Restricted labour bids costing taxpayers
Investment in public assets requires billions from taxpayers. World-wide, the construction trade exceeds Cdn$12 trillion, representing about 13% of annual world output. Much of annual expenditures are for public works. Yet, while the public interest seeks value for money spent, too rarely it occurs.
Too often, public works are undertaken without sufficient research to ensure they are needed now, as opposed to another project, and affordable. Too often, final costs exceed the estimated cost by a ‘country-mile’ — Winnipeg’s new police headquarters, Hydro’s palatial headquarters, Keeyask dam, etc.
Government, which includes Crown corporations, regularly use restrictive tendering practices, driving up costs. According to Beacon Hill Institute, restricting tendering practices by requiring unionized workers pushes costs up 12-18%, Other studies suggest requiring only union workers drive up costs 20-30% (Montreal, Ontario). One thing is clear, by not allowing all qualified bidders quality goes down and costs go up.
Consider Hydro’s massive once-in-a-lifetime expansion. Only members of building trade unions can work on most of it. As an example, Bipole III transmission projects require not only that project workers are union members paying union dues, but their hourly rates are set for each worker classification (with built-in yearly increases). Challenged in court as unconstitutional — Hydro requiring workers be in a union in order to work on the project — the Bipole contracts have survived, without the basic merits of the situation even being adjudicated.
During the 2016 provincial election, Brian Pallister promised to open up contract tendering by allowing non-unionized firms to bid on all provincial contracts. In his Alternative Throne Speech of November 13, 2015, Pallister promised to bring about “modernizing government tendering procedures by reducing barriers to participation such as forced unionization for government contracts which is unfair and hurts small business and taxpayers.”
Yet, at last look, open-shop construction firms and firms whose workers are not represented by a designated building trade union are still not able to bid on many major public-sector projects. In Manitoba, approximately 70% of the construction industry is “open shop.” By shutting out the majority of the construction industry from bidding, the public interest, and value for money, can’t be secured.
It is not only nonunion firms and their workers that are damaged and disappointed, but, largely, and sometimes without realizing it, taxpayers and utility ratepayers. The restrictive procurement practices of the former NDP government — coming into, tightening, and staying in force during the party’s 17 years in power — should have disappeared under the new PC government. Also, there remains conjecture about bush clearing and other nontechnical contract work in northern Manitoba, where, allegedly, single-sourced contracts were prevalent, unfair and resulting in very high costs.
A January 2016 poll (NRG research group) revealed that a solid majority of Manitobans oppose open-shop construction firms being shut out of bidding for public works. Brian Pallister should listen and break the monopoly union-shop contractors have, and then move on to reconsider long-standing but questionable practices such as having government setting wage levels for the construction industry.
Current government-set construction regulations and practices push costs unnecessarily high. What is now and has been for some time is far from being taxpayer-friendly and “free enterprise.”