Toronto has what’s called a closed tendering approach to awarding contracts for some of the city’s most expensive construction projects. That means that only certain construction companies affiliated with a handful of unions can bid to take on those jobs. Photo credit: Archinect
Canada’s largest city has been overpaying on construction projects to the tune of $350 million a year.
Toronto’s politicians are throwing taxpayers under the bus in order to preserve a special sweetheart deal for the city’s major construction unions.
When the typical Toronto homeowner is looking to hire a contractor for some home renovations, that homeowner gets quotes from local contractors and decides to hire the team that offers the best value for money.
Considering every local contractor interested in doing the project simply makes sense.
You’d think government would have the same common sense approach.
Apparently, the city of Toronto doesn’t follow common sense logic. And it’s costing taxpayers hundreds of millions of dollars every year.
Toronto has what’s called a closed tendering approach to awarding contracts for some of the city’s most expensive construction projects. That means that only certain construction companies affiliated with a handful of unions can bid to take on those jobs.
Toronto is set to award $1.65 billion in construction projects this year through the closed tendering process, according to a report released by Cardus, a non-partisan thinktank. Only a small handful of unionized construction companies are allowed to be chosen for the job. The report estimates that Toronto taxpayers are overpaying on these contracts to the tune of $350 million a year because of the lack of competition.
Closed tendering used to be common practice throughout Ontario. But four years ago, the Ford government passed legislation releasing Ontario municipalities from this practice.
Virtually every city in Ontario seized the opportunity to deliver better outcomes for taxpayers.
Hamilton was one of the first municipalities to take advantage of the open tendering process. The Cardus report estimates Hamilton is saving 21 per cent on construction projects by adopting this new system. The city has significantly improved its budget outlook over the past four years.
Unfortunately, Toronto has so far chosen not to follow the lead of Hamilton and every other major Ontario municipality. The city still reserves industrial construction contracts for a few unionized firms.
With Toronto’s budget stretched to the max and a billion-dollar budget hole yet to be filled, shifting to the open tendering process in Toronto’s construction contracts should be a no brainer.
Unfortunately, only two mayoral candidates from the 2023 by-election – Brad Bradford and Anthony Furey – committed to following the lead of the vast majority of Ontario’s municipalities and end the city’s sweetheart deal with Toronto’s construction union bosses. There has been no indication from the election’s winner, Olivia Chow, that she would be open to making this common sense policy decision that could significantly improve Toronto’s budgetary outlook.
For $350 million, Toronto could give every household a 12 per cent property tax cut. The city could also use that cash to increase the amount of money it spends on providing emergency shelter for the homeless by 50 per cent.
That’s a lot of cash being left on the table.
Toronto’s politicians are deliberately choosing to overspend on construction contracts and are tossing away hundreds of millions of dollars a year that the city could be using to deliver better services or help taxpayers make ends meet.
It’s time for Toronto’s city councillors to roll up their sleeves and get to work. For four years, the city has been free to end its closed tendering process, but Toronto’s politicians have deliberately chosen not to do so. It’s time to put the interests of residents, not the unions, first.
Jay Goldberg is the Ontario Director at the Canadian Taxpayers Federation. He previously served as a policy fellow at the Munk School of Public Policy and Global Affairs. Jay holds a Ph.D. in Political Science from the University of Toronto.