Transport Committee on May 7th, 2013

[Jeff Watson, Conservative, Essex, ON]

That's my understanding as well.

So open tendering does have some problems. If we're looking at opening up tendering, this is an issue that we may want to look at, in terms of contingency, and perhaps have a requirement that these payments do not go into these types of funds, or some recommendation that way.

[John Mortimer]

Alberta is the first jurisdiction in this country to attempt to deal with these inappropriate schemes that unions have put together. I've just reviewed an electrical collective agreement from Ontario, where, in some cases, it's the taxpayer who’s spending the $1.08 every hour that's worked.

[Jeff Watson, Conservative, Essex, ON]

My understanding of the Alberta scheme after the 2008 reforms were brought in is that the unions, rather than subsidizing the bid of a contract directly, went to subsidizing benefits for workers, which forms, in many respects, the same type of a subsidy to allow them to underbid work.

Let me see, then, if I can follow how the money flows here, if you will. So the taxpayer's dollar is taken in, say, by a municipality. Through their collective bargaining agreement with unions, the funding for a project goes in, and those payments to the union are then put into a market enhancement recovery fund or a STAB fund, or whatever you want to call it, and then used to help subsidize the wages or something else in order to get a bid. So the taxpayer money goes in at the top and there's an advantage given to unionized bidders versus non-unionized bidders that allows them to get the contract from the same taxpayer who pays the money. Is that how the scheme works?

[John Mortimer]

It feels like they're paying twice, in some way. I don't know whether the math is really truthful when you follow that all around, but there's something absolutely wrong with what's going on here.

[Jeff Watson, Conservative, Essex, ON]

So it's not in fact a real open tendering process.

[John Mortimer]

No, it's not.

[Jeff Watson, Conservative, Essex, ON]

So long as the taxpayer's also funding....

[John Mortimer]

The taxpayer is ending up subsidizing these bids.

What! And we let this go on.

[Jeff Watson, Conservative, Essex, ON]

I actually don't have any further questions. Thank you.

[The Chair, Conservative, Larry Miller]

Thank you.

We just have a few minutes left. We're going to start another round. But you have one minute, so be very brief with your question because that includes the answer.

Mr. Aubin.

[Robert Aubin, NDP, Trois-Rivières, QC]

If I had to summarize your testimony from this afternoon, I would say that you prefer open tendering to closed tendering. We will skip all the stuff about unions. I still have a lot to say, but I am running out of time.

Is there another area of expertise I should keep in mind about your organization that could be valuable to our study? For instance, that might involve managing PPPs or dealing with red tape. That might help us see how increased competition may be better for infrastructure programs.

[John Mortimer]

I have nothing else to add.

[The Chair, Conservative, Larry Miller]

Okay.

Mr. Coderre.

[Denis Coderre, Liberal, Bourassa, QC]

Mr. Mortimer, let's end on a happy note. When I raise a point of order, it is because I don't like to see any type of dogmatism or abuse. That is unacceptable to me. I think it is important for you to be able to express your preference for an open tendering process. I think it is a good idea to mention it, but I don't think it is appropriate to say that in Quebec we are forced to do something. I am a liberal, which means that I am not dogmatic, I am neither left-winged or right-winged. I can therefore denounce abuses by unions and by non-unionized individuals. Actually, history has shown us that companies have also abused the system.

Based on your recommendations, the federal government should not invest money in the provinces if the tendering process is not open to both those who are unionized and those who are not. Quebec is an exception because we must comply with the law there.

[John Mortimer]

That's my view.

[The Chair, Conservative, Larry Miller]

Okay.

Mr. Poilievre.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

I'm going to quote an article by Peter Shawn Taylor, the editor at large of Maclean's magazine, entitled “Why this shed could cost local taxpayers $20 million a year”. It reads:

Our province’s bizarre construction industry labour rules impose union certification with the submission of just two union cards comprising at least 55 per cent of all relevant employees working at all job sites at any point in time. No vote required.

Taylor then goes to say that the forced unionization that happened in Waterloo also occurred in Hamilton:[Where] two workers signed carpenters' union cards and were thus able to impose a union agreement on the entire city forever...[the pool of] eligible bidders for construction contracts in Hamilton was reduced by over 90 per cent. Of the 260 firms that had previously bid on city jobs, city staff calculated that only 17 were affiliated with the carpenters' union.

On the cost side, he noted:

Hamilton calculations show a 10 per cent increase in costs due to union-monopoly rules, or about $4 million to $10 million per year, for routine capital projects. With regards to a massive $1.1 billion waste-water treatment plan, the cost is estimated at an additional 20 per cent to 40 per cent.

That's on a billion dollar project.

He goes on:A report by Cardus, a Hamilton-based open shop research group, estimates that out of our region’s 2012 capital budget

—he's referring to Waterloo—

almost $200 million worth of contracts would likely be affected by a successful carpenters’ union certification. Even a 10 per cent hike amounts to nearly $20 million in extra costs. In Toronto, Coun. Karen Stintz has put the price of restrictive union rules at $100 million a year.

So my question comes then to the last point that Mr. Taylor makes. He says: All this should bring into sharp focus the region’s

—now he's talking about Waterloo—

looming $818-million light rail transit system. With funding fixed from the federal and provincial governments, any cost overruns are the sole responsibility of local taxpayers.

[The Chair, Conservative, Larry Miller]

Okay. Could you ask your question?

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

The question then is this. In an era where the FCM tells us that there continues to have an infrastructure deficit, where funding to municipalities has gone up by 70% over the last decade while inflation and population growth has been only half of that, do you believe we can afford to pay inflated prices to support a union monopoly that bans union-free workers from competing?

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

Mr. Chair, I have a point of order.

Can Mr. Poilievre send the article he's quoting to the clerk to be tabled. I'd love to see that information.

[The Chair, Conservative, Larry Miller]

Certainly.

Mr. Mortimer.

[John Mortimer]

I agree.

I looked, and Hamilton was two out of four, and it was two out of two in Kitchener-Waterloo. That's the magic union number to ensure that extra hundreds of millions of dollars of taxpayers' money is used on certain projects rather than spreading them further. It needs to change.

[The Chair, Conservative, Larry Miller]

There's one more question here, if you want it, Mr. Poilievre.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Okay. Peter Shawn Taylor, the editor at large of Maclean's magazine, wrote an additional article on the shed itself, pointing out that only two workers working on the shed signed the certification card, thus forcing everyone else in the industry in the region to become unionized. He notes that the cost of this certification will be $20 million a year.

Can I ask you about the issue of competing unions, because I understand that this certification does not just exclude union-free workers, but also unionized workers who don't belong to the approved union? Is that so?

[John Mortimer]

That's correct. There is what you'd call wall-to-wall unions in construction in this country. For example, in Saskatchewan, the CEP, the Communications, Energy and Paperworkers Union, can now operate in competition with the building trades. The Christian Labour Association of Canada can do the same.

Building trades unions are based on the hockey theme that if you're a right winger, you'd never go into your own end zone to help out your defenceman. You'd just stay there and say you're on right wing. I don't think any union boss would play hockey that way, and I don't think our construction sites should be entirely done that way any more.

So, barring CLAC and CEP—which they are doing in some parts of this country, like in Nova Scotia entirely—leads to less competitive behaviours. We need to drive change in the building trades unions in this country, and competition will do it.