Economy
Taxpayers Federation: Canada’s largest city overpaying for construction $350 million a year
From the Canadian Taxpayers Federation
Author: Jay Goldberg
Favouring unions costs taxpayers dearly
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.
Economy
Canadians should understand costs of expanding Old Age Security
From the Fraser Institute
By Jake Fuss and Grady Munro
In yet another high-stakes maneuver in the fall session of Parliament, the Bloc Québécois recently tabled a motion urging the Trudeau government to support Bill C-319, which would increase Old Age Security (OAS) payments for seniors aged 65 to 74 by 10 per cent. The motion passed and the Bloc is threatening to trigger an election if the Trudeau government doesn’t give the bill final approval before October 29.
Meanwhile, according to a new poll, 79 per cent of Canadians “support or somewhat support” the OAS increase. But crucially, the poll provided no information to respondents about the costs associated with expanding OAS, even though Canadians should understand the costs before they pledge support for any government program.
Consider this—according to past polling, more than two-thirds of Canadians expressed support for the Trudeau government’s national dental care, $10-a-day daycare, and pharmacare programs. Yet once respondents were made aware of potential tax increases (specifically, increases to the GST), support plummeted to less than 50 per cent for all three programs.
Clearly, support for government programs can change dramatically once Canadians understand the costs since they ultimately must pay those costs. So, that being said, what are the costs of a 10 per cent increase in OAS payments for seniors aged 65 to 74?
According to the Parliamentary Budget Officer Yves Giroux, the policy would cost more than $3 billion a year, with a five-year price tag of $16.1 billion—a “significant chunk of change” in his words.
Based on its latest budget, the Trudeau government expects to run deficits of at least $20.0 billion for the next five years and rack up more than $400 billion in new debt by 2028/29. If the government borrows more money to pay for increased OAS benefits, that debt number will grow even larger.
And again, Canadians will ultimately bear the costs of an expanded OAS through higher taxes in the future because Canadians must pay interest on government debt. This fiscal year (2024/25) federal debt interest costs are already expected to reach $54.1 billion—which is equal to the entire amount raised by the GST. These are taxpayer dollars that won’t go towards any services or programs for Canadians, and interest costs will continue to grow as the government adds more and more debt.
Finally, in addition to being costly, the plan is poorly targeted. While some programs such as the Guaranteed Income Supplement (GIS) provide additional income support to low-income seniors, OAS provides support to many upper middle-income seniors. Indeed, based on current thresholds, individual seniors (aged 65 to 74) earning up to $148,451 per year are eligible to receive OAS (though seniors earning more than $90,997 of income don’t receive the full amount). Therefore, if Bill C-319 becomes law, a senior couple with a combined household income of nearly $300,000 will receive an increase in their OAS payments.
Increasing OAS payments will cost billions each year while supplementing the income of many seniors who aren’t in need. Despite the political theatre in Ottawa, Canadians are ultimately the ones who will foot the bill.
Authors:
Business
What Inter-Provincial Migration Trends Can Tell Us About Good Governance
It turns out we move a great deal less than our American neighbors
Government policies have consequences. Among them is the possibility that they might so annoy the locals that people actually get up and head for the exit. Given how parting can be such sweet sorrow (and how it’s a pain to lose out on all that revenue from provincial income, property, and sales tax), legislatures generally prefer to keep their citizens on this side of the door.
Nevertheless, migration happens. And when enough people do it at the same time, they sometimes leave economic and social clues behind waiting to be discovered. This graph represents net migrations since 1971 into and out of the four largest provinces:
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It may just be possible to make out some broad patterns here. Quebec has never had a net inbound migration year (although there’s been plenty of immigration to Quebec from outside of Canada). But nothing matches the mass exodus of anglophones due to concerns over language and separation in the 1970s.
Curiously it seems that Alberta and British Columbia received far more migrants than Ontario around that time – although the actual numbers tell us that they were more likely to have come from Saskatchewan and Ontario than Quebec. By contrast, most disillusioned Quebecers found their way to Ontario. Besides the 70s, Alberta also enjoyed inbound spikes in the mid-90s, mid-00s, and early 10s. And it looks like they’re in the middle of another boom cycle as we speak.
The real value of all this data however, is in using it to test causation hypotheses. In other words, can statistical analysis tell us what it was that caused the migrations? And are some or all of those causes the result of government policy choices? Here are some possibilities we’ll explore:
- Household income trends
- Government debt
- Crime rates
- Healthcare costs
- Housing costs
Right off the top I’ll come clean with you: there’ll be no smoking gun here. I could find no single historical measure that came close to explaining migration patterns. However I was able to confidently discard some theories. That’s a win I guess. And other numbers did hint to intriguing possibilities.
Inter-provincial variations in household income, crime rates (specifically murder rates), healthcare costs (including prescriptions, eye care, and dental care), and even housing affordability had no measurable impact on migration. This was true for both correlation coefficients and lag analysis (where we looked at migration changes in the years following an economic event).
Rising unemployment had, at best, a minimal impact on outbound migration. And even then, it was only noticeable for Alberta and Prince Edward Island.
Of all the metrics I explored, the only one that might have had a serious influence in migration was provincial government budget deficits.
Folks from Alberta, New Brunswick, and Newfoundland all responded to growing government debt by clearing out. Now, I doubt this was their way to telling the government what they really thought about bad fiscal management. Rather, people probably decided to move to greener pastures in response to the ripple-effect consequences of deficits, like higher taxes, reduced social services, and deteriorating infrastructure.
I suspect that part of the reason I wasn’t able to find any strong connections between those metrics and migration patterns is because there really isn’t all that much migration going on in the first place.
Take Ontario’s record net population loss of 31,018 residents back in 2021. That may sound like a lot of people, but it’s actually just a hair over two-tenths of one percent of the total Ontario population. And even Quebec’s epic 1979 loss of 46,429 people was still nowhere near one percent. It was 0.7117456, to be precise. Those aren’t significant numbers.
When so few people choose to move, it’s probably because there’s nothing on the macro level going on that’s pushing them. Those who do go, probably do it primarily for personal reasons that just won’t show up in population-scale data.
There’s also the very real possibility that Canadians are smart enough to realize that things probably won’t be any better over there than they already are right here. Fewer than two-thirds of one percent of Ontarians left for other provinces in 2023, while only around one-third of a percent gave up on Quebec.
By contrast, annual state-to-state migration figures in the U.S. typically range between 1 percent to 5 percent of each state’s population. In 2022, that added up to 8.2 million people, according to the Census Bureau.
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