Imagine looking at a provincial policy that increased construction costs, reduced bidders, and cut out 85 per cent of an industry’s workforce from being part of building a project – and thinking, “We should try and emulate that model.”
That’s precisely what the Trudeau government has done with its proposed Investment Tax Credit (ITC), announced in March as part of the federal budget. While the goal of the ITC is to facilitate investment in major projects, the underlying conditions will hamper and needlessly complicate how proponents approach investments in major projects in Canada.
One of the most problematic aspects of the ITC is the stipulation that project owners must pay labour costs based on the collective agreements of unions that represent just 15 per cent of B.C. construction professionals and 12 per cent of Alberta's.
This federal policy is just another way of giving the building trades unions an unfair advantage in construction. It fails to learn the cautionary tale of B.C.’s Community Benefit Agreement (CBA) regime, which gave select unions – not all unions, just the building trades unions – a monopoly on several major infrastructure projects.
This monopoly, which forces one union model on companies and workers wishing to work on those projects, has effectively pushed open shop contractors away from bidding on them. Fewer bidders and more inefficient labour practices have added hundreds of millions of dollars in unnecessary costs for B.C. taxpayers to upgrade Highway 1, build the Pattullo Bridge, and replace the Cowichan Hospital.
Now the ITC would do the same for some clean energy projects.
What is it about this narrow segment of the workforce that it should be held up as setting the gold standard for workers? Do they have more flexibility, more choice, better conditions, more generous benefits, or higher wages? The answer on all these counts is no. But that is not stopping the federal government from moving ahead with a policy that is detrimental to workers and complicates project proposals from investors seeking to invest in Canada.
The ITC regime demonstrates that the federal government lacks any real understanding of how these large complex projects are built and operated. We need look no further than the massive cost overruns on the TMX Pipeline Expansion project, now projected cost $30 billion, to understand that the government should not be telling private sector investors – experts in assessing risk, allocating capital, and building major projects – how they should be doing their jobs.
History has shown time and again that interference in free markets generally distorts outcomes, limits competition, increases costs, and denies opportunities to all but a favoured few.
The heart of our challenge lies with the federal government’s lack of a serious approach to establishing the conditions necessary to attract talent and capital, reward entrepreneurs, and put Canada on the path of being one of the most competitive economies on the planet.
By all indications, we are headed in the wrong direction.
Canada’s economic growth is now projected to be dead last among the 38 most advanced economies over the next decade, reports the OECD. Our inability to approve major projects on a timely basis and with rules that provide certainty of process, is a major reason why.
The cumulative impact of Canada’s regulatory and tax framework is showing up in stagnating per-capita GDP. Canada’s 10-year real GDP per capita growth is at its lowest level since the Great Depression. From 2014 to 2021, business investment per worker in Canada decreased 20 per cent. Meanwhile, in the United States, the same metric increased 15 per cent.
Red tape, redundant regulations, outdated labour models, and unnecessary costs are choking the investment we need to help pay for our hospitals, schools, roads, and housing programs. If we don’t fix these processes fast, the only option left to policymakers will be higher taxes and even more debt.
The head-scratcher in all of this is why Victoria, and now Ottawa, is so opposed to open and fair tendering of projects and ensuring that the bidding process is a level playing field that provides a fair shot for all contractors and workers at the jobs and opportunities that flow from these projects.
Chris Gardner is president of the Independent Contractors and Businesses Association (B.C.) and Mike Martens is president of the Independent Contractors and Businesses Association (Alberta).