A home being built in Prince Albert. (File photo/paNOW Staff)

By Nigel Maxwell

Construction slowdown

PST slowing down construction in province: Saskatchewan Construction Association

Mar 23, 2019 | 9:00 AM

A spokesperson for the Saskatchewan Construction Association says the provincial government is not doing enough to reignite excitement and growth in the industry.

John Lax, Director of Advocacy and Communications told paNOW he wished the provincial government re-instated the Personal Sales Tax (PST) exemption on construction services in its budget. He said the tax can add 2.3 to 4.1 per cent in costs to every project.

“How many cases are there of someone who wanted to upgrade their businesses or who wanted to build a new facility and just could not make that decision with that extra percentage on top,” Lax said.

Lax explained no one including the government claims to have a firm grasp of what the impact is from the PST. He added through consultations he has had with businesses outside the construction industry, a business will continue to go ahead with investment decisions but will pare back what they do to compensate for the additional tax.

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“Which means essentially we are getting worse value for our money in Saskatchewan and it makes us less competitive to our neighbours both east and west who don’t have that tax,” he said.

Dan Yungwirth, General Manager of Miller Contracting in Prince Albert, told paNOW he heard local examples where projects are reduced in scope to cut costs.

“Certainly if you are looking at spending $100,000 on a project, and there’s an extra $30,000 in costs, you are are probably going to take a second look at it,” he said.

According to statistics provided by the City of Prince Albert, there were noticeable construction permit decreases last year both for residential and commercial projects when compared to the previous year. Yungwirth said his company, like many others in the province, experienced a significant slowdown. He explained the slowdown was not because of any one specific factor.

“Did PST have a negative effect? Yes but so did the regular slowdown in commodities in the market which resulted in job losses and that was exacerbated by federal [and] provincial decisions like not getting pipelines approved,” he said.

Yungwirth added a mortgage stress test on residential construction was probably the biggest factor on the residential construction slowdown.

“Any one of those on its own would have had a negative effect but would have been manageable but I think the problem here in Saskatchewan was that all of those things hit at pretty much the same time,” he said, calling it a perfect storm of negativity.

Government response

A spokesperson for the Provincial Government, told paNOW, through an emailed statement, they would continually review tax treatment and regulation for all industries in the province.

“As we move forward, we will continue to examine a range of tax policies to determine whether we can provide tax relief where it is most needed and would have the greatest economic impact, while ensuring the budget is balanced,” James Parker said in the statement.

Parker added there have been signs this year of recovery in Saskatchewan’s construction sector. In January, investment in building construction rose by 15.3 per cent compared to December, the highest increase among the provinces.

nigel.maxwell@jpbg.ca

On Twitter: @nigelmaxwell