Cornwall Ontario — The provincial interest arbitration system is hurting Ontario’s economic competitiveness, according to the Cornwall Chamber. The Chamber is calling on the provincial government to reform the arbitration system to ensure that arbitrators consider municipalities’ capacity to pay in their decisions.

The interest arbitration system is the only legal process available to municipalities to settle contract negotiation disputes with essential municipal workers, such as police, firefighters, and some paramedics.

Problematically, interest arbitration decisions give little consideration to local fiscal conditions. Instead, arbitrators tend to replicate agreements from other communities. “This is problematic,” says Kevin Hargreaves, President. “Replicating the salary and benefits from Toronto, for example, to Cornwall, doesn’t consider the differences in communities’ capacity to pay.”

Partially as a result of interest arbitration, emergency service costs are growing more quickly than the Consumer Price Index as well as the average of other public sector workers, including nurses and teachers. High interest arbitration awards mean municipalities are forced to either increase taxes and/or reduce services.

“Competitive tax rates and quality public services are key to economic development and prosperity, and will help Ontario return to fiscal balance,” says Hargreaves. “Interest arbitration is hurting municipalities’ economic competitiveness, and is ultimately hurting Ontario’s competitiveness.”

The Chamber is urging the provincial government to modify the interest arbitration system by requiring arbitrators to provide, in a timely manner, clear assessments and rationale for their decisions. They are also urging the government to broaden the definition of the ‘ability to pay’ criteria used in interest arbitration decisions, to include economic and fiscal environment, and productivity criteria.

Returning to fiscal balance is one of the priorities outlined in the Ontario Chamber of Commerce’s five-year economic agenda for Ontario, Emerging Stronger 2013.