Open Mind 2014 Alberta by Venture Publishing

INFRASTRUCTURE PERSPECTIVES: Find out how the provincial government’s capital plan stacks up

Volume 22 • Issue 1 • Spring 2014

A FORUM ON OPEN SHOP CONSTRUCTION

Has the Alberta government made progress on its commitments?

BENEFITS BOOM Build up your perks with the Merit Hour Bank plan

PM #40020055

THE $500,000 TOILET Open tender avoids project inflation

CONTRACTOR VERSUS EMPLOYEE Clarify the fuzzy line between workers

PLUS

: Fin execu d out if tive is righ coaching t fo organ r your ization

KEY PLAYERS, 2013: The Contractor of the Year Awards recognize top construction pros

TOGETHER WE BUILD SUCCESS.

Contents Volume 22 • Issue 1 • Spring 2014

7 5 Executive Editor’s Column By Stephen Kushner

7 The Benefit Boom

42 The Year’s Key Players

Merit member employees worked more than 100 million hours in 2013. The Merit Hour Bank is one of the reasons By Suzanne Pescod

The 2013 Contractor of the Year Awards recognize top construction professionals By Allison Myggland

10 The $500,000 Toilet 38 ON THE COVER Mixed Results Alberta’s provincial leaders have delivered on some key campaign commitments. What about the rest? By Ben Freeland Illustration by David Vogin

If guaranteeing work to unions is inflating the cost of public projects, why aren’t we open tendering? By Terrance Oakey

15 Perspectives on Infrastructure Find out how the provincial government’s capital plan stacks up against the one proposed by the official Opposition By Peter Pilarski

47 Build Better Apprenticeships Look to successful models, rather than legislating a poor solution By Peter Pilarski

51 Merit Canada’s Efforts Read about how Merit Canada is taking care of business By Terrance Oakey

54 By the Numbers Canadian construction statistics

20 Independent Contractor or Employee? Clarify the fuzzy line that exists between and employee and a contactor By William Johnston

26 Coaches’ Corner Find the right corporate coach and establish a relationship that could change your career By Michelle Lindstrom

33 Merit, Coast to Coast 20

Regional Merit organizations are making a splash in their home provinces advocating for an open shop approach

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Executive Editor’s Column

Volume 22 • Issue 1 • Spring 2014 Publisher

Ruth Kelly

Executive Editor

Stephen Kushner

Associate Editor

Suzanne Pescod

Director of Custom Content

Mifi Purvis

Production Manager

Betty Feniak Smith

Production Technicians

Brent Felzien Brandon Hoover

Circulation Manager

Karen Reilly

Vice-President Sales

Anita McGillis

Advertising Representatives

Kathy Kelley Alison DeGroot

Sales Assistants

Julia Ehli Michelle Benz

Art Director

Charles Burke

Associate Art Directors

Andrea deBoer Colin Spence

Contributing Writers Ben Freeland, William Johnston, Michelle Lindstrom, Allison Myggland, Terrance Oakey, Suzanne Pescod, Peter Pilarski Contributing Illustrators and Photographers Steve Adams, Stockwell Collins, Nick Crane, Kevin Ghiglione, Heff O’Reilly, Ben Rude, Raymond Stockton, David Vogin Open Mind is published two times per year by Venture Publishing Inc. for Merit Contractors Association. Venture Publishing Inc. 10259-105 Street, Edmonton, Alberta T5J 1E3 Tel.: (780) 990-0839 Fax: (780) 425-4921 admin@venturepublishing.ca www.venturepublishing.ca Merit Contractors Association 103-13025 St. Albert Trail, Edmonton, Alberta T5L 4H5 Tel.: (780) 455-5999 or 1-888-816-9991 Fax: (780) 455-2109 meritedm@meritalberta.com www.meritalberta.com Merit Contractors Association is a non-profit organization that offers human resource services to the open shop construction industry. Printed in Canada by Transcontinental LGM Graphics The opinions conveyed by contributors to Open Mind magazine may not be indicative of the views of Venture Publishing Inc. or Merit Contractors Association. While every effort is made to ensure accuracy, neither Venture Publishing Inc. nor Merit Contractors Association assume any responsibility or liability for errors or omissions.

On behalf of Merit Contractors Association,

welcome to the 22nd edition of Open Mind magazine. Open Mind is dedicated to exploring the issues faced by the open shop construction industry in Alberta and across the nation and, once again we are pleased to focus on key issues and challenges facing our industry. In this issue we shine the light on key public policy issues relating to ensuring open access of any public infrastructure projects to any qualified contractor, union or non-union in the article titled “The $500,000 Toilet.” We also discuss the differences in policy between the Government of Alberta and the Wildrose Party. In “Perspectives on Infrastructure,” we evaluate infrastructure expenditures and the respective Party policy positions for three years. On the topic of political promises in “Mixed Results” we examine the PC government two years into their four-year mandate and identify areas where they have fulfilled their promises and areas where they have not. We examine in “Coaches’ Corner” the role of a good executive coach in construction. We also examine the legal issue of employee versus independent contractor and the tests used by entities like CRA, the Labour Board and Courts. We tackle the role of government regulation in either inhibiting or facilitating greater use of apprentices on the job in “Build Better Apprentices.” For the fourth year in a row, we recognize the tremendous achievements of our construction leaders with the Contractor of the Year Awards. In an industry with little time to acknowledge the innovation and productivity of these teams that keep our province growing, we relish the opportunity to congratulate them on a job well done. We hope you enjoy this 2014 issue of Open Mind, Canada’s only magazine dedicated to the open shop construction industry. As always, we encourage you to give us feedback and suggestions on future topics. From all of us at Merit we wish you the best for 2014!

Canadian Publications Mail Product Agreement #40020055 Copyright © 2014 by Merit Contractors Association No part of this publication should be reproduced without express permission of Merit Contractors Association.

Stephen Kushner PRESIDENT MERIT CONTRACTORS ASSOCIATION

OPENMIND SPRING 2014

ILLUSTRATION: RAY STOCKTON

BOOM Why the Merit benefit plan has seen significant growth over the past 20 years BY SUZANNE PESCOD

he year 2013 was record breaking for the Merit Hour Bank program. Merit Member employees worked more than 100 million hours, a significant indicator of Merit’s tremendous growth, not only over the past year, but since its inception. A good benefit package is one of your best tools to attract and retain the best employees. As shown in many surveys, a benefit package is an essential component of preferred employment. But the construction industry has a diversity not seen in many other industries. Project based, seasonally affected, and skills driven, many components of the industry mean you can’t package just any benefit program into something that meets the needs of employers and employees. In Western Canada, open shop contractors make up nearly 80 per cent of the work underway in the construction markets. As you venture east across the country, the numbers rise only marginally for the building trade unions, but economic factors have put open shop contractors in a preferred market, as they have a much better ability to provide their clients with the most cost-effective product. This relationship and the strength of a competitive market are great for economics, but when we talk

about benefits, we need to think about the construction employee. It is with both the employer and the employee in mind that Merit provides a tailor-made benefit plan that has yet to be topped by anything else in the open shop construction industry. Merit’s Hour Bank program is the only one of its kind in the free enterprise, non-union environment.

Merit Hour Bank plan participants know that they and their families will be taken care of. As employees work they build hours in their Hour Bank account in order to qualify and maintain benefits, in contrast to stationary industry who use a monthly premium structure. To become “in-benefit” an employee must first accumulate 300 hours of work for a Merit company, and then for every 150 hours worked following, the employee receives a month of benefit coverage. If any employee ever falls below the 150 hours, they are given a self-pay option in order to maintain their benefits for themselves and their family. The per-project need for labour in the construction industry provides months, sometimes years of steady work for a OPENMIND SPRING 2014

Benefit Boom

skilled construction person, but once the project is completed, many are laid off, or left to find work on another project with another company. The Merit Benefit Plan is portable, and an employee does not lose their benefits, or standing in benefit, if they find work with another Merit company. The ability for employees to transfer their benefits to another company is an incredibly important factor in the success of the Hour Bank plan. If an employee is unable to find work

efit program as a means to attract new skilled employees. The economics of the Merit Benefit plan and its cost effectiveness are driven by several factors. One is that the Merit plan avoids the costly aspects of dealing with an insurance broker, who then engages an insurance company. With the Merit plan there are no commissions being paid and low fees to insurance companies as Merit’s size allows it to negotiate low rates not offered by any competitors in the market. The result is low premiums to contractors. The Merit plan comes with the added bonus of Mercon administration, which keeps the bulk of the paperwork and issues of dealing with benefits, out of your office. Mercon acts as a third party administration for members, the only thing companies have to do is report their hours, and then Mercon looks after everything else. Communication about benefits, claims issues, and all questions about benefits are handled through the Mercon office. Adding to the growth of the benefit plan, Merit recognized a need from members to develop a plan for their office employees, so Merit constructed a salaried plan that is being quickly taken up by member companies across the country. Although it follows a different set of guidelines tailored to the salaried worker, the benefit plan is competitive, cost effective and, again, recognized by the construction industry.

When we talk about benefits, we need to think about the construction employee. immediately following a downsizing or layoff, the Hour Bank program provides a self-payment option to the employee, giving him up to six months to retain benefits while out of work. Imagine the difference in your quality of life if you knew that you and your family would be OK in the face of job loss. The peace of mind and ease of transition is one of the reasons why employees are often Merit’s biggest source of referrals as they transfer from company to company. The transfer of benefits between Merit companies is also a huge boost to employers as Merit has seen the search term “Merit Benefits” become one of the more popular searches within the industry for online job-seekers. Companies are now using the industry recognized Merit Ben-

WORK HOURS

OPENMIND SPRING 2014

BANK HOURS

USE HOURS

TOTAL HOURS WORKED YEAR 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986

TOTAL 103,774,392 96,729,350 87,908,004 79,583,013 74,140,547 77,595,931 69,743,223 58,264,783 51,931,342 43,693,974 40,670,945 36,126,615 33,033,640 26,644,185 22,617,321 19,474,088 14,990,746 10,843,291 8,232,430 7,332,558 7,244,617 7,188,576 6,585,812 6,729,128 6,341,166 5,713,626 5,045,662 2,158,821

Recently Merit adopted a new tagline, “Your People Have People Too.” This sentiment resonates loudly within the industry. By providing not just medical and dental coverage, but optional benefit coverage, retiree plans and several freeof-charge counselling services, employees know that they and their families will be taken care of. In fewer than eight years, the Hour Bank program has doubled reported hours worked. With its competitive rates, outstanding coverage, and increased adoption across the country throughout the open shop sector, the Merit Hour Bank plan continues to grow in recogntion, use, and value to all of its members.

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OPENMIND SPRING 2014

ILLUSTRATION BY: NICK CRANE

THE

$500,000 TOILET

Guaranteeing work to unions is inflating the cost of public projects, so why is this happening? BY TERRANCE OAKEY

his past year, Merit Canada focused its efforts to bring a truly

open and transparent tendering system to the construction industry at the federal level and â&#x20AC;&#x201C; in Ontario and Manitoba â&#x20AC;&#x201C; at the provincial level. Merit Canada launched a new website to bring attention to the issue (opportunitytowork.ca) and ran ads in a number of publications, and those outreach efforts are starting to pay off. At the federal level, the House of Commons Transport Committee launched an important study called How Competition Can Make Infrastructure Dollars Go Further and held hearings from April to June. On behalf of members across the country, Merit Canada appeared before the Committee and brought other stakeholders together to advance this important issue. The move was timely, coming during continued fiscal challenges at all levels of government coupled with crumbling infrastructure in many jurisdictions.

OPENMIND SPRING 2014

The $500,000 Toilet Since then, Merit Canada’s public engagement has continued to draw attention to outrageous examples of what happens when competitive bidding is not allowed. Consider the lowest bid to build a simple brick public washroom in Kitchener: $564,744. This is 40 per cent higher than budgeted and a whopping 150 per cent more than the average cost to build a house in Kitchener.

Rob Ford said the city would save $80 million a year – $320 million in his first term as mayor – by scrapping the fair wage policy. There are other examples from the hall of shame in the area. Consider that the City of Waterloo was forced to appeal to the Ontario Labour Board in its effort to open a public tender for a $140 million sewage treatment plant to 27 contractors, rather than just two. There are many more examples like these across Canada, where too many jurisdictions continue to practice closed tendering, in which specific unionized contractors affiliated with the building trades unions are given privileged access to public sector contracts. This arcane and indefensible practice means that right off the top, seven out of 10

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construction workers in Canada are excluded from employment on these projects because they do not belong to a union. To make things even less competitive, specific unions have privileged access to these contracts over other unions, thereby further limiting competition. It does not take a degree in economics to know what happens when 70 per cent of any industry is barred from competing. Quality goes down and costs go up. A study conducted by the City of Montreal found closed tendering inflated project costs anywhere from 30 to 85 per cent. As we argued before the Transport Committee, it is time for Ottawa to take a leadership role and ensure projects that use any federal funds be tendered openly. This policy should be included in all infrastructure agreements and apply to all Crown corporations and any other federal mechanisms used to fund infrastructure. However, the debate around open tendering is not only taking place at the federal level. For example, the restrictive policies of the City of Toronto have come under scrutiny in recent months. The city continues to have laws on the books that restrict open tendering of projects, including an official fair wage policy that requires all bidders to meet the specified conditions for salary and benefits. This policy restricts competition since it blocks some companies from even bidding, while making sure that the costs for all bidders are raised to those of union-only shops, thus raising costs for taxpayers. Toronto is also bound by decades-old certifications with unions representing electricians, carpenters, plumbers, bricklayers, painters, glaziers, sheet metal workers, asbestos workers and ironworkers in the industrial, commercial and institutional sector. In addition, the Toronto Transit Commission (TTC) engages in a voluntary closed tendering process, requiring bidders to have membership in the building trades council. All this incurs a major cost to the taxpaying public. During the 2010 municipal election, Rob Ford said the city would save $80 million a year – $320 million in his first term as mayor – by scrapping the city’s fair wage policy. According to a Cardus study, construction projects in the city worth approximately $591,000,000 were subject to restrictions due to construction labour monopolies and Toronto Councillor Karen Stintz has put the price of restrictive union rules at $100 million a year. Another key development in this fight around open tendering is taking place in Ontario where the provincial Conservatives have proposed a policy that would fix the situation in Toronto. The Conservatives have recognized the harm that union-only tendering has brought to that province and have committed to “abolish the practice of closed tendering across Ontario’s municipal and broader public sector.” The party is currently the official Opposition in Ontario with an election expected in the spring of 2014. If the Conservatives are elected, this could lead to Ontario being the first province in Canada to legislate open tendering provisions in public sector infrastructure contracting. Open tendering is about fairness for taxpayers. Governments have an obligation to use their money efficiently. Real competition ensures that infrastructure dollars go further. Moreover, companies that pay federal taxes should not be

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precluded from bidding on public contracts – paid for with their tax dollars – simply because they do not belong to the right union. The open tendering fight is also taking place in Manitoba, though in this case it is more focused on the rights of workers. Merit Canada has partnered with its provincial affiliate to launch a court action against Manitoba Hydro over the so-called “Manitoba Hydro scheme.” The scheme requires all contractors who obtain work on certain large-scale Manitoba Hydro projects to agree as a condition of obtaining the work that their employees working on the project will become union members, pay union dues and be covered by a collective agreement. A similar scheme has been put in place for work on the Manitoba floodway. Merit Manitoba’s challenge of both schemes is based on two principle arguments from the Canadian Charter of Rights and Freedoms. The first is that the requirement to join a designated trade union in order to work on the project and/or remit dues to that union, whether or not the employee wishes to be a member of that union or any other, violates the affected employees’ freedom of association, which is protected by s. 2(d) of the Charter. The second argument is that, having been compelled to join a union and/or remit dues to the union in order to work on the project, the employees’ freedom of expression, which is protected by s. 2(b) of the Charter, is violated by the union’s public expressions of support for political parties or policies that the employees do not support. These breaches of employees’ freedom of association and expression are not justified in a free and democratic society as required by s. 1 of the Charter. This Charter violation is nowhere more apparent than where unions are participating in the political process, and are using union dues for political or other purposes outside of representation of workers in collective bargaining or contract administration. These battles continue in 2014 and Merit Canada will happily take them on because the issues at hand deal with fundamental rights for workers and fairness for taxpayers. It is time for governments to abolish these policies. If not, they will be forced to publicly defend them to taxpayers.

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Perspectives On INFRASTRUCTURE How does the Alberta Progressive Conservative government’s capital plan stack up against the one proposed by the Wildrose official Opposition? BY PETER PILARSKI

hen comparing the Government

of Alberta capital plan with the capital plan proposed by the official Opposition Wildrose Party, there are some similarities – and some very key differences. But we should take care that we are comparing apples to apples when we compare the two plans. The government’s capital plan, which it presented as part of Budget 2013, is a three-year plan that ends in 2016, while the Wildrose plan lays out that party’s priorities for a 10-year period. For comparison purposes, this analysis will compare the government’s three-year plan with the first three years of the Wildrose plan. For the period 2013-2016, the Government of Alberta plans to invest an average of $5 billion per year: $5.209 billion in 2013-14; $5.172 billion in 2014-15; and $4.660 billion in 2015-16, for a total of $15.041 billion over three years. In comparison, the Wildrose plan proposes an average annual investment of almost $4.3 billion per year: $4.121 billion in 2013-14; $4.282 billion in 2014-15; and $4.449 billion in 2015-16, for a total of $12.852 billion over three years. The key differences between the plans are in categories related to investments in resource stewardship, post-secondary institutions and overall OPENMIND SPRING 2014

Perspectives on Infrastructure

maintenance. Specifically, the government plans to invest approximately $1 billion in a number of energy-related projects, including $585 million towards the Shell Quest and the Alberta Trunk Line Carbon Capture and Storage projects and a number of smaller projects through the Climate Change and Emissions Management Fund. According to the Alberta government’s Capital Plan, these funds are used to “work on cleaner production of traditional forms of energy, reducing greenhouse gas emissions from agriculture, forestry, municipal wastes, and enhancing biological sequestration.” The government’s plan also includes $36 million in 2013-14 to conclude the Canada eco-Trust initiative. On these items, the Wildrose plan states that, “whether it’s carbon capture and storage, or fancy new MLA offices, this government blows hundreds of millions each year on pet projects and corporate welfare grants disguised as capital spending.” Another difference between the two plans is the fact that the Alberta government’s plan specifically mentions a $1.2-billion commitment to support and maintain aging schools and post secondary facilities, roads, health facilities, water infrastructure and provincial parks. Maintenance is an important component of any capital plan and, while the Wildrose plan does not specifically set aside money for maintenance, we should assume that it would have to spend money to keep the province’s infrastructure up to date. As such, the province’s ongoing, day-to-day maintenance needs would impact the infrastructure spending the Wildrose plan would have to undertake. The government’s Capital Plan also sets aside $282 million for new post-secondary facilities at NAIT, NorQuest College, University of Calgary, Lethbridge College, and Mount Royal University. The 16

OPENMIND SPRING 2014

THE KEY DIFFERENCES BETWEEN THE PLANS ARE RELATED TO INVESTMENTS IN RESOURCE STEWARDSHIP, POSTSECONDARY INSTITUTIONS AND OVERALL MAINTENANCE.

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Perspectives on Infrastructure

Wildrose plan does not mention specific spending for post-secondary infrastructure. The Alberta government’s plan specifically mentions funding for affordable housing, improvements to the Alberta First Responder Radio Communication System, an Affordable Supportive Living Initiative and the Alberta Electronic Health Record. The government’s planned investment into post-secondary infrastructure and these other initiatives is $838 million. The Wildrose plan has a section called “government and other capital” with $1.13 billion earmarked – and it’s likely that this fund would be used to pay for these types of initiatives. The $300-million difference between the government’s amount for these initiatives and the amount set aside in the Wildrose plan could also be used to help fund infrastructure maintenance. The Wildrose plan contains several ideas and concepts that do not appear in the government’s plan, such as publishing an infrastructure priority list for four key areas: provincial transportation network; schools; health care and equipment; and other government facilities. It ranks items on these four priority lists according to consistency, public disclosure and objective criteria. The Wildrose plan takes a different

approach towards municipal funding than does that of the government. The Wildrose plan proposes a so-called “10-10 plan for municipalities,” which proposes sending 10 per cent of all provincial tax revenues and

FOR THE PERIOD 2013-2016, THE GOVERNMENT OF ALBERTA PLANS TO INVEST AN AVERAGE OF $5 BILLION PER YEAR. 10 per cent of all provincial cash surpluses to municipalities. The current government has funded municipal infrastructure through the Municipal Sustainability Initiative and their Capital Plan continues with that approach. The Wildrose plan has a section called “innovation,” where it offers ideas about “making sure that capital spending in Alberta takes advantage of the most innovative and creative ways to save money.” The ideas that could have the greatest impact on the construction industry include: “improving tendering practices to ensure construction firms aren’t unfairly gaming the system; ending the practice of cost-plus contracts; refraining from making building announcements until project planning is

well advanced; and allowing developers to build schools as a feature of their new neighbourhoods whenever practical, integrating all or part of the cost into the homes surrounding them.” Perhaps the biggest difference between the two plans is that the Wildrose plan would be debt-free, while the current government plans to borrow $12.7 billion by the end of 2015-16 to help finance the plan. The government’s plan also mentions use of public-private partnerships to finance capital projects. The Wildrose plan does not mention such partnerships specifically, but its plan makes multiple references to being open to new partnerships, collaborating with developers and builders and finding innovative ways build infrastructure. The similarities in the two plans are in the amount of funding to K-12 education (the government earmarks $1.4 billion; Wildrose promises $1.014 billion), overall funding for municipalities (government $5.8 billion; Wildrose $5.7 billion) and health care infrastructure (government $2.1 billion; Wildrose $1.99 billion). Additionally, the Alberta government plans to invest $3.4 billion into the provincial highway network, while the Wildrose commits $2.8 billion.

A LONGER LOOK What do the Progressive Conservative Alberta government and the Wildrose official Opposition have to say about making capital plans? Here is a side-by-side comparison.* Provincial Highway Network

Municipal Funding

K-12 Education

Health Care

Government and other Capital

PostSecondary

Maintenance

Resource Investment

Total Capital Investment

Government Capital Plan

$3.4 billion

$5.8 billion

$1.4 billion

$2.1 billion

$556 million

$282 million

$1.2 billion

$15.74 billion

Wildrose Capital Plan

$2.8 billion

$5.7 billion

$1.014 billion $1.99 billion

$1.13 billion

N/A

$12.63 billion

Note: Total capital investment does not perfectly correlate to average annual spending numbers below because the government’s Capital Plan is presented on a fiscal year rather than a calendar year and rounding errors. OPENMIND SPRING 2014

OPENMIND SPRING 2014

ILLUSTRATION BY: KEVIN GHIGLIONE

INDEPENDENT

CONTRACTOR OR

EMPLOYEE There are plenty of people working hard on your site. You should know where the potential pitfalls lie that may blur the line between employee and contractor

BY WILLIAM JOHNSTON (LAWYER WITH THE FIRM MCLENNAN ROSS)

he use of independent contractors (or “direct service

providers”) in business is a means for companies to reduce costs. However, improperly classifying a worker as an independent contractor can have serious implications. Regardless of the parties’ written agreement or any clear understanding of the intention that a worker is an independent contractor, courts, Labour Tribunals and the Canada Revenue Agency cannot be bound. The government will assess the putative employer to determine his liability for unpaid taxes, workers’ compensation premiums or other levies owing in an employment relationship. The employer may amass penalties if the essence of the relationship is actually one of employment. The independent contractor can also potentially be awarded damages under employment standards legislation or human rights legislation if the relationship is truly an employment relationship.

OPENMIND SPRING 2014

Independent Contractor or Employee Companies must be aware that in pursuing this type of business relationship with a contractor they may not achieve the armslength relationship intended and could be liable just as though the independent contractor were actually an employee. What are the factors that inform whether an ostensible arms-length independent contractor is actually an employee, despite to the intentions of the parties? The answer should drive home the implications of improperly designating a worker as an independent contractor. FACTORS INFORMING THE NATURE OF THE PARTIES’ RELATIONSHIP

The tests labour tribunals rely on, in tax court and in regular court, are all very similar although there may be a different emphasis on the various factors, depending on which type of issue is under review. The intention of the parties is important but is absolutely not determinative. Beyond the intention of the parties, adjudicators look at other factors to discern the essence of the relationship. Context is extremely important as different types of independent contractors will necessarily present features of an employment relationship due to the nature of the work. No one factor is decisive, and each factor may have a different importance in the assessment depending on the type of services under contract and the forum in which the question is being decided.

There are different definitions of “employee” in various pieces of legislation, some more inclusive than others, but most tend to follow the common law test of “employment,” where five considerations are of primary importance: control, ownership of tools, chance of profit/risk of loss, integration of services into payor’s operations, and frequency of payment under contract. Other factors will also receive consideration, particularly the type of services under contract, and the overall circumstances. There is no exhaustive list of relevant indicators, and we consider each case in context. Control is perhaps the most important consideration of all. The ability to delegate tasks on an ongoing basis and to circumscribe the manner and hours in which the work is to be completed are typically essential in an employment relationship. In making these demands, the payor will typically also impact the person’s ability to make a profit, since he isn’t free to innovate, or increase productivity. For the payor to achieve control, the contractor requires direct and ongoing supervision,

which is not usually indicative of an independent enterprise and therefore points to an employment relationship. In the lists of factors set out above, it is easy to perceive control as a common element throughout.

Determining if a worker is an employee or an independent contractor is not about whether he is performing services as his own business.

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In addition to the above factors, it is also noteworthy to consider the financial dependence of the independent contractor, particularly in lawsuits against the payor company for wrongful dismissal and for matters relating to unpaid tax remittances and unemployment benefits. Courts are sympathetic to independent contractors terminated after a long history of service and whose livelihood has become dependent on the parties’ business relationship. These people typically provide the overwhelming majority of their services to the other party. The loss of the contract without warning has profound implications to the contractor’s economic

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well-being. If successful in their action, courts will assess damages for the period of reasonable notice which should have been given in a similar fashion to regular cases of wrongful dismissal of an employee.

even if a court or tribunal decides that a dependent contractor is not an employee for one purpose the possibility remains that the same person will be an employee for a different purpose.

IMPLICATIONS OF A “DEEMED EMPLOYER” DESIGNATION

INDEPENDENT CONTRACTOR FROM THE CRA PERSPECTIVE

Independent contractors in a deemed employment relationship can sue for damages when the contract is terminated without reasonable notice. You might think that a termination provision in the contract saves the day but termination provisions that are less than required by the relevant employment standards legislation will be void. The payor can also be liable for unpaid overtime, vacation pay, holiday pay and other benefits provided under employment standards legislation. Claims may proceed either in court or in an employment standards tribunal. If successful, damages for the employer who is improperly holding wages and benefits, as well as damages for failing to provide reasonable notice prior to termination, will be awarded to the independent contractor. Though uncommon, if the manner in which the contract was terminated was egregiously wrong or careless, and the independent contractor suffers emotional harm, the court may also award damages over and above the typical damages for wrongful termination. The payor may be liable to the independent contractor under human rights legislation with the potential for damages. An independent contractor whom the court or tribunal deems an employee might claim that the payor discriminated against them on the basis of a protected ground, such as denying maternity and parental leave, discriminating on the basis of family status, or failing to accommodate disabilities. Another unexpected consequence for employers is that labour boards may be prepared to accept applications for union certifications that include signatures of dependent contractors and may certify bargaining units that include these people. A ruling in any court or tribunal that decides this type of issue is not binding on any other. These decisions are made by reference to the purpose of the legislation or right that will be affected. Therefore,

The distinction between classifying a person as an employee rather than an independent contractor for income tax, the Canada Pension Plan (CPP), Employment Insurance (EI), and Goods and Services Tax (GST) purposes is crucial for determining: • Income tax withholding obligations of the payor. Employers are responsible for making proper income tax withholdings from payments of employment income to employees; no such requirement exists for payments to contractors. • Contributions and premiums required in respect of CPP and EI. Employers are required to make appropriate EI and CPP contributions and withholdings from an employee’s income, again, something not required with regard to payments to contractors. • Deductions for the recipient in computing taxable income for a taxation year. Contractor businesses (with the exception of personal service businesses addressed below) may deduct numerous expenses used for the purpose of earning income, while employees have only restricted deductions available to them. • Whether services provided by the recipient are subject to GST. A contractor’s services will likely be considered a taxable supply subject to GST, while an employee is obviously not required to charge and collect GST. The test to determine whether a worker is an employee or an independent contractor is whether or not the person is performing the services as his own business, on his own account. We base this question on a two-step process of inquiry: first, by looking at the subjective intent of the parties; second, by looking at the reality of how the work is being accomplished to see whether the objective reality matches the parties’ subjective intent. The objective reality considers all relevant circumstances focusing on the same factors as above. Even if the parties believe they have not created an employment

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Independent Contractor or Employee

The unfortunate outcome for the payor/employer is that they can be liable to pay unpaid remittances for income tax, CPP and EI.

relationship, if the circumstances do not support that conclusion, the CRA and the courts may still find that an employment relationship in fact exists. The unfortunate outcome for the payor/employer is that they can be liable to pay unpaid remittances for income tax, CPP and EI. TRAP FOR THE UNWARY: PERSONAL SERVICE BUSINESSES

Given the added responsibilities, both under employment law and tax law, a payor wishing to avoid being an employer may choose to hire workers as independent contractors as opposed to employees. One of the ways employers will help push workers into the contractor classification is by only paying corporations. Paying only corporations reduces the risk (from the payor’s perspective) that the CRA will consider the payor to be an employer. Workers often believe being paid through a corporation they own and control is a good idea, as there are numerous deductions and tax planning options available to a Canadian small business corporation engaged in an active business. However, both parties should be cautious. Under subsection 125(7) of the ITA, in circumstances where a worker would reasonably be regarded as an employee, but for the existence of their corporation, the CRA could conclude the worker’s corporation is a personal service business. Importantly, as the personal service business classification is an anti-avoidance provision, the Tax Court has indicated that the intention of the parties is not relevant to determining whether the corporation is a personal service business, even though intention is relevant in determining whether 24

OPENMIND SPRING 2014

a worker is an employee in other parts of the ITA, the CPPA, the EIA, and the ETA. Personal service businesses are taxed at a higher rate and denied many deductions. While these corporations can take tax planning steps to limit the impact of being classified as a personal service business, at best the worker will end up being taxed similarly to an employee. If he doesn’t take proper planning steps, the worker and his corporation may end up paying significantly more taxes than he would if he had had simply been an employee. As a result, it is better for the worker to be classified as an employee than a personal service business. While the direct risk of being found to be a personal service business is largely borne by the worker, there may be business reasons and overall liability reasons why a payor may prefer not to place this risk on their workers. Resist the temptation to treat employees as contractors. You should only do so when it is clear that there is a good argument that they are truly independent contractors.

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OPENMIND SPRING 2014

ILLUSTRATION BY: STEVE ADAMS

BY MICHELLE LINDSTROM

A how-to approach to find the right person and establish a relationship that could change your career

n executive coach has a relationship with a company leader

much like a sports coach does with an athlete. The sports coach pushes the athlete to improve habits, endurance, knowledge and ability to be better at his or her sport. But the coach canâ&#x20AC;&#x2122;t do the work for the athlete. FMI Corporation, one of many business-coaching options out there, purposely uses player-to-coach relationship principles when working with executives in the construction industry. Jake Appelman, a principal at FMI, says the fundamental purpose of executive coaching is to help business leaders get better results via a customized, coach-to-coached relationship.

OPENMIND SPRING 2014

Coaches’ Corner

Most executive coaching relationships start with the two parties creating a goal-focused plan that notes specific items the executive wants to improve upon with the coach’s help. It’s a plan both can refer back to along the journey, which typically lasts six months to a year. Appelman says for FMI, the coach’s first conversation with a client establishes the “criteria for success,” which breaks down how many meetings the two will have, who will contact whom and confidentiality ground rules. Some company owners will sponsor coaching sessions for one of their executives and request to hear the details and plan of what the pair covers each session. The coach makes certain how much detail the coached person is willing to share, and with whom. “From there, we build our coaching plan, which is a critical document that shows how we’re going to measure success at the end of it all,” Appelman says. Executive coaching is a foreign concept to many company leaders and therefore, few purposely seek out such assistance. Appelman says much of the coaching business FMI gets is from referrals, but it stems from the consulting work FMI does for overall organizational improvement. Consulting typically involves a comprehensive analysis of a company, followed by a full report with recommendations of areas on which to improve. Consultants would typically leave it to the company to implement the items in the report afterwards, Appelman explains. “If we’re working with a company around its succession plan, ownership transfer or leader development in general, we’ll bring in executive coaching as a way to accelerate that process and to drive individual change or help it change an organization.” Not all coaches take FMI’s two-pronged approach, but Appelman says that guiding an entire organization, in addition to one-on-one leadership training, tackles a challenge organizations tend to face during phases of change and improvement. “If you just do the individual executive

work, the executive goes back in and no one else has changed,” he says. “It’s the same culture with people who aren’t supportive and don’t give feedback so the coachee [coached person] is trying out all this new, great stuff he learned with his coach but the environment just rejects it.” Exective coaching is not therapy,

some would think. Washington says the right time should be at the middle-point between a company’s roller coaster ride of crisis and growth. “When you’re in crisis, your first job is to solve the crisis,” Washington says of company executives. “If you’re in a rapid growth phase, you’re probably just trying to manage the growth.” Between those two extremes, executives would benefit from setting aside some time to invest in themselves. “The real value of executive coaching is that it’s designed to work for very busy executives,” Appelman says. “Instead of saying, ‘We’re going to send you off for a four-day program and pull you out of operations and executive leadership for four days,’ we integrate it into their daily routine. Most of them can spare an hour for a phone call every two or three weeks.” With each check-in phone call, the coach and executive refer to the initial coaching plan and confirm things are on track. A coach may check if an executive had that planned tough conversation with an employee to see how it went. Also, a coach may suggest a book to read or listen to that pertains to the executive’s current situation, and may ask for feedback at the next scheduled call. When company leaders have a specific request, such as guidance on how to better develop talent for the organization, Appelman has asked executives to

Executive coaching starts with two parties creating a goal-focused plan around areas the executive wants to improve.

OPENMIND SPRING 2014

stresses Dr. Marvin Washington, an associate professor for the Alberta School of Business at the University of Alberta who also coaches a few executives each year. The relationship with a coach is meant to be a safe platform to talk about the challenges an organizational leader faces, he says. It is also to guide the conversations, keeping the executive focused on his or her professional goals. This type of coaching is geared to the top two or three levels of a company because, the higher up in an organization you go, the fewer people there are who have gone where you’ve gone and who have a sense of what you’re going through, Washington says. “This means you have people looking outside of the organization to get that sort of mentoring, coaching and development.” Knowing when to seek out that outside advice may not be as obvious as

Coaches’ Corner

keep a journal, noting at the end of each day the success, failure, and general progress of an initiative. The regularly scheduled check-in calls also present an opportunity for the people being coached to provide feedback about the relationship. If they aren’t getting what they expected, then they need to speak up early on and be clear about what they really want and need. This way the coach can adjust his or her guidance. Appelman says a good executive coach has no ego and remains committed to the executive’s success. He also cites other attributes a coach should have: great listening skills to provide guidance, not answers; flexibility to the day’s concerns of an executive, which can completely change the focus of a check-in call; and candor because the higher up in an organization an executive goes, the less direct feedback he or she will receive from colleagues. “I would say that the executives should be prepared for anywhere from four to five hours of homework in between check-in calls to really make it work,” Appelman says. He’s wary of anyone who requests coaching but then hesitates with the mention of the effort that both parties have to contribute to this type of relationship. His company has walked away from engagements with potential clients who were not committed enough. “The coachee really has to be willing to learn, do the work and show up – literally – for the calls and not skip them. He must be committed to the process,” Appelman says. “For that reason, we usually recommend the ideal coachee to be someone who is already a high-performer.” From an executive’s perspective, it’s important that he finds the right coach to motivate him, and sometimes the first coach isn’t the right one. Washington compares executive coaches to personal trainers at a gym. “If I’m a yeller-in-yourface, and you need somebody to hold your hand and be a cheerleader, instead of me trying to become that, let me go

find you a cheerleader,” he says, adding that a good coach will have relationships with other ones to be able to refer clients appropriately. He jokes that to determine if a relationship will work for him and a client, it’s a “three-date thing.” He doesn’t count the first meeting as one of the “dates” because it is just for coffee and it’s free. If there’s enough of a match after that to go further, then they meet two more times to discuss the goals and overall plan. The third date is to finalize a few things and ensure both parties feel this will be a good

Knowing when to seek outside advice may not be obvious. The right time should be at the middlepoint between crisis and growth.

OPENMIND SPRING 2014

use of their time. If they don’t, both can walk away and no harm is done. “It’s an intimate relationship,” Washington says. “I don’t want to waste your time, but I also don’t want to waste

my time because I could be doing this with someone else.” When a good connection is made, Washington guides executives to structure their thinking. They have spent years running from crisis to rapid growth and back again and lost the ability to think effectively. “We know that when they do think, good things happen,” Washington says. “The hour of structured thinking time [with a coach] will solve many hours of problems.” After working his way up through the

company his parents founded, Cory Jodoin became a co-owner of Jen-Col Construction Ltd. in 2000. Then last year, he bought his parents out, becoming the sole owner and president of the 36-year-old commercial contracting company in Stony Plain. The shift from managing to leading triggered Jodin’s memories of an attempt to self-train for an arduous backpacking trip years ago. He trained alone but didn’t pace himself properly or do the specific exercises needed to be truly prepared for the trip and paid for it physically. “At the end of the day, it really boils down

WHERE CAN I GET ONE? The International Coaching Federation (ICF) is currently the leading certification body for executive coaches. Certification levels are based on the number of hours a person spends coaching and whether he or she has taken an accredited coaching training program. See coachfederation.org for more information. Once you identify a potential coach based on the coach’s certification level or resumé, it’s time to interview him or her with the following questions: REFERENCES: Can I speak to a couple of people you have coached? STYLE: What is your coaching approach? How do you get results? BENCHMARKING: How do you measure results and mark progress? EXPERIENCE: How many people have you coached? How long have you been coaching? What level of executives do you coach? SPECIALIZATION: Do you focus on any particular industry? Do you understand my business at a day-to-day level? Have you worked in my industry before? (Note: The U of A’s Dr. Marvin Washington coaches all industries – police, health care, small-business entrepreneurs – and says if the relationship is good, a coach can provide effective guidance across industries.)

funnels you in the right – or different – direction to analyze something or look at it differently,” Jodoin says. “When you become a leader of a company, you change from doing to leading, and leading is basically working with your people and coaching them to achieve the vision and goals.” He doesn’t suggest taking the coaching route if it’s just another thing to check off your to-do list. “You’re not going to get what you want out of it,” he says. “But if you’re really committed to growing, coaching is a great way of doing it.” The benefits come back to a sports analogy. “The vast majority of executives spend 90 per cent of their time performing and 10 per cent of their time practising,” Appelman says. “If you look at really great performers from an athletic perspective, they spend the vast majority of their time preparing to perform.”

to this,” he says, “You don’t know everything and, to be truly successful, you need to surround yourself with the best people to help you achieve your objective. It doesn’t matter how high up the ladder you are, you do not know everything and everyone can learn and grow.” In construction, Jodoin says that when competitors talk it is never to share industry insight or to ask for advice. It’s just simple chit chat. So if the solution isn’t in-house, where do you go? Jen-Col hired FMI to consult the company through its leadership transition, which led to Jodoin and two other executives signing up for about a year’s-worth of executive coaching. He liked that FMI’s sole focus is the construction industry, then he didn’t have to spend time explaining what he does and why. He wanted coaching because the timing felt right but also he saw the folly of taking the same approach to issues over and over and expecting different results. “Coaching

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Across

NATION

Regional Merit organizations are making a splash in their respective home provinces as they continue to advocate for a fair open shop approach

All over Canada, Merit Contractors Association is having an effect on the

training, compensation and continuing advocacy for the construction industry. Their efforts are transforming our industryâ&#x20AC;&#x2122;s landscape.

OPENMIND SPRING 2014

Across the Nation Merit Alberta

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This year the Alberta association has stayed strong with its commitment to training by redeveloping and introducing more updates to the Leadership Development for Supervisors course, focused on harnessing an employee’s natural leadership abilities and providing him or her with the skills to truly mentor and lead within an organization. On the public policy front, Merit Alberta has continued to work to improve construction competitiveness by participating in an industry stakeholders consultation led by former Alberta Labour Relations Chair, Andy Sims. That process has been completed, and the report has been submitted to the government for review and action. The association is now engaged in a lobby effort to encourage the government to amend legislation in such a way that it improves competitiveness. Merit Alberta has also taken a lead role on the Alberta Coalition for Action on Labour Shortages. This group of industry associations, representing 21 industries across the country, advocates for changes to immigration laws and enhancements to the temporary foreign worker program. For another year in a row Merit Alberta saw growth in the Merit member employee hours worked under the Hour Bank program, as well as growth in the number of new firms participating in the program. The growth allowed Merit to lower rates and increase coverage for a second year in a row, putting Merit’s plan head-and-shoulders above the rest. Merit Saskatchewan

Merit Contractors Association of Saskatchewan celebrated its 25th Anniversary in 2013. The association has continued to grow and now provides services for approximately 250 members, with close to 5,000 employees. In 2013, Merit Saskatchewan launched an annual awards program to recognize the achievements of employees of member companies. Merit Saskatchewan continues to be very vocal as an advocate for the open shop construction sector, lobbying for change to various legislation and regulations pertaining to labour standards, workers’ compensation, OHS, and procurement.

Merit Manitoba

Merit Contractors Association of Manitoba continues to expand its footprint across the province. The membership is currently growing at about 10 per cent annually, and comprises 235 companies with more than 5,000 employees. In 2012, a group of construction workers, supported by Merit Manitoba, filed a statement of claim in the Court of Queen’s Bench challenging the Manitoba NDP government policy, and Manitoba Hydro PMAs that put the interest of trade unions over the charter-protected rights of workers who chose to remain non-unionized. Essentially “Does the Canadian Charter of Rights and Freedoms protect the rights of open shop or non-unionized workers?” In 2013 the case began to slowly find its way through the court with briefs and affidavits filed, and preliminary hearings set for 2014. Merit Manitoba continues to provide a voice for open shop construction and is very active in providing Gold Seal Credit Courses and other education and training opportunities to members. New construction in all sectors has sustained a fairly high level of activity across Manitoba, which is experiencing a lack of skilled trades. And although Merit is well represented on trade advisory committees, this situation is only exacerbated by the fact that the apprenticeship system has refused to relax apprenticeship ratios that would permit two apprentices to each journeyperson. Merit Ontario

Under the leadership of Premier Kathleen Wynne, the minority Liberal government, propped up by the NDPs, continues to stand in the way of an equitable and competitive marketplace for construction in Ontario. In May, 2013, Merit Ontario stood alongside MPP Michael Harris as he tabled Bill 73, the Fair and Open Tendering Act, which was designed to preserve and maintain open bidding for public infrastructure projects tendered by Ontario municipalities and school boards. In September, despite overwhelming support from municipalities, local contractors and taxpayers throughout the province, the Liberals and the NDP joined forces and voted against Bill 73. As a result, thousands of contractors who have been unfairly barred from

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Across the Nation

The Merit Hour Bank benefit plan is a strong differentiator for our members, as they continue to grow their business in a highly competitive marketplace.

working on public infrastructure – in the communities where they live, work and pay taxes – continue to have their rights ignored. Since its official opening in April 2013, Merit Ontario continues to call into question the integrity of the Liberalbacked Ontario College of Trades. Most recently, MPP Garfield Dunlop has written to the attorney general of Ontario asking for an independent investigation of the apprentice-to-journeyperson ratio review completed by a Ontario College of Trades panel in 2013. The panel’s chairman failed to disclose a 20-year professional relationship with the International Brotherhood of Electrical Workers (IBEW) union. The IBEW made a recommendation to the Ratio Review Panel that the panel accepted. The outcome has served as a prime example of the lack of process and accountability at the College. With a provincial election on the horizon for the spring, issues in construction and labour in Ontario will no doubt remain at the forefront of political debate.

keting, sales and communication skills to the association. Completion and delivery of the new strategic plan (including its goals and actions) is at the top of his challenges. “Reaching out to our existing members, and delivering Merit’s outstanding success story and Hour Bank benefits program to all New Brunswick open shop contractors are my top priorities,” Scaplen says. The premier of New Brunswick has officially announced a provincial mandatory health benefits program that affects all employers and employees. Now is the time for open shop construction contractors to embrace and secure an affordable company health benefits plan for themselves and their employees before the government mandates their program, which will not be comparable to Merit’s in terms of coverage and cost.

Merit New Brunswick

Merit Nova Scotia

After mourning the tragic passing of the highly respected Linwood Hupman, former executive director of Merit New Brunswick, and facing the huge void he left, the Board of Directors decided to hit the reset button. A new commitment to improved communication, membership, training and awareness of Merit NB became the new mandate. A strategic planning process leads the way, almost immediately after hiring a new executive director, Graeme Scaplen. He brings extensive management, mar-

Ready to celebrate its 20th anniversary in 2014, Merit Nova Scotia is proud of its efforts in 2013, which included successfully lobbying for amendments to Nova Scotia’s restrictive First Contract Arbitration law, and making workplace safety a priority by calling for more safety oversight and stricter rules on all worksites across the province. The year ahead will provide new training opportunities for open shop employers and employees and focus on changing union-favourable labour legislation that

OPENMIND SPRING 2014

hurts open shop contractors of all sizes on any given day.

Merit Newfoundland and Labrador

Members of the Merit Contractors Association of Newfoundland and Labrador are experiencing the benefits of an economic boom in the province. Construction in all sectors is at an alltime high, which brings with it a new set of challenges: recruiting and retaining qualified people to get the work done. The cyclical trade demands of the natural resource mega-projects have put a strain on open shop contractors that will continue through to 2017 with the development of both the Hebron oil project and the Muskrat Falls hydroelectric project. The Merit Hour Bank benefit plan is a strong differentiator for members, as they continue to grow their business in a highly competitive marketplace. Merit has been tireless in its efforts to reverse the decision to replace secret ballot voting with automatic card-based certification when deciding the fate of an employer to be unionized or not. It has the ire of the entire business community. “We are also excited to be working on the harmonization of apprenticeship systems across Atlantic Canada, and providing input to a new provincial immigration strategy and workforce development strategy,” says executive director Paul Dubé. “This will be a very busy year.”

George Pinckney, Director Business Development Suite 1250 10303 Jasper Avenue Edmonton, Alberta Phone (780) 429-3500

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OPENMIND SPRING 2014

ILLUSTRATION BY: DAVID VOGIN

Two years after the election, Alberta’s leaders have delivered on some key campaign commitments. What about the rest? BY BEN FREELAND

hat a difference two years make! Or not. In the two years

since the Progressive Conservatives handily snatched their 40-year dynasty back from the jaws of what looked to be certain defeat in a nail-biter of a provincial election, Alberta’s political and economic engines have settled very much into a business-asusual rhythm, with the government pursuing the path of least resistance on most fronts. For the leaders of Alberta’s open shop construction sector, this business-as-usual course has been a mixed bag. While the government’s pledge to carry on the ambitious infrastructure overhaul that began under Ed Stelmach has seen considerable follow-through, other election commitments have yet to see any decisive action. On the labour front in particular, open shop contractors still eagerly wait for action on much vaunted promises. In the two-plus years as premier of Alberta, Alison Redford was characterized by critics from both sides of the political spectrum as a flip-flopper on a wide range of issues, ranging from education funding to infrastructure borrowing. In the case of labour code legislation, however, controversy began even before her election victory. In early 2012 the PC Party released its exhaustive election manifesto, Alberta By Design. It detailed, among many other things, initiatives aimed at ensuring greater union transparency and worker freedom with regards to opting out of union dues allocated to non-union-related causes as well as promoting more efficient labour relations by way of multi-craft collective bargaining units. However, within a week of election day, Alberta Federation of Labour President Gil McGowan questioned the party’s true commitment on these fronts in a contentious interview with Edmonton radio host Dave Ruther-

ford, in which he insinuated that the PCs were making counter-promises to labour leaders “behind closed doors.” These allegations, while alarming to many within the construction industry, ultimately did not harm the party who, buoyed in no small part by a string of controversial statements by members of the Wild Rose Party, came back from behind to win a majority government on April 23. But the government’s early promises to the open shop sector have not been forgotten by the sector’s leaders, who are still awaiting action. Elsewhere, construction leaders could scarcely be happier with their government’s performance. INFRASTRUCTURE

It is somewhat ironic that the area in which the PC government has garnered the most consistent approval from construction leaders is the one area where very few concrete campaign promises were made. That said, former Premier Alison Redford made clear her commitment to continuing the Stelmach government’s infrastructure program from the outset. In a pre-election interview with Open Mind in early 2012, Redford asserted that her government was “committed to a continuing infrastructure build that is very similar to what we’ve seen OPENMIND SPRING 2014

Mixed Results in the past three years,” while expressing her frustration with calls by other parties to curtail spending on capital projects, which she alleged would harm the future of the province and its economy. This commitment to steadily building infrastructure has remained a hallmark of her premiership, with the premier holding firm to this commitment, even amid late-2012 calls for reductions in the face of a $3-billion deficit. On the infrastructure front, the PC government gets top marks from the open shop sector. “We’re really happy with the continuing strong commitment to infrastructure we’re seeing from the government,” says Merit Contractors Association President Stephen Kushner. “Last year’s f looding in southern Alberta was a real litmus test of this commitment, and what we saw was a government that quickly set about rebuilding the south, without cancelling other projects. That’s most definitely a good news story. What the construction industry needs more than anything is predictable levels of investment in infrastructure, without the sort of big swings we’ve witnessed in the past.” Kushner adds that Alberta’s unique economic and demographic challenges have served as a strong impetus to the government’s commitment to infrastructure spending. “There’s no question that this trend is strongly coupled to oil and gas and to the large-scale migration to the province we’re seeing,” Kushner says. “There’s a recogni-

tion that you can’t stop building infrastructure, especially in this type of economy. And the government understands that.” TEMPORARY FOREIGN WORKERS

While the Alberta government’s 2012 election manifesto made scant mention of infrastructure, it did reference another area of concern to the province’s construction industry, namely temporary foreign workers. The document stated that the party was “committed to working with our federal counterparts to improve the temporary foreign worker program.” Specifically, the party promised to act to “encourage the federal government to significantly increase the quota or completely remove the cap that Alberta is allowed under the National Immigrant Nominee Program,” while streamlining foreign qualification recognition across a wide range of skilled trades in order to expedite the process of hiring temporary foreign workers. On this front, the government has realized some progress and more will hopefully be forthcoming. A spokesperson for the Ministry of Jobs, Skills, Training and Labour said it has made progress in providing opportunities for some temporary foreign workers to apply to stay permanently, especially when they are working in areas where we expect shortages to continue. Moreover, the government contends that changes to the Alberta Immigrant Nominee Program will help skilled temporary

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foreign workers to become permanent workers. This program is the mechanism whereby the province nominates people for permanent residence. Changes to the program allow workers in particular trades to apply for nominations on their own behalf. And, while the federal government has yet to make changes to the province’s TFW cap, the Alberta government has continued to push for such changes, with then Human Services Minister Dave Hancock (current interim Premier) saying he would like to see the cap either removed or doubled to 10,000. Even with such changes still pending, the government gets a solid grade on the temporary foreign worker front. “There’s certainly been progress,” says Kushner. “We’d like to see more but we’re definitely moving in the right direction.” LABOUR CODE AND CONSTRUCTION COMPETITIVENESS

Of all the election promises made by the PC party ahead of the 2012 provincial election, the section called “Amend Alberta’s Labour Legislation” was the one that attracted the most attention from Alberta’s open shop contractors. Page 30 of the party manfesto pledged to introduce a “Paycheque Protection, Transparency and Freedom to Choose” act that would make it mandatory for unions to provide current and prospective members with a detailed breakdown of how they spend union dues. (This is simi-

lar to the federal Bill C-377.) It would allow members to â&#x20AC;&#x153;opt outâ&#x20AC;? of dues allocated to causes unrelated to collective bargaining and grievance administration. Additionally, the party pledged to amend the provinceâ&#x20AC;&#x2122;s labour code with a view to banning the imposition of fines against union

bers arenâ&#x20AC;&#x2122;t made to pay for causes they donâ&#x20AC;&#x2122;t support but I think thereâ&#x20AC;&#x2122;s another way to do it. And that would be allowing union members to opt out of that portion of dues that would go towards political advocacy.â&#x20AC;? Two years later, the open shop sector is still waiting for signs of life on this front. Since the election, the provincial government has been silent on the issue of union disclosure in spite of polls that demonstrate public support for such legislation. Support is even higher among union members. And the open shop sector still awaits movement on previous government pledges aimed at greater construction competitiveness, including the closing of loopholes in Albertaâ&#x20AC;&#x2122;s existing anti-job targeting legislation. Kushner argues that, while high oil prices and a booming economy have reduced the sense of urgency surrounding these issues, the province is in no position to dither. â&#x20AC;&#x153;For us thereâ&#x20AC;&#x2122;s still a sense of urgency around competitiveness,â&#x20AC;? he asserts. â&#x20AC;&#x153;We canâ&#x20AC;&#x2122;t simply rely on the high price of oil to draw projects, because we know a drop in oil prices is likely at some point in time. As for job targeting, itâ&#x20AC;&#x2122;s a question of fairness more than anything. Alberta was a leader in anti-MERFing legislation back in 2008, and the government has recognized that there are still holes in this legislation.â&#x20AC;? MERF is short for â&#x20AC;&#x153;market enhancement

On the infrastructure front, the PC government gets top marks from the open shop sector. members for working for non-union or non-signatory unions; closing the so-called â&#x20AC;&#x153;frivolous lawsuit loopholeâ&#x20AC;? and enabling parties to negotiate single collective agreements encompassing multiple trades. These promises were further emphasized in Redfordâ&#x20AC;&#x2122;s early 2012 interview with Open Mind. â&#x20AC;&#x153;We need to ensure that there are structures in place so that members can hold associations accountable,â&#x20AC;? said Redford, in reference to union transparency legislation. â&#x20AC;&#x153;And if thereâ&#x20AC;&#x2122;s work that we need to do with respect to that, we will.â&#x20AC;? She also took a clear stance in favour of an opt-out option for union members for non-union-related spending. â&#x20AC;&#x153;Union members should be permitted to opt out of any portion of their dues that supports political advocacy or political parties that they donâ&#x20AC;&#x2122;t agree with,â&#x20AC;? she asserted. â&#x20AC;&#x153;I agree with their intention of making sure that union mem-

KRAWFORD

CONSTRUCTION Construction Managers General Contractors Design Builders

recovery funds,â&#x20AC;? which minimize risk for union shops bidding on contracts. Open Mind gave the PC government the opportunity to reiterate its intentions to uphold these now two-year-old campaign promises, but the government declined interview requests. Albertaâ&#x20AC;&#x2122;s open shop leaders still hold out hope for action on this front. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re not giving the government an X-mark in this area, but weâ&#x20AC;&#x2122;re not giving them a checkmark either,â&#x20AC;? says Kushner. â&#x20AC;&#x153;To date weâ&#x20AC;&#x2122;re giving them an â&#x20AC;&#x2DC;incompleteâ&#x20AC;&#x2122;. The spring/fall session would be an opportune time for the government to start following through on these pledges, as theyâ&#x20AC;&#x2122;ve still got two years to go and governments tend not to do controversial things at the tail end of their mandate. The Alberta Progressive Conservatives were really the first political party to take these issues on board, and as such weâ&#x20AC;&#x2122;re still hopeful. Itâ&#x20AC;&#x2122;s going to be a question of whether the government will fulfill its promises made to Albertans in the 2012 election.â&#x20AC;? RESULTS REVIEW

Incomplete, with improvement needed. Thatâ&#x20AC;&#x2122;s the open shop sectorâ&#x20AC;&#x2122;s assessment of the PC governmentâ&#x20AC;&#x2122;s performance on labour code amendments. The Alberta governmentâ&#x20AC;&#x2122;s interim report card indicates neither honour roll material nor grounds for a failing grade. But with two years yet to go in its mandate, there is still time to achieve accolades.

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This Year’s KEY Players The 2013 Contractor of the Year Awards recognize construction professionals who are building a better tomorrow erit Contractors Association, Alberta R oa d bu i lder s a nd Heavy Construction Association (ARHCA) and Alberta Venture magazine present this year’s Contractor of the Year Awards. The finalists include those compa n ie s a nd i nd iv idu a l s who strive for efficiency, innovation and practicality. Their successes reflect best practices in the industry. We celebrate their leadership. Public and private companies that have a regional office in Alberta are eligible to enter these awards. The organizations sell construction services, employ tradespeople, and/or contract out labour supply in the industrial, commercial, institutional, residential, civil, road building or oilfield construction sectors.

BY ALLISON MYGGLAND

General ContraCtor Under $50 Million WINNER: Rockwood Custom Homes CEO Allison Grafton, Calgary CEO Allison Grafton wanted people in Calgary to start talking about great experiences in construction. She wanted clients to boast about how well the company, Rockwood Custom Homes, treated them. With a track record of coming in on or under budget nearly all the time, people were talking. But Rockwood’s commitment to the client goes deeper than budge adherence. As the floodwaters of June started to rise, Rockwood started buying mitigation tools, such as pumps, generators, protective clothing, fans and dehumidifiers. Rockwood prepared for the worst, describing it as their responsibility to clients in the area. Despite the flooding, none of the homes Rockwood had under construction at the time fell behind. Recently, Rockwood became the builder for two new neighborhood developments. The company is developing a subsidiary to focus on high-end multi-family developments. CEO Grafton is confident Rockwood can maintain its focus on quality.

The six award categories include: General Contractor Under $50 Million, General Contractor Over $50 Million, Trade Contractor Under $15 Million, Trade Contractor Over $15 Million, Heavy Civil, and Construction Person of the Year. Keep reading to find out which companies were chosen by this year’s adjudication panel and why. 42

OPENMIND SPRING 2014

An example of Rockwood’s custom mastery

FINALIST: Maverick Oilfield Supplies Ltd. CEO Craig Challis, Calgary Thirty-five-year-old Maverick specializes in delivering leadership in oil and gas, with the support of its heavy haul division. An emphasis on safety, an adherence to budget and great skill development programs have helped grow the company’s market share profits. FINALIST: Carbon Constructors Inc. CEO Terry Androsoff, Calgary Carbon Constructors is a commercial general contractor. The company works to match the right team to the right project. It tailors the best approach to achieve performance, quality and safety, whether the company is working on a church, a historic building or a waste facility.

General ContraCtor over $50 million WINNER: GCS Energy Services CEO Greg Schmidt, Red Deer Greg Schmidt started Greg’s Contracting Services Ltd. in Hardisty, Alberta as a teenager in 1994. The one-man operation has since grown to include three branches across Alberta and Manitoba with 400 full-time employees. Schmidt’s business, now called GCS Energy Services, specializes in industrial oilfield service. Schmidt credits GCS’s 20 years of success to a good management team with a focus on safety and mentorship that capitalized on its in-house bank of expertise, through something called the Gold Hand Mentorship program. It identifies experienced field staff to provide insight and assistance to anyone on site, recognizing that speaking to a supervisor can be intimidating. A peer level program, it captures field expertise and spreads the knowledge. FINALIST: Strike Group Inc. CEO Stephen Smith, Calgary Now a decade old and with 1,000 employees, employee-owned Strike builds on expertise in the western sedimentary basin, specializing in larger production and process facilities for the energy industry. A comprehensive incident reporting system gives management tools for prevention and identifies areas for improvement.

FINALIST: Synergy Projects Ltd., CEO Dennis Mozak, St. Albert This employee-owned construction manager and general contractor has the capacity to perform small and large scale work from its service division and its special projects division. ISO certified in environmental and quality management, Synergy packs large-project management capability.

trade ContraCtor Under $15 million WINNER: Altapro Electric CEO Bert DeBruin, Edmonton Owners Bert and Jeanette DeBruin at AltaPro Electric are advocates for creating better business strategies that benefit employees and clients. The DeBruins aim to remove the barriers between the office workers and those in the field by improving remote access from the field. The company recently purchased laptops, printers and wireless hubs for field crews, allowing them to access information from the office from anywhere. The company has also created Standard Installation Procedures (SIPs) for equipment AltaPro installs. What previously required stacks of paper instructions is now accessible with a Dropbox link. Custom labour tracking software enables workers in the field to save a trip to the office by submitting time sheets wirelessly. Other innovations include a peer recognition program developed by AltaPro employees.

Demolition at its finest by R3

Altapro Electric – Kearl Lake Substation

FINALIST: EverLine Coatings & Services CEO John Evans, Calgary Clear communication and a focus on the finished product lets EverLine bring visibility to the business of line painting for parking lots and roadways. With new, longer-lasting products that reduce volatile organic compounds, EverLine is at the forefront.

Greg Schmidt, CEO GCS Energy Services

FINALIST: Falco Electrical Systems Ltd. CEO: Miles Gillham, Calgary With a focus on projects that promote health and fitness, such as the Trico Centre and the Centennial Arena in Calgary, and by providing employees a gym and shower facilities in the office, Falco promotes health and wellness to its team of 68 employees. OPENMIND SPRING 2014

This Year’s Key Players

Trade ConTraCTor over $15 Million

Heavy Civil

WINNER: NCSG Crane and Heavy Haul CEO Ted Redmond, Edmonton With one of the youngest crane fleets in the industry, NCSG is a prime contender in the crane and heavy haul industry, and CEO Ted Redmond is looking to grow the company. In the past year, NCSG acquired companies in such locations as Tumbler Ridge, Wabasca, and Cold Lake, deepening its expertise in coal, upstream oil and gas work, heavy oil and wind projects. NCSG recognizes that aboriginal partnerships are a growing part of the Canadian economy and it fosters connections with the communities in which it works. With dangers inherent to the crane business, training and apprenticeship programs are integral. Redmond recently invested in a state-of-the-art crane simulator to provide operators with experience. And NCSG employs a team of more than 20 people who oversee safety on site and provide company-wide training and resources.

WINNER: Pidherney’s Trucking CEO Mervyn Pidherney, Rocky Mountain House Pidherney’s Trucking started in 1957, after Mervyn Pidherney sold his Chevy Bel Air to buy one gravel truck. “And then I had to diversify,” he says. Today, Pidherney’s Trucking employs more than 400 people and operates in heavy civil construction, oilfield construction and remediation, and gravel and concrete. Pidherney believes strongly in providing the best equipment, safety and job training. The company also offers a retirement savings program – unusual in an industry where seasonal turnover is the norm. “We want them around for the long haul,” Pidherney says. Philanthropy is important, too. In 2013, Pidherney and his wife Earlyne completed fundraising efforts to upgrade the Red Deer Curling Centre; the facility was subsequently renamed for them. Generosity extends across the province. “We look after the wagon races, we look after 4H, and we look after the hospitals.” As with his business, Pidherney describes his philanthropic work as still in progress. Pidherney’s equipment at work

NCSG Crane and Heavy Haul – Hauling a 350,000 pound vessel on a project site using a 12-line hydraulic platform trailer.

FINALIST: Epcor Technologies CEO David Stevens, Edmonton Epcor has had a hand in electrical work everywhere in Alberta. Recent projects include streetlight replacements in Lethbridge and Edmonton and installation of road weather information stations, which provide information to Alberta’s new 511 road report system.

FINALIST: PCL Constructors CEO Paul Douglas, Calgary Since 1906, PCL has become one of Canada’s top contracting organizations. Industry insiders know it for in-house employee training programs and sustainability directives. Waste diversion, energy reduction and equipment maintenance demonstrate PCL’s commitment to excellence.

FINALIST: Concept Electric CEO Dave Kinley, Calgary Concept Electric runs a full gamut of operations, from commercial and industrial electrical design-build projects to a service division that provides technical maintenance for building operations, ranging from energy management and billing to security services.

FINALIST: Graham Construction CEO Grant Beck, Calgary With 1,300 employees and 13 branches, Graham has successfully diversified, winning contracts for large commercial developments, transportation infrastructure, as well as unusual projects. It recently created a new fish habitat near the Athabasca River.

OPENMIND SPRING 2014

of the

Year: Les LaRocque, President, Botting & Associates, Calgary

Les LaRocque may be a humble, salt-of-theearth type of guy, but he is also a tour de force in his industry. “I have a passion for the construction industry,” he says, “and I’ve watched it grow from being the secondary choice of individuals looking for a career to being a primary pathway for people.” In addition to his duties as president of mechanical contractor Botting & Associates, LaRocque has played an active role in shaping the standards of the industry and working to advance Alberta’s training and apprenticeship program. Fabrizio Carinelli, president of CANA Construction in Calgary, emphasized the role LaRocque has undertaken as an industry leader. “The biggest thing about Les, from the work-side perspective, is the amount of time that he gives back to the community with respect to the industry,” Carinelli says. He rattles off LaRocque’s involvement in the youth employment program, the registered apprenticeship program, an education fund with the Calgary Construction Association and the Canadian Construction Association. “He’s always looking at what can he do, what can he give back – to make the industry better.” LaRocque says he has always felt that apprenticeship opportunities are key for both young people and the industry, and from 2002 to 2007 he served as part of the Alberta Apprenticeship and Industry training board. He helped develop Alberta’s government structure around apprenticeship and worked to ensure there was a balance between training opportunities for young people seeking careers in the trades, and industry looking for those young people. He is also a past Chair of Merit Contractor’s Association of Alberta Carinelli says LaRocque also plays an integral role on several industry-related boards, where “he’s not afraid to put up his hand to contribute to any issue that you might ask him about,” Carinelli says. “And he’s not afraid to ask questions.” LaRocque credits his mentor Walter Botting for his success. “He was a huge influence on me,” LaRocque says. “I learned all my business sense and everything in this industry from him and I owe him a lot.” Ultimately, for LaRocque, his work is more than just a job. “I think our industry does a lot of good, it drives the economy,” he says. “It’s a huge net adder to our provincial economy and our national economy.”

LES LAROCQUE, President, Botting & Associates, Calgary

PHOTO BY: CURTIS COMEAU

ConstruCtion Person

Merit, the Alberta Roadbuilders and Heavy Construction A s s o c iat i o n and A l b e r t a Ve ntu r e magazine thank the adjudication panel for assisting with the Contractor of the Year Awards. This year’s judges include Bruce Moisey, former partner of Alberco Construction and a past chairman of the ARHCA, Carl Knowler, Canadian Western Bank, and Aminah Robinson, University of Alberta.

OPENMIND SPRING 2014

BUILD BETTER APPRENTICESHIPS Let’s look to successful models that encourage respect, rather than legislating a poor solution BY PETER PILARSKI

anada is experiencing a serious shortage of qualified tradespeople, which

will only get worse in the next decade as we are not training enough apprentices to keep up. In fact, according to the International Labour Organization, Canada had only 30 apprentices per 1,000 employees in 2011, well below Germany with 39, Australia with 40 and Switzerland with 44. To address this problem, governments, employers, industry associations and unions have all implemented a variety of programs, strategies and regulations to get more apprentices into training. They have experienced varied levels of success. While some government programs – such as tax credits, employment insurance programs and grants, have provided incentives for workers and employers to utilize the apprenticeship training system in greater numbers – other government regulations have created disincentives to apprenticeship training. Now, some governments have been suggesting that mandating a minimum ratio of apprentices on government infrastructure project sites could be a way to increase the number of apprentices being trained. Unfortunately, these governments have made this suggestion with no evidence that this approach will actually increase apprenticeship training numbers. OPENMIND SPRING 2014

Build Better Apprenticeships

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QUALITY WORKMANSHIP HONEST PRICE

But more regulation might not solve the problem. Government regulation of apprenticeship training could be detrimental to the industry. According to the 2013-14 World Economic Forum’s global competitiveness rankings report, amongst the “most problematic factors” for doing business in Canada are “insufficient capacity to innovate, restrictive labour regulations and an inadequately educated workforce.” Some of these issues were recently studied by the C.D. Howe Institute, too. Its study, called Access Denied: the Effects of Apprenticeship Restrictions in Skilled Trades found that overall, “strict provincial regulations on the rate at which firms may hire apprentices, which is relative to the number of certified workers they employ, reduce the number of people who work in a trade.” The study also concluded that “trades in provinces with the strictest regulations on hiring have lower levels of young workers.” In other words, if provinces want more workers in the trades, they should allow firms to hire more apprentices and should loosen restrictions on entry into apprenticeship training and into the trades. The C.D. Howe study examined the impact of journeyperson-apprentice ratios and found that, among other things, these ratios “reduce the incentive for a firm to grow: if the firm wishes to hire additional apprentices, it would first have to hire more journeypersons (which may not exist or be available), thus increasing the effective cost of labour.” This disincentive to grow is problematic and can be most harmful to smaller businesses that do not have multiple certified journeypersons; this problem will be exacerbated as the number of certified journeypersons retiring from the trades increases substantially over the coming years. With a growing need to train more apprentices and an aging and retiring workforce, apprenticeship ratios could have a crippling effect on the industry going forward. The study found that “in trades in provinces where there is a journeyperson-apprenticeship ratio above one, there are 44 per cent fewer workers as

a share of the provincial workforce relative to otherwise comparable trades for which there is no fixed ratio.” The study further found that ratios above one “result in 38 per cent fewer young workers – those between the ages of 25 to 34 – in a trade.” One of the reasons often cited for high journeyperson-apprenticeship ratios is that they increase the quality of training and thus protect consumers from unqualified tradespersons. The study’s analysis of the data, however, found no evidence to support these claims. Further, the report concluded that, “while formal apprenticeship does impart valuable skills, there is no evidence that barriers to entry, such as strict journeyperson-apprentice ratios, are necessary to increase skills training.” Similar to how restrictive policies such as journeyperson-apprentice ratios distort the number of people that participate in apprenticeship training and the ability of companies to grow, potential government policy that would mandate a minimum number of apprentices on government infrastructure projects would create unnecessary market distortions. For example, regulating a minimum number of apprentices on jobs could mean that smaller firms may not be able to participate on those jobs, especially if journeyperson-apprentice ratios make hiring more apprentices cost prohibitive. It also means that the most qualified and experienced firms may not be able to participate because they don’t have enough apprentices available, or because their apprentices are working on a different jobsites. Such a policy could also create a disincentive for companies to help their apprentices to become journeypersons. After all, such a move would put a company out of line with its arbitrary contractual obligation to employ a set number of apprentices on a job. Another interesting finding in the study is that the length of apprenticeship training matters. The study found that, relative to trades with apprenticeship terms of less than two years, “employment is 48 per cent higher in trades with apprenticeship terms of

between two and three years. Trades with parents, guidance counsellors or friends apprenticeship terms of three to four encouraged them to consider the skilled years have 34 per cent higher employment trades.” It also said, “consumers and the than trades with less than two years general public do not value the contribuof apprentice training.” The authors tion that tradespeople make to society; concluded that “lengthier apprentice stereotypes exist that prevent women programs induce workers to enter a from pursuing many trades careers; and program, but there are diminishing negative impressions of the skilled trades returns for the longest programs.” This are perpetuated in the media.” The C.D. finding is particularly useful given the fact Howe study comes to a similar conclusion that it takes “roughly one-third longer to about the reasons behind the shortfall of qualify as a carpenter or welder in Canada skilled tradespeople in Canada. than it does in Germany,” which is internationally recognized as having one of A CANADIAN APPRENTICESHIP the most effective apprenticeship systems. There is FORUM PAPER FOUND value in aligning the length CONSUMERS DO NOT VALUE and structure of apprenticeship training in Canada with THE CONTRIBUTION THAT countries that are achieving TRADESPEOPLE MAKE. better outcomes. We don’t need more regulation based on unproven claims and assumptions in the apprenticeSo, rather than continuing to pursue ship system. counterproductive, protectionist What we need are policies and part- policies such as restrictive journeynerships that get to the root of why person-apprentice ratios, and rather than apprenticeship numbers are not as high regulating a minimum number of as we would like them to be. According to apprentices on government infrastructhe Canadian Council of Chief Executives, ture projects without the evidence to back “resistance to so called ‘blue-collar’ work such a policy’s effectiveness, governments remains much stronger in Canada than should partner with industry. This in many other countries, especially in partnership could reveal real solutions Europe.” This finding is consistent with to identified problems – mainly, a lack of a recent Canadian Apprenticeship Forum appreciation and respect for what have research paper called Youth Perceptions become some of the best paying, highly of Careers in the Skilled Trades. The paper technical and most exciting careers found that, “youth did not feel their available in the country.

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Merit

Canada WORKS FOR

Three federal-level measures that will tilt the balance back in favour of transparency, accountability and respect for taxpayers BY TERRANCE OAKEY

erit Canada continues to move issues forward that are of concern to the

open shop construction sector and, beyond that, people who share our free-enterprise philosophy. As the federal government considers what’s important for the next two years of its mandate, Merit Canada is focusing on three priorities, which the organization developed in response to a consideration of many examples of flagrant waste. (See “We Couldn’t Make This Stuff Up” on the following page.) The examples we listed in the sidebar are just a handful from a longer list of questionable union activity and bizarre outcomes from union-friendly public policies. The long list could ultimately stretch on for several pages. All of these examples are linked by a simple underlying fact: existing laws governing labour organizations have created an environment ripe for abuse, with no accountability to union members, taxpayers or the general public. It is time to tilt the balance back in favour of transparency, accountability and respect for taxpayers, and there are at least three immediate measures the federal government can implement to make that happen.

OPENMIND SPRING 2014

Merit Works For Canada

WE COULDN’T MAKE THIS STUFF UP Merit Canada chose to adopt its three federal-level policies in a consideration of the following and other similar events taking place in Canada. A former union executive told the Charbonneau Commission that Quebec’s largest labour union was controlled by high-ranking members of the Mafia and Hells Angels. Union bosses in Quebec helped rebuild a biker strip club that had burned down, and included a $1 million investment from a union-controlled fund. A union boss allegedly filed more than $125,000 in fraudulent expenses over a six-month period. The lowest bid to build a simple brick public washroom in Kitchener, Ontario came in at $564,744, which is 40 per cent more than budgeted and more than 150 per cent in excess of the average cost to build a house in the city – including the cost of the lot. The City of Waterloo was forced to appeal to the Ontario Labour Board in its effort to open a public tender for a $140-million sewage treatment plant to 27 contractors rather than only two. Rank-and-file members from at least 17 unions contributing thousands of dollars to a legal fund for NDP MP Pat Martin to defend himself in a defamation suit that had nothing to do with labour issues.

OPENMIND SPRING 2014

First, Parliament needs to pass Bill C-377, which will establish new reporting requirements for unions, including annual financial statements, the amount of time spent on political activities and financial support for social causes, such as legal defence funds for NDP MPs. Cases of inappropriate or questionable financial activity by union bosses will persist as along as unions collect over $4 billion annually in forced contributions, and as long as they have no obligation to report how that money is spent to their members or the public – even though they receive $400 million in tax breaks annually. How can there ever be accountability without transparency?

It is stories like those coming out of Quebec’s Charbonneau Commission about inappropriate expenses and links between organized crime and union bosses that led countries like the U.S., Britain, France

The current system is ripe for abuse – both from union organizers and employers. and Australia to implement union transparency legislation. Canada’s peers have had legislation in place for years – decades even in some cases. Continued opposition to Bill C-377 after these latest revelations is confounding and troubling and ultimately raises more questions about what may really be going on behind the scenes.

Second, to address the issues highlighted by the Kitchener and Waterloo examples mentioned at the outset, it is time to end the privileged access to public sector contracts enjoyed by unions in many parts of the country, known as closed tendering. Under this system, bidding on public sector projects is restricted to specific unionized contractors affiliated with the building trades unions. This arcane and indefensible practice means that – right off the top – seven out of 10 construction workers in Canada are excluded from employment on these projects because they do not belong to a

union. To make things even less competitive, specific unions also have privileged access to these contracts over other unions, further limiting fair competition. It does not take a degree in economics to know what happens when 70 per cent of any industry is barred from competing. Quality goes down and costs go up. The example of the half-million-dollar bathroom in Kitchener is just one of many. A study conducted by the City of Montreal found closed tendering inflated project costs anywhere from 30 per cent to 85 per cent. Ottawa should take a leadership role

on this issue and ensure that projects that use any federal funds be tendered openly. This policy should be included in all infrastructure agreements and apply to all Crown corporations and any other federal mechanisms used to fund infrastructure. Open tendering is about fairness for taxpayers, since governments have an obligation to use their money efficiently. Moreover, companies that pay federal taxes should not be precluded from bidding on public contracts – paid for with their tax dollars – simply because they do not belong to the right union.

Finally, the third area in need of reform surrounds union voting. It is time to bring basic democratic practices to unions and guarantee federal workers a secret ballot vote when deciding to join a union. The current system is ripe for abuse – both from union organizers and employers. A secret ballot is the best way to ensure that a decision to join a union is conducted in a fair manner, without any threat of intimidation or offer of reward for voting one way or another. Such a system will help ensure that an employee’s decision to join a union is based on sound personal reflection – not fear of reprisal. In addition, if unions were

also forced to operate in a more transparent manner, as outlined in Bill C-377, potential members could better understand the priorities of the organization they are being asked to join. These three policy changes extend the principles of transparency and accountability – which are the underpinning of all our democratic institutions – to unions as well. This is long overdue and those who continue to oppose timely change risk doing irreparable harm to Canada’s labour movement since the general public will not tolerate more stories like the ones listed here.

OPENMIND SPRING 2014

BY THE

NUMBERS New housing price index

Construction price index

($ thousands)

for apartment buildings:

Calgary

Edmonton

Calgary

Edmonton

% change Calgary

% change Edmonton

2012

97.1

90.7

2012

167.2

163.1

2013

102.2

91.1

2013

170.7

165.1

2.1

1.2

Yearly value of all building permits

Capital expenditures for construction in Alberta

in Alberta ($ millions)

(in $ millions):

2012 79,192.2

2013 87,046.8

2014 88,108.8

(preliminary actual)

2012

14,662.9

2013

17,358.0

(intentions)

(SOURCE: Merit Contractors Association)

Value of building permits in Alberta (in $ millions) Jan. 2013

Jan. 2014

Residential:

593.1

739.1

Non-residential:

350.0

679.6

Alberta total:

943.1

1,419.3

Total person hours worked under the Merit Hour

Bank Benefit Plan: 2012 2013

Average number of employees covered under the

Merit Hour Bank Benefit Plan:

96,729,350 103,774,392

2012

2013

48,015

51,169

Wholesale merchantsâ&#x20AC;&#x2122; sales by industry unadjusted ($ millions) across Canada 2012 81,522.1

83,637.2

Electrical, plumbing, heating and air-conditioning equipment and supplies

25,660.9

25,792.2

Metal service centres

18,827.8

18,694.8

Lumber, millwork, hardware and other building supplies

37,033.4

39,150.2

128,177.2

127,204.1

Machinery and equipment 54

2013

Building material and supplies

OPENMIND SPRING 2014

(SOURCE: Statistics Canada)

THE WAY WE WORK: no.

ALWAYS KNOW YOUR NEXT MOVE.

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