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British Columbia Independent contractors group claim new labour agreement will result in higher costs, delayed projects

A new B.C. Crown corporation is expected to track employment numbers and other benchmarks for major infrastructure projects in the province, including the number of apprenticeships in skilled trades and employment and training opportunities for groups typically underrepresented in the construction sector such as women and Indigenous people.

But questions remain about whether the Crown corporation – and the new union-friendly labour agreement it will oversee – will push up project costs, and by how much.

“I suspect, in the short run, it probably will drive up costs – how much, is an interesting question,” Mark Thompson, professor emeritus at the University of British Columbia’s Sauder School of Business, said on Tuesday.

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While some costs, such as hourly wages, are easy to compare, it is trickier to measure other benefits that the government says will be built into the agreement, such as training and job opportunities, Mr. Thompson said.

“You’re never going to be able to measure, on a dollars and cents metric, about these other benefits,” he added.

NDP Premier John Horgan on Monday announced a Community Benefits Agreement to build major infrastructure projects in B.C., including a $1.4-billion project to replace the aging Pattullo Bridge on the Fraser River connecting New Westminster and Surrey.

Under the agreement, non-union contractors can bid on such projects, but workers will be required to join unions once on the job.

The Independent Contractors and Businesses Association, which represents non-unionized construction companies in the province, denounced the new framework, calling it a sweetheart deal for unions that had backed the NDP and predicting it would result in higher costs and delayed projects.

(Until financing reforms banning corporate and union donations took effect last year, labour unions were major financial supporters of the NDP party.)

To back that claim, the ICBA cited the Vancouver Island Highway Project, a 1990s project that – under labour policies brought in by the NDP government of the time – required workers on the project be unionized.

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A 1994 Vancouver Board of Trade report, prepared by an accounting firm, concluded costs for the project were nearly 40 per cent higher than they would have been had the project been built without those requirements.

Under the master collective agreement for the project, all workers were required to join unions within 30 days of being hired.

That would also be a requirement under the current NDP government’s new Community Benefits Agreement.

BC Building Trades – an umbrella group for more than a dozen construction unions in B.C. – disputes the findings of the board of trade report, saying the project was completed for less than the projected cost estimate.

A 1996 review by the B.C. Auditor-General found the Vancouver Island project “will provide good value for money within the context of current ministry standards and guidelines.”

The union group also points to projects that went over budget after the union-friendly NDP government of the 1990s was defeated and the Liberal government came to power in 2001, including the South Fraser Perimeter Road and the Vancouver Convention Centre.

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The trade unions also cited a July 2018 report by two U.S. labour experts that examined Minnesota’s Prevailing Wage Act – 1973 legislation that provides minimum wages for construction workers employed on public projects.

According to that report, economic research finds that prevailing wage laws “increase apprenticeship training, boost worker productivity and reduce injury rates.”

The new B.C. agreement calls for wages to be aligned with industry wages, “based on prevailing construction rates.”

“If it’s true that we have a shortage − either real or impending − of skilled tradespeople, this could be a valuable contribution for at least some of these trades ... these are things that could be helpful,” Mr. Thompson said.

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