result, in summer, outdoor heat will be conducted inside the building 350 times less than it is with steel and 30 times less than with concrete, which is a major performance for the energy consumption, but also for the operating costs of the building.

In addition, still on the environmental front, in solid wood constructions, the structure will often remain exposed. Clearly, an exposed structure means savings in finishing materials. Again, we can recognize wood solutions at their proper value for their economic performance, but also for their environmental performance, because the intrinsic reduction in the consumption of materials has a direct impact.

In terms of the market, I talked about jobs. Frankly, the market is stagnant in Canada. We have seen projects emerge one at a time over the past 15 years. We have reached a certain plateau with a certain volume. The volume is there; we have inspiring examples.

For example, in our case alone, we have completed more than 2,000 solid wood construction projects to date, mainly in Quebec and Canada, but also in the United States. We are therefore far from being the exception, the oddity or the extraordinary, and this is what our industry wants to achieve. We want it to become normal for the country to build with wood.

In addition, we have built 125 bridges out of wood, bridges with long spans over forest or public roads.

Some of these solutions allow structures to be delivered before the deadline and under budget. We had that experience during a project with the Stornoway mine in northern Quebec. We delivered the 17 wooden bridge structures several weeks before the deadline and the costs were 10% under budget. Those were the most competitive solutions.

I would now like to talk about government construction.

Once again, I candidly and respectfully submit that government clients for projects are quite rare, both in Quebec, in our province, and across Canada. Still, there are some extremely interesting sources of inspiration.

For example, we at Chantiers Chibougamau provided the structure for the new U.S. defence buildings in Alabama. No one there was at all keen on supporting the Canadian forestry industry; they simply wanted to have the best possible construction that meets the highest current standards and the most ambitious environmental footprint standards. Naturally, all that pointed to our solid wood products made in Chibougamau. So the potential is there.

This year, in the cross-laminated timber construction sector, our company's sales in the U.S. market will be higher than those in the Canadian market. The good news is that it's very good news for Canada's trade balance and for Canada's exports. The other good news, which is actually a challenge, is that we can do much better here in Canada. The use of wood should not be approached as help for the forestry industry; it does not help us. It does not help us at all when we say we want to build with wood to help the forestry industry. The use of wood can be a natural choice, an ambitious choice, a competent choice, a choice made simply with a view to better building.

To that end, let us be inspired by our German friends, who promote wood construction. In Germany, they use 30 times more wood than we do here in Canada in non-residential construction. It is all driven by the ambition to achieve energy efficiency and environmental performance.

We therefore have a multitude of extremely inspiring and compelling examples of what should drive us.

I was talking about energy efficiency. Our product is carbon negative and allows us to deliver carbon-neutral buildings. We have built a few. Developers make that business decision, as with the Arbora project in Montreal: 450 wood condominium units in Griffintown. It is the largest multi-residential solid wood project in the world, and it is done in Montreal. It is a business decision made by developers. They did not want to help the forestry industry in Quebec and Canada; they made a business decision that results in such a conclusive result.

To sum up, we want the product to be considered for its benefits, its performance, its competitiveness and its profitability. Let's make sure that using solid wood for modern construction is not something extraordinary or special, but something normal in this country.

Thank you.

[The Chair, Liberal, James Maloney]

Thank you very much.

Go ahead, Mr. Harvey.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Thank you, Mr. Chair.

I'll start my questioning with you, Mr. Verreault.

While you were speaking, I was listening, but I was also on your website looking at some of your products. I see you make pre-engineered laminated beams for schools and bridges, Nordic joists, and a bunch of those pre-engineered products. Coming from a forest town, I recognize some of those products.

You spoke quite a bit in your presentation about the low-carbon footprint and the value proposition that your company offers to the environment in terms of a reduced cost of energy because of proximity to hydroelectric generation and also in terms of the general overall carbon footprint related to your product. How do you feel that proposition is playing, overall, in North America? Do you feel that is something that is going to propel the company forward at a higher rate of growth than other companies in the next 10 years? If it's not, what are some of the inhibiting factors?

[Frédéric Verreault]

I'll continue to respond in French, just to make sure the translators aren't going wild with me switching between French and English.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

You can speak in French.

[Frédéric Verreault]

So far, there is very little or no interest in low-carbon products in Canada. Strangely, the interest in these products is on the American side. People call us about the availability of our products because they want a more energy-efficient and environmentally-friendly solution. There are also signs of interest in China. We have already conducted two missions to that country, and the Chinese have come to our plant in Chibougamau. However, there is no such interest in Canada.

Some factors may explain this lack of interest or curiosity.

The first factor is the competitiveness of the products available. There is a sort of contradiction. There has been a lot of talk about wood construction to help the Canadian forestry industry, which is quite traditional. However, if I am helping someone by buying a product from him, clearly, I expect to pay more for it. Let me draw the following parallel: if I buy a chocolate bar at the local store and pay $1, I will have a certain amount of chocolate. However, if my neighbour is selling chocolate bars to raise funds for his swim club, I will not pay $1, but $2, since I'm helping him. The whole rhetoric of helping the Canadian forestry industry is sending the message to the market that it must be more expensive since it is being helped. However, that is not the case.

The first factor is therefore competitiveness. We have no complex about it and we are not asking for any special treatment for the cost of our products.

The second factor is simplicity and speed. If there are regulatory barriers or very cumbersome administrative processes, clearly, developers and professionals will be discouraged from engaging in the exercise. For example, I'm referring to the high-rise construction guide developed by the Government of Quebec, which is now used by many other jurisdictions. It costs the Government of Quebec nothing, and so far, it is yielding the best results in stimulating demand.

In a nutshell, the determining factors are the promoters, the competitiveness and the simplicity. At this point, this is not being perceived positively. Yet it is positive. The evidence is our successful projects.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Second, following on that, especially with Nordic joists and I-joists in general, that product requires a specific set of properties for the one-by-three beams that go on the top and the bottom. They need to be grown in a certain area in order to have enough growth rings in them to give them the strength that they need. Is there a competitive advantage that can be offered by Canadian companies like yours that can't be found in other jurisdictions?

[Frédéric Verreault]

There are two main categories of wood construction products: solid wood, such as beams and columns, and light-frame products made of 2x3s, such as I-joists.

The market for light-frame products is going pretty well; it is not particularly difficult to enter that market. In the case of I-joists, things are going well too. This year, we are selling 60 million board feet of I-joists in the United States and 25 to 30 million board feet in Canada. Those are big numbers. For those products, market conditions are good.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Mr. Foster, what are your thoughts on what we've heard from Mr. Verreault today and the value that could be derived from wood products that extend far beyond traditional building uses? Do you feel that there's a move by the construction industry to use more wood and to use engineered products on a significantly greater scale than in the past? If there isn't, what are some of the challenges with moving in that direction?

[David Foster]

In overall terms, yes, we've seen a steady progression over decades to move to more engineered products, such as the replacement of floor joists with wood I-joists and various other engineered components. We are, of course, creatures of building codes, so to see the widespread adoption of new technology, we need to see it proven out. We need to see it being accommodated and handled by a code and code officials.

We recently saw that happen with six-storey wood frame construction, which moved from a curiosity into something that is fully embraced by our industry. I know that there is a huge interest in cross-laminated construction in particular. At every conference of our association that I go to, somebody is showing us amazing pictures of these buildings.

This is really important in the cycle from when an innovation is developed till when it is in full commercial application. From our point of view, that's a process of de-risking something, and often it takes partnerships. It takes government encouraging and facilitating that transfer. There's huge interest. We're going to be building very differently in 10 or 15 years from the way we are building today.

The open question is the mix of materials and the type of materials, but more engineered and highly processed wood products have traditionally been a solution, and we would expect they're probably going to be one in the future.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

That's perfect. Thank you.

[The Chair, Liberal, James Maloney]

Mr. Falk is next.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chairman.

Thank you to all of our witnesses for your very interesting presentations.

Mr. Foster, I'd like to begin by asking you some questions.

In the last several years, probably in the last decade or so, there's been a move to interlock concrete-forming block construction, even in residential construction. Can you tell me why a person should consider wood over concrete?

[David Foster]

Again, from our builders' perspective, I think fundamentally we're agnostic when it comes to material choices. A lot of what is decided is dictated either by code or by affordability concerns. The type of construction that's used has to fit within the pro forma of the project and deliver a quality product at a price the market can support.

On the concrete side of things, insulated concrete forms are a technology that has made a lot of inroads, particularly in basement construction, because they tend to outperform conventional poured concrete foundations. That lowers warranty exposure and callbacks and leaks and so on and so forth.

I think we're seeing innovations across the materials spectrum. The advent of six-storey wood and its acceptance in code gave us a tool that was more affordable for some applications. I think that's why we've seen a rapid uptake of it. I think that if other technologies offered the same benefit, you'd see people....

[Ted Falk, Conservative, Provencher, MB]

You mentioned in your answers that building codes and regulations are the impetus for a lot of the technology that's being employed in the building industry. You also mentioned in your presentation that there's a decline in home ownership and that it's most significant among young people. That's very troubling. That speaks to the affordability of buying their first home, and it's something that I'm sure your industry would be very concerned about.

Building codes and regulations are forecast to become more burdensome in residential home construction, especially in view of the fact that there's maybe an overemphasis on the environment and on energy efficiency when constructing homes. That's adding costs to the price of a home that make it unaffordable for young people.

Can you speak a bit on how building code regulations negatively impact your industry?

[David Foster]

Typically, the building code process, the development process, as it takes place here through Codes Canada and the Canadian Commission on Building and Fire Codes, is probably one of the best code development processes in the world, in that basically everybody gets a kick at the can. Things don't get through that process without being challenged, tested, measured, and poked and prodded, which is a good thing, because it ensures that what comes out in code is safe for our industry to build and safe for people to live in.

I think there is an acceptance of the fact that any time we improve building codes, we necessarily increase the cost of building, and I guess we challenge that. Real innovation—and Monsieur Verreault spoke of that—can also provide better outcomes at a lower price or the same price, and we feel strongly that this needs to be an objective of code development in the future.

[Ted Falk, Conservative, Provencher, MB]

Do you see that happening?

[David Foster]

I see some recognition of the importance. Certainly the commission is discussing, I think in a serious way, how it can fit in affordability as a sort of lens that is applied, among many others, when code is developed. We already do impact analysis that includes costs and benefits. Costs and benefits aren't the decider. There are some things that you do for the public good even though they are difficult to cost-justify simply because they are socially necessary. I think we're going to see increased head-scratching about how we can do that, how we can get a better outcome at the same or lower cost, because otherwise we'll keep excluding people from the marketplace and from the benefits of home ownership. I think the emphasis is beginning to shift a bit.