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Reforming Ontario’s Broken “Interest Arbitration System”

February 13, 2014 – The Ontario Chamber of Commerce (OCC) wrote to the Honourable Yasir Naqvi, MPP, Minister of Labour on behalf of the OCC and its network of 160 local chambers of commerce and boards of trade, expressing concern over the impact that the province’s interest arbitration system is having on Ontario’s competitiveness.

As a demonstration of the importance of this issue to Ontario businesses and municipalities from across the province the Greater Oshawa Chamber of Commerce signed on to the letter along with Burlington, Oakville, Markham, Hamilton, Newmarket, and Halton Hills from the GTA and twenty-six chambers from across the province from Windsor to Thunder Bay to Kingston.

Interest arbitration is the only legal mechanism available to municipalities to settle contract negotiation disputes with essential municipal workers such as police officers, firefighters, and some paramedics.

Partly as a result of interest arbitration, emergency service costs are growing much more quickly than the Consumer Price Index, and faster than the average growth rate of other public sector workers’ wages, including nurses and teachers. As a result of the costly contract settlements created by the current interest arbitration system, there is significant pressure on municipalities to raise taxes and/or reduce services to compensate.

Competitive tax rates and quality public services are key to economic development and prosperity in our communities. The current interest arbitration model is hurting municipalities’ economic competitiveness, and ultimately the competitiveness of the province.

The OCC recommended that the following changes be made to the interest arbitration system:

• streamline the process by adopting the single arbitrator model for all hearings, imposing limits on pre-hearing processes and post-hearing submissions and mandating a maximum period of one year (from the start of the process to its completion) for arbitrators to complete their work;

• arbitrators should be provided with clear, measurable criteria upon which to base their decisions, particularly regarding the “fiscal health” of the community;

• arbitrators should be required to provide a written explanation of their decisions, with clear assessments of the mandated criteria for arbitration, and must give priority to how the “fiscal health” of a community was considered when making a decision; and

• the “ability to pay” criteria used in interest arbitration decisions should be broadened to include the wider economic and fiscal environment, and productivity criteria (as recommended by the Commission on the Reform of Ontario’s Public Services).

The OCC is increasingly worried about the negative impact of unsustainable increases in emergency services labour costs on Ontario’s municipalities and the broader Ontario economy and has requested a meeting between the Honourable Yasir Naqvi and a small group of representatives of the chamber network to discuss the recommendations and how the current interest arbitration framework is impacting the business community.