CHBA has very much welcomed the work of the government to provide emergency programs to support workers and businesses. We've also appreciated how responsive the government has been to feedback to make changes to close gaps and maximize impact. In particular, the Canada emergency business account and the Canada emergency wage subsidy program have helped support many businesses.
Changes to the reference period for the wage subsidy and the ability to use the cash or accrual accounting method have been very important, as have changes to CEBA to lower the minimum payroll threshold and to render dividends eligible. We're very thankful for those on-the-fly adjustments that have been made that have allowed many more of our challenged companies to qualify.
At the same time, though, as we have expressed in our ongoing dialogue with government, there remain outstanding challenges, particularly with regard to the wage subsidy program. The challenge is that in residential construction the revenue cycles are long and essentially 95% of the revenues don't accrue until the close of the home when the keys are handed to the homeowner. A sale made in early 2019, for example, with a small deposit of typically 5% is financed over many months or years, and revenue comes at closing.
Due to this revenue cycle, closings have still occurred in recent months from construction over the past year or years, but new sales have dried up. In these circumstances, many businesses haven't been able to meet the revenue-decline criteria of the wage subsidy program because of closings. Meanwhile, sales have plummeted and as a result many companies have very little or no new work and, therefore, no new financing and won't until sales pick up. As a result, they have laid off and will continue to lay off workers. Unfortunately, neither the changes to the reference period or to allow cash or accrual accounting capture this situation.
To make the program work better for this situation, CHBA has been recommending that the program criteria be amended to allow the fair value of contracts signed to be used in calculating the revenue. This would capture the steep decline in sales, which is the measure needed to capture these situations and keep workers employed or get them back.
A quick note, too, on financing is that our members will need to have the financial system meet the credit requirements of businesses trying to stay afloat in the short term and scale up construction over the longer term. Unfortunately, some of our companies are having issues securing the capital they need when opportunities present themselves during this difficult time, or to extend financing due to delayed closing and lost sales. It would be important that the measures put in place by government to provide more liquidity to the financial institutions actually translate into the financing requirements of businesses in our sector and other sectors.
As I know many of us are starting to think in these terms as well, I'd like to speak for a moment on recovery.
While the forecasts vary on the impact that COVID-19 will have on the housing market, there is no question that government policy can and should help to ensure housing markets remain stable, rather than dampen activity or slow the recovery. Housing can and should be a solid part of economic recovery as it has been in the past.
For those Canadians who have maintained their financial situation through the crisis, there should be opportunities for them to act on home ownership or to renovate their homes to meet the evolving needs of their situation. For many, COVID has placed new priorities on their needs and aspirations regarding their homes. A multiplier effect in residential construction to other related goods and services and jobs is extensive. Economic recovery and housing recovery go hand in hand.
In terms of recovery programming, the good thing about housing is that it can achieve many other policy objectives too. To that end, we have some recommendations.
One is removing the GST or HST on new housing across the continuum for 2020 and 2021 to improve affordability immediately, and post that period, index the existing rebate program to better reflect current house prices.
We recommend introducing a home renovation tax credit for 2020 and 2021 for all types of home renovations, and connected to that, a permanent energy retrofit tax credit to tackle climate change now and into the future.
As for mortgage financing, we need to encourage and enable those well-qualified Canadians still in a position to invest in home ownership to do so. Now more than ever, it makes sense to give them the option of a 30-year amortization on insured mortgages to help well-qualified buyers enter home ownership and also to free up much-needed rental space as our supply challenges remain.
It's also time to move forward with the previously announced changes to the stress test benchmark that were to come into effect on April 6 but were suspended.
Given the Bank of Canada's recommendation to move to longer-term mortgages, we also recommend supplementary changes to the stress test to better mitigate risks for Canadians and the financial system by incenting longer-term seven- and 10-year mortgage terms through a stepping down of the 200-point buffer for the longer-term mortgages with respect to the stress test.
These are changes that keep sound controls on consumer indebtedness risks while also enabling those still with the means and the dreams to achieve home ownership, this at a time when that activity can also be pivotal in the economic recovery.
Thank you very much. I look forward to any questions you may have.