A
s cities across Ontario finalize
their budgets and try to squeeze
out savings to expand public tran-
sit, something doesn’t add up. Too many
cities, including Toronto, are missing out
on hundreds of millions in savings. That’s
because Ontario has a labour law loophole
that’s putting cities, companies and tax-
payers at a huge disadvantage.
The heated debate over road tolls in Toron-
to has distracted from a far simpler way of
saving for public transit expansion. Here it
is: Change the way construction projects
are tendered. Right now, Toronto and too
many other municipalities including Ham-
ilton, Sault Ste. Marie and the Region of
Waterloo are forced to award construction
work to contractors affiliated with select
unions only. No other contractors are al-
lowed to compete, even if they’re better
qualified, can do the work more efficiently
and at a lower cost. A loophole in Ontario’s
Labour Relations Act forces these munici-
palities to pay a premium for construction
work by restricting com-
petition. Each year, up to a billion dollars
worth of construction work is subject to
labour monopolies. As a result, taxpay-
ers are not getting good value, and in-
frastructure dollars aren’t going as far as
they should. Ontario is the only province
in all of Canada where municipalities are
treated as “construction employers” and
automatically bound to pre-existing collec-
tive agreements with no ability to negoti-
ate the terms.
There’s a compelling and mounting body
of evidence that demonstrates the costly
consequences of limiting construction
competition. Research by the Cardus think
tank shows that in those municipalities
where construction tendering is restrict-
ed, project costs are inflated by 20 to 30
percent. Apply that to the $600 million
worth of work Toronto performs annually
(and isn’t allowed to openly tender) and it
translates into major savings that
could go a long
FEBRUARY 2017
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business elite canada 15
