UNITED STEELWORKERS OF AMERICA LOCAL 9042 AND PEEL-HALTON AREA COUNCIL
CANADIAN AUTO WORKERS, LOCAL 1986
ONTARIO AND TORONTO AUTOMOBILE DEALERS ASSOCIATION
ONTARIO PUBLIC SERVICE EMPLOYEES UNION
CANADIAN AUTO WORKERS, LOCAL 524
CANADIAN AUTO WORKERS, LOCAL 707
CANADIAN UNION OF PUBLIC EMPLOYEES LOCAL 1996, TORONTO PUBLIC LIBRARY WORKERS
COUNCIL OF ONTARIO CONSTRUCTION ASSOCIATIONS
CANADIAN FEDERATION OF INDEPENDENT BUSINESS
BUSINESS COUNCIL ON OCCUPATIONAL HEALTH AND SAFETY IN ONTARIO
CANADIAN UNION OF PUBLIC EMPLOYEES, ONTARIO
ONTARIO NETWORK OF INJURED WORKERS
ONTARIO RESTAURANT ASSOCIATION
EMPLOYERS' COUNCIL ON WORKERS' COMPENSATION
UNITED STEELWORKERS OF AMERICA, LOCAL 1005
UNION OF INJURED WORKERS OF ONTARIO
BOARD OF TRADE OF METROPOLITAN TORONTO
ONTARIO HOTEL AND MOTEL ASSOCIATION
AUTOMOTIVE PARTS MANUFACTURERS' ASSOCIATION
GREATER PETERBOROUGH CHAMBER OF COMMERCE
L.A. LIVERSIDGE AND ASSOCIATES LTD
HUMAN RESOURCES PROFESSIONALS ASSOCIATION OF ONTARIO
CONTENTS
Monday 4 December 1995
An Act to amend the Workers' Compensation Act and the Occupational Health and Safety Act, 1995,
Bill 15, Mrs Witmer / Loi modifiant la Loi sur les accidents du travail et la Loi sur la santé
et la sécurité au travail, projet de loi 15, Mme Witmer
Subcommittee report
United Steelworkers of America, Local 9042
Ron Collie, representative
Durham Region Labour Council
Tim Eye, president
Canadian Auto Workers, Local 1986
Tom Rooke, president
Ontario and Toronto Automobile Dealers Association
Bill Davis, director of government relations
Ontario Public Service Employees Union
Robert Rae, chair, Ministry of Labour employee relations committee
Wayne Ireson, member, Ministry of Labour employee relations committee
Canadian Auto Workers, Local 524
Rick Whatley, benefits representative
Canadian Auto Workers, Local 707
Bruce Gay, representative
Canadian Union of Public Employees, Local 1996, Toronto Public Library Workers
Janet Walker, president
Steve Burdick, chair, library workers' committee, CUPE
Council of Ontario Construction Associations
David Frame, executive vice-president
Ontario Federation of Labour
Ken Signoretti, executive vice-president
Ross McClellan, legislative director
Canadian Federation of Independent Business
Catherine Swift, president
Judith Andrew, director, provincial policy
Business Steering Committee
David Hambley, vice-president, human resources, Noranda Inc.
Dr Albert Cecutti, vice-president, environmental services, Falconbridge Limited
Business Council on Occupational Health and Safety in Ontario
Mark Gabinet, director of safety and environment, BICC Phillips Inc
Canadian Union of Public Employees, Ontario
Ralph Carnovale, workers' compensation specialist
Ontario Network of Injured Workers
Karl Crevar, president
Ontario Restaurant Association
Paul Oliver, president
United Transportation Union
Dennis Schweitzer, provincial chairperson
Employers' Council on Workers' Compensation
Jim Yarrow, chair
John Neal, member and consultant
United Steelworkers of America, Local 1005
John Martin, president
Union of Injured Workers
Phil Biggin, executive director
Carmine Tiano, community outreach worker
Continued overleaf
Continued from overleaf
Employers' Advocacy Council
Shirley Wylie, provincial vice-chair
Patricia Biggs, acting Toronto chapter chair
Sherri Helmka, acting executive director
Injured Workers' Consultants
Marion Endicott, representative
John McKinnon, representative
Orlando Buonastella, representative
Board of Trade of Metropolitan Toronto
Vincent Johnston, member, labour law committee
David Brady, member, labour law committee
Durham Region Injured Workers
Rick Williams, president
The Ontario Chamber of Commerce
Stephen Raymond, chair, employer/employee relations committee
The Ontario Hotel and Motel Association
Rod Seiling, president
Automotive Parts Manufacturers' Association
Ken MacDonald, director, policy development
Greater Peterborough Chamber of Commerce
Don Frise, general manager
L.A. Liversidge and Associates Ltd
Les Liversidge, president
Human Resources Professionals Association of Ontario
Michael Failes, chair, provincial government affairs committee
STANDING COMMITTEE ON RESOURCES DEVELOPMENT
Chair / Président: Gilchrist, Steve (Scarborough East/-Est PC)
Vice-Chair / Vice-Président: Fisher, Barb (Bruce PC)
*Baird, John R. (Nepean PC)
*Carroll, Jack (Chatham-Kent PC)
*Christopherson, David (Hamilton Centre ND)
*Chudleigh, Ted (Halton North/-Nord PC)
*Churley, Marilyn (Riverdale ND)
*Duncan, Dwight (Windsor-Walkerville L)
*Fisher, Barb (Bruce PC)
*Gilchrist, Steve (Scarborough East/-Est PC)
*Hoy, Pat (Essex-Kent L)
Lalonde, Jean-Marc (Prescott and Russell/Prescott et Russell L)
*Maves, Bart (Niagara Falls PC)
*Murdoch, Bill (Grey-Owen Sound PC)
*Ouellette, Jerry J. (Oshawa PC)
*Tascona, Joseph N. (Simcoe Centre PC)
*In attendance / présents
Substitutions present / Membres remplaçants présents:
Castrilli, Annamarie (Downsview L) for Mr Lalonde
Grimmett, Bill (Muskoka-Georgian Bay/Muskoka-Baie Georgienne PC) for Mr Chudleigh
Martel, Shelley (Sudbury East/Sudbury-Est ND) for Ms Churley
Pupatello, Sandra (Windsor-Sandwich L) for Mr Lalonde
Clerk / Greffier: Arnott, Douglas
Staff / Personnel:
Fenson, Avrum, research officer, Legislative Research Service
McLellan, Ray, research officer, Legislative Research Service
R-31
The committee met at 1007 in committee room 1.
SUBCOMMITTEE REPORT
The Chair (Mr Steve Gilchrist): I call the meeting to order. We will now proceed. Our first order of business is to approve the subcommittee report.
Mr Dwight Duncan (Windsor-Walkerville): I'll move it.
The Chair: Moved. Seconded by?
Mr John R. Baird (Nepean): Yes.
The Chair: All in favour? Carried. That approves the sitting times that allow us to now hear from our first deputants.
WORKERS' COMPENSATION AND OCCUPATIONAL HEALTH AND SAFETY AMENDMENT ACT, 1995 / LOI DE 1995 MODIFIANT LA LOI SUR LES ACCIDENTS DU TRAVAIL ET LA LOI SUR LA SANTÉ ET LA SÉCURITÉ AU TRAVAIL
Consideration of Bill 15, An Act to amend the Workers' Compensation Act and the Occupational Health and Safety Act / Projet de loi 15, Loi modifiant la Loi sur les accidents du travail et la Loi sur la santé et la sécurité au travail.
UNITED STEELWORKERS OF AMERICA LOCAL 9042 AND PEEL-HALTON AREA COUNCIL
The Chair: Good morning. My apologies to the United Steelworkers of America, Local 9042 and Peel-Halton Area Council. Is Mr Collie here? Good morning, Mr Collie, my apologies for the delay. We have a copy of your submission, thank you, and just a reminder, as we will be reminding all the groups today, that we're under a time constraint and we will be cutting off any discussions or questions and answers at 15 minutes. You're free to take as much time for your presentation as you wish or to allow it for questions and answers.
Mr Ron Collie: I'm here representing the Peel-Halton area Steelworkers. We represent approximately 5,000 members in the Peel-Halton area, and I'd just like to make a submission to the committee based on our concerns with Bill 15.
On November 1 of this year, the government gave first reading to Bill 15, an act which, in effect, gets rid of the bipartite board of directors at the Workers' Compensation Board and basically criminalizes the workers' compensation system.
This bill, from what we can see, is strictly an ideological way of the way this government views working people. Bill 15 does absolutely nothing to improve the financial situation of the WCB or the services provided to injured workers or employers. It is little more than a move to create a crisis in the workers' compensation system so the government can justify cutting benefits for injured workers this coming spring.
The government will replace the bipartite board of directors with a multi-stakeholder board, even though it was a multi-stakeholder board which drove the compensation system to its lowest funding position ever in the early 1980s. In fact, in 1985 the WCB had on hand only 31.8% of the money it owed to injured workers. Today it has more than 37% of that money.
The bipartite board of directors gave workers an equal say in how the board was run. In fact, the bipartite board had made some incredible progress, bringing new claims costs down dramatically, reducing the board's overhead and returning more disabled injured workers to the workplace than ever before. It enjoyed its first operating surplus in 10 years and reduced the unfunded liability for the first time in its history, and the working members of the WCB board of directors endorsed an internal financial reform package which would have paid off the unfunded liability by the year 2014.
Although the bipartite structure may at times not work, it has been proven by the health and safety agency, where over 300 decisions were reached using a bipartite structure and only once did an issue ever go to a vote.
We believe that the way a bipartite structure can work is when there is a neutral third party who is a good strong facilitator who can bring the parties to a consensus in times of deadlock.
The main reason for a bipartite structure is that it is fair. In the workers' compensation system, there are only two true stakeholders, the workers and the employers, and only those two groups should be on a board of directors.
So the question is, why fire the bipartite board? The Minister of Labour has fired a board of directors that has made tremendous progress. She probably doesn't know about the board's progress. The Common Sense Revolution made a commitment in 1994 and she's going to carry it out whether it makes sense or not: once again an ideological move, just as it was when she fired the bipartite board of the Workplace Health and Safety Agency.
I don't think this government believes in giving workers an equal share of the responsibility, yet it is workers who suffer the carnage of workplace accidents. Neither will give the Workers' Compensation Board over to the employer community. Presumably it will have more Conservatives on the WCB and the unfunded liability will again resume its climb at the expense of workers, because, although they criticize the unfunded liability in public, privately I believe employers enjoy their ability to offload their current liabilities to future employers.
In August 1995, the minister wrote a letter describing her government's proposals for WCB change. Basically, she described the WCB components of the Common Sense Revolution. Only about half of the changes proposed in her letter ended up in Bill 15. The other items, however, are gone but not forgotten, and I suppose we'll have to wait until the spring to find out what other havoc this government is going to wreak on workers in this province.
The second reason for Bill 15 that we can see is the government's contention that the WCB is being defrauded by injured workers in this province. From my own experience in dealing with workers' claims that resulted in overpayments, the overpayments were either reimbursed to the board or the overpayment decision was reversed. All the overpayments were created due to errors by board staff. None were because workers deliberately tried to defraud the board.
Again this government is creating a crisis in an attempt to mask the real fraud and abuse at the WCB, that being the fraud perpetrated by employers. The following is a short list of some of the financial facts that I believe this government should look at.
First of all, there are more than 55,000 employers who owe the WCB $430 million in outstanding assessments and penalties.
The NEER and CAD-7 programs were originally intended to promote workplace health and safety. However, these programs have loopholes which have been manipulated by employers to such an extent that they drain the WCB of more than $200 million annually.
The second injury and enhancement fund is another program being constantly abused. In over 90% of the workers' claims I handle, I see employers applying for relief under the second injury and enhancement fund, and in the majority of claims, the reasons behind the applications are frivolous and have no factual evidence. There is simply a supposition that something must be prolonging the claim, and in a great number of cases the board automatically grants 50% relief.
In 1994, more money was paid out in NEER rebates to employers than was paid to injured workers in short-term disability claims. In that year, $337 million was paid to workers in short-term disability claims while employers received $359 million in rebates.
There are an estimated 20,000 employers who legally should be registered with the WCB and contributing to the system who continue to go undetected.
Some 700,000 Ontario workers are denied WCB coverage because their employers have been successful in lobbying governments to exempt them from the system.
It is a fact that employer WCB premiums have steadily declined from a target of $3.34 per $100 of payroll in 1993 to $3 per $100 in 1995.
Now, with regard to possible future privatization of the WCB, the WCB spends approximately 17% of its expenses on overhead, while a private insurance company like Sun Life of Canada spends over 30%. This is a big difference in administrative costs.
Given the dramatic turnaround in the board's financial situation and the hundreds of millions of dollars being sucked from the system through employer fraud and abuse, how can this government justify its drive in this bill to fire a board of directors that was working and replace it with a multi-stakeholder board that has been proven in the past not to work, and to create the impression that injured workers in this province are nothing but a bunch of criminals?
To sum up, this bill is just another attempt by this government to attack the most vulnerable members of society in this province so as to pay back the employer contributors for the financial support received during the recent election campaign. There is no justification for what this bill does to the board and the act.
The board is in the best financial position it has ever been in, with $6.8 billion in the bank. It is nearly twice as efficient as private insurance companies. It is enjoying an operating surplus. Employer premiums have decreased dramatically. Hundreds of millions of dollars in employer abuse and fraud could be ended simply. Overhead costs have been slashed, and the implementation of internal financial reforms could eliminate the unfunded liability. The bipartite board of directors had the financial situation at the board in hand and was beginning to turn the ship around. This could not be done overnight by the bipartite board and will not be done overnight by this government and a multi-stakeholder board. To blame injured workers for the board's financial problems is the government's way of hiding from the public the true criminals of this province, that being those employers who are defrauding and abusing the workers' compensation system.
There's one important history lesson that needs to be remembered here: Injured workers in this province gave up the right to sue their employers for workplace injuries in order to get a fair compensation system that does not treat them like criminals. By giving up this right, many smaller businesses may have been saved from possible financial ruin.
I think this government should reconsider the path it is following before workers and organized labour are forced into actions that would be detrimental to labour relations in this province.
The Chair: Thank you, Mr Collie. Questioning will begin with the opposition.
Mr Duncan: I noted you were talking about the performance of private insurers versus publicly owned insurers. I guess you're concerned that the government is going to eventually try to privatize the Workers' Compensation Board. I wonder if you'd take a moment to elaborate on your findings. I found them very interesting. You were talking about overhead costs and so forth.
Mr Collie: There have been studies done by the Ontario Federation of Labour which have looked at administrative costs of the board and also of private insurance companies like the one I mentioned, Sun Life, and the administrative costs seem to be greater for private insurance companies.
Another thing that needs to be remembered is that private insurance companies, their sole interest is based on profit, while a publicly run Workers' Compensation Board, its interest should be in compensating workers for their injuries. I don't believe private insurers would have that same interest in mind.
Mr Duncan: You noted some of your concerns about the offences sections of the bill. The offences sections, as you know, deal both with employers and employees in separate parts, and in your text you advocate not going forward with all of the offences sections, all of part V of the bill?
Mr Collie: I think the act as it is right now has sufficient provisions for offences. I don't think there's any need for changes.
Mr Duncan: Either on the employer or employee side?
Mr Collie: Yes, both.
Mr Duncan: So you would just advocate not going forward with part V of Bill 15?
Mr Collie: That's correct.
Ms Shelley Martel (Sudbury East): Mr Collie, I want to focus a little bit on the crisis you talked about early on in your brief where you said in this case the crisis of the unfunded liability, that is, the crisis that the government is trying to promote. In relation to that, you talked about the assessment rate for employers and you have said that this has been decreasing steadily since 1991 and "the 1995 average rate is at 1988 levels." Given that assessment rate and given the state of the unfunded liability right now and the crisis the government is trying to promote, what do you think about the government's action to decrease employers' assessment rates by another 5%?
Mr Collie: I believe that it's only going to add to the board's costs, in particular if you take into account the possible decrease in workers' benefits by 5%. Decreasing the employers' assessment by 5% I believe will only add to the costs at the WCB board.
Ms Martel: So how serious do you think the crisis is that the government is claiming is behind this bill?
Mr Collie: I don't think it's as serious as they're claiming. The unfunded liability is not -- it is, in a sense, a dollar figure, but it's based on payments that the board has to make over the next how many years, I don't know. There's lifetime pensions taken into account as well. I don't think it's a crisis in as great a proportion as the government has created.
1020
Ms Martel: Do you think the fact that for the first time under the bipartite board the unfunded liability actually came down would have been reason enough to believe that the folks who were doing the work that they were supposed to, and had they been allowed to continue, would have gotten the situation under control?
Mr Collie: Yes. I believe in the bipartite system. I believe it's fair and, like I said, there's two true stakeholders at the board, that being employers and workers, and those are the ones who should be on a board of directors.
The Chair: We have time for one quick question from the government side.
Mr Bart Maves (Niagara Falls): I'll try to be quick. You were talking about fraud by injured workers and said that in your experience it never happens, and when there's problems it's usually WCB's fault because of poor paperwork and so on and so forth. You then went on with a long list of fraud by employees and employers who are skipping out and not paying premiums that they should be paying to the WCB system. Then your conclusion is that the current board works, and I'm kind of puzzled by that.
Mr Collie: I think the act works, or it should work if it was implemented properly. There are provisions in the act whereby employers can be fined and whereby workers can be fined, and I believe that if the act was administered properly it would work for both workers and employers and covering penalties as well.
Mr Maves: It's not being administered properly now then?
Mr Collie: I don't believe so.
Mr Maves: But you're in favour of maintaining the current board?
Mr Collie: I believe in maintaining the current board of directors and I believe in maintaining the current act, but I believe it should be administered more fairly.
The Chair: Thank you very much, Mr Collie. I appreciate you taking the time to come before us and appreciate your very detailed submission as well.
DURHAM REGION LABOUR COUNCIL
The Chair: Our next group up will be the Durham Region Labour Council, Tim Eye. Good morning. Again, just a reminder that we're under a time constraint here today to try to get all 72 groups in during the two days, so we'll be limiting discussion.
Mr Tim Eye: Well, I understand that this government does have a mandate to rush things through and sometimes, in my opinion, I believe in haste there's waste.
My name's Tim Eye and I'm president of the labour council in the region of Durham. I represent 51 local unions whose approximate population is about 40,000 unionized workers. I would like to bring to your attention that due to the short notice I was not able to prepare a presentation. However, I do have some notes from the federation of labour and the CAW national union; I am a member of both.
I would like to restrain my comments to the fact that presently there are 55,000 employers that currently owe around $400 million in unpaid assessments and penalties, and as many as 20,000 employers across Ontario haven't even bothered to register with the WCB in spite of their legal obligation to do so. I'd also like to point out that in its report to the royal commission, the office of the worker adviser estimated that the WCB can save money or increase revenues by $500 million without any reduction in benefits to injured workers.
I would also like to make a notation that I am an injured worker. I've been hauled out of the General Motors assembly plants twice on stretchers and I'm left with a permanent disability. I can't even play catch with my son or my daughter. So I speak from personal experience, and if you want to ask some questions later and have some comments as to a little history of how I got involved in the trade union movement, I'd be happy to discuss it.
The WCB system is not in crisis. The unfunded liability is not a debt. The unfunded liability represents the present cost of future payments owed to injured workers by their employers for present claims. The WCB is not bankrupt; it has more than $6 billion in assets. In fact, in the past employers have opposed a fully funded system on the basis that they did not want a fund of billions of dollars in the control of the board, but instead wanted access to that money for current investment under their own control. Now they complain about a crisis and this government is using this false understanding of the financing of the compensation system to attack workers by reducing their benefits.
The purpose clause, section 0.1 amending the act: labour's position is there's no need for further financial accountability language in the act. The present language is adequate and it should be enforced and thus this change should be opposed. The focus of the act should be on providing benefits and services for injured workers, and money should be saved by means of worker-employer cooperation on health and safety and return-to-work programs. Proactive health and safety committees work.
I would refer you to a submission that I made on Bill 165, through the Hansard. In there, I referred to the health and safety committees in the General Motors workplace. I'm a carpenter at General Motors and we just had a massive retooling in General Motors' car plants without any lost-time accident to the skilled trades workforce in the workplace, but that's only because of vigorous and proactive health and safety committees in the plants working with the workers and the employers to make it a safe place to work. They do work if there's cooperation.
The labour position: WCB already has the tools at its disposal to deal with the small number of worker fraud cases. There is no need for a whole new set of offences targeting workers. WCB should put its resources into pursuing employers who are ripping off the system.
The new board of directors: The labour's position there is the bipartite board of directors gave workers an equal say in the governance of the Workers' Compensation Board. It recognized the primary role of the two workplace parties. It was a structure that would have allowed for solving the system's problems without reducing worker benefits or services. We should oppose the idea of a multipartite board and call for the restoration of the bipartite board, including injured worker representation.
If you want to ask somebody what it's like going through the circus of red tape that's through -- in the board policy and how it's enacted from a worker's perspective, maybe you should ask an injured worker.
Interim governance of the board: The labour position is that we should strongly opposed the dismantling of the bipartite board of directors, and the position of labour in the region of Durham is such. We should also oppose the illegal firing of the board members and oppose the unprecedented use of legislation to legalize illegal acts after the fact.
Memorandum of understanding, section 13, replacing subsections 65.2(1) and (2) of the act: The labour position -- we should oppose the use of a memorandum of understanding to dictate the government's agenda to the Workers' Compensation Board. It's a separate agency, set at arm's length from government, and I'm sick and tired of having to come down here and advocate on behalf of people who are getting maimed, mangled and murdered in their workplace just for the sake of one government of the day making a political football out of this issue. We should have fairness and respect to the workers whom I represent in Durham.
I demand that we should have the royal commission fully reinstated with all its participants to carry on the work that it was initially legislated to do by the previous government of Ontario so that the people of Ontario can be heard, and not just the board of trade, the chamber of commerce and labour unions. We should allow the opportunity for full public debate and disclosure on this issue. It is a very contentious issue, it is very complex and it's important that everybody get an opportunity to participate in it and to allow for three days of hearings for organizations that are used to making depositions to government. It's important that we speak to the people, that you ask the people what they think. To simply say, "Well, we have a mandate because of our election of six months ago" -- when you start rifling through all the dotted i's and crossed t's and commas and parentheses in the legislation and how it actually affects them, it's insane. It isn't just. It isn't democracy. How can you call it just and democratic government when you ram something through in a matter of days or hours or less than several weeks? I just can't understand it.
The labour position on the memorandum of understanding is that we should oppose it for the very reasons I just gave. While we support ordinary audits that ensure the Workers' Compensation Board is accountable for its spending, we should oppose the idea of government-ordered, value-for-money audits. Any review of the Workers' Compensation Board should be done by bipartite review teams who will thus be accountable to the workplace parties, people who are directly involved.
1030
Part V, Offences and Penalties: labour position -- we should oppose the new offences provisions. We should say the Workers' Compensation Board already has the tools to deal with fraud and should be focusing on pursuing employers who rip off the system.
As amendments to the Occupational Health and Safety Act, in addition to amending the Workers' Compensation Act, Bill 15 also proposes to amend the Occupational Health and Safety Act. Those amendments deal specifically with the government's move to disband the Workplace Health and Safety Agency. The amendments bar any litigation commenced or to be commenced challenging the government's actions in revoking the workers' health and safety agency appointments and appointing an executive director. The Ontario Federation of Labour and Paul Forder challenged the terminations in court but were unsuccessful. The court in that case based its decision primarily upon a provision in the Occupational Health and Safety Act which allowed the minister to step in and effectively take control of the operations. The courts did not address whether it is appropriate for any government to engage in a course of action and then legitimate the course of action after the fact through legislation.
Labour position is, with the firing of the Workers' Compensation board of directors, we should oppose Bill 15's attempt to retroactively legalize illegal acts. The restitution orders in section 27 adding new section 153 to the act, the amendment which specifically allows the board to pursue an order for restriction for any sum deducted by an employer for an employee's wages for compensation costs and pay the sum outlined in the order to the worker is a welcome addition to the act. This is a helpful provision for workers who have wages deducted, as in the past the board refused to pay these sums back to workers.
Labour position: This is one amendment we can support.
I would also like to point out some highlights that I picked up through the national union CAW's brief that Sister Cathy Walker and Brother Nick De Carlo of the health and safety department will be presenting. Safety is deteriorating; workers are being killed and injured. In the last number of years, workplaces across the province have been speeding up production and scheduling more and more overtime.
Mr Ouelette, I would address that you pay particular attention to this, because if you take a tour through those GM plants in Oshawa and you count heads, people who are wearing tensor bandages on their wrists, forearms and elbows, you'd know they were working in pain; and if you asked any of them, eight out of 10 of those workers would tell you they're working in pain and it's because of the increased productivity levels. General Motors has basically doubled its productivity levels in the Oshawa plants since 1995 and out of that, because of a thing called synchronism, manufacturing and the implementation of all this tooling that I was telling you about and the changeover that the construction gangs put in, the workers also have to work longer hours at a higher rate of production and their bodies cannot lubricate the joints in their musculoskeletal system fast enough to prevent the wear and tear on those bodies.
Now the business community is going to come in here and they're going to demand a limit to entitlement on repetitive strain injuries, because they see through their own internal accident rates, which used to be about one in five, then it was one in four, now it's one in three in the Oshawa car plants -- I got that from the health and safety committee member in the car plant, one Brother Paul Gogan. Please refer to him in the CAW, Local 222 for any specific information coming out of the union.
I also understand that the employer community feels that it's important that we cover the cost of this unfunded liability, but I believe that the unfunded liability is just a financial burden that employers owe to the Workers' Compensation Board to pay those benefits out to workers who've been maimed and injured and worn out in their workplace.
I also would like to bring to your attention the fact that, because proactive joint health and safety committees in the workplaces work, to deny the education and the training for those committees so they can prevent accidents in the workplace, which is a tremendous financial burden to the board -- I think you will find that unforeseen chance events have been greatly reduced although the repetitive strain injury is a major issue specifically dealing with the Canadian auto workers; and General Motors, where I'm from, it is a big issue.
I would like to close my comments by thanking you for allowing me the opportunity to come in here and say what needs to be said, although I don't believe it's enough to deal with all the issues. I highlighted some of the issues I feel very strongly about and if there's anybody who has any questions, feel free to ask. Thank you.
The Chair: Thank you. We have about two, two and a half minutes; Ms Martel.
Ms Martel: I'd like to ask you to comment about the firing of the board being an illegal act. You mentioned, and I should just reinforce, that not only did that contravene legislation that was put in place under Bill 165, the bipartite board, but the government has with this legislation not only justified that firing but also said, "You can't take this to court." What do you think about a government that not only operates in contravention of a law that was passed less than about 10 months ago, but also puts into legislation right now the fact that no one can challenge that in court?
Mr Eye: I would like to bring to your attention the teachings of a carpenter of nearly 2000 years ago who preached "Love thy neighbour as thyself," and to turn your back on the worship of Mammon, okay? As far as I can see, loving thy neighbour as thyself by reducing those who are less fortunate than ourselves, who are on subsistence living, who are in bad situations, and putting them into desperate ones, and throwing tens of thousands of workers on to the unemployment rolls and to allow for room for these people to be collecting welfare benefits by reducing the benefit rate 21%, which allows for the growth of people receiving welfare -- I believe the teachings of the good Lord, saying, "Love thy neighbour as thyself." I would like to remind all of you that when he went into the temple and he upset the tables of the moneychangers -- and the moneychangers of those days are the predecessors of today's modern banking system.
To be a worker who has put his work out on to the free and open market, the labour market, to be exploited by those who profit from the work and the sweat of my brow is a system that has been in place for thousands of years. However, to base a government policy only on the interests of Mammon, the worship of money and those who control it, is anti-Christian and it's anti-democratic, because when you take a look at how many people control the big financial levers in this country, it is a very small minority of people. I would remind those of you in government and in opposition that they carry very little votes even though they may influence the media and the information that is getting out in today's society. They may control the levers, but when the wheels decide to stop turning, they will stop turning.
I think it is reprehensible that a government would even consider saying, "Well, we're going to have to invoke a retroactive law because the action that we did wasn't legal and violated a pre-existing law," and thumb their noses at a system that's been in place for a couple of hundred years. I think it's insane.
The Chair: Thank you very much, Mr Eye. We're out of our time here now but I appreciate your taking the time to come and make presentations before us today.
CANADIAN AUTO WORKERS, LOCAL 1986
The Chair: Our next group up is the Canadian Auto Workers, Local 1986. Good morning, Mr Rooke. Again, I saw you in the room here, but just in the interests of fairness we're telling all the deputations we have 15 minutes per presentation and it's up to you what amount of that time you wish to take for presentation and how much for question and answer.
Mr Tom Rooke: I'd like to take the opportunity to thank you for the opportunity to be here this morning. I find it very difficult to prepare a brief on two days' notice. I was called Thursday afternoon to be here this morning at 10:30, and it's awful difficult when you're a full-time local union president and 50% of your time is spent on workers' compensation.
Also, I'd just like to bring to the government's attention that I have a WCB hearing at 10 o'clock next Monday morning. Usually we used to get the claim files six weeks in advance so you could prepare a hearing for the injured worker. I received that claim file Friday afternoon. So I'd just like to take the opportunity to thank the government for rushing this through and allowing me not to do my job properly for the injured worker I'll be representing. If there are any hiccups in that file and I have to get any information from doctors, I will not have the opportunity now.
I want to begin our presentation today by demanding the Royal Commission on Workers' Compensation be reactivated and that the Cam Jackson, minister for workers' compensation, report rumoured to be tabled December 20, 1995, be subject to public consultation and debate before it goes to the Legislature.
Bill 15, in our opinion, is the next step of the Harris government's attack on the working people of Ontario. We are demanding the bipartite board of directors be reinstated, as this board gave workers an equal say in how the board was run. In fact, the bipartite board had made some tremendous progress in bringing new claims costs down dramatically, reducing the board's overhead, and returning more disabled and injured workers to the workplace than ever before.
We just have to check last year's annual report to see that the board is not in debt and has never borrowed money. According to last year's report, the WCB has $6 billion in savings. Employers' premiums are decreasing and now below 1989 rates. In 1993 they were $3.34; in 1995 they're $3. The board has paid more to employers in rebates, $359 million, than to injured workers in short-term disability benefits, $337 million. The WCB wrote off $173 million in unpaid debts by employers. In spite of all this, the WCB reported a surplus of $130 million.
1040
We just have to review what's expected in the Jackson report.
A three-day unpaid waiting period: The ludicrousness of this is outstanding. I'm out of a heavy metal stampings plant. We have 500-ton presses. If something in the presses fails, if the clutch goes and a worker's got his hand in there and that press comes down, the hand's gone. And now to expect that individual to wait three days because of malfunctioning equipment is just ludicrous. Workers go to work to earn a living. They don't go to work to be injured, and a lot of times the injuries aren't the worker's fault. It's because the employer hasn't maintained his equipment as he should.
The reduction of benefits by 5% or more: It's tough enough to live on 90% of your net, let alone another reduction. In some cases you get letters from the board stating that it's all right to wait up to 12 weeks for a new claim to be initiated, another point that is just ludicrous.
The reduction of employers' premiums by 5%: They're talking about this unfunded liability, and now they're going to give the employers another 5% back so the debt grows.
A review of lifetime pensions awarded before 1990: As you heard from the brother before you who has a permanent disability, he didn't ask for that injury to happen to him. He's lost a lot of his quality time that he can spend with his children. He can't play catch with them any longer, as you heard him speak. We have injured workers who face that daily and injured workers who also can't do a lot of recreational things they used to do.
There's the reduction of future economic loss awards by up to 40%, and the reduction of entitlement to compensation benefits such as back and repetitive strains, chronic pain and stress.
The government refuses to address the real fraud and abuse in the WCB system and is attempting to create a phoney crisis to make the following: More than 55,000 employers owe the WCB $430 million in outstanding assessments and penalties; an estimated 20,000 employers which legally should be registered with the WCB and contributing to the system continue to go undetected; some 700,000 Ontario workers are denied WCB coverage because their employers have been successful in lobbying governments to exempt them from the system.
With the above points taken into account and the hundreds of millions of dollars being sucked from the system by employers, how can Harris and his government justify their drive to slash benefits and attack disabled workers?
During the period of 1990-94, there were 25% less claims coming into the board, but the denials of initial entitlement were increased by 40%. With the proposed changes such as material change, we can see the denials increase even further. We are concerned with the definition of "material change." As of this point we haven't seen any definition, so are we to take this definition to be wide open to interpretation?
To follow along with this, a worker who fails to inform the board of a material change in connection with his or her entitlement within 10 days is guilty of an offence. A worker who is guilty of an offence under the act could receive a fine of up to $25,000 or a jail sentence of up to six months.
Presently an employer who fails to submit a form 7 in three days is liable for a $250 fine that is rarely enforced by the board, but with the new material change clause, the board is now intimidating injured workers not to file a claim because of this "material change" definition.
With the definition change of injury to disability, and now that you must have your accident witnessed or prove it was a direct result of your work, this is further going to tie up the adjudication process. Our question now is, if I'm on my way back to my workstation and slip on oil on the floor, falling and injuring myself, will this be covered by the board?
WCAT has traditionally been an independent body of the board. Now under the proposed changes they want to bring it back under the umbrella of the board, removing the impartial aspect of the tribunal.
We compare the unfunded liabilities as a cost the employers will have to pay in premiums for current and future injuries, such as we all do with our present home mortgages. Our mortgages are also unfunded liabilities, something that we have to take out now and pay later, so it's similar to the unfunded liabilities now facing the employers of this province.
Bill 15 on the Workplace Health and Safety Agency: Why was the Workplace Health and Safety Agency created? The agency was created to develop and deliver health and safety training programs. The creation of the agency recognized that workers and employees working together as equals is the most effective way for achieving a healthier and safer workplace.
Does cooperation in health and safety work? The agency was governed by an equal number of worker and employer representatives. The spirit of solving health and safety problems jointly resulted in the certification of close to 32,000 members of the joint health and safety committees. According to the latest WCB statistics, this training contributed to a $630-million reduction in accident claims and a 30% reduction in the number of fatalities.
Why was the agency board of directors disbanded? Labour minister Elizabeth Witmer cited two reasons: the agency's $300-million expenditure for certification training and the fact that only half the joint committee members who required certification training were trained. As a result, she revoked the appointment of the board of directors. Thirty thousand committee members have not been certified. The employers' refusal to comply with the certification training was supported by Ms Witmer when she extended the certification training deadline.
Despite Labour minister Elizabeth Witmer's commitment to occupational health and safety, documents from the Ministry of Labour reveal the government plans to make deep cuts to the ministry's operation. A leaked ministry document contains some of the following: cut the Ministry of Labour's total budget by 46.4% over the next two years; reduce inspections of larger companies with joint health and safety committees and certified members and set up preventive inspections of so-called high-risk workplaces with less than 20 employees; reduce the ministry's mediation services with respect to appeals and health and safety committees; introduce user fees to lodge appeals with the office of adjudication.
There are only 215 health and safety inspectors working in the field to protect 4.5 million workers and 300,000 workplaces.Less than 10% of industrial workplaces are inspected by a health and safety inspector. Scientific evidence shows that declines in workplace fatality and injury rates are correlated with the number of inspectors, the frequency of inspections and the frequency of penalties.
Harris's health and safety: no right to know; no right to participate; no right to refuse unsafe work.
Prevention must be at the heart of the Ministry of Labour's occupational health and safety policy. Intervention and enforcement must increase. We must remember that all workers are an accident away from an injury.
We demand that Bill 15 be withdrawn, that funding be maintained for the Workers' Health and Safety Centre, and that the enforcement of health and safety laws be strengthened.
In closing, government and employers have cut back on workplace health and safety. Serious injuries have gone up. If benefits are reduced, employers may pay lower premiums, but taxpayers pay more to cover social assistance and health care costs for injured workers.
We demand that workers' compensation remain employer-funded and be designed to compensate workers for injuries caused by or related to the workplace. We also demand that the Harris government provide the workers of this province with safety and security in the workplace, which is the right of every worker in Ontario.
The Chair: Thank you, Mr Rooke. The questioning this round will begin with the government benches.
Mr Jack Carroll (Chatham-Kent): Thank you very much for your presentation. Did I pick you up right in the beginning when you said that as a union local president you spend about half your time on WCB issues?
Mr Rooke: Over half my time.
Mr Carroll: Previous presenters have said that the red-tape burden has a tremendous impact on workers. You've suggested a reappointment of the royal commission. Some 55 employers owe over $430 million; 20,000 employers are not even signed up; 700,000 workers aren't represented; we have an $11.8-billion unfunded liability and the second-highest premiums in the country. And we don't have a crisis?
Mr Rooke: The crisis was developed by the employers. The reason I spend so much time on workers' compensation is because the majority of the employers I deal with don't send in their form 7s. Until the form 7s are sent in, the board can't act. So the injured worker's reports are in, the doctors' reports are in, and then you spend your time chasing around the employers. You call the board and you get hold of the adjudicator and they say, "Well, we're missing the form 7." You call the employer and they say, "Well, we'll get it in right away."
I've started to ask adjudication to fine the employers where I represent the members, and it's, "Well, we'll give them another week." So then you have the injured worker sitting out there for 12 weeks with no money. In some of our larger plants in our collective agreements, we've been able to negotiate clauses where if a WCB claim is held up or in dispute, they receive the equivalent of our weekly indemnity programs. So that allows them to get some money in. They sign a waiver. Then if we're successful, it comes back in.
Most of the time it takes us two years to get to a hearing, and the reason we're there is because of what's put on the forms by the employers and because of the fact that the employers don't fill out their forms.
Mr Carroll: I think the system is busted, and I think we have to fix it. Obviously, based on the things you say, it doesn't work for the workers very well either. So we think it needs to be improved and that's what we're trying to do.
Mr Rooke: I think if you lived up to the present act, the system would work fine for the workers. Under the present act, it seems that you pick and choose.
Mr Duncan: Mr Rooke, on page 6 of your statement you indicated that WCAT has traditionally been an independent body of the board and under the proposed changes they want to bring it under the umbrella of the board. How does that happen? I didn't find that in the act.
Mr Rooke: I got this information from the workers' adviser.
Mr Duncan: I think they're wrong. Bill 15 doesn't deal, to my understanding, with WCAT, except to reaffirm that the chair of WCAT will continue to sit as an ex officio member of the multi-stakeholder model.
1050
Mr Rooke: The information we received was that they were looking at bringing the tribunal back under the umbrella of the board. That would take away their independence. They would then fall under all the policies of the board. That's the information we got from the workers' adviser; it could be wrong.
Mr Duncan: One other supplementary: Has your local or have you individually been asked to make a submission to Mr Jackson?
Mr Rooke: No.
Ms Martel: You were asked earlier, if I might, Mr Rooke, as to what your thoughts were with respect to all of the things that are happening at the board: workers' payments being delayed, a number of employers who, for whatever reason, refuse to register, refuse to send in form 7 etc. You were asked whether or not, if the system isn't broken, we shouldn't fix it. Do you see anything in this legislation, frankly, that deals with the concerns you have as a union rep who spends 50% of your time dealing with WCB cases?
Mr Rooke: Not at all. If anything, I can see it increasing my time.
Ms Martel: If it were left to you, then, to take a look at Bill 15 and revise Bill 15 and deal with some of the things you see as a rep are causing a problem to the workers you represent, what would some of those changes be?
Mr Rooke: I think I'd put the royal commission back in and let the stakeholders tell you where the problems are. It's great until you face it. The penalties to the employers have to be increased and enforced. A lot of the problems we have are the fact that the forms aren't sent in; it causes a delay. We get to adjudication and there's pressure put on because of the unfunded liability, because of the threats of cutbacks at the board. So a lot of things are being denied. We're led to believe that they're being told to deny a lot of initial claims just to move it on.
The new system that's come in since October 2 on taking one step of the appeal level out is just going to clog up the system. If you had claims in prior to October 2 that you were waiting for a hearing for, like the one I alluded to before -- that claim's been waiting for a hearing for about a year and a half. Now we get a week, but we're getting all kinds of the 9,000 that were backlogged at decision review sent out to us right away and we've got 45 days to go through the file and make a decision whether we go (a) or (b). That's clogging up the system as well.
The Chair: That, I think, runs out our time, Mr Rooke. I appreciate you taking the time to come before us today and I appreciate your answering the questions as well.
ONTARIO AND TORONTO AUTOMOBILE DEALERS ASSOCIATION
The Chair: Our next presentation is from the Ontario Automobile Dealers Association. Good morning, Mr Davis.
Mr Bill Davis: Good morning. I'm Bill Davis and I'm the director of government relations for Ontario and Toronto Automobile Dealers Association. Our association represents some 1,000 new-car franchise dealers located in every major city and town across Ontario. In aggregate, we employ approximately 55,000 people. The average dealership in Ontario employs 55 to 65 individuals, and our members are indicative of the small, entrepreneurial businesses that play a major role in powering the economic engine of this province.
In 1993, under rate group 657, automobile and truck dealers, our members contributed some $16 million to the WCB; and under rate group 630, vehicle service and repairs, our industry, along with other employers of that classification, contributed $48 million to the WCB.
The auto industry retail sales and services contributed in excess of $60 million to the WCB in 1993, and they're the latest figures we have. Our members do indeed have a stake in any reform to the WCB.
The business community was not alone in pointing out the obvious reality that the workers' compensation is a system in crisis, broken both financially and structurally. The unfunded liability, as you know, stands at a staggering $11 billion and continues to grow at $2 million per day. This liability threatens both the competitiveness of the Ontario business and the long-term viability of workers' compensation itself.
The heart of the problem has been government's failure to make the organizational and regulated changes needed to foster accountability and operational efficiency in the workers' compensation system. All political parties in Ontario have recognized the extent and the nature of the problem of the WCB. It was the previous NDP government which asked the PLMAC to undertake WCB reform based on economic viability and the governance structure.
The Liberal Party, both in its election red book and its reviews of the WCB under former Labour critic Steve Mahoney, called for major structural and operational reforms. All parties recognized that the WCB was in crisis financially and structurally.
Our members commend the Minister of Labour and the Harris government for assuming decisive and corrective action as outlined in Bill 15. These reforms will address financial and governance issues and ensure that the WCB conforms to the original concepts as a vision by Sir William Meredith as that of a workplace accident insurance plan.
Our association supports the government's recommendation to replace the bipartite board with a more effective and accountable multistakeholder board of directors.
The bipartite model of labour versus management approach resulted in confrontation and paralysed effective decision-making on crucial administrative policy and financial issues. This form of government simply did not work and was aptly demonstrated at the Workplace Health and Safety Agency.
It's also interesting to note that the NDP government of British Columbia arrived at the same conclusion recently. They found it necessary to remove the WCB bipartite board of governors and replace it with a panel of administrators.
It is our contention that the new multistakeholder board comprised of representations from employers, workers, members from the insurance, medical and rehabilitation communities and others will bring a different and renewed perspective to the WCB. This will result in better and more responsive management and decision-making, as now in the cases of Alberta and Manitoba.
In our submission on Bill 165 to the standing committee on resources development, our association petitioned for fiscal responsibility and accountability at the WCB and the elimination of the unfunded liability by the year 2014.
Our members and the business community at large committed themselves to a funding strategy of increases of 15% and 10% of assessment over a six-year period that would have retired the unfunded liability by the year 2014.
Employers of the province have reduced both the number and total costs of new claims, but assessment rates have spiralled. Since 1984, the cost of new claims has decreased by 19%; overhead charges of the WCB have increased by 19%; cost of old claims, the unfunded liability, has increased by 76%; employer premiums have increased by 170%; and Bill 165's $200 supplement increased the unfunded liability by a further $1.5 billion.
Our association supports the Minister of Labour's initiative to incorporate a financial responsibility framework in the new purpose clause for the WCB. This action, in concert with the new measures requiring the WCB to provide a five-year strategic plan, a statement of priorities and their investment policies to the Minister of Labour and a legislative directive to perform value-for-money audits, will ensure fiscal accountability and sound financial management practices at the WCB.
We endorse the six principles set out in the purpose clause and are pleased to see the inclusion of the two new objectives: to "prevent or reduce the occurrence of injuries and occupational disease at work" and to "promote health and safety in the workplace."
These objectives are encouraging because they clearly indicate that the responsibility for health and safety is being returned to the WCB where our members believe it rightfully belongs.
The amendments announced on November 1, 1995, only carry out the first half of the government's commitment to reform the WCB. Our association looks forward to and will cooperate with the Honourable Cam Jackson's pursuit of economic reforms that will address the issues of benefit levels, entitlement, assessment rates and the unfunded liability.
Our members expect the government to fulfil its commitments to:
Reduce the assessment rates by 5% for schedule 1 employers as soon as possible. This action would remove present inequities in the system, enhance competitiveness and encourage investment.
Introduce a waiting period for benefits. This action will reduce substantially the number of frivolous claims, as the experience in New Brunswick has demonstrated.
Reduce benefit levels to 85% of net average earnings for new and previous claims. This action will address the issue of overcompensation. It will reduce pressure on the WCB and WCAT to give privileged treatment to groups of claimants and claims.
1100
Apply the Friedland formula to all WCB claimants.
Ensure the WCB new claims performance drives the price of the system. Improved new claims performance should result in reduced WCB assessment rates. The WCB and the government must then take action to reduce and control overhead expenditures and the cost of old claims.
Our association strongly disagreed with the provisions of Bill 165 that granted a $200 supplement for life to workers receiving a permanent disability pension and who were in receipt of a section 147(a) supplement. This act increased the unfunded liability by $1.5 billion and was a classic example of the WCB's failure to exercise fiscal accountability.
In our opinion, the supplement should be means-tested, payable to age 65 and applicable only where an earning loss was caused by a work-related disability.
As well, compensation for stress-related claims should be limited to those cases where stress arises as a result of an acute reaction to a traumatic workplace incident.
Finally, the experience rating program, NEER, needs to be supported and developed. This program, in our opinion, is one of the most accurate and effective ways to reward the positive achievements in the health and safety and return-to-work practices while at the same time discouraging negative behaviour and practices.
Bill 15, An Act to amend the Workers' Compensation Act and the Occupational Health and Safety Act, is an essential first step to restoring financial viability of the WCB and making the system serve stakeholders in a more efficient, cost-effective and responsible manner. However, the WCB will continue to be a fiscal risk until decisive action is taken to retire the unfunded liability. We therefore commend the government's initial action but look forward to the economic reforms promised for 1996.
The Chair: Thank you. The questioning will begin with the official opposition.
Mr Pat Hoy (Essex-Kent): Mr Davis, on page 3 you speak about the members and business community at large committing themselves to increases of 15% and 10% over a six-year period to help the unfunded liability by the year --
Mr Davis: To remove it by the year 2014. The first three years was a 15% increase in the assessment rate; the next three years was a 10% increase in the assessment rate. The employer community undertook that obligation -- in fact, accomplished that obligation -- but the unfunded liability wasn't reduced because of the increases.
Mr Hoy: Then could you help me in how you reconcile, on page 5, to "reduce the assessment rates by 5% for schedule 1 employers as soon as possible"?
Mr Davis: That was a commitment made by the provincial government. It's a commitment we endorse and we're now asking them to enact that. They were unable to do it at this time because of some technical errors in their computation. We believe it can be done and we believe it will not provide any difficulties in still meeting the obligations of the employer and the workers' compensation obligations financially.
Part of that has to do with the fact that they did, about three or four years ago, a reassessment, and attempted to bring all the assessments into line. So, for example, in our industry, the top assessment rate will be about $3.90. Some of our members are already at that, some are under that, and it really goes back to the WCB's inefficiencies in arriving at that. There are rate groups out there right now that are paying more money than they should and there are rate groups that are paying less money than they should. We're asking for that balance, and that 5% will be part of that balance.
Mr Duncan: We were trying to reconcile your first position, that your employers or the people you represent would support or have supported a 15% and then a 10% increase in assessments, and later in your document, you go on to urge the government to fulfil its commitment. You just don't restate it, you urge them to fulfil it.
Mr Davis: No, no, you misunderstand. The 10% and 15% were actions that have already occurred -- I believe they occurred in the mid-1980s -- taken by the employers' community to reduce the unfunded liability. It wasn't accomplished. It wasn't accomplished because the WCB was inefficient. So now we're telling the government, from the business community's perspective and also from the PLMAC perspective, that there are steps they can take now that will reduce that unfunded liability, and we expect them to take those steps.
Mr Duncan: So your employers actually experienced those increases already?
Mr Davis: We certainly did.
Ms Martel: Let me follow up from that, because if that was during the mid-1980s, we were dealing with a multi-stakeholder board of directors. At the same time that we had that multi-stakeholder board, in a single year, 1984, we saw the biggest single increase in the unfunded liability in the history of the province, from about $2.4 billion up to $5.4 billion in a single year. So, Mr Davis, tell me why I should have any confidence at all that moving back to a multi-stakeholder board of directors is not going to lead us right down the same path that we already were on?
Mr Davis: I can't answer the question in 1984, I'm sorry, because I wasn't around then. But I can tell you that our experience with a bipartite board of the Workplace Health and Safety Agency and the WCB in the present surroundings since 1989 -- in fact in 1985, 1986, I believe, or 1987, one of those three years -- there was no such thing as a bipartite model in the WCB. It just occurred and the governments of those days allowed it to occur without any type of legislation or structure.
But those two agencies and the bipartite boards have shown that they wind up grinding to a halt because they cannot make compromises. They become, I guess, areas in which there are embattlements. We believe that it's better to have multi-stakeholder people on the board. Many of those people have expertise in WCB, and we believe it'll be better.
Ms Martel: Let me just follow up on that. The bipartite board at the WCB, those appointments went into effect in April 1995 and those folks had all of six months to deal with the new system at the board. When you talked about the bipartite form simply not working, you referred to the health and safety agency and you referred to an experience in BC, but the experience that I want to talk about is the six-month experience that the bipartite board at the WCB had.
That experience was (a) the board agreed to a plan to reduce the unfunded liability by the year 2014, which is what the government is trying to bring in with this bill; (b) they had an operating surplus that year for the first time. They also, for the first time in 10 years, had a decline in the unfunded liability. Yes, it was only by $100 million, but it was the first time we had a decline.
This, to me, does not characterize a board that was paralysed or that simply did not work. I wonder if you can give to the committee some very clear and concrete examples of what it was that so paralysed this board.
Mr Davis: Shelley, first of all, there's a rationale for the unfunded liability surplus. It has nothing to do with that board, it has to do with the way some calculations were done.
Second, in the instance of the bipartite board which did operate for six months officially, although it operated unofficially for several years as a bipartite board, they refused to enact a funding strategy developed by the management side -- the other side did, by Mr Copeland. They refused to enact that section, which would have gone some way in addressing some of the issues. Those are the realities. The realities were they were stalemated.
Ms Martel: My understanding of the financial improvement package that the staff at the board put together that would have resulted in a $400-million saving was that it was not the worker members of the bipartite board who objected to that, it was the employer members.
Mr Davis: Well, I guess you hear a different story than I do.
The Chair: Thank you, Mr Davis. That exhausts our speaking time. I appreciate your coming down.
Mr Duncan: On a point of information, Mr Chair: In a document you submitted to committee members that was based on questions that I had asked last week, there had been in the 1994 fiscal year a $400-million transfer from the WCB accident fund into operations, which would have left a net deficit of some $300 million had it not occurred.
The Chair: Thank you, Mr Duncan.
1110
ONTARIO PUBLIC SERVICE EMPLOYEES UNION
The Chair: Our next group up will be the Ontario Public Service Employees Union, the employee relations committee, Ministry of Labour. Please introduce yourselves for Hansard and the committee.
Mr Robert Rae: Good morning. My name is Robert Rae. I'm chair of the Ministry of Labour employee relations committee, the OPSEU committee. With me today is Wayne Ireson, another member of this committee.
We appreciate the opportunity to present our views on the changes in Bill 15 and the potential impact on the enforcement of health and safety in this province.
We are two of the four elected OPSEU members of the ministry employee relations committee. The committee represents over 1,200 workers in the ministry who belong to the Ontario Public Service Employees Union.
The OPSEU members whom we represent have the primary responsibility for enforcing the Occupational Health and Safety Act. These members include front-line staff such as health and safety inspectors, occupational hygienists, ergonomists and technologists. We also recognize the excellent support provided by the scientists and technologists who work in our laboratories and in the radiation protection service. We also have OPSEU members who work in regulation development and program evaluation.
As front-line deliverers and enforcers of occupational health and safety legislation, we provide the public services that ensure that workplaces are safe and workers are protected. We believe that this service should be cost-effective and efficient. We also believe that these activities should not restrict the economic growth in this province. At the same time the working men and women of Ontario must be protected in the workplace.
For this very reason, our committee has made a submission to the Minister of Labour on Necessary Reforms to Ontario's Health and Safety Enforcement System. We have provided copies for the members of this committee today for your consideration. We sincerely hope our minister will listen to the experience and the suggestions of her front-line workers. We hope the minister will not decimate the enforcement system and the necessary technical and professional support that goes along with that system.
The issues of workers' compensation before this committee are serious issues that must be addressed. The increasing cost of human suffering experienced by the workers in this province concerns us. Both our daily experience in the workplaces of Ontario and general statistical trends show that health and safety conditions in these workplaces are deteriorating.
Between 1991-92 and 1994-95, critical injuries have increased by 80% and occupational diseases and illnesses have increased by 102%. Over roughly the same time, the Ministry of Labour budget allocations for health and safety have decreased by almost 18%, from approximately $51 million to $42 million. These facts and trends we have just noted clearly show us that the costs of workers' compensation will not decrease until the workplaces of this province are safe and healthy.
If one considers that it is primarily through interventions in the workplace that health and safety programs will have an impact, then the ministry must immediately reverse the trend it has established. A larger portion of the available resources should be dedicated to and support front-line enforcement activities.
We firmly believe that strict enforcement of the Occupational Health and Safety Act is essential in achieving safe and healthy workplaces for the workers and the employers of this province.
The bill under consideration by this committee proposes to change the purpose clause to include the prevention of injuries and occupational diseases and the promotion of health and safety as one of the major purposes. We understand that this highlights the importance of accident prevention in the workplace. We cannot disagree with the overall concepts. However, placing the emphasis in this act and within the jurisdiction of the WCB greatly concerns us. We believe that this will serve to dilute and likely signal the demise of the enforcement function of the Ministry of Labour. We are also wary of seeing another bureaucracy set up with overlapping goals and activities. This kind of action does not make sense.
There is, and probably will continue to be, some controversy over the dividing line between the activities that describe prevention and those that describe enforcement. There has been a lot of debate over the method and tools of enforcement. We know some of our own members have differing views on this subject. The great difficulty lies in finding the right balance of tools one can use to bring about compliance. However, the bottom line is that employers must comply with the legislation. The penalties for non-compliance must be a sufficient deterrent to discourage breaking the law.
Broadly speaking, we believe that an effective and efficient health and safety system must include at least the following components: adequate regulations, worker and employer training, and strict enforcement.
The Occupational Health and Safety Act, as well as the Workers' Compensation Act and the associated regulations, must be adequate to protect the health and safety of all workers and to compensate workers when unfortunate injuries occur on the job.These regulations need to be clearly defined, understandable, adaptable to change and, above all, enforceable.
Both the worker and employer communities need to be educated and trained to recognize the hazards associated with their work and the techniques to reduce and eliminate these hazards. Both groups must be able to receive the training in the manner that best promotes learning, retention and acceptance of the course materials. We believe that this education must begin at an early age. We also believe that health and safety training should be a necessary part of the high school curriculum.
We believe that consistent enforcement of the Occupational Health and Safety Act is essential to ensuring a safe workplace. A strong presence or the threat of the presence of an inspector in the workplace must drive enforcement. There needs to be technical and professional support that makes workplace investigations meaningful. An administrative penalty system must be initiated with progressive penalties to deter repeat violations and ensure that the cost of complying is substantially less than violating the law. This will allow some immediate enforcement action to be initiated at the time of the violation.
Where workers, employers and respective bargaining agents work cooperatively to advance health and safety, the parties should carry on with a minimum of interference. There should be some reward for compliance. Conscientious employers should have nothing to fear from enforcement under either the Occupational Health and Safety Act or the WCB act. On the other hand, there should be a significantly heavier penalty for non-compliance. The magnitude of the penalties must make it more economical to comply with health and safety legislation.
Safe and healthy workplaces make good economic sense and are cost-effective.
This bill proposes an explicit requirement for employers who must register with the board to do so within 10 days. We suggest that this cannot be done in isolation from other registration systems. We also hope this will not present an opportunity to develop a completely separate system.
We have heard claims, and again today we've heard them here, that there are as many as 20,000 employers who have not registered with the board and should be registered. We urge consideration and implementation of a one-source company registration with the Ontario government. This should take care of all the legislated requirements for all ministries, agencies, boards and commissions. We shudder at the thought of how many databases there might be within this government today having various bits and pieces of information.
Our own ministry has a merged information system database developed over the last six years at a cost of tens of millions of dollars. There is much information on many workplaces in this system. The WCB has a system as well. We expect that the board has more detail on some aspects of individual companies and more companies registered than our own ministry. We are aware there are databases in other ministries -- the Ministry of Consumer and Commercial Relations, Finance, etc -- yet we are not aware of any direct links between these databases within government such that the common data identifying a workplace are shared and not duplicated.
The Ministry of Labour needs to direct its efforts to workplaces that are not safe and not healthy. To be more effective in identifying these workplaces, the ministry must make better use of the information that could be made available to it. Some of this information could come from the board. This will help to manage the relationship between enforcement and targeting of repeat violators.
In conclusion, we'd like to reiterate that all the initiatives in this bill will have little impact unless workplaces in this province are safe and healthy.
The Chair: Thank you. The questioning will begin with the third party.
1120
Ms Martel: If I may go to page 3, Mr Rae, I want to focus a little bit more, please, on your concern that if you change the purpose clause in the WCB act to focus more on health and safety, the net result will be actually to signal the demise of the enforcement agents within your ministry. Can you expand a little bit more on that concern, because I think that's a concern for all of us.
Mr Rae: There was a document that became available generally signalling a decline of roughly 46% in the Ministry of Labour. Now we recognize that the minister, in the House, has said that health and safety inspectors will not be decreased. However, the minister hasn't said anything more about the support to the health and safety inspectors, or the rest of the ministry in fact. But as we said in the brief, there's a fine dividing line between enforcement, which people sometimes refer to as reactive work, and proactive prevention. There have been controversies in the past about who's going to do what and I don't think that this province at this time can sustain two bureaucracies fighting over what they should do.
Mr Carroll: Good presentation. I compliment you on the idea of the need for training in schools in health and safety. I think it's right on, and also the idea of ministries sharing databases. On page 3 you talked about that by dismantling the occupational health and safety agency and placing it under the WCB, you fear another bureaucracy being set up. Could you explain exactly what that fear is and how you see another bureaucracy being set up?
Mr Rae: What we fear is that people in some ways -- routine inspections of workplaces, depending on whom you're talking to within our ministry or outside the ministry -- consider those as preventive activities, whereas we, as front-line enforcers, feel that routine inspections of workplaces are enforcement activities and we're very concerned that the routine inspections or auditing of workplaces, which we see as a necessary function of enforcement, will be taken away from the ministry. I guess this goes back to the discussion about accreditation under the agency before the actions of June.
Mr Carroll: As I see things now, we have two bureaucracies: We have the occupational health and safety agency and we have the Workers' Compensation Board bureaucracy. I would have assumed that we were going to eliminate one and just have one left, and yet you fear the establishment of another one. I'm really having trouble understanding that.
Mr Rae: Right now we inspect workplaces. We're also aware the board also has people who go out to workplaces under the Workwell program, and I'm not totally conversant in it. I'm sorry, I have to apologize, but in terms of that program they go out and they evaluate the paperwork that people have in place: the policies, procedures. Well, to us, it seems like a duplication of effort, and that's the fear, that something along those lines will be developed where we will have two different parties all going to the same workplace asking very similar questions.
Perhaps, if we could, Wayne would like to answer.
Mr Wayne Ireson: Keep in mind, when the workplace health and safety agency was established, it was to take on a definite role of being the proactive body to look after the delivery of the training, to look after providing information to the employers and to the workers in the province. And it looked like, to those of us who were in the profession, that finally we were going to have definitive roles: a definitive role for the Workers' Compensation Board to look after compensation for the worker and to have the agency look after that information source to the workplace parties. And by folding it back into the WCB, we go back to what we were before, which is one agency trying to be all things to all people in the workplaces, and it hasn't worked. In the years that I've been in this profession, it's just not working. That's why the accident rates are so high.
Mr Carroll: So your comment is not that we create another bureaucracy, but that the bureaucracy that would be there wouldn't work as effectively. Is that basically what you're saying?
Mr Ireson: It hasn't in the past, as effectively as it could or should.
Mr Duncan: Mr Rae, if I could, I'd like to pursue it. I spoke in the Legislature about my concerns around the purpose clause and the two additional sections, and you've put forward one of two possible cases. One is that they eliminate or reduce the function of the occupational health and safety division of your ministry and its enforcement provisions, but the more interesting one that I'd like to pursue with you, and I think the government's been very clear on other issues about its desire to cut red tape for business: Are you suggesting that inserting these two purpose clauses, in addition to the purpose clause, could create a parallel or second bureaucracy dealing with health and safety enforcement at the Workers' Compensation Board, say, similar to what local utility authorities do at the same time local building departments do. Is that a concern to you?
Mr Rae: Yes. The short answer is yes.
Mr Duncan: So you think this could lead to a lot of bureaucracy and red tape both for workers and employers?
Mr Rae: We think it could lead to more than one person from the government, in the broad sense, going into a workplace asking very similar questions.
Mr Duncan: So duplication and unnecessary expenditures of funds.
The Chair: Thank you, Mr Rae and Mr Ireson. We appreciate your taking the time, and what with midnight sittings, the members of this committee that have House duty tomorrow will have lots of time to digest your other submission here. Thank you.
CANADIAN AUTO WORKERS, LOCAL 524
The Chair: Our next group up: the Canadian Auto Workers, Local 524. Good morning.
Mr Rick Whatley: Good morning. My name's Rick Whatley. I'm the benefits rep for Local 524 CAW in Peterborough, representing 1,000 workers at the General Electric plant there.
Due to short notice, my summation is short, and I've kept it basically to some of the problems that we have on the shop floor in Peterborough in a heavy industry. There is one typo in the summation I gave you. On page 2, second last paragraph, should be "specialty paints," not "especially paints." I'm not a great typist.
Again, as the earlier CAW rep said, I spend more than 50% of my time coordinating the WCB on the shop floor. I also look after the sickness and accident and the UIC on the shop floor. I'm full-time, and I'm paid by the corporation.
I would like to open my presentation with a strong protest against the short notice given for these hearings. I received my notice on Friday, December 1. This kind of short notice makes it difficult to be prepared, especially on such vital concerns as we are dealing with here today. Another inconvenience is that all the hearings are in Toronto, and this will stop a lot of good people from putting forth their views. It's clear to myself and others that this government is not interested in the democratic process or other people's points of view.
The amendments to Bill 15 are in direct conflict with the laws of Ontario and the rights of the citizens of this province. The Workplace Health and Safety Agency and the Workers' Compensation Board's structure and makeup were defined by law but this government disregarded the law and fired both boards.
Now, after the fact, Bill 15 proposes to outlaw lawsuits or civil proceedings against the government for these violations of the law. The people of Ontario did not vote for a benevolent dictatorship but for a democratic government with open debate. In fact, one of their platforms in the campaign was more law and order. To paraphrase Winston Churchill: some law, some order.
Safety in the workplace: With the new direction of corporations the last few years of lean production, line speedup and scheduling of excessive overtime has become the norm, health and safety enforcement has declined and the health and safety of workers has been jeopardized. Where we are today is already unacceptable, but by limiting the inspection even more, by reducing the right to refuse unsafe work and limiting safety training, you will be placing a large segment of workers at risk on their jobs.
The corporations rate worker health and safety away down on their list of concerns. The only way that we're going to have adherence to the rules is with strong and viable workers' input to the process, along with government inspections.
Workers' compensation: I think many of the presentations being made to you today will lay out to you the economics surrounding workers' compensation and will help to diffuse the big lie about workers' compensation being broke. I would like to address a problem I see in my own workplace arising out of the proposed changes.
1130
I represent workers at GE Peterborough, a plant that is over 100 years old; a workplace that uses and has used over the years many dangerous chemicals and substances to produce large and small motors plus nuclear fuel. Some of the chemicals used were PCBs; epoxy resin, which is still used today; beryllium, which is still used today and one of the most deadly poisons that can be used in the workplace; varnishes; thinners; specialty paints; and asbestos. Asbestos is not used now.
A little sidelight to the asbestos: I started in the plant 33 years ago. I worked in the area where asbestos was used; I didn't work specifically with the asbestos. There is not one of those workers today who is alive who worked on the asbestos, and they were basically my age or younger. They are all deceased, all with lung problems. We were never able to establish a WCB claim until the last one, a gentleman by the name of Wendell Woodcocks. He passed away and through an autopsy we were able to establish asbestosis, and his widow and family are now receiving benefits.
I have the painful task of dealing at this time with five young widows and their families who lost their life partners to cancer. All five of these workers can be tied to the vapours coming from the VPI tanks curing the armatures for large motors. The youngest of these workers was 38; the oldest was 52. It is not a pretty picture to watch your fellow workers cut down in the prime of their life because they were doing their jobs.
A sidelight to this one: In last December's round of negotiations we managed to negotiate a cancer study for the plant in Peterborough. We're a year into it. We've had some people from WCB involved; we've had people from occupational health and safety involved. Five deaths doesn't sound like much. Those five deaths are five out of one small area, young people, basically the same type of cancer, all contacted the same type of vapours, worked with the same type of chemicals. We have 134 so far that we've tracked and we think that we will probably hit about 40% of our workforce either has or is dying of cancer or has died of cancer.
Repetitive motion strain is a byproduct of certain jobs in our workplace. We are a senior workforce with an average age of 47 years, with an average seniority greater than 25 years. Years of winding electric motors day after day takes its toll on wrists, elbows and shoulders. We have a high number of female members with carpal tunnel syndrome, tennis elbows and frozen shoulders. To say that RMS injuries shouldn't be compensable is criminal. Most of these workers will be in constant pain for the rest of their lives. Activities that they would normally do away from work are greatly curtailed. The pressures of speedup and more overtime have compounded these problems.
We are an industry that at this time of year, I am lucky that I am here. If I wasn't paid full-time -- no worker off the shop floor is allowed off the shop floor. At this time they have been working now 19 straight weeks without a day off to get the year-end profit out of that company.
To reduce payments to injured workers, to put in a three-day waiting period for benefits lends credence to the lie that workers are at fault, not the corporations that are making increased profits on the backs of the workers.
With large pools of unemployed workers in Ontario, it is much easier to throw injured workers on to the scrap pile and replace them. The worker who lost most of one hand in a machine that the company said would never double trip -- surprise; it did and took off most of his hand -- will never again have the same quality of life. Neither will the worker who fell 15 feet from a scaffold and crushed two vertebrae in his back, or the 53-year-old female worker who had both arms operated on for tennis elbow and must wear supports every day.
I would urge you out of common decency and common sense not to weaken workplace health and safety but to strengthen the legislation to protect the workers of Ontario and their families, and at the same time I would beseech you not to take away the financial protection provided workers by workers' compensation. I thank you very much.
The Chair: Thank you, Mr Whatley. The questioning will begin with the government members. Mr Carroll.
Mr Carroll: Thank you very much, Mr Whatley. We members of the government agree with you totally about safety in the workplace. We have no intentions of making the workplace a less safe place. Our objectives are to make it safer. Our approach maybe is a little bit different than yours, but that certainly is our objective.
But you're the second person now, and maybe the third even, who has made reference to the impact of overtime on this whole issue. Are you and your union and your members in favour of eliminating that overtime component to make the workplace safer?
Mr Whatley: You ask me a loaded question. Am I in favour of doing away with workplace overtime? Not all overtime. I believe businesses do have sometimes an emergency where overtime may crop up.
Am I against the type of overtime that they're doing now because they've laid off so many of the workers? I had 3,500 members in my bargaining unit; I now have 1,000. We're putting out, moneywise, more than we put out when we had 3,500 people. The way they're doing it is working the people every weekend. My collective agreement does not say "voluntary overtime," so they can use what's known in the Employment Standards Act as the 48-hour week, six eight-hour days. They come to the people on the shop floor and say, "Jeez, if you don't work Sunday, we're going to lose the business; you're not going to have a job." So that's pressure. The law is not on their side to do it, but it's pressure.
Are my workers in favour? I've got some workers who'd move their bed in there and work 24 hours a day, seven days a week; I'm not going to kid you on that. But I also have other people who are very upset that they're forced to work every Saturday of every weekend, and then the company wants them to work every Sunday to go along with it, and then it wants them to work two or three hours after every shift during the week.
Mr Carroll: Obviously overtime is a component of workplace safety. Would you suppose that in a new round of negotiations unions like yours and other unions would in fact negotiate that overtime be eliminated?
Mr Whatley: I have tried in the past three rounds of negotiations to make overtime voluntary in the collective agreement. The company has told us it will never, ever give up the right to mandatory overtime. So it's a sawoff.
Mr Duncan: I'm curious about your views on health and safety, particularly the occupational disease area. You're experiencing a very tragic circumstance obviously in one, I guess, small part of the group that you represent. To come back to the purpose clause that's in this bill that adds purpose sections to the Workers' Compensation Act that would see the board being involved in the administration of health and safety, do you feel that is necessary? The CAW historically has often expressed concern about the Ministry of Labour health and safety division. Would you prefer to see the health and safety enforcement function under the board or remain with the Ministry of Labour?
Mr Whatley: You're asking me a personal question. I may violate my rules with the CAW. I think it should be separate. It should be under the Ministry of Labour.
Mr Duncan: So you feel it should stay with the Ministry of Labour?
Mr Whatley: Excuse me?
Mr Duncan: So then you feel that the inspectorate and the enforcement of the Health and Safety Act should remain with the Ministry of Labour.
Mr Whatley: No, that's not what I said.
Mr Duncan: Oh, I'm sorry; I misunderstood. So you're saying we should move it over to the Workers' Compensation Board?
Mr Whatley: I guess you got me. I guess it should stay with the Ministry of Labour. That's not my expertise; my expertise is looking after my own local client. I talk to our national people, and our national people, I know, are making a presentation. I don't know whether they've already made it or are making it. I know Cathy Walker is making one. That's why I didn't want to go into a whole lot of details. I could fish the numbers out about the board and that, but I didn't want to get into that.
Mr Duncan: In terms of the study you're doing on the cancer deaths and the incidence of cancer, have you had a lot of support from the Ministry of Labour on this?
Mr Whatley: Yes, we have.
Mr Duncan: Okay. Thank you.
Ms Martel: Mr Whatley, you'll know I don't mean this to you when I say that your workplace sounds like a horror show. The number of deaths alone is just unbelievable. What do you think, then, of one of the presentations we heard earlier from the business side which urged the government -- and this is the government's own recommendation, so maybe you should tell me what you think about a government that's quite prepared to reduce benefit levels to 85% of net and quite prepared, and I assume this is coming in the spring, to disallow repetitive strain injuries. You've got a workplace where you've got not only people dead from all of the toxins and chemicals and everything else that's been used but a whole bunch of people who are seriously injured because of the repetitive work they do.
1140
Mr Whatley: I think it's absolutely criminal that you would take something like repetitive motion strain out of the act. The people in there were healthy when they came in at 18, 19, 20 years of age. We don't have an early retirement plan. People have to stay there until they're 60 years of age or they don't get a pension. The 53-year-old that I mentioned is on modified work. The company may or may not keep her on modified work till 60 years of age. They are running out of places to put people with repetitive motion strain on modified work. These are legitimate people who have had the carpal tunnel injuries operated on, both wrists in most cases, and both elbows for the bilateral injuries that they get.
In our industry, in a heavy industry where you wind motors and you wind them by hand and you're working in tight spots -- they used to put the females on it back in the days when we could have female jobs and male jobs. Before 1971 that was a female job because they had small hands and because they could work on it, but now everybody's on it. We have a lot of senior females, over the age of 50, who have had one, two, maybe three operations over this, and to say it's not work-related -- and now they want them to work 56, 60 hours a week doing that type of work, which speeds up the process of them getting there. I have a big concern, because where are those people going to go?
Are we going to send 53-year-olds who have worked 30 years of their lives to the social services? Is that where we're sending them? Or do we pay them and give them an economic loss? Because they'll probably never be able to wind another motor again once they start this, and winding motors is a reasonable rate of pay. You only have so many cleaning jobs within a plant, so where are you going to put people? I think it's criminal to take that type of thing out, just the same as it would be criminal if the person who gets cancer from something in his workplace is not going to get compensated for that. If you're going to go back to just a straight injury, and I can see a broken bone, where are we going to be?
The workers are in jeopardy here and the workers are the ones we should be protecting, not the corporations. The corporations want to make it better? We went after them for years that they could do things to get rid of some of the ergonomic problems that are in that plant, and they wouldn't spend $10 to save themselves $50 down the road. So yes, I have a real problem with where this is going.
The Chair: That's the end of our time, I'm afraid, Mr Whatley, but thank you very much for taking the time to come from Peterborough to speak to us today.
CANADIAN AUTO WORKERS, LOCAL 707
The Chair: Our next group up is the Canadian Auto Workers, Local 707. Good morning.
Mr Bruce Gay: I apologize for not having a written submission. My notification came in kind of late too, and because of some appointments I had at the board in Hamilton on Friday and some commitments on Saturday and Sunday, I wasn't able to put a presentation together.
Much of what you're going to hear from me has already been said. I'm concerned about the 55,000 employers that owe the WCB $430 million. What's going to be done about that? NEER and CAD claim management schemes drain the WCB of more than $200 million annually. Cash flows from the WCB back to employers because of loopholes in these programs which purport to encourage safer workplaces. Some employers are refunded up to 80% of their WCB premiums. If they manipulate these programs successfully, this is real cash, not just an addition to the unfunded liability's paper debt.
I understand that new claims costs have decreased over 8% in the last four years, from an average of $2 to $1.68 per $100 of payroll. The WCB's overhead has decreased 8% in the past four years, from an average of 49 cents to 44 cents per $100 of payroll.
According to its 1993 annual report, the WCB devoted 17% of its total expenses to pay for overhead; Sun Life of Canada 30%, and the Minnesota privatized workers' compensation system, 29%. I also understand that the board will enjoy this year a cash flow surplus. If indeed this government is thinking of privatization, I would have to ask the question, what justification?
I'm very concerned about the changing of the definition of "accident," which will make it much more difficult for legitimate WCB claimants to access benefits. Once UI benefits or sickness and accident benefits are exhausted, where will these disabled people turn? Employers will offload the responsibilities to Ontario's social assistance programs; property taxes will rise.
A three-day waiting period -- there is no justification for that -- will not have any impact on reducing the unfunded liability because short-term claims have absolutely no impact on the unfunded liability. It is very seldom when a person is off work for three or four days, a week, 10 days, that they develop a permanent disability which would impact on the unfunded liability.
I'm going to finish by telling you something that happened on Friday. As I said, I was at the regional office in Hamilton. I had a meeting in the morning in the main office and a hearing in the afternoon. When I went to the counter in the Hamilton office, I was asked by the girls on the counter what I was doing in Hamilton. I said I had a meeting and then a hearing. They said, "You don't have a hearing here; we don't have hearings at the Hamilton office on Thursdays and Fridays."
My hearing was indeed over at Commerce Place, across the street and down on the corner of King Street in Hamilton. Meanwhile, two meeting rooms sit vacant and empty in the Hamilton office Thursdays and Fridays, while they're renting space at Commerce Place. I don't know where they rent it in London, I don't know where they rent it in Toronto, I don't know where they rent it in Thunder Bay, but that's some waste that, if you're looking at reducing costs, certainly could and should be looked at.
I thank you for the opportunity to speak.
The Chair: Thank you. The questioning will begin with the official opposition.
Mr Duncan: Mr Gay, could you share with me some of your experiences with the board in terms of wasteful situations that you think could be corrected without penalizing injured workers? You just cited one example. I know you've got considerable experience. I'd be curious to hear some other thoughts in that area.
Mr Gay: I think part of the waste that is created at the board usually ends up at the hearing level. I think if there were sufficient adjudicators to properly adjudicate claims you could cut down on a lot of the subsequent appeals down the road. You could cut down on the backlog, which used to be at decision review and is at the appeals section now, because the right decisions would be made at the time the claims were being adjudicated. I tell you, at least 90% of the claims that I take to hearings we have a favourable response to. The claims are allowed at the hearings level, and if they're not allowed at the hearings level, then chances are you've probably got a pretty good shot at WCAT. This is waste. You do not have enough people at the regional offices to properly adjudicate the claims.
If you choose to talk to some of the adjudicators and some of the people in the regional offices who have just thrown their hands up, they are so overworked, they have so high a caseload volume that they just cannot function properly. I know in the Hamilton office, and it's a standing joke, if the young ladies in the Hamilton office need some time off work, they get pregnant and they take their time off work.
Mr Duncan: Have you been invited to make a presentation to Mr Jackson on his reforms?
Mr Gay: No, sir. I was in Mr Jackson's office a couple of weeks ago and we weren't even invited to come back and see him. The receptionist in his office would not make an appointment for us; we were a labour group.
Mr Duncan: So there's been no opportunity for your local to comment or have input into the reforms that Mr Jackson is contemplating?
Mr Gay: Absolutely none whatsoever.
Ms Martel: Mr Gay, you have some sense, because it's been widely publicized, of the mandate that Mr Jackson is involved with in terms of some of the changes he would like to make. I wonder, since you haven't been invited to talk to him about this or make a presentation, if you can give us some sense today as to whether or not the government's direction, which we expect will be given to us in the spring, is going to do anything to help the workers you're trying to represent or anything to fix the system that the government alleged is so broken.
1150
Mr Gay: No, I can't see anything in the direction the government is going that really is going to enhance the position of injured workers. In fact, I can see by the information that I have that your new compensation bill, Bill 15, will be a detriment to the workers. It really does seem that much consideration is given to the employers and very little consideration is given to the injured workers, and I think that's a shame. I guess the cartoon in the Toronto Star -- was it yesterday or Saturday? -- where the gravestone, the grave marker, says, "Fairness, Victim of Common Sense," says a lot.
Common sense is fairness. We do have to look after injured workers, as we do have to look after the ill, the poor and all other peoples who cannot look after themselves, and if you want to fix the compensation act, there are a lot of good things contained in Bill 165 that should be held on to.
I said earlier how much the NEER and CAD-7 claims management schemes drain the compensation board of. Once you have that money, why do you give it back? There is another way to do it. If indeed a manufacturer, a business, reduces its claim costs, then in future drop its premiums to reflect that. But to drain $200 million out of the compensation, to me that doesn't make sense. It is a scheme that is manipulated by employers. I know at the Ford Motor Co I saw a memo. The memo stated that this person, this person, this person should be brought back before a certain time or it would be adversely reflected on their NEER. I mean, this is total manipulation, and it should be corrected.
Mr Baird: I didn't get which community you're from.
Mr Gay: I represent 4,500 people at the Ford Motor Co in Oakville.
Mr Baird: Okay, great. You're outside of Toronto. I just wondered.
Mr Gay: I'm sorry?
Mr Baird: I wanted to confirm just where you were from. Being from Ottawa, I always like to see a representative sample from the province, so it's great.
I wanted to just touch on the issue of fraud. You mentioned the 55,000 employers -- your figure -- that, in your words, are owing hundreds of millions of dollars, and I can certainly share the government's concern with that. Obviously, that's built up over time, and I don't know why the board hasn't taken more successful action in getting that. That'll be something very much that we've heard from a number of witnesses, and we'll certainly relay that concern on, because it's an extremely valid one.
With the issue with respect to the measures contained in Bill 15 dealing with getting tougher with employer fraud, there have been a number of figures used by witnesses: 20,000 employers who have not registered with the WCB. One of the amendments contained in Bill 15 would require employers to register within 10 business days in order to ensure that they're paying their WCB assessment rates. Would you support that measure, and increasing fines to $100,000 for employers who fail to register? That's similar to what they do for the health payroll tax and with the retail sales tax. Would your union support that measure of increasing fines to $100,000 for employer fraud?
Mr Gay: It's an interesting concept. I think my union would be in favour of increasing fines, because I think every worker should be covered by workers' compensation.
Mr Baird: Oh, they're covered. That's the problem. If an employer fails to register, the worker's covered still, so all the other employers are paying for their workers. So the worker's covered already. It's the employer that's getting away with not having to pay, which is the problem.
Mr Gay: Let's make it $200,000 then.
Mr Baird: So you would support those measures then?
Mr Gay: I would support them, sure.
Mr Duncan: In your experience, again, with the Workers' Compensation Board and its treatment of workers versus employers, the bill also contemplates a lot more I think onerous requirements on business as well as employees. Are you nervous that the provisions in the bill around fraud will be directed mostly at workers and not at employers? Is that the position your union is taking?
Mr Gay: I think that historically anything which has been contained within amendments to the Workers' Compensation Act, with the exception of maybe Bill 165, has been directed at the people who stand to lose the most, and I'm talking about injured workers.
Mr Duncan: Has it been your experience that the board has been particularly effective at enforcing its current fines to employers who've --
Mr Gay: Absolutely not. A gentleman just prior to me, perhaps two before me, mentioned the fact that the bureaucracy at the board -- I think anyone who has ever dealt with the Workers' Compensation Board, and certainly your assistants in your ridings would be able to tell you this after they've been dealing there for a while, the greatest bureaucracy in the world happens to be at the Workers' Compensation Board, because each department there seems to be an entity unto itself. What I find is there's very little information, very little input from here to here. It's a little empire, and there's very little talkback between the departments down there. I don't know what people are afraid of, losing their dynasty or their empire, whatever it is, but you cannot effectively administer the Workers' Compensation Act unless you can effectively administer your own house.
The Chair: We have time for one more quick question from the third party.
Ms Martel: Mr Gay, let me ask you a little bit about your sense or your feeling about workers' or their representatives' participation at the Workers' Compensation Board. You will know that under Bill 165 one of the major changes we implemented was to have a bipartite structure because we certainly felt that the representation that could be brought by workers, injured workers and their representatives was as important as the other workplace party, that being the employers. What do you think about the government's unilateral move, which this bill is now justifying, to actually take out that bipartite structure and move back to a multi-stakeholder form?
Mr Gay: When the bipartite system was brought in, I had a great deal of faith that if given a half a chance, it very well could have succeeded. I believe at the July 1995 board of directors meeting, the worker members of the WCB supported a proposal called the financial improvement package, or FIP. The FIP would have generated enough annual savings to eliminate the unfunded liability by 2014, and this was blocked by the employer members because it reduced their ability to manipulate, as I said before, NEER, CAD-7 and second injury and enhancement claims.
It's more political ideology than common sense. I think you have a chance. You have a chance to do something if you feel that the Workers' Compensation Act needs to be fixed, needs to be improved. I mean, don't tear the place down. Don't throw the baby out with the bathwater. Improve it. But think of the people on whose back you're going to improve the Workers' Compensation Board.
The employers already have enough loopholes in the Workers' Compensation Act. I could tell you stories. I'm one person against -- many of you may know Les Liversidge. Mr Liversidge has eight full-time people working out of the Ford Motor Co in Oakville -- eight full-time people. These guys that spend 50% of their time on compensation problems: God, I wish that was the case in my case, because I've got one person working out of Local 707 on workers' compensation claims and that's me. I spend 100% of my day working on compensation claims. At any given time, I've got 200, 250 up to 300 claims at some stage of either inquiry or appeal. I cannot get sufficient hearing dates to get these people justice. It just doesn't work that way.
The Chair: Thank you very much, Mr Gay. We appreciate you coming in to see us this morning to make your presentation.
Ms Martel: Mr Chair, before we go on to the next presentation, I wonder if I could raise a point of order. It's with respect to some comments the parliamentary assistant made that in fact an injured worker, even if the employer doesn't register, would be covered under WCB. I think there's a clarification that is required, and it would be this.
I won't name the employer, but there was a large, celebrated case that was raised in this House by my colleague from Lake Nipigon. It was not recent, I will give you that, but the case was that the employer of the particular 150 employees did not register himself as their employer; he registered each of them as an independent operator.
When one of them did get hurt, it was found that premiums had not been paid, of course, because the worker didn't know anything about being registered as an independent operator, and did not get compensation, and it was only because this case was raised in the Legislature that in fact there were some moves to get the employer to pay and get the people covered.
I just wanted to clarify that a worker is not automatically covered. If the employer doesn't register, there are some ways and means that they can still manipulate that system.
1200
Mr Baird: I'd like to respond on the record. You let her go on --
The Chair: Well, I don't. It wasn't a point of order, but it's in the record now, so that's fine.
CANADIAN UNION OF PUBLIC EMPLOYEES LOCAL 1996, TORONTO PUBLIC LIBRARY WORKERS
The Chair: I'd like to move on to the next group, if we can, the Canadian Union of Public Employees, Local 1996, Toronto Public Library Workers. Good afternoon.
Ms Janet Walker: Good afternoon. I'd like to thank the Chair and the members of the committee for the opportunity to appear before you today. I didn't have the privilege of hearing a great deal of the preceding comments. I'm going to try and tailor my remarks a bit.
My name is Janet Walker. I'm president, as you know, of the Toronto Public Library Workers, and I think we could be recipient of the dubious distinction award, because virtually every branch has 50%, or higher, injury rate from repetitive strain injuries. So we have a great deal of concern over the changes that are being proposed not just to the board but to the act. These are real injuries. These are injuries to people and to their lives.
What I want to focus on is the bipartite relationship that we've had for the last four years with the board. It's been the experience of our local that consultation between stakeholders leads to cooperative efforts, which yield a better result than what can be achieved with parties working in isolation. This isolation leads to marginalization, pits the stakeholders against each other and generally causes us to dissipate our energies, and these are energies that I think are better spent in reaching understanding and a resolve of shared concerns.
It's no secret that the current government is pursuing a mandate of cost-cutting and in that course is seeking any number of efficiencies. I certainly respect the current government's mandate to put its own imprimatur and change what it feels should be changed, but I question, as did the previous speaker, throwing out the baby with the bathwater. The concerns that I want to present to you are around the actual savings that will be achieved by returning the board back to a model that we view as adversarial in nature.
As equal partners, labour and management have been working towards their mutually shared goal of reducing injuries as well as costs. I can certainly appreciate that the bipartite approach involved is, if you'll excuse the pun, using a new set of muscles for both parties. But within four years of the board's most recent incarnation, the new claims costs have decreased over 8%, as the previous speaker has said, and the overhead has decreased 8% as well. So there's been a net decrease in costs, even though labour and management still approach their common cause from different viewpoints.
Another example that I want to bring to your attention is that of the corporation of the city of Sault Ste Marie, which in 1991 was hit with a very large pension billing in its WCB costs. A joint committee was formed of representatives of all the unions of the city and management representatives to come up with a solution to lower the costs of workers' compensation. After one year of implementation, the bipartite policy, devised in cooperation, yielded a reduction in cost to the city of $600,000. The city has been able to maintain its WCB costs at approximately $900,000 a year, including the increasing costs of the benefits, so that's a very hefty savings.
I guess the main point I'm trying to make is that of the government leading by example. I think that stakeholders in both the public and private sector benefited from the cooperative model structured by the government of the day. In its press release, the Ministry of Labour stated that "Ontario's experience with bipartism has proven that it is not conducive to effective and responsible decision-making," but I would respectfully suggest that there is a lot of evidence that would indicate otherwise. I think it's clear that costs decrease and accountability increases when labour and management come to the table as equals.
So we're very concerned about the move to a multi-stakeholder board. There appears to be a clear conflict of interest for doctors and insurance specialists to participate in decisions that they could direct to their own benefit.
The restructuring will only serve to pave the way for the privatization of the board. I find it very curious that a government seeking increased accountability would endorse measures that would indeed divest itself of control over the public purse. The same holds true of the measures proposed for the Workplace Health and Safety Agency. We believe it would be disastrous to abolish this agency and move backwards to a time when service delivery organizations such as the Industrial Accident Prevention Association, the IAPA, were given millions of dollars to spend. What savings can be had without direct government control and accountability? I know that the Common Sense Revolution has in its mandate less government, but I never heard the mandate of less responsible government.
We would therefore ask that the standing committee revisit those actions which would lead the Harris government to surrender accountability and responsibility for what may appear to be short-term savings and to give reconsideration to working within the existing bipartite board structure. Labour helped to build our province; surely it deserves equal responsibility for the safety of the workers. As my colleague said to me before I came up, "Make sure you tell them it's the Workers' Compensation Board and Workers' Compensation Act." We have to be players.
The Chair: The questioning this round will begin with Ms Martel.
Ms Martel: I was struck at the beginning of your comments by the number of people within the branches of the library who have repetitive strain injuries. Just given that information -- 50% I think is what you said -- what do you think then of the move that will probably come in Mr Jackson's set of reforms -- I use the term loosely -- in the spring?
Ms Walker: We're terrified. These are real injuries. These are injuries that are increasing in spite of cooperation between the parties to improve workplace health and safety. Because of the downsizing, the city has been neutron-bombed through restructuring. The work hasn't gone away; it's increasing daily. Our use increase is 500% to 1000% in some locations. No matter how safely you work, if you don't have the staff you're going to continue to be injured. The injuries aren't going to go away. I don't know what will happen to these people. Will they go on welfare? I don't know. I wish I could bring all of them to tell their story to Mr Jackson. I wish he could hear what it's like not to be able to brush your child's hair.
Ms Martel: Let me ask one further question. This is with respect to the bipartite model. The minister was certainly very clear in her remarks that, "The bipartite, labour-versus-management approach has paralysed constructive decision-making on very crucial administrative, policy and financial issues facing the board...." Given that the bipartite board of directors was only in place for six months and given some of the comments that you've already raised with respect to the situation in Sault Ste Marie, do you really think that's a fair characterization of the work that group was trying to do when they'd only been in place six months?
Ms Walker: No, I don't think so. I think you have to run before you can fly. The board was just starting with a new process and I don't think it was given a fair chance. I think that both parties have to adjust to a change in your role. If it's been adversarial for a long time, going into a cooperative structure involves changes on both parts. But all the examples that I've been shown indicate that it was starting to work and I think it could continue to work with modification.
The Chair: I understand that another representative from CUPE would like some portion of your allotted time. We're certainly amenable to that if you see fit. I wonder if you could introduce yourself, sir.
Mr Steve Burdick: I want to thank the previous speaker for sharing her time with me and I want to thank the committee for letting me come on. I'll be quite brief. My name is Steve Burdick. I'm the chair of the library workers' committee in CUPE in this province. We represent therefore, through our committee, about 52 public libraries and about three university and college libraries. We figure that the people we represent directly are about 4,500.
We meet regularly with our committee and with representatives of these various libraries, and one thing that's become very clear to us over the last couple of years is that there is a need in fact to strengthen the workers' protections in the Workers' Compensation Act and not to undercut them. The reason I say that is because we hear throughout the province stories similar to those that Ms Walker laid out before you. The public library system in Ontario is undergoing massive technological change, very significant organizational change and, as I'm sure you're aware, even before Mr Eves's announcements of this past week, budgetary restrictions.
1210
The net result of all that has been an increasing workload placed upon the institutions to provide services and, of course, on the front-line workers to make sure those services happen. Furthermore, with technological change, many of the service adaptions are handled through use of automated techniques. In consequence, the rise of repetitive strain injuries and soft muscle injury claims and problems among our workers has increased, I would be inclined to say, geometrically.
This is not in anybody's interest. Obviously it hurts the individual workers; it hurts the institutions because they have difficulty providing service when workers have to call in sick or go on sick leave or be away for extended periods of time, particularly when these institutions are not in the position to replace these workers in any significant way, shape or fashion; and obviously it hurts the public. It's the public, at the end of the day, that will be hurt if the workers are not protected adequately under workers' compensation. I say that knowing that we represent workers, but I think the reason we represent workers is so that they can do their job with some degree of dignity, but also so that they can provide the public services that the people of Ontario expect and certainly require in this changing economy.
Changes that move in the direction of making it harder for workers to stay on compensation, changes that make it harder for workers to have their claims honoured, changes that move in the direction of diminishing worker input at the management level or the board level of the compensation board are, in our view, shortsighted and will not be helpful to the workers or the people of Ontario.
The Chair: Thank you, Mr Burdick. We have time for questions.
Mr Maves: I'm not trying to make light in any way, but I was rather astonished that you had said 50% of library workers have compensation claims or are injured workers.
Ms Walker: In my workplace it's either a new or a recurring injury, and our experience is that the second occurrence is frequently resulting in permanent injuries.
Mr Maves: I would have assumed that it was a rather safe workplace. Could you give me some examples about some of the injuries?
Ms Walker: Sure. What happened at the Toronto Public Library is that it was an unautomated library system for a long period of time. When automation was introduced, what it did was it put library workers on to the assembly line. Without criticizing the employer unduly, I think it's very real to say that very few of us knew exactly what we were doing when we first put automation in. We didn't know that to ask someone to go like this for three hours at a time with a light-pen was going to have disastrous results, or that the height of desks and tables was important.
There was some -- I don't know how to phrase it -- unintentioned neglect there, but employers are trying to take steps to resolve that. It's difficult, though, when you've got the other pressure of increased need and decreased staffing. Those are the types of injuries. They're fine motor movement, from repeating that type of motion, but also static loading in the shoulders. I can tell you that I know someone who has to run water over her hands to get them to uncurl.
Now, as much as people want lower deficits and budget cuts, I have yet to meet a Tory who wanted to hurt somebody, and people say that's not the kind of accountability they're looking for.
The Chair: Thank you very much, both Ms Walker and Mr Burdick.
Mr Duncan wanted to raise another procedural matter or request for information.
Mr Duncan: I had a request for information of the committee. I wonder if we could be provided with information, in terms of both employer and worker fraud, about (a) the investigative processes at the Workers' Compensation Board that are currently in place; and (b) the number of investigations against employers versus workers, let's say, in the last three years; and then, finally, the number of times that current maximum fines have been levelled against employers.
The Chair: Are there any other procedural matters? That being our last submission before recess, I'll call the meeting recessed until 3:30 this afternoon.
The committee recessed from 1216 to 1533.
The Chair: I call the committee back to order. Good afternoon all.
COUNCIL OF ONTARIO CONSTRUCTION ASSOCIATIONS
The Chair: Our first deputation this afternoon will be from the Council of Ontario Construction Associations. We remind everyone that we have 15-minute time slots today, and you can use that time as you see fit for either a presentation or a question-and-answer period, but we will be enforcing the 15 minutes. My apologies for the slight delay in getting started, gentlemen.
Mr David Frame: As you mentioned, we're here representing COCA, the Council of Ontario Construction Associations. My name is David Frame, executive vice-president. To my far left is Don Stewart. Don chairs our committee and he represents the Mechanical Contractors Association of Ontario. Also with me is Bob Brodie of Dewar Insulations; he is vice-president of finance.
COCA comprises 48 associations representing various trade and local mixed associations servicing Ontario's construction industry. These associations include a membership representing 8,000 large, medium and small contractors, a list of which is attached to my presentation.
The changes presented in Bill 15 represent a good start towards comprehensive reform of the WCB system. The bill itself is not a comprehensive change, but it does set the table for badly needed overhaul. Key changes in Bill 15 focus on administration and governance so that the board will be prepared to respond appropriately when a comprehensive overhaul is introduced.
On the issue of the board, we strongly support a move away from the bipartite to a multipartite structure. We have not been well served by bipartite structures in the WCB, the Workplace Health and Safety Agency and OTAB and we must learn from these failures. We must develop a system which is not designed around the labour relations model but rather one which will provide strong corporate governance.
When the former government changed the governance structure it declared the Workers' Compensation Board to be the joint property of the employers and the employees of Ontario. It established a bipartite model in which both would have equal representation based on common ownership. In doing so, the government abdicated its responsibility to ensure that the system was operating in the interests of the citizens of Ontario, and we believe these changes go a long way to move it back to where it should be.
The criteria for identifying the best board members should not be whom they represent, but do they bring the right tools to the table; do they provide a background which will be beneficial to the decision-making process? The board must be able to operate as a team. They must have strong leadership and there must be a common vision shared by all board members. Without this, once again, the system will not be given the type of leadership it desperately needs.
In making these changes, however, we must caution that they alone do not represent comprehensive changes to the system itself. We have worked extensively with senior management and members of the board of directors over many years, and time and time again we have found ourselves frustrated in suggesting positive changes that are not possible because bad legislation requires that it be done differently. A succession of WCB chairmen and vice-chairs has said to us, "I agree with what you are proposing but the legislation does not allow us to consider it." We must realize that even the best board will not solve many of the problems without comprehensive changes to the benefit structure.
Legislative changes, not governance problems, have been the major factor in creating our current financial crisis. Let's just quickly look at the record. In 1984 the unfunded liability doubled when the Legislature indexed the act but provided for no means to pay for it, short of massive rate increases. In 1989 the government brought in the dual award system and promised it would be revenue-neutral. In fact, the cost of this system proved to be roughly double that of the old one. Just last year a number of changes were made, including the application of the Friedland indexing formula, which should have reduced costs. Instead, we found that 70% of the benefits were exempted from the formula and that the new subsection 147(4) supplements finally have been costed at about $1.5 billion instead of the $700 million that the government estimated at the time.
This tinkering by government every four or five years has amounted to over $7 billion of debt added to the system and is a major reason for the financial crisis that the board now faces. We believe this Legislature must accept the responsibility to bring in comprehensive reforms which will provide fair levels of compensation and entitlement but in a manner that the board can manage on a fiscally sustainable basis.
Much of the conflict that exists in the system can be significantly reduced by the legislation being made more specific on key criteria. These will include eligibility, levels of some benefits, terms of payment, requirements for continuation of benefits and termination of benefits. These lack a clear definition in the act, which leads to time-consuming and costly processes of policy development, adjudication and appeals and has produced countless inconsistencies and unfair applications.
1540
We're going to recommend to you today two small but, we believe, very significant amendments to Bill 15. The future economic loss provision, the FEL component of the dual award system, is about to enter its sixth year. It is still to fully mature, in that the earliest recipients have not had their second review. These are due to begin early next year. The legislation is silent on the issue of whether this review will lock in benefits until the recipient reaches age 65. At this time, the board's intention is to lock in benefits. The cost of this is not yet confirmed in the calculations of the unfunded liability or the assessment rates. If they are locked in, we face an enormous increase to some employers' costs and in the unfunded liability.
The Honourable Cam Jackson's review will address the financial sustainability of this award, but we are very concerned that before the next round of reforms are implemented a significant group of recipients will have these benefits locked in at possibly unreasonably high levels.
We recommend an amendment to subsection 41(2), which clarifies that review number two of FEL benefits will not be considered to be locked in. This will simply allow changes to the FEL to be applied equally to all, should that be the decision.
We are concerned that the bill's proposal to amend subsections 108.1(1) to (3) will require registration within 10 days of becoming an employer. We don't feel this is reasonable. The board is preparing to implement a new registration and review system called RESET on January 1 next year. The board worked for years with employers and systems experts to construct an effective and workable system. It's one that allows employers up to 30 days to register upon them becoming an employer. It recognizes that the employer must produce proof of things such as cancelled paycheques to prove that, yes, they are an employer. It is also consistent with the timing of the board's assessment schedule. The vice-president of finance of the board admitted to us just last week that it would not be reasonable or possible for them to enforce the 10-day registration period. We encourage you to amend this requirement so it becomes 30 days, or at least to make it consistent with the registration requirements of Revenue Canada.
I want to take a few minutes to talk to you about the relationship between accident reduction and WCB costs that we faced in the construction industry. Much has been accomplished in the last decade to improve construction safety performance. This includes an extensive development and implementation of regulations under the Occupational Health and Safety Act for our industry; increased resources and education, largely provided through the Construction Safety Association of Ontario; increased labour and management cooperation in the development of workplace procedures; and of course the introduction of construction's own experience rating system, called CAD-7. Our research indicates that of all these processes, experience rating has probably had the most significant impact on reducing the industry's accident level.
Early in the 1980s, our industry made a commitment to reduce the number of lost-time injuries. The industry spent a number of years working with the WCB to develop CAD-7 so that it would reward employers for having fewer accidents and lower costs and also would surcharge those who have more. The message is very simple: Safety is a bottom-line issue. Reduce your accidents, you will reduce your WCB costs, and the company's level of profitability therefore will be enhanced.
Experience rating in construction was introduced in 1985, and in that year the industry sustained 15,440 lost-time accidents. Last year, in 1994, the number of LTIs in the industry was off significantly, to 6,374. This is a tremendous accomplishment. Chart A shows that in the first two years of CAD-7 there was no significant change in the accident frequency level, but from 1988 through to 1993 the accident rate has continued to fall every year regardless of employment levels in the industry. As a result, our accident frequency rate has been reduced 62% over that period. We believe it's a significant accomplishment for all those involved.
While our occupational health and safety performance has produced steady improvements, we have failed dismally to use it to reduce WCB costs. Chart B compares construction lost-time incidence versus benefit costs. In 1982, the benefit payments to injured workers paid out were just over $130 million. By 1992, 10 years later, those benefits had increased to $452 million, despite a significant reduction in the lost-time accident claims.
To consider the magnitude of this growth, we produced a comparison of the costs on page 10, chart C. It shows that the cost per LTI grew from $10,813 in 1982 to a staggering $55,875 by 1992. The board's report on how these costs break down is shown on chart D. It compares the division of costs in the construction sector before Bill 162 was implemented and after it was introduced featuring the dual-award pension provisions.
It illustrates that while most areas of costs, particularly those of short-term compensation, have been reduced, largely because of fewer accidents, the cost of pensions, particularly the future economic loss, and their related supplements have soared from 33% to 53% of total payments. This has convinced us that the key to controlling costs is to revise the future economic loss provision to make it more efficient in delivering its benefits to the workers who are truly in need. The industry's efforts to reduce costs by reducing the number of accidents has failed, in part because of this growth of the FEL benefits.
Future economic loss was designed to compensate workers with work-related permanent disabilities by providing partial compensation for lost income-earning potential related to the accident. Our five years of experience with FEL show the system does not restrict itself to this and, as a result, has caused significant overcompensation in some areas and driven the construction industry's unfunded liability up by over $1 billion so that today it is well over $3 billion.
Very quickly, we believe some of the flaws in this system are:
The law assumes that all full-time workers work a full year. But in construction, seasonal work and high unemployment mean that a 60% FEL award often will pay higher benefits than the average healthy worker will receive in that full year. This is a great disincentive for return to work at a lower level of pay.
The Chair: Excuse me, Mr Frame. I just want to alert you that you've got about 30 seconds to a minute to wrap up, if you could.
Mr Frame: Okay, I'll move through it very quickly.
The Workers's Compensation Act establishes that a worker who has not returned to work one full year after an accident will be assessed for a FEL. This assumes that an impairment caused by the accident has blocked re-employment, but in some industries, such as construction, most are victims of the economic turndown. FEL has become a lucrative unemployment and retirement fund for thousands of workers, and obviously changes need to occur.
We believe the FEL supplement simply must be overhauled to stop this haemorrhaging, only providing payment for lost-time wages due to the impairment, not for other personal conditions. We understand that the reform of the FEL is not in the intention of Bill 15 but will be a prime focus of the Jackson review. Therefore, we would like you to give a full consideration to the recommendations to change subsection 41(2) so that it's clarified that pensions are not locked in.
Thank you for the opportunity to present on Bill 15, and if there is any time for questions, we would welcome them.
The Chair: I regret that, in the interest of getting all of the 73 groups and people that have requested time to speak, we're strictly enforcing the 15-minute limit. But thank you all for taking the time to make your presentation and offer these suggestions.
1550
ONTARIO FEDERATION OF LABOUR
The Chair: The next group up will be the Ontario Federation of Labour. Good afternoon, gentlemen. Would you be kind enough to introduce yourselves for the committee and Hansard.
Mr Ken Signoretti: Thank you, Chairperson. My name is Ken Signoretti and I'm the executive vice-president of the Ontario Federation of Labour. On my left is Ross McClellan, the legislative director.
I just want to make a few comments. First of all, I just want to say that we're pleased to be here and I just want to start reminding the committee that in fact the Ontario Federation of Labour has been deeply involved with workers' compensation for a long time. We've done it because we really believe that there are problems with the system and we want to do the best we can to try to fix it up.
We have a workers' training project which is involved and we've trained over 6,000 participants for compensation advocates. We've participated in all levels of the workers' system, from the board of directors to many committees and subcommittees involved in workers' compensation issues. This, as I said, was done for the sole purpose of helping to create a more just, a more effective system of workers' compensation. We want a system that compensates workers fairly and justly for their injuries and gets them back to work as quickly as possible.
We were making real progress towards that goal of a fair, effective workers' compensation system, and here are some facts I hope you would consider when you pass, or hopefully don't pass, Bill 15.
Fact: The board does not have a debt; it has an unfunded liability. We all know there's a difference. The WCB is not bankrupt. It does not borrow a cent. It has more than $6 billion in assets sitting in an accident fund. It has an unfunded liability, which is the present cost of future payments owed to injured workers by the employers for present claims. The reason that there is a $12-billion unfunded liability is because employers have always refused to pay the actual cost of workers' compensation.
Fact: Measured in 1994 dollars, the unfunded liability grew the most during the 1980s when the Progressive Conservatives were in power. In 1980, the unfunded liability was $398 million. In 1985, when the Tories left office, it was $5.4 billion. I just want to remind you here -- and I was listening to Mr Frame earlier when he talked about 1984 -- when Bill 101 was passed and they increased to full indexing, 100%, for workers, one of the things that was necessary to do was to also increase the funding level. There was a great deal of pressure from the business community, and at that point the funding level was not put into place, so consequently you had a misbalance. If that funding level had been put in place as it should have been, we probably wouldn't have the trouble or perceived problems that we have today.
Fact: The WCB is better funded today than it was 10 years ago. In 1985, the ratio of assets to liabilities was 31.8%. In 1994, the ratio was 37.4%.
Fact: New claim costs have decreased over 8% in the past four years, from an average of $2 to $1.68 per $100 of payroll.
Fact: The WCB's overhead has decreased over 8% in the past four years, from an average of 49 cents to 44 cents per $100 of payroll.
Fact: According to its 1993 annual report, WCB devoted 17% of its total expenses to pay for overhead. In comparison, Sun Life of Canada charged 30% and the Minnesota privatized workers' compensation charged 29% against overhead. This year, in 1995, WCB has a cash flow surplus. These are the things you have to think about before talking about privatization.
The fact is that the real abuses at the WCB are abused by employers, and not workers.
Fact: More than 55,000 employers owe the WCB $430 million outstanding.
Fact: An estimated 20,00 employers which should legally be registered with the WCB and paying their fair share are not registered at all.
Fact: Over 700,000 Ontario workers are excluded from WCB coverage because their employers have been successful in lobbying government to exempt them from the system.
Fact: While employers scream about WCB costs, they've been stripping the funds out of the board through the experience rating scam, because it encourages employers to hide and oppose claims. It is supposed to pay out roughly the same amount in rebates to the so-called good employers as it imposes penalties on the so-called bad employers. In fact, in 1994 the WCB paid out $280 million more in rebates than it collected in penalties; in 1993, the figure was $216 million. This is higher than the total amount paid each year for temporary total disability benefits. And it is real cash, not actuarial projections.
Earlier this year, the labour members of the bipartite board of directors, now dismissed, voted to support a financial improvements package which would have eliminated the WCB unfunded liability by the year 2014. It was the employers who opposed it, out of greed to keep the experience rating scam pumping more WCB money into their coffers.
Bill 15 proposes to turn total control of the WCB over to these same business people who have been ripping off the system for 25 years. It is a wrong and foolish policy. It will not work. We urge you to re-establish a genuine partnership of governance for the WCB. Let's get on with the job of creating a fair and effective public insurance plan for the workplace accidents.
I just want to say, I heard Mr Frame earlier when he talked about how we have to restore balance and bring the system back to where it was. If we have to honour the system as it was in 1915 -- I understand that in 1995 things are not going to work the same, but in terms of the principle of workers' compensation, the whole idea of workers' compensation was a plan which employers paid into and in return for that employees would not sue. It was a no-fault insurance. I think when you do that you get into a bipartite structure because one side is giving to the other in that whole process.
So I would hope, on behalf of the Ontario Federation of Labour and all the affiliates, that you reconsider your position. That's our submission. Ross has given you the whole details. That was just a capsule of what we want.
Mr Ross McClellan: There's an appendix at the second half of the brief which I'd ask members to have a look at. It covers some of the detailed points of the legislation.
The Chair: Thank you. We ended the questioning in the morning session with the third party, so the leadoff will be the government members.
Mr Baird: I'd like to thank you, first, for your presentation today. You've obviously put a lot of time into it, and we all greatly appreciate that and your attendance here today.
Just two or three comments before a question: One of the facts, that the unfunded liability went from $2.8 billion to $5.4 billion in 1984-85, that was of course because of the extending of inflation protection which was supported by all parties. Your point, though, on the funding level to the plan never being raised as well, is very well taken. It obviously should have been.
The second comment: With respect to another one of the facts, the funding ratio was 31.8% in 1985. By 1990 it had improved, under the Liberal government, to over 40%, but then unfortunately it started to go down, to 37.4%, as you indicated. So it was actually getting worse historically.
The question I had was with respect to the provisions in the proposed legislation calling for increased fines to businesses. One of the criticisms you I think very justifiably brought forward is the abuses taking place by employers. Do you support the provisions in the bill which levy $100,000 fines to employers who fail to register within 10 days, as is the case with the retail sales tax and health care payroll tax?
Mr Signoretti: Yes, we have no problems with the fines. When we talk about the system, I think you can get around the fines thing. One of the problems that we have when we talk about abuse by employers -- and I just want to talk for about a minute, if I can, about the experience rating that Mr Frame talked about, which went down from $12,000 to $6,000, or whatever the figures used; I couldn't quite hear. Part of that problem with the experience rating, as we've been saying all along, is -- and if you talk to employees, this is what's happened -- the experience rating was being abused because employees are being told that in fact it's better for you to go on S and A benefits than workers' compensation. A lot of people are convinced that's the best way, for a couple of reasons. One is that money's in the pocket of employees quicker, and secondly -- just for that reason, I guess, alone, that they want to get the money quicker.
The problem with what the experience rating does is that if a person then has a follow-up injury to that and it's not recorded, so then it doesn't show up as a recurrence, part of the problem, we think, is that if you have a true system where employers and employees work together on the whole problem, because we have just as much at stake as everybody else, that will make it a lot better than trying to use an experience rating.
1600
So you can have $100,000 or you can have $500,000 in fines; the reality of it is they don't pay. A good example was what happened with -- the ministry has now backed off with that young man who got killed --
Mr Baird: Mr Kells.
Mr Signoretti: Yes, Sean Kells. You backed off, but you backed off after considerable pressure.
Anyway, fines sometimes really don't mean a whole lot. That's the short answer.
Mr McClellan: Could I just say, particularly in the construction field in this city there's a whole army of underground employers who are not registered as employers. They're systematically avoiding compensation benefits. The proof will be in the enforcement, and people are very sceptical about, quite frankly, your willingness to enforce that. You could be enforcing it right now.
Mr Baird: As a newly elected member, I can't speak to why the board has let this problem get out of control over the last number of years. But I guess my final comment would be, your comment with respect to employers not paying the dues that they're supposed to pay is certainly an issue. That's why we think getting tough with fines is important. But your point on enforcement is well taken. These powers have got to be used by the board.
Mr Duncan: The amount in the act and the fine are meaningless; it's enforcement.
Has anybody from Mr Jackson's office asked you for any input on the major changes he's making?
Mr Signoretti: Nothing.
Mr Duncan: There's been no consultation at all? None?
Mr Signoretti: We've had no consultation with anybody on anything.
Mr Duncan: Written or verbal?
Mr Signoretti: As a matter of fact, we tried. Mr Hambley is here. Mr Hambley and I both tried to get a meeting with the minister on this and we were unable to.
Mr Duncan: Ms Castrilli has our supplementary.
Ms Annamarie Castrilli (Downsview): I'd like to turn to another matter which deals with the composition of the new board. As you correctly stated in your brief, it was a bipartite board. That bipartite board came to loggerheads on occasion. This new board, I'm wondering if you have any concerns about how it would be appointed, what input your organization and others would have with respect to that board. Does it concern you?
Mr Signoretti: I'm sorry. I didn't hear you. I didn't bring my hearing aid.
Ms Castrilli: Yes, forgive me. I'm suffering from a cold. I'll try and speak more clearly. The government has introduced this new board, the multi-stakeholder board, in order to overcome the difficulty of the bipartite board. I wondered what, if any, concerns you have about how the board would be structured.
Mr Signoretti: We like the bipartite structure and we think it worked very well. You made a comment; you said there were some problems and it got into loggerheads sometimes, and it's true. Any time two people with two different views get down, there are going to be differences. But by and large you can work the differences out.
We have been trying to work the differences out. Mr Hambley and the business council are going to be here a little later on, and I've got to tell you, we had a good relationship with these people. We worked hard, they worked hard, and there were times we had disagreements, but by and large we were able to work our problems out.
As I said, when you get two people who have different views, you're going to get into difficulties sometimes, but I think you can work them out, and by and large we did. We did a lot of hard work. That's why from a multi-stakeholder board, if you're asking me would we want to be on one, I don't know. That's something we haven't talked about. We want to see how the how the whole thing plays out, but at this point I would say no. I think the best thing was a bipartite structure. We know that it worked.
The Chair: Thank you, Mr Signoretti. That's the end of our 15 minutes, but I appreciate your taking the time to visit us today and thank you for your submissions.
CANADIAN FEDERATION OF INDEPENDENT BUSINESS
The Chair: Our next group up will be the Canadian Federation of Independent Business.
Good afternoon. I wonder if you'd be kind enough to introduce yourselves for Hansard and the committee.
Ms Catherine Swift: Good afternoon. My name is Catherine Swift. I'm the president of the Canadian Federation of Independent Business. My colleague Judith Andrew, who is the director of provincial policy with special responsibility for Ontario, is with me today.
As we don't have a lot of time, we'll try to be as brief as we can. We certainly, as always, appreciate the opportunity to express the views of small businesses in Ontario today. We are, as you probably know, a national organization. We have about 85,000 members, small and medium-sized business members across Canada, and almost half of them happen to be in Ontario, roughly 40,000.
We've been very active as an organization on workers' compensation issues for a very, very long time. We've done fairly substantive research, I guess we'd like to think, over the years. A study we did back in 1987 in fact was a fairly instructive tome and one that interestingly enough, when we read, we don't find too much of it out of whack in terms of the policy recommendations for today.
We've found the issue of workers' compensation has increased as a concern for our members over the years, and there's no question that this tracks the increase in premiums and certainly the well-founded belief that the system is currently well out of control. Despite the fact that we see a decline in the incidence of workplace accidents, we see ever-increasing premiums, so there's clearly a problem here.
Generally speaking, we view workers' compensation premiums as just one more of that area of taxation we refer to as payroll taxes. It's quite a significant body of research, as you may know, that has shown how payroll taxes, those levied as a percentage of payroll, as workers' comp is, both penalize employees via a reduction in their real wage levels over time and also serve as a deterrent to employment. So we think there's a very good array of evidence to suggest that anything that brings down the level of payroll taxes will be a plus in terms of job creation and also, of course, the overall level of employment in the economy.
We have been very supportive for a long time now of quite comprehensive reform of workers' compensation in Ontario. We support, for example, what this government has already done in terms of terminating the former government's royal commission. We are very supportive, again, of reducing assessment rates by 5%, which has been part of the government's reform plan to date, a reduction in overall benefit levels and the introduction of such things as a three-day waiting period for claims.
This is something that, as you probably know, is working quite well in New Brunswick, and we think the New Brunswick model, as well as others in other jurisdictions across the country, have a lot to guide us, because many of them have been in place for a number of years and have not ended up in any kind of gutting of the system, but have very much enhanced financial accountability and benefits to both workers and employers.
I'd like to now ask Judith to cover some of the nitty-gritty of our recommendations.
Ms Judith Andrew: The next few sections of our brief actually deal with Bill 15. The purpose clause is something we've had a very close look at. We believe that a prerequisite to establishing an enduring board of directors structure is to articulate the vision of the WCB in legislation. Certainly if the board of directors does not understand and agree upon the vision or the purpose of the organization, the differing views of what the WCB is attempting to accomplish will inevitably clash, and this is what we have witnessed over the past few years.
We articulate a vision here in our brief. It contains a concept that is not in Bill 15 and that we suggest be injected into Bill 15, and that is the concept of competitiveness. We believe that element is critical to ensuring that financial accountability is not interpreted by others in the future as the simple exercise of levying sufficient payroll taxes to cover all of the spending, excessive or otherwise, that may be going on. We think it was precisely this kind of thinking, "the spend now, employers will pay later" approach, that resulted in the current situation where Ontario has the dubious distinction of having the largest unfunded liability as well as almost the highest assessment rates in the country. So we would strongly recommend that the notion of competitiveness be injected into the purpose clause of the act.
On the governance model, I just would say briefly that we applaud the move to eliminate bipartism and its structures and replace that with a multi-stakeholder model. We believe that all stakeholders should be represented. Of course small business is one of them but also the non-union employee group as well as the labour interests, big business as schedule 2 employees, and a mix of the different sectors that are affected by workers' compensation.
We believe that professional expertise at the board table will be important so that the right questions are asked of staff before important decisions are made in this very complex area.
1610
We also believe that it would be important to name to the board a senior government official from a key financial ministry. This we propose in conjunction with a change in reporting to the Ministry of Finance.
We also view governance in its broader context in terms of the board of directors being responsible for the management of the entire system, including all of the organizations funded from WCB moneys. It's our view that the system would never be financially sustainable if outside bodies can spend WCB funds without being ultimately accountable to the taxing authority.
On financial accountability, and of course this mixes in with the governance issues, we believe that accountability to small business taxpayers can only happen via the elected representatives of the people of Ontario. For too many years our concerns were buffeted back and forth between the government and the WCB, with each blaming the other for the problems. We believe that the new memorandum of understanding, which in effect is a contract between the WCB and the government, is a good idea. We support the requirement of value-for-money audits, with the minister determining annually which program is to be reviewed. We believe those audits should be made available publicly on a timely basis.
We would also recommend further measures to bolster financial accountability within the system, things like the WCB board of directors referring policy issues of public or major economic importance to the government for legislative or other action, with a certified actuarial evaluation attached.
We also believe the board of directors should file a detailed budget in the autumn with the relevant standing committee of the Legislature, probably this committee, and justify variances to the committee shortly after the year-end. This recommendation is made on the assumption that the MOU plans and statements would not be publicly available.
We think the WCB unfunded liability should be shown as a contingent liability of the province and that at year-end the WCB actuaries should sign both the rates and the liabilities and report the same to the board of directors and also make them public at the same time.
On the issue of fraud and revenue loss, our members are extremely concerned about the extent of this in the system. We have a total of 79% of our members concerned about abuse of the system. In fact, we published a piece to assist our members in dealing with WCB fraud and abuse in order to help them combat this issue. We certainly support further measures to give the WCB the necessary tools to attack the problem evenhandedly and to a much greater extent.
Our analysis on Bill 15 has us concerned that employee fraud is to be treated with more leniency than employer fraud. In subsections 161(1) and 161(2), for example, the words "willfully" and "knowingly" are used in connection with employee misstatements. On the other side of things, the revenue loss section, for example, section 156 makes it an offence for an employer who fails to register, without considering whether or not it was done knowingly or willfully.
Certainly with the government's Clearing the Path project there should be fewer situations where an individual registers a business without being aware that he or she should be signing up with the WCB, but there does remain many such situations where employers are genuinely unaware of the requirement. We would argue that it's very difficult for a business owner to discover some years later that they should have registered, only to be in a quandary as to registering at that point and facing several years of back assessments. Accordingly, we recommend a time-limited amnesty in conjunction with an awareness program in order to get all the businesses properly signed up and paying into the WCB.
We recommend several other fraud prevention measures on the top of page 6, and I just want to briefly draw your attention to the key issues that were held over for phase 2 reform which we have strong member positions on.
On the whole area of benefits, attached to the brief is our mandate 160, which shows 91% of our members in favour of limiting WCB benefits so that the employee's original earnings are not exceeded. Of course, when the original earnings are exceeded, this in effect is overcompensation, when the person ends up taking home more than 100% of pre-injury income. This is financially unsustainable.
We recommend eliminating top-ups, revisiting the Bill 162 retirement pension issue, scaling back the future economic loss awards that have turned out to be far more costly than even the most generous costings that were done before Bill 162 was passed and looking at and dealing with the overcompensation in Bill 165. Catherine mentioned the waiting period. We believe that would be an important part of the reform, and our mandate 168, attached to the brief, shows 81% of our members in favour of such a waiting period.
We also attach some suggested legislative language for limiting entitlement in stress to work-caused events, and that's enclosed at the back of the brief.
I just would say in conclusion that our small and medium-sized firms are looking forward to the promised reforms, both the phase 1 and the phase 2, to follow Mr Jackson's review. Once those take effect, they will certainly provide early positive results for the WCB system and for Ontarians generally.
The Chair: Thank you. The speaking rotation will start with the third party this time. I beg your pardon. The OFL didn't have any questions. I stand corrected. You're up, Mr Duncan.
Mr Duncan: Your members have consistently expressed their concern about paperwork and the paper burden associated with government, specifically section 17 of the bill, section 108.1 of the act. Are you not concerned that that section could possibly create an additional paper burden on your members, that historically you've spoken very strongly against these kinds of things?
Ms Andrew: You're speaking of the notion of registering within 10 days after becoming an employer?
Mr Duncan: Not only the registration, but subsection 108.1(2) of the act, "When registering and at such other times as the board may require, an employer...." It strikes me that if we give legislative effect to these types of changes, your members could be faced with a considerable paper burden that they don't presently have. I'm curious as to why you haven't addressed that issue. You addressed that issue in a number of other forums in the past.
Ms Andrew: Employers are currently required to register when they have employees.
Mr Duncan: No, again, in subsection (2) and also in the offences section -- I envision a situation where when the officials at the board get a hold of these legislative changes, the kinds of paper that they could impose on members of your organization could be very onerous. You've been very forthright and candid in the past about your concerns about red tape. Wouldn't you share our concern that possibly the red tape associated with these changes could be more onerous than, say, the corporate filing?
Ms Andrew: I would certainly think that the notion of doing it within 10 days might be impossible, certainly for small businesses, probably for the WCB as well.
Mr Duncan: You would acknowledge, then, that these are a very onerous paper burden?
Ms Andrew: Paper burden issues are always a concern for us. Obviously, in some instances it's a necessary evil, but we are supportive also of the Clearing the Path effort to make sure that registrations kind of happen in a one-window effort.
Mr Duncan: Have you been consulted by Mr Jackson yet on his reforms?
Ms Andrew: Only in a preliminary way. I understand Mr Jackson is going to release a discussion paper.
Mr Duncan: So you have been consulted. What form was that preliminary way?
Ms Andrew: We have requested and had meetings with staff to discuss various issues.
Mr Duncan: So you have had the opportunity meet with his staff.
Ms Andrew: Yes.
1620
Mr David Christopherson (Hamilton Centre): I have to confess, there's so much I fundamentally disagree with I wasn't sure which question to ask, because I'm likely to only get one. So we'll just start at maybe the largest piece.
I still have a great deal of difficulty understanding those who disagree with the bipartite system, given that the WCB was originally a pact, if you will, a public social pact between employers and employees in terms of employees receiving compensation for lost wages and benefits if they're hurt on the job through no fault of their own, while employers are saved from any kind of lawsuit.
That was the original pact, and I really would like you to help me with this. Why, if that's the case, would it be so unacceptable to small business people that workers would then have 50% of the say in the decision-making -- not more, not less, but 50% of the say in that decision-making -- if it was an equal partnership when it was first brought in in 1914?
Ms Andrew: I think if you go back to the Justice Meredith inquiry, the involvement was also on the part of government. This wasn't a deal that employers just made with labour --
Mr Christopherson: But the government provides the legislation.
Ms Andrew: -- but government was involved there and, as you notice in our brief, we recommend that the government take an important role and be quite accountable for this system.
We think employees should have good representation at the board table, but that would not be exclusive to organized labour. There's a large non-union contingent out there that has been disfranchised for many years for not having any representation at the board table, and we think the process should be more open than that.
We also believe that professionals should be named to the board, public-minded people who have special expertise, for example, actuarial, medical and so forth, who would be able to help elicit the right kinds of information for the board to make decisions. This is not an area that people can get up to speed on in a short orientation. It is not quite like the normal board that people sit on, and that's why we believe that it should be a multipartite effort.
To get right at your question, the bipartite approach didn't work. We've had a couple of examples of disasters with the bipartite approach, the most notable being the Workplace Health and Safety Agency.
Mr Christopherson: Oh. I fundamentally disagree with that so much. Jeez.
The Chair: You were right in your expectation; you only have one question.
Thank you very much. I'm afraid we've used up the 15 minutes. Thank you for taking the time to make your presentations.
BUSINESS STEERING COMMITTEE
The Chair: Our next group up is the Business Steering Committee. Good afternoon, ladies and gentlemen. I wonder if you would be kind enough to introduce yourself to the committee and to Hansard. Just as a reminder, we're keeping a strict eye on the clock today to try and get all 73 deputations in.
Mr David Hambley: Good afternoon. My name is David Hambley. I'm vice-president of human resources at Noranda and chair of the Business Steering Committee. With me today are Dr Albert Cecutti, vice-president, environmental services at Falconbridge; Laurie Harley, manager, government relations at IBM; Dale Kerry, vice-president of human resources at Jannock Ltd; and Charlie Ryan, manager of government relations at General Motors.
As background, the Business Steering Committee was formed in 1993 to support the business members of the Premier's Labour-Management Advisory Committee or the PLMAC, as you may know it. The business community united behind the issue of workers' compensation reform establishing a process that gathered input from over 200 small and large companies and associations. A well-researched document was prepared and presented to the government. Many of the recommendations contained in that submission form part of Bill 15. Other key issues will be studied by Minister Jackson, and we will be active in that review as well.
We are pleased with the direction the government is taking in reforming the workers' compensation system and encourage them to continue their efforts.
My comments first address the purpose clause. The purpose clause as proposed is a major improvement to the current wording in the act. It will require financial responsibility and accountability on all aspects of the system.
However, it doesn't go far enough to address our long-standing concern about the long-term financial viability of the system. As written, the purpose clause sets out the services the act provides and then requires the accomplishment of those services in a financially responsible and accountable manner. We think we need something stronger if it is to be of assistance to the government in restoring financial sustainability. We suggest a change to the opening clause as follows:
"The purpose of this act is to prevent workplace accident and illness and reduce the overall cost of work-caused injuries and illnesses to workers, employers and the citizens of Ontario, to ensure the long-term viability of a fair, effective and affordable workers' compensation system in Ontario, and, in doing so, accomplish the following in a financially responsible and accountable manner."
We suggest that points 1, 2, 4 and 6 should not be changed, but that point 3 should read:
"To facilitate the provision of rehabilitation programs to restore the workers' condition of employability and programs to facilitate the workers' return to work."
We think it is very important to distinguish between employability versus employment. Rehabilitation should not be a substitute for lack of employment.
We suggest point 5 should read:
"To prevent or reduce the occurrence of injuries and occupational diseases at work," we would add "through financial incentives to employers."
We certainly support the use of experience rating in the act for encouraging and promoting prevention programs.
On governance: We fully support the general direction of a multi-stakeholder board. However, we have several suggestions to ensure the success of this model.
We believe the government controls the system in three ways: setting out the broad parameters of the system; appointing the board of directors and approving hiring of the chair and the president; using a memorandum of understanding which clearly defines the roles of government and the WCB.
Consistent with this control, we have the following comments regarding governance.
On policy direction: While giving the minister the ability to provide policy direction without restrictions is sound policy in the short term, we suggest that with the new governance structure in place the minister should be much less involved in the longer term.
While we have every confidence in Minister Witmer, we are concerned that the minister applying policy directly may undermine the independence that should be in place for the WCB to function effectively. We are also concerned that this may expose policymaking to political pressure in the Legislature in the longer term.
For these reasons we recommend that the minister's ability to issue policy be limited to no more than 12 months -- six would be ideal -- providing the necessary direction and support for the new board.
On the issue of appointments: We support the multi-stakeholder model. The involvement of very senior stakeholders, including people from workers, employers and the community, committed to achieving the goals of the act, is essential.
Directors should be representative from, rather than of, their respective communities. Directors must be appointed based on skill and not affiliation.
We continue to have concern that appointments will be made more on a representative basis than on skill. It is critical that the directors bring with them the skills inherent in running a multi-billion-dollar organization.
The chair should be part-time, although in the shorter term, until a new CEO or restructuring officer, as we prefer to call him or her, is able to turn the WCB around, it would be appropriate to have a full-time chair. Eventually we think that the chair should be recommended to the government by the board of directors.
It is important that the board have the full authority to monitor the president's performance and take corrective action as required.
On WCAT: Employers continue to be concerned about the role and powers of WCAT. Decisions of WCAT have resulted in a major expansion of entitlement to benefits with almost total disregard for the system's ability to pay. We believe immediate action is necessary.
Although WCAT is part of Minister Jackson's review, it is not likely that we will see any legislation until early 1997. We are concerned about this interval.
Powers of WCAT should be limited through the bill; otherwise it can continue to undermine the effectiveness of the board and its policymaking role. WCAT should rule only on whether the WCB has applied its policy correctly and not on the correctness of the policy.
Restricting WCAT's ability and powers to interpret the law would require a minor change to section 86 of the act, as I understand it, and is consistent with the government's overall objective. For example, what would the government do if WCAT overturned a government-initiated policy directive? WCAT decision-makers in the past have been both independent and creative. That concerns us quite a bit.
1630
I'm also of the view that the chair of WCAT should have responsibility to the chair of the WCB. Also, he or she should attend board meetings only at the invitation of the WCB chair.
On the issues of fraud and abuse: We fully support these measures and the value-for-money audits.
Regarding the registration of employers, government may wish to consider a revenue amnesty for back assessments prior to, say, 1995 and allow a six-month window for firms to come forward before implementing the changes.
Government and WCB also need to consider the critical importance of communication and information with businesses that are newly established. Many firms that do not register with the WCB may be unaware of their obligation.
Workers' compensation fraud and abuse should not have any special immunity from prosecutions.
Bill 165 issues:
On the experience rating: In particular, Bill 165 put in place changes to experience rating in section 103 which changed these programs from results-based to process-based programs. To ensure the continued success of experience rating, and until the longer-term study is complete, we urge the government to rescind subsection 103.1(3) of the act.
On return to work: Requiring the workers' consent for the release of information surrounding return to work has imposed barriers in the return-to-work process. To ensure the effectiveness of return-to-work programs and efforts of employers, we recommend this requirement be removed from section 51 of the act.
On permanent partial disability supplements, or section 147: Bill 165 provided an additional $200 per month to about 40,000 people who were in receipt of the subsection 147(4) supplements. This added $1.5 billion to the unfunded liability.
The purpose of the original supplement was to bridge injured workers who were not likely to benefit from vocational rehabilitation with a monthly benefit equal to the old age security benefit until age 65. Bill 165 gave an additional $200 a month per life, which was not the intent of the supplement.
We are not sure if Minister Jackson will include this issue in his review, but with approximately 40,000 people currently receiving the benefit, the more time passes, the more difficult it will be to amend it.
Also, the WCB interpretation regarding subsection 147(4) awards added $350 million to the unfunded liability in 1994 and should be reviewed immediately.
Some of the options: Review the process to determine individual needs for the $200 per month; cut the $200 per month off at 65 because OAS starts then, and this was supposed to be a bridge up to the commencement of old age security; allow WCB to cease payment of the supplement at times of review, at 24 months and 60 months, where appropriate.
Mr Chairman, thank you for allowing us the time to present our recommendations.
The Chair: Thank you for your comments. Questions will start with the third party.
Mr Christopherson: I was interested in your, and other employers', comments on the experience rating system. All the employer groups are praising it. Given the fact that, as I understand, the policy principle is that it should not be paying out more in rebates than it collects in penalties, and we know that in 1994 they paid out $280 million more in rebates and in 1993 it was $216 million more in rebates than in penalties, and given that clearly your priority is the fiscal status of the WCB, how do you reconcile wanting fiscal accountability to be the top priority and yet continuing to endorse a system that is clearly benefiting employers at the expense of the unfunded liability and other operating costs, given that it's running at a deficit, actually, the way it's been carried out in the last couple of years? Can you explain that to me, please?
Mr Hambley: The only way I can answer that is to say that the employer community has been saying for quite a few years that the rating system needs to be reworked. I don't think I can comment any further on that. We know there are problems with it and it needs to be fixed.
Mr Christopherson: Sorry, but reworked in what way, though? How would you suggest it?
Mr Hambley: We need to study it and find a way to properly put in a rating system that's fair to everyone.
Mr Christopherson: Even if that had the effect of lowering the rebates, even in the formula that employers would receive, you'd support that?
Mr Hambley: Some people will have their premiums increased and some of them decreased, but the way the system is now, it's not fair to everyone.
Mr Christopherson: But if you're going to net this out, then obviously the decrease part would have to be pretty substantial, if now you're saying some people may even get more money in a rejigged formula than exists now. So you're still supporting the idea, though, that this needs to be brought in line and that some employers are not going to receive nearly as much money as they now do. Is that correct?
Mr Hambley: You mean, not pay as much money as they now do.
Mr Christopherson: No, receive -- in terms of rebates.
Dr Albert Cecutti: The only thing is that we believe that it should be balanced. We've said for some time that the intention is that this should equal out, and if it's not equalling out, then there has to be a system that would do that. It's very simple, and the employers have been saying this for some time. They believe that experience rating does work, period, and that it just shows that it has been an effective method of improving their accident statistics. Therefore, it has to be there in some way. We believe this. If there's an imbalance, then it has to be looked at by some other method. I know that some business communities have put in several suggestions on how this could be rejigged -- the actuaries have spoken to them -- to make it more fair.
Mr Christopherson: I understand that this has been pursued in the past and, each and every time there was a rejigging of the system, someone within the employer community would feel that they're receiving a particular hardship, and from their point of view they could make that case. Are you suggesting, though, clearly going on the record that regardless of the cost to employers this needs to be brought into balance and there would not be more money going out in rebates that is received in penalties? Is that correct?
Dr Cecutti: I won't go on the record, no, not what you just said. I said that we are in favour of experience rating and that it has to be fixed in some way to make it more equitable. I don't know that you could ever, say, guarantee that it would be balanced. It may not, but that would show up eventually in the rates.
Mr Christopherson: In this particular case, then, fiscal accountability is not necessarily the absolute top priority?
Dr Cecutti: I'm sorry?
Mr Christopherson: I'm just having some trouble understanding. If the fiscal requirements and needs of the WCB are the absolute priority driving the business community position, by and large, and yet they're also supporting one of the key elements within the WCB that gives a greater benefit to employers over and above what the policy says, then it would seem to me that you should be quite comfortable saying: "That has to be fixed. It has to balance the way that the policy is meant to." I would just offer, with great respect, that if you are not comfortable to say that, it does a great deal of damage to your argument that the fiscal accountability has to be the driving force of reforming WCB.
Dr Cecutti: No, I think you're incorrect in making that assumption. I think that what we're saying is that the whole board has to be accountable. Experience rating is one of the tools that has to be addressed. You've misinterpreted what the whole intent is. The intent is that the whole functioning of the board has to be financially accountable and run more effectively, but we still want experience rating as part of the system, and you can't take it out of context of the whole board.
Mr Christopherson: That's interesting.
The Chair: That more than uses up our 15 minutes. Thank you very much for taking the time to visit us today and preparing your presentation and brief you left behind.
BUSINESS COUNCIL ON OCCUPATIONAL HEALTH AND SAFETY IN ONTARIO
The Chair: Our next group up will be the Business Council on Occupational Health and Safety in Ontario. Good afternoon to you. I wonder if you'd be kind enough to introduce yourselves to the committee and Hansard.
Mr Mark Gabinet: Good afternoon, Mr Chairman and members of the committee. My name is Mark Gabinet and I am the director of safety and environment for BICC Phillips Inc. Accompanying me today is Dawn Janveaux, who is the director of health and safety for Cuddy Food Products Ltd. We are here as representatives of the Business Council on Occupational Health and Safety in Ontario, an employer organization to which both of our companies belong.
The business council was established in 1991 and is now comprised of 27 companies, the names of which are shown on the page following the cover of our brief. The mission of the business council is to support the development of public policy in the areas of occupational health, safety and workers' compensation which is both protective of individuals and consistent with economic competitiveness. To this end, we have supported programs of policy research and published a variety of reports and commentaries on health and safety policy matters. Our members have also worked actively with this government, as well as the with the previous NDP and Liberal governments, in the pursuit of our objectives. Currently, one of our association's directors, Ms Mary Roy, is a business representative on the ministerial review team respecting the Workplace Health and Safety Agency.
1640
We are pleased to have this opportunity today to provide the standing committee on resources development with our views on Bill 15. The reforms set out in the bill are most welcome by our members and long overdue. We are generally supportive of the bill, although we do have a particular concern and objection relating to one provision which appears to have the effect of giving quasi-regulatory powers to employer accident prevention associations created under the authority of section 135 of the Workers' Compensation Act. This matter will be the starting point of our submission. We also wish to use this opportunity to suggest further enhancements to Bill 15, as well as broader system reforms.
I will begin by addressing the matter of offences under the Workers' Compensation Act. In a prior submission to the Minister of Labour, dated September 26, 1995, we recommended that the act be amended to create a series of strict liability offences with a view to facilitating prosecution for fraud or system abuse. This is clearly the case in Bill 15, and we are generally supportive of the provisions.
However, we do have a very serious concern over subsection 154(2), which reads, "A person who contravenes a rule of an association formed under subsection 135(1) that has been approved and ratified as provided under subsection 135(2) is guilty of an offence." In referring to subsection 135(1), we see that the association in question is an accident prevention association, such as the Industrial Accident Prevention Association, the Construction Safety Association or any of the other employer accident prevention associations formed under subsection 135(1).
Therefore, subsection 154(2) effectively gives the accident prevention associations, which are supposedly non-governmental and non-regulatory organizations, regulatory or law-making authority by virtue of the fact that any rule they create would be one which an employer would be compelled to conform with under threat of penalty and prosecution under subsection 154(2).
This is troubling to our members for many reasons.
First, these accident prevention associations are not competent to function as lawmaking bodies. They are not structured, administered or otherwise equipped with personnel, expertise or processes necessary for creation of law or public policy. Nor do we believe they should be. Moreover, since many of these accident prevention associations are independently governed not-for-profit corporations under Ontario statutes, neither the WCB nor the government can expect to exercise control or direction over the rule-making activities of such associations.
Second, conveying such powers to safety associations would create an obvious conflict of interest. Currently, the accident prevention associations are essentially service providers. They provide training and consultation services, often for a fee, despite the fact that these services are already paid for through employer WCB assessments. It would seem, therefore, that these associations could face the tremendous temptation to create rules which would, as a direct or indirect effect, compel employers to utilize the associations' fee-for-service offerings.
This is not an improbable scenario. During the era of the Workplace Health and Safety Agency, a similar conflict of interest arose due to the agency's authority both to set standards for certification of joint health and safety committee members and to control the delivery of training to achieve such certification. Predictably, the agency created standards that called for several weeks of core training, which might still be followed by several weeks of sector-specific training; then set a price to such training; and then decreed that only they and their health and safety delivery organizations, that is, the accident prevention associations, could deliver such training. In fact, this tendency to create standards to create work seems, from our perspective, to have been a pervasive mindset at the agency prior to the election of the current government.
If subsection 154(2) survives, you should anticipate an unprecedented frenzy of association rule-making and a degree of discontent in the employer community that will make the past relations of employer groups to the Workplace Health and Safety Agency appear cordial by comparison.
Please don't misunderstand our position. We are not opposed to the creation and legislation of health and safety standards. It is simply that we believe this to be the proper domain of the government, not the WCB nor the accident prevention associations.
As a fourth and final point, the policy aim of subsection 154(2) is unclear. Is the government seeking to delegate its role and responsibilities for lawmaking and standard-setting in the area of workplace health and safety? This raises questions respecting the role of government in lawmaking and enforcement, and it also raises concerns over due process. Laws are made by governments, under the authority of elected representatives. Acts require the assent of the Legislative Assembly and regulations require the approval of the Lieutenant Governor in Council. These processes are not accidental but have been designed deliberately to provide opportunity for public input.
By comparison, we might ask where public representation and accountability can be found in the rule-making process envisioned by subsection 154(2). The answer is that public representation and accountability are absent. Subsection 154(2) undermines the role and responsibility of government and extends to non-governmental bodies a variety of powers to which they are not entitled.
Finally, with respect to subsection 154(2), we wish to express our disappointment and puzzlement that this was not a matter on which the government chose to widely consult prior to the introduction of Bill 15.
For these reasons, we strongly recommend that subsection 154(2) be excised from the bill.
I will now turn to the matter of governance of the Workers' Compensation Board.
Like many employer groups, we have shared the view that the board's prior bipartite government model was ineffective. Therefore, we are supportive of the move to a multi-stakeholder board. However, this alone provides no assurance of remedy for the paralysis and dissention that characterized board governance in the past. We believe it is critical in reforming the governance system of the board to focus on the duties assigned to members of the WCB board of directors and the skills needed by persons serving in that capacity.
We support the inclusion in Bill 15 of a provision to give WCB board of directors an explicit and clear mandate, concerned solely with the good governance and financial stability of that agency. Moreover, we believe that the act should provide for the creation by the board of directors of its own rules of conduct and guidelines respecting conflict of interest. The objective of these rules and guidelines should be to clarify for all members that their fiduciary duty lies with the WCB, and that although they may be selected as representatives of a particular segment of society, they are not to act as de facto lobbyists for the interests of that segment. Our goal in recommending this is to see the WCB board of directors freed of the narrow and self-interested partisanship that played so large a role in its dysfunctionality.
Similarly, we support the inclusion of a clear statement of the specific authority of the board of directors, which in our opinion should be limited to the establishment of operational policy, policy interpretation of the Workers' Compensation Act, direction of senior officers, and the hiring and firing of the WCB chief executive officer.
More importantly, we believe that members of the WCB board of directors must be selected on the basis of merit and with a view to constructing a board having expertise suited to the operational needs of the WCB. Collectively, the board of directors should possess experience and knowledge in areas relevant to the effective and efficient operation of the board as a loss-insurance system.
Specifically, we believe this to include expertise in the following areas: disability, health and life insurance; financial and actuarial science; customer service; occupational accident prevention; information systems technology and management; labour market economics; and health care administration.
We also believe there to be merit in having board positions occupied by one or two representatives who are chief executive officers of successfully operating workers' compensation systems in other Canadian jurisdictions or of a large private sector disability or health insurance provider.
On a final note concerning governance, the board of directors should not be composed with a view to balancing the representation of political or economic stakeholders. Should this happen, the board of directors will once again primarily be a forum for fractious lobbies. To the extent that the government considers there to be a need for stakeholder representation as such, the employer and labour representatives should occupy minority positions. In short, neither political affiliation nor representation should be dominant factors in the appointment of directors.
1650
I will move now to the subject of financial accountability.
We strongly support the inclusion in the Workers' Compensation Act of the proposed purpose clause which speaks to the importance of maintaining the financial integrity of the system. However, if this is to be more than merely symbolic, it will be necessary for the government to define in legislation the financial parameters which constitute financial integrity.
Specifically, we believe the act must eventually stipulate the empirical financial parameters that the WCB should strive to achieve and maintain. For example, federal and provincial insurance legislation governing private insurers often stipulates specific financial conditions and ratios -- such as reserve levels, degree of full funding and constraints on investment policy -- which must be maintained. There is no apparent reason why similar legislation should not govern the financial management of the WCB.
Similarly, we believe there to be merit in giving consideration to legislative limits to the level of operating deficit the WCB may incur in any fiscal period. This is conceptually no different from the discipline imposed by provincial legislation on municipal governments and school boards.
With respect to the value-for-money audits, we strongly support legislation to require such auditing on an annual basis. Moreover, we believe it is essential that this extend to all organizations and agencies which are funded by the board.
It is not, however, sufficient in doing such auditing to simply look at issues of efficiency and utilization of resources. It is essential that the scope of evaluation be sufficient to assess the extent to which WCB policies and programs are effective in achieving their goals. This should extend particularly to the accident prevention policies and programs of the board and the accident prevention associations funded by the WCB.
Accordingly, it is our recommendation that in addition to value-for-money auditing, the act be amended to require periodic external evaluation of policy and program impact and cost-effectiveness.
We congratulate the Minister of Labour and her government for taking this important next step to correct the many problems plaguing the WCB system. Recognizing that future changes are required, we wish to close by highlighting those issues we believe must be addressed as part of system reform, either within the context of Bill 15 or thereafter. However, in the interests of time, I leave these issues for your reading and due consideration.
We appreciate having this opportunity to present our views to you and the committee and we would be pleased to address any questions you may have.
The Chair: I'm afraid we've used up the full 15 minutes, but we appreciate your leaving us the other points there. I can assure you they'll be considered prior to the clause-by-clause debate. Thank you very much for taking the time to come and address us today.
CANADIAN UNION OF PUBLIC EMPLOYEES, ONTARIO
The Chair: Our next group up is the Canadian Union of Public Employees, Ontario. Good afternoon. I wonder if you would be kind enough to introduce yourselves to the committee and to Hansard.
Mr Ralph Carnovale: My name is Ralph Carnovale and I'm the workers' compensation specialist for CUPE in Ontario. To my right is Mr Bill Harford, who is the chair of the workers' compensation committee for CUPE in Ontario, and to my left is Ms Yvonne Carr, who's president of Local 1750, who are the employees of the Workers' Compensation Board for Ontario.
First of all, let me say that we welcome the opportunity to address this committee today. The Minister of Labour sought input on several fundamental changes to the Workers' Compensation Act during August 1995. Although given a short time frame, we submitted a response to those and anticipated full consultation and full participation. It's therefore with great disappointment that we're here today, appearing that it is debating a bill which in our view is completely unnecessary and a bureaucratic disaster.
We wish to address the following proposed areas of change: offences and penalties; financial viability; overpayment; and the Workers' Compensation Board employees. We must point out that we do not want this interpreted as support for the other sections of the bill, but rather it's the sheer irresponsibility of those particular sections that is difficult to accept.
Under offences and penalties, we are going to turn Workers' Compensation Board employees into compensation cops or, at best, collection agents. These new responsibilities are to be introduced without regard to the number of changes currently imposed on board staff as a result of both Bill 165 and the new appeal structure, just to name two.
It will now force workers, unions, advocates and employers to purchase expensive liability insurance as protection against civil actions. And let us say to you on the record today that the Canadian Union of Public Employees will in every effort recommend to every one of its members that should they be denied workers' compensation, they should seek out legal redress in the courts for all injuries not being paid for by the Workers' Compensation Board. It is our opinion that once having been denied workers' compensation, every employee in this province has the legal right to civil recourse, and it will be our position to recommend to our members such action. If the employers in the province feel they are going to save money, let us assure you that the litigation in this province will do anything but save them money.
We ask you what is meant by "material change." What is the purpose of increased fines and/or imprisonment when currently some 55,000 employers owe approximately $400 million in unpaid fines and assessments? How do you collect that money? I've heard the business community say, "Give them amnesty" -- this from an organization or groups of organizations that say they want financial accountability. So let's give up $400 million, let's take $400 million a year out of the investment fund because the general fund isn't making enough, let's not have employers pay their share. And this is financial accountability?
We've heard comments about NEER, experience rating and SIEF. The bill does not address the problem of companies that walk away from past compensation debts simply by changing their names and continuing to operate under a new company, without any penalty for experience. Bill 15 does nothing to address this serious loss of revenues. Simply by changing the name of a company, not even their address, there is no review of their experience under past names, past history, past experience. But we hear the business community saying, "Experience rating is working." Some 22,000 companies are not registered, but "The system is working."
We further submit that if fraud exists, then the compensation board simply needs to proceed under the Criminal Code. The board policy on fraud, which we have attached at appendix I to our brief, properly addresses these situations. We fail to see the need for further duplication of authorities created by this bill.
Under the financial liability, it is our submission that in 1994 the board paid out $280 million more in unplanned rebates to employers than it imposed as penalties. This payout was an increase of $64 million more than that of 1993. The average rate of assessment for employers has been decreasing since 1991, and the 1995 average rate is that of the 1988 levels. In addition, when the impact of the experience rating off-balance is taken into account, the real average declined even more. It is now approximately $2.70 per $100 of payroll, compared to more than $3.10 per $100 of payroll in the early 1990s. That is a decrease, not an increase.
Although average assessments for employers are continuing to decline, the board showed an operating surplus of $130 million in 1994. This was the first surplus in 14 years.
It is the province's employers who did not wish full funding. It is this province's employers who said they would rather have the money which would go into full funding to be used for job creation and investment. If this government is true about its fiscal accountability and financial accountability, then simply increase the funding to 100%. That will give you full funding, that will eliminate your unfunded liability, that will make the employers pay their true share; not 37%, not 31%, but 100%.
1700
In the fall of 1995, the Minister of Labour hinted at a 5% reduction in assessment. The business community here today has said to you they applaud it. If the board is in financial crisis, why would the government incur what has been estimated as an additional $120 million per year in loss of revenue by allowing a 5% assessment reduction, added to the unfunded liability?
The compensation board is currently removing $400 million annually from the investment fund. The absence of any repayment system in this bill, at the very least, is troublesome to us. There has been no mechanism introduced anywhere for that $400 million a year to be paid back into the investment fund. Where are the moneys coming from and how does this reduce the unfunded liability?
It appears to CUPE that this bill will encourage companies to join the underground economy or force them to close shop in the province.
Under overpayments, the current policy provides a thorough method of recovery. It incorporates recovery from future payments to injured workers and employers. Civil action for recovery is also included. The current policy is in line with any other government agency or civil law system.
We urge you to review the submissions and appreciate the submissions from the front-line workers, the employees of the WCB. We have attached their royal commission submission and hope that you take the opportunity to review it.
In conclusion, it is our submission that this bill is unnecessary at this time. The government had, and in fact still has, the opportunity to learn from the royal commission. Allow them to report. If that's unacceptable, release the report of the royal commission for public debate. Don't keep it in a library. Release it to the public. Let the public decide what the royal commission has said so far.
In summary, this bill will not do what the government intended it to do. It's going to criminalize the Workers' Compensation Act. It will create a greater level of distrust and fear among all the stakeholders. It will chase away business from Ontario. It will not reduce the board's unfunded liability. It will not reduce fraud. It will not reduce premiums or cost.
We urge this committee to withdraw Bill 15 and hold full and public hearings.
We wish to leave you with one final comment. We would like you to consider the vision statement of the Workers' Compensation Board: To be a Workers' Compensation Board valued and respected by workers, employers and the people of Ontario. We urge this committee to meet that vision.
The Chair: Thank you, Mr Carnovale. First questioning this time, government members.
Mr Carroll: Did I hear you right, that you suggest, if we want to cover the unfunded liability, we look at 100% funding by employers?
Mr Carnovale: The funding ratio currently is 37.8%. We have suggested and the labour movement has suggested for the last 10 years that it be fully funded, yes.
Mr Carroll: We currently in the province of Ontario have the second-highest assessment rates of all the provinces in the country and you're recommending that we triple that already excessive rate to cover the unfunded liability?
Mr Carnovale: Let me ask you which rate you're talking about -- the $3.10 rate or the $2.70 rate?
Mr Carroll: I'm talking about the rate that covers 37%, according to you.
Mr Carnovale: We're suggesting to you that all of the employers pay their ratio.
Mr Carroll: So you're recommending we triple the rate, which is already one of the highest in the country?
Mr Carnovale: We didn't say "triple," no. We're recommending that the plan be funded, simply as you would with any insurance plan, as you would with any long-term disability plan, as you would with any sick leave plan, as you would with any other type of coverage that you would have for income protection.
Why would it be any different for the WCB to be funded than it would be when you buy sickness and accident benefits, or you would when you buy from London Life? Why should the premiums be any different, why should the funding be any different?
Mr Carroll: Okay. Second issue: You say that CUPE believes that this bill will encourage companies to join the underground economy and close up shop. Would you like to elaborate on that a little bit?
Mr Carnovale: Simply put, if you continue to go with this bill, you're going to criminalize the bill. You're going to say to people -- and we don't understand what material change is. The government has introduced a concept of material change. We don't know if that means that every time an injured worker becomes pregnant, that's a material change. If they declare bankruptcy, that's a material change. If they change their address, that's a material change. We don't know what that means, but what it will do is have all the companies that are worried about or scared about how they report, when they report or whether or not they should report, they simply won't do it and will hide, as the 22,000 are now.
Mr Carroll: So you believe that will cause companies to close up shop?
Mr Carnovale: Yes, we do. We believe that they're going to go away from the concept of reporting. Why would they?
Mr Duncan: Two aspects of your presentation struck me. Number one, you referenced the funding ratio in 1994 versus 1985 and you indicated that the funding ratio had increased. There has been quite a body of work done on what the so-called appropriate funding ratio is. I wonder if CUPE has had an opportunity to review that issue and over what period of time you would see us moving to that zero figure.
Mr Carnovale: We think that the projections that the original -- although we didn't fully support, as a labour movement, the financial improvement package that was submitted by the board, it was the labour members of the board of directors who put a motion at the last board meeting to have the financial improvement plan passed. In fact it was the labour community on the board of directors who voted against it. We supported that package and we still do, looking at 2014 as being the zero, the year 2014.
Mr Duncan: Okay. Then, if I can, just one other question. At one point in your presentation you referenced the $130-million surplus in 1994, but in another part you made reference to the $400-million subsidy from the investment fund and you also expressed your concern about no plan for repayment robbing that fund, if you will, to make up the operating deficit. Do you have any thoughts along the idea of how you would set up a repayment plan?
Mr Carnovale: I think the repayment plan is part of the overall financial package that has to be reviewed. I think that if the ratio or the $3.10 -- we actually reduced to $2.70 per $100, and if you go back to a stable $3.10, which apparently is what they want to go back to, certainly a designation of a portion of that $3.10 should be made towards reinvesting or putting back into the investment fund. Remember, we're not just talking about the $400 million. It's all of the interest and all of the advantage that that $400 million annually would have garnered that's been missed as well.
Ms Martel: I'm interested in your comments about the financial improvement package that was put forward at the board of directors, clearly to try and bring into line the unfunded liability issue by the year 2014. I wonder if you can just comment again as to who in fact was responsible for bringing that forward and who voted against it.
Mr Carnovale: The labour side of the board of directors, with a lot of review and a lot of discussion, brought forward the motion that the funding package recommended by the staff of the board be approved. It was the employer members of the board of directors who voted against it, and that's a matter of record.
The Chair: Thank you, Mr Carnovale, and your associates, for coming in to see us this afternoon and for leaving us with your presentation.
ONTARIO NETWORK OF INJURED WORKERS
The Chair: Our next group up is the Ontario Network of Injured Workers. Good afternoon, gentlemen. I wonder if I could have you introduce yourselves for the committee and Hansard.
Mr Karl Crevar: Certainly. My name is Karl Crevar. I am the president of the Ontario Network of Injured Workers. On my left is Mr Phil Biggin, who is the executive vice-president of our organization.
I have to apologize, first of all. I do not have written submissions, so I hope you all have your tape recorders so it can be recorded what we're going to be talking about.
I'm going to be talking from a little bit different angle, because the discussions that have been going around -- I have not followed all of them -- but we are the ones who are going to be impacted, the injured workers in this province and workers in this province, by any changes that are being implemented, and I think that's one of the most basic things that has been forgotten. I have not heard that since I've been here today. All I've heard is the financial responsibility and all the financial aspects of it.
1710
Let me say that I'm clearly disappointed and angry at the manner in which these hearings were set up. Our organization is represented in 34 communities across this province, in the range of 50,000 or more injured workers, largely the unorganized.
When we got the word, when it came down that this committee was meeting, I tried to confirm to get a position here on behalf of injured workers in this province on the first day of hearings. I was informed the Thursday previous of the hearings that were going on.
We have participated in the past on Bill 162, we participated on Bill 165, and all our groups want to be able to participate and express our concern over the changes and the impact that it's going to have on workers and their families across this province.
With that, I want to start off just by giving committee members -- maybe they're not familiar with the history of what workers' compensation is all about in this province. It was introduced in 1915 by Judge Meredith and that was after a long discussion, a long process between labour and management on how we can address and get away from civil litigations to be able to fairly compensate workers injured in the workplace.
There have been four royal commissions in this province. The latest one, which is the one the government of the day decided that they were going to do without, they weren't going to take the reports -- and I can assure all members here, if you're not familiar, that many injured workers addressed the last royal commission. There were very many submissions. Many, many thousands of injured workers submitted what was wrong with the system, how to correct it, yet we find ourselves in the process of dealing with Bill 15 again.
I can tell you on behalf of injured workers, we will not be part of justifying the government's initiative just to say that they had consultation in this province to deal with workers' compensation in this province.
The three royal commissions that were established, very interestingly, the first one was in 1931. The commissioner of that royal commission was the Honourable William Edward Middleton, Justice of Appeal of the Supreme Court of Canada. Following that royal commission, the basis for that was to address benefit levels. There was an increase in benefit levels, and that was on the recommendation of Justice Middleton.
In 1949 the next royal commission that was set up was headed by the Honourable Wilfrid Daniel Roach, Justice of the Appeal of the Supreme Court of Ontario, and I just want to take an excerpt of his findings in his report:
"This act should be considered for what it is and was originally intended to be, namely, a scheme by which compensation is provided in respect of injuries to workers in industry. It is not a system for dispensing charity. It is not unemployment insurance. It is not social legislation for the purpose of elevating the standard of one group in society at the expense of another."
At that time, benefits again were raised.
Sixteen years later in 1966, the third royal commission, the Honourable George Argo McGillivray, Justice of Appeal of the Supreme Court of Ontario, was appointed commissioner. His report was filed September 15, 1967. Regarding workers' compensation, the report advised:
"For the working poor, the balance between earning just enough to get along and having to do without certain basic necessities is easily upset. Income interruption or income reduction, even for a short period, spells disaster for anyone whose budgeting is done on a week-to-week or even day-to-day basis. The reduction of earnings which takes place during the period when a low-income worker is forced by accident or injury to rely on workmans' compensation benefits inevitably causes serious problems."
Each royal commission -- the poverty report, the McRuer commission and the task force report -- all brought attention of the government and the public to the low benefits and poor treatment of injured workers. What are we dealing with in Bill 15? Again, the process and the discussion that the Ministry of Labour had announced earlier this year in reforming WCB -- reduction in benefits to workers, the introduction of the three-day waiting period with no top-up -- in my view invades the privacy of citizens of this province. When you buy insurance or whether you have a mortgage on your home and the bank rate says it has to go up, guess what? You pay the increase. That's the price of doing business, whether it's workers' compensation, whether it's purchasing a home or whether it's purchasing car insurance. When the car insurance industry says, "We have to raise your rates by 20%," you either take coverage or you take the chance of driving without insurance, at which time if you ever, God help you, get into an accident, you will pay dearly. There's no negotiations for lowering the rates of benefits.
I want to leave some time for questions if you do have them, so I'm not going to get too extensive, but I do want to make a last-minute comment in here. I would suggest to the members here, this was a submission made by June Howard. It's a history on the worker's compensation in Ontario. It was submitted to the hearings committees on Bill 165. Take the time to research it and see what's in these documents as to what the worker's compensation is all about.
It said: "The majority of Ontario employers are just and fair," and that is true; we believe that very strongly. "They pay their premiums and trust that the WCB will look after their accident victims as humanely as possible. But a vocal minority consider workers to be animated disposable machines. You work them as hard as you can, fix them if it's possible to return them to productivity, and dispose of them as cheaply as possible if they no longer have value in your workplace, all in the name of profit and greed.
"This vocal minority is the voice heard today asking for a reduction in WCB benefits, that want back and other soft-tissue injuries removed from compensation and demand workers pay premiums for their compensation. They care little about what happens to the victims of their accidents."
These were words that were heard back in 1910. We hear those same words today, and those vocal words by a few minority in this province are reaping millions of dollars. I ask you seriously: You've heard some of the submissions before. If you want to look at problems, look at the revenue leakage which amounts to almost $2 billion in the last four years. This is money taken out of the system to pay for administrative costs. Also, you've heard before on the experience rating, on the off balances. In today's dollars, in 1994 dollars, the assets of the workers' compensation would be sitting at $10 billion and we wouldn't be sitting here today talking about workers' compensation reform or addressing the issue of unfunded liability.
1720
We have seen the unfunded liability only as a scheme and a way to not only harass, but to scare the hell out of the public in this province, when we know in fact where the real problems are. I urge you, look at the facts. They're in your annual reports. Do not proceed with this legislation. You will be destroying a system; you will be destroying a society. Workers' compensation is not a charity, it's a right. Thank you very much.
The Chair: Thank you, Mr Crevar. The first questioner in this round will be from the Liberal Party.
Mr Duncan: As you know, Minister Jackson will be bringing forward the most substantive amendments to the Workers' Compensation Act. I believe they're expected next spring. The minister has indicated on a number of occasions that they are undergoing extensive consultation. Have you or your group been asked to consult on the changes that Minister Jackson is contemplating?
Mr Crevar: It's odd that you should ask that, because as I indicated in my opening remarks, my concern is over the consultation about changes that affect us, the workers. It's going to reduce benefits; it's going to force people to go on to social assistance and to other income supplement agencies. We had just very recently been contacted by the minister to discuss, and informed that, yes, there will be consultations going on. We were well aware -- and hoped -- that it would be the smart thing for this government to do, to have full consultation on any changes to workers' compensation which the minister has been directed to be completed by April 1996.
The concerns I raise again with the Chair in terms of the process, as I indicated during Bill 165: How can we tell you in 15-20 minutes the devastating impacts that the changes will have when you don't have input from the people it will directly affect? And I'm not talking about having extra money; I'm talking about having an income in order to survive.
So it's been limited. We've been made aware that the minister is going to have consultation, in answer to your question.
Mr Duncan: Were you invited to consult at all on Bill 15 before it was introduced in the House?
Mr Crevar: The previous speaker said it entirely. We were notified by mail to have written submissions, and the time element was very, very limited in order to have effective input into that. There was no consultation requested in that respect, open consultation, as to the impact of the changes.
Mr Christopherson: My question would be on the government's proposed action regarding the 5% cut. I'm going to ask some of these questions now because I never know when we're going to get public input any more with this government, so I'm going to grab it while I can. Given your thinking and position on the funding of WCB, the unfunded liability and all those things in relationship to the priority of the board, which is to make sure that workers are covered, what are your thoughts on a proposed 5% cut to disabled workers at the same time the government proposes reducing the assessment rate by a further 5%? Can you see any benefit at all to the system or to workers by carrying out those two positions?
Mr Crevar: What we're seeing today -- and I ask the committee to go and look at the Minna-Majesky report, the task force report. This came out about four years ago, I believe it was. When you look at that indication of the percentage of injured workers not returning to work on that report and look and see what's applied today and the benefits that those injured workers -- and I'm talking about 80% at the first review under Bill 162; 80% of injured workers have not returned to meaningful employment, so they are receiving some sort of benefits. Thousands, and a good percentage of them, because they're limited in the entitlements, have had to resort to seeking social assistance, other income supplements.
I'm sure you've heard the stories of what it implies and the tragedies that have ensued as a result: the family breakup, the marriage breakup, suicides. Those are realities. Then to suggest another reduction of 5% in benefit levels, that will be devastating. Those injured workers who have the limited incomes now or benefits that they receive from WCB will have to go on to other income supplements.
Where do they turn? They will have to turn to social assistance, and lo and behold, we've already had a reduction in those benefits. It will be devastating. It will cost, because the taxpayers of this province will be paying for that.
The Chair: We've reached the allotted time. Thank you, Mr Crevar, for making your presentations. I certainly encourage you to continue to provide submissions.
ONTARIO RESTAURANT ASSOCIATION
The Chair: Our next group up will be the Ontario Restaurant Association.
Mr Paul Oliver: Good afternoon. My name is Paul Oliver and I am president of the Ontario Restaurant Association. The ORA welcomes the opportunity to present our views on Bill 15, An Act to amend the Workers' Compensation Act and the Occupational Health and Safety Act.
The ORA and the more than 15,000 employers which comprise the restaurant and foodservice industry are deeply committed to reforming the WCB system. The ORA strongly supports the principles of the existing no-fault compensation program which "provides a fair level of compensation to workers and protection from legal proceedings for employers." The ORA believes that reforming the WCB system, however, must be a priority of this government. The competitiveness of Ontario and the competitiveness of Ontario's restaurant and foodservice industry is directly influenced by the ability and the success of the government in reforming the existing compensation system.
We believe the Ontario WCB system is in crisis. It is broken both fiscally and structurally. Operating with a staggering $11.4 billion in underfunded liability is not a sustainable prospect. Without addressing the long-term stability of the system, the future viability of the WCB system is in jeopardy, as is the ability to pay benefits to injured workers both today and in the future.
We support the initiatives of the government of Ontario to undertake structural reform by introducing Bill 15. However, we must emphasize that we see this as only the first step towards stabilizing the system. The real fundamental reform, which is an even more major step, must follow quickly.
The establishment of a new board of directors is a key element to facilitating change and reforming the WCB system. The foodservices industry strongly supports the announcement that the WCB governing structure will move away from a bipartite structure and towards a multi-stakeholder approach. We believe this is a positive step and one which is critical to undertaking meaningful reform of the system. We feel that the bipartite model has not effectively served the people of Ontario, nor enabled the WCB system to be operated in a prudent or responsible manner. The bipartite model has led to confrontation and paralysis in decision-making, and has been a contributing factor in the staggering underfunded liability.
The ORA has had experience within the bipartite governing model through our direct participation at the WCB's sister bipartite organization, the Workplace Health and Safety Agency. At the WHSA board, the ORA was represented on both the board of directors and the bipartite small business advisory committee. I myself co-chaired the agency's bipartite small business advisory committee and know all too well from firsthand experience how inappropriate the bipartite structure is to developing good and workable public policy.
From the experiences we faced at the Workplace Health and Safety Agency, it is clear to us that the bipartite model of governing is not an effective model to be used at the policy development and policy implementation levels. Bipartitism has worked effectively in many workplaces in Ontario. However, at the policy development and administrative levels we believe it has failed, and it has failed to the point of jeopardizing the WCB system.
We believe the departure away from a bipartite governing model is important because this change in governance is critical to moving the WCB away from being an adjunct to the social welfare net and instead restoring it to its original objective, that being that "in exchange for giving up the right to sue an employer, an employee can expect to receive fair," and equitable, "compensation." This change is critical to the WCB returning to a workplace accident insurance organization, and as a result, a corporate model of governance is the only vehicle for this transition.
1730
By moving to a multi-stakeholder board, the Ontario Restaurant Association recognizes that this means that the business community is giving up its ability to have direct representatives who speak for their interests at the board of directors. However, we believe that all stakeholders will be far better served when board members place the interests of the system's long-term viability above their individual respective interests.
The Ontario Restaurant Association also supports the inclusion of a clear policy direction role for the government through a revised memorandum of understanding.
We support the requirement for the annual five-year strategic plan, an annual statement of priorities and an annual statement of the board of directors' investment policies and objectives. The enhanced role made for the government by Bill 15 makes it clear that the WCB crown corporation is an element of the provincial government which must serve the public interest as set forth by the government of Ontario.
We also support the establishment of a new requirement that each director of the board must act in a clearly defined fiscal and accountable manner which helps to restore the confidence in the leadership and direction of the WCB. This provision will help make the directors focus their responsibilities more directly and correctly on the financial management problems at the WCB.
The ORA welcomes the amendments to the purpose clause as outlined in Bill 15. This amendment will help focus the activities of the board of directors on securing and protecting the long-term fiscal viability of the system. We strongly support the six elements of the purpose clause in the order in which they are outlined in the legislation.
The ORA also welcomes the two major additional objectives outlined in the purpose clause, which expand the responsibilities of the WCB to include provisions "to prevent or reduce the occurrence of injuries and occupational disease at work" and "to promote health and safety in workplaces." We believe that the WCB can play an important role in focusing the efforts of workplaces on the prevention of accidents and the implementation of health and safety in workplaces. In this regard, we support the return of this responsibility to the WCB.
We must, however, raise a serious issue of concern to the hospitality industry at this point, and that is the funding of health and safety within our sector. We are concerned that the current funding allocations do not warrant enough resources to enhance health and safety training within the foodservices, accommodation and hospitality industries. This is not because our industry's unwilling to contribute financial resources; it's just the opposite.
We have previously raised this issue on a number of occasions, but unfortunately it fell on deaf ears with the previous government. We therefore raise the issue again. We believe that it is an important issue which must be addressed and is appropriate at this time, as the committee is now reviewing the Workers' Compensation Act as well as the Occupational Health and Safety Act.
On an annual basis, as part of WCB rate group assessments, hospitality employers contribute approximately $2.5 million towards health and safety training and accident prevention. Unfortunately, once these financial resources are allocated to individual sectors, our industry receives less than $1 million, or 40% of what we actually pay.
We believe that this financial allocation, or what we would consider a misallocation, is unfair and that if an industry is contributing financial resources towards accident prevention in their sector, then these resources should be rightfully allocated to the contributing sector.
We recognize that this issue is not directly impacted by Bill 15. However, we strongly urge the committee to raise this with the Ministry of Labour, as it is part of the WCB's new fiscal accountability.
Foodservice operators share a common business desire to reduce fraud by identifying areas of potential revenue loss and overpayment and implementing preventive measures to eliminate these concerns. We are pleased that this approach is now a part of the business process of the WCB. These actions will ensure that all employers within the foodservice industry pay their fair share and, most importantly, are treated equally and equitably.
While supportive of the amendments contained in Bill 15, the Ontario Restaurant Association believes that it is only the first tentative step towards more substantive and fundamental reform of the WCB system which is critically needed.
We applaud the decision of the government to establish a minister responsible for WCB. Minister Cam Jackson's review in many ways will be more substantial and meaningful than Bill 15. However, we recognize that the amendments contained in Bill 15 are important to clearing the path for Minister Jackson's review.
While not directly impacting Bill 15, we felt it was important to highlight some of the additional reforms to the WCB system which we believe are critical to ensuring the long-term viability and sustainability of the compensation system. Some of the issues of concern to the foodservice industry include:
1. Ensuring that there are no exceptions or exemptions to the application of the Friedland indexing formula.
2. Foodservice operators in Ontario have earned at least a 5% reduction in assessment as a reward for their successful efforts at reducing accidents over the past decade.
These reductions are critical to the competitiveness of Ontario's restaurants, especially when recognizing Ontario has the second-highest WCB assessments of anywhere in Canada for the restaurant industry. At $2.75 per $100 of payroll, Ontario's assessment rate for restaurants is substantially above any other provincial jurisdiction expect for one. Other jurisdictions, such as New Brunswick, are priced at $1.04, Alberta at $1.42 and British Columbia at $1.07.
This inequity in assessment rates across Canada places Ontario at a significant disadvantage when competing for head office jobs, such as marketing, administrative jobs and the many other portable jobs within the foodservices industry. To ensure that Ontario does not lose existing jobs or future job creation to other jurisdictions, these discrepancies in WCB rates must be corrected.
3. We also believe that the performance of new claims should be driven by the price of the WCB system. We believe that it is imperative that an improved new claims performance should result in a direct reduction in WCB assessments.
4. We also believe that modifications to the benefit levels should apply to both new and old claims.
5. We believe that the experience rating program of the WCB needs to be further supported and enhanced. As the foodservice industry is comprised of employers of all sizes, the experience rating program is an issue of great concern and interest. We believe that experience rating needs to be meaningful to all employers regardless of size. To do this, a variety of choices and applications must be available.
We also do not believe that the current experience rating off-balance should be seen as a major contributor to the WCB's reported cash flow problems. The current experience rating off-balance is a direct result of the dramatic reductions in new claims and should be viewed as a positive initiative, not as a negative consequence.
In conclusion, once again, the Ontario Restaurant Association supports Bill 15, as we see it as an essential component to the successful future economic and administrative changes within the WCB system. From the perspective of the foodservice industry, we believe that these changes are vital to improving and enhancing the economic environment in Ontario. We do, however, urge the government to continue to remain very focused on the more important and pressing long-term reform issues facing the WCB system.
The Chair: Thank you, Mr Oliver. We've got about two and a half minutes remaining. Questioning will commence with the third party.
Ms Martel: Most of the employer groups that have been here this afternoon have made a comment in one way, shape or form about how the bipartite model had led to confrontation, paralysis in decision-making and any other number of characterizations. I guess the reason I want to focus on this is because I would like some concrete examples, if you can provide them, not with respect to your experience at the health and safety agency but with respect to what went on at the WCB, because I know that at the point where both the business and the labour reps were fired by this minister, we had a situation where the board, for the first time, had an operating surplus. It wasn't a lot, but it was for the first time. We had for the first time as well a reduction in the unfunded liability, and we also had worker reps, for example, who had moved to accept a financial improvement package which would have reduced the unfunded liability by the year 2014, as this government is wanting to do in this bill. So I am really curious as to what experiences, what issues etc people can point to, as the minister has pointed to in her own statements, that in fact the reason she had to fire everyone was because of the paralysis that went on.
Mr Oliver: Well, you mentioned the FIP package, the financial improvement package. I would submit that the length of time that it sits on the table at the board, not looking at meaningful issues, not being able to break up the package, not looking at the different components of it, probably is an indication of a system that's not working. In a normal corporation or an insurance company or in a board that's effectively working, you'd be able to move through those policy initiatives, make the decisions fairly quickly.
How do you resolve the decisions where there is deadlock at the board, where there are two fundamental different approaches? The FIP package is an example of that. Getting beyond what is just written on the paper and getting into the true financial accountability of that package was something that needed to be done and it was never able to be done.
1740
Ms Martel: I would have assumed, though, that even for the labour representatives to agree to move forward on FIP, they would have had to make some compromises too. I suspect in that package there are some things that, as worker reps, they would have found pretty untenable. I guess I don't understand why --
Mr Oliver: You're mentioning about compromises and negotiations, and quite frankly I don't buy into the idea that good public policy is always negotiated. If you're basing it on facts and you're basing it on information and you're bringing technical expertise to the table, there shouldn't have to be negotiation. You shouldn't have to be negotiating what is good public policy. You'd just be able to identify it and move on with it.
Ms Martel: I guess that's if you're all coming from a similar point of view. You know, it's easy if everyone is representing either a labour perspective or an employer perspective. Then you don't have to negotiate. We're talking about workplace parties dealing with a system that was in place (a) to protect workers who got hurt and (b) to make sure that employers didn't have to get sued.
Mr Oliver: But I think in the multi-stakeholder approach you would not have to have this too polarized approach. You would have professionals on there, you'd have representatives from the accounting and financial communities, and they would be bringing forward the professional approach and looking at issues from more than just two perspectives, because there are more than just two perspectives.
Ms Martel: But if I listen to you talk about professionals and people having the skills etc, I have to assume then that the people who were appointed, either by the business community or by the labour community, weren't in fact that. That's the only impression I am left with as I hear you talk about people's qualifications and skills. But surely your business colleagues, at least from your point of view, who were there representing business interests were qualified to be there.
Mr Oliver: But they were there representing business interests or labour interests, and what I'm suggesting is, developing public policy, there may be more perspectives than just business and labour.
Ms Martel: They had no skills with respect to accounting, human resource management, fiscal accountability etc?
Mr Oliver: If you want someone with fiscal and accountability background, why don't you go to the financial community and bring that person forward? That's what you would do under a multi-stakeholder approach.
Ms Martel: I would have assumed that people in the business community would have brought that perspective as well.
Mr Oliver: And I would have assumed that they would have done it from organized labour, but they didn't.
The Chair: We've surpassed our 15 minutes slightly there. Thank you, Mr Oliver, our appreciation for taking the time to come and make your submissions today.
UNITED TRANSPORTATION UNION
The Chair: Our next group up is the United Transportation Union. Good afternoon, gentlemen.
Mr Dennis Schweitzer: Good afternoon.
The Chair: I wonder if I could get you to introduce yourselves to the committee and for Hansard.
Mr Schweitzer: My name is Dennis Schweitzer. I'm provincial chairperson for the United Transportation Union. With me is Paul West. He is the vice-chairperson of the Ontario legislative board. Our main responsibility in representing bus and rail workers in the province of Ontario is in dealing with workers' compensation.
I have provided you with a lengthy submission, which I do not intend to read, and I would like to take a cue from the last question and answer period with Ms Martel and Mr Oliver.
I was a former vice-chair, from labour, of the board of directors of the Ontario Workers' Compensation Board, and I would like to put it on record clearly that both the business and labour representatives on the board of directors took their responsibilities very seriously, that the board was made up of people who had expertise, unlike what Mr Oliver seems to suggest. That board of directors, both while I was there and after I left and prior to the minister's dismissal of that board, was making sufficient progress for us to have optimism in the future of the Ontario Workers' Compensation Board.
When the board in 1994 had an operating surplus of $130 million, when the board accepted a package on to the table from its administration for financial improvements that would not have reduced, if my recollection is correct, the unfunded liability by 2014 but eliminated the unfunded liability by 2014, I would suggest to you that there was a measure of irresponsibility, and that irresponsibility lies clearly on the employers' doorstep. The package that was put together did have pros and cons, both for the worker community and for the business community, no doubt. There were a lot of things that were hard to swallow for labour. Yet labour agreed that it was their financial and fiscal responsibility to promote the package.
Now, you have to bear in mind that the administration is made up of many different areas of expertise: the financial expertise, the client service expertise etc, etc. They brought a package to us while I was there and while in the interim, between my end of term, when I was an adviser to the CEO, Mr Copeland. It's somewhat ironic to me that the business community and the CEO would not support a package of administrative improvements that would have seen the end of the unfunded liability. I find it very difficult coming before you and listening to my predecessors talk in the manner in which they're talking about the people who served on that board. I for one, personally, and, I understand, John Martin, who's going to be here after me, resent the implication that we were less than what we should have been on that board of directors.
I would also suggest to you that this government has invented a crisis by saying that the board is out of control, that the unfunded liability is driving business out of the province, that workers are ripping off the system and making illegitimate claims. You have to consider that the WCB is unlike any other business in this province. It's not an insurance company. It's not a business like Eaton's or Simpson's. It's a business that deals with workers who get injured and workers who need assistance.
In 1994, there were 230 workplace deaths in Ontario. We need to improve that to the point where there are zero deaths. The Ontario WCB has recognized only one out of 17 occupational disease victims in this province. Those are the things that are the crises in workers' compensation, as far as we are concerned.
We also believe that the worker community has been forthright with respect to the rate assessments. As far as I can recollect, the average rate has not increased beyond $3 since 1993, the last year that I had anything to do with rate-setting at the board.
We do suggest to you that there are as many as 20,000 employers in Ontario who should be registered and paying workers' compensation premiums but who aren't. I would suggest to you that many of them are in the Ontario hotel and restaurant business.
When I was at the board, one of the last things we did was move a motion forward to pursue employers who did not register. One of the things that was discussed and talked about around the board table was granting employers a short amnesty after a very vocal campaign to let them know what their obligations were and then, after that, it was our intention as a board to come down on them with all the force of the law to make them pay their assessments. Right now, we understand that there are over 55,000 employers in Ontario who owe the Ontario Workers' Compensation Board in excess of $400 million, either in unpaid assessments or in penalties.
I would like to end my submission with just one suggestion to you with respect to the unfunded liability. It has been purported to be the cause of the crisis in the Ontario workers' compensation system. To us, the unfunded liability is not a debt; it is merely a figure which represents the present cost of future payments owed to injured workers by their employers for their current claims.
I believe that we have to take into consideration that the WCB has an accident fund of over $6.8 billion. I'd have to ask the employers who are in this room: What do they want? Do they want a fully funded system? Do they want $50 billion in assets in the Workers' Compensation Board? I think the answer to that question is no.
There's a lot for you to read in the submission, and I think that if you take the time, you will see that we do have some legitimate points of view. We would like to answer any questions that we're able to.
The Chair: Thank you very much. The questioning this time will be starting with the government benches.
Mr Maves: A couple of things: The first one is with regard to the financial improvement plan that keeps getting bandied about. I understand there was a plan brought forward from, I think, Mr Copeland which had about 200 proposals. The labour representatives on the board brought forward a plan, kind of their own version, with significantly less proposals. That was the one which the employers disagreed with. Is that accurate?
Mr Schweitzer: In my recollection, it's not accurate.
1750
Mr Maves: There was only ever one --
Mr Schweitzer: My understanding is that the board of directors, of which I was a part from 1993 up until July 1994, directed the administration to find ways to financially improve the lot of the workers' compensation system. That, in and of itself, is a big job. The administration is made up of a number of different areas, and I believe what they were asked to do was to find ways of trimming costs, saving money and producing the overall net result of a reduction in the target area of approximately $400 million.
I believe, if I'm not mistaken, that the target of $400 million had something to do with the amount of money that was withdrawn each year for a period of three or four years from the accident fund to be used for operating revenues.
So the administration did what they were asked to do and came back with a package. I don't know how many recommendations there were. It might be 200, it might be 250, it doesn't matter, but it was my understanding that after I left the board it was to be brought to the new board as constituted by the previous government, which would have been March of this year. When it was brought to the board, it was defeated.
Mr Maves: But there was only ever one group of proposals brought to the board? That was never changed?
Mr Schweitzer: As far as I'm aware.
Mr Maves: I'll check my sources then.
This bill goes after employers, in a sense, those 20,000 employers we were talking about, with stiffer penalties for the failure to register. Do you agree with that aspect of Bill 15?
Mr Schweitzer: My suggestion to the writers of the bill would have been very simple. All they had to do was legislate that all workplaces and all employers should be covered for workers' compensation in the province. The province of British Columbia has done it and Ontario fell far short with this bill.
Mr Hoy: I don't want to at all put into question the value or the contribution of employees and employers on the board prior to our discussion today. However, I would like to ask you, since you stated that you were on the board, do you think that the expanded board that's proposed under Bill 15 would improve the WCB?
Mr Schweitzer: Let me answer by suggesting to you that we have appeared before three governments and three standing committees on three bills. The first one that we appeared before was Bill 101, which was a Tory government. At that time, there was a multi-stakeholder board of directors in place. The multi-stakeholder board of directors is made up of people from, I guess, whomever the government wants to appoint. I don't believe we're going in the right direction.
I do believe that the business and labour people on the bipartite board were able to significantly improve workers' compensation in the province and I believe that bill 15 is going in absolutely the wrong direction. I believe that a bipartite board representative of the two major stakeholders, the workers and the employers, is the only way in which we can expect workers' compensation in Ontario to move forward. And we didn't fight, believe me.
Mr Hoy: You actually answered my second question there as well, so I'll defer.
Ms Martel: If I might, Mr Chair, I would like to read to you the minister's characterization of the bipartite board, which was as follows, and this is when she introduced the bill for second reading, "Unfortunately, the bipartite, labour-versus-management approach has paralysed constructive decision-making on very crucial administrative, policy and financial issues facing the board."
I have felt that that was a very unfair characterization of the board because I certainly believed that both sets of representatives, from labour and from management, came, were prepared to do an important job, took their roles seriously and were qualified to do that job. But you were a member on the board for some time, and I wonder if you can respond to that characterization and outline whether or not you think it's an unfair or a fair criticism.
Mr Schweitzer: I certainly think it's unfair, particularly because the minister was never near the board. The minister's relying on certain special-interest groups to come up with those statements. I find it kind of ironic that she would rely -- she's certainly not relying on the labour groups for her input. She has to call into question the business community itself, because they were ably represented on the board. They had the Honourable Robert Stanbury, who took business's positions very seriously. I would say, for my part, he was certainly an honourable opponent. We didn't often or always agree, but in the end there was usually a solution for the problem and it was seldom, if ever, that we ended in a stalemate.
Ms Martel: If that was the case, then why do you think this particular government fired everyone and is now moving back to a multi-stakeholder position, a position we were once in under the last Tory government?
Mr Schweitzer: I guess they're listening to the wrong people. I think that there are those, out in the business community particularly, who think that expertise is somebody who runs a financial institution, runs a physiotherapy clinic, is a vice-president of a manufacturing company. What I believe is needed in a bipartite situation are people who are committed and able to put in the time to deal with the various complex problems that are involved in a workers' compensation system.
The thing with multi-stakeholder that really scares me is that what you're going to have is a group of people who don't have the time, aren't able to give the commitment, don't have the knowledge and, frankly, don't know what they're getting into. I don't think they will be a board that will perform. I don't know if that answers your question.
The Chair: With that we've reached our 15 minutes. We appreciate you allowing time for at least one round of questions. Thank you very much for coming this afternoon and making your presentation.
EMPLOYERS' COUNCIL ON WORKERS' COMPENSATION
The Chair: Our next group up is the Employers' Council on Workers' Compensation. Good afternoon, gentlemen. Just a reminder that we're limiting all the groups, in order to get all 73 deputations in, to 15 minutes, to be divided as you see fit between the presentation and question and answer. Introduce yourselves to the committee and to Hansard.
Mr Jim Yarrow: Thank you, Mr Chairman. My name is Jim Yarrow. I'm chairman of the Employers' Council on Workers' Compensation. With me at the front table today is John Neal, a consultant to the ECWC, as well as a member. I feel more confident and can talk much better for my part of it because I have him to answer the questions at the end, as he had a lot of the input, particularly nice sharp questions we had from over here. The other gentleman is Mr John Blogg, who is a member of our council and also from the mining association.
You have in front of you our presentation, some of which I will not be reading, most parts of which I will be in order to get it into the record.
The Employers' Council on Workers' Compensation appreciates the opportunity to present its members' views on Bill 15 and the need for further reforms next spring following Minister Jackson's review.
The ECWC, for those who might not know, is a non-partisan coalition of employer associations, employers and experts in the workers' compensation field, representing the interests of over 100,000 employers. Our members represent all sectors of the economy and include large and small business.
Since 1984, the ECWC has been active with the board, the WCAT and the Ontario workers' compensation system, working with those agencies to attempt to ensure that Ontario has an effective and sustainable workers' compensation program. A full list of our membership is attached to your copy of the presentation.
Before turning to Bill 15 and next spring's reforms, we would like to briefly review the last few years in order to set the stage for the debate on the current reforms.
As outlined in your copy below these comments, its members have been deeply involved in the reform of Ontario's workers' compensation system for many years. Copies of some of our presentations as well are available for the benefit of the committee.
What is clear from our hands-on experience with Ontario's workers' compensation system is that nobody is satisfied with the current state of affairs. The experiments with various forms of governance and benefits since 1985 have been ineffective. These reforms have left us with a bloated, all-but-bankrupt system. It often provides more than is needed, discourages proactive self-rehabilitation and still leaves some workers with less than that which is appropriate.
What Ontario needs for its workplace insurance program is protection of covered workplace participants from the real losses caused by workplace accidents; proactive behaviour by workplace participants to minimize the number of workplace accidents; and proactive behaviour by workplace participants to minimize the real losses caused by workplace accidents.
1800
What Ontario does not need for its workplace insurance program is: provision of real gains from workplace accidents; protection of covered workplace participants from losses caused by lifestyle, retirement, loss of employment, aging, congenital disabilities, non-traumatic stress and non-workplace accidents and diseases.
In order to reform Ontario's workers' compensation system so that Ontario gets more of what it needs and less of what it does not need, the ECWC recommends: rename the WCB to something like the Workplace Insurance Company; replace entitlement to benefits with indemnity for real losses caused by workplace accidents; exclude indemnity for acts of God, war, insurrection, lifestyle, aging, retirement, loss of employment, congenital disabilities, stress and all other non-workplace events; and register all covered participants.
We also recommend increased accountability for the government, the administration, employers, workers and injured workers.
The government should be held accountable for: effective legislation that is affordable, sustainable, clear, avoids unrealistic expectations and outlines the responsibilities of the administration, employers, workers and injured workers; realistic pricing of all reforms and policy changes; and the appointment of the board of directors.
I'm taking each of these areas. The administration should be accountable for: the pricing of new claims and the planned funding of the system; staff as well as the board of directors must be financially responsible; courteous, timely, accurate administration which includes getting it right the first time, prompt decisions regarding when indemnity is required and when it ends, prompt collection of funds and payment of indemnity, and proactive communications with government, employers, workers and injured workers.
Employers should be accountable for: financing the system, based upon their own claims experience; registering covered participants; ensuring occupational health and safety; obtaining medical support at the time of accident; rehabilitation and reinstatement of injured workers; supporting the administration to make the system work.
Employees should be accountable for: safe work practices and healthy lifestyles.
Injured workers should be accountable for: healthy lifestyles; immediate reporting of workplace injuries; proactive self-rehabilitation; proactive participation in rehabilitation programs; proactive participation in modified work programs; and a timely return to work.
Having set the stage for the reform of Ontario's workers' compensation system, we will present our views on Bill 15 and the need for further reforms next spring, following Minister Jackson's review. The ECWC supports Bill 15 as it starts its journey towards more accountability.
We urge Minister Jackson to rename the system. We recommend replacement of entitlement with indemnity for real losses. Indemnity must be limited to indemnity for events directly related to workplace accidents. There must be provisions that lay out the responsibilities of government, administration, employers, workers and injured workers.
We support the structural changes outlined as follows in our presentation.
We recommend a focus on clarity and simplicity. By way of example, we note that the current registration rules can be complex. The complexity arises out of the fact that the WCB has its own rules for whether or not an individual is deemed to be an employee. There are no fewer than seven questionnaires used for this purpose. It would be far clearer if the board were able to adopt the rules used by Revenue Canada to determine the requirement for making CPP and UIC contributions. Use of Revenue Canada rules and reporting requirements would clarify and simplify an organization's responsibilities and enable prompt, cost-effective, courteous administration.
We also note the fact that there are no pricings for the savings expected from Bill 15. We acknowledge that many of the provisions of the bill are difficult to cost. Nevertheless, costings plus administrative targets such as a 10% reduction in appeals for 1996-97 and again in 1998 would provide the new board of directors and the system's stakeholders with a clear picture of what is expected from them.
On the need for further reform next spring, we reiterate the need to:
(1) Rename the WCB. This will return the program to its original intent of providing no-fault employer-paid insurance for workplace accidents in exchange for the elimination of the right to action.
(2) It will replace entitlement with indemnity for real losses. This will clarify that indemnities are limited and not part of the welfare safety net. Replacing entitlement with indemnity for real losses will require several things:
(a) Lower benefits to address overcompensation arising out of the tax-free status of payments and the impact of our progressive income tax system;
(b) Lower benefits to address reduced expenditures arising out of not going to work;
(c) Removal of supplements that fail to recognize sources of income such as retirement pensions;
(d) Removal of supplements that result in compensation based upon the higher of actual loss and average loss -- for pre-1990 claims, lifetime pensions are based upon a chart of average disability ratings;
(e) Lower benefits in order to introduce financial incentives for proactive rehabilitation and return to work;
(f) Replacement of an open-ended system with one where rates of indemnity can be finalized.
(3) Include responsibilities, for covered workplace participants, for proactive: prevention of accidents; self-rehabilitation; participation in rehabilitation programs; return to work and reinstatement.
As outlined in the document, Workers' Compensation Reforms: Common Sense for a Change, these changes will have a significant impact upon the current system. By way of example -- you don't have to be a mathematician to make this work -- the combination of: a 5% cut in indemnity; a three fifths of a week waiting period; a 10% cut in overheads; reformed FELs and FEL supplements plus full application of partial indexing for new claims; reforms to existing claims to remove the $200 per month supplements; reformed FELs and FEL supplements and pre-1990 supplements plus full application of partial indexing.
All of these in combination could reduce the schedule 1 unfunded liability by $3 billion. They could reduce the schedule 1 annual cost of the program from $3 per $100 of assessable payroll to $2.32.
As large as these potential savings are, it's important to note that Ontario's schedule 1 unfunded liability would still be larger than the sum of the unfunded liabilities for all other provinces. In spite of what we're saying, it would still be higher. Ontario's schedule 1 annual cost per worker would still be among the highest of any Canadian province.
These facts are even more alarming when considered in light of the fact that between 1989 and 1993 Ontario reduced the number of schedule 1 lost time injuries by a whopping 42%, from 185,000 in 1989 to 108,000 in 1993.
In conclusion, we appreciate the opportunity to present the views of our members. We applaud the government for starting the journey towards a sustainable workplace insurance system. We applaud the government for its actions to revitalize Ontario's economy. A revitalized economy is a necessity. Without it, even a system reformed along the lines that we've talked about will be unable to provide our current and future injured workers with the indemnity that they will require.
That completes our presentation and we are open for some questions.
The Chair: Thank you very much. The first up for the questioning this time will be the official opposition.
1810
Mr Hoy: I would make a small comment here on the workplace insurance system. It's something the government can consider, I suppose, but indeed it is the people who work there who receive the benefits because of an injury.
On page 4 you talk about provision of real gains from the workplace -- it's something that we don't require -- and protection of covered workplace participants from losses caused by.
If one is to be covered in an adequate way under workers' compensation, wouldn't some of these concerns that you have take place in any regard? Or are you suggesting -- well, I would ask you to help me here a little bit in these provisions that we do not need.
Mr John Neal: We are suggesting that the natural aging process should not place a person who has a workplace injury in a fiscal advantage over those who have not had such an injury, as a simple example. We're suggesting that the tradeoff of litigation versus no-fault compensation was a tradeoff for things that happen in the workplace. We do not believe that workers' comp was put in place as a social safety net. If the aging process requires additional funds, we fail to see why injured workers should be a privileged class.
Mr Hoy: Okay. What are you trying to convey to us, that we do not need "protection of covered workplace participants from losses caused by lifestyle"?
Mr Neal: Workers whose degree of disability is substantially enhanced by their own personal choices should not be subsidized by those who choose to live a healthy lifestyle.
Ms Martel: I can only summarize my comments in this way: I thought I saw Jurassic Park once at the movies, but I think I'm seeing it here again this afternoon. I am just so totally opposed to almost everything you've put down here, I can barely begin to describe it.
You've just called workers as being in a privileged class. You said you should change the title of this board to not even have the word "worker" in it, instead to talk about workplace. You said that workers themselves should be responsible for safe work practices and healthy lifestyles. This is somehow to infer that when people go to work every day, they're looking to get hurt.
I just have to say to you that I'm finding it really, really difficult to control my real concern, having been an MPP for eight years and one who has a full-time staff that does nothing else but deal with workers' compensation. I find it very hard to accept a brief like this which basically puts all the problems of the system on the backs of injured workers. I find it really offensive.
Mr Neal: I would suggest that you read it with care and attention. I think you will find that the accountabilities are extremely well balanced. The system needs people to understand that this system is there for those who need help, and unless everybody is proactive at minimizing the use of the system, those who really need it will find it is not there. Those that the system was really designed for are going to be the very casualties of a system that is overused. Why are Ontario's workers receiving twice as much per client as in other provinces? Are we that unhealthy? I don't think so.
I think we are living in the best province. I think we have the most proactive services. We have dedicated people in the labour movement, in the workplace, in the employer community, working very hard to make it work, to make a difference, to help people go back to meaningful work.
I don't see that happening any better in other provinces, so you tell me why the average claim in Ontario costs twice as much as it does in other provinces.
The Chair: And with the end of that sentence, thank you. In deference to the last group, so that we can finish by our allotted time, thank you for making your presentation and coming to see us today.
UNITED STEELWORKERS OF AMERICA, LOCAL 1005
The Chair: Our last group up before recess is the United Steelworkers of America, Local 1005. Good afternoon, gentlemen.
Mr John Martin: Good afternoon. My name is John Martin. I'm the president of Local 1005, Steelworkers, in Hamilton. On my immediate left is Alan Hodder, who is the compensation benefits chairman. I'd like to make note to the committee that I was previously the vice-chairman representing workers at the WCB.
Having sat here for the last half-hour, I think it would be important that I limit my statement to allow the government to ask the very needed questions, because there seems to be a misconception about what went on regarding the financial improvements package.
The financial improvements package which was tabled to the board of directors was Ken Copeland's unaltered financial improvements package. Mr Copeland was and currently is the interim president and chairman of the Workers' Compensation Board of the province of Ontario.
I attended intense meetings with the vice-chair of the employers, Stephen Cryne, and with Mr Copeland. It was the labour movement -- and I want this unequivocally clear before I leave here today -- that took the unaltered financial improvements package as put forward by the administration of the WCB. I went to a caucus of the stakeholders, which I represented, and, grudgingly so, convinced them to support the changes needed in that package as put forward by the administration to bring the unfunded liability in control as per the 1985 funding strategy of the WCB. These are the facts.
I would suggest to the committee that I provided the Minister of Labour, Elizabeth Witmer, copies of the minutes of the July 28, 1995, meeting, to show very clearly that the workers' side unanimously voted to introduce the financial improvements package, even though we knew it would take benefits away.
Who voted en bloc against the financial improvements package? The employer community. I'll tell you why they voted en bloc -- and I'm watching the clock so you can ask me questions. Because they didn't want to give up their second injury and enhancement fund and they didn't want to give up the new experimental experience rating system.
When I throw you the next group of numbers, you should be shocked: $400 million a year, starting in the year 1991, was transferred from the investment fund at the WCB to the operations of the board for 1991, 1992, 1993 and 1994. In 1995, $400 million was transferred from the investment portfolio to the operating account, but only $250 million used.
I beg the question of the government: Employers got off the hook for revenue leakages to the tune of $1.6 billion cash. That $1.6 billion cash, had it been left at $400 million in 1991, would have brought the current balance of $6 billion in cash assets at the board to over $10 billion today.
The Workers' Compensation Board of this province is not in trouble. The WCB fiscally operates in the red because they collect off employers every three months. Due to a reset program that's to kick off next year, we're going to be collecting -- I'm using a prior tense -- we would have been collecting the revenues every month.
Here's the situation, and I provided one exhibit under the freedom of information act to the committee which factually shows, as of December 31, 1994, $270 million in outstanding assessments and $160 million in outstanding penalties. Even if the government had gone through with the 5% rate reduction, you would have created $140 million in benefits, in money; you would have created a $120-million shortfall to the operating accounts of the board, which would have meant we would have had to go and draw another $120 million against the investment fund.
1820
Now, let me talk about the act. The act says very clearly in the revenue sections that the board is not to unduly burden employers into the future. Where do you think the $400 million went every year when it wasn't recovered? Into the unfunded liability. The unfunded liability, as Dennis Schweitzer from UTU told you, is not a real debt. It has no solvency rules, it is not funded.
I want that to be very clear. If my company tomorrow went broke, our pension agreement is funded by 66--%. It has to meet the Pension Commission of Ontario solvency rules. Every employer in the province of Ontario would have to go broke tomorrow simultaneously for the debt level of the unfunded liability to even become effective.
That's not going to happen, unless there's an atomic explosion, and if it did happen, workers would get zero anyway because it's not funded. So the issue is around the operating expenses of the board, and labour and management while I was there worked hand in hand to try to get our minds around the fiscal responsibility.
I may be naïve or I may be stupid, as some employers would have you believe, but if I was left at the compensation board, I truly believe that labour would have assisted management in bringing the unfunded liability to zero by the turn of the century because we're the ones that are going to convince workers to take cuts, not the Legislature of this province. Having said that, I'll open the floor for questions.
The Chair: Thank you very much. The questions will start with the third party.
Mr Christopherson: John, I appreciate your clarifying that because time and time again we've heard a lot of this stuff repeated and it's good to have it on the record.
I want to ask further about the bipartite system and the relationship on the board. An awful lot of groups have come forward and talked about the bipartite system not working, that by inference the members of the board prior have been incompetent, they didn't have the qualifications, the ability to do the job, and further, that because it's 50-50, it's naturally going to always create a logjam and decisions can't be made and therefore you can't go about doing the business that has to be done.
I'd like you to comment on that a little bit and perhaps you could also, while you're doing that -- because I think you were there -- comment on the 5% reduction to benefits that the board was asked to approve on request by the minister. I believe that's the way it happened. Maybe you can clarify that for me too.
Mr Martin: First of all, with respect to the bipartite board working, we weren't really a true bipartite board, by the way. Bill 165 contemplated and did include two public members whom the board of directors had chosen and submitted to the current government. It would have made it a multi-stakeholder board.
With respect to working together, we had unanimity on every issue except FIP. FIP was the only issue while I was at the comp board that we split on and it was bloc against bloc and the chair chose not to break the bloc. What's important for the panel to understand, because of the inclusion of fiscal responsibility to the purpose clause under 165, we actually hired the leading corporate lawyer on fiduciary responsibility to educate ourselves on exactly what fiduciary responsibility was. That was the direction we were following.
Now let me deal with the question, Mr Chair, with respect. Had the board of directors taken the direction of a 5% rate reduction and a 5% benefit reduction in June when we were directed to do that, I would have created, as an individual, and we would have created as a board -- and by the way, we were unanimous in not taking the direction of the government -- we would have created a $120-million revenue shortfall on the one side, but the benefits side would only have gained $20 million to the board -- that's where the shortfall comes in, from $140 million to $120 million -- because benefits, long-term, are based on severity, and therefore the immediate cash savings in operations to the board would only have been $20 million. In hindsight, we were right in what we did, and that, in my view, is the reason why the government in September announced that it wanted to take a second look at the 5% assessment reduction.
Mr Christopherson: The experience rating system has been talked about a lot throughout these hearings. Employers are urging that that be retained. I questioned a number of groups about that with regard to the fact that there's an imbalance; it goes against the policy that's there in terms of the number of rebates and penalties. Can you comment on that whole system and what your thoughts are?
Mr Martin: The problem with rebates versus premiums, in the first instance premiums from employers aren't being collected. Under the act they're not stringent enough in invoking the penalty. However, consultants, wonderful people that they are, come in at a percentage basis and say: "Whoa. I can go to the board and I can get you a cash rebate on your assessment dollar." In some instances premiums aren't being paid but rebates are given out instantaneously, so what you have here is a cash cow to employers.
That's happening. That's where the revenue leakages are coming in. In fact 80% in some instances on the NEER program are given in rebates. What does that do? It really hurts us in the manufacturing -- I represent 5,000 employees, 6,000 pensioners at Stelco. You pick all the big manufacturing-based industries in the province; they're paying close to 47% assessment rates. The majority of restaurant people aren't paying anything, and the ones that are paying have a consultant there to get them 80% of the rebates in the first instance. I would suggest to government, before it moves forward on anything, to ascertain who these 55,000 employers are.
The other problem you've got with small employers, they open up a corporate number, they don't pay their revenues, they shut down, then they open up another corporate number over here. But what happens to the liability that remains from injured workers? It gets carried over to the rest of the employers.
In our view, very clearly the revenue problem is what is causing the dilemma to the system in trying to claw back on entitlements and trying to claw back on a 5% benefit reduction. It's like dropping a drop of water in that jug, because you're talking minuscule amounts of moneys in comparison to the $1.6 billion that I've proven to you, and that's in the audited records that have been pulled from the system since 1991.
Mr Christopherson: Can I ask a short one?
The Chair: If it's very short, very quick.
Mr Martin: Oh, no, he went over almost five minutes, I think, Mr Chairman.
The Chair: No, actually you've got about a minute and a half left. You started out at 6:17.
Mr Christopherson: I'll get a quick one in and then let another one. I've heard, John, and you may not be aware of this, that some companies are receiving more money in WCB rebates than they make in corporate profits. Are you aware of that being the case?
Mr Martin: I have nothing factual to give the committee, but I can say this: There are a number of seminars put forward by consultants, and the actual title of the seminar is Make Profits from Your NEER Refunds.
Mr Carroll: Thank you very much for your presentation. You suggested, if I understood you properly, that it would be labour and only labour and not the Legislature that would be able to convince workers to take reductions. Did I understand that?
Mr Martin: No, I said workers. Workers and only workers will stand up in this province, not the Legislature.
Mr Carroll: No, I realize that, but you said it would be only workers who --
Mr Martin: That's right, and there's a reason why.
Mr Carroll: Do we assume from that then that you believe there should be reductions in benefits?
Mr Martin: I believe, and I'm going to be honest, that the WCB system needs to be fixed. There are some difficulties in it. Workers would have to give back some things in that process, and that process would be through a workers' representative through consultation. The reason I say that, Mr Carroll, is that I did a tour of 14 cities before I was fired by the government and I got it loud and clear that they would be prepared to have a guy from the worker community tell them why it's got to be done versus the government telling them.
Mr Carroll: Okay, but you do admit there need to be some changes in benefits.
Mr Martin: Not in benefits. I didn't say benefits. I said there have to be reductions in the way the board operates itself.
Mr Carroll: So your comment that only workers could convince workers to take less didn't mean in terms of benefits.
Mr Martin: That's correct.
Mr Carroll: One other quick question: Did your union get a request in writing from Minister Witmer to make some submissions about changes to the WCB?
Mr Martin: No. I got it through a mass notification system.
Mr Carroll: But you did get a request for some written input?
Mr Martin: Me personally?
Mr Carroll: No, your union.
Mr Martin: The Steelworkers? I don't know that. I just said my local union found out about it through the labour movement, through the OFL.
Mr Carroll: Did you make any submissions to Minister Witmer?
Mr Martin: On this?
Mr Carroll: No, written submissions on the reform to the Workers' Compensation Board.
Mr Martin: No, I didn't, and the reason is, sir, because I had private meetings with the minister on three or four different occasions, and there was an agreement between the government and ourselves that any dealings while we were employees of this ministry would be with the Minister of Labour.
Mr Carroll: So you had an opportunity for input then?
Mr Martin: With the minister, yes.
Mr Carroll: Okay, thank you.
The Chair: Thank you very much. We appreciate your indulgence, as we've run a little late this afternoon. With that, trying to get back on schedule here, we're going to take a very brief recess for dinner and we will reconvene at 7 o'clock.
The committee recessed from 1832 to 1902.
UNION OF INJURED WORKERS OF ONTARIO
The Chair: Seeing a quorum, I call the meeting back to order and welcome our first deputation of the evening, the Union of Injured Workers of Ontario, Mr Biggin. Good evening.
Mr Phil Biggin: Good evening, Mr Chairman and members of the resources development committee. We're pleased to be here. The Union of Injured Workers has been in existence since 1974. We have appeared before this committee through three or four different governments and the only thing I would say at this point is that we certainly favour, because Ontario is such a large province, that you go out and reach the people, go to the people directly. That's part of what we're about.
We directly service people, we represent people who are having problems with workers' compensation, with welfare, with Canada pension, people who are having depression, we give hands-on support to people. You've probably heard about us through our demonstrations, but that's a very small part of the work that we actually do. We work one-on-one with a lot of people in groups, small groups and large groups, educationals and so on.
We're here because we feel very strongly that the workers' compensation system is something that was right to be set up in the first place. Certainly, when Chief Justice William Meredith laboured between 1910 and 1913, in 1915 it became a reality. Today there is a need for workers' compensation to assist injured workers, people who get hurt on the job.
Labour Minister Elizabeth Witmer said that in tabling Bill 15, she was acting now because the board is on the brink of a financial crisis. Obviously, the Minister of Labour has trouble digesting the 1994 annual report prepared by the WCB, or perhaps that's why she felt obliged to dismantle the bipartite board of directors before it was even determined whether they were going to be able to do the job that they had set out to do.
It's our position that the Workers' Compensation Board has two stakeholders. The primary stakeholder is the injured worker and the secondary stakeholder is the employer who funds the system. This was the bargain that was set out by Chief Justice William Meredith in 1914 when he intended the system to be set up to provide economic security for workers who were unfortunate enough to be hurt on the job.
There was a historic tradeoff or compromise where workers gave up the right to sue their employers in order to get this security of benefits. It was agreed by all parties -- labour, the manufacturers' association, everybody -- that employers would fund the system and no money would be taken from tax revenue. Finally, it was agreed this system would be administered by an organization which operated at arm's length from the government.
Now your government is planning to drastically alter this arrangement. All of this because of the so-called financial crisis. We're not saying that there are not problems at the board, financially, but why call it a debt crisis? You've heard presenter after presenter explain that this is not a debt; it is an unfunded liability. It's not the same thing. It's not something that Moody's takes into consideration when it is looking at Ontario's credit rating.
In real terms, the WCB is better funded today at 38 cents for every dollar than it was five years ago at 32 cents for every dollar. That's not good enough, of course, but let's look at the 1994 annual report. Bill 165, against our vociferous objections, took away full indexation of pensions and benefits. We haven't even seen those savings because this is the 1994 report. Yet, in the 1994 report, before Friedland went into effect, the WCB built a new office at a cost of $180 million, paid out $359 million in rebates through experience rating -- the off balance -- wrote off $173 million in bad debts by employers and ended up reporting a profit of $130 million.
Mr Chairman, when I indicated to you when we were presenting as a network that I wanted to speak, it was because I said if anybody had any commonsense, how could you put forward a proposal to reduce employers' assessment rates by 5% at the same time that you're taking away from the injured workers? At the same time that the people are consulting with you, the employers and the employers reps are telling you that this is a financial crisis, the system is going to go bankrupt.
Yes, if the system is going to go bankrupt, then why are these employers taking $359 million, last year, from the revenues of the compensation board when the board's statistics show that $337 million were paid out in temporary benefits for 1994? In fact, the employers are taking out $22 million more than the workers are getting, and this is supposed to be a workers' compensation system?
We heard the employers a little while ago tell us that yes, we should change the name of the system. I think you realize, Mr Chairman and committee members, that there are many more workers in the province of Ontario than employers. I'm not putting down the employers, and certainly through all of our presentations we have stressed that we want a strong economy so everybody can be justly compensated, whether they're injured, not injured, whatever. But this is not fair in any way. What you've got here is you've got the employers creating this crisis of collapse. Yes, many workers come up to me and say, "The Workers' Compensation Board is going to collapse." Well, we know from the statistics that it's not going to collapse with $6.8 billion in the bank.
Certainly, we want to have a responsibly run Workers' Compensation Board, but we have to have a board that is going to go after the 20,000 employers who do not pay coverage even though the act requires them to do so and another $200 million lost through employer non-registration, non-filing, underreporting of payroll and non-payment of assessments.
I'm going to turn it over to my colleague Carmine Tiano, who's a community outreach worker with our organization, just to give you some specifics about the bill.
1910
Mr Carmine Tiano: I'm basically going to discuss two sections of the act, of the way the act is proposed to change. Section 21.1, specifically the section on overpayment: As someone who works with injured workers, I see this section specifically geared towards legislating to account for administrative errors at the board.
The majority of overpayments are created by board employees. I feel it would be a better idea to try to stop the overpayments before they happen, put policies within the board that will stop these overpayments. Most of them are created by board employees, and who bears the brunt of it? Workers.
Of all the stakeholders in the system, it seems that the injured worker is the one who is economically the most vulnerable. If an overpayment occurs, the worker is the one who will be affected the most by it.
The way the proposed changes are worded, there are no mechanisms which will allow for forgiving of any overpayments. This is unbelievable. Meanwhile, when the board last year, in 1994, forgave $173 million in bad debts, it seems that all they do is forgive employer bad debts but when it comes to workers having overpayments they're hounded and forced to make restitution. In the last couple of weeks I could count at least six or seven workers who have gotten notices that there have been overpayments. They've received one notice; two weeks later already they're demanding payment. This is ridiculous, when the board is forgiving $173 million in bad debts. I think if you're going to forgive any debts at all, some of the workers' overpayments should be forgiven.
The other section I want to talk about is section 161, which puts criminalization into the act. I have a number of concerns with this. The first: The way section 161 is presently written, it states, "A person who knowingly makes a false or misleading statement or representation to the board in connection with any person's entitlement to benefits is guilty of an offence." It's very open-ended. Not only is the act now targeting injured workers, it's going after employers, representatives and doctors. The way the present legislation is written, it's going to deter injured workers from putting in claims and putting in appeals. Also, doctors now are going to have in the back of their mind, "If I write this medical report for this worker and there is fraud on his part, I'll be responsible."
As someone who represents injured workers, in the back of my mind that causes problems for me too. If I'm representing someone and there's a misunderstanding that could lead to misrepresentation, I could be guilty of criminal charges. I think that this section should be rethought and reconsidered, especially when now even employers could be charged with criminal charges.
I think that the two sections I went through and other sections in this new bill should be reconsidered and rethought. There should be more input, the type of input we're putting in tonight. I feel that even though the government has fundamental differences in the way we see workers' compensation, the ultimate goal is to build a better Workers' Compensation Act. The way the changes are now, we're not going to that. We're going to give employers more power and we're going to take power out of the hands of the injured workers, and I don't think that's the way to go.
The Chair: Thank you. We have time for some brief questions, and this time the rotation will start with the government benches.
Mr Joseph N. Tascona (Simcoe Centre): I'd just like to discuss your comments about section 161. This is not a criminal section. These are provincial offences, if anything. Looking at that provision, which equally applies to employers in other parts of the act, we're dealing with false or misleading statements that are knowingly made. That is not open, and it's not something that would be subject to anything just short of having knowledge. If it had said, "a person makes a false or misleading statement," I would totally agree with you, but the fact that it says "knowingly" is a big difference.
Also, with respect to subsection 161(2), it deals with, "A person who wilfully fails to inform the board," which is an intent. We've heard from employers who have looked at one section, where it doesn't even have "wilfully" or "knowingly" in front of it and, just basically, you've actually done the act.
I would say to you that the approach that's being taken is not a criminal approach; it's an approach to deal with situations where there is an intent to defraud the board, be that involving a physician or be that involving an employee. It's not the intent to go after workers. I'd just like to hear your comments, based on my view of that provision.
Mr Biggin: That can be handled through criminal charges right now. I don't know why we need an additional section in the Workers' Compensation Act. I think the reason for that section is that it's giving a message to people. I mean, your whole approach seems to be, "We've got to cut spending and we'll do it any way we can." I'm interested to hear your comments. Certainly, somebody who is knowingly defrauding the compensation board, we wouldn't represent them in the first place, and I don't think any other representative would who had any credibility.
Mr Tascona: That's just the point, though. That's what the point is. Knowingly and wilfully defrauding the board is what this is dealing with, and you wouldn't deal with it under the Criminal Code. This is something that would be dealt with specifically under the act, and that's all the intent is.
Mr Biggin: How are you going to deal with the 20,000 employers who are knowingly not registering with the Workers' Compensation Board?
Mr Tascona: There are provisions in there to deal with them also.
The Chair: Thank you, but unfortunately we've used our 15 minutes, and it's going to be a full house this evening. Thank you very much, Mr Biggin and Mr Tiano, for taking the time to come and make your presentation this evening. We appreciate your comments.
EMPLOYERS' ADVOCACY COUNCIL
The Chair: Our next group up is the Employers' Advocacy Council. Good evening. Introduce yourselves for the committee members and for Hansard.
Ms Shirley Wylie: Thank you, Mr Chairman and standing committee members. I'm Shirley Wylie. I'm the provincial vice-chair for the Employers' Advocacy Council. To my left is our acting executive director, Sherri Helmka, and to her left is Patricia Briggs, who is the Toronto chapter chair. Each one of us will take a portion of our presentation and I'll begin.
The Employers' Advocacy Council is a non-profit, volunteer organization of employers across Ontario. Our mission is to reduce employers' workers' compensation costs by influencing constructive change to workers' compensation in Ontario and through education of employers on all aspects of workers' compensation and workplace health and safety.
With over 1,700 members in nine regional chapters across Ontario, the EAC represents a broad cross-section of Ontario's diverse economy. Our members include small business owners employing less than a handful of employees and large multinational organizations. We also have many public sector employers and employers from schedule 2.
We welcome the opportunity to comment on this important initiative to begin reforming the workers' compensation system. We are pleased to see that the government, in laying out its plans for reform, has chosen to proceed cautiously in separating reforms into long- and short-term measures.
The EAC is in full support of the overall direction of Bill 15. This initiative will, in our view, begin to restore our workers' compensation system through measures that will provide professional leadership, greater accountability, deterrence of fraud and abuse, and improved overall efficiencies.
Most importantly, we believe that Bill 15 also begins to restore the confidence of workers, who rely on the system, and employers, who are the sole funders.
1920
Based upon our active involvement and participation in pursuing constructive reform to workers' compensation over the past 10 years, we have a number of suggested amendments to the bill which we believe will serve to strengthen the legislative reform. We have also put forth some limited, yet key, suggestions to limit costs and restore some of the balance eliminated by the previous government with the introduction of Bill 165.
In supporting and proposing these amendments to Bill 15, the EAC wishes to ensure that the changes implemented are durable and in the interest of improving the entire system. It is in this spirit that we offer the following comments and recommendations for the consideration of this committee. Today, we would like to provide you with our comments in six key areas.
The purpose clause, as proposed, is a major improvement to the existing clause. However, we are concerned that it may not be strong enough to ensure the long-term viability of the system.
We have also concerns that the purpose clause leaves the system open to abuse and interpretation regarding voc rehab programs. In many instances it's the economic situation, and not the worker's disability, that is in the reason for the worker not returning to work. A distinction needs to be made between "employability" and "employment" in the purpose clause.
We believe it is also necessary to clarify support for the use of financial incentives to employers to prevent workplace injuries.
We propose the following changes.
Suggested amendment to section 0.1: "The purpose of this act is to prevent and reduce the incidence of work-caused accidents and illnesses to workers, to reduce the overall costs of these accidents and illnesses to employers and the citizens of Ontario, to ensure the long-term viability of an effective and affordable workers' compensation system in Ontario and in doing so, accomplish the following the following in a financially responsible and accountable manner."
We feel there's no change required in regards to providing the fair compensation, no change to providing health care benefits.
However, we do recommend, "To provide rehabilitation programs that restore the worker's condition of employability and programs to facilitate the worker's return to work."
We endorse, "To provide rehabilitation programs for their survivors."
We recommend changes in, "To prevent or reduce the occurrence of injuries and occupational diseases at work through financial incentives to employers."
Lastly, we see no changes in but certainly endorse, "To promote health and safety in workplaces."
Ms Patricia Briggs: With regard to governance and appointments, the EAC is supportive of the measures to establish a multi-stakeholder board of directors. We have several recommendations which we believe will strengthen the government's objective of restoring leadership, management and accountability.
Directors must be selected based on their merits and skills, not because of their affiliation. They must always act in the best interests of the corporation.
To eliminate the concern of partisan views at the board, directors should be representatives "from" their respective communities rather than "of" the communities.
To be effective and have the confidence of the board, we propose that the chair be an order-in-council appointment made on the recommendation of the board of directors.
To maintain the level of independence and to display confidence in the board, the board should also have the power to hire, monitor the performance of and replace, if necessary, the president. The president should be a member of the board.
We also recommend that the chair of WCAT not be a member of the board.
With regard to policy direction, while we have the utmost confidence in the ability of the government and the minister to act in the best interests of the system, we are nevertheless concerned that in allowing an open-ended process for issuing policy directives to the board, it may in fact undermine the independence and confidence that is fundamental to this system.
In our view, the government maintains its control and direction over the affairs and activities of the WCB in three ways: by establishing the broad parameters of the system, setting benefit levels, definition of accident and coverage etc; through the appointment of the board of directors and approval of order-in-council appointments recommended by the board for the positions of chair and president; and through a memorandum of understanding with the WCB which clearly defines the roles and responsibilities of the government and the WCB.
We suggest that this provision be revisited within six months following appointment of the board of directors.
With regard to WCAT, employers continue to have concerns about the role of WCAT in the system. Generally, employers are of the opinion that WCAT has expanded the definition of "accident" well beyond what was contemplated by the legislators and has had a significant impact on the overall costs of the system.
While we recognize that the future role of WCAT and entitlement issues are being considered under Minister Jackson's review of the system, we are of the opinion that our strong concerns about WCAT can be partially addressed in this short-term initiative.
Restrictions must be imposed to ensure that WCAT can only deal with matters of fact and is bound by statute to follow and rule upon application of established WCB policy. This can be achieved through a minor change to section 86, as outlined in our main brief.
With regard to fraud and abuse control measures, the EAC fully supports the measures proposed in Bill 15 to contain fraud and abuse in the system. These measures are long overdue and will, in our view, lead to a greater level of confidence in the integrity of the system.
To promote and encourage registration of employers, we propose a six-month window and that recovery of back assessments be limited to collection of assessments that should have been collected for 1995 and 1996 as appropriate. Employers who fail to register at the end of that period should be prosecuted to the fullest extent of the law and required to pay WCB all outstanding assessments.
Returns of accidents: The EAC is of the view that the responsibilities imposed on employers under section 133 can be greatly enhanced by strengthened requirements on workers to provide notice of accidents under section 22. It's been our long-standing view that section 22, as currently written, provides an opportunity for abuse and prejudices the employer's position.
We propose that all claims for workplace injuries, except those of course that are occupational disease and obviously latent, filed outside the six-month period should be rejected without exception.
Inclusion of such a provision in this round of reforms is consistent with the overall objective to restore accountability and responsible behaviour from all parties.
Ms Sherri Helmka: Measures relating to Bill 165: As the government is aware, the employer community was strongly opposed to many of the provisions contained in Bill 165 introduced by the previous government. Elements of that bill have added significant cost to the system and have in certain instances undermined, or have the potential to undermine, the effectiveness of existing programs.
We believe that in this short-term package of legislative reforms significant corrections can be made to the finances of the WCB, and the effectiveness of existing practices and programs restored.
In regard to permanent partial disability supplements, section 147, the supplements under this section, when introduced in 1989, were intended to be a bridging supplement until age 65 for disabled workers unable to return to work and for whom rehabilitation was not likely to be effective. The change introduced by the NDP distorted that intention and simply awarded some 40,000 workers an additional $200 per month regardless of the extent of the individual's needs or the extent of the injury. The change to these supplements resulted in an additional cost of $1.5 billion to the system.
To compound the cost of this program, the WCB interpreted the original provisions of subsection 147(4) to the effect that once a supplement is awarded, it cannot be rescinded, even though the act requires reviews at two and five years post award. The impact of this administrative decision increased the WCB's future liability by $350 million in 1994.
We believe that the government has a number of options available to address this problem:
Develop a review process to determine individual need for the additional $200-per-month supplement.
Limit payment of the $200-per-month supplement to age 65.
Clarify the legislation to allow the WCB to revoke the supplement, and the additional $200 per month, at the time of the review prescribed in subsection 147(13).
1930
In regard to return to work, the changes introduced by Bill 165 have frustrated the attempts of employers to develop and promote meaningful re-employment opportunities and modified work programs. This has imposed barriers where none previously existed and complicated a process that worked quite well. Return to work information is not medical in nature; however, these provisions have now medicalized a non-medical issue, to no one's benefit.
We propose these subsections of the act be rescinded.
The Vice-Chair (Ms Barbara Fisher): Excuse me. I would just like to advise you there is one minute left in the presentation. If you'd like to reserve it for one question, that's fine. Otherwise, you have one minute.
Ms Helmka: Okay, I'll go on with this.
In regard to experience rating, experience rating has been an unqualified success in reducing the incidence of accidents by more than 30% since 1989. At the same time, the duration of short-term disabilities has declined from 110.8 days in 1991 to 71.6 days in 1994. The changes introduced through Bill 165 will, if acted upon by the WCB, undermine the effectiveness of the program and measure processes surrounding health and safety and return to work programs rather than measuring the results of those programs.
Until the longer study is complete, we urge the government to rescind subsection 103.1(3) of the act.
On behalf of our members, we thank you for the opportunity to make these comments.
The Vice-Chair: Thank you. You've taken it right to the wire and unfortunately we will not be able to have any questions, but thank you very much for coming.
INJURED WORKERS' CONSULTANTS
The Vice-Chair: I would ask the next group to come forward, the Injured Workers' Consultants. While that's happening, for anybody who arrived late, I'd just like to remind you that there is a 15-minute presentation and question and answer period. Both of those are inclusive, so it has to be done within the 15-minute period. If you'd like to leave it open for questions at the end, then please, I guess, acknowledge the fact that the time is going while you're presenting your brief as well. I would invite you to introduce yourselves, please.
Ms Marion Endicott: Good evening. My name is Marion Endicott. With me is Orlando Buonastella and John McKinnon. Each of us has represented injured workers for many years, primarily in the context of our work at Injured Workers' Consultants, which is a community legal clinic which provides free representation for injured workers having problems with the WCB.
In cooperation with the Union of Injured Workers and the Industrial Accident Victims Group, we have made presentations to the standing committee on resources development for some 17 years. We have felt that our experience and insight into workers' compensation has been valued over those years.
We have appeared before your committee during the Davis government, the Peterson government and the Rae government. Your committee, we regret to say, is the one that appears least interested in hearing what injured workers have to say. There are injured workers in this room who have presented to you in the past and they were not advised of these hearings until it was too late.
I would like to point out in particular Mr Eddie Couchi, whose name you may well know. He is from the Asbestos Victims group and he's been presenting and fighting for the rights of asbestos victims for 30 years now. He was not advised of these hearings. He's here tonight; he's not able to say anything. We also have Barbara Pyzot, for example. She's in the crowd. She made a request to present to your committee and was simply told, "There's no time." There are many injured workers who would like to be speaking to you of their experiences and their ideas and they have not had that chance with this committee.
The Davis Conservatives were not afraid of public debate. This standing committee had a session on the steps of the Legislature in 1983 in order to hear from all of the injured workers who were advised of those hearings in notices that went out with the monthly cheques from the WCB.
We think that a new government and new MPPs who are just becoming familiar with the complexities of the workers' compensation system should be proceeding with caution and humility. Instead, we see a bill, Bill 15, which attempts to rapidly respond to simplistic misconceptions and not real needs. We call these misconceptions "myths."
The first myth is that the WCB is facing a debt crisis because of its $11.4-billion unfunded liability.
Mr John McKinnon: The facts are otherwise. The WCB is not in debt. It has always been able to pay injured workers out of the premiums collected from employers. It has never borrowed a cent.
The unfunded liability is not a debt, it is the projected future cost of all claims on file minus the $6.8 billion in savings already in the WCB's reserve fund. The jump in the unfunded liability, which began in 1985, was just a paper change reflecting the introduction into the legislation of cost-of-living adjustments. There was no increase in injured workers' benefits nor in employers' costs. Inflation adjustment is done without cost to employers -- and we refer you to the government's report from Paul Weiler.
Everyone has their own personal unfunded liability. Multiply your own income or living expenses by the number of years of age to 75 and subtract what you have in the bank. For example, a 45-year-old MPP living on $50,000 a year with $50,000 in RRSPs in the bank has a personal unfunded liability of $1.45 million, even if that individual doesn't owe a cent to anyone.
Ms Endicott: I'd like to point out that attached to our brief is the section of Paul Weiler's report that does talk about how there was no increased cost to the employers by bringing in the cost-of-living adjustments.
The second myth is that the unfunded liability has been increasing and therefore WCB funding must be out of control.
Mr McKinnon: It's our view that the unfunded liability is not a concern in the WCB context. The private insurance industry is different. It is required by law to be pre-funded. It cannot have an unfunded liability because, with competition, it may have few or no customers to generate revenue in future years when it has to pay out.
The WCB is funded differently. It is funded on a collective liability basis. It was established in 1915 and funded on a "pay as you go" basis at the request of employer groups.
As long as participation in the workers' compensation system remains mandatory, and preferably for all employers, there will be adequate revenue to fund the system at lower premiums than a private insurance style pre-funded system, and this will also allow more money to remain in the hands of employers for ongoing investment in their enterprises.
The concern is not the projected future cost but ensuring an adequate collection pool of income each year. The concern for WCB funding ought to be directed at bringing all Ontario's employers into the WCB system.
Ms Endicott: Myth number 3: Since the unfunded liability has been increasing, common sense tells you that benefits to injured workers are too open-ended.
Mr McKinnon: If the unfunded liability concerns you, don't blame the cost of WCB benefits on injured workers. Benefits to injured workers were reduced in 1989 by Bill 162 which replaced the permanent pensions for permanent disabilities with discretionary payments for deemed wage loss until age 65.
Injured workers paid again in 1994 when the full cost-of-living adjustments were taken away by Bill 165.
According to the WCB's 1994 annual report, the benefits expense was at the lowest level in 10 years. The cost of injured workers' benefits is now 36.5% less than the cost a decade ago.
So don't blame injured workers' benefits for this "actuarial speculation" that is known as the unfunded liability. Benefits are going down while that figure is going up. In our submission, you ought to find out what is going on before you begin to attack injured workers' benefits.
Ms Endicott: Myth number 4: Employers' WCB premiums are rising at a rate that is out of control.
Mr McKinnon: Again, the facts are contrary. According to the WCB's annual report, the average premium from employers has been steadily decreasing. The average premium is now less than employers were paying in 1988. Compare that with rate increases in the private insurance industry for auto, home and life insurance premiums.
The effective rate is even lower because of, as Mr Biggin was pointing out, the expansion in experience rating and the increase in rebates. In 1994, as was pointed out, the net cost of rebates to employers was $359 million for schedule 1 employers, and this amounts to a kickback of 14% in the premiums collected.
So Ontario's premiums don't look as bad as some would like us to believe. As Mr Biggin pointed out, compare that to the treatment of the workers injured in those same workplaces; they received $22 million less in temporary benefits than their employers received in rebates.
In 1994, the WCB still paid injured workers full cost-of-living increases for over 11 months, gave employers a reduction in premiums, gave $359 million to employers in rebates, plus wrote off $173 million in employers' bad debts, bought a $180-million new building, and still declared $130-million profit. That's not bad for an institution in crisis.
1940
Ms Endicott: Myth number 5: The cost of WCB premiums is reducing Ontario's competitiveness and reducing investments in Ontario's industries.
Mr McKinnon: Last week, the Canadian Auto Workers' submission to this committee reported that in 1994 there was $8.8 billion invested in the manufacturing sector of Ontario and that was the most for any year in Ontario's history. Ontario has an infrastructure and advantages that provinces with low WCB costs, like Prince Edward Island, cannot offer. Executive salaries are up by 18%. The average wage of a chief executive was reported by the Canadian Auto Workers to be $632,000 last year and this suggests that our WCB rates are not a barrier to investment or profits.
Ms Endicott: Myth number 6: The previous board of directors was narrow and Bill 15 broadens it.
Mr Orlando Buonastella: The previous board of directors represented an equal number of employers and trade unionists. It came to the consensus that it needed to be expanded to include the organized injured workers' movement, ONIWG, that presented today, and small business. They undertook to lobby the new government to bring this about.
What was the government's response? Fire the new board of directors. Appoint a new slate that will have the stomach to implement the cuts in workers' benefits that will come with Bill 15, part II, in the spring, as announced by the government.
We note in passing that when opposing the NDP's Bill 165, the Tory caucus brought in amendments -- and we have them here in the appendix -- saying that one injured worker should be and would be in the panel to recommend directors for the board. In Bill 15, injured workers' representatives are not even mentioned. Some progress.
Ms Endicott: Myth number 7: Bill 15 is not an attack on workers' benefits.
Mr Buonastella: Except that in introducing Bill 15, the Minister of Labour said it will set the stage for further comprehensive reform next spring. We call it an appetizer in that sense. What did Ms Witmer say these reforms would be? Reduction in the compensation rate by 5%, rethinking the idea of lifetime pensions, reducing the monthly FEL awards up to 40%, a three-day waiting period and, to add to this balance, a 5% reduction of premiums so that employers will benefit directly every time an injured worker is thrown on the street. This is why Bill 15 must have a new board, a board to stomach these changes.
But Bill 15 will affect benefits directly as well. The new purpose clause is being brought in to have financial concerns discipline the entire compensation system, including WCAT, the appeals tribunal. What does this mean? The board has a legislative responsibility to make decisions based on the true merits and justice of each case. This will now be compromised. Financial concerns, the concern about cost of a claim or the concern for precedent-setting cases -- these concerns will now de facto be considered. In doing so and in adopting a narrow cash register approach, justice and fairness will be seriously compromised.
Let's take the example of the Elliot Lake silicosis cases or the Johns-Manville workers -- and we have one here tonight. The WCB began the special rehabilitation assistance program in 1975 for these miners. Although receiving a partial disability pension for lung disease, these workers returned to their old workplace because they could not earn a living any other way. Many got sicker and died unnecessarily. The WCB then agreed to pay full benefits for those who came out and looked or trained for other work.
The program would likely not survive these days, with the new concern for financial responsibility. It would have cost less to let them die, having returned to work at no wage loss and just paid their families the death benefit when the time arrives. This is the cost-cutting approach that we're putting in place for our sons and daughters. Let them work, even if we know it's killing them.
Ms Endicott: Myth number 8: Fraud and overpayments are a major problem.
Mr Buonastella: The Ontario WCB has received national and international awards for its anti-fraud technology. There's no evidence that fraud or overpayment is a more significant problem today than under the previous Conservative, Liberal and NDP governments. The difference is that today the WCB has an entire department that deals exclusively with fraud and overpayment, and the 1994 annual report gives no figure to assess how effective they are. Why don't you propose a value-for-money audit of the fraud investigation unit before you entrench so-called anti-fraud measures in the act?
Most of the injured workers we deal with think that they are being defrauded. These are injured workers who survive on small pensions from the board, who are pushed on to welfare, workers who receive a small FEL benefit for a phantom job they don't have. You may say that we and they are biased, but a lot of your constituents are equally biased. But if you think we are biased -- and we disagree -- we urge you to read the Ontario Medical Association submission to this committee on Bill 165 last fall, and I included it in our addendum.
The OMA reported a disturbing trend by injured workers to request non-reporting of their WCB injuries at the apparent request of the employer. We have provided the brief to you, as I said, and I should say that Elizabeth Witmer listened to that submission very attentively, as we were in the audience, so do something about that.
Ms Endicott: Myth number 9: Injured workers must be forced to report material changes.
Mr Buonastella: In the interest of brevity, I want to say, without repeating what's here, that this is the first time a section of the act is being introduced without telling us the reason for it. Are we supposed to tell you the reason for this change? When we look at it, we think it's totally unnecessary because a lot of these material changes, like a changing in employment condition, a changing in employment status, are not relevant to people who are on a pension, to people who are on a supplement, or to people who are on a FEL benefit, because there are regular reviews scheduled for that. So there's no necessity at all to introduce these changes.
The Vice-Chair: I just might note you have one minute left in your presentation time.
Ms Endicott: We hoped by reading we'd be quicker than usual, but we will conclude now, and in concluding, I'd like to read from a document which we think summarizes the general approach of the government fairly well: This government "has developed a plan which will eliminate the unfunded liability while ensuring the principles of fairness and efficiency for workers and employers alike. Among its plans are reducing benefit levels, improving the ongoing review of long-term benefits, strengthening definitions of compensable accidents, and improving the review of worker recovery periods."
This happens to be not a government document that I'm quoting from. I replaced the words "Marsh and McLennan" with the word "government" as I read it out. This is a special-interest group that this government is representing. The entire document is appended to your brief there, and a lot of it reads like the current government documents.
The Marsh and McLennan company goes one step further. After the government makes it very profitable for them, they would then be interested in taking over the WCB, or, to put it in their words, the government should "Introduce meaningful long-term changes to the structure of the system with a view to handing stewardship to the private sector." That's page 4 of the same document which you have.
Is this what Bill 15 and the study under the minister without portfolio, Cam Jackson, are all about? We urge you to withdraw Bill 15 and to listen to the people for whom the system was created, the injured workers of Ontario.
The Vice-Chair: Thank you very much for your presentation. That does expire the 15-minute time allocation, so unfortunately or fortunately, there won't be any questions this evening.
1950
BOARD OF TRADE OF METROPOLITAN TORONTO
The Vice-Chair: I would ask that the next group come forward, please, the Metro board of trade. Welcome this evening. I would ask that you introduce yourselves, please, and who you are representing.
Mr Vincent Johnston: My name is Vince Johnston, and to my right is David Brady. We're both members of the labour law committee of the Metro board of trade.
Ladies and gentlemen of the committee, you have the materials in front of you. I won't go through the history of the board of trade. Suffice it to say the board of trade is the largest board of trade or chamber of commerce in the country. It represents a broad spectrum of employers in this province. We have played and continue to play an active role in providing constructive criticism to the government and to the WCB with respect to issues concerning the workers' compensation system, and we will continue that role.
I don't propose to run through the submissions for you. What I propose to do rather is highlight some of the submissions and elaborate on some of the rationale that's contained in those submissions.
Employers in the province are concerned. They are concerned because the magnitude of the problem facing the system is obvious and it's pressing. There are problems in three key areas: There are leadership problems, there are financial problems and there are systemic problems. To the royal commission we made submissions which identified these as critical issues, and they continue to be critical issues. These critical issues have led to a financial crisis and they've led to a crisis in confidence on the part of especially employers in the province.
In part, the crisis has arisen because the system which has been given the board is not managed, because it's unmanageable. I was reminded of this fact today when I received a letter from the chairperson of the Workers' Compensation Appeals Tribunal, Mr Ellis. His letter to me was apologizing to me on behalf of their tribunal for the lengthy delay in getting a decision to us. I found this quite curious, but you might understand this letter when you understand the context.
The case was before the tribunal in May 1993. We had a one-day hearing. We concluded that hearing on that day. Post-hearing submissions were requested. All of that process was finished March 1, 1994. There are issues of credibility in the case, and yet over two years -- two and a half years now -- since the date of that hearing, we do not have a decision.
Mr Ellis, in his letter to us, said the following: "Gee, we're sorry" -- and I'm paraphrasing, obviously -- "but part of our problem is the fact that the pre-government to this particular government introduced a bunch of legislative amendments, and those legislative amendments have proven to be complex and time-consuming and have led to difficult issues. We didn't understand the impact that those legislative amendments would have on our jurisdiction until it was too late, so you're caught in a backlog and you're just going to have to wait for your decision. We can't say to you, `You're going to get priority because your decision's this long overdue.' It's just going to have to wait till everything else."
That, I think, exemplifies the crisis in confidence that employers have in the system today. That crisis in confidence can't be underestimated. The employers right now are questioning the cost of doing business in Ontario. They're questioning the decision-making by the board. They're questioning the decision-making by the Workers' Compensation Appeals Tribunal. They're questioning what they view to be aggressive collection and rating actions by the board against employers with what appears to them to be a laissez-faire attitude towards collecting overpayments from workers.
All of these things are problems. The question that I think faces this committee is, does this bill fix all those problems? The answer is no, it doesn't. What it does do, though, is it puts the building blocks in place, and those building blocks need to be there in order to restore confidence in the system. All of the building blocks need to be there, ladies and gentlemen of the committee. If you remove some of those building blocks that are contained in Bill 15, these amendments just aren't going to work.
The building blocks I see starting at the top, and at the top is the WCB itself. The WCB should be the manager of the system. It has not been the manager of the system for an excessive period of time. It needs to take a leadership role in determining issues concerning entitlement and issues concerning voc rehab, concerning collection activities. It should not merely be a tool for achieving social policy objectives.
Bill 15 contains within it amendments to the composition of the board of directors. We cautiously approve the amendments which are contained in Bill 15, but quite frankly we need the right people in place. We need strong people. We need people with proven track records in turning industries around. The president and the chairperson of the board must be senior insurance executives. They must have actuarial training, because the board is, after all, in the business of insurance. We need these people in place in order to restore confidence in the system. Right now we're at a critical stage of the process for this system. We need key people, people who can pull the system out of the mess that it's in.
The board of directors which has been proposed in Bill 15 again we cautiously approve. We say no to bipartism. I don't need to address the types of concerns that Dr Tuohy raised in her reports concerning the agency. The board, though, has already experienced and has exhibited a great degree of inaction with respect to policy matters in the past, and if we go to a bipartite model, the anticipation is from the employer community that that inaction will become even worse.
We don't need brokered decisions at this stage of the process. We don't need decisions that are a result of negotiations going on in back rooms. We need decisions that deal with the real issues in place.
One of the facts which comes to my mind which shows the problem with the previous system concerns the policies that came into place with respect to section 54 and the obligations to re-employ. Somehow the board determined, as a result of what process we know not, to institute a just-cause test. I defy anyone in here to find a just-cause test in the workers' compensation system. It just isn't there. The only thing that employers can imagine happening is that some kind of brokered arrangement was made, and that is not in keeping with the spirit and intent of this act.
The other building block which we've identified is the concept of financial accountability and responsibility. We find it helpful that that has been enshrined in the purpose clause. We also find it helpful because this reminds everyone that there are two major groups of actors in this system. There are employers and there are workers, and both groups -- both groups -- were supposed to benefit from this entire process. Workers were supposed to be able to get their benefits with a minimum of difficulty, employers were supposed to have financial certainty, and they were supposed to feel as though they were contributing to a system that would spend its money the way it itself would spend its money, and right now that's just not there.
Section 7 of the proposed amendments reinforces the board's obligations. Again, we find that helpful. We do have one concern, and that concern is that the proposals with respect to financial accountability and responsibility leave one actor outside of the scope of those proposals. That actor of course is the tribunal.
The tribunal, in the not very distant past, has made a number of decisions which are completely contrary to board decisions. They have expanded entitlement for chronic pain disability, they have expanded entitlement for stress, and what that has caused in the system is a reactive mode to be instituted by the board, but it has also resulted in a number of costs which no one could have anticipated when the system first came into place. The tribunal, unfortunately, is making decisions on a one-off basis without a full appreciation for the scope of its decisions, and we would ask that one of the factors that the tribunal have to take into account in its decision-making process is the fact that its decisions must be financially accountable and must be financially responsible.
2000
A further building block that we have identified concerns the checks -- and checks is c-h-e-c-k -- and balances provided by the government. We find that this restores a level of confidence in the system, a level of confidence that is lacking right now.
Again, cautionary notes: We must ensure that that type of process does not become too intrusive. We must ensure that we don't end up with a system that's a tool for social policy objectives. We just need to know that someone is there at the end of the day, looking over the shoulder of the board of directors to ensure that it's doing what it's mandated to do under the act. If they do that, that will restore a great deal of confidence.
Again, confidence in this area is restored when we see things like the memorandum of understanding being put in place, strategic plans. Quite frankly, employers want to know how their money's spent. They want to know how the board's going to deal with this system. Right now we don't have a proactive board, we have a reactive board. The board's reacting to tribunal decisions, the board is reacting to pressures from workers, the board is reacting somewhat to pressures from employers. But we don't know where it's going, we need to know where it's going, any corporation would want to know where it was going, and right now the board doesn't know where it's going. That, I think, would be remedied with the memorandum of understanding in place.
Again, the value-for-money audits greatly assist in this process. It's exactly what is needed in order to ensure some accountability. One of the first value-for-money audits which should be conducted is with respect to the whole voc rehab system. Right now, in the view of many employers, there's untimely intervention, there are unrealistic goals being set, and at the end of the process it seems that neither workers nor employers are fulfilled, or feel fulfilled, with respect to what has been occurring.
The final building block and perhaps the one that's most important is worker and employer accountability. The board of trade fully endorses and supports the obligations which are imposed by Bill 15 and the penalties which are imposed by Bill 15 for failure to abide. Right now, employers are frustrated by the process.
In section 54 hearings, for instance, the board quite often finds in favour of workers because it relies on just-cause tests or on unrealistic financial viability tests. Employers quite often appeal those to the tribunal, and oddly enough, the tribunal sometimes finds in favour of employers. But no one seems to be too concerned about collecting overpayments. By implementing in the Bill 15 amendments the fact that overpayments are debts which are due and owing, we have full confidence that those debts will in fact be collected.
The material change in circumstances provision again is a very good idea, one which we think will bring some more accountability to the process, and the reason it will is it's going to force employers and workers to participate in the process, something which neither group has been doing lately. Both employers and workers have been sitting back. They've been waiting for the board to intervene. The board can't intervene because it doesn't have enough resources to intervene. By ensuring some self-reporting and some greater responsibility on the part of the major actors, you ensure that this entire system is going to start to work. In that regard, we're fully in support of the provisions with respect to the material change in circumstances.
A cautionary note, and the final note, really, with respect to the issue concerning obligations and penalties: We would ask this committee and we would ask the Legislature to consider a process of education. The reason we're asking for that is because of the potential impact on both employers and workers of a finding of a failure to abide. Right now, as I said, the process is one in which both employers and workers to a certain extent aren't doing anything. This bill proposes to make both parties self-report, and I don't believe that is a concept that has received a great deal of attention to date and it's a concept that does need to receive a great deal of attention because it does change the way the system operates.
In the final analysis, ladies and gentlemen of the committee, all of these building blocks have to be in place. They're a good first step. They're not going to fix all of the problems, but they need to be there in order for any of us to be able to fix the problems. We thank you for the opportunity to make submissions.
The Vice-Chair: We also thank you for your presentation. We have time, a two-minute period left, that we will start with some questions. The official opposition is first this time.
Mr Duncan: The Injured Workers' Consultants raised a very interesting point in their recitation of the various myths surrounding the WCB, and it was one they raised in a meeting with me that I was frankly stymied on an answer for. I'd like to ask you to address the question, and I'm paraphrasing what they said. The unfunded liability's not a debt, and it shouldn't be treated as a debt or considered as a debt. How do you respond to that, first of all? Second, I'm assuming that you see it as a problem, and in terms of its being a manageable problem, how do you see it being addressed?
Mr Johnston: Two issues: One, it is a debt. It's there right now. It's been calculated on the basis of what the board will have to pay out based upon the injuries that are in the system to date. It certainly is a factor that's reflected in employers' cost statements; it's a factor that's reflected in the whole NEER program. So I'm fundamentally in disagreement with the proposition that it's not a debt. It is, quite frankly, a debt.
In terms of how to manage it, there are a number of ways to manage that process. Bill 15 isn't going to do it. What Bill 15 is going to do is ensure greater accountability by all the parties with respect to the issues.
Some of the potential problems that are in place right now that Bill 15 may address are problems, for instance, with respect to employers who aren't properly reporting payroll papers. Bill 15, with respect to reporting obligations, could remedy that.
Other problems could be the worker who sits at home and waits and waits and waits for someone to contact him or her, and until someone does, that person's not going to say anything. The quicker we can get that person off the system and back to the workplace, the better.
Mr Duncan: Just one supplementary, Madam Chair.
The Vice-Chair: A very short one, please. Time has expired.
Mr Duncan: You noted in your presentation that, while supportive of the multi-stakeholder model, which we are, you noted some concern about the actual composition of that three- to seven-member board. We are proposing an amendment that would be more specific with respect to the numbers of appointments. Specifically, it would indicate that there would be equality between workers and management, exclusive of the non-stakeholder members, if you will. Would you be supportive of that kind of amendment, or are you looking at something different?
Mr David Brady: I get my chance for a 30-second response. I think the board of directors has to have some flexibility and it ought not to be strictly structured such that you have so many of this and so many of that, because what it does then is it introduces blocs and it introduces agendas and a voting approach to practical problems which I think must be considered practically on their merits.
Mr Duncan: So then what you said in here is less concerned --
The Vice-Chair: Excuse me.
Mr Duncan: Oh, I'm sorry. I apologize.
The Vice-Chair: That was a second supplementary. Sorry, but in fairness to everybody else who's here tonight, I don't want to delay them into the midnight hours as well. So thank you very much for your presentation.
DURHAM REGION INJURED WORKERS
The Vice-Chair: The next group tonight is the Durham Region Injured Workers. Would you please come forward. I'd ask that you please introduce yourself and, obviously, who you represent.
Mr Rick Williams: I'm Rick Williams. I'm the president of the Durham Region Injured Workers and the regional vice-president for the Ontario network.
As a union representative and an injured workers' representative, I have seen first hand the workings of the system and the effect it has on those who try to access it. I have also seen first hand the effects of three major changes in the law within the last 10 years: Bill 101, Bill 162 and Bill 165. As such, my submission will focus on the cuts to the benefits, entitlement, privatization and the compensation system. The system definitely does not need another massive change in benefit structure, and with three major revisions in the last 10 years, the system has been made worse, not better.
Cuts in benefits by 5%: It's not the injured workers who are responsible for the escalating mythical debt of the Workers' Compensation Board; it is the employers who are responsible. The reduction in the benefit levels represents the blame-the-victim approach that wouldn't offset the 5% reduction in the employer assessment rates. If the assessment rates of the employers had been increased over the years instead of holding the low rates, part of the problem would have been solved.
Rolling back workers' benefits and entitlement while at the same time lowering employer assessment rates is the type of strategy that allowed the liability to grow to its present state in the first place. WCB coverage should be considered a cost of doing business, and the cost of assessments should not be used as a threat to the payment of the benefits of the injured workers.
Workers lose when they are injured on the job and receive only 90% of their net income. They also suffer physically, mentally and emotionally, and even suggesting reducing benefits to 85% is an affront to their human dignity. It is in fact difficult for injured workers to even find out how their benefits are calculated, let alone what information has been given to the WCB to set the earnings base. It is left up to the employers to ensure that the additional information about overtime, incentive programs and shift premiums are included in the calculation of the net earnings.
2010
The employers' position is that 90% of the net rate is too generous and that the payment of benefits at this rate is bankrupting the system. Injured workers are not getting rich off the system.
The Conservative government business caucus and newspapers fail to report that the 1994 Workers' Compensation Board annual report discloses: $6.6 billion in savings in the bank; paid rebates to good employers which totalled $359 million; wrote off $173 million in bad debts to employers; purchased a new building at $180 million; still paid injured workers full cost-of-living increases and temporary disability benefits, at a cost of $337 million. And the WCB still reported a profit of $130 million last year.
The government is planning ways to take away lifetime permanent disability pensions awarded to people injured before 1990 and to reduce the future economic loss awards by 15% to 40%. This has to be stopped.
Pre-Bill 162 injured workers were assessed for pension awards by board medical personnel based on the Ontario permanent disability rating schedule, a chart compiled by the board in 1972, which states the percentage rate considered appropriate for each disability. This rating schedule contains percentages based on the average unskilled worker's "impairment of earnings capacity, estimated from the nature and the degree of injury." Pension awards do not take into account the type of work the worker was doing, the worker's educational background or the ability to return to work.
These pensions are based on the earnings at the time of accident, and under Bill 181 in 1985 no increase was provided for inflation. In the PLMAC, the inflation protection that was given to injured workers as a permanent right, set in law, has been bargained away by people who will never have to suffer the consequences of this. The failure to protect long-term workers' compensation benefits against erosion by inflation is already a reduction of benefits.
The future economic loss awards have been the fulfilment of the nightmares of injured workers, and I believe those workers with dual awards for permanent disabilities are at a far greater disadvantage than those who received pensions under the old system. They are not based on the actual post-accident earnings but on the power of the board to deem phantom wages for what they consider the injured worker likely to be able to earn in suitable and available employment. Workers who have been unemployed for the two years following their initial FEL determination are magically deemed to have received pay increases within that two years, and by the time the first review comes around, their FEL is decreased to take into account the supposed wage increase that they have gained over the two years of experience.
The fact of the matter is that the dual award system does not adequately compensate injured workers for the degree and severity of their injuries. Coupled with that is the board's position that they cannot review the FEL awards until the statutorily mandated review times, which means that injured workers must live with the changes in their financial circumstances until such time as the review date occurs.
How then should an adequate wage replacement system be structured? At the very least, it should be based on the actual wage the injured worker is earning at the time of the determination. It should not be based on deemed wages.
Under workers' compensation, employers are protected from civil suits brought against them by injured employees, and this was the historical compromise behind the very existence of the workers' compensation. Give the workers back the right to sue the employer and only one accident could bankrupt a small company. Maybe then realization by the very cheap cost of this protection would be recognized by the employers of Ontario. Cuts to the benefits will force many more injured workers and their families on to welfare or family benefits just to survive, which will shift the financial burden to taxpayers.
Premier Harris made public statements that cutbacks to workers' compensation benefits would save taxpayers money. In light of the fact that the Workers' Compensation Board receives absolutely no public funding, this distribution of inaccurate information is seen as a deliberate attempt to manipulate public opinion in order to satisfy the demands of business.
The unfunded liability is a projection of future costs made with no consideration of future assessments. In short, it is a term that designates how far behind on payments due to injured workers employers would be if they ceased to pay for their current obligations.
The employers paid very small assessments for years while accidents continued to happen in the workplace. The average employer assessments have been steadily decreasing and are lower than they were seven years ago: Some $3 per $100 payroll in 1995, versus $3.02 per $100 payroll in 1988. WCB benefits paid are now the lowest in 10 years at 36.5% decrease. In a time of deficit reduction, it makes absolutely no sense to further reduce WCB assessments.
The business lobby has admitted that at least 20,000 employers in Ontario are legally avoiding WCB assessments at an estimated annual cost of over $60 million, yet no effort has been made to collect this money. Every employer should be required to have compensation coverage for their employees. This would increase the funding base, and give much needed protection to injured workers province-wide.
There is no reason why some employers can get out of the costs of WCB coverage for their employees. The fact that the types of employment that are exempt from reporting are considered low risk for injury -- for example, banks, insurance companies, doctors' offices, private homes for the aged -- and when the potential for serious injuries are contemplated, particularly considering the instance of repetitive strain injuries, this is not acceptable. There cannot be two classes of employers any more than there should be two classes of workers. Exempting classifications of employers dilutes the concept of collective liability.
Changes to the kinds of injuries covered by the workers' compensation will mean many injured workers will not receive benefits. The government wants to change entitlement requirements to effectively deny coverage to most gradual onset of chronic pain conditions -- injuries from repetitive strain injuries, chronic pain, back pain and stress. These proposed changes will have a drastic effect on all present and future claims.
In the manufacturing sector with recent restructuring and the implementation of synchronous manufacturing techniques, production workers have had more demand to produce more, better, faster and cheaper for the sake of being competitive. The direct result leaves workers working a 56-minute work hour, which places stresses on their bodies that human beings were never designed to withstand. More than 30% of lost-time claims are for back injuries and the majority of claims have proven to be soft-tissue injuries such as repetitive strain injuries, tendonitis, epicondylitis and carpal tunnel syndrome. This is the main reason employers are demanding cuts and entitlement limits on the type of injury.
It is unrealistic to believe that compensation for stress-related disorders can be provided efficiently and systematically through a compensation system in which eligibility for benefits depends on proof of cause. We have probably all seen cases in which a person has had a compensable disability for now and is now totally disabled but is denied full benefits on the grounds that the present disability results partly from other causes, such as of subsequent sickness or other dramatic experiences, which affect fitness of the injured worker to work.
2020
The business caucus and the employers are fully aware of the statistics provided by the Workers' Compensation Board in regard to the type of injuries which are costing the system the highest amount; therefore, rather than reduce accidents and provide a workplace which will eliminate these injuries, they recommend to change the definition of "accident" to eliminate the benefits for these injuries.
In the large proportion of the occupational disease cases and soft-tissue injuries, it is impossible for the medical profession to establish a diagnosis let alone determine the cause even when the diagnosis is clear. The victims of disease generally go without compensation not because it is established that the disease did not result from employment, but because the cause of the disease is unknown. When the cause is unknown claims are not approved.
In cases where the injury results in hospitalization, why should the worker have to wait three days? Private insurance companies will pay benefits for hospitalization effective immediately without any waiting period. Sick pay plans are now very extensive in Ontario and the cause of the disability is no longer relevant to the eligibility for benefits. This will relieve the employers of their liability under the workers' compensation to pay the injured worker from the day of the accident and shift the burden to insurance companies. This will also encourage workers covered by private insurance to claim from their insurance companies and not report work-related accidents to the Workers' Compensation Board which, in turn, will cause complications if the claim is filed later.
Workers' compensation reports the majority of the claims do not involve lost time and a very high percentage of the claims are of relatively short duration. One injured worker has suggested the employer be responsible for paying full wages for the first month following a work-related accident and payment for any period beyond this time be executed by worker's compensation. This would allow the adjudicators time to review the details of the accident, doctors' reports, and benefits could be processed, if necessary, at the 30-day period.
The implementation of a three-day waiting period could force injured workers with repetitive strain injuries to stay at work because they can't afford to report an injury. This could have serious repercussions by exacerbating an injury and costing the system more money in the long term.
The Vice-Chair: Excuse me. I just would like to advise you, you have one minute left.
Mr Williams: The original purpose of the board's medical advisers was to interpret medical opinions expressed by the treating physicians and specialists for the adjudicators. The board's doctors also assessed injured workers for permanent disability pensions prior to the inception of Bill 162.
Unit medical advisers' opinions usually conflict with medical reports sent by the family physicians and specialists. Interpretations are often misconstrued to the adjudicator and it is the injured worker who suffers.
One solution for saving money would be to get rid of the board doctors. With the implementation of the new mediation system, adjudicators and mediation officers will be speaking directly with the treating physicians. There will be no need for board doctors to intervene; their jobs will be redundant.
I would like to thank you for the opportunity of allowing me to make this presentation on behalf of the Durham Region Injured Workers and the southeast district of the network.
The Vice-Chair: We thank you very much, and having used the full 15 minutes there won't be time tonight for questions and answers. But thank you for coming.
ONTARIO CHAMBER OF COMMERCE
The Vice-Chair: I would ask the representatives of the Ontario Chamber of Commerce to come forward, please. Good evening. I'd like you to introduce yourselves, please, if you would, and identify whom you're representing.
Mr Steve Raymond: My name is Steve Raymond and I am the chair of the Ontario Chamber of Commerce's employer/employee relations committee. I am one of the thousands of volunteers across this province who donate their time to chambers of commerce throughout this province. I have with me Ian Cunningham, who is the director of policy for the Ontario Chamber of Commerce.
I'd like to take you to our submission, which I hope you all now have, and I have attached to it the submission that the chamber made to the Royal Commission on Workers' Compensation this past spring. I draw that to your attention because of the statements that are made there by the chamber of commerce on the issue of workers' compensation.
You will see in the introduction, which is the first page of that submission, that in recent surveys done by the Ontario Chamber of Commerce, workers' compensation has received a significant priority from our members. In fact, in 1995 our survey of chamber members indicated that repairing the workers' compensation system was exceeded as a priority issue by only the elimination of Ontario's deficit and the existing debt load. In other words, for our members, fixing workers' compensation was the second most important thing that government should direct its efforts towards, and it with in that background that we come now and present to you on Bill 15.
Just by way of background, the chamber, as many of you will know, is a business association that represents over 65,000 employers in the province of Ontario. Our members include large and small enterprises in all sectors of the economy and from every region of the province. We believe, therefore, that we come to you and speak as -- I don't want to undermine other business groups that come before you, but we come and we speak with perhaps the broadest membership of any business organization that will appear in front of you, and I've already told you what our members think about workers' compensation.
In our view, there are three significant reforms in Bill 15. Those are governance, the introduction of increased financial accountability and efforts made at fraud and revenue loss. I'd like to speak briefly about each of those three issues, and I may make some passing comments about some of the other reforms in the bill.
Obviously the key issue with the governance is the new board of directors of the Workers' Compensation Board. We think there are a couple of things this committee should consider in relation to the board of directors.
First of all, we'd like to tell you about what our board of directors would look like. We think members of the board of directors should possess the following personal qualities, attitudes and experiences: One of those is experience making a positive contribution as a director of a large organization because, after all, that is what the job is; second, to have a business-mindedness and an ability to understand financial statements; third, someone who is a strategic thinker; fourth, someone who has an ability to consolidate and analyse complex information.
In terms of experience, we think it's critical that actuarial and insurance experience be present because, after all, the workers' compensation system is an insurance system. We would recommend, therefore, that the new chair and president have strong actuarial and insurance background and knowledge.
The bill, as it now is, refers to the board of directors as being "representatives of workers, employers and such others that the Lieutenant Governor in Council considers appropriate." In the chamber's view this section must be looked at and clarified so that we do not end up with a board of directors that is bipartite. The failed experiment of the Workplace Health and Safety Agency where the board of directors was bipartite is proof enough to the government that we ought not to replace that failed experiment of bipartism with a new board of directors that is also bipartite,
We therefore recommend that representatives have the following skills and/or views: the employer perspective; the worker perspective; actuarial expertise; insurance expertise; medical or scientific expertise; and financial expertise.
2030
We suggest one subtle but significant change to the act in this area: that the representatives should be "from" the business or worker communities, not representatives "of" the worker or business communities. We think that one change of the one word is a significant one that would move this bill away from the chaos that was part of the Workplace Health and Safety Agency and the problems that the Workers' Compensation Board had when the two main stakeholders simply faced off at the board of directors level. We have to move beyond that. We have to go multi-stakeholder and we have to emphasize personal skills of these people who are running a very complex and difficult organization.
In terms of financial viability, there is one significant addition that Bill 15 provides to the Workers' Compensation Act and that is section 0.1, which makes the entire purpose of the bill subject to acting "in a financially responsible and accountable manner." All the purposes of the act flow within that framework. It's important, we believe, that this be given further emphasis.
There's nothing in the purpose clause itself that talks about the board of directors approaching problems, approaching issues with fiscal responsibility. That is in the bill, in section 7, I believe, where it says, "The board of directors shall act in a financially responsible and accountable manner in exercising its powers and performing its duties."
But the obligation of all parts of the workers' compensation system, ie, and most importantly, the WCB board and adjudicators at the WCB board -- they don't have that same obligation, in our view, and the purpose clause could be strengthened by adding a section, that one of the purposes of the act is to have a compensation system that is financially responsible and accountable to the people who pay the freight, and that, after all, is the employers.
Before I leave financial viability, I would like to stress that we do support the responsibility and accountability that are enshrined in sections 4, 17, 18 and 19 of the bill. Those responsibilities and accountabilities are shared by employers and workers alike and they make it clear that the system does not provide a free ride to any individual.
Finally, as it relates to fraud and revenue loss, it's certain that the provisions of Bill 15 strengthen the ability of the board to pursue fraud or revenue loss in a helpful and straightforward manner. However, in our view, the changes need to go further.
Fraud that is perpetuated upon the workers' compensation should be dealt with harshly. Fraud is a criminal act and should be pursued as such. There are provinces that deal with fraud as a criminal matter and there should be some recognition that fraud can be pursued not only by the board but by the police as well, because the fraud is on all stakeholders: It's on employers, it's on workers, it's on everybody.
In terms of the value-for-money audits, we are supportive of this introduction in Bill 15. We think this is a very overdue and necessary change.
Finally, one suggestion: that the government consider a low-cost but effective means of communicating these changes in as broad a manner as possible.
It's our view that if you communicate these changes broadly to the community -- the amount of compliance with the changes, particularly the fraud changes, the changes in terms of financial accountability of employers and workers -- you will have a higher compliance rate if these are understood. You have to find some method for providing that information.
In conclusion, I'd like to say a few final things about Bill 15. First of all, the chamber and the chamber movement are very supportive of the amendments contained in Bill 15. The minister, in her bill, has a great first step in repairing a system that was badly in need of repair.
Obviously, the changes proposed here cannot be viewed in isolation and must only be viewed as a first and necessary step on the road to the restoration of the system's financial viability and security. A clear and concerted effort must be made to continue this process of change. We would strongly urge this committee not to diminish the proposals in Bill 15 throughout or by the committee process. Future amendments must ensure that benefit levels are reviewed, issues of entitlement are addressed and further worker obligations are imposed. The chamber movement is confident that the changes that are introduced in Bill 15 are an important first step and a valuable first step in righting the previous wrongs.
Thank you. Those are all our submissions.
The Vice-Chair: We do thank you for your presentation and comments and we have two and a half minutes left of the 15 minutes' allocated time for questions and answers. The member from the third party can start tonight.
Mr Christopherson: Thank you for your presentation. I find it interesting that your brief traces perfectly the outline of the government. I can't see an exception here, so far.
I would point out again that in bold letters you point to a "financial crisis...a crisis of confidence," supporting the government's need to show that everything is a crisis to justify the draconian measures it's taking in a whole host of areas: a heavy emphasis on fraud, as if that's the problem too, that in large part there are massive amounts of fraud and that's the problem; again focus, implicitly at least, on the credentials and capabilities of prior board members -- you talk about "a clear message...that the system does not provide a `free ride,'" in bold letters again; you've noted, and I'm quoting, in the past "that the unfunded liability is the product of benefit levels that are simply too high."
I would like to challenge all of those, and in particular I'd like to challenge the concept that you make; I'm surprised that you would make a statement like this as definitive as you have, "that the unfunded liability is the product of benefit levels that are simply too high." I would suggest to you with a great deal of respect that in 1985, when the cost-of-living increases were included, there was a proposal that would have allowed that to be paid for along the way. It was rejected or resisted by employers on the board at that time -- some of them, enough to block the passage of a policy that would allow that to be paid for. The financial improvements package would have had the unfunded liability completely gone by 2014. There was some compromise on the part of the worker employees but they're the ones who supported that proposal. It was the employers who didn't.
I would suggest to you, and offer to let you make comment, that if indeed employers had been paying an appropriate amount throughout the history of the WCB, we would have lower costs now, and that our costs in the future would be lower yet because there would be real incentive to make sure that we provide real safe workplaces for workers, and at the end of the day business would have gotten a better deal. By being so very shortsighted --
The Vice-Chair: Excuse me, but if you have a question --
Mr Christopherson: Was it turning into a speech?
The Vice-Chair: It's a speech and the problem is that the time is now up.
Mr Christopherson: I finally got the floor after listening to all these damned presentations. Anyway, I would end there.
Interjections.
The Vice-Chair: Excuse me.
Mr Christopherson: I would end there and ask --
Interjection: Do you really want input?
Mr Christopherson: All I've been getting is input. We want a little output.
In summary I would just suggest to you, and indeed flip it around: Had employers been paying adequately along the way, they'd have been doing themselves the greatest service in the world in addition to the workers.
2040
Mr Raymond: Mr Christopherson, I certainly thank you for your question, although I'm frankly troubled by it and I don't know how to respond within the time that's been given.
The Vice-Chair: It's all right by me.
Mr Baird: That's the problem for us all.
Mr Raymond: Let me just say very quickly, on behalf of the chamber movement and business communities, I'm frustrated that you would indicate that you're tired of these "damned submissions." We're dealing with a very significant problem for the economy of the province of Ontario here today.
I would hope that our submissions would be taken in that light and, regardless of what happened in 1985, we now find ourselves, in 1995, with the problems we have in this province and we have to work together to fix those problems. It has been just that type of attitude from a certain community that has prevented the opportunity to fix the system over the past few years.
Mr Christopherson: On a point of privilege -- when you're finished.
Mr Raymond: Those are all my submissions.
Mr Christopherson: Good. My point of privilege is that I was making reference to the fact that in rotation we can't ask questions for a long period of time. That's why I was asking a rather long-winded question.
The Vice-Chair: Okay. I don't mean to be rude, but I do have to cease this presentation at this time, in fairness to others. I do thank you very much for your coming here tonight and presenting your position.
Mr Raymond: Thank you very much.
ONTARIO HOTEL AND MOTEL ASSOCIATION
The Vice-Chair: I would ask that the representatives from the Ontario Hotel and Motel Association come forward, please, and for the sake of Hansard and the committee members, please introduce yourself.
Mr Rod Seiling: My name is Rod Seiling. I'm president of the Ontario Hotel and Motel Association. The Ontario Hotel and Motel Association, OHMA, would like to thank the members of the committee for the opportunity to appear before you today.
We are firmly committed to working with the government to ensure Ontario has a workers' compensation system that is affordable, competitive and sustainable. We would suggest that most everyone would agree the current system fails on all three counts. This concerns us greatly, not just from a business perspective but also that with an unfunded liability of $11.4 billion, injured workers' benefits are at risk as well.
Our association is the largest in the province representing the accommodation and hospitality industry. We have over 1,000 members located all across the province. A recent government study indicated the accommodation and the food and beverage sectors within the tourism industry represented about 105,000 direct jobs and over $7 billion in expenditures.
The OHMA has been active for the past couple of years participating in a number of initiatives to bring about positive reform of the system. These reforms were directed to the structure of the WCB, its accountability and substantive economic changes. Bill 15, we believe, deals with the first two aforementioned issues. Meaningful economic reform, as we understand it, is to be dealt with by the minister for the WCB, the Honourable Cam Jackson.
We applaud the government for taking quick, positive action. Everyone agrees the system is in crisis. We simply cannot afford more time delays for more studies before acting. Continued inaction will only exacerbate the problems and make it more difficult to put in effect a meaningful and realistic solution.
The OHMA, therefore, supports the two-stage process the government is undertaking: structural reform followed by substantive economic reform.
With respect to governance, the OHMA supports the change to a multi-stakeholder board of directors responsible for the long-term viability of the WCB. A bipartite governance structure did not work. It was confrontational and paralysed meaningful decision-making. This only served to make the problem of the unfunded liability insoluble.
Justice Roach, in his 1950 royal commission report on the WCB, stated and I quote:
"This act should be considered for what it is and was originally intended to be, namely, a scheme by which compensation is provided in respect of injuries to workers in industry. It is not a system for dispensing charity. It is not unemployment insurance. It is not social legislation for the purpose of elevating the standard of one group in society at the expense of another."
He went on to say: "I will have occasion to point out later that certain amendments which have been introduced into the act since it was originally passed are really in the nature of social legislation and a departure from the original scheme and purpose of the act. The effect of those amendments has been to impose upon industry burdens which should be borne by society generally.
"If the true purposes...of the act are adhered to, justice will be done as between industry and labour. If, on the other hand, those purposes are lost sight of, or this act from time to time be regarded as a convenient place into which to put legislation which in substance is social and not compensatory, it may become very much distorted. In the result, labour will continue to be relieved from unjust burdens which it suffered too long under the common law but an injustice will be done to industry by placing on its shoulders burdens which should be borne by society generally."
It is interesting to note that in 1967 the Honourable Justice McGillivray in his royal commission report on the WCB reiterated Justice Roach's comments as still valid. The OHMA would agree with that statement as it relates to the present.
The proposed changes, therefore, are that important first step in moving the WCB away from that of a social welfare system and back to an insurance system for injuries experienced by workers at the workplace. That was the intent of the 1915 agreement whereby injured workers gave up their right to sue an employer in exchange for a system of compensation.
For this to happen, the WCB must be operated as an insurance system based on sound business principles. This means the board of directors must become responsible for the long-term economic health of the system.
Reducing the size of the board to nine members and having its composition selected from a multi-stakeholder base will benefit the system, as decisions will be based on sound business principles. It will also ensure the acquisition of the required professional resources to provide the board with the information it will need to make the hard choices it will be forced to make.
The revised memorandum of understanding, which includes a clear policy direction role for the government, will ensure the system becomes accountable to its superior, the government. We believe that type of accountability must be there to ensure that policy, as defined by the government of the day, is carried out.
The OHMA supports the changes to the purpose clauses. Specifically, I refer to the opening phrase, "The purpose of this act is to accomplish the following in a financially responsible and accountable manner."
We also support the inclusion of the following two objectives: to prevent or reduce the occurrence of injuries and occupational diseases at work, and to promote health and safety in the workplace. The WCB, we believe, can and should play a leading role in the ongoing effort to ensure we have proactive and effective workplace health and safety programs. The WCB, therefore, is the logical place for the responsibility for the workplace health and safety program.
The OHMA has put forth this position to the workplace health and safety task force. We believe an integrated approach with sector-specific programs and delivery organizations answerable to the respective industry will ensure a safe and healthier workplace. A better-educated workforce will lead to reduced levels of claims and less stress on the system. Lower costs translate directly into a more competitive industry.
We also support the Workers' Compensation Appeals Tribunal, WCAT, being included within the purview of the new purpose clause. This body must have applied to it the same levels of governance and accountability as the WCB.
The move to eliminate fraud by implementing preventive measures and identifying areas of potential fraud is to be commended. Perception is reality, and if the WCB is to regain the support it needs to renew itself, it must eliminate the perception that the system is full of abuse and is unaccountable.
Substantive economic reform must follow in the near short term if the system is to be saved from its current crisis. This means Minister Jackson's reform package must be ready early in the coming year. Specifically, this reform package needs to include the 5% reduction in assessment rates as promised; the introduction of a three-day waiting period; the definition of an injury; the alignment of benefit levels to neighbouring and competing jurisdictions; the strict adherence to the Friedland formula, no exceptions; experience rating must be retained -- it has been a positive force in reducing claims; modifications need to be made to benefit levels of old claims to reduce pressure on the system; and a re-examination of the $200 per month for life supplements, and then payable only to age 65 where the loss was caused by a work-related injury.
We suggest claims performance should drive the price of the system. Improved new claims performance must result in reduced WCB assessment rates. Additionally, the costs of old claims need to be reduced and the WCB overhead costs must be controlled.
In conclusion, the OHMA supports the measures introduced by the government in Bill 15. We view it as an important first step in getting at the root problems inherent in the system. However, it must be quickly followed by the more substantive economic reforms. Only then can the crisis which has gripped the WCB for too long be ended. The WCB is too important a component of Ontario's socioeconomic fabric not to give it the chance that Bill 15 is finally providing.
2050
The Vice-Chair: We thank you for your presentation as well. We do have seven minutes left for some question-and-answer time. The government side has the first question.
Mr Carroll: A quick question. Mr Seiling, thanks very much for your presentation. Several of the labour groups that have come before us have told us that the $11.4-billion unfunded liability was not a debt, was nothing to be concerned about, it was almost like a game with mirrors. How do you feel about that $11.4-billion unfunded liability?
Mr Seiling: I guess they've gone to a different accounting school than I went to. I believe it is a debt, and we're concerned about the ability of the system to pay the money that is owed, because it's a debt to the injured workers. Our concern is that without addressing it positively, their benefits are in doubt down the road. So certainly in our view it is a debt and it's a debt owing to those workers themselves.
Mr Duncan: Have you been invited to consult with the minister responsible for the WCB, Mr Jackson, with respect to the second part of his reforms?
Mr Seiling: We've had preliminary discussions with him and expect to be involved in the consultation process, yes.
Mr Duncan: So you have had preliminary discussions with the minister himself?
Mr Seiling: No, I didn't say I had preliminary discussions on a consultation basis. I said that we expect to be part of that process and that we've expressed an interest in being part of that process.
Mr Duncan: As of yet, have you been invited to be part of that process?
Mr Seiling: No, we have not received a formal invitation.
Mr Duncan: Just one other question with respect to the fraud offences, the new part V of the act. One of the issues that's been raised by a couple of business groups is the notion of red tape and the bureaucracy surrounding the board. Does your organization have any concerns with the type of bureaucracy that might be imposed on your members as a result of the 10-day filing requirements and some of the other I think rather onerous clauses in the bill with respect to the potential for further red tape and WCB bureaucracy?
Mr Seiling: It's our view that if we're going to bring accountability to the system, we can't just expect one side to be accountable; we have to have both sides. Therefore, if the system is to be fair, it's got to appear to be fair to both sides. So yes, while it may put some of my members in a position where they have to do some things within a certain time frame, I don't think that we can expect that to be perceived as not being fair if we're expecting certain things on the other side as well.
Mr Duncan: So then your members aren't concerned about the paperwork --
Mr Seiling: I didn't say we're not concerned, but I think it's one of perception, an issue of fairness. If you're in business and you've got rules and regulations to adhere to and if this leads to a system which fixes the problems, then I think we can live with it.
Mr Christopherson: I think you had a chance to hear my earlier speech-slash-question, so I won't repeat it. In fact, what I'd like to do is to take the opportunity of the time that's available to ask you, if you can recall most of it, to give me your thoughts on it, the premise being that rather than trying to blame the victims, which is the way we see all of this, that if indeed the employers had been paying the amount necessary to pay the injured workers what they were entitled to, we wouldn't have this fiscal problem and in fact we'd be in a stronger position now and in the future.
Mr Seiling: With respect, I couldn't agree with your premise for a number of reasons. One, the employers some time ago agreed to increased rates which would eliminate the unfunded liability. In fact, it hasn't done that; it's grown. This is also an issue of competitiveness, and if we're to regain jobs and have Ontario and our businesses compete -- because we do compete; we don't compete with one another as much as we compete with businesses in other provinces and in other countries. We have to have a cost structure that reflects that ability.
For example, you referenced earlier the financial improvement package. That was a great package. Business was to pay again. That's what it was. One of the things was to get rid of NEER, and NEER has demonstrated that it is the carrot that helps to reduce the incidence of workplace injury and also helps to get injured workers back to work faster. We don't view that as being beneficial to the system.
Mr Christopherson: I hear your points. I don't agree with them, but I hear them clearly. If I can, you made the comment, "Business has to pay again." In fairness, in 1915, wasn't that the agreement? The agreement was, workers would give up the right to sue under any conditions, regardless of how much they may have had a case. They gave all that up, but the employer, on the other hand, and the province agreed to pay enough premiums to cover the costs of replacing wages and benefits for workers injured on the job. Isn't somewhat contradictory to the original intent of the WCB to say, "Business has to pay again"?
Mr Seiling: I would suggest to you that business has, and I would also suggest to you that the agreement back in 1915, if you go back to Justice Roach's comments, the system was to be an insurance-based system, not a social system. Governments over the years have added more and more to it to increase the cost of the system to business.
What we're asking for is to return the system to its original intent. If you were in the normal business world and you were the management and the board of directors in charge of the WCB, you would have been fired a long time ago. You wouldn't still be there. I would suggest to you very strongly that the System hasn't been run as an insurance-based system. What we're asking to do is take it back to its original intent, as you suggested it was supposed to be. That's what we're saying: Let's put it back on sound business principles and operate it as an insurance system, as it was originally intended to be.
Mr Christopherson: I would see the irony in that position being the fact that for 40 years, Tories made the appointments to the WCB.
The Vice-Chair: Excuse me, Mr Christopherson. We're out of time again and you've had a supplementary to your original question.
Thank you very much for coming before us.
AUTOMOTIVE PARTS MANUFACTURERS' ASSOCIATION
The Vice-Chair: I would ask representatives from the Automotive Parts Manufacturers' Association to come forward. Welcome. Introduce yourselves to the committee members and for Hansard purposes.
Mr Ken MacDonald: My name is Ken MacDonald and I represent the APMA. Briefly, the Automotive Parts Manufacturers' Association represents 400 companies that supply to GM, Ford, Chrysler and the other major assemblers in the auto industry. The membership employs collectively over 81,500 workers and will have produced goods worth about $23 billion in 1995.
The APMA strongly supports the goals of Bill 15. My purpose for being here this evening mainly is to propose some incremental changes to the wording of certain provisions.
I've arranged to have circulated to you the letter of today's date. I propose first to add to section 21.1 -- which is on page 2 of the bill, if you have that before you -- a third subsection that would provide for a setoff. It would provide that the board may set off an overpayment against any payment the board is required to make to a person to whom that overpayment has been made.
It's an additional option to the board to ensure that if an overpayment is made, it can reduce a subsequent payment by a certain amount to offset the loss from the overpayment. It's an extra option. I don't see any downside to it at all. Nothing in that provision would require the board to take an onerous position to require a worker to go without money for weeks and weeks because of early overpayment. The board can do it incrementally, but it is that option. I'd suggest that it be added. It's something that I saw in the BC Workers' Compensation Act, to give that due credit.
2100
I also suggest that section 22.1, which is on the same page of the bill, be amended by adding a requirement that notice to the board be in writing. I think the merits of that pretty much speak for themselves. If you're going to require someone to report material change in circumstances, the board would find it much more helpful to have that notice in writing. Of course, if the offence provision is to have teeth, then you want the requirement to include a written notice; otherwise, you're going to be in a situation with one person saying, "Well, I phoned the board," and the other person saying, "Well, no, I didn't hear about that," one person's word over another's. You want to have the assurance that if notice is given, it's done in writing.
Thirdly, section 158 on page 8 of the bill, if you wish to turn to that: It's a provision that creates an offence for obstructing or hindering an inspection. As presently worded, this section limits that offence to inspections under subsection 113(1) or to examinations or inquiries under subsection 111(1). Why limit it? I propose that a person who obstructs or hinders any examination, any inspection or any inquiry be guilty of an offence. As the bill stands now, it will omit such inquiries as those under section 25, for example.
Section 161 is the next provision. I'm going through the bill, not in order of importance, but rather in the order they appear in the bill. Subsection 161(6), on page 9, very helpfully creates an opportunity for the board to file a certified copy with the court for enforcement purposes. Very useful. Again, I ask that it not be limited to orders under subsection 161(5), but extended to any order that the board may be making that involves the collection of money. Note that given that money paid for fines is payable to the board, it seems appropriate that the board be empowered to take the initiative on the collection of fines or on any collection of moneys and to have the benefit, the convenience of court enforcement.
Also, in subsection 161(8) the provision states that if two years pass from the date of the most recent act or omission that would be the basis for an offence, the prosecution shall not be commenced. I would suggest that freedom from prosecution is a bit too generous. I would propose that it be changed to six years, to be in conformance with the Limitations Act, which would give a person in a civil dispute six years; that is to say, only after six years would the issue no longer be legally commenceable in any court.
Finally, section 163 on page 9, the maximum fine there that is indicated for an individual, $25,000: I see a concern there in that potentially a wrong done to the board could involve a very considerable amount of money, particularly in the case of a long-term disability benefit. We are talking about a maximum penalty here. I suggest that the maximum be raised. It does not mean that the average penalty being imposed is going to be raised, but it gives the court or it gives whatever adjudicator that much flexibility for the occasional circumstance where you have a very egregious or very exceptional wrong being perpetrated against the board and there were exceptionally large amounts of money at stake.
Those are all my submissions on Bill 15.
The Vice-Chair: Thank you very much. We have lots of time now for questions and answers. I would like to start with the opposition party.
Mrs Sandra Pupatello (Windsor-Sandwich): You have 81,000 members in your organization?
Mr MacDonald: That would not be correct. We have 400 companies employing about 81,000.
Mrs Pupatello: What is the largest company that is your member?
Mr MacDonald: Magna International.
Mrs Pupatello: And then what are other examples?
Mr MacDonald: Other large ones would be SKD, Johnson Controls, Lear Seating, the Woodbridge Group.
Mrs Pupatello: Okay. So it's safe to say that your comments represent all of those groups, so they would have likely been consulted in your presentation today?
Mr MacDonald: We certainly had consultation with members drawn from the large and the small within our organization. We know that as a trade association we would be creating problems for ourselves if we did not consult with the small employers as well as the large.
Mrs Pupatello: But your paper today represents those views of those members you mentioned?
Mr MacDonald: It represents a synopsis of discussions we had.
Mrs Pupatello: Okay. What is your opinion of the liability issue with the WCB? Do you feel that the unfunded liability is truly a liability?
Mr MacDonald: I could not be more articulate than my friend Mr Seiling a few moments ago, but if I were to answer the question, my own individual view on this is that the size of the unfunded liability is not even pertinent to Bill 15 and the issues that are, I think, before us tonight. Even if there were only an insignificant unfunded liability, the provisions that are set out in Bill 15, together my suggested changes, would still make good sense.
Mrs Pupatello: That's the opinion of the organization you're representing as well?
Mr MacDonald: Correct. I'm here on their behalf.
Mr Christopherson: Are most of the companies in your association unionized or non-unionized?
Mr MacDonald: About half are unionized.
Mr Christopherson: Most of those unionized would be auto workers?
Mr MacDonald: They're the largest union, yes.
Mr Christopherson: I ask because I do want to press on with matters that are in Bill 15 regarding the bipartite board, which arguably is the most important thing in Bill 15. I would argue it's merely meant to allow the government to load up their people on the board to carry out the decimation of benefits to workers in the spring, but that remains to be seen.
I want to ask about bipartism and how you feel about it, given that the auto workers' union in the parts sector has, at the admission of employers, been working closely with employers to the benefit of the company. Productivity is up and profits are up, and would it not make sense that carrying over that kind of cooperation into the WCB is a good way to go when the vested interests at stake are both employer and workers?
Mr MacDonald: What I see in Bill 15 is a continuance of a multi-stakeholder model that, while it's not polarized, if earlier models were, it does represent workers, as it does employers, as it hopefully will represent other interested groups as well. I don't see anything in the bill that would indicate any loss of representation for workers, frankly.
Mr Christopherson: But on the contrary, they lose the 50% representation they now have.
Mr MacDonald: They will be represented together with others.
Mr Christopherson: But it won't be 50%. I would point out that given that the two stakeholders -- and it was admitted by one of the employer groups that was here -- the two major stakeholders are employers and employees, if they have to make some difficult decisions, whatever they might be, if the worker representatives on there feel that they have to be there to protect the turf as much as they can, but aren't really partners the way they were under the existing legislation, you're not going to get the kind of cooperation that would benefit the WCB, and therefore business in the long run, the most. Wouldn't you agree?
Mr MacDonald: I see there being a role for a lot more than just the workers and the employers, and both of those are represented. If there's going to be a severely lopsided appointment process -- that would be speculation.
Mr Maves: The Ontario Chamber of Commerce, which was a few presenters before you, said that WCB reform was the second most important issue to employers of the chamber of commerce.
In my riding of Niagara Falls, in 1993, there was a survey done of 110 manufacturing companies which at the time were left in Niagara Falls. They listed what they thought were the most severe disadvantages to doing business in Ontario and Workers' Compensation Board premiums and the Workers' Compensation Board system was the third-biggest disadvantage.
With that in mind, I'll put this as a two-parter so as not to lose my supplemental: (a) Would you say that this is true of the folks you represent in your umbrella organization? and (b) We heard I think it was a CUPE organizer say that in order to get rid of the unfunded liability we should look at increasing premiums on employers in Ontario up to three times. What effect would that have on people in your business, as far as staying in Ontario and investing in Ontario?
2110
Mr MacDonald: Answering (a) first, let me say by introduction that the industry that I'm representing is one that is peculiarly closely tied to American industry in that all of our members have as their biggest customers by far American-based companies -- GM, Ford, Chrysler; some production to transplants, we call them -- Toyota, Honda -- but by far to American customers. These American customers, as you can imagine, scrutinize more closely than probably anyone else cost advantages vis-à-vis one jurisdiction over another.
As things stand now, there is a small cost advantage in terms of labour costs to building auto parts in Ontario vis-à-vis any American state. Although adjusted for exchange rates, if you take the wages of Canadian workers, they may be marginally higher than American, the health care costs of American factories are significantly greater, such that at the end of the day labour costs are lower in Canada. So health care costs are not a major concern in the sense of their being too high in Canada, that we're losing workers on account of that. If we see a rise in premiums, then of course we'd lose that advantage. We wouldn't say now that health care costs are way higher than --
Mr Maves: WCB premium costs are --
Mr MacDonald: WCB premiums would only be a portion, of course, of overall health care costs. You can imagine that OHIP and its equivalent in the United States comes into the formula as well.
Mr Maves: So (a) was, is this a major concern, increased costs to your group, and (b) what kind of effect would it --
Mr MacDonald: So (b) would be, what would be the effect of a major increase in premiums? It would be to probably erase the cost advantage that Canadian producers enjoy. I'd say that the advantage was in the area of health costs.
The Vice-Chair: You've now closed out the 15 minutes of your presentation and question and answer time. I do thank you on behalf of the committee.
GREATER PETERBOROUGH CHAMBER OF COMMERCE
The Vice-Chair: I'd ask the representative from the Greater Peterborough Chamber of Commerce to come forward and introduce yourself, please, to the committee and for Hansard purposes.
Mr Don Frise: My name is Don Frise. I'm the general manager of the Greater Peterborough Chamber of Commerce. Maybe I could just start by telling you a little bit about who we are. We've been in business for over 106 years continuously. We have about 1,000 members, employing about 20,000 employees locally, and we are part of the Ontario Chamber of Commerce. We're the people who are working in the trenches with our members. Our members tend to be small business; a lot of them tend to be in the service sector.
Peterborough, as I learned back when I was going to high school here in Toronto, used to be regarded as a bellwether community and today I think it still is a bellwether community in a lot of regards. We've been rediscovered along those lines in that we have a typical cross-section of industry. In fact, I understand in the last 11 elections federally we've only voted against the government once. So we're being rediscovered as a place to come and look for opinion. My job is to try and keep in touch with our members and find out where they stand.
The Ontario Chamber of Commerce told you, when it made its submission, that the WCB was a very important issue to its members. I can tell you that, just as they've said, when we have polled our members over the last number of years -- and we've had a lot of occasion to do that -- it's come up as one of the highest on the list. In fact, when we take government debt and deficit and government-imposed red tape out of the process, WCB comes up very high. That's maybe even more significant when you think that about probably 60% of our members are actually now in the service business and a lot of them don't even have to participate in the WCB program. So you can understand how significant they think it is.
I'm not going to particularly talk about Bill 15 this evening. I think our members from the Ontario chamber have already talked about that. I've given you a submission that we presented to the royal commission earlier this spring, and I'll be covering some of the points that are in there, but in a slightly different fashion.
What I'd like to talk a bit more about in a more macro way is what our concerns are regarding workers' compensation. I'm hoping that as you're designing the legislation to control this very important program in the province, you'll be keeping some of those thoughts in mind, because obviously we have to know what we want to accomplish before we can start accomplishing it.
The very first thing is how very concerned we are about the program itself. Over the last few years, our members and their employers and employees have stated time after time that the system just doesn't work. Employers, with considerable justification, feel they're paying too much for a system that doesn't seem to be able to differentiate between legitimate claims and those that are questionable. It seems to take forever to make even simple decisions. Employees complain of monumental red tape and bureaucracy and problems with receiving benefits. We've heard that time after time in the different opportunities we've had to make submissions over the last few years.
As to the unfunded liability that people have been asking about this evening, most definitely our members think it's a debt. To tell you the truth, if I were one of the persons on workers' compensation, and say that was a pension rather than my workers' compensation, I'd try to be making alternative arrangements for my long-term support. If the money is not there and there's a debt in its place, I would be really concerned about where the system is going, if I were an employee as well as an employer.
Of course the cost, the burden to business, that we currently have is also of concern. We've said time after time, as business organizations, that payroll taxes are job killers. I was talking to somebody today and I don't think they really understood what we were talking about when we said they're job killers, because they said: "You know, we're only talking a few cents, a couple of dollars. What difference is that going to make? If we roll back UI, if we roll back workers' compensation, how is that going to make a difference?"
I said to them, "Let me tell you an old story," and this really is an old story, so bear with me. There are two hunters out in the woods. A bear comes upon them and they throw everything off and prepare to run like heck. The one guy starts to put on his running shoes, and the other fellow says: "Why are you putting on your running shoes? You can't outrun that bear." He says: "I don't have to outrun the bear. I just have to outrun you."
Basically, where we're at today in business is that we've got the runners on, we've thrown everything off and we're going like hell. But our competition is all around us. Our competition is on my computer screen on the Internet. I can now buy stuff in the UK or in the United States or in New Zealand or Australia as easily as I can walk across the street and buy my product over there. We are in a heck of a race. We need all the help we can get.
What we're talking about is not a couple of cents or a dollar. What we're talking about is that if business is successful, not only do they get to employ more people but they get to keep the people they already have and those employees get to keep their jobs. We aren't talking about a difference of a couple of cents; we're talking about the difference between success and failure, which has a tremendous multiplying effect. When I was talking to the person about that, I think they finally started to understand what we were talking about.
Another thing that's been coming out loud and clear in some of the meetings we've been having locally is that another thing's happening due to the increase in payroll taxes. We've heard about the GST and the PST, and I understand 50 new auditors are going to be hired as part of the recent financial statement. But we have all kinds of people working as part of the underground economy now, some of them semi-legitimate and some of them not. Most of them tend not to be members of the chamber of commerce, and we don't have a lot of direct communication with them. But I guess I'm a little concerned that some of those auditors are going to be knocking on the doors of our members because they're a lot easier to find than the guys who are out working for cash.
Those guys aren't paying workers' compensation and they're aren't paying anything else, but you aren't going to find them through the process of additional auditors because they are out there for the reason that they find it easier to do it that way than to work in a legitimate fashion. But if they get injured -- to tie it back into what we're talking about this evening -- they become part of the social problem we have in the province.
Those are a couple of things we're really concerned about as business people.
One of the other things that really got us going when we were talking back in the spring was that the government at that time was talking about extending the program. If I could go back to the submission we made at that time, we said then:
"At a time when most people agree that the system doesn't work, we understand the government is considering extending the system to make it mandatory for all in the province to be covered. As Einstein said, `We can't solve the problems with the same thinking that we used to create the problems.' Taking a system that doesn't work and forcing all businesses to participate will do nothing but exacerbate the problem.
2120
"We assume that when workers' compensation was first introduced in 1914 there were few, if any, alternative methods of protecting workers. We believe that today there are alternatives that are not only equivalent to but in fact are superior to the protection offered under WCB. As an example, we now have approximately 7,000 businesses in Canada that are protected under the chambers of commerce group insurance program. The chambers' own staff are protected 24 hours a day, seven days a week, and at a cost that's considerably less than would be available through WCB. If we were forced to add workers' compensation in our office, we would not be able to afford the superior level of coverage currently offered to our employers. Clearly, this would not be in the interests of the employees or the employer."
In fact we went on to say, "We really believe that the only way to bring about meaningful change in an organization such as the Workers' Compensation Board is to provide true competition for the organization. This is the only way that the organization will be forced to become more efficient and more effective. One only has to look at what's happened with long distance rates and the service provided to telephone users since competition was increased in that industry to understand what effect increased competition would have on the Workers' Compensation Board system.
"Not only do we believe that it would be absolutely ludicrous to extend the workers' compensation system to a system of full mandatory coverage, but we believe it's absolutely essential that the government of Ontario take immediate action to allow private insurance to compete with WCB and to allow employers to opt out of the workers' compensation program" -- and the following is underlined -- "providing that the employers are able to provide comparable coverage from another source." We believe this coverage is required, it's necessary, it's a program we have to have, but let's do it in the most cost-effective way. "We believe that this is the only way we will ever get the organization back on track."
That's what we had to say at that time.
Some of the principles we believe you should be looking at, and I hope and I think you are:
Obviously, it has to be effective and well-organized; the needs of the users have to be handled in a prompt and a responsive way. We believe there also should be a responsiveness to both local and provincial needs.
We suggested in the brief we made back at that time that you might take a look at the way the unemployment insurance system is set up, with its tribunal process and the appeals boards made up of employees, employers and a chair. For those of you who may not be aware, any appeals going through the system right now in our particular locale are handled in less than 30 days, not the four years or more that I understand it can take to get to WCAT. There's been a lot of criticism of the unemployment insurance system, but there might be some things you could take a look at and learn from in the way they're operating. They aren't doing nearly as bad a job as some people think they are.
We believe there has to be an incentive built in for workers to return to work. We're making changes to UI now, we're making other changes. There has to be incentive built in to have them return to work, so when you're setting the compensation rates, obviously that has to be taken into account.
One other thing our members thought was really important was that there should be freedom of information regarding medical information on WCB claims. We believe that all pertinent information related to the claim should be made available to both the employer and the employee, even if this would require patient-doctor privilege being waived by statute.
We believe there also has to be a flexible approach in the application of the program. We understand that in some cases there are still considerable problems with the coding of businesses and that in some cases -- we give an example of a person working for a construction business but working in the office being misclassified. There has to be some flexibility and of course it has to be done in a cost-effective way.
The last thing I would say is that if we're going to try to enforce it, it's got to be enforceable. Therefore, with things like stress-related claims, I think you should be very cautious. If you have anything to do with the final legislation that's going to affect that -- I understand the Ontario Medical Association has refused to adjudicate in claims of stress, and if they aren't going to adjudicate, God knows how we're going to differentiate between the valid claims and the non-valid claims.
I think those are the things our members would have wanted me to say to you this evening.
Mr Christopherson: I'll try to ask a brief question, if that's possible for me, but first a quick statement.
Your story at the beginning was interesting. As I heard you say it, I thought that if the bear represented new legislation, when the person putting on the running shoes turns and says, "I just have to beat you," the "you" is the workers in this case, because they're the ones who are going to get eaten by the bear of this legislation.
Mr Frise: The bear is the international marketplace and other businesses.
Mr Christopherson: I would disagree with that, but I'm not going off on that one.
I want to ask a very short question. In terms of the privatization of the WCB, which you advocated in your March 1995 document, you said employers should be allowed to opt out. I'm curious. How would those who choose to opt out be held to account for that part of the ongoing public WCB that is legitimately part of their responsibility?
Mr Frise: They wouldn't be.
Mr Christopherson: So who pays the bill?
Mr Frise: The taxpayers. They're also taxpayers.
Mr Christopherson: Why? Why are the taxpayers paying the bill when this is an agreement between employers and workers?
Mr Frise: There is also a component in there that we believe, and I think most people believe, is a social component. Although, as I heard you explain before, the original process was between just employers and employees, obviously there are people on workers' compensation today for whom it's not strictly a work-related situation.
Mr Christopherson: I'd love to go on, believe me, but I did promise my colleagues that I'd give them a shot.
Mr Tascona: We've heard today that registration is a problem. You sort of commented on that in terms of the underground economy. The approach we're taking is requiring an employer to register within 10 days of becoming such. Do you agree with that approach? That's the first part. Second, what do you think about a revenue amnesty with respect to this registration problem?
Mr Frise: Could you explain what you mean by "revenue amnesty"?
Mr Tascona: For employers that are out there who --
Mr Frise: When I'm talking about underground economy, I'm talking about businesses that aren't reporting much of anything. They might be on unemployment insurance at the same time that they're out working. They aren't reporting anything. I don't think an amnesty would really have much effect on that kind of economy.
We're talking about people who are doing recreation rooms and dens and things like that. They're getting the person to buy the materials themselves, they're supplying the labour and they're working for cash. You just don't see them at all. They're totally invisible for most intents and purposes.
Mr Tascona: What's the solution to get them to register?
Mr Frise: We wrote a document a few years ago in response to Searching for Fairness, the taxation brief written at that time. We called ours, interestingly enough, Searching for Common Sense. We were saying at that time that the only way to really turn things around is that we have to strike an environment where it makes sense to have all businesses working within it in a legitimate fashion, and that meant we had to have a fair tax structure, one that made sense and one that was cost-effective. That would be my response to you.
Mrs Pupatello: Much of the position you take is similar to that of the Ontario chamber. Much of it is, in principle and philosophy, what our party campaigned on: streamlining, improving the system etc.
I was surprised to see that you compared it to your chamber of commerce group insurance program for the chamber staff. Most that I've ever seen are service-oriented work in an office setting, and it's very difficult to compare that kind of employee group to Ford, GM, Chrysler, Magna, Lear, all the companies under the gentleman who was here first. I don't know that that's a fair comparison, with respect. Why did you include that?
Mr Frise: Because most of the net new jobs are being created in the small business sector; that's where it's happening. Again, we're typical of what's happening in Ontario and Canada. We used to be a very large manufacturing centre in the 1950s; over 50% of people living there were directly in manufacturing-related jobs. Now the predominant part of the sector we have is the service sector. That's where the people are going, that's where the businesses are being created.
Mrs Pupatello: Would you probably agree, then, with the gentleman who was just here from APMA, the automotive parts, who said that at the end of the day the cost of labour is lower in Ontario than in any other state? That was Ken MacDonald, who was just here.
Mr Frise: It probably is, as long as we have a 74-cent dollar.
The Vice-Chair: Thank you for attending tonight and presenting your position to us.
2130
L.A. LIVERSIDGE AND ASSOCIATES LTD
The Vice-Chair: May I please have the representatives from L.A. Liversidge and Associates. I would ask you to introduce yourselves, please, to the committee and for the purposes of Hansard.
Mr Les Liversidge: My name is Les Liversidge. I'm president of L.A. Liversidge and Associates Ltd. With me is Mr Michael Mitchell, who is vice-president of consulting services with my firm, and Mr George Nolis, who is manager of appeals with the firm.
We're a management consulting firm of 24 employees specializing in workers' compensation issues and provincially service a client base of approximately 500 corporations and organizations from all sectors of the economy. I presently serve as an executive member and consultant to the Employers' Council on Workers' Compensation, which I understand appeared earlier on today, which is a coalition of employer trade associations. I'm also a member of the Workers' Compensation Appeals Tribunal advisory group.
Workers' compensation reform has been active and continuous in the province of Ontario for at least the last two decades. While the system still manages to provoke very sincere and oft-times very valid criticisms and while these criticisms appear to conserve some certain essential elements over time, the program of 1995 in my view bears very little resemblance, from a delivery and benefit perspective, to the program of, say, 1975, just 20 years ago.
If you're following along, I'm going to be editing as I go through this so that there perhaps is some time for questions. I'll be skipping ahead a little bit.
Since the early 1970s, the Ontario workers' compensation system has undergone a continual and almost complete overhaul. I am convinced that if the system of 1995 were somehow transported back in time to 1980, it would far exceed the expectations then of even the most ardent worker reformer on most fronts. Yet after two massive legislative adjustments -- Bill 101 in 1984, which put in place a representative board of directors, the Workers' Compensation Appeals Tribunal, the offices of the employer and worker adviser and the Occupational Disease Standards Panel, and Bill 162, which completely overhauled the benefit delivery structure, eliminating systemic over- and undercompensation, along with a very aggressive reorganization of the WCB itself -- old criticisms persist and new ones still emerge.
Many observers may conclude, and not without some cause, that the attempts at reforms have failed, that they did not address the root problems of the system. If the test for success is the silencing of the critic, then I agree they have failed. But if the test is the refinement of the system to make it a little fairer, more responsive, those reforms did achieve a large element of success. While the system remains imperfect, the claimant of 1995 is infinitely better served than the claimant of not even a generation ago.
While the system has been responding administratively and legislatively as a direct result of those changes, the effective constituencies have become far more aware, more educated, more involved and likely less patient. The workers' compensation community, if indeed that designation is appropriate, of 1995 is far more cognizant, knowledgeable, sophisticated and demanding than the community of 1985, and certainly that of 1975.
Paradoxically, the very reforms that were demanded and which were delivered have launched increased and enhanced demands over time. The advent of the Workers' Compensation Appeals Tribunal, a particularly significant and far-reaching institution which has set in motion a dynamic process of law reform that not only ensured individual cases would receive a higher standard of justice but significant and contentious issues would be openly debated, along with the creation of a representative board of directors in 1985, with employer and worker participation, with an accessible and committed membership, assured a link to the community while guaranteeing some direct involvement in policy design.
It is more than simply a fascinating fact to realize that over the last decade not only have all three political parties introduced workers' compensation reform legislation -- the Tories in 1984 with Bill 101, the Liberals with Bill 162 in 1989 and the NDP in 1994 with Bill 165 -- WCB reform in each case was almost their last act as a government. While the Tories introduced Bill 101, the Liberals were critics; they had to implement it. The Liberals introduced Bill 162, a very significant reform package which completely revamped the benefit delivery model, and the NDP, who actively campaigned against those reforms, were required to implement them. Bill 165, one of the last acts of the NDP, received aggressive criticism and many elements will not survive and, in my view, some rightly so.
The backdrop of political realities then is not without some very significant implications to the current state of workers' compensation and may begin to explain what I believe is one of the most compelling causes behind the state of today's system.
I am convinced, having participated in one way or another, in all three major legislative reforms from 1984, that today's problems are less a function of design than they are of execution. The lack of political accountability has had profound impacts on the system.
By the end of the last decade, after a massive amount of workers' compensation reform had taken place, speaking at the 75th anniversary symposium in September 1989, the then president of the board said this in response to the massive changes implemented, "The underlying agenda will shift from an agenda of change to one of stabilization and renewal."
In a publication released near the end of the last decade, Workers' Compensation in Ontario: A System in Transition, this was said: "On the legislative front, the program of major reform commenced last decade has now been largely accomplished with the enactment of Bill 162. However, it is very likely that housekeeping amendments will be in order."
This period of stabilization and renewal never did occur. The architects of those very changes found themselves displaced with the change in government in 1990. Rather than continue with the aggressive administrative reform agenda and ensure a period of stability and renewal, beginning in 1991 the senior executive group at the WCB was purged.
The implementation of Bill 162, which completely revamped the benefit delivery model introducing future economic loss and non-economic loss, was never allowed to mature. Shockingly, Bill 162 never underwent that required and expected refinement. Instead, the administration of the day renewed investigative efforts at corporate design and retraced the ground, step by step, that had been exhaustively covered since the late 1980s, and I'm alarmed that five critical years have been effectively wasted.
Never before, though, to my recollection, has a government not only set out a workers' compensation reform agenda prior to an election, but actually actively campaigned on the issue, providing a strong and aggressive platform. The present government, in my view, is to be congratulated not only for the substance of the platform that it presented but for the swiftness of movement on needed and immediate reform.
By presenting change at the beginning of the mandate, the political accountability so sadly lacking since 1980 -- and during that period of time I think all three political parties can do a mea culpa on that. The tough decisions and the follow-through will be shepherded by the very government that has spearheaded the reforms, a requirement that has been absent for over a decade and a half and three major reform packages.
Accountability of the government and of the WCB management is a theme that is clearly embraced in Bill 15. With the absence of accountability, the WCB has been afforded the luxury of ignoring the growth of a perilous financial crisis that threatens to lead to the bankruptcy of the system and put at risk the payments and pensions of those who rely on the system the most. This committee is well aware of the current financial state of the WCB and needs no comment from me.
I would like to turn, though, to three aspects of Bill 15 that do warrant comment and invite this committee to consider amendments in several areas. First, let me commend the government for moving swiftly on changing the composition of the board of directors. While the prevailing argument -- I mean, you look at a system that is dealing with, to a large measure, issues concerning workers and employers.
At first blush, it does not appear unreasonable at all to have that system managed by those two core constituencies. However, even before Bill 165, when the bipartite board was officially enshrined in the act, the WCB had been operating under a bipartite scheme for several years and it simply didn't work.
The board could not even agree several years ago to pursue a funding strategy at a time when an untold crisis was beginning to unfold. The board released a discussion paper, WCB Funding Strategy, in February 1992 and the board was never able to get its hands around that and make one inch of progress to putting together a comprehensive plan for the future. In fact, for 1993, for 1994 and for 1995 employer assessment rates were set in the absence of any long-term funding plan.
2140
Bill 15 makes a small improvement to the purpose clause. I've recommended in the paper -- I've commented on it a little bit to suggest that some reference be made to a requirement to consider the competitiveness of Ontario business which was something that was considered some time ago by the management caucus of the past governments, premiers, businesses and labour advisory committee.
One of the requirements of Bill 15, which I strongly support, is the requirement for the development of a strategic plan which the system has been sadly lacking. Not surprisingly, the past board was unable to agree upon a strategic plan, even though a development was attempted throughout 1992 and 1993.
The last strategic plan, in fact, goes back to 1984. Mr Christopherson asked a question with a long preamble, a few presentations ago, and I'd just like to take one very quick moment and respond to that to save him the opportunity and the need to chew up my portion of the clock on that. As I sort of sense the question --
Mr Baird: If you don't, he will.
Mr Liversidge: That's right. Maybe I'll let him do it. As I sensed the question, it was why should it be costing workers to reform the system? The bottom line is that it shouldn't. If the current state of the Ontario workers' compensation was because business was not paying enough, it was because accident rates were up, it was because business was somehow getting a free ride then, considerations of benefit reductions and assessment rate reductions would be absolutely irresponsible. But that's not the case.
You need only go back to 1984, when business went to the government and went to the WCB, when they first saw the beginning of the unfunded liability which, at that time, was peanuts. It was approaching over $1 billion, which unfortunately is peanuts in the context of it today. They said, "Listen, we have to do something about this." At that time, they set an unprecedented plan in motion and said, "We, business, will take, we will absorb for three years running, assessment rate increases over and beyond the rate the inflation for 15% per year each year for three years followed by three more years of increases of 10% per year over and beyond the rate of inflation."
In 1987, the WCB reported in its annual report that this was having some effect. In fact, it said that if things continue, that by the time 2014 rolls around the unfunded liability should be zero. Two years later, 1989, the WCB reported in its annual report that the financial plan, agreed to by business five years earlier, was a tremendous success and that if accident rates held to 1989 levels, the unfunded liability would be paid off not in the year 2014, but rather in the year 2007. Guess what? Accident rates did better than hold at 1989 levels, accident rates in many industry sectors actually decreased by 50% from 1989 till now and, as we all know, the dream of an unfunded liability being zero in 2014 is pure fantasy at this point in time. So business tried to do something; business contributed more money.
The one area where I think some very strong amendments to Bill 15 are needed, deal with a theme of workers being required to provide notice to the board when there's a material change in the circumstance. I think we can all understand and appreciate why that is there, and there's a reciprocal requirement on the part of business which was discussed earlier on by one of the earlier presentations. I don't think that amendment, that requirement is going to have the intended impact. Let me explain why. I've listed four examples in this paper, and I encourage you to look at them. I'll just give you but one, and it deals with future economic loss awards, a core important benefit component of the system. Right now, under that system -- if you just look at case 1 on page 11, these are real cases, and if I'm able to provide the WCB with the case numbers and you want any further details from them, I'm sure you could get it that way.
This worker was granted an award June 13, 1994, in the amount of $1,267 a month, but he returned to regular work, with no wage loss within three months after the issuance of that award. Under the current law, that worker will continue to receive full salary plus that $1,267 a month for at least another 24 months, which is a perfectly legal windfall of $26,620.86 tax free. That worker had net earnings of $2,902 before his accidents and net earnings of $4,169 post accident.
If you can get -- we're not just talking about people ripping off the system and there are huge amounts of fraud and concerns like this, these are legitimate people, these are people who have done nothing wrong, these are honest individuals who are simply getting what they are legally entitled to and for them workers' comp was a windfall. That's wrong; that's wrong. It's simply a matter of correcting problems like that within the system which I think will return untold millions of dollars, and all workers will still be fairly and properly compensated.
I've listed three other examples that I think warrant some consideration that I think get the point across that there's a serious problem that ought to be reviewed. I suggested that you consider putting in place an amendment in anticipation of the upcoming Jackson review to not allow the board to lock in some of these inappropriate awards, which they will start to do, which they will be required to do beginning in January of next year.
With that I'll end my comments. I don't know if I used up all my clock or not.
The Chair: We have about one and a half minutes for questioning. I'm told the government ranks are up next in the batting order. Anyone have any questions?
Mr Baird: I guess the question I have, since you work extensively with many firms of both small and large sizes: What could you tell us about both high premiums and about the unfunded liability and its effect on the economic performances of the businesses you work with and on job creation?
Mr Liversidge: Let me deal with the second part first. In this package I've outlined some examples and I'm giving you some newsletters that we regularly send out to our clients. In one of those newsletters some months ago I said the government is proposing reducing employers' assessment rates by 5%, understanding again if that's from windfall for business, that's inappropriate, but we all know that Ontario has the second-highest average assessment rate in the country -- second only to Newfoundland.
How would that impact your business, I posed? The response was tremendous and people indicated, and they've always tied in, payroll taxes and particularly workers' compensation payroll tax which, remember, is a variable tax. You see the stated premium which an employer pays every year, but that premium is altered by that company's individual performance, and our clients and most of the companies with which I come in contact would far prefer to see the premium measured more to their performance. If they cost more they ought to pay more; if they cost less they ought to get a rebate. But the starting point has to be competitive, the starting point has to be reasonable and workers' compensation tax, which is essentially a payroll tax, does cost jobs.
Mr Maves: I want to ask a supplementary of the PA.
It's my understanding, Mr Baird, that there's a public discussion paper on reform in early winter.
Mr Christopherson: What's going on?
Mr Duncan: We're requesting delegations. You're using up the time to ask delegations questions. Now, we've been very cooperative --
The Chair: I indulged your time to ask two questions of the research.
Mr Duncan: No, you didn't. That happened after the delegation's time had expired, at the end of the time. This is time to ask questions of the delegation.
Interjections.
The Chair: The clerk picked a good time to absent himself.
Mr Ted Chudleigh (Halton North): You've used up the time. We're going to go again.
The Chair: That solves that. Thank you, Mr Liversidge, and your associates. We appreciate your taking the time to come and make a presentation tonight.
Mr Liversidge: Thank you.
The Chair: Now Doug comes back.
Mr Duncan: I would suggest the clock to be restored to about 34 seconds left. I counted them, and when that started --
The Chair: It was actually 9:15.
Mr Duncan: -- and get a ruling from the clerk.
The Chair: The question wouldn't affect Mr Liversidge anyway.
Mr Duncan: Yes, but it used up time.
The Chair: No, he was at the time. I was indulging a supplementary.
Mr Duncan: I counted 34 seconds.
The Chair: The question arose, is it possible to ask questions of other members around the table or do questions have to be posed to the deputation?
Interjections.
The Chair: It's a matter arising from this question: Is it appropriate for someone else to ask for clarification?
Mr Duncan: During the time when the delegation is still up and the opposition has questions of the delegation?
The Chair: We will have to chat about it further.
2150
HUMAN RESOURCES PROFESSIONALS ASSOCIATION OF ONTARIO
The Chair: Our last group of the evening, the Human Resources Professionals Association of Ontario. Good evening.
Mr Michael Failes: Good evening. Thank you very much. My name is Mike Failes. I'm the chair of the provincial government affairs committee. This is Mary Beth Currie, a former chair and a member of the committee as well.
We're here tonight on behalf of the Human Resources Professionals Association of Ontario, HRPAO. This is an association of approximately 6,500 members throughout Ontario who are human resource practitioners. We perhaps bring a slightly different view from a group representing employers or workers. We represent instead the people who often have to administer acts such as the Workers' Compensation Act.
We're certainly pleased to speak with you tonight. In keeping with the late hour, our submissions are very much to the point. We've reviewed the legislation and there are a number of aspects which we're very pleased to see, things that we've been looking at for quite a while. We're pleased with the financial accountability aspects of the legislation; the newer, more streamlined board of directors, which appears to be based on a multistakeholder model; we're certainly pleased to see the value-for-dollar audits and the additional enforcement mechanisms in the legislation.
One area, though, our members have been very concerned with is with respect to the material change requirement contained in section 109.1 of the legislation and the complementary enforcement mechanism that goes with that. The concern, first of all, focuses on the fact that section 109.1 talks about the obligation to advise the board of material change. Of course, it's a reciprocal obligation for both employers and workers, but it's very vague. That vagueness raises a number of concerns for our members.
First and foremost is a fairness issue for them. What is a material change? If you just put yourselves, perhaps for a moment, in the chair of someone who's trying to administer this piece of legislation for an employer, is for example an increase of 10 employees a material change in your payroll? It might be, for example, if you have 10 employees in your workforce; it might not be seen as material change in some workforces where you have perhaps 500 employees.
These are difficult issues which will have to be dealt with every day with the very short time line that's in there, that is, the 10-day time line. It'll be difficult for people to respond to it. We can see there'll be some difficulties for employees as well, workers, in terms of their understanding of what a material change is.
There's also a concern with respect to the vagueness of material change for the government. Obviously, one of the things that we like in the legislation is the ability to enforce these requirements, but it's going to be difficult to enforce when people are not going to really understand what a material change is. It's going to be difficult, frankly, we'd suggest, to get convictions as well when you are trying to show -- and I'll come back to this in a moment -- that there's been a wilful failure to advise the WCB of material change.
I mentioned the 10-day time limit as being a concern as well, and that's largely related to the fact that there is a certain vagueness in the terms which are being used. The solution we see is that you should provide some sort of definition of "material change." We'd suggest it should be in a regulation so it can be fine-tuned and administered easily.
With respect to the concern which most of our members face, if the material change in the workforce was linked in some way, for example, with the Employment Standards Act requirement for notice of mass termination -- just for those of you who might not be familiar with it, if you have a situation where you terminate the employment of 50 or more people in a period of any four weeks, there's an obligation to provide a notice to the minister.
Similarly, if that was defined as being a material change, where you either hire or terminate the employment of 50 or more people on a four-week period, that's the kind of material change where a human resource practitioner can say, "Okay, we have an obligation to advise the WCB of this," this is a material change and there's paperwork that's already being generated in any event in that situation.
Most importantly, though, we think there have got to be some sort of guidelines for people so they know what they're supposed to do, what they're supposed to be reacting to. Right now it's simply too vague.
This also ties in with the prosecution section. As we indicated to you, we'd suggest there are going to be some real difficulties in terms of getting convictions where the term is defined as broadly as it is, and in particular with the wording of the act right now which requires a wilful failure to advise the board of a material change. That is going to require proof of a state of mind, which is going to be difficult to show.
We'd say it's much better if (1) you define what a material change is; and (2) you make this simply a regulatory offence, that is, if you fail to advise the board of that material change, that's an offence. Then, just as there is under, for example, the Occupational Health and Safety Act, there's a defence of due diligence. If you took all the steps that are reasonable in the circumstances to ensure that the board would be advised of a material change, then that is an absolute defence to the charge.
We'd suggest that's a better approach than putting the board in the position of having to show state of mind, and secondly, putting employees and companies in the position of having to respond to something as vague as a material change. Define it; make it a regulatory offence with a defence of due diligence.
Incidentally, the definition of what a material change is will also resolve some of the concerns our members have about the 10-day time limit. If you define "material change" to be a significant enough change, then there won't be a problem in terms of responding within the 10-day time limit which is currently in the act.
Subject to any questions you have, those are the concerns that we had. It's very, very defined in terms of what our members have come to us and said they'd like to see different in this legislation.
The Chair: Thank you, Mr Failes. The questioning will begin with the official opposition.
Mr Duncan: I want to ask you a question around the whole issue of governance and the appointment of people to the new board as defined in Bill 15. The previous delegation, in its presentation, although he omitted it in his verbal presentation, said, "Perhaps the election of 1985 had less of an impact as the incoming Liberal government appointed the former Labour minister" -- that was Robert Elgie, who had been the Labour minister under the previous Davis government -- "as chairman of the WCB, which...ensured a high degree of stability and accountability."
A number of employer and employee groups have suggested that it's very important to find qualified and competent people to fill the positions on the board and try to remove the partisanship that's been there in the past. Would you agree with that?
Mr Failes: Certainly you want to look for people who are qualified and competent, and often people who have formerly held positions such as legislative assistant subsequently become MPPs, and you see them years later and you recognize them from perhaps a former career. I'm just speaking in a very hypothetical way here. It's not at all directed to anybody in this room. There's certainly no question that sometimes former experience can be very valuable, but I think that's got to be weighed on a case-by-case basis. I don't necessarily mean that as an endorsement of any particular former MPP or otherwise.
Mr Duncan: I guess the question is a serious one, though, that governance is, in our view, not clearly enough defined. We support the multi-stakeholder model. We did in the run up to the election.
Mr Christopherson: And now?
Mr Duncan: And we do now, as we have all the way through. I guess the question is this: Do you feel it's necessary to be more specific with respect to the composition of the board, or are you satisfied that the amendments as contemplated in Bill 15 are sufficient to guarantee that irrespective of who the government is, there will be a fair and balanced board of directors?
Mr Failes: I share your concern that you don't want to see a change in government undermine what we think is there right now. There's obviously a firm commitment on behalf of this government to have a multi-stakeholder model. That's desirable; that's obviously going to happen. If it's not enshrined in the legislation, yes, there is some concern, but I'm not too sure you can really fine-tune this legislation sufficiently to say, "It should be this person or this type of person." I'm not sure that's really suitable in a piece of legislation.
Mr Christopherson: Interesting submission. You didn't comment on this but I'm hoping you'll have some thoughts on the proposed benefit cut, just what your thoughts are on that -- the government's proposing a 5% cut to existing WCB benefits -- either your association's thoughts or your own.
2200
Mr Failes: We had to wrestle with this in our earlier submissions to the government, which I appreciate you don't have before you. We were reluctant, as an association, to comment upon that. We do believe, obviously, in the financial viability of the plan, and we appreciate that cuts may be necessary, but the kind of analysis that would be required in order to determine the amount of a cut or reduction is not something which we have done, and we're not really comfortable commenting on the exact amount. We do, though, support anything that's going to obtain fiscal viability.
Mr Christopherson: Fair enough. It wasn't meant to be a setup question anyway. I just wanted your thoughts.
Following that, because having professional human resources, I know someone who's in that field and if ever there's a group you can't label or the ones that will fool you every time, it's that group, because they have a unique perspective that doesn't lend itself to left-right if you will, in my opinion.
One of the groups made the statement -- this will be a quick question -- Employers' Advocacy Council stated in their report, "In many instances, it's the economic situation, not the worker's disability that is the reason for the worker not returning to work." What are your thoughts on that statement?
Mr Failes: I think there are a lot of reasons why workers often don't get returned to the workplace in a timely way. If I was going to pick the most common one, it's because intervention and reintegration at an early stage doesn't occur, not really so much the economic circumstance. I'm not sure of the entire context of the submission.
Mr Christopherson: Their thinking is that there needs to be an economic incentive, and I'm analysing now, because most workers will not return to work as quickly as they could if they didn't have that economic need pushing them.
I guess two parts to the question: One is, is that your experience? What percentage of workers do you think could be back at work sooner than they are? Secondly, for whatever proportion that is, isn't a financial incentive necessary to do it or an important part of it?
Mr Failes: I don't think there's any question that financial incentive does play a part. I don't know of any studies that have really analysed it. If you look at the experience of our members with disability plans which have waiting periods, for example, or which have an element of employee funding, invariably the experience where there's a waiting period or there are scaled-down benefits as opposed to a plan which pays 100% and has immediate payments, there's going to be less use of the plan. There's no question about that. Now, whether people are at times forcing themselves to come to work when they're not really able to, that's difficult to say, but there's no question that financial incentive is going to make people come back to work more quickly.
One thing, though, that is absolutely clear is that the sooner the worker gets back to work, the more like they are to be reintegrated successfully. So some element of pushing is desirable from the worker's own point of view. If you talk to any medical practitioner in the field, that's the first thing they'll tell you. If the person doesn't come back to work within the first five days, their chances of returning to work are greatly reduced, and the longer it goes on, it's astronomical the way the odds increase of them never coming back.
Mr Tascona: I guess as a practical matter on that material change, unless the employer advises the WCB of the material change the WCB has no way of knowing, and you suggested a guideline with respect to the material change, that the WCB would have policy guidelines with respect to what a material change is. Would you see it to be preferable to be part of the regulations or part of the statute versus to be a policy guideline?
Mr Failes: No, absolutely. We'd suggest the regulations. You're going to be faced with prosecutions on this. This isn't something for WCB guidelines; this is something for the government to legislate. If you're going to go and prosecute people, it cannot just be a WCB guideline. I'm not even sure that would be enforceable.
Mr Tascona: As to what a material change actually is.
Mr Failes: Yes.
Mr Tascona: So then we move on to what the defence should be, okay, and you suggest that the defence should be due diligence rather than wilfulness, which arguably is a lower standard.
Mr Failes: Yes, definitely a lower standard.
Mr Tascona: But you'd be satisfied with that.
Mr Failes: Yes, but when I say it's a lower standard, the due diligence defence is, but you're turning it into a regulatory offence, so a mere breach of the requirement is going to result in a conviction absent the due diligence.
Mr Tascona: We're not talking about absolute liability. Wilfulness is a little different.
Mr Failes: Yes, wilfulness is definitely different. There's a mental element to it, which I'm not sure you're going to be able to prove in very many cases. You're going to have to show that the person knew that this was a material change and intentionally failed to advise the board. That's going to be tough to show. You're better off to simply have an ascertainable standard which is contained in the regulation. If you fail to meet that standard, then you've got to show that you had the mechanisms in place, if you're the employer, for example, which should have advised the board; you did everything reasonable.
Mr Tascona: What if the standard was "knowingly" rather than wilfulness?
Mr Failes: I think it's the same standard.
The Chair: Thank you both. In the interests of being fair to the other groups that spoke, we've actually gone a minute or two over, but I appreciate your taking the time and the patience to be the last group of the evening, Ms Currie and Mr Failes.
Before the committee scrambles away, having had the opportunity to consult with the clerk, it's the Chair's decision that questions may be posed to the PA or to the minister at times either between deputations or, in case of evenings such as this, after the conclusion of all presentations. I would entertain your questions at this time.
Mr Maves: Mr Duncan continues to ask witnesses whether or not they've been asked to appear before Mr Jackson. It's my understanding that there's going to be a discussion paper on reform that's going to come out this December or early next year and the consultations on a new bill will be around that, and so, if that's true, is the first part of the question; the second part of the question would be, therefore, will the minister be asking people to come in and consult with him at that time?
Mr Baird: That's a good question. The member for Burlington South, the Honourable Cam Jackson, Minister responsible for WCB reform, is undertaking a public discussion paper detailing the need for intervention and the objectives of his reform and will outline the approaches that he'll propose. That'll be issued very shortly, early this winter. With the release of the dis cussion paper, he'll be meeting with the public for the basis for a focus consultation.
Like my colleague from Windsor, we were in favour of disbanding the WCB royal commission, and he has secured the intellectual property of that as well. So there will be a public discussion paper in early winter and there'll be direct consultations by the minister in the winter as well.
Mr Duncan: Will those discussions and consultations be held in public?
Mr Baird: You'd have to ask the minister directly, or I could get that for you at the next meeting.
The Chair: You undertake to get that answer?
Mr Baird: I do.
Mr Christopherson: Just a short observation: How impressed I am at the clairvoyance of the parliamentary assistant to have a written response ready for a spontaneous question from his colleague in the Tory benches.
The Chair: The committee stands adjourned till 9 am, Wednesday, December 6.
The committee adjourned at 2208.