Juno News - Canada’s infrastructure projects are riddled with fraud and corruption

00:00:00.000 Hi, welcome to the Candice Malcolm Show. I think most Canadians who worry about out-of-control

00:00:11.040 government spending focus on big-ticket items, things like corporate welfare, new unaffordable

00:00:17.100 entitlement programs, or probably how the Canadian government sends money overseas to corrupt

00:00:22.880 international institutions like the World Health Organization or the United Nations,

00:00:26.360 and we also send money to corrupt and authoritarian governments through our bilateral aid programs.

00:00:32.060 But I think most Canadians would probably be surprised by the amount of corruption, fraud,

00:00:37.160 and lack of competition that sometimes happens right here in Canada in our own governments,

00:00:42.380 both federally and locally, specifically when it comes to things like infrastructure projects. So

00:00:48.500 our next guest today knows a thing or two about this waste and I'm very pleased to be joined by

00:00:54.440 Walter Pamick. Walter is the former chair of Merritt Ontario and he's a local contractor in Ottawa.

00:01:00.740 Walter, thanks so much for joining the Candice Malcolm Show.

00:01:02.960 Thank you, Candice. The pleasure is all mine to be here with you and to shed some light on this issue.

00:01:07.400 Yeah, thank you. So I was reading a little bit about this sort of issue with what you call

00:01:12.200 closed tendering or open tendering when it comes to government contracts. So I hope you can just give

00:01:17.240 a very brief introduction to what it is you're talking about when we're looking into government

00:01:22.460 contracts and how they are awarded. Certainly, I'll just give you a little brief overview, Candice.

00:01:28.560 Anytime, so being in Ottawa, you know, the federal government is one of the biggest buyers of

00:01:33.680 construction services in our nation's capital, just given how many employees they have here and how much

00:01:39.500 space they occupy. Anytime that they are doing any sort of retrofit, and we're primarily electrical

00:01:45.580 contractors and also general contractors. So if they need an electrical contracting job done and

00:01:51.100 new electrical panel put in, they would post on Merck's, which is their government contracting or

00:01:57.020 procurement website, that they're looking for these services. And there's no, as long as you comply,

00:02:02.140 and are capable of doing the work, then you're able to submit a bid for this work. What we're seeing

00:02:09.740 happening right now on Parliament Hill is well over $2 billion worth of construction work where the

00:02:15.740 federal government has abdicated its contracting authority to a third party and this third party is

00:02:21.260 not able to meet the government's requirements of fair and open tendering. In fact, one of the

00:02:27.740 contractors selected for this parliamentary precinct project is signatory to many union agreements.

00:02:34.460 Therefore, you must belong to one of the unions that they are signatory to in order to be able to

00:02:41.420 submit a quote, let alone do work on this project. So a company like mine, we employ 50, 60 people.

00:02:49.020 I've been in business for over 20, I've got 1996, so 20 some years in business right now.

00:02:57.020 Have a great crew, very competent individuals. I've done many projects similar to what's happening

00:03:00.620 down on the Hill. We're not allowed to even submit a bid and that's

00:03:04.460 precludes about 70% of us that are union free or open shop that will not be allowed to

00:03:10.540 to put forward a tender because of this. So just because you're not part of some club that the

00:03:16.380 government created, they said that you have to be part of a specific union in order to qualify for

00:03:22.060 contracts. You're not even allowed to apply to participate in these projects, to work on these

00:03:27.020 projects? 100%. So in this example, one of the contractors, Ellis Dawn, is signatory to the

00:03:33.420 International Brotherhood of Electrical Workers. Therefore, your company must be signatory to the

00:03:38.460 IBW in order to submit work. In Ontario, and this is pretty true across the country with the exception

00:03:45.260 of Quebec where everything is unionized, but about 70% of all work done in this country is done by open

00:03:50.780 shop contractors like myself. 30% by groups that are signatory to different union agreements. So 70%

00:03:57.740 of us are locked out of tendering this project because our employees choose to bargain directly

00:04:03.580 with us. They're satisfied, you know, they're compensated well. We're flexible work hours,

00:04:10.140 great working conditions. There's no need for them to actually to go out and to seek a third party to

00:04:16.140 represent them whatsoever. They're very, very happy in the way that work is working out for them right now.

00:04:22.220 So hence, we're not allowed to bid. And so I mean, this almost sounds like a discriminatory

00:04:28.060 district discriminatory practice to me just because your workers choose that they don't need to be

00:04:32.860 represented by a specific union. The government doesn't let them get involved. What other consequences

00:04:39.420 they have? The Carta study I read, basically said that this created that these regulations restrictions on

00:04:45.900 bidding serve as a petri dish for corruption in public procurement. We've read of other instances of

00:04:51.980 fraud. What are the kind of consequences of these rules? Well, I mean, first of all, we've seen all

00:04:58.220 sorts of tremendous cost overruns. The city of Hamilton building a wastewater treatment facility.

00:05:04.460 They were unionized quite some time ago by, I think it was the Carpenters or Laborers Union in

00:05:11.100 Hamilton. Hence, everybody must be signatory to that union in order to do work on those sites. Their costs

00:05:17.740 were 30 to 40% over budget because of the limited amount of contractors that were then eligible to

00:05:24.060 a tender. You know, it doesn't take a brain surgeon, Candace, to realize if you're out trying to get the

00:05:28.220 best price you could possibly get, the more people you invite, the wider the range of your pricing is

00:05:33.340 going to be. You take the lowest compliance bid at that point. If you're locking out seven out of 10

00:05:39.820 contractors from being able to bid, then definitely you are not going to be receiving the best value for

00:05:45.340 your money. So what is the government's rationale behind this? I mean, it sounds like a pretty

00:05:50.620 obvious thing that this is, again, I think it's discriminatory. These are laws that have been

00:05:55.820 placed for a long time, not just federally, but provincially in Ontario, in Quebec. What is the

00:06:01.660 justification for the government behind these restrictive rules? I don't think the government

00:06:06.620 realized that when they when they abdicated their authority to this, to this, these two companies,

00:06:12.700 which are PCLL is gone, to do this work, they're the only ones I believe actually put a tender

00:06:17.180 forward. I don't think that they realized that they couldn't comply with their own tendering

00:06:22.220 regulations, which are very simply on the government's whole buy and sell a website. It tells you that

00:06:28.940 their objective is to acquire good services and construction in a manner that is that facilitates

00:06:33.980 access to all contractors, encourages competition, treats suppliers fairly, and results in the best value

00:06:40.540 for Canada. I would suggest to you that none of those four subjects will occur given their tendering

00:06:47.340 practices right now. Well, certainly not getting good value for money or having a fair process. I

00:06:53.740 mentioned earlier how this leads to corruption and fraud. I think probably the best known example of that

00:06:58.380 was what happened in Montreal. I think everyone's heard of the Charbonneau Commission that looked into

00:07:04.220 some of the deals that happened in the city of Montreal and sort of gave a bunch of recommendations.

00:07:08.380 What happened there and how is that related to these closed tendering contracts?

00:07:12.940 Well, you know, I think this is a very, the Charbonneau, I mean, I followed that relatively closely too,

00:07:17.500 and I still remember the McLean's Magazine picture of the Bonhomme with a suitcase full of money,

00:07:23.100 you know, and it was ironic. I mean, as they say, the roads in Quebec are paved with gold because it costs

00:07:28.540 more to pave a kilometer of road in Quebec than anywhere else in this country. It's very simple,

00:07:34.460 okay, when you limit competition, then you limit the amount of people that are bidding. It encourages

00:07:41.580 collusion, it encourages many different bad bidding practices, but it definitely does not get you the

00:07:46.700 best value for your money. Well, yeah, I think we're seeing that all over. I mean,

00:07:52.780 one example that stood out to me in that Cardist report was this is in Kitchener, Ontario. There was a,

00:07:59.020 basically, Kitchener was looking to build a simple brick public washroom. And the lowest bid that they

00:08:06.220 got because they had these restrictions that blocked out 40% of people who could, or more than 40% of

00:08:13.260 people who could potentially bid on these 70%. Okay. Yeah. So the lowest bid to just build a simple

00:08:18.460 public brick washroom was $564,000. And that didn't even include the land. That was just the construction

00:08:25.100 cost, which, again, you don't have to be super familiar with construction and cost of things.

00:08:30.220 Wow. I mean, that's the cost of building a house, not a bathroom. For sure. You could build a four

00:08:35.900 bedroom home in Ottawa for that kind of money, let alone a little single person washroom, right?

00:08:40.700 And that's just a very classy example, Candice, of what you see happening when you restrict

00:08:44.940 competition in any industry whatsoever. You know, I live in Ottawa. I'm not sure where you are, if you're

00:08:50.300 in Toronto or not, but I pass apart buildings every single day. I live right downtown. And I look at them

00:08:56.540 and, you know, they're an iconic building. They belong to every single Canadian. They belong to you,

00:09:01.500 to me, to our employees, to every single person that is a citizen. And every single person should

00:09:07.660 have the right and the ability to tender freely any work that comes out of any of these new projects

00:09:13.740 that come forward. And the reality is that is not happening. And yet our taxes fund this construction,

00:09:18.940 Candice. So gladly take our money to fund these projects. It just won't take our labor.

00:09:23.740 Right. I mean, one of the things I wonder is, you know, do we have a ballpark idea of how much

00:09:29.100 this is costing Canadians? Because we often hear, you know, when it comes to these infrastructure

00:09:32.860 projects, we have to take out large amounts of debt. I mean, that was Justin Trudeau's full pitch and

00:09:38.140 proposition to Canadians back in 2015, that they're going to take on some debt to build some

00:09:42.460 infrastructure. You know, we hear a lot of times about raising taxes and doing other kinds of

00:09:47.180 schemes to fund infrastructure projects. But how much would Canadian taxpayers save? And how much

00:09:52.780 more could we get for a buck if we actually, you know, follow the recommendations of Merrick Canada

00:09:57.340 and opened up tender to all Canadian companies? Well, you know, Candice, if you look at that CARDIS

00:10:01.580 study and you look at the cost overruns anywhere from 20 to 40% on a billion dollars, that's 200 to 400

00:10:07.340 million dollars, you know, of infrastructure money that could be going towards other projects,

00:10:13.340 you know, instead of what's happening right now with these overruns.

00:10:17.900 That's wild.

00:10:18.700 They're definitely not getting their value for their money.

00:10:22.460 Well, yeah, we're all not getting our value and imagine how much fewer we would be in debt,

00:10:27.660 how smaller our debt would be if we took some of these recommendations. And then there's also an impact

00:10:32.780 on companies, because like you said, seven out of 10 construction workers are excluded from employment.

00:10:39.580 I think one of your campaigns said that the way that the government has these bidding contracts

00:10:45.420 basically could lead to thousands of construction workers losing their jobs because they just don't

00:10:49.820 have enough work because of the unfair laws that the government had. So what is it that you're proposing

00:10:56.540 and what can Canadians do to fight back against these unfair laws?

00:11:00.380 Well, the Canadians can, first of all, I mean, this is a matter of fairness, Candace,

00:11:03.340 and this is what I really don't like about this, right? I mean, every company should have the right

00:11:07.660 to tend to this work and to basically stand on their merits, right? They're going to qualify

00:11:13.260 or they're not going to qualify. If they don't qualify, there's a specific reason. But if they do,

00:11:17.260 if they're competent, they can do the work, they can finance the work, there shouldn't be an issue.

00:11:21.180 Every single person that can, should be allowed to work on these projects. You know, we're going

00:11:27.180 through, you know, we see what's happened and how COVID has ravaged our economy. You know, we have

00:11:32.140 many people that are at home right now not working because sites have been closed up. They have many

00:11:36.300 companies that have closed their doors until COVID is over and the quarantine period is over

00:11:41.740 and they can get it back to work. So we're all going to be fighting for work. It's going to take a

00:11:47.340 while for things to ramp up. And the sad reality is that we will not be able to tender this work on

00:11:53.260 Parliament Hill, which we should be able to. On top of this, there's also, I read recently,

00:11:58.540 there's over a billion dollars worth of work coming to the West Memorial building, I believe, and the

00:12:05.020 Supreme Court of Canada building. So again, you know, we need to stop this because this just keep

00:12:10.780 perpetuating itself and we will not be getting the best value possible.

00:12:15.100 So what other recourses do you and your, you know, your company and your workers, what do you have?

00:12:20.300 How can you fight back against the government for imposing these really restrictive rules that do

00:12:25.820 hurt your business and they're unfair to all Canadians?

00:12:29.100 Yeah, this is the top part, you know, Candace, we have provincial labour legislation

00:12:33.820 messing, meshing with a federal project. We've had a legal opinion done by a well-respected local

00:12:42.620 law firm and they believe that we should be looking at, and our best chance is a charter,

00:12:49.580 a charter challenge actually. And basically it's, they're stating that the mandatory requirement for

00:12:56.140 a union affiliation in order to present a bid, this request for proposal is a violation of the freedoms of

00:13:02.700 non-association under section 2D of the charter. So we're looking at that a lot closer and, you know,

00:13:11.260 we're going to fight, this is not just a local fight, this is a fight that will take us right across this

00:13:16.220 country, Candace, because the federal government has buildings from coast to coast to coast.

00:13:20.380 And I believe that every competent company should be able to put forward a bid, regardless where in

00:13:27.020 this, you know, this beautiful country of ours we actually live. It should be open,

00:13:30.860 it should be transparent, every single company should be able to bid.

00:13:33.740 So Walter, one of the questions I had was about the differences in laws between the previous

00:13:39.420 conservative government federally under Stephen Harper and the current government of Justin Trudeau.

00:13:43.660 Has Justin Trudeau made this problem worse? Is it the same? Has he been better? What's your diagnosis here?

00:13:50.380 I think he's made it a lot worse, Candace. If you remember back during the Harper years, he had brought

00:13:57.020 forward Bill C-377, it was Rusky Bear that brought it forward. It had to do with union financial

00:14:02.700 disclosure and any expenditure over $5,000 was going to have to be actionistic. You remember unions

00:14:09.820 do not pay any taxes. So on all the dues that they collect, any revenues they have through training

00:14:14.220 halls, et cetera, they pay absolutely no taxes. Estimates are that's in the range of $2.5 to $4

00:14:20.300 billion worth of income that's not being taxed by the federal government, which could result in about

00:14:26.140 $800 million in revenues for this government if they wanted to go there. Stephen Harper had brought

00:14:31.900 in 377. It had passed in the Senate. I still remember that day very, very well. And the building

00:14:39.180 trades had gone to Trudeau just in the 2015 election and had thrown all their weight and support

00:14:44.780 behind Trudeau. And guess what he did? 377 is no longer around. He got rid of that nice piece of 1.00

00:14:50.620 legislation. So there's a very close relationship. Sorry, well to that piece of legislation,

00:14:55.900 it required unions to pay taxes and was it to do with transparency as well or what was it? No,

00:15:01.500 it didn't require them to pay taxes, but I think this was a potential first step. So unions don't pay any

00:15:07.420 taxes on any of the revenues that they bring in, right? And I mentioned it's about two and a half

00:15:11.740 to $4 billion worth of revenues that they bring in. They were going to have to disclose every

00:15:16.380 transaction that was over $5,000 in value. So if they were taking a trip to a convention in Vegas,

00:15:21.820 they'd have to disclose that instead of a line item on their balance sheet that would show travel

00:15:27.980 expenses, for example, or on their income statement that show travel expenses. It would all have

00:15:33.420 be broken down individually instead of one lump sum of a million dollars or whatever it is.

00:15:38.220 And they did not want to do that. I don't know why. We can only make assumptions as to why people

00:15:45.820 would not want you to see where their money is actually being spent. But I think that they

00:15:51.180 realized that there's so much happening. Union dues are supposed to be used for collective bargaining

00:15:56.460 purposes and that's why they're not taxed. But collective bargaining for most unions happens

00:16:00.300 once every three years over a two, three, four month window or so, right? So the rest of the time,

00:16:06.060 you know, those funds are being used to operate halls, to lobby the government, to ensure that

00:16:10.860 union-only work happens on projects like Parliament Hill. And now that money is taxed. So I think they

00:16:16.620 saw the writing on the wall, which is why they didn't want this legislation to be around anymore.

00:16:21.180 So Harper had demanded that they have more transparency with the money that they were getting,

00:16:27.020 a break on from the tax perspective. And then what did Trudeau do? So these unions backed Trudeau

00:16:31.580 in the 2015 election, and then what happened after that? The bill ended up, they never moved forward

00:16:38.620 with the bill. It never came into legislation. And it basically just died with the new government.

00:16:43.740 They decided not to do anything with it. And I thought it was good. Listen, financial accountability

00:16:47.820 is huge, Candace, for every single person. You know, and for taxpayers as a whole, to ensure that

00:16:54.620 we are getting the best value for our money. And if the money's not being spent where it's supposed

00:16:59.260 to be spent, then maybe there is a reason to tax it. And what was Trudeau's sort of explanation or

00:17:05.980 justification? Why wasn't he pressed on, you know, forcing more accountability? Because I recall when

00:17:12.060 Justin Trudeau was first elected, his whole thing was that he wanted to make government more accountable

00:17:17.020 and that he wanted to change the way things were done in Ottawa. But this seems like reverting back to the

00:17:21.900 old corrupt ways of the Liberals of the past. Well, people don't have very long memories,

00:17:27.980 Candace, right? You know, those that were involved in this fight to bring financial disclosure to the

00:17:33.500 forefront for unions believe that it's a good thing to do. And why is he not being pressed? You're the

00:17:42.540 press. You can press them. Well, we at Trudeau try, Walter. You may not get part of that six or eight

00:17:48.700 hundred million dollar fund that he's got set up if you press it too hard. Well, I don't think we were

00:17:54.060 going to get that anyway. But it's certainly disappointing to see the sort of lack of accountability

00:18:01.740 and transparency there from a guy who literally campaigned on that kind of stuff. Well, for sure,

00:18:06.540 you know, and to me, this is the underdog. This is, you know, we just don't have the resources that these big

00:18:13.900 labor organizations have Candace, right? So they've done extremely well and they lobby hard and they

00:18:21.100 try to do the best for their members at the expense of 70% of the other people in that same industry.

00:18:27.660 And that's what I don't think is fair. Set up rules that everyone can abide by, that are fair,

00:18:32.620 that are transparent, and then may the best person win. May the best company win. May the lowest compliant

00:18:38.380 tender win. What they're doing right now is they're picking the winners and the losers.

00:18:42.540 And right now they've considered 70% of us to be losers that they don't want to deal with.

00:18:48.300 So, yeah, I wish this was a bigger issue that was on every Canadian's mind and it should be Candace

00:18:54.780 because it's about getting value for our tax dollars and it's about fairness. And we all want to,

00:19:00.860 you know, believe that we live in a fair and just world, but there's still a lot of work to be done and

00:19:05.420 that's why we're pushing this issue. Well, that sounds like a very noble challenge and hopefully you

00:19:11.820 take that because I think that we should uphold our charter rights and we should be very serious

00:19:16.700 about those. And it seems to me like a case that, you know, not only infringes your ability to have

00:19:22.140 access to work, but also, again, it leads to all kinds of consequences like we see with corruption

00:19:28.540 and fraud. Well, Walter, thank you so much for joining us on the Candace Malcolm Show and breaking

00:19:32.300 down this issue. Again, it's almost obscure when you first hear about it, but then the more you learn, the more,

00:19:37.420 you know, it just seems like really a common sense problem the government has because they operate

00:19:42.620 kind of behind closed doors and people don't know a lot about it. So thanks for joining us and best of

00:19:47.500 luck to you with these projects. Thank you very much. It's been a pleasure talking to you.

Juno News - May 11, 2020

Canada’s infrastructure projects are riddled with fraud and corruption

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