Terrific. Thank you very much, Mr. Chair.
It's a pleasure to be here this afternoon. I did want to share with you a few views of small and medium-size businesses.
A deck was passed around to each of you, and I'll stick to that, if I could. I believe there are 10 minutes to speak about the federation, our work on red tape, questions about government spending, and the infrastructure gap, if any. Those are the subjects that we'd like to discuss.
For those who need a quick reminder, the Canadian Federation of Independent Business has 109,000 small and medium-size firms as members. All of them are 100% voluntary members of CFIB. No one, unlike a union, is forced to become a member of the federation. We represent all sectors of the economy, all regions of Canada, and all of our funding comes from our membership. We don't receive any support of any kind from government.
Our policy positions are based on one member, one vote, and we do a variety of polls of our membership to determine their views and opinions, some of which are shared in this presentation with you today.
One of the questions that was asked in the committee background notes was around red tape and regulation. We have done a great deal of work on red tape in Canada. The estimate is that the business community pays $30 billion in red tape compliance costs each year. It is one of the best estimates we found in the country, something which we're very proud of doing every couple of years at CFIB.
The burden of red tape falls disproportionately hard on smaller and medium-size firms. That stands to reason. If you're a larger firm, obviously you can spread that cost over a larger base, a larger number of employees, but if you're a very small business, the cost of complying with red tape is about $5,500 per employee. That's about five times more than the cost to comply with red tape for larger firms.
The government has done some really good work on red tape. We think that the Red Tape Reduction Commission made some very good recommendations. Minister Clement has implemented some of those policies, so there have been changes to the way that red tape is made in Canada at the federal level, which we think is very positive.
Some provinces are also starting to get on board. The Government of British Columbia, for example, has been a leader in red tape reform for many years.
With respect to procurement, government contracts, infrastructure dollars, in general when we ask our members why they don't sell to government, the top four reasons, outside of the fact that the government may not purchase their product or service, are that the procurement system is too complicated; businesses may be unsure of the needs of government or government agencies; the paperwork requirement that does come into play; and also an inability to contact the purchaser, which is related to their ability to understand where the needs are.
I should note that our study on procurement-related issues is very similar to data that was collected by the office of small business and procurement that is run by Public Works and Government Services Canada.
Beyond our concerns about red tape, I want to speak a little bit about the much discussed infrastructure deficit that exists in Canada.
Small businesses do favour spending on infrastructure. They favour government spending on infrastructure, core infrastructure services. But municipalities have been crying poverty for an awful long time. This government has allocated more dollars in its recent budget to infrastructure spending at the local level. I'm not suggesting that the federal government shouldn't play a role in spending on municipal or local infrastructure, but I have to say that I think our members do question whether municipalities are as broke as they claim to be, and whether they are making proper spending decisions on their own. We feel that if they had better control over government spending, government wage levels, government benefits, there wouldn't be the huge need for them to cry poverty and ask the provincial governments and the federal government for transfers of dollars to spend.
We're going to be releasing some new data tomorrow, but I thought I'd share this with you now, on the spending at the big city level in Canada. It's a report called “Big City Spenders”, and it does challenge that notion that municipalities are cut to the bone. Adjusted for inflation, municipal spending has increased, operating spending has increased by 55% over the last decade, while population has increased by about 12%.
This study shows that the three biggest cities spend about a third more than they would have, had they stuck to some measure of inflation and population growth. Overall, this means that across Canada, municipalities were spending about $86 billion more over the past decade than was needed to stick to inflation and population growth.
How much more infrastructure could municipalities have purchased if they weren't overspending themselves? Would the TTC need as much money from the federal government and the provincial government if there were some restraint on wages and benefits, particularly government pensions that are offered to civil servants?
There is no doubt that good-quality infrastructure is important to small business. We don't accept that there's a giant infrastructure deficit, as is suggested by municipal governments. But there's very little work done on how municipalities, and governments in general, spend on infrastructure. We feel that governments could get much better value if infrastructure were easier to access for small and medium-sized companies, and importantly, if it were 100% open to non-unionized firms, allowing them equal access to government spending.
We've done some surveying in the past. Some data on slide 9 shows that our members favour—this was an Ontario survey—the Ontario government's outlawing union-only contracting in the public sector. The vast majority, 84% of our members, felt that this was appropriate.
Our members don't like the idea of new dedicated levies, such as are being discussed in many provinces to help them deal with their so-called infrastructure deficits. This issue is at hand in Ontario right now. We have done some surveys in Alberta and have had results similar to these.
There's been a great deal of data, some of which has been shared with the committee by other groups and organizations, as to how much more we could get if we ended things such as union-only preference policies, those that exist provincially and municipally. The City of Hamilton study showed that work that was originally slated to cost $1.1 billion might have to be 20% to 40% higher because of union-preference policies. The Government of Quebec is suggesting that it is 30% to 40% more that it had to spend because of closed contracting.
We feel that if this policy were changed, if the federal government were to insist that there be no union-only preference policy allowed if there are any federal dollars in a project, governments in general would get a much better bang for their buck.
Those are the main points I wanted to raise. Our recommendations in total are to end union-only preference policies in all circumstances. We ask that you challenge municipalities to fix their own houses before you shower them with more federal tax dollars for various projects, and that you continue to focus on reducing red tape, as this is really helpful to small and medium-sized firms in accessing such things as government procurement and in helping you keep costs down.
As one quick side note, we know that in the recent federal budget there was some notion that infrastructure spending would be linked to an employer's ability to participate in apprenticeship training. The concept sounds very good, but it may bog down on detail. For many firms, especially for small firms, finding and processing apprenticeships in their business can be a significant challenge, particularly in provinces such as Ontario that have terrible journeymen-to-apprenticeship ratios. The Ontario government has been very beholden to unions under that policy in particular, and we are worried that such a policy on the part of the federal government may gum up the system with more red tape than is needed.
Those are the points I wanted to make. I'm delighted to take questions when the opportunity arises.