Community Benefit Agreements: Its not what you call them that matters. It’s who benefits.

In September of 2022 Whitesand First Nation and Impala Canada signed a Community Benefits Agreement which provided a framework for their ongoing partnership, communication and consultation about Impala's palladium mine at Lac des Iles, 90 minutes north of Thunder Bay. The accord formally outlines how Whitesand's rights will continue to be recognized by the mining operation, and lays the foundation for future socio-economic benefits for the community, including jobs, education, training, and business opportunities.

The two parties said fundamental respect for the First Nation's heritage and culture, and encouraging the integration of traditional Indigenous knowledge in the operation of the mine, underlies the Agreement. The Lac des Iles mines, formerly owned by North American Palladium, is one of only two known pure palladium sources in North America. It employs over 1,000 workers and contractors and has been operating since 1993. 

This kind of milestone represents an important step forward in Canada’s resource sector. It represents a recognition of the essential role communities play in the success of any organization that plans on exploiting our natural resources. In particular we must turn our attention to sustainable solutions that leave communities better off across many dimensions both during operations and once the resource is depleted and the company has moved on.

This type of success demonstrates how a Community Benefits Agreement can bring shared value to multiple stakeholders. In contrast, in British Columbia the provincial government’s use of the term Community Benefit Agreements has given the concept a bad name.

For example, the BC Government’s Community Benefit Agreements (CBAs) that covered the construction of the Cowichan BC District Hospital, being built on the traditional territory of the Cowichan pledged members of those tribes would get first crack at training and job opportunities under the terms and conditions of CBA.

However, the catch is only workers who pay dues and belong to the Building Trade Unions (BTUs) can participate on major B.C. infrastructure construction projects such as the Cowichan Hospital that fall under the CBA framework. This structure was setup despite the fact that 85% of B.C.’s construction workers do not to belong to the BTUs. The problem is that in the Cowichan case (and other B.C. examples) the CBA is actually simply a Project Labour Agreement that grants the BTUs exclusive access to a project in exchange for certain promises (such as protection against the impact of a provincial construction strike). In one instance a Cowichan First Nations’ contractor who had been awarded work on the hospital project had permits pulled because his company did not meet the criteria under the CBA with respect to Union membership.

The Cowichan situation has received a significant amount of attention from the media and politicians as it is one of the most egregious cases of how the program’s objectives are out of step with the public interest. But therein lies the rub. The public is an important stakeholder in government sponsored infrastructure projects and often has no idea how government policies are creating discriminatory practices that serve to exclude the vast majority of workers in a given sector rather than providing work opportunities to all, and, true sustainable benefits arising from these public expenditures.

It seems this specific labour relations issue, which impacts all of us, somehow flies under the radar. It seems it is not an issue that capture people’s imaginations as being important. Possibly the underlying problems are too complex for many people to wrap their heads around. Or perhaps the hype generated by government and the BTUs regarding how beneficial these arrangements are is simply that much more effective than are the voices who are trying to correct this injustice.

For example, prior to Bill 66 in Ontario, several municipalities in the province were stuck under Ontario Labour Relations Act rules requiring all construction work be awarded to BTU contractors. This essentially created an oligopoly that reduced the number of eligible bidders on municipal work and created cost premiums that totaled tens of millions of dollars of tax payers’ money. And this unnecessary spend is a drop in the bucket compared to the restrictions under the Electrical Power Sector Construction Association (EPSCA) in Ontario which restricts all contractors on construction projects for OPG, Bruce Power and Hydro One to be BTU signatory contractors (or organizations willing to have their workers represented by the BTU during the work regardless of the union or non-union affiliation choices selected by their workers).

Ironically EPSCA was established back in the days of Ontario Hydro to protect the company from abuses that it might suffer if it were included as a participant in provincial bargaining with the BTU because of the magnitude of capital expenditures made each year. Initially EPSCA was quite effective and ensured the wage rates paid by Ontario Hydro were competitive and fair for all parties. However, after the break-up of Ontario Hydro in 1998 the effectiveness of the EPSCA model has eroded and today it is obvious that the successor entities are stuck with these restrictive practices in construction that drive up costs and ultimately have a negative impact on Ontario’s economy due to unnecessarily high costs of producing electricity.

In recent years Manitoba Hydro realized that it was faced with the same problem. Under what was known as the Burntwood-Nelson Agreements Manitoba Hydro had granted the BTUs exclusive access to megaprojects undertaken by Manitoba Hydro. After years of this practice it came to light while building the Keeyask Dam facility, that the system did not work. Without competition the BTU contractors had lost their edge and the result was wage premiums, lost productivity, significant budget over-runs and a project that could not be completed on schedule.

When Manitoba Hydro and the Manitoba government came to the realization that the restrictions imposed by the Burntwood-Nelson Project Labour Agreement not only excluded the majority of construction workers in the province from participating on a project being financed by the public (arguably unconstitutional and against the Charter of Rights) but also seriously impaired project performance. They then vowed never to enter into such an arrangement again.

The point of course is that we need to in earnest inform the public that these practices are happening, that they have a negative impact on all of us, that they hurt us in the “pocket-book”, and they are inherently unfair. The alternative is to establish an open and fair bidding process that allows all contractors to participate regardless of union affiliation or non-affiliation.

If we are going to leverage Community Benefit Agreements to ensure that public expenditures (or even private ones) are used in ways that enhance sustainable benefits for the affected communities we have to understand that the only way this can be achieved is through an open and transparent process that does not provide any advantage to a given union group.

The BTUs are good organizations that do great work in representing their members and in helping to train and develop the construction workforce in Canada. However, they represent a minority of workers in the sector and are simply not the only game in town. They absolutely must be given a seat at the table and be participants in publicly funded projects.

We all benefit when the bidding process is open and transparent and allows for competition.  With competition there are inherent incentives to be more productive, to better utilize assets and to ensure that there is a supply of skilled labour to complete the work on time and on budget. When we provide one group with a monopoly, we see costs being driven up, productivity eroded and ultimately we get squeezed on the available supply of labour. Some Unions foster a degree of labour scarcity in order to use the tight supply as bargaining leverage. 

We need the public, as a key stakeholder, to be outraged and to demand that the government end these exclusionary regulations and practices and begin to insert fairness into the procurement process. Equally we need all those in a position to make decisions regarding the letting of major project work in the construction sector to be educated in precisely how our labour market works so we can move forward with a healthier and more competitive model.