In Ontario purchasing, ‘buy as I say, not as I do’

Fresh off a win against protectionism in New York, Premier Kathleen Wynne was in Chicago on Monday to continue the fight.

It’s become an urgent battle for Ontario, whose economy depends on goods and services we sell to states led now by the nationalist and capricious Donald Trump. So far it’s going pretty well, but it might go even better if we practised more of what we’re preaching.

Much of the fighting goes on behind the scenes, and overwhelmingly at the state level, where Ontario has to deal with a dozen governors and scores of legislators.

The New York win was a withdrawal of harsh new rules that would have made it very difficult for the state government there to buy Ontario products for anything.

There were a bunch of exceptions — the head of a state agency could certify that buying American wasn’t in the public interest, for instance, and put the rules aside — but overall they’d be the toughest such rules in America.

Wynne, her cabinet, business leaders and diplomats went to work to explain to New York legislators why this would be a problem: how much stuff New York buys from Ontario ($17.7 billion worth each year), how much stuff Ontario buys from New York ($12.6 billion), how badly screwed-up our relationship could get. Car parts and raw materials go across that border all the time in tightly integrated supply chains.

In successive iterations, the protectionism in the budget bill got ground down harder and harder until by the time the legislature sent a final version to Gov. Andrew Cuomo to be signed, the Buy American provisions were simply gone.

Cuomo’s a pretty liberal Democrat and a naturally kindred political spirit for Wynne; the Illinois governor is a Republican and so is Rick Snyder, the governor of Michigan with whom Wynne has spent hours in the past six months. The swing-state Republicans will be the key to resisting protectionism from the U.S. federal government.

Appealing as it is, protectionism in procurement is crummy government policy. By definition, it means favouring more expensive, lowerquality vendors because they happen to be nearby, when you could get more for your public dollars with wide-open competition.

Toronto sole-sourced a huge contract for subway cars to Bombardier a decade ago, partly on the grounds that it meant employment in Thunder Bay. Competitor Siemens alleged Toronto overpaid by as much as $100 million — though there was no bidding, so it’s hard to know for sure.

Toronto followed up in 2009 with another massive contract for streetcars that’s already legendary for delays and poor assembly. And now Bombardier and Metrolinx, the provincial agency that handles bigpicture transit in greater Toronto, are squabbling in court over delays.

One reason for favouring Bombardier is that Ontario has a Buy Canadian rule. It’s not as stringent as the one Wynne fought in New York, but it still requires 25 per cent of a large transit procurement be spent on Canadian goods and services.

The city of Ottawa has a whole light-rail assembly operation thanks to this, putting together trains it’s buying from Alstom, a French company. An Alstom plant in New York “builds” the trains before sending them up here in pieces to be put together like Ikea furniture.

It’s providing work for Canadians, no question. But how sustainable long term is the business of assembling a particular model of train? And how much less tax money might we have spent if we had just let the New Yorkers tighten the bolts themselves?

We need them and they need us. Living the free-trade ethos we promote to others would help that crucial case.