September 30, 2004
Bentley determined to win underground economy fight
Ontario Labour Minister Chris Bentley was interviewed recently about issues related to the construction industry. This is the third in a four-part series from that interview.
The Ontario government is serious about tackling the underground economy in construction and has already taken a number of steps to stem the tide of black market operators, says provincial Labour Minister Chris Bentley.
“We’re determined to do something about this to make our workplaces as safe as they should be and to recoup the $2 billion in lost tax revenue,” he said in a recent interview with Daily Commercial News. “Frankly, we can’t afford it anymore.”
Bentley said a report presented to him earlier this year by the Ontario Construction Secretariat sums up the problem and contains information that is helpful to the government.
The report concluded that the annual revenue loss to governments and the Workplace Safety and Insurance Board (WSIB) exceeds $1.5 billion annually as a result of the underground economy in construction.
The report noted that although strengthened enforcement in the construction industry has slowed the advance of the underground economy it has not halted its advance in the ICI sector and a new approach to solving the problem is needed.
“The widespread prevalence of underground practices in Ontario’s construction industry constitutes an urgent challenge to public policy,” the OCS report says.
“It is imperative that the Ontario government act quickly and decisively before conditions in the ICI sector deteriorate further.”
Bentley said government takes the report seriously because the OCS represents both management and labour in the construction industry.
“The report was very helpful. It’s absolutely something we’ve been discussing in the action groups because, as I say, it starts as a health and safety issue.”
The minister said the underground economy has always been a problem in construction but it’s now costing the government too much in lost revenue and it’s hurting legitimate contractors.
“From the time I started there was a unanimous call by contractors, by contractor associations, labour groups and unions that we have to do something about the underground economy.
“It starts as a health and safety issue but its cost is $2 billion in lost tax revenue to the federal and provincial governments every year. That’s not taxable revenue, that’s taxes.
“It means that not everybody is paying their fair share and that means the ones who are paying are paying more than they should and we’re getting less services than we should.”
Bentley said the government can’t afford a thriving black market.
“We’re driving the overwhelming majority of legitimate, honest paying contractors out of business by not going after the underground economy ones.”
The labour minister also said there are a lot of people working on construction sites that don’t have the proper health and safety training and aren’t paying premiums to the WSIB.
Yet, they’re creating risks and working alongside people who are paying premiums, he said.
Earlier this year, the province announced it was taking a number of steps to combat the underground economy.
The government announced it would, in collaboration with other partners:
• Train inspectors to deal with issues related to the underground economy;
• Expand efforts to identify unregistered operators in the construction sector;
• Undertake a public awareness campaign; and
• Look to expand and improve enforcement.
Bentley said other concrete steps have been taken.
For example, the WSIB and Ministry of Labour are now working more closely to catch cheaters.
“The WSIB and the Ministry of Labour have an underground economy initiative as we speak and there’s great co-operation now between the MOL and the WSIB that never really existed before.
“We’ve got a new co-operation agreement so we can share existing information. WSIB also has an information sharing agreement with the CCRA.”
While those efforts are under way, Bentley said the government is also considering whether new legislation is needed to deal with the problem.
“We have to take a look at whether we need some legislative pieces,” Bentley said.
“That’s what’s been suggested to us by the Ontario Construction Secretariat, it’s been suggested to us by individuals, by contractor organizations, by labour organizations, saying basically: ‘You know, if you work on a construction site you should be covered by the WSIB so everybody has the same financial incentive to be safe.’”
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