Toronto gains global attention for high construction costs

It’s a dubious distinction that makes building more affordable housing in Toronto a whole lot more daunting. A new  global ranking shows Toronto has the second highest construction costs not just in Canada, or even North America, but the world. And the reason can’t be blamed entirely on factors that are out of the city’s control.

Rising material costs, labour shortages and supply chain issues have contributed to a 40 percent surge in the cost of construction in Toronto between January of 2020 and August of 2023.

But there’s another reason Toronto is second only to Prague when it comes to spiralling construction costs.

While Toronto City Council can’t do much about all of the above, it could reign in the cost of building more affordable housing, community centres and other city projects by hundreds of millions of dollars, through one simple reform: open tendering.

Right now, Toronto only allows companies affiliated with favoured unions to bid on, and build city projects that are funded with public tax dollars. Toronto is the only city in Ontario that prevents many qualified companies from building public projects, because their workers aren’t affiliated with select unions.

Research by the Cardus think tank, shows Toronto could save taxpayers $347 million each year through open tendering. When more companies are allowed to bid for projects, this increases competition and innovation, leading to better prices and lower construction costs for local taxpayers.

When Toronto Council tries to argue that higher taxes and more fees are the only way to tackle the city’s $1.5 billion dollar budget shortfall, it should be reminded that open tendering would allow the city to realize sizable savings, and build more of the projects people need, for less.