Canadians deserve fair tendering processes across Canada

Op/ed by AEG President Tim Shipton in the Montreal Gazette.

May 10, 2013

When Quebec firm Structal-Heavy Steel Construction was selected to supply steel to Edmonton’s proposed downtown hockey arena project by Alberta construction giant PCL, there were more than a few raised eyebrows in and around Edmonton.

Local steel construction and fabrication firms (Waiward Steel and Supreme Group) submitted a joint bid that was $5 million to $6 million higher than Structal’s and didn’t win the job. Structal’s winning bid was reportedly in the $50-million to $60-million range.

Edmonton companies were quick to criticize the awarding of the contract to a Quebec firm, pointing out their long-standing support for local communities. Making matters worse for the local outfits is the slowdown in Alberta’s oilsands construction, which has hit local steel fabricators hard.

Waiward and Supreme’s concerns are understandable — in part because of the controversial nature of the downtown arena project. As it stands, Edmonton taxpayers are footing the bill for a large part of the arena. Isn’t it only fair that if a project is paid for with public dollars, local firms should be awarded the business?

Not necessarily.

What’s really important is whether the decision is fair to the taxpayers and other investors — including Darryl Katz and Rexall Group — who are footing the bill for the project. Favouring local firms is a slippery slope toward inefficient protectionism.

Canadians deserve transparent and fair tendering processes across Canada — processes that don’t discriminate based on location, but on price and quality of service.

And here is the problem highlighted by the arena project — we don’t have fair processes across Canada. It’s frustrating that PCL did the right thing on the arena project by awarding the contract to the most competitive firm, but Alberta companies can’t always expect the same treatment in other provinces.

Take Quebec, for example. Should the rumoured Quebec City NHL-ready arena proceed, can Edmonton companies Waiward and Supreme expect a fair shot at winning the steel fabrication business in that province? We’re not so sure. Quebec municipalities often have preferential policies in place that benefit local firms over companies from other provinces.

It’s not just Quebec. Governments across Canada give an advantage to local firms in a variety of ways. In fact, Canada is blanketed by a patchwork quilt of subsidies and restrictions aimed at preventing Canadians from doing business with one another in order to appease some local concern or another. Nobody wins under these rules in the long run, and everyone loses by paying higher prices for public services.

It’s also costing us our international competitiveness, as Perrin Beatty, Canadian Chamber of Commerce president and CEO, told the Globe and Mail recently. Liquor monopolies, provincial securities regulators, shipping rules, licensing and accreditation rules and food-supply management boards all serve to “balkanize” the Canadian economy and hinder our ability to both attract investment from around the world and sell our wares globally.

There has always been a push to reduce these trade barriers in Canada and there have been some wins. The New West Partnership Agreement between Saskatchewan, Alberta and British Columbia harmonized hundreds of regulations among those three provinces. Quebec and Ontario have a trade agreement in place (although not as meaningful as the new west partnership.)

While there is some support for freer internal trade in Canada, the comfortable status quo often carries the day. After all, a firm that is the beneficiary of a distortionary government regulation probably won’t go quietly into the night after that crutch is snatched away in the interest of national economic growth.

Rather than resort to more protectionism or expensive preferential local procurement policies, situations like the Edmonton arena should serve to inspire us to tear down inefficient trade barriers. Instead of retreating into silos or throwing up more road blocks, Canadians should demand a single common market. It’s time for business leaders to reach out across borders and find allies in the cause of freer trade, and make sure governments know the status quo is no longer an option.

We welcome the participation and full partnership of Quebec companies in Alberta. Structal Steel, a subsidiary of Groupe Canam, is just the latest in a long list of Quebec companies operating successfully here. We need more of this kind of inter-jurisdictional cooperation and investment and we should work together to ensure a level playing field for business across provinces.

Tim Shipton is the president of the Alberta Enterprise Group, which is a member-based non-profit business advocacy organization. AEG members employ more than 150,000 Canadians across all sectors of the Canadian economy.