Thank you, Mr. Chair and members of the committee. I'd like to thank you for this opportunity to add Merit Canada's voice to the pre-budget consultations.
You will be pleased to know that, unlike many organizations and witnesses you've heard at this committee in the past, I am not here to seek more government spending or more of your money. I am here, though, to ask for your assistance in ensuring that the money you do spend creates maximum value for taxpayers and creates more jobs.
First a little bit about Merit Canada. We are the national voice of Canada's eight provincial open-shop construction associations. Open-shop companies and their workers build more than 70% of the industrial, commercial, and residential construction projects from coast to coast. Simply put, employees in open-shop companies build Canada, and we are proud of their record.
I am here today to speak to an issue of fairness for hundreds of thousands of these workers who choose not to belong to the building trades unions. Some of those workers may choose to be union-free or belong to another union such as the Christian Labour Association or other independent unions. Unfortunately, in many cases these workers are barred from working on projects that are funded with their federal tax dollars.
Our message is very simple: when government funds infrastructure, all qualified contractors should be allowed to bid on those projects. Unlike the building trades unions, we are not asking for rules to be written so our employees have a greater chance of working on these projects; we just want the ability to compete. We believe that fair and open competition is what ensures the best project for the best price.
A degree in economics is not needed to understand what happens when you shut out 70% of the construction industry from competing on public infrastructure. Costs increase and quality decreases. Some U.S. studies suggest that closed tendering rules increase the cost of construction between 12% and 18%.
Federal procurement rules would never allow union-only schemes for projects that it exclusively funds, but this is not true across the country. Far too many jurisdictions have rules that limit competition. For example, the federal government recently contributed $28 million in stimulus funding to a project for the City of Hamilton. Of the approximately 260 qualified contractors, only 17 had workers registered with the union that the city rules require, so the other 243 contractors, or 94% of the available workforce—some of your constituents—were not even allowed to bid on this project. We believe this is unfair, and it only serves to increase costs and keep some of your constituents from working on these projects.
Recent media reports about the Toronto District School Board's problems with repair work show all too well the consequences of such restrictive bidding. Costs are inflated: $143 was billed for installing a pencil sharpener. Productivity is reduced: bills were inflated to pay for people who didn't even bother to show up for work. Taxpayers are ultimately the ones left paying the price.
Closed tendering rules ultimately harm workers. Companies they work for aren't even allowed to bid on these projects, and we must remember that it is their tax dollars that are paying for these projects. Therefore, those employees are at a significant disadvantage.
All Canadians pay for federally funded projects; therefore, we believe that all Canadians should have at least an opportunity to provide services that these tax dollars pay for. It makes no sense for federal funds to be spent, with restrictions put in place that would never be allowed on a project that was exclusively funded by the federal government. In the end, fewer projects get funded and fewer jobs are created.
We all have a responsibility to hard-working Canadian taxpayers to ensure that each dollar the government spends goes as far as possible. Therefore, our members feel that the federal government should ensure that all construction projects financed with federal funds be tendered in an open and competitive manner, and that union-only schemes should not be allowed, as they simply drive up the cost and harm the majority of workers in the industry.
The Canada–Nova Scotia Building Canada Fund Communities Agreement could easily serve as a template. Let me quote from that agreement under schedule A, “Mandatory Criteria”:
The contract award process will be competitive, fair and transparent (e.g., no sole-source contracts, no union-only processes).
Our members and their employees could not agree more with this language, and we think this clause should be inserted in all agreements with the federal government.
Thank you, and I'd be happy to answer your questions.