Finance Minister Chrystia Freeland wants Canadians to believe that she’s serious about addressing the country’s housing shortage.
In her view, it's an "intergenerational injustice" that Canada has the largest gap between incomes and houses of the G7 countries.
Nowhere is this worse in Canada than in two of its largest cities, Toronto and Vancouver.
To try to address this in the recent federal budget, Freeland announced $4 billion over five years for a new Housing Accelerator Fund to provide incentives to municipal governments to create 100,000 net new housing units.
Another $6 billion has been invested in other housing initiatives. That includes a new tax-free home savings account to allow younger homebuyers to set aside up to $40,000 toward a new home.
The finance minister also indicated that infrastructure funding to provinces, territories, and municipalities would be tied to increasing housing supply “where this made sense”.
“Over the next 10 years, we will double the number of new homes we build,” Freeland declared in Parliament. “This must become a great national effort, and it will demand a new spirit of collaboration: provinces and territories; cities and towns; the private sector and nonprofits all working together with us to build the homes that Canadians need.”
She’s not the only politician promising to increase the supply of homes.
The B.C. NDP government set a target of "114,000 affordable rental, nonprofit, co-op, and owner-purchase homes through partnerships" in its first decade in office.
And in Vancouver, Mayor Kennedy Stewart says the Making H.O.M.E. (Home Options for Middle-income Earners) initiative will result in 10,000 new homes in single-detached neighbourhoods.
The promises are grandiose—Freeland, in particular, thinks Canada can move from a longer-term average of about 200,000 new homes per year to 400,000 new homes per year. But is this really possible, given the shortage of construction workers in Canada?
The British Columbia Labour Market Outlook 2021 Edition forecast 75,900 job openings in construction over the next decade. That accounted for eight percent of the entire total.
In separate phone interviews with the Straight, the president of the Independent Contractors and Businesses Association (ICBA), Chris Gardner, and the executive director of the B.C. Building Trades (BCBT), Brynn Bourke, both readily conceded that there are existing challenges in filling all the current vacancies.
Last fall, the ICBA surveyed 3,600 members last fall and found that 76 percent of respondents said they cannot find enough people for the work that they already have.
“It means in some cases, obviously, they’re spending more time recruiting and looking for people,” Gardner said. “It means that some are turning down work because they don’t have the people to do the work. It could mean delays in a project because they haven’t assembled the necessary workforce to meet the scheduled requirements.”
BCBT’s Bourke, who’s also on the board of BuildForce Canada, said that the construction industry is already hitting a peak in employment from 2022 through to 2024, due in part to the boom in road and infrastructure projects, including the Broadway subway line.
“Do we have enough people?” Bourke asked. “It’s a real challenge.”
She noted that many skilled tradespeople are planning to retire—25,000, or 13 percent of the B.C. construction labour force—by 2027, according to BuildForce Canada.
To keep pace, even before Freeland’s budget promises, BuildForce Canada stated that the industry in B.C. would “need to recruit and train an estimated 27,600 workers throughout the six-year forecast period”.
Compounding these difficulties, according to Bourke, was the former B.C. Liberal government’s decision two decades ago to scrap compulsory trades certification. She said that B.C. was the only province to do this—and she maintained that this has had an impact on the quality of work being done on some projects.
“I would say for 20 years we have not been investing in our apprenticeship system, and now we’re sort of watching as those folks who have Red Seal [skilled-trades certification] are retiring,” Bourke said.
B.C. Liberal Leader Kevin Falcon, on the other hand, blamed the B.C. NDP government for introducing new requirements making it more difficult for tradespeople to obtain a Red Seal designation by limiting the number of apprentices working with a skilled mentor.
"There are just not enough training spaces or they’re all at BCIT here in Vancouver, which doesn’t work real well if you’re from the Peace country or Prince George or whatever the case might be," Falcon told the Straight last month. "And they’re doing this right at the moment when we’ve got such a huge shortage of labour."
The labour situation is so tight that subtrades companies in Surrey, Langley, Chilliwack, and Abbotsford don't have to venture outside of their areas to find work. That makes it tougher for developers to find construction workers for major real-estate projects in Vancouver.
That's driving up the price of labour, according to Gardner, which is reflected in the cost of housing.
"You will see young people consider a career in the trades because you'll see compensation opportunities presenting themselves in a way that they haven't before," he said.
Moreover, Gardner noted that people think of construction as an industry where people often get dirty working outside in the rain, However, he said that it also offers a route for those with an entrepreneurial bent to start their own companies or to rise up and become project managers.
"If you want to work in technology, there are jobs in construction—$25 million has been invested in software applications directly related to construction," Gardner said.
Supply has not kept pace with demand
Most economic observers believe there’s a real need for new housing supply. B.C. could attract 80,000 to 100,000 new residents per year if the federal government achieves its immigration target of more than 400,000 per year.
Last year, Scotiabank released a report showing that Canada had the lowest number of housing units per 1,000 residents of any G7 country.
"Heading into the pandemic, the supply of housing simply had not kept up with population growth, pointing to a near-record imbalance between the supply of housing and demand," the bank noted.
Andrew Ramlo, a demographic expert and vice president advisory at rennie, pointed out that the number of construction jobs per residential housing start has dropped dramatically in B.C. in recent years.
In 2011, there were 8.02 construction jobs per start; by 2021, that had fallen to 4.98, when there was a record number of 43,360 housing starts in B.C.
The 10-year average was about 6.6 construction jobs per residential dwelling start, according to Ramlo.
He noted that while 2021 was a record year for housing starts, the average during the past decade was 33,886 homes per year.
All things being equal—and if the province wanted to sustain a level of 40,000 housing starts per year—there would need to be 265,000 construction workers, which is almost 50,000 more than today.
But Ramlo emphasized that could be reduced if there was smaller labour input as a result of building more prefabricated homes or modular housing.
Meanwhile, Gardner sees one ray of hope.
“The federal government is making changes to allow a greater portion of immigrants to come in who would be focused on opportunities in agricultural, hospitality, and construction sectors,” he said. “That’s a change that they just implemented.”
Bourke is feeling optimistic about a new “virtual campus” that her organization launched last year called College of the B.C. Building Trades. It offers opportunities for people interested in a trades career to upskill in areas where they have gaps, like mathematics, rather than obtaining their GED over a prolonged period before being eligible for apprenticeship training.
“I’m pretty excited about how we’re changing the way that we recruit, but also the way we assess and place people so that there are less barriers,” Bourke said.
Nevertheless, finding tens of thousands of construction workers in a relatively short period to meet the demand for housing in B.C. is not going to be easy.
Last month, Canadian Centre for Policy Alternatives senior economist Marc Lee wrote a policy note outlining how the B.C. government is far short of reaching its target of 114,000 affordable dwellings. Fewer than 10 percent had been completed nearly four years after the NDP had taken power in 2017.
B.C.'s minister responsible for housing, David Eby, subsequently blamed municipal governments for tying up housing projects in red tape. It's a point echoed by Gardner at the ICBA.
“It can take up to four years to approve and permit a project,” Gardner said. “That’s longer than it takes to build it.”