Bonds do more than protect taxpayers, small business and workers, they also provide measurable benefits to the national and local economy by protecting GDP, creating jobs and allowing governments and public agencies to recover some, or all, of the premium paid to the surety company, suggests a recent study from the Canadian Centre for Economic Analysis (CANCEA) and recently shared by the Surety Association of Canada (SAC).
(Infographic courtesy of the Surety Association of Canada and the Canadian Centre for Economic Analysis Inc.)
SAC says the research, which examined the economic impact of requiring surety bonds on public construction projects in Canada, strongly reaffirms the benefits to governments of adopting a mandatory surety requirement on all publicly funded projects.
Some of the key findings highlighted by CANCEA president and CEO Paul Smetanin include that a non-bonded construction enterprise is 10 times more likely to become insolvent than bonded companies; that surety bonds will protect $27.24 million of GDP for every $1 million of premium paid on public infrastructure; and that some or all of the surety premiums paid by the government for bonds on public work can be recovered through the tax revenue generated from the timeliness and certainty of the completion of the bonded asset.
Bonds also provide job protection, he added, noting that under stable economic conditions surety bonds will protect 29.4 full-time jobs for every $1 million in premium paid, and 207.6 full-time jobs per $1 million in premiums in more volatile times.
“Surety bonds combine financial assurance with project accountability, ensuring work is finished, workers are paid, and taxpayer dollars deliver full value—no matter the economic climate,” he said.
“The CANCEA report provides empirical evidence that confirms the value of surety bond protection to governments and other key industry stakeholders,” added SAC president Steve Ness. “It clearly demonstrates that all public work should be protected by performance and payment bonds.”
In addition to the national results, CANCEA also examined the impact of suretyship in six key regions across the country: Atlantic Canada, Quebec, Ontario, Prairies (Manitoba and Saskatchewan), Alberta, and British Columbia. Copies of the CANCEA reports for each jurisdiction can be accessed from the SAC website.
