Brian Dijkema is Program Director, Work and Economics at Cardus. Prior to joining Cardus, Brian worked for almost a decade in labour relations in Canada after completing his master’s degree with Cardus Senior Fellow, Jonathan Chaplin. He has also done work on international human rights, with a focus on labour, economic, and social rights in Latin America and China.
Brian Dijkema: email@example.com
Cover Photo: Annie Ling
Toronto rightly calls itself the economic engine of Ontario. But Toronto's performance is hampered by legislation which prevents it from getting the best value for its construction projects. Why?
One of the reasons can be found in a 2008 Toronto city staff report which studied the cost implications of closed-tendering in Toronto. This paper reviews that staff report and finds significant methodological problems with it that lead to faulty conclusions. Particularly, the report failed to account for the variety of ways in which competition works. Instead, it focused on one small segment of competition: labour costs. The fact that the City's fair wage policy specifically restricts competition on labour costs makes the report's conclusion misleading. Further, the report focuses too heavily on the unionization or non-unionization of firms, rather than examining a wider range of variables which would affect competition and cost.
We suggest that these factors should compel Toronto to revisit its construction procurement practices with a view to providing a clear signal to the market that it is open for business. One way to do this would be to commission an independent review by leading competition experts to evaluate the competitiveness of Toronto’s construction procurement market. Another would be to join other leading municipal organizations like the Association of Municipalities of Ontario and the Large Urban Mayors Caucus in supporting a fair, open, and transparent procurement regime.
Cardus has produced a series of papers that examine the issue of restricting qualified con tractors from bidding on public construction projects. These papers were produced as a series under the heading “Cardus Construction Competitiveness Monitor.” The monitor proceeds from the assumption that public contracts should not be restricted to a subset of private companies because of the choices of their workers; rather, all qualified contractors, regardless of the private affiliations of their workers, should be allowed and encouraged to bid on public projects.
The first of these papers, Ontario Municipal Construction Markets, described how Ontario construction labour law has effectively created statutory oligopolies in vast swaths of its public construction markets. These statutory oligopolies exist in a variety of public construction markets, which include municipal construction markets, but also other public markets like school boards, other crown agencies, and corporations.
This paper surveyed the number of municipal taxpayers affected by restricted bidding, pro vided estimates on the amount of public monies affected by these restrictions, and surveyed the available estimates provided by a variety of stakeholders on the overall impact of these restrictions on the public purse. The cost estimates were spread over a wide range from a minimum estimate of 1.7% in additional costs (from a City of Toronto report) to a maximum estimate of 40% additional costs (from consultants hired by the City of Hamilton).
A number of other iterations of this paper were published in response to developments in Ontario, particularly the restriction of bidding in the Region of Waterloo, and to provide estimates to the way in which restrictive bidding affects other jurisdictions, including Manitoba, British Columbia, and the Government of Canada.