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The Cost of BC’s Community Benefit Agreements

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On July 18th, 2018 the BC government announced that all new major infrastructure projects will now go through Community Benefit Agreements (CBA). The objective of CBA is to prioritize local employment, increase wages and create opportunities for apprenticeship training. As designed, it will also require workers on government projects to join specific trade unions.

While some of objectives are laudable, the government needs to be very careful. The unintended consequences could lead to sizeable tax increases for British Columbians.

What does this mean? 

  • As a result of the new Community Benefit Agreements (CBA), British Columbians could be paying significantly more for provincial infrastructure projects
  • Using an estimate from a 1994 report analysing a similar BC infrastructure contract policy, labour costs for infrastructure projects could increase up to 37.6 per cent as a result of the CBA
  • For the $1.4 billion Pattulo Bridge project, the CBA could result in an increase between $130 million to $259 million in extra costs[1]. This translates into a family of four in BC paying an extra $113 to $216 for the project
  • More broadly, all provincial infrastructure projects are estimated to cost $25.6 billion over three years[2]. With a 37.6 per cent increase to labour costs, these projects could cost $2.4 billion to $4.8 billion more, or $1,998 to $3,996 for a family of four
  • The BC government needs to ensure the new policy does not result in escalating costs for infrastructure projects and affirm the playing field is level to ensure cost-effective construction

See CFIB's Research Snapshot for more details

 

[1] Depending on the share of labour. These estimates are based on labour costs taking a share of between 25 per cent to 50 per cent of the total costs. Full calculations on attached research snapshot.

[2]  BC Budget 2018.