Building Up Again: Home Renovations Upgrade the Economy

Home renovations

As the world slowed to a crawl in 2020, the DIY and home renovation market prospered. With building supplies deemed essential and nowhere to go plus money to spend, people began sprucing up their home turned office turned prison.

To keep some much-needed cash flowing into the struggling economy, the Government of Saskatchewan is further encouraging this recent burst of renos with the introduction of a home renovation tax credit (HRTC). For homeowners, it’s a nice rebate on costly projects, with savings up to $2,000. (A 10.5 per cent tax credit on up to $20,000 of eligible expenses.) But the benefits of the HRTC and a flourishing building supply industry goes beyond a new bathroom or energy-efficient windows—it provides a substantial boost to the economy, locally and across Canada. In fact, the HRTC and a continued focus on home renovations is one of the best ways to drive our economy forward.

“An increase in sales in the building supply sector generates far more economic value in Canada compared to an increase in sales in many other retail sectors, including automobile, appliances, communications equipment and clothing,” says Liz Kovach, president of the Western Retail Lumber Association (WRLA), which represents the lumber and building supply industry across Western Canada.

According to an economic impact report of the building supply industry commissioned by the WRLA, if every household in Saskatchewan spent, on average, an additional $500 on repair construction activities, it would grow the provincial GDP by over $277 million, generate $173 million in labour income and support 2,835 jobs.

In 2009, the Government of Canada implemented a Home Renovation Tax Credit (HRTC) to help reboot the economy after the recession. The temporary 15 per cent tax credit was established for eligible home renovation expenditures. In a review of the tax credit program, TD Economics concluded that renovation spending was the only major component of GDP that grew in 2009 and credited the HRTC with the sector’s strong performance. The bank stated that “[a]long with record low interest rates, the [tax] credit worked. It helped boost renovation spending by an estimated $3-4 billion.”

“The building supply industry has the ability to make a significant impact on the local economy and help Saskatchewan thrive after the pandemic,” says Kovach. “In addition, many of the core products sold by local building supply dealers, such as lumber, wood products, paint and other manufactured goods, are produced in Canada, so a boost to the industry in Saskatchewan goes beyond the province and will support thousands of jobs, companies and economies throughout the country.”

The key to all this though is the necessity to support local. The economic benefits won’t be as significant if people shop at stores that are owned by American companies, such as a certain orange big box store or an online retail giant that needs no introduction.

“We all need to support stores that are locally owned and operated rather than supporting a huge American corporation or another billionaire CEO who is certainly not hurting,” says Kovach. “By supporting our local stores, our hard-earned dollars work harder and go deeper into our communities.”

To build up the economy so it’s stronger than ever, it’s vital that we support the stores that are going to help drive our own community and province forward. Because at the end of the day, when the smoke clears post-COVID, it’s the local stores that we want to see standing. If they are thriving, the entire province will thrive.

In Canada, the building supply industry is a $80 billion industry that directly employs 262,000 Canadians. From Western Retail Lumber Association Inc.