Ontario NDP leader Andrea Horwath recently signed a petition at change.org to end the Tarion monopoly. Tarion is an arms-length agency of government, a “Delegated Administrative Authority” (“DAA”) with a monopoly in new home warranties and responsibility for regulating the new home building industry.
In her statement accompanying her signature, Ms. Horwath explains why she’s in favour of ending Tarion’s monopoly status: “The NDP has long recognized that Tarion is an unaccountable monopoly that protects the developers who control it, and not the home buyers who pay the bills. Other provinces give consumers a proper choice when it comes to home warranty protection, and it is time for Ontario to catch up.”
Many MPPs of both the NDP and PC parties have also signed.
Premier Wynne, on the other hand, has remained silent on all things Tarion, refusing to meet with or respond to consumers who’ve written to her about “horror stories” they’ve experienced with Tarion. A revolving door of Liberal ministers during the last 12 years has brushed aside problems, saying they’re “working with Tarion“, while their mandate is to oversee it. Working with and overseeing are two entirely different things, but no one in government has answered concerns about this contradiction.
A recent revelation in The Toronto Star (29/03/16 by M. Regg Cohn) that Liberal ministers have “fundraising targets” does not surprise consumers who’ve raised red flags about this for years with both Premiers Wynne and McGuinty. No answer from either. It’s no secret the top donors to the governing Liberals are the building and construction industry, the same industry the government is supposed to be overseeing through its monopoly, Tarion.
The only people who seem to favour the monopoly model are government officials and Tarion executives. Tarion’s former board Chair, a real estate lawyer and 10-year Tarion board member said in an interview with The Ottawa Citizen (May 15, 2015): “The model that we fall under is a really good one. It allows for efficiency (…) and keeps the government’s nose out of doing things.” That’s the problem: keeping the government’s nose out of doing things, like the butcher inspecting his own meat.
No economics textbook or any concrete examples we’ve been able to find can demonstrate that monopolies benefit consumers. Here’s the Wikipedia definition:
“In economics, a government-granted monopoly is a form of coercive monopoly by which a government grants exclusive privilege to a private individual or firm to be the sole provider of a good or service; potential competitors are excluded from the market by law or regulation.” The words “coercive” and “privilege” set off alarm bells with many consumers. Alberta, Manitoba, and B.C. all have gone to the multiple-provider model for new home warranties. There, the regulatory function is the responsibility of government, not the provider.
Premier Wynne herself seems to be no fan of monopolies, however, since she was quoted in The National Post in April 2015 as saying: “the days of monopoly are done.”
Tarion is not only a monopoly, it’s also exempt from oversight by the Auditor General and the Ombudsman of Ontario, and all its executive salaries are secret. This seems very outdated. Response to the petition at change.org to #EndTarionMonopolyNOW indicates consumers want choice, and independent regulation of the industry.
What may change the landscape is the recent scandal revealed in March this year regarding political fundraising. The current Wild West rules are to be significantly reformed by January 2017. This means generous donations the government has enjoyed from the building industry will be hopefully banned. This may level the playing field for consumers and reduce the influence of big corporations on public policy-making.
Before this political fundraising scandal was revealed in March 2016, the Minister responsible for Tarion had announced a wide-ranging review of Tarion by a respected Ontario Superior Court Judge, J. Douglas Cunningham. Public complaints and pressure from Opposition MPPs had been mounting for years. The review was seen at the time either as a political stalling tactic, or a way to back into reforms the building industry may find uncomfortable.
Again at that time, Andrea Horwath hit the nail on the head. In a statement to The Toronto Star (05/11/2015) she explained: “The review is not necessary. The problems are rampant. If the government doesn’t know what’s wrong with Tarion yet, after all the private members bills and all the criticisms we’ve been raising, then they simply have been turning a blind eye to a very bad situation.”
The government’s excuses for turning a blind eye to problems with Tarion for over a decade may have run their course. The tide seems to have turned on the outdated monopoly model. Tarion is finally under the microscope of a seasoned judge.
Sometimes a perfect storm, a confluence of unrelated events, produces unexpected results. Sometimes, as the Dutch saying goes, the shore stops the ship.