Thank you, Chair, and thank you for giving me the opportunity to speak to you today about the importance of preserving open tendering for public infrastructure projects, specifically as it relates to Ontario.
As your committee has heard during recent meetings, Ontario has a growing problem with closed tendering. For years, certain construction unions have successfully exploited a legal loophole in our outdated labour laws that allows them to certify public sector employers as construction companies. Once certified, these bodies are then bound by a collective agreement that is bargained at a provincial level on behalf of all construction employers and that contains strict contracting-out clauses.
The restrictions in these agreements stipulate that a certified employer must only award contracts to companies organized by a specific union. In other words, this legal loophole allows certain unions to set up labour monopolies that inflate costs and deny qualified contractors the right to work on infrastructure projects, including those funded by all three levels of government.
Sault Ste. Marie, for instance, has been certified by the United Brotherhood of Carpenters and Joiners of America, as well as the Laborers' International Union of North America. This particular set-up has restricted the overwhelming majority of contractors from working on public infrastructure in Sault Ste. Marie, since municipal projects must be awarded to companies organized by both unions. It goes without saying that this lack of competition inevitably pushes costs up. The Greater Essex County District School Board reports that its costs for public projects have jumped by 10% to 20% after being certified by several trade unions since the early 1980s.
Similarly, the City of Hamilton reported an initial 5% uptick in public infrastructure costs after it was certified by the carpenters' union in 2005. It later found, however, that the increase was closer to 40% after a consultant analyzed the impact of certification.
The millions of dollars that are needed every year to pay for these inflated costs come from taxpayers, regardless of their financial situation. Canadians are willing to pay their fair share, but they don't want to see their taxes rise simply because the government allows certain unions to restrict open competition.
I have to say this issue got personal for me when I learned that the carpenters' union was attempting to certify my own region, the Region of Waterloo. By now, I know all of you have heard the story of how two regional workers tasked with building a blue garden shed in Wilmot Township on a Saturday signed union cards asking to join the carpenters. The Region of Waterloo, just like the other public sector employers I already mentioned, did not enter this process voluntarily. These two workers, who constituted a majority of the workforce that day, took it upon themselves to submit a certification application. If this application is successful, nearly every regional project that is put out to tender will have to go to a company organized by the carpenters' union. That means thousands of contractors and their employees will be deprived of the right to work on publicly funded infrastructure projects in the Waterloo region. In fact, this development would block as much as 90% of contractors from bidding on certain infrastructure projects.
For example, Waterloo region has tendered more than $140 million worth of water and waste water infrastructure projects since December 2009, according to the Progressive Contractors Association of Canada. For each of these projects, 27 companies pre-qualified to bid on the work. However, if the region had been certified over that same period of time, only two companies would have pre-qualified to bid on those projects. With so few bidders, the result of this union monopoly would undoubtedly be higher infrastructure costs. In fact, Cardus estimates the increase for the Region of Waterloo could be as much as $78 million a year. These additional costs would have to be covered by the region, as well as the province and the federal government for jointly funded infrastructure projects like the light rail transit system, which is worth roughly $820 million.
Now just think. If this project were subject to a labour monopoly that pushed up the price by 40%, it would cost an additional $325 million. That represents significantly higher costs for all three levels of government.
To stop this from happening in my region, and to prevent it elsewhere, I tabled a bill in the Ontario legislature last week called the fair and open tendering act. This bill is based on two fundamental principles. The first is fairness. I believe all Ontarians, regardless of their affiliation with a particular union, should have the right to work on publicly funded infrastructure projects.
The second is competition. When all qualified unionized and open-shop companies have the opportunity to fairly compete for contracts to build bridges, new schools, and other public buildings, we can ensure that taxpayers get the highest quality work at the lowest possible cost.
Following these two principles, this bill, if passed, would exempt municipalities and school boards from province-wide bargaining in the construction industry. In other words, unions would no longer be able to certify municipalities and school boards under the construction sector provisions contained within Ontario's labour laws.
This bill also protects workers' rights by expressly stating that unions still have the ability to organize public sector employers under the provisions in the Labour Relations Act not related to the construction industry. This is a fair and reasonable solution that has already gained a significant amount of support from both unionized and non-unionized contractors.
In fact, to date, the Christian Labour Association of Canada, Merit Ontario, the Ontario Road Builders' Association, and the Progressive Contractors Association of Canada have all backed the fair and open tendering act. Having all of these organizations publicly endorse this bill demonstrates the overwhelming support from both unionized and non-unionized contractors to preserve and maintain open tendering in Ontario by correcting a long-standing problem.
Although closed tendering has been identified as a major issue for quite some time, municipal leaders have not been able to persuade the Liberal government in Ontario to act. The Large Urban Mayors' Caucus of Ontario passed a resolution in 2008 calling on the province to exempt municipalities from province-wide collective bargaining in the construction industry, but unfortunately, it fell on deaf ears.
So clearly, there is a lot of work to be done at Queen's Park to get members of the provincial government on board with this legislative solution. But if history is any indication of the future, I'm sure the province will need an incentive to act. That's where the federal government could come in.
To ensure all workers, regardless of union affiliation, have the right to work on publicly funded projects, the federal government could require that transfer payments for infrastructure be subject to open tendering. This requirement would be similar to the federal government's open-tendering clause in the building Canada fund agreement with Nova Scotia. By taking this action, the federal government could ensure that federal tax dollars were used to improve our communities instead of subsidizing labour monopolies in Ontario.
I think what we all need to realize is that at the end of the day, there's only one taxpayer, and considering that Ontario has a $60 billion infrastructure deficit, we should be doing everything in our power to make tax dollars go even further.
That's why I'm calling for legislative change at the provincial level and for an open dialogue with all levels of government to determine what reasonable conditions can be put in place to guarantee fair and open competition. Ensuring that all workers have the right to work on publicly funded infrastructure projects would be a good first step towards bringing our labour laws into the 21st century and protecting taxpayers across this country.
Again, I'd like to thank the committee for giving me the opportunity to speak today. I'll be happy to take your questions.