Toronto Mayor Olivia Chow should implement common-sense construction contracting reforms to head off a massive property tax increase in 2025. Pictured: Mayor Olivia Chow. Photo Credit: Olivia Chow/X.
They say less is more, especially when it comes to budgeting. Apparently, Toronto Mayor Olivia Chow never got the memo.
Canada’s largest city keeps overpaying on construction projects, to the tune of $350 million a year. The reason, in many cases, is that only union-affiliated firms need apply.
With modest construction contracting reform, Toronto could save a bundle and see property taxes frozen for 2025.
Over the past two years, Toronto politicians voted to increase property taxes by a whopping 18 per cent. Last year’s increase alone was 9.5 per cent.
Because of these massive property tax increases, many families were pushed to the brink.
Property tax bills for most Torontonians soared by hundreds of dollars over the past two years.
Yet so much of this pain could have been avoided with a little common-sense policymaking.
Would you refuse to even consider quotes from a non-unionized company? Or would you get quotes from everyone and then make your decision?
To nearly everyone on the planet other than Toronto’s zany politicians, the choice is obvious.
But when you’re a Toronto politician spending other people’s money, apparently open competition to find the best deal isn’t a priority.
Right now, Toronto uses a closed-tendering approach to award contracts for some of the city’s most expensive construction projects. That means only a handful of companies associated with a small group of unions can bid on those jobs.
Cardus, a non-partisan thinktank, released a report last year projecting Toronto was poised to award $1.7 billion in construction projects through a closed tendering process in 2023. Because Toronto only allows a small number of unionized construction companies to bid on those jobs, the cost goes up.
In fact, Cardus estimated Toronto taxpayers were set to overpay on construction projects in 2023 to the tune of $350 million due to a lack of competition.
Closed tendering used to be the norm in Ontario. Every city across the province overpaid on construction projects to cater to big unions.
That all changed in 2019, when the Ford government passed legislation allowing municipalities to open up the construction contracting process to real competition.
Sadly, Toronto has thus far chosen not to take advantage of the Ford government’s legislative reforms to save a boatload of cash.
But nearby cities sure have.
Consider the example of Hamilton.
Hamilton was one of the first cities in Ontario to take advantage of the Ford government’s reforms. Cardus estimates Hamilton is saving 21 per cent on its construction projects because the city opened up its contracting process. This single reform did a great deal to improve the city’s bottom line.
Yet Toronto politicians appear stuck in the past. During last year’s mayoral by-election, only two candidates, Councillor Brad Bradford and Anthony Furey, pledged to follow Hamilton in reforming construction contracts.
There has been no indication from Chow, who won that by-election, that this common-sense reform is even on the table.
Last year, Chow and council increased property taxes by 9.5 per cent, the highest property tax hike in Toronto’s history.
Had Chow implemented construction reform and saved the $350 million Cardus pointed to, last year’s property tax increase could have been wiped out entirely.
Think about that. Chow had a choice: save money through competitive bidding or hammer taxpayers with a huge tax hike.
The mayor picked the tax hike.
To break the cycle of massive property tax hikes, it’s high time Toronto looked at construction contract reform.
Taxpayers shouldn’t put up with politicians overpaying on construction contracts to the tune of hundreds of millions of dollars a year, only to see those same politicians turn around and impose record property tax hikes.
This isn’t just a problem restricted to Toronto: taxpayers from British Columbia to Quebec themselves face similar anti-competitive policies at the provincial level.
It’s time for politicians to put taxpayers, not unions, first.
Chow should implement common-sense construction contracting reforms to head off a massive property tax increase in 2025.
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.
