A “Made-in-Canada” Purchasing Policy

Governments and not-for-profit institutions funded by governments spend tax dollars in order to deliver the public services that are needed across Canada. Governments of all levels spend money for repairs and construction. They buy professional and financial services. They are significant purchasers of pharmaceutical drugs, and they consume large quantities of printing and publishing services. They account for 21% of all wages in the country, and 29% of other income earned by workers, such as pensions and benefits. In fact, public sector spending represents about 23% of the value of all goods and services produced in Canada. That’s a lot of purchasing power!

In 2008, local governments spent $74.3 billion. Most of these expenditures went to support the production of high quality services by public sector workers, but a lot went to purchases from private sector suppliers:

• Transportation and Communications – 21%
• Environment – 17%
• Protection – 16%
• Recreation and Culture – 12%
• General Government Services – 10%
• Social Services – 9%
• Housing, Health, and Other Expenditures – 11%
• Free trade Deals (like NAFTA) Won’t Let Us Buy Canadian?

Wrong!

A few days before Barack Obama made his first visit outside the United States to come to Ottawa early in 2009, the Canadian government suggested that the United States was not abiding by its NAFTA and WTO obligations because it had linked $900 billion in stimulus spending to “Buy America” purchasing policies.

The problem with the government’s campaign was that it was based on false assumptions. In fact, “Buy American” policies go back many years, and Chapter 10 of the North American Free Trade Agreement (NAFTA), which deals with procurement issues, clearly states that governments are permitted to support national purchasing policies.
The Procurement Chapter does not limit the use of “any form of government assistance, including co-operative agreements, grants, loans, equity infusions, guarantees, fiscal initiatives, and government provision of goods and services to persons or state, provincial and regional governments.”

As  well, any state or municipal government in the U.S. is entirely within their rights under NAFTA to dedicate their spending to goods and services produced in the U.S. The same goes for Canada.

The recent Canada-U.S. deal on government procurement placed some unfortunate limits on provincial procurement but will not apply to municipalities after the temporary federal stimulus program expires.

Governments should use stimulus funds to help create jobs. Tax dollars should be used to strengthen our communities and secure the livelihoods of workers in Canada.  Taxes paid by Canadians should be spent in Canada to buy Canadian goods and strengthen public service delivery.

Purchasing Policies

One area where we can confront the economic crisis at the local level, is by working to have municipal councils adopt “Made-In-Canada” purchasing policies. These would create local jobs now and support our communities far into the future.

Many municipal councils have adopted, or are in the process of passing, the CLC “Made-In-Canada” procurement policy. In Ontario alone, eight municipalities, including St. Catharines and Windsor, have passed or are about to pass such policies.

Municipal councillors and local activists should study and then oppose the new and proposed provisions of the Agreement on Internal Trade that are poised to take away remaining mechanisms by which provinces support “Made-In-Canada” production.

Some municipal governments have used the excuse of budget shortfalls to contract out, seek “alternative” service delivery options, establish competitive bidding within the public sector, agree to public-private partnerships, or extend privatization in other ways. These are not what we are proposing, and they are not solutions to economic crisis. The labour movement works to support the public funding and public delivery of the services communities need. We will continue to oppose the privatization of our public services.

Increasing Canadian Content

We recognize that there are goods that municipalities need to purchase from the private sector. If these goods were to be produced in Canada, we could create good jobs here. For every $1 million of reduction in imports of goods, three new jobs could be created in the manufacturing sector.

For example, in 2007, we imported $694 million in “buses and other public transport passenger vehicles.” Displacing these imports through domestic production would create about 2,000 new jobs. Some provinces and cities have already taken action to source transit vehicle procurement in Canada.

Investments in wind power is just getting off the ground, but imports of turbines are already running at almost $200 million per year, and there is currently no Canadian production capacity of any significance.