Do you remember the $640 toilet seat? Or the $7,600 coffee maker? At one time, these were near-legendary examples of waste uncovered in U.S. military contracting.
We might laugh at these stories, but when rip-offs like these get close to home, they cease to be funny. Take the outrageous waste that one media outlet recently uncovered in Toronto schools. How funny does $19,000 for the installation of a sign sound? How about $3,000 for an electrical outlet in a school library? About as funny as stories about $436 hammers sold to the U.S. Army sound to Americans, I imagine.
Whether it is at the Pentagon, or the Toronto District School Board, the root of the problem is the same -- sweetheart deals made possible thanks to what's called closed tendering, allowing the well-connected to charge ridiculous rates for routine items or work. And it's a real focus in our latest, hotly-debated Ontario PC "Paths to Prosperity" series of white papers on ideas to help us create jobs. It's called "Flexible Labour Markets." And as controversial as it's turned out to be in labour circles, I think most Ontarians will find it's rooted in basic principles the rest of us can agree on.
As a basic principle, for example, all qualified companies should be allowed to bid on government contracts. Is that a controversial idea? I hope not (although if you're in the business of selling $7,600 coffee makers you might disagree.) Closed tendering is the practice of allowing only contractors with collective agreements with unions in general, or particular unions, to bid on construction or maintenance projects.
Restrictive contracting and subcontracting clauses in union collective agreements with public institutions and municipalities -- including Ontario Power Generation, Hydro One, the City of Toronto and the City of Hamilton -- have created monopolistic bidding conditions that inflate costs and stifle job creation.
More expensive infrastructure means less of it gets built. This means fewer hospitals, fewer roads -- and ultimately, fewer jobs. For example, the City of Hamilton estimates that restrictive clauses within its collective agreement with the United Brotherhood of Carpenters and Joiners of America inflates the prices of its construction projects by up to 40 per cent.
Additionally, last year, Infrastructure Ontario revealed that the $155 million Pan Am Games construction project at Ivor Wynne Stadium would be subject to the same tendering restrictions. As a result, it's expected that the price of this project will also be inflated by up to 40 per cent -- costing Ontario taxpayers millions more.
People often assume that closed tendering affects only non-union contractors. In reality, closed tendering also prevents union contractors from bidding on some contracts as well. Again, the City of Hamilton is a perfect example. Of the 260 or so contractors registered with the City at the time, only 13 of the 260 contractors had unionized workforces with the United Brotherhood of Carpenters and Joiners of America.
Some of the contractors' workforces were unionized by other unions, some were not unionized at all. Hundreds of employers were prevented from competing, and thousands of workers were left with time on their hands.
This is yet another example of outdated government policy that hurts our economy and reduces opportunities for individual workers and businesses. As the representative of taxpayers, government ought to be getting the best price and offering opportunities to the full range of Ontario businesses, not a favoured few.
Government shouldn't be picking winners and losers, but rather ensuring all businesses have the same chance to compete for government work. Opening up tendering for all companies will increase competition, and ultimately cut infrastructure and energy construction costs across the province.
Ontario can lead Canada again in competitiveness and job creation. But first we need to clear away the economic deadwood left over from the last century, such as labour practices which date back to the 1940s and 50s. Closed tendering is one of them.