Canadian construction stakeholders have welcomed the federal government’s announcement of a new Productivity Mega Deduction, describing the measure as a landmark step while also praising Prime Minister Mark Carney’s decision to bring 300 international capital investors to Toronto for the Canada Investment Summit.
However, representatives from the Canadian Construction Association (CCA), the Progressive Contractors Association of Canada (PCA), LIUNA and other industry advocates stressed that attracting investment is only the first step. The government must now create the conditions needed to turn those commitments into projects and construction activity.
At the conclusion of the two-day summit, the federal government said the event had established a foundation for new investment and helped accelerate negotiations already underway, generating nearly $500 billion in new investment commitments to Canada.
Many of those commitments had already been arranged before the summit by Canadian pension funds, banks and other investors.
Ken Lancastle, chief operating officer of the Mechanical Contractors Association of Canada, said he had pushed earlier this year for the government to expand its original Productivity Super Deduction.
In a presentation to the Standing Committee on Finance, Lancastle had called for construction and productivity-enhancing investments to be included in the measure.
“This was one of the recommendations we really leaned into as a policy lever that the government could utilize to help unlock some of the industry’s potential, so that we can start building projects, the infrastructure, the built environment that we need,” he said.
For Lancastle, the policy also changes the broader discussion around construction productivity.
“We’re shifting the conversation to, how can we be more productive? How do we enhance productivity to allow our contractor members to build smarter and to build faster, to build more productively and to build more efficiently.”
‘Very good news’ for businesses
CCA president Rodrigue Gilbert said his organization had likewise been advocating for the new deduction and welcomed the government’s decision.
“Investing in businesses is the key to succeed,” he said. “It’s overall very good news…our members will be happy.
“The concept they’re trying to do, it’s excellent.”
According to a federal statement, accelerated capital cost allowance measures announced in Budget 2025 lowered Canada’s marginal effective tax rate (METR) from 15.4 per cent to 13.0 per cent.
The Productivity Mega Deduction is expected to reduce the METR further, to 6.4 per cent.
The U.S. METR stands at 16.9 per cent.
Gilbert described the reduction in Canada’s effective tax burden as “long overdue,” but said implementation will now be critical.
“Now we need to make sure the process follows.”
The federal government’s technical description of the measure indicates that certain classes of buildings are not eligible for the deduction. Gilbert said the CCA is continuing to examine the details of the policy.
PCA Ontario vice-president Karen Renkema also welcomed the government’s approach.
“We commend the prime minister for his leadership, his commitment to building a stronger Canada, and his willingness to embrace all innovative approaches. This is the bold, forward-looking leadership Canada needs to unlock its full potential,” she said in a statement.
Industry warns about compliance burdens
Renkema said the next challenge will be ensuring that investment commitments can translate into actual construction.
She argued that the Carney government must avoid regulatory requirements that could make projects more difficult, slower or more expensive to deliver.
As an example, she pointed to the government’s clean-economy Investment Tax Credit and its prevailing-wage requirements, which she described as an unwelcome compliance burden for construction companies.
She also called for changes to Bill C-5, legislation intended to streamline federal approvals for projects designated as being in the national interest.
According to Renkema, the process should be simplified and approvals should be accelerated for all viable projects.
Canada’s Building Trades Unions (CBTU) similarly described the nearly $500 billion in new investment commitments as a major opportunity.
“The $500 billion in new investment commitments is a historic vote of confidence in Canada and an extraordinary opportunity to build our country,” the organization said.
The CBTU also described the Productivity Mega Deduction as “game-changing.”
“This is what nation-building looks like,” said CBTU executive director Sean Strickland.
But Strickland also called for conditions to ensure Canadians benefit fully from public incentives supporting private investment.
“If we are going to use public money to accelerate private investment, we must make sure Canadians see the full benefit,” he said.
Companies using the incentives, he added, should be required to meet specific labour conditions, including paying prevailing wages and providing minimum apprenticeship hours.
Workforce capacity remains a concern
LIUNA international vice-president Joseph Mancinelli said in emailed comments that Labourers, Canada’s largest building trade union, welcomed the government’s emphasis on attracting long-term investment.
“At a time of global economic uncertainty and intense competition for capital, Canada needs to be deliberate about creating the conditions for investment, accelerating major projects and turning opportunity into construction,” he said.
Mancinelli nevertheless said the government must also address workforce capacity.
“That means continuing to invest in apprenticeship, training, upskilling and pathways into the skilled trades,” he said.
The scale of the investment pipeline was highlighted by Water Canada, which noted that the federal government’s summit prospectus included 167 investment-ready projects with an estimated combined value of $327 billion.
The largest of the eight sectors represented in the prospectus were minerals and metals, with 57 projects; clean energy, with 31; and marine and port infrastructure and advanced manufacturing, with 19 projects each.
Housing gap raises another question
Housing, however, was absent from the list of sectors highlighted in the investment prospectus.
That omission was noted by Richard Lyall, president of the Residential Construction Council of Ontario.
Lyall said the Carney government’s investment objectives were “wonderful,” but argued that the country’s existing housing shortage and shortage of skilled trades workers must also be addressed.
“People forgot to say, do we have the people to do this, and can we house them.”
The comments underline the central challenge facing the government as it moves from investment announcements to project delivery: Canada may be attracting substantial amounts of capital, but construction stakeholders say the country will also need sufficient labour, housing capacity, efficient approvals and workable regulatory conditions to turn those commitments into completed projects.
