Transport Committee on April 30th, 2013

[Jocelyn Dumais]

This is what I'm saying. They have this clause. Large companies, and I'm using PCL as an example, are signatories with many unions. So, if my company is signed up with the carpenters union—so I'm not anti-union—but my labourers are not, and PCL is signed up with the labour union, that means I can't bid on a job that PCL is running. It actually stops me from bidding on that job.

[Ed Holder, Conservative, London West, ON]

So that might be an issue of fairness for you Mr. Dumais, but that doesn't necessarily mean that you would be more competitive than a closed shop, would it?

[Jocelyn Dumais]

Yes, because many jobs that I bid on are general contractors that are completely non-union and I have their jobs and they are contractors that are a signatory with the carpenters union, which I'm okay with, but this is fairness. It's just when it comes to our federal government I feel it is not acting properly towards my situation. In the private sector, I have no problem with this. This is the name of the game. I win, it's good; I lose, it's good. That's the name of the game. But when it comes to my federal government, I would like to have just as fair play as the union-only company.

[Ed Holder, Conservative, London West, ON]

Thank you.

Thank you, Chair.

[The Chair, Conservative, Larry Miller]

Thank you very much.

Ms. Chow, for five minutes.

[Olivia Chow, NDP, Trinity—Spadina, ON]

There are two ways that the federal government transfers money. One, as you know, is through the gas tax, which is basically an agreement. It's a direct transfer from the federal government to the provincial and municipal governments. In that instance, the funding is more predictable, but the federal government takes a completely hands-off approach. Whatever the municipality wants to spend it on, it's up to them whichever way. The other approach is the Building Canada fund and the P3 fund and the provincial-federal agreement fund. In these ones the federal government has some say over the agreement with the provincial government or it would be as a grant-based project.

I see what you are trying to say. You're saying that the federal government should, in the way it spends its infrastructure funds, make sure that the bidding process is open, but that wouldn't apply to the gas tax fund. It really wouldn't apply to the direct transfer, right?

In your mind, do you think that the federal government should put on more conditions when there's an agreement with the municipalities that there should be some conditions? Condition one could be that you have to generate apprenticeship spots, for example. Your suggestion could be another one.

In your mind, how do you go about coming to a place where you want to be? Right now, in terms of the old funding, the existing funding, there's not a whole lot left. In fact, there's a bit of a cut. It's about a $2-billion cut. We used to get $5 billion. It's now down to $3 billion, so we're actually losing about $2 billion a year of existing funds. That's through the Building Canada grants program. Are you specifically talking about the Building Canada program? That program is the old program, not the new one. The new one doesn't really wrap up until three or four years from now. So I can't see how, even if we want to, we would apply conditions.

[Terrance Oakey]

I think on the old agreements it probably is too late for that, given that they've already been negotiated with the provinces, but I think in the new round of negotiations it should be a condition.

I also think that for any federal agency, so whether you think of P3 Canada or Canada Post, any agency that spends federal money, they should ensure that there's an open bidding process that ensures greater value for taxpayers and doesn't shut out 70% of the construction industry and their workers.

If I were to make a recommendation, if I were a negotiator with the provinces, that would be the federal government's position, and the province and municipality could either continue in a closed tendering way and not be eligible for that portion of the money.... I think very quickly, though, municipalities and provinces would understand the importance of having an open tendering process, and therefore would likely agree to it.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Allow me to just keep going on that one. In the past, the Conservative government has said over and over in a lot of this discussion, such as when I was trying to push for a national transit strategy....

The government seems to have the belief that we should not say what the provinces and municipalities should do. Apprenticeship programs shouldn't be a condition; a transit strategy shouldn't be a condition; it should be hands off, and let them decide. I keep hearing that.

Isn't there a contradiction between saying to let them decide, let them manage—because their level of government allows the municipalities to make a decision—and now, all of a sudden saying that perhaps there should be a condition? That doesn't seem to connect with the kind of ideology, or the belief, of the Conservatives, my friends across the way. Let me put it that way.

[Terrance Oakey]

I'm not here to comment on the belief of the government or the ideology of any one party. I'm here to make the case that there's a cost rationale and a fairness rationale to ensure that any public money that's spent on infrastructure is open to all qualified bidders and their workers.

In construction, it's especially necessary, given that in some jurisdictions only 10% of the industry is unionized. Nowhere is it as high as 30%, except in Quebec. You're shutting out so many of the very people you are elected to represent. They just cannot work on these projects simply because they have made a private decision, in their own private lives, choosing to be union-free.

We think that's unfair.

[The Chair, Conservative, Larry Miller]

Thank you very much.

Mr. Toet, for five minutes.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

Thank you, Mr. Chair.

Thank you to our guests today.

Mr. Oakey, you stated, when Mr. Holder asked you about it, that the Merit group of companies, the companies that are under your umbrella, do about 70% of the construction in Canada. That adds up to also about 70% of the workers.

How does that percentage change when you go into public sector construction, which is kind of what we're talking about today? Where is it in comparison with that 70% of overall construction?

[Terrance Oakey]

It's much, much lower. It depends on the province. I will get you the numbers on that—we're currently doing a lot of that research—but it's a lot lower in public construction.

I'll give you a great example. It's currently not the case in British Columbia, but the party that looks like they're about to win the election in British Columbia has it right in their platform that all public construction in the province of British Columbia will be reserved for only union contractors. In British Columbia right now, that would shut out basically 80% of the industry.

You can only imagine what that will do to the costs. Also, those who are currently working on those projects will no longer be allowed to.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

It would be very helpful if you could table that data for the committee, through the clerk, when you have it. That would be very much appreciated.

I have another question for you regarding your member companies. Are they held to the same safety standards, building codes, quality standards, etc., as any other company across Canada?

[Terrance Oakey]

Of course. Collective bargaining agreements deal with a lot of things, but they usually don't deal with building codes and safety codes.

Walter can speak to his own experience as an electrical contractor in Ontario.

[Walter Pamic]

Yes, absolutely. We like to pride ourselves on our health and safety record. You would not be in business if you were not a safe organization.

When it comes to being an open shop or a closed shop, all the rules apply to everybody. There are no studies that we've seen anywhere that would disprove that.

In fact, we looked at the province of Quebec. They are virtually 100% unionized when it comes to construction, yet their accident and fatality rate is double what it is in the rest of Canada.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

Mr. Oakey, if all things are equal from company to company—I'm talking about capability and the quality of the work—should price then be the only factor that is taken into account?

[Terrance Oakey]

We believe so, if it's the best quality, lowest bid. But it's important to emphasize the best quality.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

What about things like historical relationships and knowledge of a particular infrastructure project, and having the elements of that particular thing being part of the equation?

Just as an example, let's say some municipality, city or province is in the process of building a new hospital, or is expanding an existing hospital. They'd be looking to use some of the same materials. The ventilation system in an operating room is extremely important. Let's say the hospital is very satisfied with the product they have; they believe it is the best product that's out there today, even though it may not be the lowest price when it comes in.

Do you see those kinds of exceptions as being reasonable and fair to everybody? Everyone can still compete, but the bottom-line price isn't always the absolute factor. I would agree that it should be a huge factor, but are there other factors such as this that should be considered at times?

[Terrance Oakey]

Absolutely. That's why I said best quality, lowest bid.

If the ventilation system needs a higher grade of aluminum which is more expensive, that's built into the specific bid requirement. If you're doing Parliament Hill renovations, you don't want to put up drywall. You probably want to have good quality stone, so you write that into the bid requirement.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

We're also talking about things such as familiarity. When you have an operating room, you want the doctors and nurses to feel very comfortable in that room—

[Terrance Oakey]

So you design them—

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

—so you want room after room after room to be the same.

[Terrance Oakey]

Right.

[Lawrence Toet, Conservative, Elmwood—Transcona, MB]

Even when you do an expansion, you want to see some continuity, so there shouldn't be interference to that level.

I understand where you're coming from, having been a business guy myself in the past. There are times when I believe strongly that relationship is also part of it. It's not 100%, but it should be part of the equation and not strictly a lowest price aspect.

I have one more question for you.

Mr. Moist, from CUPE, was here last week and he actually supported the idea of unbundling large contracts on infrastructure projects to allow for companies of all sizes to be able to compete, which I was very happy to hear.

Would you agree with this also, that an unbundling aspect to some of these large umbrella-type contracts would be helpful to keep pricing down and allow everybody to participate? Mr. Moist used the example of a gentleman in Alberta who had the ability to build schools. He could build a school, but he couldn't build the six schools they put under an umbrella-type contract. Would you also be in favour of what Mr. Moist was advocating?

[Terrance Oakey]

Yes, our members are currently struggling with that dynamic in all infrastructure. As I do my consultations across the country, there are examples that have been brought to me of general contractors, as you've just described, who can build one school or one hospital but can't build every one in the province.

That's something provincial governments are looking at. Another part of that is the P3 model that some of our members are struggling with, but they're learning more about how to deal in that space. It's definitely a concern they have.