Heavy construction industry across West calls for action on trade barriers
The Western Canada Roadbuilders and Heavy Construction Association Board of Directors at its May 28 meeting unanimously resolved to call upon on the Prairie province premiers to halt the use of local preference clauses in tenders, making it all but impossible for companies outside to win construction contracts.
Saskatchewan recently introduced community benefits clauses which award points to firms who draw most of their labour from that province. Such clauses, often referred to as ‘local preference’, offend the principles of free trade, and drastically diminish the value of free flow of trade and labour across provincial borders,
Along with the community benefits clauses, Saskatchewan has introduced hefty penalties in construction contracts should audits find the number of workers at a construction site falls below thresholds.
The Board unanimously agreed to communicate to the premiers of the three Prairie provinces an appeal to maintain strict compliance with free trade respecting the provisions of the New West Partnership Agreement in the broad best economic interests of the public commerce and industry.
“The use of the local preference practices makes it almost impossible for an out-of-province company to win a provincial construction contract even when it is the lowest bid,” said Chris Lorenc who serves as president of the MHCA and of the WCR&HCA.
All four western provincial governments have signed the New West Partnership Agreement, which requires open trade and labour flow. Saskatchewan has introduced the benefits clauses and penalties, explaining it wants to ensure communities get help with economic recovery from the COVID-19 business shutdown.
Local preference and other protectionist measures in trade across borders reduces competition and that means taxpayers get lower value for the dollar, Lorenc said. And it would be very difficult to eliminate such practice once it is accepted, even if it is dressed as a short-term, exceptional measure.
“Nothing that is bad in the short-term – and local preference practices are bad even short-term – never turns out good in the long-term.”
The MHCA has assurances from the Manitoba government it is working at the highest levels to bring Saskatchewan’s use of local preference in procurement to the attention to counterparts in governments across the West.
Premier Brian Pallister has repeatedly stressed that provinces must resist the “thickening” of borders to trade as Canada works to manage and then ease travel restrictions as the pandemic eases its grip.