The Restoring Ontario’s Competitiveness Act and Impact on the Construction Industry

Bill 66, the proposed Restoring Ontario’s Competitiveness Act, 2018is the second in a series of bills that form part of Ontario’s Open for Business Action Plan. Its intent is to stimulate business investment, create good jobs, and make Ontario more competitive by cutting unnecessary regulations that are inefficient, inflexible or out of date. It is an omnibus bill that amends 9 other acts and several additional regulations.

Omnibus bills are conceptually flawed. They force members of parliament to have to agree to package of changes that include provisions that they may oppose in order to get those they favour. In this particular Bill, there are provisions that could impact the protection of the Greenbelt around the GTA that we would oppose while it also includes amendments to the Employment Standards Act and the Labour Relations Act are changes we agree are needed. We start with this caveat to ensure that our endorsement of the changes to the Labour Relations Act (LRA) should not be construed as our agreement with the total of Bill 66.

Within the current LRA, there are a unique set of rules governing the construction industry that result in province-wide, multi-employer collective agreements. These provisions are necessary given the unique nature of construction employment. These particular provisions of the LRA have established an efficient means for collective bargaining that reduces the incidence of labour disputes. These exceptions to the “normal” rules of labour relations generally have produced outcomes that are good for the industry and for the participants in the construction industry.

However, there are provisions of the “construction” parts of the LR Act that result in non-competitive situations or inordinately complex relationships. For example, certain municipalities may have at one time in their history engaged in self-performed construction work and as a result became signatory to a Building Trade Union(s). The net impact has been that these municipalities can now only tender work out to contractors that are unionized with the Building Trade Unions.  This is occurring even in circumstances where the municipality no longer self-performs any construction work. This unduly constrains competition because non-union contractors and contractors signatory to “alternative” construction unions cannot bid for work. The resultant Building Trade Union contractor monopoly or perceived monopoly ends up driving a cost premium on work for those municipalities.

A study by Cardus looking at five Ontario municipalities who are restricted in their bidding processes estimated that $2 billion worth of work was available to a small set of Building Trade Construction companies that effectively formed an oligopoly.  The resulting premium due to this concentration of work and lack of competition costs the Ontario taxpayers $370 million. That is a lot of money that could be channelled to other public policy initiatives. Moreover, this is only a sample of five municipalities. There are other public organizations facing the same restrictions so the public cost is significant.

Bill 66 seeks to relieve municipalities and certain other local boards, school boards, hospitals, colleges, universities and public bodiesof obligations to the Building Trade Unions and contractors by deeming them to be non-construction employers. Thus, these organizations will be able to open up bidding to all contractors regardless of union affiliation or non-affiliation. The increased competition can only result in more competitive bidding, the elimination of the premium paid to the oligarchy and improved performance.

This has a negative impact on those unions who currently represent workers in these organizations by essentially nullifying their collective agreements.  The Act does allow the BTU to organize those municipal ‘’inside’’ construction workers under another provision of the Labour Relations Act. In some instances, we acknowledge this to be impractical as many of those organizations may not have separate entities involved in construction or the result of the Act may be that those workers might be absorbed by other established unions within the organization.

We acknowledge the Building Trade Unions are losing something. However, if this Act passes, the greater good argument is that allowing these municipalities and other publicly funded organizations to have open bidding for construction projects creates a competitive environment that will result in lower costs for public projects and better performance in construction.

It is anticipated that the Building Trade Unions will challenge the passing of this Act under the freedom of association guarantees of the Canadian Charter of Rights and Freedoms. However, the basic concept has already been tested in IESO v CUSW 2012 ONCA 293. An organization can be deemed a non-construction employer and be relieved of any obligations it may have had to the Building Trade Unions if it can show that the essential nature of the organization’s work it performs is not in the construction industry, that any construction activities it engages in are incidental and are solely for its own benefit and not undertaken for a third party for profit.

We support this change to the LRA as it is eliminating a situation that has resulted in an unfair monopoly/oligopoly to the detriment of the wider public and other workers in this province and is not justified by fair labour relations considerations.

The government remains open to comments on Bill 66. We think the Bill, in regards to this particular amendment, ought to be broadened to ensure that other public agencies like Local (power) Distribution Companies, public utilities including water treatment agencies and other similar publicly funded entities are also given the same consideration in terms of relief from antiquated and outmoded labour relations restrictions and free them to get work completed in a competitive and open marketplace.