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Industry Perspectives Op-Ed: Toronto could solve its budget crunch by getting more for less

Karen Renkema
Industry Perspectives Op-Ed: Toronto could solve its budget crunch by getting more for less

Here we go again. Toronto is facing another multi-milliondollar budget shortfall. While it’s easy to blame the pandemic, most of the problem is of the city’s own making. For years, Toronto has refused to recognize that construction competition could go a long way in keeping it out of financial trouble.

We’re all impacted by the high price of too little competition. It drives up the cost of everything from groceries to cellphone bills. What many residents may not realize, is that a lack of competition also makes municipal construction work as much as eight to 15 per cent more expensive in Toronto. That’s enough to prevent many of the projects this city needs from going ahead.

Right now, Toronto is so cash-strapped that it’s putting dozens of planned capital projects on hold, from transit work and road repairs to upkeep at public parks.

According to a staff report, the city will have to cut $300 million from its capital budget unless additional funding comes through. It seems Toronto’s elected officials prefer to convince other levels of government to chip in rather than consider how to get much better value on local infrastructure projects.

It was around this time three years ago that Toronto turned down any potential cost savings on public construction. It became the only municipality in all of Ontario to opt out of Bill 66. The groundbreaking legislation passed by the Doug Ford government provided municipalities with a major opportunity to realize sizable savings when building public infrastructure.

Instead of opening up competition on everything from public housing repairs, to transit expansion, Toronto decided to expand a select group of companies and labour groups that have monopolized the city’s public construction projects for decades. By doing so, Toronto passed up on savings of up to $381 million in 2019 alone, more than enough to cover its current capital budget shortfall.

One has to wonder how long Toronto’s elected officials can blame the pandemic for the city’s annual budget woes.

“All of this shortfall we are experiencing is entirely related to COVID, it is not because we spent too much money or any other failure on our part,” explained Mayor John Tory. But it’s hard not to view Toronto’s rejection of cost saving legislation as anything but a failure to do right by taxpayers.

Bill 66 has made a huge difference in other regions. Removing restrictions that limited the number of bidders on projects has saved the Region of Waterloo at least 14 per cent on municipal construction work.

That translates into savings of $24 million over two years, according to a report by the Cardus think-tank. It notes similar results in Hamilton and Sault Ste. Marie, which also opened up their construction markets, awarding contracts based on merit, not union affiliation.

Our member companies at the Progressive Contractors Association of Canada employ thousands of unionized workers. They live and pay taxes in Toronto, yet they aren’t allowed to build city projects from community centres to splash pads. By not giving all qualified local workers and companies the chance to build municipal projects, public construction costs in this city will continue to escalate.

Toronto has received nearly $3 billion in COVID-19 funding from federal and provincial governments since 2020. While the pandemic has impacted the municipal budget, it is not entirely to blame for Toronto’s money trouble.

Capital budget cuts are not the answer. Instead, Toronto should be expanding transit and public housing and maintaining roads and parks at a fraction of the cost. The city could get more for less by encouraging construction competition, rather than pretending the savings aren’t worth it.

Karen Renkema is VP Ontario at the Progressive Contractors Association of Canada. Send Industry Perspectives Op-Ed comments and column ideas to editor@dailycommercialnews.com.

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