Builders Demand Accountability from Canadian Cities

Written by Posted On Wednesday, 07 March 2007 16:00

"Cities engage in practices that would quickly bankrupt any private business," said Canadian Home Builders' Association President Richard Lind at the trade group's annual conference. "There is little long-term planning. Vote-catching projects often have precedence over sound reinvestment to maintain existing infrastructure. Grant money from other levels of government often underwrites projects that are not financially sustainable once they are built. Most importantly, there is seldom any relationship between who pays for a project, and who benefits," said Lind.

The CHBA president said that federal infrastructure funding should be helping out new home buyers "in the form of reduced municipal charges, fees and levies. We are still waiting for evidence that this is happening." A study by Canada Mortgage and Housing Corp. showed that government mandated levies, fees, charges and taxes account for more than 12 per cent of the cost of a new house in most municipalities, and more than 17 per cent in several municipalities.

The CHBA cites a paper by the C. D. Howe Institute that "exposes the general lack of transparency and accountability in the management of municipal finances." The association wants the government to "set up a single, straightforward, public record that discloses which municipalities receive federal infrastructure funds, how much they get, and for what projects."

The issue is one of five goals that the CHBA has set for government action this year. The association has been fighting for these issues for several years. Finding skilled labour is an ongoing problem for the country's home builders. "This is not a cyclical condition," said Lind. "It is not the result of strong market conditions. It is far more fundamental - our workforce is aging. Not enough new people are entering our industry."

The CHBA developed an action plan for an education and training system and sought help from the government, but "when support for that plan was not forthcoming we were extremely disappointed," says Lind. "We don't need more studies, we need action."

The association is also concerned about over-regulation in the industry. "All too often, regulations are used to avoid liability," says Lind. "As well, regulations are frequently put into place without proper assessment of their costs, or whether other, more effective alternatives may exist."

Lind says that regulations "are applied in a mindless fashion, with little or no regard for the underlying objective of the regulation. This adds cost without value. It stifles innovation and holds back improvements in housing quality, construction efficiency and affordability."

The CHBA's solution to cutting back on red tape is to educate consumers so they can "reach informed decisions." Lind says this principle is "both simple and profound.

"It is simple because a well-informed consumer will demand professional performance -- and we are able to deliver this. It is profound because a marketplace where consumers place value on performance, innovation and continuous improvement is far more agile and efficient than one directed by regulation."

The fourth goal of the association is to "attack the underground economy," says Lind. "For many years, the CHBA told government exactly what was driving this problem and what actions were needed to attack it. But government didn't act on our advice … . Today, we are all still filling out the forms, while the underground is still raking in the cash."

Lind says that because so many consumers pay "under the table" for home building services, Canada's housing stock is threatened. "It opens the door to unqualified people. It invites poor workmanship, and unsafe building practices," he says.

A few years ago, the association developed the Get it in Writing campaign to help educate consumers about the hazards of accepting "cash" deals, with no paperwork. The Canada Revenue Agency, originally a partner in the campaign, has not renewed its participation for the last two years.

Finally, the CHBA is asking the government to support more research and development in the housing industry. There are two federal agencies that are currently involved in housing construction research -- CMHC, and the Institute for Research in Construction, at the National Research Council.

The most recent Pulse survey -- a semi-annual survey of CHBA members -- shows that the rising cost of development land and increased development charges are considered to be the most critical problems currently facing home builders.

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Jim Adair

Jim Adair has been writing about Canadian real estate, home building and renovation issues for more than 40 years. He is the former editor of Canada’s leading trade magazine for real estate professionals, as well as several home building, décor and renovation titles. You can contact him at [email protected]

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