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Governments That Take On Construction Monopolies Deserve Praise

Fairness and value for hardworking taxpayers should be the principles that guide procurement practices in every Canadian province and city.

One might be hard pressed to connect the dots between Northern Ontario's third largest city, and one of Canada's three prairie provinces. But it turns out Sault Ste. Marie and Manitoba have more in common than turning out their fair share of NHL players. Both also share the political gumption to do what too few elected officials seem willing to even consider: taking on construction labour monopolies.

Fairness and value for hardworking taxpayers should be the principles that guide procurement practices in every Canadian province and city. All too often though, they're not.

That's why Manitoba and Sault Ste. Marie stood out when they recently announced their intent to end the practice of restricted construction tendering. While the issue may not register with the average person, it's significant. By opening up construction tendering, and allowing all qualified contractors and workers to compete for public projects, the potential cost savings to taxpayers in Manitoba and the Sault are huge.

In Manitoba, where the province is trying to get out from under Manitoba Hydro's ballooning debt, change can't come soon enough. The Pallister government is making good on a campaign promise to deliver better value for taxpayers and make Manitoba "the most improved province in Canada." Infrastructure Minister Ron Schuler made it official, saying, "The Manitoba government has started consultations on procurement practices with a view to reducing or eliminating the costly practice of project labour agreements (PLA) regarding major government projects."

Under the previous government, PLAs were expanded, allowing the Building Trades Unions to monopolize massive Manitoba Hydro projects. "This had the effect of increasing the cost of a project, discouraging some contractors from bidding and infringing on the rights of workers," Schuler said.The end result: sticker shock. Project cost overruns have pushed Manitoba Hydro's debt to a staggering $16 billion and counting.

In Sault Ste. Marie, the municipal government has also taken a big step forward to free itself from a construction labour monopoly. For more than three decades, the United Brotherhood of Carpenters and Joiners and the Labourers International Union of North America have been allowed to monopolize all municipal construction projects in the Sault.It's meant that local qualified contractors and their workers have been prevented from bidding and working on local projects. This is all the unintended consequence of a loophole in Ontario's Labour Relations Act that treats Sault Ste. Marie, as well as Toronto, Hamilton and the Region of Waterloo, as "construction employers," binding them to collective agreements suited for construction contractors, not municipalities.

Although the Sault is the smallest Ontario municipality impacted, it's the only one that's stood up. In an overwhelming show of support for fair and open construction tendering, Council recently passed a resolution to start the process of changing its "construction employer" status. That requires convincing the Ontario government to amend Section 126 of the province's Labour Relations Act. Similar calls from the Association of Municipalities of Ontario (AMO), the Ontario Chamber of Commerce, the Large Urban Mayors Caucus of Ontario and many others, have all been ignored.

What's becoming harder to ignore, though, is the growing and compelling body of research demonstrating the public benefits of open construction tendering.

For starters, in municipalities like the Sault, where tendering is restricted, taxpayers could save anywhere from 20 to 30 percent if more contractors were allowed to compete for projects.Right now, little competition makes construction work a lot more expensive. Based on Sault Ste. Marie's own infrastructure estimates over the next three years, taxpayers could be over-charged at least $8 million for future construction work. Or look at it this way: closing that legislative loophole could save taxpayers $8 million.

In Ontario, where up to a billion dollars worth of municipal construction work is monopolized each year, changing antiquated labour laws translates into major cost savings. According to the Cardus think tank, those savings are anywhere from $188 million to $283 million annually, simply by making small changes in the way public construction projects are tendered. These savings are significant enough to make a difference in improving public transit, or covering the cost of badly needed social housing repairs.

There are clear benefits to bringing labour laws in step with the times. The public, contractors and workers are treated more fairly, and it saves millions in tax dollars. The governments of Sault Ste. Marie and Manitoba deserve our recognition for their efforts, and hopefully inspiring others to follow their lead.

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