To avoid harpooning household budgets with the biggest tax hike in Toronto history, Mayor Olivia Chow could reform Toronto’s construction procurement process. It would save hundreds-of-millions of dollars. And that would virtually wipe out the need for a property tax increase.
Toronto has been overpaying for construction projects to the tune of $350 million a year. That’s according to a report released last year by Cardus, a non-partisan think tank.
Unlike other major Ontario cities, Toronto uses a closed tendering process to award contracts for many of its most expensive construction projects. The closed process means only a select number of construction companies affiliated with a handful of major unions can bid on those jobs.
The city awarded roughly $1.65 billion in construction project contracts through the closed tendering process in 2023. Because of that, Toronto lost out on roughly $350 million due to overpayments last year.
The closed tendering process used to be a common practice in Ontario. But soon after the Ford government took office in 2018, it passed legislation releasing municipalities from the obligation of using a closed tendering process for major construction projects.
Almost every major city in Ontario opted out of the closed tendering process soon after.
Nearby Hamilton was one of the first cities to opt out and usher in a new open tender process. The Cardus report estimates Hamilton is saving 21 per cent on its total construction costs, which significantly improved the city’s budget outlook during the final years of former mayor Fred Eisenberger’s term.
Unfortunately, Toronto politicians have thus far refused to follow the lead of Hamilton and most other major Ontario municipalities. During the 2023 mayoral by-election, Councillor Brad Bradford and Anthony Furey committed to ending the closed tendering procurement process. Toronto’s new mayor, Olivia Chow, decided to defend unions instead of taxpayers.
Chow is currently trying to push through a property tax increase of $443 million. Cardus estimates Toronto would save roughly $350 million a year from construction procurement reform. Making that change could reduce the need to raise property taxes from $443 million to $93 million, or from 10.5 per cent to 2.2 per cent. This would allow Toronto to have one of the lowest property tax hikes in southern Ontario instead of the highest.
Chow and her allies at city hall are deliberately choosing to overpay on construction contracts as a means of favouring their union pals. But at a time when Chow says the city is broke and taxpayers don’t have extra cash to send to city hall, common sense procurement reform should be a no-brainer.
It’s time for Chow to realize that she needs to prioritize protecting taxpayers, not big unions. For five years, Toronto has been free to end its closed tendering process, but politicians have made the conscious choice not to. Add up all the overpayments over the years and Toronto taxpayers have been on the hook for billions.
If Toronto really is broke, as Chow claims, there’s never been a more important time to consider substantial reform. With 400,000 Ontarians working two jobs just to pay the bills and half of Canadians $200 away from not being able to make ends meet, asking taxpayers to pay more should be an act of last resort, not first resort.
Chow has until Feb. 1 to present the final draft of her budget to council. She still has plenty of time to lower costs and lower the property tax tab for struggling Torontonians. It’s time for Chow to do the right thing, take on big unions and protect hardworking taxpayers.
Jay Goldberg is the Ontario Director of the Canadian Taxpayers Federation
