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Finding Common Ground
Bob Finnigan Inaugural Address
CHBA 74th National Conference
Kelowna, British Columbia May 5, 2016
Distinguished guests, friends and colleagues – I am honoured to be here today, as the next President of the Canadian Home Builders’ Association.
Before getting into my remarks this afternoon, I want to thank Jane Morgan for her great leadership of our Association.
Jane and I have worked together for the last four years, and it has been a real pleasure to serve as her First Vice-President.
Jane has headed up an Executive team that works really well. She encourages open and frank discussion, and brings a keen interest in ensuring the leadership team makes well-informed decisions.
This is an approach that serves the Association and its members well, and one I will continue during my term as your national President.
Jane, thank you for your dedication over the last 14 months - and I look forward to continuing our work together over the next year. .
Before I lay out where I see the Association going during my term, I want to talk briefly about CHBA as an organization.
Our Association continues to build momentum and become more effective, right across the country, and at all levels.
We truly encompass and serve all facets of the residential construction industry, and all of its customers.
CHBA is working hard to make affordability for new home buyers a goal shared with us by governments.
We are stimulating important conversations about how our communities should grow and develop ,and how we can ensure that they provide a place for everyone.
And, given that renovation is the largest and fastest growing part of our industry, we are working closely with our renovator members to ensure CHBA is truly the “home” for professional renovators across Canada, and that this is recognized by consumers.
In Ottawa, we have established a constructive and respectful relationship with the federal government, and look forward to building on this.
The most important thing to me is seeing the high level of collaboration between local, provincial and national levels of our Association, and the value this is delivering to our members.
In all the years I have been a CHBA member, I’ve never seen us work together as effectively as we do today.
And for that, I am deeply grateful to all of my colleagues leading HBAs across the country, because this is something we are achieving together.
I’d also like to take this moment to thank Kevin, as CEO of our national association, and his staff, for all of their continuing hard work. Since taking the helm three years ago, Kevin has brought a new dynamic to the Association. We see the results of this within the Executive Committee and the Board. And his efforts have done much to build a spirit of collaboration between CHBA nationally, and our local and provincial Associations.
Today, we are one powerful, united voice. And I’d like to thank Kevin for all he and the national office does.
Our Association is engaged with governments and the public on very important issues, at all levels
These issues don’t just affect our businesses, they shape the communities we live in, the economy we all rely on, and they touch the lives of every Canadian.
As an Association, our job is to represent the business interests of our members, and of their customers. That is what we do.
But, increasingly, how we do this is critical to our success, and to getting results.
When I look at the issues that CHBA continues to work on, they are all familiar.
Affordability, red tape, regulation and development policies, new home taxes, skilled labour supply, the underground economy, the environment – it’s a list we all know well.
What has changed is how we are approaching many of these issues.
In order to advance our point of view, we have to understand and address the needs of many others, including governments, advocacy organizations, other industry groups, regulators and the residents in our communities.
Increasingly, collaboration is the key to success – for us and for the many other stakeholders that play a role in shaping the future of our communities.
And I know that this is a common experience at all levels of the Association.
It’s simply the way things work today, both in our companies, and within our Association.
For very practical reasons, we have to actively seek-out areas of common ground with others in order to move things forward.
This is a role that CHBA has become increasing good at. I know this is true both nationally and at the provincial and local levels of the Association.
As we have ramped-up the Association’s advocacy work, we have also reached out to other industry and government groups with overlapping, and sometimes even conflicting interests, in an effort to find common ground where we can agree.
Make no mistake, we still hold firmly to our principles and values, and are quite prepared to disagree with others—sometimes that is a necessary step in creating a healthy discussion.
Collaboration isn’t about abandoning what’s important, it’s about being clear about where we stand, while also understanding what’s important to others.
- For instance, in working with the Federation of Canadian Municipalities and a range of low-income housing advocacy groups, we created broad agreement on needed improvements not only to social housing policies, but affordability across the full housing system, that includes the type of market-based solutions CHBA has always pushed for.
- And now, as the federal government begins work on a national housing strategy, CHBA is at the table. As we consult with ministers and other government officials, we are also part of a broad collaborative with other national associations developing comprehensive approaches to the full spectrum of housing requirements, from social housing to market housing, that will specifically address affordability.
- CHBA’s Net Zero Energy Housing Council demonstrates how builders, manufacturers, government researchers and others can work together to achieve remarkable technical advance. In addition they are developing innovative marketing and communication approaches that will encourage Canadians to make smart investments in energy efficiency. All of this has been through collaborative industry/government innovation and voluntary levels—and I repeat: voluntary levels—of energy performance.
- CHBA’s Get it in Writing! partnership with the federal government, building material retailers and others is providing homeowners with solid information that will help them avoid the renovation nightmares that often result when an underground ‘cash’ contractor gets hired. Through this, the association has found an entirely new set of strategic alliance partners.
- In the labour supply area, working with BuildForce and its diverse membership, we have seen broad agreement on many issues that CHBA has advocated on over the years, including better recognition of residential trades as a distinct labour market component. This has led to the publication of the first ever residential-only labour market information report.
As these examples illustrate, forging common ground with governments and other organizations is increasingly essential in order to advance our own interests, and I expect this will only become more so, in the future.
In parallel, CHBA is doing a lot more research work, particularly on housing and economic data. CHBA has always been an evidence-based organization, and this even more critical today.
You’re likely familiar with the yearly Economic Impacts data sheets we publish nationally, provincially and for every HBA community. That’s just a small part of the analytic work CHBA is involved with.
In order to collaborate with others, our views need to be backed up with facts and data. And, more than ever before, we’re bringing that information to the table.
When I look at the big picture, the changes in how CHBA advocacy operates today are pretty impressive.
- Advocacy is job #1 at CHBA, as it should be.
- Three years ago, CHBA recognized that effective alliances are a strategic priority, and today we have built important bridges, and continue to build more
- CHBA is increasingly seen as an important and credible source of insight and data on a wide range of housing issues. Media, government decision-makers and other organizations come to us asking for this information.
- Overall, CHBA is viewed as a strong advocate for our industry and its customers, but also as one that recognizes that addressing our issues means understanding other groups’ interests as well.
This approach to advocacy provides important context when we look at the specific issues that matter to members, and how we tackle these with a greater likelihood of success.
I’ll start with affordability, which is the most critical issue we face today, right across the country.
Affordability is a problem in virtually all markets, and an acute problem in some like the GTA and lower BC Mainland.
At a ‘high level’ there are many aspects of the affordability issue that virtually everyone agrees with:
- We all want to see young people and families have a place in our communities.
- We all know that home ownership remains the aspiration of the vast majority of Canadians, and a cornerstone for their longer-term financial success.
- We all want younger people to have housing choices that meet their needs, at a price they can reasonably manage.
- We all see the connection between a housing market where there is room for everyone, and sustaining a competitive and growing local economy.
These are important points of agreement, because finding solutions is not a simple matter. We first need to build a consensus on what is causing deteriorating affordability. And this is where CHBA insights, research and analysis are shedding new light.
With high house prices dominating headlines so often these days, governments are being pressured to do ‘something’ to address the situation.
What is too often overlooked is what government policy has already done, and continues to do, that has played a major role in creating this situation.
When you look past the headlines, and really analyze the situation, there is a clear link between government policy and house prices in many cities. But just as policy had led us to this point, policy changes could help lead us to a better place.
CHBA research shows us there are three primary government policy directions that directly push up house prices, although these are not always obvious or recognized outside of our industry. These include:
- Policies that make it very difficult, or impossible, to build the types of homes people want, in the numbers that are required;
- Policies that unfairly load an ever-growing array of development-related taxes(we are calling a spade a spade here – Development charges are simply a TAX) linked to services and amenities for the whole community onto the small portion of the population who are new home buyers; and
- Policies, regulations and complex approvals that drive up land costs.
The specific impact of each of these three drivers varies from community to community, but all of them exist, to some degree, everywhere.
What are these impacts? I’ll tell you about my experience building in the GTA.
- I know that when I began in this business, we could purchase development land and expect to be ‘in the ground’ in a matter of months to a year and in some cases up to maybe two years. Today, at best its several years and in many cases it can take a decade or longer The carrying costs for the additional years- and believe me they are not small - end up in a home’s selling price.
- Ten years ago in our market, the actual construction cost of the house accounted for about 40% – 50% of its selling price. Today, it can be down as low as 20% - 25% . The bulk of the price a new homebuyer pay isn’t ‘in the home’. That’s a massive change, and it helps explain why affordability is such a huge issue in my community.
- One of our most respected housing economists estimates that, in the GTA, there is an acute shortage of ground-oriented homes amounting to some 10,000 units each year, over the last decade. Think of what that does to demand!
In our largest cities, many of the forces impacting affordability simply reflect stronger economies and in-migration as people move to where good jobs are.
We see the most acute affordability problems where a combination of such strong demand, a growing supply crisis, and escalating land-cost-factors drive prices upwards. This has the greatest impact in relation to the type of ground-oriented product that almost all young families say they want and need.
When we look at Vancouver it’s clear that geography presents very specific land supply challenges – mountains on one side and the ocean on the other – but what cities don’t get is that greenbelts and growth boundaries are ‘regulatory mountains’ – and they have exactly the same effect.
And that’s certainly not to say greenbelts are bad. We just have to realize that any restrictions that limit or delay access to serviceable land, especially where there is a housing shortage and high demand, will drive up prices—that’s not a judgment, that’s just basic economics.
Such policies make any land you can build on very expensive. When coupled with the labyrinth of approvals needed to move land into development, and the ever-rising development taxes being charged, you have the ‘perfect storm’ in terms of vanishing affordability.
There are constructive measures the federal government can take now to help ease the affordability problem for younger people and families trying to achieve home ownership, such as reinstating 30-year mortgage amortization for well-qualified first-time buyers. This involves no cost or risk to government, and should be done
To get the affordability problem truly under control, we also need to address the underlying issues involved in continually escalating prices, and find common ground that allows us to move forward.
Neither we, as builders, or our Association, are ignorant of the challenges governments face in balancing all the needs and desires of Canadians today, No one expects development taxes to disappear, or that restrictive land development policies will change overnight.
But we need a more open and honest conversation with governments about the real and growing negative impacts these policies are having, and the need to look for alternative approaches that work better for everyone.
Thankfully through the hard work of the Association at all levels, in many of our communities this sort of dialogue has begun to take place.
We need to keep pushing for this, because the longer-term risks being created threaten our communities.
- If young people and newcomers are locked-out of homeownership by lack of affordability, they will suffer financially over their entire lives. This affects not only their socio-economic well-being, but that of all society.
- If home ownership levels fall, over time this will threaten the equity that current home owners have built up.
- If young families cannot afford to buy a home suitable for raising their children, many will move elsewhere, either to peripheral communities or to other regions or countries entirely.
- If poor affordability drives well-educated young people away from our largest cities, employers will have difficulty attracting the talent they need to grow their businesses and create new jobs. This will have broader, and long-lasting, economic impacts.
To avoid these risks, we need to find more constructive ways to achieve the outcomes everyone wants: space-efficient communities that are vibrant, diverse and both environmentally and economically sustainable.
Our communities must also include the full range of housing choices, including market rental and affordable units, that Canadians want and need, at a cost they can afford to pay. There needs to be a place for everyone.
We recognize that our cities face significant financial pressures, and that development will have to pay its fair portion to help address these pressures. But new home buyers cannot continue to be the primary source of funding for services and amenities not directly related to their new home. We need to work with municipalities to find better ways to meet municipal financial needs without harming first-time homebuyers.
This year’s federal budget included some important steps in this area.
By moving beyond the traditional funding formula for transit, water and waste-water infrastructure projects, the federal government has responded to the very real fiscal limitations at the municipal level. With the federal portion of funding moved up from one third to fifty percent, there is less financial pressure on municipalities.
This is something CHBA was calling for, and we were very pleased to see it in the budget.
Now we need to see the provinces to follow suit.
If Ottawa is willing to pay up to half the cost of these capital projects, provinces should ‘step up’ as well and increase their share. Otherwise municipal governments will be pushed to ratchet-up development taxes to meet their portion of costs, and affordability will simply get worse.
Our cities and residents need efficient and effective transit and other infrastructure, but new home buyers alone should not have to pay most of the costs involved. Transit benefits all.
The federal budget also includes modest funding to help communities develop capacity to manage their capital assets better, on a ‘best practices’ model. This has been a long-standing recommendation from CHBA, and we welcome federal recognition of its importance. Proper asset management can help avoid infrastructure deficits in the future.
Overall, the federal budget had a very strong infrastructure focus, and included many constructive measures that directly address the needs of our communities. We commend the federal government for demonstrating effective leadership in this area.
The government has even moved to consider social housing as infrastructure, or “social infrastructure” to use its term. The energy upgrading of social housing is another measure that CHBA recommended and we are very pleased to see the Budget address.
In terms of infrastructure, the challenge now will be to ensure that other levels of government respond to this as an opportunity to ‘get it right’ and follow through with the measures they need to take.
If they do, improving affordability and housing choice should be the key measure by which they judge their success.
More resources flowing to much-needed transit expansion is a great first step. But we also need as-of-right zoning that allows diverse transit-oriented development, and we need to see transit planning that anticipates future growth and maximizes ridership, rather than ‘rear-view mirror planning’ that reacts to gridlock that could have been avoided.
Cities and provinces need to engage with our industry. They need to encourage innovation in development, not put up barriers. And they need to work with builders and developers, along with other interests in the community, in an open, purposeful and collaborative manner.
For our part, we stand ready.
This same collaborative approach is equally important in others areas as well.
In relation to climate change, as Kevin noted, there is a tremendous opportunity to find common ground, create more sustainable communities and address affordability in an integrated way.
This is an area where our industry has every reason to be proud of what we have already achieved, and our experience and expertise can help the federal government as it works towards comprehensive and effective ways to protect the environment while also bolstering the economy.
In the area of labour market development to create our workforce of the future, effective collaboration is also the key to success. As chair of our national Professional Development Committee for the past two years, I’ve been engaged first-hand in CHBA’s important efforts in this area.
CHBA now works very closely with BuildForce Canada to ensure the labour market information needed for smart government policy and programming is available. With this in hand, we are well positioned for our discussions with the federal government as we join with other stakeholders to advance the issue of skills training.
These efforts are essential to ensure that the skilled people we need in the future will be there.
Current projections indicate that we’ll need to hire around 100,000 new people in the next decade. It is essential then that the system ‘get it right’ in this important area by encouraging young people to choose careers in the skilled trades, and then supporting them as they proceed. Getting this right needs to be a common goal.
The federal government is making some positive changes that address this goal, but there are opportunities to do much more.
While Canada has the highest level of post-secondary education among OECD countries, much of it in the vocational stream through our colleges, more needs to be done to create a “parity of esteem” that encourages young people to choose a rewarding career in our industry.
CHBA is actively collaborating with BuildForce, Colleges and Institutes Canada and others to make this happen. We need the federal government to continue as an active partner in these efforts.
As an industry, we are also doing more every year to ‘walk the talk’ in terms of professional development. Here is B.C., there are new requirements for licensed builders to participate in continuing professional education throughout their careers.
In fact, the concurrent business sessions that begin later this afternoon here at our Conference have been approved by the Homeowner Protection Office under this system, so B.C. builders attending will earn Continuing Professional Development credits—another great example of the collaboration in our association, in this case between national and CHBA-BC, who together made this happen.
In closing, let me summarize a few key points.
As an Association, our focus remains firmly on areas and issues that have tremendous importance to our businesses, and to our customers.
- Affordability for the middle-class, young people and new Canadians is a critical issue that effects us all, and will have a huge impact on the future of our communities and our economy.
- Supporting jobs and innovation is the key to maintaining a skilled workforce in an industry that is Canada’s largest employer, and in providing Canadians with homes and communities that are the best in the world.
- Climate change represents a significant national challenge, one which our industry has been uniquely able to address, and where we can continue to contribute, if policies are carefully thought out.
- Combatting the underground economy is essential to growing and professionalizing the renovation sector of our industry, and it’s an area where CHBA is a recognized leader in providing information that helps consumers make smart, and safe, choices.
In each of these areas, CHBA is actively seeking common ground and collaborative solutions with other stakeholders.
In each of these areas, we are bringing solid research and data to the table, so that discussions can be focused and well-informed, and decisions effective.
And in each of these areas, we collaborate with others, and we do so with clear principles and goals. We know what we stand for, and we know what we’re trying to achieve.
As an Association, this how we do business today. And it’s something we should be very proud of.
We’ve worked hard to make collaboration an essential part of how we do things within our Association, at all levels. And our success in achieving our goals through this approach speaks well of the maturity of our organization and the competence and dedication of our leadership and staff, at all levels.
In bringing this same commitment to finding common ground to our work with governments and other stakeholders, we provide members with a strong and respected voice. And that is something we should be equally proud of.
I am excited about the coming year and my term as your national President. There is much to be done, and I’m confident we have the right team in place to do it, right across our Association including most of the people right here in this room today!
I particularly look forward to getting out across the country to visit with local and provincial Associations and members to learn, first-hand, about the tremendous work you are doing. And in so doing, continue the important dialogue about how the Association can continue to best support your business needs.
Home building and renovation is a very different business from when I first started, but it remains a people-business, so I know I’ll learn a lot by spending time with many of you over the coming year.
Finally, I want express my gratitude for the opportunity to serve our industry, and our Association – one that has played such a large and important part in my life for so many years.