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Why pay more for infrastructure?

June 13, 2015

Kathleen Wynne’s government is hoping to get Ontario moving down the road to a balanced budget by 2017-2018. The Liberals are counting on “the biggest infrastructure investment in Ontario’s history” to give the province a ride down that road. It’s a major trip: $130 billion over 10 years and the announcements are happening almost daily. Over $11 billion will go toward public infrastructure in the next two years, with large chunks of the money aimed at the Toronto and Hamilton areas. The trouble is that Ontario’s labour laws have given the province the equivalent of a slow leak in its tires. The lack of competition in an increasing number of major Ontario construction markets—including Toronto, Hamilton, and Waterloo—mean that we are not getting the mileage out of the money we are spending on public infrastructure. This means that Ontarians will either pay more for their water treatment plants and transit stations, or get less of them; likely both. Why the lack of competition? Ontario’s labour laws contain a clause that is unique in Canada. It prevents municipalities such as Toronto, Hamilton, and the Region of Waterloo, as well as agencies such as Ontario Power Generation, from accepting bids from all qualified contractors. Instead, the law forces municipalities to take bids from a set of companies that are affiliated with a subset of construction unions. Warnings have been sounded for years about this flawed approach to public expenditure—Cardus research suggests increases of 20 to 30 percent on billions of dollars of work—and little has been done about it. It appears we’re content to throw away hundreds of millions of extra dollars every year without anything to show it. Read the rest of this article at the National Post website.