BCCA RESPONSE TO BC BUDGET 2021: We understand and fully support the need to budget meaningful financial supports for sectors hard-hit by COVID-19, such as tourism and hospitality. It is essential that our government protect businesses in these industries which are, like construction, crucial to our economy and to so many hard-working British Columbians in communities across the province.
We’re concerned not to see a more significant investment in infrastructure, with only $3.5BN in new spending committed over the next three years. That may seem ungrateful and certainly there is money being spent on infrastructure, but there are two major impediments to the real market impact of this spending.
First, construction costs have escalated at an alarming rate, to the point that bid validity is an enormous challenge in the face of supplier pricing being good for only 7 to 14 days. The drywall market in North America is essentially sold out, lumber and steel costs have doubled. All this means taxpayer dollars won’t go as far as they did pre-COVID. In fact, a case can be made to show that the $3.5BN budget increase has already been spent on the increased costs of supply – and then some.
Second, the 3-year capital spending budget of $26.4BN, will be hampered by risk premiums conservatively estimated at $1.32 BN. This cost could be mitigated were BC to follow the lead of other provinces and introduce prompt payment legislation to support contractors in our industry who are faced with cash-flow challenges due to late payments. Given the $8.1BN projected deficit, that premium is something BC taxpayers can ill-afford.
BC’s construction employers and contractors can find value in some of the continuations of supports announced in Fall 2020, such as:
- $150 million for the StrongerBC Increased Employment Incentive tax credit.
- $195 million in funding to continue the Small- and Medium-sized Business Recovery Grant program.
- Budget 2021 more than doubles the number of $10-a-day child care spaces, which means 75 more child care centers and the thousands of families who rely on them will benefit.
- An ongoing PST exemption on capital investments in select equipment and machinery to help businesses pivot or upgrade operations with an anticipated 110,000 incorporated B.C. businesses eligible.
- An average 25% reduction in commercial property taxes 2020.
Although we are always in support of investments in youth and training, especially now with our young talent hardest hit by the COVID-19 pandemic, we see a significant missed opportunity with this budget’s lack of focus on career development in our sector. Construction has continued to operate safely during the pandemic and provides many rewarding career paths for BC youth, yet lack of skilled workers remains our number 1 challenge and has been so for more than a decade. We would have liked to see the emphasis on technology and health care jobs complemented by a re-invigorated commitment to the industry that has helped to keep BC’s economy going. The $4 million “continuation of short-term skills training programs for unemployed or underemployed people to train in high-demand sectors, such as construction, technology, health care, and childcare” is welcome but not nearly enough to make a difference.
Construction needs future leaders as much or more than any other industry, and we will watch to see if these new programs will provide meaningful support for our industry’s workforce development needs, which are long-standing and significant.
The construction industry has proven itself to be resilient and adaptable in this time of great challenge. We have been here for British Columbia. But our contractors are struggling with cash flow challenges, increased costs, late payments, and lack of skilled workers. If the budget does not remember us, we hope the Attorney General will so that we can at least get paid on time for the work we do.
During the 2020 budget consultation, BCCA President Chris Atchison once again urged the Select Standing Committee on Finance to prioritize prompt payment legislation in BC. In August 2019 BCCA was advised that its recommendations regarding Prompt Payment legislation were adopted by the Select Standing Committee on Finance and Government Services and included in their unanimous report on the 2020 Budget. The recommendations made were given during this presentation on June 13, 2019 as part of the 2020 Budget Consultations. A previous presentation was given by BCCA President Chris Atchison on September 25, 2018 to the Select Standing Committee on Finance and Government Services as part of their 2019 Budget consultations. Specifically, the recommendation was for the introduction of prompt payment legislation to require payment within a set number of days.
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