From the editor… Eager to build, but waiting to be shown the money
By David KennedyConstruction Financing Infrastructure
It won’t surprise anyone the outlook for Canada’s construction industry in the year ahead is somewhat muddier than it was 12 months ago.
At the end of 2019, industry experts weren’t predicting a global pandemic would derail supply chains, limit staff on job sites and shake investor confidence in new building projects across nearly every sector of the economy. Even with promising vaccines on the horizon, new health and safety measures established on-site and a better collective understanding of coronaviruses than could have been imagined at the outset of 2020, there is a lot up in the air heading into the new year.
When exactly federal cash will backstop municipal budgets and help ensure work moves forward is top of mind. In Ontario, for instance, a survey this fall found half of civil contractors have seen fewer tenders to bid on since July 1. The situation threatens to create a work shortage, if not corrected. But so far, Ottawa has been enthusiastic about pointing to infrastructure as key to a recovery, but decidedly less keen about providing timely financial backing.
Accelerating Gas Tax Fund transfer to cities this June is among the steps it has already taken, but as the Federation of Canadian Municipalities’ pointed out, this was not “new” money. More common throughout this crisis has been billion-dollar commitments with no immediate follow-through. In October, for instance, Ottawa introduced the Canada Infrastructure Bank’s Growth Plan, which included $10 billion over three years for five project categories, such as clean building retrofits and rural broadband upgrades. Two months later, specific project announcements remain to be seen. It’s responsible to avoid rushing funds out the door, but with the pandemic now nine months old, there has been plenty of time to properly ready the shovels and for the government to move forward with granular project announcements as opposed to broad policy plans.
This work is almost certain to materialize eventually, but at a time when the construction industry is seeing increased competition for new public projects and the market for private sector work is forecast to remain shaky, contractors need new infrastructure projects to tackle sooner rather than later. I encourage you to take a closer look at our 2021 Forecast for how this would help both construction and the Canadian economy as a whole.
A quicker rollout of infrastructure dollars could also put many of those in the industry who have been laid off since the start of the pandemic back to work. Construction fared well when COVID-19 first gripped North America in March, but was laid low in April and May, largely as a result of shutdowns in Ontario and Quebec. Rehiring was strong during the summer, but stalled this fall. The industry has seen no significant job gains since July. The November figures are not yet available, but the most recent data shows employment in construction down nearly 10 per cent, or roughly 125,000 jobs, since the start of the pandemic.
Finally, as Canadian Construction Association President Mary Van Buren highlights in the Top 10 trends the industry group is watching for 2021, the federal government continues to struggle reconciling its social policy goals with its infrastructure spending priorities. Putting up more affordable housing and building more green infrastructure are worthwhile endeavours, but there are myriad road and bridge projects that can start today.
This column first appeared in the December 2020 edition of On-Site. Click here to read through the whole issue.