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Fighting the Underground Economy
By Don Johnston

As the Chair of CHBA’s Canadian Renovators’ Council, John Friswell knows firsthand the level of frustration that renovators are feeling. The underground economy is growing and renovators aren’t going to take it anymore.
John Friswell is the president of CCI Renovations, an award winning renovator in Vancouver. He is well aware that the HST is going to fuel the underground “cash” economy in his province, and in Ontario.
This is one of the big-ticket items on his Council’s agenda. HST aside, no province is immune to this problem. The HST had a devastating effect when it was introduced in Atlantic Canada a decade ago but, according to a recent poll of the industry, the underground economy is present and thriving in all provinces.
The federal government promised that the GST would be revenue neutral when they introduced the new tax 20 years ago, but then started collecting extra taxes on renovations. They have been doing so ever since. “It’s time to restore tax fairness, and that’s message we are taking to the federal government,” Friswell said.

Canadian Homeowners Love Rebates
Last year’s Home Renovation Tax Credit (HRTC) was a huge success in creating jobs and getting the economy going. It also demonstrated that homeowners will abandon the cash operators to get a receipt if they can use it to get a rebate.
“The receipt makes all the difference,” Friswell said. “That’s why we have recommended a permanent home renovation tax rebate.” He realizes, however, that the rebate must be supported by other initiatives. Consumer education is an important part of the solution, which is why he was so pleased when Canada Mortgage and Housing Corporation (CMHC) “picked up the ball” to help the CHBA to renew its “Get it in Writing” campaign, noting that, “CMHC has done a terrific job and done it quickly.”
The new materials are centred on a consumer website that is loaded with excellent information about the hazards of dealing with cash operators. It even has a feature where consumers can tell their own stories about cash deals gone bad. The Canada Revenue Agency (CRA) has also kicked in to make copies of the brochures available in quantity to all local HBA’s who order them.

Last year’s Home Renovation Tax Credit (HRTC) was a huge success in creating jobs and getting the economy going. It also demonstrated that homeowners will abandon the cash operators to get a receipt if they can use it to get a rebate.

So far, the federal government’s main response to the threat from the underground is the Contractor Payment Reporting System or CPRS. “This is like looking for your lost car keys under the street light,” Friswell said. “The real cash economy avoids paper, so there is no paper trail. Yes, it will find careless non-filers, but otherwise all it does is to create more paperwork for honest businesspeople.”
The federal government provides millions of dollars each year to homeowners for basic house upgrading through the Residential Rehabilitation Assistance Program (RRAP) and there is always a risk that some funds can find their way into the underground. That’s why, several years ago, the Canadian Renovators’ Council asked CMHC to review its policies and procedures to minimize this risk. CMHC responded by tightening up the rules in response to this request to require a paper trail.
CMHC’s response is the kind of thing that the Canadian Renovators’ Council makes possible. It provides a direct “face-to-face” channel to the federal government and its agencies, which is instrumental in getting things done. Last year, when the federal government was planning its stimulus package, the CHBA President wrote to the Minister suggesting he consider engaging the home renovation industry to kick-start the economy and the rest is history.
“I was sorry to see the end of the ecoEnergy grants program last month but I understand that it was an expensive program for them,” Friswell said. “CHBA has written to the Minister of Natural Resources offering our help to develop a new, more sustainable initiative. Stay tuned!”

Education and Information
The Underground Economy has been a major focus for the Council for many years, but not its only concern. In addition to working with the federal government to improve government policies and programs, the Canadian Renovators’ Council also works on information products for renovator members, as well as consumer education initiatives.
The Council produced a Guide to Renovation Contracts three years ago which was well received. The Councils’ Vice Chair, Mike Martin of Luxury Renovations in Ottawa, reports that the Council is about to release the second edition of its popular publication. New clauses have been added and others revised based on feedback from members.
“We plan on sending a copy to every renovator who is a member of CHBA,” Martin said. “The reaction from renovators to the original version was very positive, and the new edition is even better.”
As far as public education is concerned, October has been Renovation Month for almost as long as there’s been a Canadian Renovators’ Council. Since its launch almost 20 years ago, Home Hardware Building Centre has been a partner and this year will be no exception. Joining them again this year as National Renovation Month sponsors will be Genworth Financial, Delta and RBC Royal Bank.
“Home Hardware counts the number of copies of its flyers in the millions and so messages carried by them about the benefits of working with a professional renovator go a long, long way,” said Martin. Each year, CHBA produces articles and model public service announcements for use by local associations, and has again distributed them early to give local planning committees a head start.
RenoMark logo
The CRC has also promoted the Renomark initiative at every opportunity. RenoMark helps customers connect with professional renovators while creating a vehicle for manufacturers and suppliers to invest in the professional renovations industry. It is a win-win-win situation and the CRC would like to see Renomark present across the country.
“BILD deserves credit for making this happen,” Friswell said, “and it’s up to the rest of us to make the most of it.” Friswell, and the Canadian Renovator’s Council, are also open to suggestions. “If you are a renovator with ideas about how to make it easier for professional renovator members to be successful, we’re all ears. We’d love to hear from you. Drop us a line at crc@chba.ca.” 

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