OGCA: Investment in construction is the solution!

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By Giovanni Cautillo

Special to Ontario Construction News

The Ontario General Contractors’ Association (OGCA) has sought to be succinct and consistent with our messaging to the government regarding its overarching question to all construction stakeholders on what we believe is needed for the economic recovery of Ontario.

Investments in construction will stimulate multiple aspects of the economy and properly pave the road to a turnaround in our current situation.

The Ontario government, like the rest of the world, is coping with a pandemic that has fully turned the economy of each nation completely upside down. And as all the world economies struggle to find the “silver bullet” as to how to properly emerge from COVID-19 and provide the much sought-after solution to our current situation, construction is the key to moving the economy forward.

The OGCA messaging has been simple and straightforward: investment in small, medium and large construction projects will yield a greater economic impact both directly and indirectly.

Firstly, construction is the impetus for the flow of money. Investments into construction projects will get companies, and therefore people, back to work. These investments will then reignite the supply chain and the trickle-down effect on the work and those employed is truly synergistic, wherein the whole is actually greater than the component pieces. The more projects that are tabled, the more trades, suppliers, manufacturers, and finally workers will be engaged and employed.

Secondly, construction yields confidence and stability. Confidence in construction translates into confidence in the economy, since when there are projects underway and the proper investments to facilitate infrastructure and construction projects, there is generally more outside investment by private buyers of construction due to the stability caused. And the more confident investors are, the more investments will be made, therein creating a somewhat perpetual situation of benefit.

Thirdly, construction creates. Construction yields physical constructs that benefit communities and constituents. These benefits can be in the form of hospitals, schools, long-term care facilities, stadiums, office buildings, water and wastewater pumping and purification stations, or whatever is needed in said community. Construction investments translate into physical, usable and necessary buildings that, in turn, benefit society. Once built, those structures create residual income for the owners and keep the economy moving forward.

Finally, construction provides monies that, in turn, are spent elsewhere. Those workers who are employed in our field understand fully the economic benefit that they have in working and getting remunerated in high paying jobs. The income that is derived by construction workers is then invested into all aspects of the economy, from purchasing groceries and other consumables, to larger items such as cars and houses. Money flows into the economy because of employment in construction.

So you see that without the initial investment into construction as the catalyst for the economy, all that would follow, in both the direct and indirect benefits, cannot be derived. Hence, it is imperative that government recognize the necessity to invest into our sector.

So, what has the OGCA done to ensure that government is listening?

The OGCA, provincially, and the General Contractors Alliance of Canada (GCAC), federally, have been touting the rationale and the benefits for the respective tiers of government to increase the level of investment into construction. I do not believe that I have been involved in any recent discussions with any governmental entity or forecasting group where I did not table the overall need and benefit with investments into our sector.

Recently, the OGCA was asked to provide a submission to the pre-budget committee on what is needed to move the economy forward. In that address, the OGCA stated clearly that a greater level of construction investment to the pre-pandemic period was required now. Matching the same levels as before the pandemic would yield in job losses as would a reduction in project volumes from the same time last year. Only a more robust investment from all three levels of government will succeed in moving the economy forward.

The OGCA cited two RCCAO studies titled: 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, there would then 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. We did not include the resultant increase in Gross Domestic Product (GDP) or the income tax that would be derived from the stimulation of increased employment, since as I stated, we wanted this to be kept simple and straightforward.

Incidentally, the OGCA and GCAC have also linked construction as a potential solution for the government regarding the large percentage of unemployed with which our economy currently has to contend. With some retraining, construction can be properly utilized as the bastion of hope for a great many people.

The OGCA will keep repeating this message to the government until they fully understand that our sector can fix the current economic situation. The government simply needs to start the flow of projects to turn our economy around.

Should you want more information about the OGCA’s initiative with government, or if you require assistance from the OGCA, please contact me directly at giovanni@ogca.ca or via phone at (905) 671-3969.

Giovanni Cautillo is the OGCA’s president. This article originally appeared in the association’s weekly eletter.

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