It should be a no-brainer to ensure that our domestic businesses are given a fair chance to bid on government projects. Pictured: Ontario Finance Minister Peter Bethlenfalvy. Photo Credit: Peter Bethlenfalvy/X.
The Ford government recently received many kudos from the news media about its decision to devote one-quarter of its advertising dollars toward news publishers based in Ontario. It wasn’t surprising that this move on Ford’s part would be complimented by the media outlets that will be on the receiving end of these funds – pegged at about $25 million – but this is in general a good policy approach. In announcing this policy, Finance Minister Peter Bethlenfalvy stated, “Our government believes strongly in the importance of supporting and promoting Ontario-made products, services and workers.” If true, that is welcome news as it certainly hasn’t been the case in the past.
The allocated media buy was presented as part of the Progressive Conservatives’ Building Ontario Business Initiative, intended to direct procurement spending to Ontario businesses. The media industry in particular has been hard hit by the loss of significant amounts of advertising revenue to foreign platforms such as Google and Facebook, to the extent that the legacy media business is a declining industry. Federal government bailouts have been enormous, and have definitely had an impact on editorial content as traditional media has been much less critical of the Trudeau government than warranted. Canadians have been very aware of this development, which has reduced trust in conventional media. The recent Ontario move will only involve $25 million dollars as opposed to the billions the federal government is using to subsidize media. Nevertheless, some cynics are suggesting that perhaps the Ontario government is trying to emulate the federal policy and buy favour for its media coverage as well.
The principle behind having governments procure goods and services from domestic businesses wherever feasible makes a lot of sense. Canadian governments have for many years been abysmal at taking action to promote and patronize domestic companies via procurement, as compared to other countries. Although they may claim to prioritize Canadian businesses, their actions belie their words. Examples range from the previous Ontario Liberal government signing a $7 billion contract with Samsung under its Green Energy Policy to recent agreements reached with profitable foreign auto manufacturers Stellantis, Volkswagen and Honda, among others, to produce Electric Vehicles (EVs) and EV batteries in Ontario. In the case of the EV plants, there appear to be minimal if any requirements for the foreign companies receiving the subsidies to use Canadian businesses in their supply chains, or even local workers. In fact, the Stellantis plant brought in hundreds of workers from South Korea and Japan to set up the facility, and some other subsidy recipients also brought in foreign workers.
Another recent mega-project that involved a great amount of foreign content was the massive LNG facility in Kitimat, BC. Decisions were made to import modular components for this large undertaking from China, as it was deemed Canadian businesses could not have fulfilled the requirements. However, no Canadian businesses appear to have been consulted, and a number of manufacturers have claimed they would have been able to do the work if they had been permitted to bid on it. It seems in Canada we are too quick to turn to suppliers outside of Canada without giving a decent chance for Canadians to fit the bill.
Even if governments do end up patronizing Canadian businesses, they are frequently large corporations as opposed to small- and medium-sized businesses (SMEs). Major procurement projects are often allotted in processes so bureaucratic and complex that no SME can possibly deal with the mountain of paperwork and legalities entailed. As well, many government bureaucrats overseeing these projects choose to deal with companies they are familiar with even if they do not provide the best deal for taxpayers, as having a truly open bidding process is much more work than going with a company familiar to the government. In recent years with the federal Liberals, we have seen many so-called “untendered contracts”, which suggests no effort was made to open tendering to eligible firms that could offer better products or services at better prices, and could imply corruption in the awarding of contracts.
With regard to better inclusion of SMEs in government procurement, Canadian governments could take a page out of American governments’ books. The US has long had a system of “set-asides” in much of their government procurement, in which a certain proportion of a given project is set aside to be available to SMEs to bid on. This depends on the number and type of smaller firms who are able to do the job and the value of the contract. There is a significant part of the US Small Business Administration agency which is tasked with overseeing the set-asides program to ensure SMEs are able to access government procurement projects. There have been some attempts to establish set-asides in Canada, but they have been few and not offered consistently.
Canadian governments have a track record of being patsies in providing major subsidies to foreign companies without requiring them to involve domestic companies of all sizes in their projects, or sometimes even ensure that Canadians workers are involved. It should be a no-brainer to ensure that our domestic businesses are given a fair chance to bid on government projects and large resource projects in which governments are invariably involved. Taxpayers should demand this as well, as boosting our domestic economy by investing in competent local businesses will always have the best payoff.
She has published numerous articles in journals, magazines & other media on issues such as free trade, finance, entrepreneurship & women business owners. Ms. Swift is a past President of the Empire Club of Canada, a former Director of the CD Howe Institute, the Canadian Youth Business Foundation, SOS Children’s Villages, past President of the International Small Business Congress and current Director of the Fraser Institute. She was cited in 2003 & 2012 as one of the most powerful women in Canada by the Women’s Executive Network & is a recipient of the Queen’s Silver & Gold Jubilee medals.
