Proceedings of the Standing Senate Committee on
National Finance
Issue 22 - Evidence - June 12, 2012 (morning meeting)
OTTAWA, Tuesday, June 12, 2012
The Standing Senate Committee on National Finance met this day at 9:30 a.m. to study the subject-matter of all of Bill C-38, an Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures, introduced in the House of Commons on April 26, 2012.
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: Honourable senators, this morning we are continuing our study on the subject-matter of Bill C-38, an Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures.
[English]
Honourable senators, this is our fourteenth meeting on the subject matter of Bill C-38. This morning we will be looking at Part 4, Division 23 of the bill, and I have that at page 305. It is one of those sections that, if you were reading through the 425 pages of this bill, you might not even notice of because it is one line long. However, they are the ones that come up and bite you, so we thought we better find out what it all means.
I can read the section to you. It is clause 441 of Division 23. It says:
The Fair Wages and Hours of Labour Act is repealed.
That is it.
We are very pleased to have with us this morning Mr. Erin Weir, an economist with the United Steelworkers.
Mr. Weir, we understand you have some brief introductory remarks. You may be able to tell us what this all means, and then we will take it from there.
Erin Weir, Economist, United Steelworkers — USW: Thank you for having me. Before I get into the substantive part of my presentation, I would like to show the committee my New Democratic Party membership card. The Conservatives at the House of Commons Finance Committee have suggested that I have been insufficiently transparent about my political affiliation, so I just want to make sure I am being up front about that.
The Chair: It is one of our great regrets that we do not have any NDP members in the Senate, so you have a major job here.
Mr. Weir: We will try to remedy that soon.
I have been asked to speak about the omnibus budget bill's repeal of the Fair Wages and Hours of Labour Act. I think it makes sense to begin by talking a little bit about what the Fair Wages Act is. It is a statute that requires contractors for federal construction projects to pay at least the prevailing wage, and to pay overtime where someone is working more than 48 hours per week.
I believe this legislation is important because it allows contractors to compete for federal projects on the basis of skills, experience, innovation and other relevant factors. However, it prevents a race to the bottom in which contractors try to win jobs by undercutting the prevailing rates of pay.
I would say that the Fair Wages Act is a good piece of legislation in that it allows competition for federal public works projects, but prevents that competition from driving wages down below a specified floor.
I think it is also worth adding that if there were circumstances where overtime provisions were inappropriate, the Fair Wages Act already gives the Minister of Labour discretion to make exceptions.
The recent federal budget itself actually said nothing about the Fair Wages Act. As you alluded to, Mr. Chair, the budget implementation bill repeals the act in about 10 words without any explanation. Since the government itself has provided no rationale for repealing the Fair Wages and Hours of Labour Act, I am left to speculate as to the reasoning.
The common theme that I see between repealing the Fair Wages Act and other elements of the omnibus budget bill is putting downward pressure on wages. In the omnibus bill we also see changes to Employment Insurance, aiming to force unemployed workers to take the first available job even if it pays significantly less than their previous one. There is also the delaying of eligibility for Old Age Security which will force many seniors to stay in the workforce for an additional two years. At the same time, the government has loosened up the Temporary Foreign Worker Program to make it easier for employers to import foreign labour on a temporary basis at lower rates of pay, and over the past year the government has intervened to take away the right to strike in six large federally regulated workplaces.
When you look at all of these things as a package, it seems to me that the common thread is this push to try to put downward pressure on wages.
The repeal of the act is very much part of this pattern. It is a pattern that I believe tilts the playing field in favour of business and against working Canadians. I will express the concern that I think this may prove to be a self-defeating strategy, because in the end, suppressing wages will also tend to suppress consumer spending, which is ultimately a bad thing for business as well as the wider Canadian economy.
I will leave things there and am happy to open things up for your questions.
The Chair: Thank you very much. We appreciate that analysis.
Senator Eaton: Mr. Weir, was repealing the Fair Wages Act not just another layer of bureaucracy on top of what provincial and territories have already mandated in terms of worker compensation, hours, and benefits? Is that not just another layer there?
Mr. Weir: I do not think so. Not many provinces really mandate the wage rates that would have to be paid to construction workers, and provincial governments certainly would not mandate that for federal construction projects.
Senator Eaton: With the shortage of skilled labour right now, which we have heard about, is there not enough competition in the workplace that if you have somebody skilled who is very good at their job, you will obviously pay what the market demands you to pay if you want to keep that person?
Mr. Weir: That is probably true right now, because Canada has a very strong housing market, and there is certainly a construction boom happening in the oil sands. Frankly, that has driven construction wages above the levels mandated by the Fair Wages Act. However, I think we should take a longer-term perspective, as well. This type of legislation has been in place for decades, and over the economic cycle, it can be very important, especially if there is some kind of a downturn in construction and there is not the kind of demand for construction workers that you are describing.
Senator Eaton: So many provinces that have had NDP governments, whether it is Ontario, Quebec, Manitoba, Saskatchewan, B.C, et cetera. I guess Alberta might be the only place that has not had an NDP government for a while. Would they not have put in place employment conditions that would favour the skilled worker or the worker in those provinces? Have the provinces done away with everything that has been put in place by past NDP governments?
Mr. Weir: Many of them have. Certainly, we are seeing a real gutting of labour legislation right now as we speak in Saskatchewan. The Harris government in Ontario took away a lot of the labour standards that had been established there. I think the answer to your question is "yes.''
Senator Buth: Clearly we have some ideological differences, which will probably come out in the questioning. Why do you think we would need wage controls in one small part of the industry?
Mr. Weir: Basically, we would have this legislation because this is an area where the federal government has a lot of ability to set a standard. It applies just to federal construction projects because that is what the federal government controls most directly. I think it makes sense for the federal government to ensure that its own construction is respecting prevailing wages and paying appropriate overtime.
Senator Buth: I just find it odd that we would have one small piece of the industry. The federal government spends a lot of dollars for services and for supplies, and we would continue to expect that one small piece of the industry to have wage requirements under it, essentially.
Mr. Weir: If you are suggesting that the Fair Wages Act should be expanded to cover the whole construction sector, I would probably support that.
Senator Buth: I am sure you would. That was not what I was getting at, though.
What do you feel about industry competitiveness?
Mr. Weir: The whole point is that this ensures that competition is channeled into areas of skills and productivity rather than just bidding down wages. The legislation applies equally to the whole country, so it does not put any firms at a disadvantage relative to any others. It is not possible to import ready-constructed buildings, so there is no real threat of international competition here.
Senator Buth: However, we seem to be able to get major construction projects done across the country without putting wage requirements in, and competitiveness seems to be regulating the industry. Everybody seems to be doing just fine.
Mr. Weir: That might be true right now in the context of a construction boom, but as I say, this legislation has been with us for many decades and I hope will stay with us for many more decades. We may find ourselves in a situation where the housing market is not quite so strong, or the resource sector faces a downturn or the major projects there are completed, in which case I think this legislation could become quite important in upholding some kind of floor for the construction sector.
Senator Buth: Do you know how large the total federal contract program is relative to the entire industry?
Mr. Weir: I do not know for sure, but I have spoken to my colleagues at the building trades unions and they would suggest that in terms of the work their members do, it is probably less than 1 per cent of the total. Again, that is right now, in the context of a construction boom in the private sector.
Senator Buth: So it could likely be even less than that?
Mr. Weir: I said less than 1 per cent, yes.
Senator Buth: Okay, good. Thank you very much.
The Chair: Mr. Weir, I wonder if you could help us understand the relationship between construction contracts, provincially and federally. We have sort of skirted around that in some of your answers. Is there a minimum wage in federal contracts? We are very familiar with minimum wage provincially.
Mr. Weir: I suppose this legislation is, in a sense, very deferential to what happens provincially in that it requires the federal government to pay the prevailing wage in the local area. I certainly do not see this as any kind of intrusion into provincial jurisdiction; it is really the federal government deferring to whatever kind of standards provinces have put in place and ensuring those are upheld for federal projects, as well.
In terms of a legislated minimum wage, the legislation does indeed make reference to that, but of course the federal minimum wage is basically set to equal whatever the minimum wage is in the province in question. That also is pretty similar to the first part of my answer.
The Chair: This particular provision just does away with the act; there is no transition and no adjustment. What about outstanding contracts? Where is the protection for those who have already signed contracts and labourers who are signed on to a project such as those we see around here? The repairs to various government buildings will be going on for the next 20 years.
Mr. Weir: Your guess is as good as mine. Essentially, we have these 10 words in the omnibus bill to go by. I do not know how any of this will work in practice.
Senator Peterson: Mr. Weir, you made reference to foreign workers coming in and primarily driving labour rates down. It would seem to me that with a severe labour shortage, especially in my area of the country, that certainly would not be a factor. They need workers and the employers are not really in the driver's seat. Do you naturally assume that this would happen? Why would you state that?
Mr. Weir: I would point out that even in provinces such as Saskatchewan and Alberta that supposedly have labour shortages, it remains the case that there are significantly more unemployed workers than there are job vacancies, according to Statistics Canada. I do not necessarily accept the premise that the labour market is quite so tight.
Certainly, temporary foreign workers have been used by employers as a kind of contingent and dependent source of labour to hold down wages. Recently, the Temporary Foreign Worker Program was changed to allow employers to pay up to 15 per cent less than the prevailing wage. My question would be: Why did the government make that change if there is no desire on the part of employers to pay less?
Senator Peterson: I can assure you that regardless of what Stats Canada says, there is a severe shortage of workers in Saskatchewan. If they will not accept employment for whatever reason, something has to be done. I think in our area there will be a severe labour shortage for the foreseeable future. This was one way of trying to address it.
Mr. Weir: In a market economy, shortages are usually addressed with price increases. The way to address a labour shortage is to pay better wages to attract more workers.
I can understand why employers do not want to do that, so it seems that they are getting the government to make all these changes to make it easier for them to have seniors work longer, to import temporary foreign workers, to undermine the fair wages act. That is the pattern that I am seeing in this omnibus budget bill.
Senator Callbeck: Mr. Weir, I believe your union is the most diverse in Canada. What are the major sectors in your union?
Mr. Weir: We do represent workers in essentially every industry other than auto assembly. We represent a lot of auto parts workers, but not actually assembling vehicles. I would say about 55 per cent of our members would be in manufacturing, about 15 per cent in mining, and the remainder would be in the service sector. Our single biggest Canadian local is actually the support staff at the University of Toronto.
Senator Callbeck: There are no construction workers here?
Mr. Weir: No, very few. I think it is important to make a distinction between the United Steelworkers, which is an industrial union that started out representing the workers who make steel, versus the iron workers who are a construction union that represent workers who do that type of construction work.
Senator Callbeck: The piece of legislation that will be repealed, the Fair Wages and Hours of Labour Act, mentions fair wages defined in the act, and I also read somewhere that fair wage rates often lag actual market rates. Who sets the fair wage rate?
Mr. Weir: I believe it is set through regulation, and I think you are right that it does tend to lag behind market wages, certainly in the present context of quite a robust construction sector. I do not think it is a very major imposition on employers. It just essentially sets a floor that they cannot go below.
Senator Callbeck: Is there usually quite a difference or are they pretty well the same between the fair wage rate and the market?
Mr. Weir: My impression right now, again from talking to colleagues in the building trades unions, is that the wages they are able to negotiate would be maybe 20 per cent higher than the minimums mandated by the fair wages act. Again, that is talking about unionized construction workers who would be better paid than the average.
The Chair: I am looking at the "fair wage'' definition in the act that we are just about to see disappear, and it refers to Part 3 of the Canada Labour Code, and "in no case shall the fair wage be less than . . . .'' In effect what it is saying is the provincial minimum wage.
Mr. Weir: Your understanding is correct, yes.
Senator Runciman: Mr. Weir, I wanted to get your reaction. When the Red Tape Reduction Commission was doing its study, a number of non-union, smaller construction firms appeared before them and indicated this legislation was unwarranted and penalizing small, non-union firms. What is your reaction to that?
Mr. Weir: I do not think it penalizes non-union firms. All it says is non-union firms need to pay the basic wage floor. It does not say that anyone has to be unionized.
Senator Runciman: They would argue that limits it to a narrower group of companies in terms of bidding because they have the more experienced individuals working for them and, in terms of being able to compete for those contracts because of this regulation, which they consider very restrictive, they are not able to compete on a level playing field. You talked earlier about tilting the field, and they say this law tilts the field in favour of the larger, unionized firms.
Mr. Weir: The only way I guess in which it could do so is if the larger, unionized firms actually have more skilled workers or more experience or in some way are actually better qualified.
Senator Runciman: It is a question of giving people an opportunity for work, especially young people, that it limits those opportunities as well for the smaller firms, if you will, and limits opportunity for youth.
You have expressed concern about youth unemployment. What is the position of your organization regarding the one to one tradespeople-to-apprentice ratio that is in place in Ontario at the moment, which is the most restrictive in the country in terms of giving young people opportunities to find work?
Mr. Weir: I would like to see a lot more investment in the apprentice system, but it is important for young people entering construction trades to have the opportunity to work with fully qualified journeymen in order to learn the trades. I do think that it makes sense to have some kind of ratio. I am not going to go through every trade in Ontario, because I think that would not be a good use of the committee's time. However, I do think the apprentice system is sort of built on the idea that you do not just have a bunch of young, inexperienced workers, you have kind of a combination of them working with fully qualified journey persons.
Senator Runciman: I am quoting you again: "I think the real rationale for the Ontario ratio is the way to address labour shortages and pay higher wages.'' We obviously disagree. I think, and I am sure you would share the view, that in respect of any federal construction project, you want to get something built at the best quality and the best value for Canadian taxpayers. What you are suggesting, I think, is that you see these contracts with this regulation as some form of social program, essentially.
Mr. Weir: No, I do not, but I do think it is sort of striking an appropriate balance. I think you do want to have competitive bidding for federal construction contracts, and the fair wages act certainly allows that. It allows different contractors to try to innovate and to try to use the best possible skills to do the best quality work in the fastest time. It just ultimately does put some floor under wages to make sure that that competition does not have a kind of a destructive effect and does not drive down wages for Canadian workers, which is also an important objective.
Senator Runciman: As I said, the smaller firms would consider this legislation and do consider this legislation as a competition barrier. You will see many of the same firms being awarded these contracts on a continuing basis over the decades, really. They simply have not been able to compete on a level playing field, as you wish to see occur, apparently, from your perspective, anyway, and the people who are out there in the workplace, other than the unionized folks who perhaps want to protect their turf, they see this as a barrier to real competition and the best benefit for Canadian taxpayers.
Mr. Weir: I would just again reiterate that smaller firms can compete on exactly the same playing field as everyone else. They need to pay the minimum wages stipulated by the fair wages act which, in many cases, are actually lower than what unionized firms might negotiate.
Senator Runciman: We will agree to disagree.
Mr. Weir: Fair enough.
The Chair: I am still at a loss to understand how this would work. Fair wages defined as a minimum wage would not go below that. How does it get above that? It refers to "fair wage'' as defined as a wage generally accepted as current by a competent workman.
Is there somebody sitting around on a monthly basis saying "this is the wage''? How did that happen?
Mr. Weir: I am not sure if it is on a monthly basis, but it is done through regulation, by looking at the labour market and looking at prevailing wages. That requirement is sort of separate from the requirement in the act that you have also noted, that contractors must pay at least the provincial minimum wage.
The Chair: That I understand. That is an objective standard. How do you get something above that that would cause the small employer that Senator Runciman was just referring to, how do you know what that figure is? It is all just words here. It does not say anything objective.
Mr. Weir: It is something that ultimately is executed through regulation. It involves looking at what construction workers are actually being paid in a region and looking at the various construction contracts that are out there to come up with some kind of a standard.
The Chair: You would be able to access that information, and all contractors would be able to access that information whenever you wanted?
Mr. Weir: I believe the government posts the wage rates under the act, so it is quite accessible and transparent.
The Chair: It would be interesting to know how many people were needed in order to determine what that fair wage was on a regular basis.
Mr. Weir: I do not know offhand.
Senator Ringuette: The mean — meaning average — salary for any kind of work in Canada is established by information gathered by Statistics Canada, the industry sector and HRSDC. They use the same types of schemes to establish what kind of jobs in the next five or ten years will be lacking in Canada with regard to different planning.
Mr. Weir, in the current legislation regarding the Fair Wages and Hours of Labour Act, we are not only talking about the renovations happening on Parliament Hill. If I read the legislation correctly, it also includes any kind of work that could be done on the Champlain Bridge. It could also mean any kind of work done on an interprovincial pipeline. Any kind of federal tax dollars provided in the project is included in this legislation, the Fair Wages and Hours of Labour Act, whether it is the renovation of a campus lab, where $2 from the federal tax dollars have been committed. Federal dollars are in; therefore, this legislation applies.
I am looking at that. I am also looking at the changes to the foreign worker visa schemes where now the employer, instead of having to post a job opening for 12 weeks, can post it for 10 days. The employer working on any kind of contract that has one or two Canadian tax dollars into the project could pay $9 an hour for a welder and post that job for 10 days. No Canadian will want to weld on the Champlain Bridge for $10 an hour, so we will have this influx of foreign workers after 10 days.
I hear Senator Runciman saying it is the best value for the Canadian taxpayer. I do not think so. Those foreign workers, during the time the job is done, their earnings are sent back home. Their earnings are not spent in Canada. How does that help the Canadian economy and benefit Canadian taxpayers, except for the business community, which seems to have an ability to lobby the current government in a way that is outstanding?
We are talking about fair wages and hours. You add to that the issue of equity and employment, so you remove the possibility of our native community to work on these sites, as well as any minority community in Canada. From my perspective, this is just one aspect, but it is part of the whole that is included in Bill C-38.
Mr. Weir, you have indicated that, but I would like you to at least confirm — Senator Runciman, do you have something to say?
The Chair: He was wondering where your question was. We almost had it.
Senator Ringuette: One of the questions, certainly, is that this is not a social program; this is an open door to have within Canada, paid with taxpayer money, foreign workers who will take their earnings and spend it in their own country instead of in Canada. It is the demise of the working class.
Mr. Weir, the question is the following: What can this committee do in order to remove this legislation that is, in my perspective, destructive?
Mr. Weir: I suppose you know better than I do the powers and prerogatives of the Senate, but I suppose anything that this committee and this body can do to slow down or stop the omnibus budget bill would be a good thing for working Canadians.
You raise an important point, which is that the fair wages mandated by this act are dollars that go back into the Canadian economy, that get paid in taxes, that get spent in local businesses and that ultimately are a good thing for employers as well. It is important to bring a broader macroeconomic perspective to this debate. I do fear that this whole variety of measures designed to undermine wages will be a self-defeating strategy because it will also have the effect of undermining consumer spending and the wider economy.
You are also right to draw the linkage between the Fair Wages and Hours of Labour Act, which may only be a small piece of the puzzle, and other measures, such as loosening up the Temporary Foreign Worker Program, cutting back Employment Insurance and deferring Old Age Security, all of which has the effect of pushing more Canadians and foreign workers into low-wage positions.
Senator Ringuette: Chair, I certainly agree with our witness. To your satisfaction, I have no more questions.
The Chair: I have to say that you raised a good point. In sections 4 and 5, any federal government grant, contribution or loan used by anyone is caught up in this legislation. Therefore, any repair work done in a loan, any of us who had taken advantage of repairing our house and getting that federal money to help repair a house, would be caught up in this legislation, as it now stands, before it disappears. It is not a point we were thinking about when you talked about the 1 per cent of contracts across Canada.
[Translation]
Senator Hervieux-Payette: Who will benefit from this? At the end of the day, whose interest is repealing this act in?
We were told in another meeting that the Canadian Federation of Independent Business was consulted. It represents about 100,000 businesses out of several million.
I have difficulty getting my mind around the fact that, in this case, they can go as much as 20 per cent under the provincial minimum wage. Does this bill mean about 20 per cent under the hourly wage? Under this bill, could they pay $8 per hour in a province where the minimum wage is $10?
Mr. Weir: First, I have to tell you that those who benefit from the present act are construction workers. But the ones who will benefit from the changes will clearly be the employers.
The 20 per cent I mentioned is the difference between union wages in construction at the moment and the minimum set out in the act. It is not 20 per cent less than the minimum wage.
Senator Hervieux-Payette: Okay. Clearly the biggest beneficiary of these measures will be the government. The government is "the client.'' If the contractors and the small businesses who hire the employees do not come under this provision, the big winner will be the federal government because it will cost less to do the work.
Mr. Weir: The federal government will come out ahead in one respect, but in another, it will collect less in taxes from construction workers. The lower the wages, the lower the taxes.
Senator Hervieux-Payette: How do we deal with the professional qualifications of construction workers? As I understand it, only day labourers have no skill requirements.
You mentioned welders earlier. Welders have to pass exams and there are various categories of welders. Who will decide on the level of the qualifications? Will the workers affected by these measures have no requirements for professional qualifications? Usually, depending on the province, are qualifications not issued either by the trade itself or the provincial government?
Mr. Weir: Qualifications are determined by provincial governments. Most provinces are part of the interprovincial Red Seal certification program. Qualifications are common to all provinces. Quebec is an exception, but I think the qualifications are quite high there too.
Senator Hervieux-Payette: So, in that context, once the fair wages act is abolished, fair wages will always be tied to the job. That is to say that, for people who are welders, or in other skilled trades, we can assume that they will get decent salaries.
I would like to know what will happen when foreign workers come in. If employers decide that they are no longer covered by the act, that they can submit lower bids, how are we going to handle the workers in terms of professional qualifications? I know that, in the West specifically, a number of workers come from China.
Mr. Weir: That is a good question. We have a real problem if an employer says that he has a job, but at a very low salary. Canadians will say that they are not interested and the employer will say that there are no Canadian workers so he can look for foreign ones. Sometimes those foreign workers are not sufficiently qualified. This is a real danger and it is not good for Canadians who will have to use the infrastructure that is built as a result of this process.
Senator Hervieux-Payette: Tomorrow morning, we will have a legal vacuum. What will we do when the fair wages act is no more? I want to see the big picture. It will mean chaos. If employers decide to pay $4 per hour instead of $15 per hour, who knows what will happen to the wages paid to agricultural workers? No Canadian will want to work for that salary or for those hours, whereas foreign workers are prepared to work 12 hours per day.
Legislation dealing with salaries usually also deals with hours of work. We are dealing with that here. Are we likely to see workdays of 12 or 14 hours as we see in some countries? Will fair wages become meaningless if workers can be found from anywhere around the world who are prepared to work for half the price? Could that happen because a bid has been submitted, workers are needed, no Canadians want to work, so it will become legitimate to use foreign workers?
Mr. Weir: I hope the minimum wage will still be paid. That will not be $4 per hour. But it could certainly go down. You are right, I think. The biggest problem is that it is possible that workers will work more than eight hours a day but will not be properly paid for doing so. I think there is a real danger of that as well.
[English]
The Chair: I have three senators who wish to be involved in second round, shorter, quicker questions.
Mr. Weir: I think you still have a first-round guy here.
Senator Gerstein: That is right; first-round guy.
Mr. Weir, I understand you are an economist with the United Steelworkers. As an economist, would you agree with a number of your eminent international economists and bond rating agencies that view that Canada has weathered the storm better than any other G8 country?
Mr. Weir: Yes, I think that is fair.
Senator Gerstein: Would you agree that employment is at a higher level today than it was at the beginning of the global turndown?
Mr. Weir: I think that is an empirical fact, yes.
Senator Gerstein: Would you agree that the government's Economic Action Plan is working for Canadians?
Mr. Weir: The Economic Action Plan encompasses many things.
Senator Gerstein: Yes; it does.
Mr. Weir: I certainly was involved in advocating a stimulus program, which the government was initially resistant to but did implement as part of the Economic Action Plan. I thought that was a very good thing.
Senator Gerstein: You are part of creating the Economic Action Plan and supporting it?
Mr. Weir: Certain elements of it; there are other elements of it that of which I am quite critical.
Senator Gerstein: You might be critical, but as an economist, what criteria would you be using to suggest — since we have seen that it has been successful within the global economy — that it is not working for Canadians?
Mr. Weir: First, I am not suggesting the whole thing is not working. I think it is a big plan and there are some elements that are working and there are other elements that are not working.
Senator Gerstein: Why would you suggest that we slow down approving Bill C-38 and delay it over years?
Mr. Weir: I see elements in the bill such as the repeal of the fair wages act that I think would be bad for Canadians.
Senator Gerstein: In return for that, you suggest we should slow down the whole process? You do not like the concept that we are getting things done for Canadians to preserve our economic future?
Mr. Weir: I guess I question the process. I do not see why this measure needs to be bound up with implementing the budget. There are a lot of things in Bill C-38 that actually are not necessary to implement the budget. I suppose that is the real question as to why the government has sort of tethered it all together and tried to ram it through.
Senator Gerstein: Is there an example in Europe that you would like to refer us to that you think is working better? Perhaps in the United States there is a process that is working better. What would you like us to do?
Mr. Weir: Like a process to approve budget legislation? What is the question?
Senator Gerstein: You are suggesting that you do not like the process. What process would you like to refer us to in Europe or in the United States that you think is working better than what we are doing in Canada?
Mr. Weir: I guess I would refer back to the process which we typically use this in this country, which is to pass budget implement bills that actually implement the budget rather than budge implementation bills that budget the whole government's agenda.
Senator Gerstein: How do you suggest that we can use typical approaches to approving the budget when we are undergoing the strains in the global economy of today?
Mr. Weir: I thought you said we have weathered those strains so well that we should not be under such panic.
Senator Gerstein: We are continuing to do so, that is right, by doing these types of things. Thank you.
The Chair: That was our former deputy chair. He has an interesting cross-examining technique, but I will allow you to finish any of those points you were trying to finish when you were cut off previously, Mr. Weir.
Mr. Weir: I think I have made the point. I am certainly not objecting to every single element in the omnibus budget bill, but I am objecting to the repeal of the Fair Wages Act. I think we should be able to debate that measure on its own terms rather than say, "Pass everything because Canada has done less badly than Greece'' or something.
The Chair: Any reply, Senator Gerstein?
Senator Gerstein: I have nothing further. I mean, this is an ongoing challenge.
Senator Eaton: I wanted to counter the assumption from Mr. Weir that wages would necessarily go down. They could go up as well.
The Chair: You are satisfied that has been addressed?
Senator Eaton: I am saying it now, yes.
Senator Buth: I want to confirm that your understanding is that by repealing the Fair Wages and Hours of Labour Act, this now leaves it up to the provinces and territories to regulate wages and working conditions — which they do already — and that would essentially require a minimum wage be paid?
Mr. Weir: The case is already that provinces regulate it and set the minimum wage, so I do not think that this act changes any provincial legislation.
Senator Buth: Right, but for construction contracts, repealing this act puts the responsibility on the provinces — which they are already doing — to put the floor in, in terms of minimum wage and the working conditions. They all have programs all across this country. Repealing the act essentially says that construction workers and federal contracts will have to follow provincial regulations. Is that right?
Mr. Weir: Certainly federal construction contracts would have to follow the kind of minimum provincial regulation. What would change is that contractors would no longer have to pay whatever the prevailing wage is, which is typically a lot more than the provincial minimum wage.
Senator Buth: Except it is not right now. We just had that conversation about fair wages, which is minimum wage.
Mr. Weir: I think "right now'' were key words in that question. We have quite a strong construction sector at the moment, but certainly we have experienced times in history where federal public works are an important part of the economy, there is a lot of unemployment and not a lot of demand for construction workers. At that point, the floor established by the Fair Wages Act has been quite important and could be in the future.
Senator Buth: Can I just confirm again how many construction industry workers you represent?
Mr. Weir: We represent very few. I am not purporting to speak for them here today. I have been quite clear in referencing information I have gotten from colleagues who work for the building trades unions. I suppose I am giving you a broader labour perspective on the Canadian economy.
Senator Runciman: I wanted to go back to one thing that Senator Ringuette was talking about, which is how you arrive at this level of wage. It strikes me that if you are looking at an average across the Ottawa region, for example, the unionized contractors' wages for their employees tend to be higher. That is going to distort the average. It gets back to what I was talking about earlier in terms of presenting a competition barrier. That will be distorted because of the higher wages that non-union companies are not paying their workers.
I think it gets back to the main point that because of the much higher unionized wages, arriving at this so-called fair wage is going to make it more difficult for smaller firms to bid successfully on these contracts.
Mr. Weir: I suppose I would not accept the characterization that it is a distortion. I think an average is taking all the wages out there and coming up with the mean.
Again, I reiterate that smaller firms are at no disadvantage; they simply have to live up to the same floor as anyone else. They are just not able to gain any kind of unfair advantage by undercutting prevailing wages.
Senator Runciman: I would argue that it also makes it less fair for taxpayers in this country with respect to this limitation placed on the amounts of money being paid to the workers on any given federal contract.
I think you agree that this legislation was brought in during the height of the Great Depression. It was a time of high unemployment and we did not have the provincial labour laws to protect employees that are in place today. In terms of impact and relevance, would you agree it has decreased substantially since 75 years ago in the midst of the Great Depression?
Mr. Weir: I will note that although that was the history of the legislation, it was significantly updated in 1985 when we had a radical socialist Prime Minister, Brian Mulroney. It was thought to be relevant at that time.
Senator Runciman: Did you support him?
Mr. Weir: I was not allowed to vote then.
Senator Runciman: We continue to disagree. Thank you.
The Chair: Thank you. You are continuing to disagree.
As a point of clarification, Mr. Weir, going back to Senator Buth's line of questioning, the Canada Labour Code continues. That is not being done away with. My understanding would be that it applies to federal contracts.
Mr. Weir: Not necessarily. The Canada Labour Code applies to federally regulated industries, which would not be construction. As other senators have hastened to point out, construction is subject to provincial labour legislation but not the Canada Labour Code.
The Chair: I am trying to establish how much of a retreat in the construction marketplace is doing away with this legislation, with the federal government passing it over to the provinces? In this legislation that we are proposing to do away with, it also applies now to non-federal government contracts where federal money is involved in the construction work. Is that a clear retreat? When we do away with this, is the federal government getting out of that business entirely?
Mr. Weir: Certainly, the federal government is taking away a floor that it has in place right now. I see that as a significant step in the wrong direction. Yes, the federal government would essentially be withdrawing from the area.
The Chair: Essentially leaving that to the provinces in each instance, as Senator Buth pointed out.
Mr. Weir: Yes. I would add that it is mostly all regulated by the provinces right now, but the federal government has — quite wisely in my judgment — said that where federal money involved, contractors need to adhere to a somewhat stronger standard.
The Chair: That is helpful.
Thank you very much, Mr. Weir. We appreciate your being here and sharing your experiences with us.
Mr. Weir: I thank you for your time and for having me. I appreciate the invitation.
The Chair: I will let Mr. Weir get his papers together and then I will bring you up to date on what we will be doing the rest of the week. This meeting is now concluded.
(The committee adjourned.)