The House of Commons and Senate has adjourned for the summer, sending Parliamentarians to their ridings to engage closely with constituents following a heated spring session dominated by debates on foreign political interference, the carbon tax, and the ongoing housing crisis. The summer break serves as a crucial reset for the government as parties promote their policies, refine their platforms, and look towards the fall session.

Economic measures impact construction industry

In 2024, Canada’s construction industry navigated a delicate balance of economic measures aimed at curbing inflation while stimulating growth. While interest rates remained steady at five per cent, the position contributed to a notable deceleration in economic activity and investments nationwide.

2024 has also been a pivotal year for construction-related policies, most notably with the federal government’s active approach to the housing affordability crisis. Central to this approach is the Canada Housing Plan, which was outlined in Budget 2024. Key components of the plan include the commitment to completing 3.87 million new homes by 2031, the Public Lands for Homes Plan, the Office Reduction Plan, and the deployment of $15 billion towards the Apartment Construction Loan Program to incentivize private investment in housing development.

While these efforts aim to address housing shortages, the plan fell short in providing the necessary investment and incentives to support housing construction, housing-enabling infrastructure, and workforce development, which are critical for stabilizing the industry’s cyclical boom and bust fluctuations.

Capital gains tax adjustment

Budget 2024 also introduced significant changes to the capital gains tax effective June 25, 2024, increasing rates for corporations, trusts, and individuals from one-half to two-thirds for the portion of capital gains exceeding $250,000 realized within the year. While Finance Canada claims the adjustment aims to ensure tax fairness, it may pose unintended risks to SMEs in the construction sector. Increased taxation on capital gains could limit their financial flexibility, potentially affecting reinvestment in their operations and impacting overall business growth.

Federal Prompt Payment Act

The Federal Prompt Payment for Construction Work Act came into effect December 2023. The legislation builds on existing regulations to ensure timely and predictable payments for contractors and subcontractors engaged in federal public infrastructure projects. Now that the Act is in effect, there is a pressing need for increased collaboration between the government and industry to address emerging issues with its implementation.

Addressing supply chain risks

Formerly known as Bill S-211, the Fighting Against Forced Labour and Child Labour in Supply Chains Act mandates that entities surpassing certain thresholds must submit annual reports on their assessments of modern slavery risks within their supply chains. For contractors, this mandate adds layers of compliance burdens across complex international supply chains, potentially leading to an imbalance in procurement risk-sharing, with contractors bearing a disproportionate burden of due diligence.

Looking ahead

Efforts to tackle housing affordability, spur economic growth, and uphold ethical standards in governance and commerce will continue to shape policy agendas. The upcoming fall parliamentary session is poised to bring further developments and initiatives that will have an impact on the construction industry. In the meantime, the recent Liberal upset in the by-election of Toronto–St. Paul will likely have profound ramifications within the Liberal caucus and should lead to a busy political summer.

CCA remains actively engaged, monitoring these policies and advocating for measure that support industry growth and sustainability.

For more information on CCA’s advocacy work, please email Louis-Philippe Champagne, Associate Vice-President, Public Affairs, and Industry Practices.