On April 17, 2024, the Government of Canada announced Budget 2024: Fairness for every generation.
In the budget, the federal government has indicated it plans to implement several policies aimed at increasing productivity, particularly in the construction sector. The changes, which appear to be mostly directed at increasing construction of housing – particularly multi-family housing – may increase activity in the sector.
Measures announced that will impact the construction and infrastructure industry, along with MLT Aikins commentary on the potential consequences for legal and business decisionmakers, include:
- Improving regulatory and permitting process: Getting projects built faster by announcing measures to improve the regulatory and permitting processes. This measure is focused on clarifying and reducing timelines, working towards “one project one review” and improving engagement and partnerships, including with Indigenous partners and communities.
In our view, a move to a “one project one review” will be a welcome development, particularly for major industrial projects that are often delayed for many years by overlapping review processes.
- Increased homebuilding: Addressing the housing crisis with a plan to build nearly four million homes by 2031. Goals include lower housing costs for Canadians and ensuring that workers can afford to live near work (shorter commutes increase productivity).
If this plan is successful, it would represent a vast increase in the number of homes built in Canada on an annual basis.
- Modular construction: Scaling-up modular housing to facilitate a housing economy that can build homes year-round to ensure construction takes place at the pace and scale needed to solve Canada’s housing crisis.
From our experience, use of modular construction practices is already growing across many industries in Canadian construction, particularly to simplify on-site construction and take advantage of winter periods where construction is generally performed at lower rates of productivity. Continued growth in this sector will be likely to deal with cost, schedule and weather challenges, particularly on remote projects.
- Improve apartment project feasibility: Introducing an Accelerated Capital Cost Allowance for new purpose-built rental projects to enable homebuilders to increase their cashflow and more quickly reinvest into more projects, create more jobs and build more apartments. Ottawa’s aim is to help move more apartment projects from unfeasible to feasible.
We anticipate this will be welcome news for developers of multi-family residential projects, as it may increase the feasibility of projects that were priced out by recent growth in construction costs.
- Increase in infrastructure spending: Investing in infrastructure to grow communities and enable more homes to be built, including through the new Canada Housing Infrastructure Fund, the Canada Infrastructure Bank’s Housing Initiative and by delivering an estimated $57.3 billion in support of infrastructure projects across the country from 2023-2024 until 2028-2029. Infrastructure Canada provides a summary of the programs available.
Significant infrastructure funding will need to both precede and follow any large increase in residential construction – with municipalities having to grapple with transportation, water and waste infrastructure necessary to service growing residential communities, particularly in new communities.
- Incentives for innovation and productivity projects: Introducing an Accelerated Capital Cost Allowance for innovation-enabling and productivity-enhancing assets, such as computers and data network infrastructure. By providing businesses with enhanced write-offs for their investments, businesses can increase their cashflow, create more jobs and hopefully be more productive and innovative.
In our view, those involved in the development and construction of IT-related assets are most likely to benefit from this change.
- Credentials for foreign construction workers: Cutting red tape with Foreign Credential Recognition for construction workers. An investment of $50 million to streamline the Foreign Credential Recognition Program has already helped more than 9,000 skilled newcomers receive work placements and another 20,000 workers receive low-cost loans to minimize the cost of practising their trade in Canada. In addition, the federal government is calling on provinces and territories to urgently streamline their trades certification standards for interprovincial consistency.
From our review, it would appear that this program will need significant buy-in from provincial regulatory bodies to allow for the recognition of foreign credentials on a provincial basis.
Overall, Budget 2024 is aiming to get more projects built, faster. Given the challenges faced in recent years in the construction industry, efforts to improve construction productivity are likely to be welcomed by owners, developers and the overall industry. Many of the proposed changes and incentives will require significant collaboration with other levels of government to be successful.
For more guidance on how Budget 2024 impacts you and your construction projects, our Construction Projects group would be happy to hear from you.
The MLT Aikins Construction & Infrastructure group is also holding a seminar on May 8 on strategic procurement considerations, with an emphasis on examining recent trends and strategies in construction and infrastructure procurement. If you’re in Winnipeg, please join us on May 8 for this informative event.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.