Partial PST rebate for new homes

Saskatchewan’s struggling homebuilding industry is getting some relief from the provincial government.

The province’s spending update tabled Wednesday included a provincial sales tax (PST) rebate for part of the value of new home sales.

The rebate will cover up to 42 per cent of the contract for a new house with a value of up to $350,000, not including land.

The new initiative will kick in for homes purchased starting April 1 and continue for the next three years.

Finance Minister Donna Harpauer told reporters on Wednesday she worked closely with the chief executive officers of the home builders’ associations in Regina and Saskatoon in crafting the rebate.

“This was a proposal that they came forward (with) that I thought was doable in our fiscal situation at that time,” Harpauer said.

“And I was viewing it more from the affordability side because the (federal mortgage) stress test was eliminating certain people from qualifying for their down payment.

“Now I’m viewing it, quite frankly, as an economic stimulus.”

Harpauer said she thought restrictions at the federal level, known as the mortgage “stress test,” which were introduced in 2018, were having a more severe effect on the home building industry.

The Saskatchewan Party government started charging the six per cent PST on home construction in 2017 to address a revenue shortfall.

“This is a very welcomed tool for our sector,” said Chris Guerette, CEO of the Saskatoon and Region Home Builders’ Association.

Guerette called the province’s homebuilding sector a “significantly underperforming industry” in the province.

In 2018, Saskatchewan’s homebuilding industry was valued at $3.5 billion in investment and $1.7 billion in wages and accounted for 26,500 jobs, Guerette said.

“We need to do something if we wanted to have an industry that is responding to growth. It’s a phenomenal job-creating industry.”

Guerette said projections on how the initiative will affect the industry are difficult right now due to the uncertainty created by the COVID-19 pandemic.

While housing starts have increased in the first two months of this year compared to 2019, Guerette said her association prefers to look at permits, which she said provides a better indication of the industry’s health.

Guerette said permits were down in January 2020 compared to January 2019.

According to Canada Mortgage and Housing Corp. numbers, 369 new homes were started in Saskatchewan in the first two months of this year, compared to 211 in the same period in 2019.

Mark Cooper, president of the Saskatchewan Construction Association,

welcomed Harpauer’s announcements in a statement posted on the association’s website and called the PST rebate “incredibly welcome news.”

Cooper said the initiatives “will give a jolt of confidence to our industry and Saskatchewan’s economy as a whole as we deal with the COVID-19 crisis and look to the days beyond it.”

The provincial government backed away from its plan to present a complete budget on Wednesday and instead announced spending estimates without revenue projections due to efforts to contain the spread of the COVID-19 coronavirus.

The provincial government also announced a new tax incentive to help encourage the building and expansion of oil pipelines. The Oil Infrastructure Investment Program is intended to support the construction and expansion of pipelines and terminals.