There are the haves and there are the have nots. As time goes on it is becoming increasingly clear that a province’s regulatory environment in construction is its bellwether for determining if it’s a giving province or a taking province.
While Ontario and Quebec continue to be major economic powerhouses, their governments are for many reasons faced with significant deficits and reduced revenues. In the face of this, the Ontario government commissioned former TD economist Don Drummond to survey the province’s fiscal situation and make recommendations to improve the province’s outlook. His work, “The Drummond Report”, highlighted some startling statistics. Said Drummond,
In 2010–11, the latest full fiscal year, the government ran a deficit of $14.0 billion—equivalent to $1,059 for every Ontarian and 2.3 per cent of the province’s gross domestic product (GDP), the largest deficit relative to GDP of any province.
In the face of this sobering picture, Drummond “offered 362 recommendations, sector by sector, that will allow the government to constrain spending enough to balance the budget without tax increases.”
Just east of Ontario, the government of Quebec is faced with a similarly sour economic outlook. A recent report by the Conference Board of Canada suggests that
[i]f Quebec’s taxation rates remain unchanged and the historical trends of actual per capita program spending are maintained, the Quebec government is headed for deep fiscal trouble. The Conference Board estimates that by the end of fiscal 2030–31, the Quebec government would post an annual deficit of $45 billion—this, despite an assumed continued increase in federal transfer payments.
But Ontario and Quebec face more than financial deficits. The physical infrastructure of both provinces is aging, and in the case of Quebec, is crumbling away. The former president of the Association of Municipalities of Ontario, Doug Reycraft suggested five years ago that “Federal and Provincial historical budget deficits have been transformed into a municipal infrastructure deficit.” In other words, the financial situation in central Canada is crumbling at the same speed as its bridges, energy grids, water treatment plants, schools, and other public infrastructure.
Underlying this crumbling infrastructure is an outdated labour relations environment which continues to stifle innovation. It is fascinating to note that while Ontario’s municipal infrastructure needs are acute, it maintains a policy of allowing those same municipalities to be classified as any other construction employer. In many cases, including in two of Ontario’s largest cities—Toronto and Hamilton—municipalities are required to accept bids only from companies who are signatory to building trades unions. Contractors with more innovative approaches to workplace organization, and those that are non-union, are barred from bidding. Municipalities lose a competitive advantage. In Quebec, the situation is even more closed. All construction workers in Quebec are required by law to be a member of a trade union. The unionized environment in Quebec does not provide workers with a clear system of entrance into, or out of, building trade unions. Quebec’s legislated monopoly stifles innovation.
It also provides a breeding ground for corruption. The Duscheneau report found in September 2011 that corruption in Quebec’s construction industry is endemic. One witness interviewed in the report suggested that there is a close link between the closed nature of the construction industry in Quebec and its corruption. A former political aide, referencing the involvement of organized crime in the industry , noted that
“The more contracts they get, the more they give; the more they give, the more influence they have; the more influence they have, the more contracts they get. And the influence is exercised everywhere whether it is by becoming members of foundations or doing fundraising for charity organizations. They become almost untouchable.”
A brief look at Ontario suggests that, perhaps, the road to corruption can be paved in more ways than one, and that the negative effects need not be instigated by organized criminals. Ontario’s building trades unions have a de facto monopoly over many significant sectors of the construction industry and have a voice in government which far outweigh their actual size. While such unions represent less than 20% of the construction industry in the province, they have sole rights to municipal work, protected by law, as mentioned above.
Their influence on the current government is very similar to that seen in Quebec. The building trades unions are key players in the Working Families Coalition, which donated millions of dollars and is seen by many to have been the key to the successful re-election of the Liberal party in Ontario. In return, building trades representatives hold key seats in some of the most influential government agencies relating to construction. Pat Dillon, the Secretary Treasurer of the Building and Construction Trades Council, oversaw the creation and appointments on the Ontario College of Trades: the body charged with deciding key construction labour questions, including apprenticeship ratios and compulsory certification. Dillon’s colleagues now find themselves placed highly on most of the decision-making arms of that college. Dillon also holds positions on the board of Infrastructure Ontario, the body charged with overseeing major provincial infrastructure projects in Ontario, as well as Ontario’s workplace insurance board. It appears that in Ontario, like in Quebec, “The more contracts they get, the more they give; the more they give, the more influence they have; the more influence they have, the more contracts they get. And the influence is exercised everywhere.”
The road to an open, fair, and fiscally responsible Ontario begins in construction. PCA is a leading voice in seeking a more balanced playing field in Ontario.