The NDP government has made a political calculation that adding hundreds of millions of tax dollars in costs to public infrastructure projects is a risk worth taking, if that’s what it takes to reward key supporters and to stick to ideological values.
That is one takeaway from the government’s recent announcement that major projects costing more than $500 million will have to be covered by a “community benefits agreement.” The 1990s NDP government used a similar framework to build the Vancouver Island highway, and it led to a higher final price tag for that project.
The agreement stipulates all workers on such projects must be unionized and paid at set rates that will increase two per cent every year for at least six years. A brand new Crown corporation is being created to oversee things.
How much will this cost? Well, the NDP has said these agreements will add between four to seven per cent in extra costs over original estimates. So, let us apply that math to some big-ticket items on the drawing board.
The Broadway subway line is estimated to cost $2.85 billion. A seven per cent increase (given all governments’ tendency to lowball numbers, I think using the top end of this four-to-seven per cent scale is more accurate) would boost that project’s cost by about $200 million.
The Surrey LRT line is pegged at $1.65 billion. Extra costs: $115 million. The second and third phases of the new Royal Columbian Hospital project will cost $1.1 billion. That’s another $77 million. So on those projects alone, the extra costs total about $400 million.
But given that pretty well all major public infrastructure projects go over budget anyway, the NDP is betting this won’t be much of an issue with voters.
Certainly, the B.C. Liberals won several elections despite coming in well over budget on a number of big projects, so perhaps it is true that budget overruns don’t count for much at the ballot box.
In any event, it is a risk the government will take because it is rewarding its construction union supporters rather handsomely, and it is also coming close to implementing a quota system on hiring. Although no actual numerical targets are included in these agreements, contractors who employ more Indigenous people and women appear to have a better chance at winning contracts to work on these projects. Hopefully, this will indeed lead to more jobs for Indigenous people and women tradespeople, but there is no guarantee of that happening.
However, the forced unionization of everyone is rigid. Thus, the unions (the 19 that the NDP has specified) get to collect a lot more in union dues, and get to control some new funds that will be created by taking 32 cents an hour on behalf of all workers.
That an NDP government would reward its union supporters is hardly surprising, but it does apply a layer of hypocrisy to many of the criticisms it threw at the B.C. Liberals for years, for doing the same kind of thing for the business sector.