Hundreds of billions worth of construction projects are on the drawing board in B.C. As a result, most construction contractors geared up for even more work this year, despite an already intense pace. This will keep the industry’s GDP and employment contributions growing at the same pace as the provincial economy.
This piece by ICBA VP-Communications Jordan Bateman was first published on The Orca Feb. 19, 2019.
It was a day of re-announcements and pre-announcements in B.C.’s 2019/2020 provincial budget.
Finance Minister Carole James spent a lot of time recapping last year’s budget measures before dangling a few carrots – mainly for B.C. families – next year. (If you’re a spring election truther, this gives your theory ammunition – the NDP could run for re-election on a child tax break.)
But the clearest message in this year’s budget is that the NDP think B.C.’s economic growth will continue unabated – despite warning signs from other world economies and in our own statistics.
While they post a modest surplus of $274 million on a $59 billion budget spend, the NDP borrow at almost Trudeau-like rates: adding $14.4 billion in new debt over the next three years. That’s a staggering $400 million per month.
Typically, governments borrow in bad times, not good ones. James is taking the opposite tact, which means less flexibility in future years, if the economy turns sour.
Housing starts are a leading indicator for the provincial economy. Buried deep in the budget documents is a concerning stat: starts will drop a third from 43,664 in 2017 to 30,517 in 2021. This undercuts the NDP’s professed desire for housing affordability by limiting supply. It also puts thousands of construction jobs at risk.
Incredibly, despite this one-third drop in new housing, the NDP Budget claims the property transfer tax will remain steady at $1.9 billion per year. This almost beggars belief.
Further, the NDP are predicting a billion-dollar turnaround at both ICBC and BC Hydro. After ICBC lost $1.18 billion this year, they say ICBC will only lose $50 million next year. Further, BC Hydro will move from a $424 million loss to a $712 million profit, in one year. So, brace yourselves for big rate hikes at both.
There was no money in the budget for a Massey Tunnel replacement, no Surrey SkyTrain, no Highway 1 expansion east of Langley. This is where the NDP’s sweetheart deal with its friendly Building Trades Union bites them.
Even the Transportation Minister has previously said this monopoly will add at least 7 per cent to the cost of major construction projects; other estimates from groups like the Canadian Federation of Independent Businesses, have been as high as 40 per cent. Instead of trying to stretch every taxpayer dollar as far as it can to get the best value, the NDP Government is continuing its terrible plan to feather their union buddies’ nests. Overspending on a few select projects means no money for these other pieces of necessary infrastructure.
But the biggest issue is the lack of preparation for an inevitable downturn. Asian economies are slowing, and the U.S. is coming back to earth after a couple of years of overperforming. Red tape, higher taxes and roadblocks against investment will affect B.C.’s economic performance.
Winter is coming, but the BC NDP is taxing, borrowing and spending like they don’t have a care in the world.
Coverage of ICBA’s thoughts on the NDP Government’s 2019/20 BC Budget:
- Jordan Bateman’s op-ed in The Orca: “Housing starts are a leading indicator for the provincial economy. Buried deep in the budget documents is a concerning stat: starts will drop a third from 43,664 in 2017 to 30,517 in 2021. This undercuts the NDP’s professed desire for housing affordability by limiting supply. It also puts thousands of construction jobs at risk.”
- Sooke News: “As economic storm clouds gather on the horizon, the NDP Government’s 2019/20 B.C. Budget offers nothing to help construction and responsible resource development companies prepare for any looming downturn.”
- Voice Online: ““Around the world, prudent leaders are preparing for the next downturn as economic warning lights pop on,” said Jordan Bateman, ICBA’s VP-Communications. “But in B.C., the NDP Government thinks economic growth will continue on happily for at least the next three years –and are taxing, borrowing and spending like mad.”
- Georgia Straight: ““This budget re-announces a lot of last year’s measures and pre-announces a lot of next year’s, like changes to child tax credits,” Bateman said. “There was very little for today, and nothing to give the construction industry—which powers the B.C. economy—any comfort.”
- Sing Tao (Chinese): “Bateman said that the reduction in housing construction means that the construction workload is reduced and the PTT income should be reduced. He believes that the provincial government is killing the market.”
- Special TheOrca.ca #BCPOLI Hotstove, live from the budget lockup:
VICTORIA – As economic storm clouds gather on the horizon, the NDP Government’s 2019/20 B.C. Budget offers nothing to help construction and responsible resource development companies prepare for any looming downturn.
It also adds red tape and more costs for employers, ratchets up government spending, adds billions in debt, and fails to address B.C.’s startling lack of competitiveness with the U.S., Asia and other Canadian provinces.
“Around the world, prudent leaders are preparing for the next downturn as economic warning lights pop on,” said Jordan Bateman, ICBA’s VP-Communications. “But in B.C., the NDP Government thinks economic growth will continue on happily for at least the next three years –and are taxing, borrowing and spending like mad.”
Construction is the unsung hero of the B.C. economy, employing nearly 250,000 people and contributing almost 9 per cent of the provincial GDP – yet it was totally ignored in this budget.
Housing starts dropped 6.4 per cent in 2018 and are projected to drop another 16.7 per cent this year. In fact, under the NDP’s economic mismanagement, housing starts will fall almost one-third from 43,664 in 2017 to 30,517 in 2021. Yet, inexplicably, the NDP budget suggests that property transfer tax will somehow remain steady at $1.9 billion per year.
“Slowing housing starts means fewer jobs in construction, less PTT revenue, and one-third less supply to meet the demand for new homes,” said Bateman. “Instead of cutting red tape and trying to turbo charge housing starts to drive down costs, the NDP is quietly choking out the market.” Read more
Yesterday, the Independent Contractors and Businesses Association has released its annual Wage and Benefit survey, tracking trends in the construction industry. It has both good and bad news. In good news, construction workers can expect an average 5.1 per cent pay bump this year, and another 5.3 per cent next year.
But in bad news, a majority of construction companies think the BC Government is headed in the wrong direction when it comes to managing the economy. Only 8 per cent of companies believe the NDP is on the right track; 51 per cent say they’re on the wrong track.
Chris Gardner is the President of ICBA, and joined TheOrca.ca’s Rick Cluff in studio to break down the numbers.
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VANCOUVER – B.C. construction workers should see pay raises of more than 10 per cent over the next two years, according to the results of the Independent Contractors and Businesses Association’s (ICBA) 2019 Wage and Benefits Survey. But there is a sense that storm clouds are gathering on the horizon for this vitally-important industry.
ICBA President Chris Gardner released the results of its annual survey of 1,000 construction companies Wednesday morning at ICBA’s 22nd annual CEO Breakfast, kicking off the BUILDEX construction tradeshow at the Vancouver Convention Centre.
“The state of construction in B.C. is strong with just over half our companies expecting more work in 2019 than the year before,” said Gardner. “The industry is firing on all cylinders and then some.”
Construction in B.C. now employs nearly 250,000 people and contributes almost 9 per cent of the provincial GDP. This year, survey respondents said they expect to give their workers a 4.8% raise; in 2020, they expect another 5.3% increase. That’s more than double the rate of inflation.
The ICBA Wage and Benefits Survey also noted:
- Interior: 37% of contractors expect more work in 2019 than last year; 78% say they are short of workers, especially labourers, carpenters and framers.
- North: 64% of contractors expect more work in 2019 than last year; 68% say they are short of workers, especially carpenters, labourers and welders.
- Vancouver Island: 29% of contractors expect more work in 2019 than last year; 82% say they are short of workers, especially carpenters, labourers and plumbers.
- Lower Mainland: 54% of contractors expect more work in 2019 than last year; 78% say they are short of workers, especially carpenters, labourers and plumbers.
“Worker shortages are not a problem unique to construction – retail, food, tourism and many other industries are experiencing things as the B.C. workforce ages,” said Gardner. “This demographic cliff is partly why construction continues to be an exciting and appealing career for a quarter million British Columbians – there is plenty of work, and good workers are being well-paid, well-trained and well-rewarded.”
But construction company owners are worried about the direction the B.C. Government is taking the economy. Of those surveyed, only 8% said John Horgan’s NDP government was on the right track in dealing with businesses like theirs. More than half – 51% – said Horgan was on the wrong track, while another 41% said they didn’t know.
“The NDP government is actively discriminating against 85% of construction workers in B.C. by forcing them to join a specially-selected union if they want to work on projects like the new Pattullo Bridge,” said Gardner. “Add in the NDP’s opposition to project likes Trans Mountain and the Massey Tunnel replacement; reams of new red tape; and $5.5 billion in tax hikes, and it’s no wonder so many job creators are worried about the direction B.C. is headed.”
A long time ago, a wizened veteran of a thousand political campaigns told me the most important demographic he looked at was the rate of home ownership.
Kid, he said, in that cynical way only grizzled campaigners can muster, homeowners vote Socred (or, in the modern era, B.C. Liberal), renters vote NDP.
Of course, nothing in politics is ever that cut-and-dried. Even the NDP know they need some homeowners to support them if they ever hope to have a majority government.
That’s why one particular piece of information collected on the speculation tax exemption form should give voters pause. No, not the social insurance number, or overreaching personal details, or what you do with your private property.
It’s your email address.
Why is the NDP government sending out 1.6 million letters to homeowners to capture, maybe, 20,000 British Columbians who should pay the tax? Email addresses.
Claims that the speculation tax opt-out process is just like the homeowners’ grant process are false. To get that $570 tax saving, you must sign your property tax form or — if you pay online — click a box. Easy peasy.
The speculation tax is different.
Don’t take my word for it. Vancouver Sun columnist Vaughn Palmer says the speculation tax forms are far more complicated:
“Whereas the ministry admits that on average an exempt property owner will need up to 20 minutes to complete the speculation tax application — and that is a lowball estimate in my opinion. It takes much more than 20 minutes to navigate the more than two dozen pages of information about the tax and its exemptions posted on the ministry website.”
Then, of course, your spouse has to repeat the process — and hand over his or her email address too.
The crazy thing is that the homeowners’ grant can only be claimed if the property is the taxpayer’s “principal residence.” It would have been simple to cross-reference databases and eliminate those properties from the initial tax, saving maybe a million bucks, time and a batch of bad press.
So why bother with such an intrusive rollout?
There is only one piece of personal information on that speculation tax exemption form that government can’t get through its myriad of databases: email addresses.
I’m not suggesting that the NDP government or the provincial bureaucracy would directly email British Columbians partisan messaging. This would be immediately caught by the Privacy Commissioner and be a public-relations disaster.
But what’s to stop the government from dumping those email addresses into Facebook or other social media advertising platforms in order to “better communicate” with British Columbians or target government-friendly ads to homeowners? Or to analyze the data and create “like audiences” to market?
The NDP have a historic disadvantage with homeowners — what better way to soften and/or test messaging with them than by social media?
There is no compelling reason why the NDP government needs our email addresses for this speculation-tax exemption. Indeed, cybersecurity experts and academic researchers have been saying for years that you shouldn’t collect information you don’t need (or plan to use) — because then you have a duty to protect it.
One presumes the government has plans to use its database of 1.6 million email addresses for something. But what? Will the Privacy Commissioner weigh in to stop them? Will the B.C. Liberals or the B.C. Green party kick up a fuss in Question Period?
Even the most cynical campaigner has to tip their tinfoil hat to the NDP on this one.
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