Steps for how to Build for Recovery...

In preparation for their upcoming 2021 budget to be released prior to March 31, our Provincial government has reached out to all stakeholders and asked one question: What do we need to position Ontario for a strong economic recovery after COVID-19?

I believe that the response to this question is actually easier than they believe but will require specific conditions to be met in order to properly Build for Recovery.

Step One: Invest!

The first and overwhelming response from the construction industry will be that the governments, at all levels, will need to invest in construction projects at a scale far higher than normal to ensure that they are Building for Recovery.

Only through widespread investment in small, medium and large construction projects, be they infrastructure or from the MUSH sector (municipalities, universities and colleges, school boards and hospitals), will this government move toward a true recovery. Additionally, as the OGCA has requested in our previous presentations at the Standing Committee for Finance and Economic Affairs, all projects must be issued without exclusionary language, specific conditions or limitations.

The rationale for this level of investment is supported by two studies commissioned by the Residential and Civil Construction Alliance of Ontario (RCCAO): Navigating the COVID-19 Socio-economic Shock: How infrastructure investments will facilitate future growth in Ontario (June 2020) and Navigating the COVID-19 Socio-economic Shock: New Higher Risk Scenario Supplement (July 2020). These studies assisted in demonstrating the quantifiable need for a higher level of investment into construction by noting that, should the governments keep the same level of investment as pre-pandemic, there would be a loss of 55,000 jobs. Should that level of investment be reduced due to the cancelation of construction projects, then there would be a further loss of 60,300 jobs.

The only scenario that demonstrated a net positive result on all aspects of the economy was an increased level of investment. The investment would be in proportion to the money being tabled by the federal government and the net result was an increase of 61,000 jobs. Hence these studies provide the evidence that greater investment in construction yields greater benefits. Ultimately, the best way to stimulate the economy is to get people back to work; back to being productive; back to a sense of pride in a job well done; and back to some semblance of normalcy.

Step Two: Cooperate!

COVID-19 has demonstrated that once everyone is focused on a common goal, anything is possible. This trend needs to continue and only by all levels of government working together, setting aside any individualized agendas, and focusing holistically on one ultimate reward – Ontario’s recovery – will our economic recovery truly happen.

I understand that this type of logic sounds simplistic, but history has demonstrated that even those who do not agree with each other over fundamental issues can overcome any differences and rally against a shared enemy. Our enemy is COVID-19. This pandemic can actually yield a greater cooperation when all industries, all sectors, all businesses, all individuals and especially all governments unite as one in the spirit of getting past this and facilitating a true recovery.

This is where the governments and other industries can learn from construction. The construction industry understands how to cooperate and collaborate towards a shared mutual outcome. We do this in our everyday lives by ensuring that pertinent information is constantly shared amongst projects and that there is a continual flow of information to ensure the successful completion of a job. We connect sub-trades, supply chain, personnel, insurance, banks, associations, organizations, and above all people. There is an innate inter-reliance on one another in construction to keep things safe and always moving forward, and the most successful endeavours are those that cooperate the best.

Step Three: Support!

The final, and perhaps the most vital, step for the success of the construction industry is that the Provincial government needs to provide support to contractors. This support comes in two distinct forms.

Firstly, the government needs to establish a relief provision that allows banks and bonding companies to financially support contractors while they deal with contractual and payment delays. In essence, the government needs to backstop lines of credit and ensure the financial viability of contractors as they continue to deal with issues arising from COVID-19. The last thing the government needs is more companies filing for bankruptcy or simply closing their doors because they couldn’t stay afloat during this period. Construction is not immune to cash flow issues and is perhaps more susceptible than other industries.

Secondly, the government needs to apply pandemic related costs to the force majeure clauses of contracts. It has been nearly one full year of working under COVID-19, and there were distinct and related costs in having to establish working conditions that kept our workers safe. For the most part, the buyers of construction on the private side have compensated our contractors for their additional costs. The issue remains with the buyers of construction on the public side and their inability to recognize, or perhaps acknowledge, this pandemic as a clear and distinct force majeure situation. By making this a clear distinction, all of our contractors would be reimbursed and future matters of this kind would be avoided.

So, these are the steps to Building for Recovery for the construction industry. They may seem simple, but I have witnessed that the most effective strategies are those that are clear and simple in nature. Invest in construction. Cooperate with each other and construction. Support construction. Together, we will Build for Ontario’s Recovery.

Should any of our members require any assistance from the OGCA, please contact me directly at giovanni@ogca.ca or via phone at 905.671.3969.