Monday 27 November 1995
Workers' Compensation and Occupational Health and Safety Amendment Act, 1995,
Bill 15, Mrs Witmer / Loi de 1995 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
Ministry of Labour
John R. Baird, parliamentary assistant to the minister
Canadian Manufacturers' Association
Paul A. Nykanen, vice-president, Ontario division
Ian T. Howcroft, director, human resources policy, Ontario division
United Food and Commercial Workers International Union, Local 1000A
Pearl MacKay, executive assistant to president
Herb MacDonald, benefits coordinator, Locals 175 and 633
Retail Council of Canada
Elizabeth Mills, director, government relations
Brian Cassidy, manager, occupational health and safety, Hudson's Bay Co.
Max Roytenberg, vice-president, Canadian Council of Grocery Distributors
Building Trades WCB Services
Julie Nielsen, workers' compensation specialist
Industrial Accident Victims Group of Ontario
Airissa Gemma, community legal worker
Alberto Lalli, community legal worker
Sebastian Spano, community legal worker
David Wilken, student at law
Canadian Auto Workers
Cathy Walker, director, health and safety department
Federal Employers Transportation and Communications Organization
Dr Roger Rickwood, chair, workers' compensation committee
Madeleine Meilleur, manager, WCB liaison, Canada Post Corp
Ontario Public Service Employees Union
Diana Clarke, workers' compensation benefits officer
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:
Danford, Harry (Hastings-Peterborough PC) for Mr Tascona
Froese, Tom (St Catharines-Brock PC) for Mr Carroll
O'Toole, John R. (Durham East/-Est PC) for Mr Maves
Also taking part / Autres participants et participantes:
Martel, Shelley (Sudbury East/-Est ND)
Clerk / Greffier: Arnott, Douglas
Staff / Personnel: McLellan, Ray, research officer, Legislative Research Service
The committee met at 1529 in committee room 1.
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.
The Chair (Mr Steve Gilchrist): It being 3:30, the standing committee on resources development is called to order. Today we're beginning our hearings on Bill 15, An Act to amend the Workers' Compensation Act and the Occupational Health and Safety Act.
MINISTRY OF LABOUR
The Chair: My name is Steve Gilchrist. I'm the Chairman. It's my pleasure to greet our guests today and the members of the committee. We will commence with a brief opening statement by the parliamentary assistant to the Minister of Labour, with responses from the opposition critics.
Following the opening statements, we'll hear from our first presenters. Each presentation has been scheduled for 15 minutes exactly, which the witnesses may use as they wish. Any part of that time they choose to leave for members' questions will be up to them.
I propose to divide the question time available, if any, equally among the three parties and to rotate recognizing questioners, starting with the official opposition on the first round. If there's no other business, I'll now recognize the parliamentary assistant for up to 10 minutes.
Mr John R. Baird (Nepean): The minister has asked me to appear on her behalf today. Unfortunately, she's sick at home with the flu and wanted me to apologize for not having the opportunity to meet with the committee to make an opening statement. So I'm pleased, on her behalf, to appear before you to introduce Bill 15.
As I present the bill for public hearings to the committee today, I do so mindful that the window of opportunity for turning around the Workers' Compensation Board is rapidly closing.
That Ontario's workers' compensation system has serious problems is beyond dispute, even among members in this room. The board has by far the highest unfunded liability in the country. It has a staggering $11.4-billion unfunded liability. On top of that, it has the second-highest assessment rates in the country. High assessment rates and a huge unfunded liability are problem enough. They are a drain on the economy and a deterrent to future investment and job creation in the province of Ontario.
What makes the situation even more desperate is that the board long ago stopped meeting the needs of its principal clients: the employers and workers of the province of Ontario. Management and governance is ineffective, and there is no sense that the board is accountable to either its stakeholders or to government. Our government is determined to turn around the deteriorating situation. We're doing so quickly, but we are also doing so thoughtfully.
Bill 15 begins this essential process of reform. It overhauls the governance, management and accountability of the board and also provides the tools a revamped WCB needs to ensure compliance with the legislation.
With these reforms, the stage is set for the second set of reforms based on the recommendations of my caucus colleague, the minister without portfolio responsible for WCB reform, Cam Jackson. He is conducting a study into what injuries are compensated, how they are compensated and at what level. His recommendations will fix the financial problems with the system and retire the unfunded liability by the year 2014.
Mr Jackson is examining the adjudication system, the service delivery system, as well as how the government will meet its commitment to reduce employer assessment rates. He will report to cabinet next spring.
More immediately, though, Bill 15 is why we're here today. Specifically, Bill 15 establishes a new multistakeholder governance structure, introduces a new accountability framework, introduces measures to ensure that the board operates according to sound financial practices, and adds provisions which strengthen the board's ability to aggressively attack the problem of both worker and employer fraud.
In addition to these measures, there are amendments that reflect the changes the government has made to the Workplace Health and Safety Agency and amendments to the purpose clause of the WCB to reflect the shared objective of improved workplace health and safety.
Bill 15 establishes a new, more representative multistakeholder board of directors. Our intention is to broaden representation on the board beyond simply employers and labour. This amendment is necessary because bipartite governance structures have proven in the province of Ontario to be both ineffective and, in the end, unsuccessful in the government's view. It recognizes that other stakeholders also have legitimate interests in the wellbeing of the system, and their expertise will contribute to a well-governed Workers' Compensation Board.
We've also strengthened the purpose clause to ensure that all WCB activities are carried out in a financially accountable manner. While a financial accountability provision does already exist in the purpose clause, it applies only to the board of directors. It does not go far enough in ensuring that the whole compensation system makes financial sustainability a priority, let alone a top priority.
We are amending the legislation to require the board to prepare a five-year strategic plan, a statement of priorities for administering the act and regulations and a statement of the board's investment policies and goals.
Bill 15 also gives the minister permanent authority to issue policy directions to the board of directors. These and other related amendments recognize that while the WCB remains an independent, self-funded agency, the government retains an overriding public interest in its successful operation.
The bill imposes a requirement on the WCB to conduct annual value-for-money audits. These are tools used by organizations to ensure that efficiency, economy and effectiveness are achieved in the delivery of programs. These audits will be undertaken by an external auditor.
The bill introduces a new offences and penalties section. It clarifies the board's authority to prosecute and impose sanctions for illegal acts. New obligations are created for employers and workers to provide the WCB with material information. These new provisions place positive obligations on workers and employers to report to the board when there are changes in circumstances that, in the case of workers, affect their rights to benefits or, in the case of employers, affect their obligations under the act.
This legislation is all about proper administration and giving the board the tools it needs to go after all forms of fraud. It recognizes that fraud and abuse of the workers' compensation system is a problem for both workers and employers, as well as for taxpayers in the province of Ontario. Thus, it will become an explicit requirement for employers who must register with the WCB to do so within 10 days of beginning operations. Failure to register will be made an offence under the act, subject to penalties.
The act establishes for the first time fines of up to $25,000 for individuals who are convicted of an offence under the act. Maximum fines for corporations are increased to $100,000. Directors and officers can now be convicted of wrongdoing.
Other measures give the board authority to order restitution; in other words, the board will now be able to collect moneys owing to it, a power it did not previously have. In addition to these provisions, further amendments are proposed for the purpose clause to make occupational health and safety a priority objective of the WCB. I believe that this change is long overdue.
We are also amending the Occupational Health and Safety Act to reflect the changes previously made to the governance structure of the Workplace Health and Safety Agency. This includes the revocation of order-in-council appointments of the board of directors and the appointment of an executive director to administer the agency.
In conclusion, I'm very pleased to present this bill to the committee for your review. As I mentioned to you at the outset, the objectives of these reforms are to establish an effective multipartite governance structure; provide stronger, more effective management at the WCB; establish a new accountability framework; provide the WCB with the tools that will allow it to administer and enforce the act, and set the stage for the systematic reforms that will be introduced following Minister Cam Jackson's study.
As I review our government's objectives for this first stage of reforms, I am confident this strategy is right. I am confident we have reflected and implemented the strategy correctly in the drafting of this bill. Having said that, I recognize that the committee has a very important task in front of it. No doubt it will be hearing from many interested groups who will have comments and suggestions to make. I know too that members themselves will have valuable input of their own. So on behalf of Minister Witmer and the government, I want to say that I'm looking forward to the committee's deliberations and am committed to working with you to achieve the best possible results for the people of the province of Ontario.
The Chair: Mr Duncan will be responding on behalf of the official opposition, 10 minutes.
Mr Dwight Duncan (Windsor-Walkerville): I want to begin by saying that it's good to be having hearings on a bill of this import, a bill affecting injured workers and employers across the province. We weren't given that opportunity with Bill 7, so this is indeed a pleasure.
I want to take a few minutes to discuss some of the aspects of the bill that we see as problematic, because I think we probably all agree that there is a financial problem, a crisis at the board that needs to be addressed in a substantive manner. To that extent, we are a bit disappointed that the government has brought forward a bill that really doesn't deal with the substantive issues. We had anticipated that we would be dealing with WCB reform in its entirety. Indeed, based on the government's own commitments prior to the election and during the election, we assumed that the reform the government envisioned would be out sooner than it's going to be.
We want to begin by saying that this is only a very small component of reform that needs to be undertaken, and we're disappointed that we can't be dealing with the entire package all at once.
With respect to the substance of the bill, I want to begin by talking about the bipartite versus the multistakeholder model. As members of the committee are aware, our party supports the multistakeholder model. We did so in the pre-election period, we did so during the election and we continue to believe that the multistakeholder approach is the proper approach.
Where we part company with the government in terms of Bill 15 is in the lack of definition of "multistakeholder," the three to seven members of the board, without giving any kind of specifics with respect to whether that will be one labour representative and six management representatives. We'll be bringing forward some amendments to give precision to that, that would see us in effect say we have to have equal representation. We'll also bring forward amendments with respect to specificity around the question of who the other stakeholders are.
Again, as you know, we did that in our Back to the Future document, which formed the basis of our party's position on workers' compensation reform. We'll be talking about those issues in greater length in committee here and we'll, as I say, be bringing forward amendments.
The value-for-money audits are an interesting concept that's been used in other jurisdictions and by other levels of government to some effect and with some success. I don't think that we ought to assume somehow that these value-for-money audits are going to fix the problem. I'll give you a for instance. Members of the committee will be aware that with respect to the WCB's accident fund, it has an outside audit done every year now. It's done this year, I believe, by Towers Perrin. The portfolio is analysed with respect to its investment objectives as well as with respect to rates of return relative to other funds of a similar nature. So value-for-money audits are useful in some instances, are indeed being used by the board now in parts of its operation.
What we don't want to see happen, however, is if these value-for-money audits become a tool by which we justify cuts to injured workers in the future. Value-for-money audits ought to be directed very specifically with respect to what their target is; if it's vocational rehabilitation and the proper management, are we getting the best bang for our buck, certainly. But we want to talk a bit about the implementation of those.
Finally, we will bring forward amendments to the bill on this particular issue that will give the Legislature the power to determine where value-for-money audits happen, not the minister, and certainly not by this government. One can envision a situation in the future where part of the board could be embroiled in controversy, and business people and injured workers at our doors pounding them down and the minister, because he or she doesn't want to fan the flames, will have the value-for-money audit done on some other aspect of the board. So we'll bring forward amendments to that effect.
I want to just take a couple of moments to address the question of the closure of the Workplace Health and Safety Agency, because the bill contains amendments that give effect to this. My friends opposite have gleefully held up the red book, as I said, that we no longer supported the inclusion of the Workplace Health and Safety Agency in the board.
We did so with two very clear reasons: One is Dr Tuohy's report, which is in the possession of the minister, was in the possession of the previous minister, that very clearly and unequivocally recommended against that. Dr Tuohy, who I suppose it could be said was viewed as a management-side person, advocated that the agency ought to have the opportunity to address her concerns prior to collapsing it or folding it into the board. Her concerns -- she had, as I recall, about 24 recommendations with respect to the administration and management of the agency.
Finally, we had a letter from the auditor of the agency -- I forget, one of those big accounting firms with a long name -- signed by the senior partner, saying that in effect the agency is well run and ought not to be part of the WCB. It may have been Mr Farlinger's firm, if I'm not mistaken. I stand to be corrected on that. In any event, it was a senior partner, and they made that point.
Then, finally there was my own experience. As a health care administrator I had employees and managers in our operation partake in the programs last spring and was astounded simply by the quality of the programs and the effect they had on our workplace, both for management and worker. Therefore, based on that, I persuaded our caucus to change its position.
The last issue I wanted to address today was the whole section around offences and penalties. The government has made a very clear case and has advocated for a long time the need to get government red tape dropped back. As I read the sections dealing with offences and penalties and filings, I sense that the management community, if it hasn't already realized it, had better give some thought to what those people down at that big building will do with this in terms of operationalizing the clauses of the act and what that means for red tape. I think, just reading the bill, that the red tape that will be needed to give effect to this will probably cause a lot of businesses to shudder. So we will, again, be bringing forward amendments in that area.
Finally, with respect to the whole question of offences and penalties, it's not exclusively the wording of the act that will determine whether or not we're good at enforcing our act. It comes down to the issue of enforcement. It comes down to the resources you apply to prevent fraud, at what point there's a cost-benefit to additional resources. So we'll be looking at those parts of the bill closely as well, because our fear is that while the bill says a lot of good things about preventing fraud and abuse, our fear is that what it does is to create a paper burden for employers as well as workers and at the same time will not, in our view, realistically reform or improve the prevention of fraud and abuse.
With those few words I will relinquish the seat.
The Chair: Mr Christopherson, will you be speaking on behalf of the third party? Yes? Then you have 10 minutes, please.
Mr David Christopherson (Hamilton Centre): First of all I would like to make it very clear that in the opinion of the New Democrats this is, by and large, to do two key things. The first is to deny workers the equal share in the decision-making that they now enjoy under existing WCB legislation, and the second is, this is the tee-up for the slashing that Minister Jackson will be bringing forward in the spring.
The changes to the makeup of the board of directors will allow the government to load up that board with a clear majority of people who view the WCB and workers' minority place in that vision, into place, where they can implement the kinds of destructive policies that this government is hell-bent to put in place.
With regard to the Workplace Health and Safety Agency, which my colleague from the Liberal Party has commented on, I am pleased that he continues to remind the public, and I'll join with him in doing that, that the Liberals are also keen on changing the makeup of the WCB to ensure that workers are put in their rightful place as Tories and Liberals see it; and the rightful place for workers, according to Liberals and Tories, is to clearly be in a minority position, if one is forced to go that far, "but by God, this business of workers having a 50% say in matters that affect their lives has to go." You not only have changed the makeup of the board with Bill 15 in the WCB, but annihilated the entire agency when you took office and announced what you were going to do with workplace health and safety.
Of course, it needs to be said that none of these things can be taken in isolation. One has to look at the entire picture when you're dealing with the Tory agenda. The whole picture, when you fold in what will happen on Wednesday with regard to the Ministry of Labour, and then start to put all the pieces together, clearly it's the intent of this government to put workers back in their place, as they see it, that silly, warped vision of how the world ought to be in the late 1990s as compared to the 1950s, which very much seems to be where this government is going. What's interesting is, of course, they've always accused us of being social engineers, yet that's exactly what this government is doing in a way that's unprecedented in the history of Ontario.
Clearly, in our opinion, there are other aspects to Bill 15, and I will comment on them, but it is our view that most of those things are meant to provide cover and distraction from the main intent, which is to take away the 50% decision-making power that workers now enjoy under existing WCB legislation, move them into a minority position, load up the board with like-minded Tory types and jam through your anti-worker agenda as it relates to the WCB. I'm convinced that as time unfolds, over the years, actually -- it's going to take a couple of years -- these comments will be seen to be an accurate reflection of what is really happening here and what's happening to working people.
I will comment on the funding, again, the funding ratios and the unfunded liability. We know that this government has decided that it needs to create a crisis in every area that it wants to make changes, to provide a justification for the kind of ruthless attack on benefits to ordinary Ontarians that it's conducting. In the case of the Ministry of Education and Training, of course, there is even the minister on tape, on the record, stating that they need to manufacture a crisis. That, in our opinion, is consistent with the way the government is operating in every area.
We also know that this is being done in large part because $5 billion of the cuts they're making is to make room for a tax cut that the wealthy will benefit from the most. As long as they can keep everybody thinking there's a crisis out there, then they can move under that cover, and we intend to do everything we can to make sure that's exposed for what it really is.
This is no different. The government talks of the crisis that exists, when the reality and the fact is that there was a plan brought forward by experts within the WCB administration, at the behest of the board, that would see the unfunded liability eliminated by 2014. That plan was endorsed by all of the worker representatives on the board. I think that shows there is an ability, if you're willing to work with workers' representatives in this province, to deal with real problems that exist in a real, meaningful way.
But this government's not interested in that. That's not what this is all about. This is all about going after those benefits, and in this case it's so blatant. It's a 5% cut that will be coming in the spring, and I still say it's attached to Bill 15, because this puts in place the decision-making structure the Tories need to fulfil this. In the spring, Minister Jackson will bring forward recommendations that he says will show a 5% cut to workers on disability, and at the same time bring in a tax refund, because it is no different, an assessment cut for employers.
Again, as we've seen time after time after time, it's a question of taking away rights that workers have legitimately gained and worked for over the years to pay for a political commitment that you made in the Common Sense Revolution to the very wealthy in our province. You're bound and determined to give that money to those who have the most already at the expense of disabled workers, and as we've seen in other cases, through government action, through the poor, children, abused women, all those who are most vulnerable in our society. That's probably what we in our party find so despicable, the blatant attack on benefits to ordinary Ontarians, not to deal with the deficit but to give an even greater benefit from the wealth of our province to those that are already fortunate enough to have the most.
Specifically on the unfunded liability, in 1985, which was the last time the Tories were in power, the ratio was 31.8%. As of December 31, 1994, it was at 37.4%. That's not a huge change, but it's a trend in the right direction, and that's the kind of approach we've always advocated: Attack these problems in a way that maintains the values that we have as Ontarians and at the end of the day resolves the problem, as would have happened with the unfunded liability in terms of eliminating it by 2014.
And speaking to the unfunded liability, again, the trend lines are there. In 1993, the unfunded liability was $11.4 billion; in 1994, it was down to $11.5 billion. Again, not dramatic, but a trend line in the right direction that allows us to meet those fiscal obligations, but not making victims of people who are already innocent victims.
With regard to the fraud, again, the government's very good at finding hot buttons. I give them their due. They're excellent at it, and your ability to capitalize on that is quite extraordinary. But again, if you can talk about fraud in a way that suggests that's the big problem, as you've done with welfare, if you can find one or two cases that you can use as an example and play to the perception in the public that there's this widespread fraud and that's why we have a debt and deficit problem and that's why we have fiscal pressures on us, then you're away to the races, because nobody looks beyond that.
You've done that with welfare and virtually attacked everybody when we know that it's about 3%; every independent study has shown it's about 3%. You're doing it again with WCB in the way that you've put this bill together, suggesting that there's massive fraud out there and that's what is causing the problem. And the reality is that you're not doing anything extraordinarily new with regard to fraud. In fact, the fraud department within the WCB just recently won an independent award for the way they conduct their business.
So in wrapping up our opening comments, it will be our position to consistently show, through the evidence of people making presentations, that this is not to address and correct the WCB; this is to go after workers, among the most vulnerable people in our society, so that the government can again benefit their political backers, which are the very, very wealthy in our society. It's an absolute disgrace, and we will do everything we can to expose it for that.
The Chair: Thank you, Mr Christopherson, and I thank the three presenters for staying within their time.
CANADIAN MANUFACTURERS' ASSOCIATION
The Chair: We'll now hear from our first presenters, the Canadian Manufacturers' Association. Would the representatives please come forward. We all have copies of your submission. How you use the 15 minutes to make your submission is up to you; I'll remind of that. Any time you want to allow for questions has to be taken out of the 15 minutes. Welcome to the committee. Please introduce yourself to the members of the committee and for the benefit of Hansard.
Mr Paul Nykanen: My name is Paul Nykanen, and I'm vice-president of the Ontario division for the Canadian Manufacturers' Association. With me is Ian Howcroft, the director of human resources policy.
On behalf of the Canadian Manufacturers' Association, I would like to extend our appreciation for the opportunity to present our views to the standing committee on resources development on Bill 15, An Act to amend the Workers' Compensation Act and the Occupational Health and Safety Act.
What I'd like to say from the outset is that we at the CMA fully support the direction of the government with regard to workers' compensation reform. It is a good first step. We recognize that this is a first step, and we want to assure the committee that we will be very involved in the reform initiative as it proceeds. We're looking forward to providing input and further comment to Minister Jackson as he conducts the broader review that will examine the entire system in order to make the necessary long-term changes.
Before we provide some substantive comments on Bill 15, I'd like to state a few facts about the CMA. First of all, it's a voluntary association with members from all regions of the province. This year we celebrated our 124th anniversary representing manufacturers. Our membership base contains small, medium and large companies from all aspects of manufacturing, and our membership produces approximately 75% of the total manufacturing output of Ontario. That represents about $121 billion on an annual basis. There are about one million individuals in Ontario who are directly employed in manufacturing and another 800,000 who are employed in directly providing services to the manufacturing sector. These statistics clearly state that manufacturing is certainly the engine of growth, and particularly in Ontario.
Secondly, we've had a very long involvement with the issue of workers' compensation. As a matter of fact, our submissions date right back to 1912, when we made our first submissions to Justice Meredith. His work became the seminal work which is the basis of the whole framework for the system as it stands today. We've continued our active involvement in this thing and I believe are recognized today as one of the leading associations dealing with the issue.
There's one very good reason for this issue, and that is that the significance of it to our manufacturers is very great because almost half of the total assessment rates for the system are borne by the manufacturing sector, so it is a very big issue for us. We want to ensure a strong and sustainable workers' compensation system. To achieve this, we feel that major reforms are necessary, that we must return to the insurance principles and that we must recognize that workers' compensation must be related to work-related injuries. It has gone far beyond the original intent or scope and we thus have the severe problems that we have today. If such reforms are not implemented, the system on which injured workers rely could be undermined and unable to guarantee the benefits on a continuing basis.
I'd like to comment on a few issues with regard to Bill 15, starting out with governance. We're very pleased that the current bipartite governance structure at the WCB is being replaced with one that will be more efficient, more productive and more able to directly affect the Workers' Compensation Board. The bipartite system has proven to be counterproductive, confrontational, divisive and unable to deal with the essential issues. This is true not only for the Workers' Compensation Board but also at the Workplace Health and Safety Agency. The agency "experiment" in institutional bipartism was a failure.
Given this afternoon's time constraints, we're providing members of this committee with our submissions on the Workplace Health and Safety Review Team, as it provides in more detail our views on health and safety regulatory reform.
We therefore support the introduction of a multi-stakeholder board comprised of individuals with the requisite skills to effectively guide and govern the Workers' Compensation Board. It is essential that well-qualified experts be appointed to deal with and to solve the board's financial crisis.
Given what we have just said, it should come as no surprise that we support the amendments pertaining to the governance structure at the agency. We also look forward to providing ongoing input as the health and safety regulatory system is reformed.
Financial accountability: With an unfunded liability of approximately $11.4 billion, it is hard to understand why stronger financial accountability requirements were not introduced years ago. The current financial accountability framework, which is set out in the purpose clause, falls markedly short of what is necessary. Consequently, CMA is pleased that Bill 15 will address the current inadequacies. The workers' compensation system must be based on sound financial principles which include fully funding the cost of new workers' compensation claims; improving the ratio of assets to liabilities; providing a positive cash flow; eliminating the unfunded liability through a range of strategies; and maintaining a competitive workers' compensation system in its entirety.
An entrenched financial accountability structure would ensure that sound financial principles are observed, implemented and followed to keep the system operating efficiently, equitably and in a fiscally prudent manner. It would prevent a future financial crisis from ever occurring again.
However, the CMA wants to confirm its view that the Workers' Compensation Board itself should remain at arm's length. It must not be subject to government interference or involvement on a day-to-day basis.
I will now call on Ian Howcroft to comment on some of the other substantive issues.
Mr Ian Howcroft: Good afternoon. The CMA feels that the best way to ensure the Workers' Compensation Board operates in a fiscally prudent manner and adheres to the requirements of the entrenched financial accountability structure is to conduct regular value-for-money audits. With the enormity of the financial problems at the Workers' Compensation Board, we agree with the provisions in Bill 15 for mandatory annual audits. We have long argued for such audits and we have always advocated that they be conducted by outside independent auditors. In addition to ensuring that the Workers' Compensation Board is operating properly, the audits would identify problems immediately and allow for the necessary corrective action. This would prevent small problems from growing to become a crisis.
With regard to fraud and revenue loss, we'd like to say that fraud of any kind cannot be tolerated within the workers' compensation system. In addition, it must be incumbent on the Workers' Compensation Board to take any and all reasonable action to recover moneys paid out because of fraudulent misrepresentation or because of an overpayment for whatever reason. CMA believes that the government's direction in this regard is a positive step. However, we would like to see even stronger provisions to address this serious problem that is estimated to be approximately $150 million a year.
We had argued that extreme cases of fraud should be pursued through the criminal process and other lesser cases of fraud or the intentional provision of misleading statements or false statements be pursued through a system similar to that found in the unemployment insurance system. For example, with regard to unemployment insurance, if a claimant makes a false or misleading statement knowingly or with intent, that individual can be penalized up to 300% of their benefits.
With decreasing resources and the current financial crisis, it is essential that all moneys paid out go to the legitimate recipient in the correct amount. Bill 15 allows for more offences under the Workers' Compensation Act, which is a positive step and one we support, but we would like to see an even more expeditious way to deal with this problem. It may therefore be worthwhile to further explore this type of approach.
To conclude, we support Bill 15 as a first step in the long-needed reform of our workers' compensation system. As Paul stated at the beginning of our remarks, we are pleased that the government has appointed Minister Jackson to conduct a comprehensive review of the entire system, as many other changes are necessary if the system is to become financially sustainable. We'll be providing comments to Minister Jackson as his initiative continues and we'd like to outline some of the areas that we feel must be addressed.
First is reducing the benefit rate to 85% of net from the current level of 90% of net. In fact, we've even argued for a tiered or staggered rate whereby the first 39 weeks would be at 80% of net and then they would go to 85% thereafter.
There's also great need for a new definition of what is a compensable injury. The current level of entitlement has been expanded far beyond that which was originally intended or what should have been allowed. For example, we'd also like to see stress specifically excluded in the definition.
The workers' compensation system should provide for a waiting period similar to what has been required in other jurisdictions with great success.
It is also essential that employers be charged appropriate premiums. The government has recognized that the current assessment levels are too high and it has stated that they will be reduced by 5%. Again, we're pleased with this direction but we want to raise the fact that manufacturing, as a sector, has been paying more than its fair share for many years. We'd like to see this inequity addressed.
There's a need to improve and strengthen the current experience rating system to more appropriately and adequately deal with and reward individual employers. We will be providing further comments to Minister Jackson as his initiative continues, and the result, we hope, will be an equitable and financially sustainable system. It's essential that injured workers receive fair, adequate and guaranteed benefits from a well-run and competitive Workers' Compensation Board.
Those are our formal submissions and we'd be pleased to answer any questions.
The Chair: Thank you very much. I must apologize to both you and future groups. In our efforts to make sure we had as many presentations as possible, we've of needs limited each presentation to 15 minutes. So I guess we have time for probably one question. Mr Duncan.
Mr Duncan: I wanted to ask you a couple of questions. The issue of governance and the multistakeholder model, the way the legislation is framed, it leaves open the question of what the balance and what the makeup of the board should be. Would you support an amendment that gave effect to saying that the management and labour reps should be equal on the board, recognizing that there's room for other stakeholders?
Mr Nykanen: If we take the experience of the Workplace Health and Safety Agency, where you had equal representation on both sides --
Mr Duncan: No, I'm not advocating bipartism. Let's just, by way of example, say that we have a seven-person board and we then say that there will be management and labour representation, which the bill says, would you support a clause that said that labour and management representation -- let's say it totals four -- should be two each, with the balance being other stakeholders? Would you support that kind of amendment?
Mr Nykanen: We haven't specifically attached numbers as to what the representation might look like. The whole principle would be that if the directors are selected on the basis of their skills and what they are to bring to the board -- in other words, if the objective is to provide on-going, continuing benefits to injured workers and to have the system on a financially sound basis -- then it's more the qualifications of the individuals towards that objective. I would say that from both the employer side and the worker side this is the principle objective of the thing. The board, as it's constituted, if it carries out that mission, then we feel it would have accomplished something.
The Chair: Only a very, very brief supplementary.
Mr Duncan: Would you agree that there are worker representatives who have something to contribute in a positive way to the board?
Mr Nykanen: Unquestionably.
Mr Duncan: If we're going to a multistakeholder model where we say in the statute that there ought be labour and management representatives, and it says that, would you not agree that the statute ought to say there should be equal management and labour representation, recognizing the multistakeholder model?
Mr Nykanen: It's quite possible that's the way it would end up being. Certainly there's no denying that the workers are a key stakeholder in this thing, after all, and it is a workplace issue that we're dealing with.
Mr Duncan: If I were to bring forward that amendment to say there would be an equal number of labour and management representatives, would you support that?
Mr Nykanen: On the basis that the qualifications were as defined.
Mr Howcroft: I think merit and the requisite expertise of the individuals have to dictate who gets appointed to the board.
Mr Duncan: That's --
The Chair: Mr Duncan, if I could, Mr Christopherson wanted to get one in.
If I could ask that your question be relatively short, Mr Christopherson.
Mr Christopherson: You aren't going to penalize me because he was long, I'm sure.
The Chair: No.
Mr Christopherson: Don't you, though. I'd like to follow up on that but it'll be another time.
You mentioned in your presentation that you'd like to see the government remain at arm's length from the operations of the WCB -- I'm paraphrasing -- and you're supporting Bill 15. You'll know that Bill 15 also gives the minister and cabinet much greater power to dictate policy to the board, and the board has to accept them. Do you support that concept as it is outlined in Bill 15? If you do, I just wonder how it squares with what you've said in your presentation.
Mr Howcroft: We support the concept of what you've paraphrased. What we don't want to see is the government getting involved on individual claims or the day-to-day management of the Workers' Compensation Board. We feel that the government has a great deal of accountability for the whole system and we do support more of a role to ensure that the board does operate in a more fiscally and financially prudent manner. So we do support the gist of what is in Bill 15. We put the caveat in there because we don't want to see the House dealing with individual claims on a regular basis. We know that can be a result. We still think the Workers' Compensation Board, with the appropriate individuals in place, should be running the system and that the day-to-day operations should not be part of the function of government.
Mr Christopherson: If I can follow up on that just very briefly, I'm a little confused. If the government is now giving itself more power than it's ever had before and it can virtually dictate what the board will or won't do and whether it's related to a direct case -- you can easily fudge that issue -- the minister will have absolute right to dictate what the policy will be. I find that interesting, given that you don't believe they should be getting as involved as it seems to me they are in Bill 15.
I would ask how you square that, again, with the comment about the valuable contribution that workers have to make and the fact that it affects their lives and their income and your not agreeing that they should have a 50% say in the decision-making. I have trouble understanding exactly where you are, particularly as it relates to Bill 15 and what's in here.
Mr Howcroft: I guess our position is that we feel that workers and employers should be selected to sit on the board because of the skills they bring, not because of the group that they necessarily represent. It should be on the merit principle in who gets the job and who brings the requisite expertise to that board.
With regard to the control of the board, we would like to see the government have more of a role to prevent the crisis from continuing and to deal with the problems that exist today. What we don't want to see is the minister getting involved in individual cases or the government being involved or embroiled in the day-to-day operations of the Workers' Compensation Board.
Mr Christopherson: So all the prior members weren't qualified?
Mr Howcroft: We didn't say that.
The Chair: Again, my apologies that we have to put the time limitation on, but thank you both, Mr Nykanen and Mr Howcroft, for your presentation. We appreciate your leaving this information for us.
UNITED FOOD AND COMMERCIAL WORKERS INTERNATIONAL UNION, LOCAL 1000A
The Chair: We'll now hear from our second group of presenters, the United Food and Commercial Workers Union, Local 1000A. Good afternoon. As we just saw in the last presentation, perhaps if you want time for questions you might consider allowing, say, five minutes or six minutes for that. Welcome to the committee. Please introduce yourself.
Ms Pearl MacKay: I'm Pearl MacKay with the United Food and Commercial Workers, Local 1000A. With me today as well is Herb MacDonald from UFCW, Locals 175 and 633.
The United Food and Commercial Workers, Local 1000A, is UFCW's second-largest local in Ontario and represents just over 14,000 members who work predominantly in the food retail and food processing industries throughout Ontario. Some of the employers we have collective agreements with include Kretschmar, Brandt G Meat Packers, Cambridge Canadian Foods, Loblaw Supermarkets Ltd, franchised No Frills, SuperCentres and many others.
Many of our members suffer from workplace injuries such as carpal tunnel syndrome, bursitis, frozen shoulder, trigger finger, low back strains and herniated discs. These injuries are often caused by the repetitive type of work and often permanent damage has occurred to their bodies by the time they are diagnosed and a WCB claim has been filed.
Throughout our representation of our members before the Workers' Compensation Board, we have had a firsthand opportunity to experience the problems in the workers' compensation system on a daily basis as we service our members who have been injured on the job. We believe the bipartite board of directors at the WCB could assist in making a profound difference in improving the system for its stakeholders and looked to the royal commission on WCB to investigate longer-term issues as it relates to workers' compensation in Ontario, including an investigation into a public universal disability system.
I had the privilege of being one of the members of the bipartite board of directors of the WCB for the last six-month period, up until November 1 of this year. All of the directors on that board, I believe, brought with them a true commitment to improve the WCB system in this province. Part of that improvement included ensuring financial accountability in the system through ensuring that the two stakeholders in the system, workers and employers, had input into the appropriate funding in the system.
The unfunded liability is not a new problem. It began in the late 1970s when the government and multistakeholder board of directors kept assessment rates artificially low. In fact, in 1985 the WCB had on hand only 31.8% of money it owes to injured workers. Today, however, it is more than 37% of that money. So there has been a small turnaround at the board in the last few years.
This turnaround has occurred in most-recent years, when workers of this province had a vice-chair at the WCB, as did the employers. Most recently, through Bill 165 amendments, a true bipartite board of directors was enshrined in the Workers' Compensation Act.
This government would have the people of this province believe that the bipartite structure, representative of the two stakeholders in this system, did not and does not work. The Minister of Labour would have the people of this province believe that a bipartite structure is one of an adversarial nature rather than one of consensus.
Well, I am here to tell this government and to tell this committee that that is simply not true. The bipartite board of directors gave workers an equal say in how the board was run. In fact, the bipartite board made some incredible progress by bringing new claims' costs down dramatically, reducing the board's overhead and returning more injured workers with disabilities 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. The worker members of the WCB board of directors endorsed the administration's financial improvements package, called FIP, which would have paid off the unfunded liability by the year 2014.
However, the worker directors supported this package in a complete package because we didn't agree with a lot of the things that were in FIP, and the employer community didn't agree with a lot. But when we looked at the whole thing, there was the give and take on both parts, so we felt that it was the fairest solution to reach in terms of eliminating the unfunded liability. It would have saved the board over $400 million in cash flow annually.
The FIP would not just result in paper saving, like reducing the unfunded liability, but real cash. Had the FIP been passed, it is our opinion that Cam Jackson, Minister without Portfolio for workers' compensation reform, could sit back and rest assured that there would be no incentive for him to look at imposing a three-day unpaid waiting period on injured workers' claims on benefits; there would be no incentive for him to reduce the benefits paid to injured workers by 5%.
Mr Jackson could also rest assured that he would have no incentive to review lifetime pensions awarded before 1990, which could possibly include their elimination, and put at ease these most vulnerable of workers, more reliant on our social safety nets than ever before -- if in fact by the time this government is through with its agenda there are any social safety nets left -- nor would he have had any incentive to consider the reduction of future economic loss awards to workers with permanent injuries who are not employed in their pre-accident job or a comparable job by up to 40%, often because their employer has sidestepped its obligations under the Workers' Compensation Act or the Human Rights Code of Ontario.
There are a number of other things that you probably wouldn't need to look at either if FIP had been agreed to, but unfortunately the employer directors had blocked the adoption of FIP. One can only suspect that once this government was elected on June 8, they felt that perhaps they could get more out of this government than they could get out of FIP.
However, I want you to note that we, the worker and employer directors at the Workers' Compensation Board, were able to reach consensus on a number of issues, and one of the crucial ones, in my opinion, was around the 1996 assessment rate package. The board of directors, in its summer meeting, passed a motion to not include a 5% assessment rate reduction in the assessment rate discussion paper that goes out to the employers each year regarding the following year's assessment rates.
We were advised by the administration at the compensation board that a 5% assessment rate reduction would remove $140 million from the system in 1996 and that in all likelihood the board would be faced with having to draw moneys from its investment fund in order to operate. As you all know, this would have more of a significant effect on the unfunded liability than a dollar-for-dollar basis.
We and the employer directors reached this decision because we were acting in a fiscally responsible manner, even though at the time there was considerable pressure from the Ministry of Labour's office to have a 5% assessment rate reduction indicated in the paper. Had we had more time on the board of directors together with the employer directors, we might have been able to reach consensus on the FIP. After all, we do have a history of reaching consensus with the employer community, and one only needs to look at the work that was done on the previous government's Premier's Labour -- Management Advisory Committee and secretariat on workers' compensation.
However, the Minister of Labour has instead opted for firing the board of directors that had made such tremendous progress. One can only ask why. It is true the Tory Common Sense Revolution did make this commitment in 1994 and it seems the minister is going to carry out this commitment whether it makes sense or not. This is nothing more than an ideological move, just as it was when she fired the bipartite board of the Workplace Health and Safety Agency.
It is the workers of this province who suffer from the carnage of workplace accidents, so one must ask, why has their voice been stifled in the very system that was set in place back in 1915 to ensure they were fairly compensated and for which they gave up their right to sue their employer for workplace accidents they might suffer?
It seems to us that the Harris government intends on giving the Workers' Compensation Board over to its employer buddies. Presumably, we'll have a board with the numbers that ensure the unfunded liability will resume its climb at the expense of workers, because although they criticize the unfunded liability in public, privately employers enjoy the ability to offload their current liabilities on the future employers of this province. How else can this be explained?
UFCW Local 1000A wishes to go on record opposing Bill 15 and all that it stands for. On behalf of UFCW Local 1000A, I do thank the committee for the opportunity to present our views and hope that it does not fall on deaf ears. I would now turn over for Herb MacDonald to continue with the presentation.
Mr Herb MacDonald: Good afternoon. I will keep my remarks short. I'm sure you have some questions for the fired board of directors. My name is Herb MacDonald and I am the benefits coordinator for the United Food and Commercial Workers, Locals 175 and 633. Locals 175 and 633 represent some 40,000 members in the province of Ontario. These members work in 20 different sectors, from industrial, manufacturing, retail, service and health care, among many others. Some of our major employers we have under agreement include the A&P company, the Oshawa Group, Cuddy Foods and Maple Lodge Farms. We also represent approximately 4,500 members in health care.
My comments this afternoon will be on the issue of fraud and the real abuse of the workers' compensation system in Ontario.
Bill 15 provides for a penalty of a $25,000 fine or up to six months' imprisonment for workers who do not notify the board within 10 days of a material change in circumstances in connection with his or her entitlement to benefits. What does this mean? What happens if a worker receives a severance package, an inheritance, a gift from a family member or wins a lottery?
How can a worker be assured that a change-in-circumstances message left on a voice mail at the Workers' Compensation Board will be recorded? We all know that it takes 14 days within the workers' compensation system for a letter to get distributed, and not all injured workers in this province have fax machines in their homes.
This amendment creates a false impression of workers defrauding the system. There is absolutely no support for massive worker fraud.
The Workers' Compensation Board has recently put sufficient funding into beefing up its special investigation branch in order to detect fraud and has recently passed anti-fraud policies. Has this government investigated those policies? Is there something wrong with these new policies?
What does this language, "material change in circumstances," mean? It certainly is not clear and will, we suggest, create nothing more than confusion and a threatening climate in an already adversarial system.
The Labour minister is blaming injured workers for the problems of the WCB and has stated that the board is on the brink of a financial crisis. Attacking injured workers for fraud might perhaps result in minimal savings to the board, but it will do little by way of dealing with the unfunded liability or the general operating costs.
Now, let's talk about the real abuse and fraud in the system. First, 55,000 employers owe the WCB $430,000 in outstanding assessments and penalties. Second, $200,000-plus per year is lost in revenue annually for NEER, CAD-7 and SIEF schemes. Employers such as banks are currently exempt from the system: 700,000 Ontario workers are denied WCB coverage because the employers have been successful in lobbying governments to exempt them from the system.
Employers and their consultants, with a simple letter requesting SIEF relief, receive a minimum of 50% relief on a claim. Over the past years, our local has reviewed thousands of files where SIEF relief was granted simply by a letter of request.
We suggest this is not only an abuse of the system but out and out fraud and has created a significant draw on the finances of the Workers' Compensation Board. Why has this government not addressed this serious issue? These same employers have been rewarded for their health and safety practices when in fact many of these employers are not in compliance with the health and safety act and some have not done health and safety training at all.
As a trustee of one of our local unions' benefit plans, we have discussed the government's proposed changes to the Workers' Compensation Act, and let me tell you, we are concerned. Unloading the cost of workplace accidents to sickness and accident plans where there is a union and such plans are in place will result in many plans going under and more and more injured workers will end up on social services in this province.
What happens to the unorganized? They will have nowhere to go but social services, at a cost to the taxpayer.
Bill 15 and the changes proposed for the spring in 1996 will have a devastating effect on injured workers, social services and benefit plans in this province. Locals 175 and 633 strongly oppose the changes introduced in Bill 15.
We thank you for the opportunity to make this presentation.
The Chair: Thank you both. Regrettably, that's actually about 17 minutes, but I appreciate the comments you've brought and I understand you'll be sending us a copy of your presentation.
Ms MacKay: Yes, within the next couple of days.
The Chair: We don't have time, not if we're going to keep on schedule. Thank you very much.
Our third group of presenters --
Mr Christopherson: Point of order, if I can: I realize your ruling under the rules we had already set for ourselves, but we did have a discussion about whether or not 15, if kept that tight, would be sufficient. I'm just raising a concern that on the first day, the second group up, there is no chance for any questions or comments at all. I see a bit of a problem. If you will refer it to the subcommittee -- but I have some concern.
The Chair: Perhaps it should be referred to subcommittee, Mr Christopherson, but you will recall we also discussed that each group is free to make their entire presentation questions and answers or alternatively to make it a presentation to the committee. So to some extent I think it's responsible for us to leave it up to the groups to decide how best to use their 15 minutes.
RETAIL COUNCIL OF CANADA
The Chair: With that, we invite our third group, from the Retail Council of Canada, to come forward. Good afternoon. I remind any latecomers that we are committed to a 15-minute deadline for presentations, and how you choose to make up that time is certainly your choice. If you want to allow for any questions, it will be taken out of the 15 minutes. So welcome to the committee, and if you'd be kind enough to introduce yourselves to the committee and to Hansard, that would be great.
Ms Elizabeth Mills: My name's Elizabeth Mills. I'm the director of government relations for the Retail Council of Canada, and I will allow the two gentlemen with me to introduce themselves.
Mr Brian Cassidy: Hello. My name is Brian Cassidy and I'm the manager of occupational health and safety for the Hudson's Bay Co.
Mr Max Roytenberg: My name is Max Roytenberg. I'm a vice-president with the Canadian Council of Grocery Distributors.
Ms Mills: You have a copy of our remarks and I will not actually go through it in its entirety, but all of our detail is provided there. We'd like to thank you for the opportunity to speak with you this afternoon to express on behalf of the retail community our views on workers' compensation reform. As you may know, the retail sector is a very employment-intensive sector, and as a result, in retailing there's a great deal of interest in workers' compensation.
The retail council has direct members representative in every sector of retailing and together account for over 65% of Canada's retail store volume. Within Ontario, we have a representative volume of sales of $75 billion. In Ontario, we employ 532,000 workers, or one in eight workers in the province. Affiliated with the council are approximately 100 sectoral-specific and regional associations whose members among them account for a substantial additional percentage of retail volume. And, as you've noted, our sister association, the Canadian Council of Grocery Distributors, counts within its membership all the major wholesale and retail food distributors, and they support the views presented within this submission.
The retail council has participated in the initiatives of reform in the WCB in the past two years as a member of the Business Steering Council. The Business Steering Council was established to advise the management representatives of the Premier's Labour-Management Advisory Committee set up by the previous government. The Ontario Federation of Labour represented labour's interest on the PLMAC.
In a recent submission to the minister, the business steering committee made clear again its position on governance, accountability and fiscal responsibility, among other items. The Retail Council of Canada fully supports the views expressed in that submission. I'll be happy to send the committee a copy of that if you would like it.
The business steering committee members have continued their dialogue on structural change since the collapse of PLMAC earlier this year. This committee's opinions on the WCB reforms proposed in Bill 15 proceed organically from the report that committee submitted over two years ago to the Ministry of Labour. The issue of importance remains consistent: In our view, the Ontario WCB system is in crisis, broken financially and structurally. The unfunded liability stands now at a staggering $11.4 billion, which puts the future viability of the WCB in jeopardy and, importantly, threatens its ability to pay benefits to injured workers.
The extent and nature of the problem has been recognized by all parties. It was the previous NDP government which asked the PLMAC to take on WCB reform based on concerns about the same issues. The Liberal Party, both in its election red book and in the WCB review undertaken by Steve Mahoney, called for major structural and operational reforms. By action and by word, there is an all-party consensus that recognizes this system is in crisis.
There has been a tremendous amount of repetitive time and resources spent examining and developing solutions. What is needed is swift action. This government's action to initiate real change at the WCB is therefore welcome news. The Ontario retail industry applauds these first steps taken by the government to frame a rescue for Ontario's WCB system. It is equally important, however, to retailers that Minister Jackson's review leads to a second wave of sweeping change to an organization in real peril.
This submission will focus now on two areas of announced reform: structural reform and economic reform. In essence, we support this two-staged process of reform because it puts in place an essential framework through which substantive change can take place next year.
The new board of directors is a key element, in our view. The retail industry supports the announced move away from the bipartite structure, a structure and model which led to confrontation, paralysis in decision-making and a staggering unfunded liability. These changes in governance are important if we are to move the WCB away from being a strand of the social welfare safety net and restore the true balance of the system which was established in 1915, that in exchange for giving up the right to sue an employer, employees can expect to receive fair compensation. As well, the return of the WCB to a workplace accident insurance organization also demands a corporate model of governance.
The retail council supports the proposed multi-stakeholder board whose responsibility will be the long-term health of the system. We recognize that this means a shift for the business community in giving up its ability to have representatives who will speak to its interests at board meetings, but we believe it will be better for all interested parties if the board is responsible first to the system's long-term viability.
This model also promises to give the WCB meaningful and responsive leadership necessary to make the hard decisions and the professional resources required to turn around a system in crisis. A reduction in the size of the board to nine members also creates a more effective decision-making body.
The retail council also supports the inclusion of a clear policy direction role for the government through the revised memorandum of understanding. As outlined, we support the requirement to have a five-year annual strategic plan, an annual statement of priorities and an annual statement of the board's investment policies and goals. This enhanced role for the government makes clear that this crown corporation is an element of the provincial government which must serve the public's interests as set out by the government.
The establishment of a new requirement for each director to act in a clearly defined, financially responsible and accountable manner helps to restore confidence in the leadership and the administration and direction of the WCB. It will also help to keep the directors focused on their responsibility to correct the financial management problems of the WCB.
The retail council is pleased with the amendments to the purpose clause. In particular, the opening phrase, "The purpose of this act is to accomplish the following in a financially responsible and accountable manner," in our view correctly focuses the activities of the board in securing the long-term financial health of the corporation.
We also fully endorse the six elements of the purpose clause and the order in which they are set out. They represent a clear set of directions and priorities for the board. These are priorities that all participants within the system can support.
The retail council is particularly supportive of the two new objectives within the purpose clause: "To prevent or reduce the occurrence of injuries and occupational diseases at work," and, "To promote health and safety in workplaces." We believe that this integrated approach brings a new focus and role for the WCB in putting efforts into prevention and proactive programs in our workplaces. In this connection, we support the return of the responsibility for health and safety to the WCB.
In the summer of 1995 the retail council began a project to develop health and safety training which we feel will enable us to act on this integrated approach. Designed by health and safety professionals and industry partners, the program will provide certified health and safety training as a tool to improve the conditions in the retail workplace, if approved.
The results of this project and the commitment to train will lead to a retail workforce that is better educated in occupational health and safety and reduced compensation costs. Both health and safety and reduced costs are important to the Ontario retailer in a growing, internationally competitive retail marketplace.
The retail council applauds and fully endorses the direction that the government has set out in governance and accountability, including the extension of the purpose clause to cover the Workers' Compensation Appeals Tribunal.
The retail council makes one final observation on good business practices: Retailers, large and small, have long had to use common sense to reduce revenue leakage, to identify areas of fraud and to implement preventive measures to eliminate these concerns. The retail trade is extremely pleased that this approach is now part of the business processes of the WCB.
Substantive economic reform: The amendments announced on November 1 act only on the first half of this government's commitments. The retail council remains intent on the reforms that will be undertaken by Minister Cam Jackson in the coming months. In some ways, Minister Jackson's review is more substantive than Bill 15. However, we do believe that the fundamental reforms introduced in Bill 15 make it possible for those reforms by Minister Jackson's process to proceed with due diligence and speed.
The next few pages actually outline some of our specific interests in the reform process, but I won't go through them. I'll leave those to you.
In conclusion, Bill 15 is essential to the success of the future of economic and operational changes expected by retailers at the WCB. This organization will remain in financial peril until swift and decisive action is taken by this new board to retire the unfunded liability. The retail council applauds the government's announced amendments but remains intensively focused on the substantive economic reform to come in 1996.
The Chair: Thank you, Ms Mills. We have about five minutes. First we'll go to a government member.
Mr Ted Chudleigh (Halton North): Hello. Given that Ontario has the second-highest assessment levels in Canada, what kind of effect does this have on your members' ability to invest and create jobs in Ontario, given that most of the competitive areas have access to border states?
Ms Mills: Actually, we have a representative from the Hudson's Bay Co here. Perhaps he would like to speak to that.
Mr Cassidy: I think the increasing amount of assessment that employers are required to pay definitely has an impact on the fiscal health of an organization, and as we become more internationally competitive, this comes more and more into play.
I would like to reiterate my support for Elizabeth Mills's comments pertaining to the financial accountability that the board members will now have to take. I think it's very important that future policy decisions will have to be looked at with regard to the impact they're going to have on the unfunded liability at the board. There's definitely a correlation there between the rates that employers are paying and the policy decisions that the board makes, particularly in 1995, where these days the work-relatedness of a disability increasingly becomes tenuous in nature.
Mr Chudleigh: We hear that Wal-Mart's coming into Ontario big-time.
Mr Cassidy: Oh, they're here.
Mr Chudleigh: There are rumours in the financial press that K mart isn't doing as well as it used to be doing or it's not getting a satisfactory return to its corporate offices. Given the picture that these retailers require a large amount of employees in their companies, what kind of effect does that have when they're deciding on which side of the border to locate their retail operations?
Ms Mills: I don't think it's a question of locating here or there. In fact, the penetration that we will see of American-style retail formats is not going to change. We have adopted several, whether it's big-box or power-shopping centres, but what does become clear is that when you're making a business decision, the tax elements, like a WCB assessment rate, make it that much more difficult for a company that is here and paying rates to compete with an introduced new format.
Small business generally finds it more difficult to compete against a large new format that's just opened up in the parking lot down the road. It would be a competitive advantage for them to at least be able to sustain a more reasonable level of assessment rates. Given that we have the second-highest ones in the country, it really speaks to the fact that while we have a volume of employees here, we simply aren't operating a system that reflects the true cost.
Mr Roytenberg: Mr Chudleigh, if I could just respond, we had a cross-border shopping study very recently, and the area that you identified was one of those pinpointed by the consultants as an area where we have a disadvantage, relative to our competition across the border, in areas of overhead and of costs related to these kinds of services and taxes. The tax area and the overhead area were two that were pinpointed as placing Canadian distributors in a particularly difficult position relative to their competition across the border.
Mr Duncan: Ms Mills, you favourably referenced our red book in here, and it's so seldom that happens that I felt I had to ask a question. Two issues: One, could you define for me how you see the new purpose section differing from the old purpose section and what substantive weight you see with that? Secondly, since you did reference our Back to the Future document, would you agree that an amendment stipulating equal representation on the part of labour and management, as well as who the other stakeholders are, would be supportable to your organization?
Ms Mills: I'll answer the first part first. In fact, the indication that we made both in referring to your Liberal red book and the Back to the Future document, from our point of view, simply means that the Liberal Party, as well as the other two parties around this table, has already itself initiated a dialogue about a system that is in crisis.
The patterns of reform that have been indicated in your Back to the Future document -- I wouldn't necessarily proceed along all lines. I think that what Steve Mahoney had intended for that document to do was to highlight a series of recommendations that he felt would put the system a further step ahead. I wouldn't support an amendment to have equal representation of I believe you said employees and --
Mr Duncan: The bill calls for labour and management reps in a multistakeholder model.
Ms Mills: Right.
Mr Duncan: What we said, and you referenced our document in yours, is that we would have equal labour and management reps among a broader multistakeholder model. Would you support that kind of an inclusion?
Ms Mills: No.
Mr Duncan: Secondly, could you define for me how the purpose act now differs from the existing purpose act and what weight in law you see it having?
Ms Mills: I think in fact for us it is the addition of prevention and health and safety within the purpose statement, and the way it's now been highlighted. For us, what we anticipate in addition to support that, though, is the agency moving within the WCB. Structurally, then, you're actually integrating two systems which currently are duplicated, and we feel that there ought to be a relationship with the performance that industries are able to achieve. Their accident rates should also be related to how they are proceeding with health and safety training.
Mr Duncan: If I can, though, your document addressed financial accountability in the purpose clause.
Ms Mills: Yes.
Mr Duncan: The question relates to financial accountability, and I just wondered how you see the new clause differing from the old legislation. The subsections on health and safety aren't addressed in your document. In your document you address financial accountability, and I wondered how you see it differently, just basically rearranging the purpose clause.
Ms Mills: I don't think that the last purpose clause in fact gave the correct amount of emphasis to a financially responsible and accountable system. There has been a reorientation of the purpose clause which makes it much more clear that the entire system and the WCAT are to be held financially and fiscally responsible and that the directors of the board themselves will have to act in that way.
The Chair: I'll have to cut you off at that point.
Ms Shelley Martel (Sudbury East): I'm very curious. I wasn't too surprised by most of the contents of what you had, but there was one comment and one point of view that I find quite bizarre, and that is with respect to moving away from the bipartite model, which you said was one that led to confrontation, paralysis in decision-making etc.
The reason I was curious is that I note your friend from Hudson's Bay who is here also had a colleague, a Mr David Crisp, vice-president of human resources from Hudson's Bay Co, who sat as one of the management representatives on the bipartite board. The reason I am curious about this is that I wonder why you would move from that model and I wonder if you can answer for me whether or not you thought Mr Crisp was qualified to be selected from his peers in business to participate. Secondly, if it was such a problem, why did he continue to participate right up to the point that he and all the other members were fired?
Ms Mills: I'll speak to that. I think the appointment of David Crisp to the board was a very wise decision. Within the economic makeup of Ontario, retailing is a significant portion of the economy. It only makes sense that under the previous bipartite structure you would have a representative model that would have included many different varieties. I think also Mr Crisp is well qualified as a VP of human resources of a large corporation that represents a large number of employees in a sector that has a low-risk level. That that perspective would be under that structure under the previous government would be an important element to add. I don't think Mr Crisp's qualifications were ever questioned.
The participation of the board of directors was a long-standing, frustrating and at times almost antagonistic process for both sides. I think the design of a bipartite structure, as has been highlighted in other agency assessments, like the agency one, has been well documented, particularly the way in which it was run in Ontario, as being very fruitless in terms of being able to move forward.
If Mr Crisp was fired, I don't think that Mr Crisp would view that as necessarily a negative comment on his abilities.
Ms Martel: Oh, I think he was quite capable, along with every other board member who was there. The experience that you relate with respect to the board of directors' experience is quite different from a labour member who we just heard from previously, Ms MacKay, who said that a number of important changes that were very positive took place and that her experience, as quoted by the minister, one of confrontation etc, was just not the case.
I guess why I raise the question again is, if it was such a problem, if the bipartite group was such a problem, why did the management members in particular continue to participate in this particular mechanism? This is a very important board of directors. I would think everyone who was appointed was qualified. If it was such a problem, if there was such confrontation, why did they continue to participate up till the point that the minister fired them all?
Ms Mills: To use your own words, I think that because it's such an important system and a vital part of any business decision, it's not always productive to stomp out of any committee meeting or process and not participate. Once inside the tent, to continue the dialogue is often more productive, at least in terms of providing information to the rest of the employer community, and certainly that was the well-intended role of a lot of the board of directors who did find it frustrating, and probably, had they had a personal choice, might have left earlier.
The Chair: Thank you very much for your presentations and your answers. I appreciate your taking the time to come and see us today.
BUILDING TRADES WCB SERVICES
The Chair: We'll now hear from our next group, the Building Trades WCB Services. Good afternoon. You have 15 minutes at your disposal.
Ms Julie Nielsen: Good afternoon. My name is Julie Nielsen. I am a WCB specialist with the Building Trades WCB Services. WCB services is a project of the Toronto-Central Ontario Building and Construction Trades Council, which has over 30 affiliates within its jurisdiction. Ten of those affiliates participate with this project, and the concept of the project was created because injured workers within the construction trades needed assistance with their compensation claims.
I represent a variety of construction trades from bricklayers to painters, drywallers, boiler-makers, asbestos workers, electricians and iron workers. All these trades have several commonalities. Their members work in fields that are of heavy physical, demanding labour. Work opportunities may be cyclical in nature, of short duration, with several different employers during any given year and at temporary work sites and conditions that differ from many other sectors. All of these factors make construction a unique industry and one that requires specific regulations to address the needs of its injured workers.
It is interesting to note that the Occupational Health and Safety Act has regulations specific to construction, yet if health and safety practices fail within that workplace, there are no sector-specific regulations or guidelines to address the needs of injured workers within this unique industry.
The government introduced Bill 15 on November 1 with two ideas in mind: to change the governance and the accountability structure of the board and, secondly, to put the system back on a sound financial footing to protect the future needs of injured workers.
It is our position that, again, the government is creating a crisis. The WCB is not on the brink of bankruptcy. The unfunded liability is not a debt. The unfunded liability represents the present cost of future payments owed to injured workers in this province by their employers for their present claims. The WCB, again I repeat, 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 financing of a compensation system to attack workers.
Subsections 103(4) to (9) address the merit systems that are currently practised by the Workers' Compensation Board. The concept of surcharges and refunds had been minimally used since the early 1950s, but we have seen an increase in the amount of surcharges and refunds since the early 1980s. These increases are a result of the NEER and the CAD-7 programs. NEER stands for the new experimental experience rating program, which is applicable to all sectors, and CAD-7 means the council amendments to draft 7, which is specific to construction. The CAD-7 program was established on a trial basis in 1984, and unfortunately it is still with us.
These programs have encouraged employers to engage in undesirable practices in an attempt to hide compensation claims, to minimize severity of accidents and contest established claims. Practices that we encounter are inappropriate reporting of accidents, incorrect reportings of earnings basis, improper reporting of lost-time claims as no-lost-time claims by leaving the injured worker on full payroll doing meaningless work or no work at all in some cases, and utilizing the appeal system to obstruct claims.
These programs have enticed employers to hire expensive consultants on a contract basis to monitor and contest claims involving benefits and services, in that they get a percentage of the savings realized by the construction company. Within the CAD-7 program, construction employers are encouraged to offer vocational rehabilitation programs, like modified work, in order to reduce their accident costs and collect credits or rebates. In essence there is an abuse of the light-duty modified work program. Employers are also encouraged to report no-lost-times accidents, as this too reduces their accident frequency history and again provides them with rebates.
Bill 15, as you know, was introduced on November 1, and it is the opinion of the council that Bill 15 be withdrawn. It is not in the best interests of either injured workers or the employers in this province.
The fraud section that has been raised is not clear. We need definitions as to what "change in circumstances" is. It's a situation today that the system that we have isn't perfect, but I believe it's a system worth keeping. With the presentations that we're seeing in the first stage of changes, it does not bode well, and I speak both for the workers I represent and the employers who are on the other side of the table when I'm going to hearings.
The whole question of refunds and rebates is one which pits the worker community against the employer community. Employers have a responsibility mandated by the Occupational Health and Safety Act. If they fail to provide what is required of them by the act, then it is our opinion that they should be assessed penalties and have their assessment rates increased to reflect their true accident history. But are those assessments being collected? It is our position that they're not.
I hear too much about the fraud committed by injured workers in this province, and I suggest to you today that there is more fraud being committed by the employers of this province than by the workers. Some of that is on the part of the compensation board itself. Their fraud squad is very keen on looking at injured workers, but I can tell you, in preparing for a hearing I had a corporate search done on a numbered construction company. I found 16 different companies related to that numbered company, and basically what they had done was opened doors and closed doors to escape their assessment costs. That is not being checked upon.
As I said earlier, I do believe the system that we have is worthwhile keeping, but when I see a government coming in with the plans that I'm seeing within Bill 15, I have to come in front of you and tell you to withdraw it.
Given the short notice for this appearance and due to my heavy schedule of hearings and caseload work, the brief that is being worked on is not prepared; it will be ready in the morning. It's being printed at this time and it will be sent to the committee. Thank you for the opportunity to address you.
The Chair: Thank you very much. The first question will go to the government side. Mr Baird.
Mr Baird: I want to thank you for your time in appearing before us today. It's appreciated.
I have two questions. The first discusses the issue on whether or not the unfunded liability at the board, currently at $11.4 billion, is a problem. Certainly there seems to be broad opinion, far from unanimous but broad opinion, that there is a crisis at the WCB, financially speaking, but everyone I've spoken to and talked with admits that real action must be taken on the $11.4-billion unfunded liability. I guess I'd like first to get your thoughts on it. Does your union believe this is a problem or it isn't a problem?
Ms Nielsen: The unfunded liability is of concern if it continues to grow. But if you were able to recapture the funds that are owed to the board, then the unfunded liability would not be the problem it is today.
If you go back on the annual report from 1994, in 1985 the unfunded liability was at $5 billion, I believe; it's now at $11 billion. If you take a look at the true dollar figure and the dollar value in 1985, I'm not too sure there's that much of a difference between what the board had as an unfunded liability in 1985, as opposed to what it is in 1994-95. But again, I think it's something that we have to look at inside the board in collecting the money that is being owed to the board.
Mr Baird: Obviously there'd be a big disagreement on that issue, but I certainly respect your opinion.
With respect, you brought up the issue of fraud. This bill of course contains both measures to go after fraud with $100,000 fines to employers who fail to register; as an addition, on the other side of the coin, to employees who fail to register. The issue of the definition of "material change in circumstances" could come up. What would your definition of that be and what are your thoughts on the employer fraud measures in the bill?
Ms Nielsen: I have no opinion on "material change in circumstances." It's the government that brought it in and I think the government should be defining it for us. As far as the second part of your question, yes, fraud is identified, but again I'm only going to go on past experience, that even though there are in the present act as it stands penalties and assessments against employers, it's not being collected. So if it's not been collected in 1990 or 1994, then what's to say with the new amendments, with Bill 15, that we're going to see it collected in 1995?
Mr Baird: Your administration of the act is very important and I'll certainly take that --
The Chair: Any questions from the opposition?
Mr Duncan: I want to come back to this question of the unfunded liability, because quite frankly, before I came to this place, I bought into the argument that it was a huge problem. A number of groups have made this argument for me. I always viewed the unfunded liability and the size of the unfunded liability as representative of the board's ability to pay workers in the future and, as such, should be taken very seriously. I would like to hear you expound a little bit more on that whole issue, because I'm very intrigued by this line of thinking that while it's a problem, we ought not to blow it out of proportion. I'd just like to hear you say a bit more about that.
Ms Nielsen: I agree with you that we've heard many stories. Working in the compensation system, I'm more on the hands-on as far as caseload goes. When we came into Bill 165 and we heard this great horror story about what the unfunded liability was, we had it explained to us in the sense --
Mr Duncan: Bill 165, that was last year?
Ms Nielsen: That was in January. What we had explained to us was that it's money the employers are to be paying into. Now, it's going to grow if they're not paying into it. If I have an injured worker who was injured back in 1987 and he's collecting a pension and that company's gone out of business, then how is that money to pay that worker going to be there?
Mr Duncan: Yes, I understand the principle of it. Again, as I say, you're not the first group that has expressed this notion that while it's a problem, it's not a crisis. I'm wrestling with that legitimately myself. But I view it, frankly, as a measure of the board's ability to compensate injured workers in the future and therefore should be viewed very seriously.
Ms Nielsen: I'm not taking away from the seriousness of it; I'm saying if the board had the ability and did their job in the present state, the way they're there, to collect the money from the employers that is owed to the board.
Mr Duncan: The other issue that's been brought up in this light is the notion that we've been digging into the accident fund, I guess, to the tune of $400 million a year -- correct me if I'm wrong -- the last three years, four years, to subsidize current operations. Again, I'm troubled by that in terms of what it means. If you reference the annual report, this is the first year we saw an actual decline in the accident fund; it was down 1.7%, at least the return on the accident fund was. Would you agree that we do need to take steps, at least some steps, to address the unfunded liability?
Ms Nielsen: Most definitely, and one of the areas that I think should be looked at very seriously is that the assessments the employers have been paying have been going down. They've been going down on a yearly basis, and if it continues to go down and the number of accidents continues to go up or that payments are still going out to injured workers, then the amount of money that's required becomes higher, and if the assessment rates are coming down it's not going to meet --
Mr Duncan: Now, employers argue -- just one?
The Chair: No, sorry. We're going to have to proceed. Mr Christopherson promised a very short one.
Mr Christopherson: Thank you, Mr Chair, I appreciate the opportunity. The government's been talking a lot about fiscal accountability and fiscal responsibility. Both the government and the Liberals have advocated a 5% cut in the assessment rate. Given your expert knowledge of the WCB and the unfunded liability, can I ask you how much sense you think that makes in terms of fiscal accountability and responsibility to be advocating a 5% cut in assessment rates, given the circumstances that we have?
Ms Nielsen: Absolutely none, none whatsoever. They're talking about cutting benefits to the workers. My understanding was that they had frozen the assessment rates. But to cut assessment rates is absolutely ludicrous in the eyes of injured workers and to the representatives out here.
The Chair: Thank you, Ms Nielsen. I appreciate your coming to make your presentation. We'll look forward to receiving your written comments.
INDUSTRIAL ACCIDENT VICTIMS GROUP OF ONTARIO
The Chair: Our next group up: the Industrial Accident Victims Group of Ontario. If they could come forward and introduce themselves to the committee and Hansard.
Just a reminder again, if you were late coming, we have a 15-minute time limit, including questions, so please govern yourself accordingly. Thank you for joining us today.
Ms Airissa Gemma: Can we take half a second for some water?
The Chair: Certainly.
Ms Gemma: First of all, I'd like to thank you for the opportunity to hear us out. My name is Airissa Gemma and I work at the Industrial Accident Victims Group of Ontario, which is a legal aid clinic that's funded by the legal aid plan. Our clinic represents injured workers who can't afford the services of a lawyer. We're talking about financial crisis -- you should come to our clinic for a couple of weeks and you'll see financial crisis there.
I'd like to start by introducing the people from my clinic who will be speaking on some of the issues in Bill 15. With me is Sebastian Spano, community legal worker; Alberto Lalli, also community legal worker; and David Wilken, who is a student at law.
First of all, I'd just like to start off by mentioning that we are here but it took us a lot of scrambling to get here. We were notified very late Thursday and we haven't got a prepared submission or brief written. Hopefully we'll be prepared. We're a clinic of eight people and so it wasn't possible to prepare for a written submission.
We would like to remind the members here that the process doesn't give enough time for everybody who is interested in making submissions to the committee to have the opportunity to do so, and also we didn't get enough notice, and organizations that are outside of Toronto -- I'm not aware of, but I don't believe have gotten notice. So I would kindly remind the members that we understand there's going to be a new bill in the spring, according to the Minister of Labour, and we would like the opportunity to remind them that we'd like enough notice so that everybody who's interested in making submissions will do so. Thank you very much.
I would like to turn it over to Alberto Lalli.
Mr Alberto Lalli: I will be referring to the bill itself. What can be said is that unfortunately it offers nothing to injured workers but more hardship. We know that this is just a preamble. As Airissa mentioned, the real bill is still being cooked in secrecy and behind closed doors. We have no idea. We can smell the cooking stuff and it's not to our liking, unfortunately.
Even in this bill, what seems to be positive at first glance, it turned out to be a mirage. For example, workers have now the possibility to get reimbursed for money which has been wrongfully deducted from their wages to pay for the workers' compensation assessment. But, and this is a big but, they will receive this money only if the employer is successfully prosecuted for a provincial offence and the board is able to collect the court order restitution moneys from the delinquent employer. If these conditions, both of them, are not met, the board will simply keep the stolen money and the workers are out of luck.
Unfortunately, this is the general tenor of the bill. Workers are supposed to pay up front for whatever it is that they owe money -- overpayments or whatever -- while the employers will pay when the board gets around to enforcing the statutory provisions regarding penalties and employers' obligation. And we who have been working in the area of workers' compensation helping injured workers know what the attitude of the board has been in regard to our recovering moneys, whether for penalties or whatever, from the employer.
The Minister of Labour has mentioned in Hansard that this bill will bring hope and optimism, and we also believe that and agree wholeheartedly. It's going to bring hope and optimism to employers. Employees have to be given the control of the board of directors and workers will be faced with the criminalization of the compensation system. Although it's always been possible to prosecute fraud artists under the Criminal Code, this bill will put workers now facing an unfamiliar system in danger of prosecution for failing to disclose a material change in circumstances. This is a term so vague that not even lawyers can be able to agree on what it really means, and I realize that was one of the questions here by one of the members. And it's true, there is no definition and nobody knows what "material change of circumstances" will mean.
Likewise, workers, their family representatives, health care providers, anybody who will call to the board on behalf of the worker, will be subject to a police interrogation regarding the statement with some bureaucrats at the board and he could be accused of misleading or giving some false information. We don't know how they, the bureaucrats at the board, are going to determine that. It could be said that this bill, the people who brought this bill, the government, will dismiss these scenarios, that they are unrealistic and will never happen. We don't think so. We have been dealing with the board for quite some time. It will be certainly no easier to secure a conviction under these provisions than under the fraud provisions of the Criminal Code.
So the question is, why no offences are created in the act? Why give employers and bureaucrats even more tools to threaten and intimidate honest injured workers, their families or friends in the absence of any evidence of significant worker fraud? When I say that, I don't mention that because we are representing injured workers; I'm just basing on the annual report, 1994, from the board that is so full of figures and graphs and numbers in every section, but with the section dealing with fraud there is nothing. On the contrary, the only thing that it says is they won an award for innovation in the public sector. So once again, we're seeing that the fraud crisis as one of the reasons why the compensation system is going bankrupt is bogus. It's a big lie. And we believe that this will be used, once again, against injured workers.
We see that always, too often, injured workers who spend years of hard work and loyalty to companies all of a sudden suffer an accident and they're then accused of being liars by their employers and by the board. Now they can also be prosecuted by this situation.
People will say that it is also mentioned in the bill about employers' fraud. While it's true it's there, I would like to remind people of the words by our Premier, Mike Harris, which he mentioned. There are two kinds of fraud: one that is irresponsible and should be prosecuted to the extent of the law; and the other one that is reasonable or understandable. He mentioned, on the one hand, the so-called welfare fraud as being the one that we should step on and eliminate; and the other one, in regard to employers cheating on taxes, considering that they are being taxed to death, it's understandable that they cheat.
If we transfer that to the situation with compensation, we think that will also happen, because everybody's mentioning that the assessments are high, the second highest in Canada. So it would be understandable that some cheating will go on, or it would be reasonable.
So why is this fraud crisis created? We think that, besides being the government's idea, creating crisis to put forward policies and legislation, this is just a part of a larger strategy pursued by extreme elements of the employment community. By creating the artificial financial crisis, it will justify the destruction of the workers' compensation system and the reduction of injured workers to charity cases. This artificial crisis has been propagated in a number of ways. Mr Spano will deal with those ways.
Mr Sebastian Spano: I'd like to talk a little bit about the so-called invented funding crisis, financial crisis in workers' compensation. I know you've heard this from other groups, and I think you should hear it time and time again, because that's all it is. It's simply a myth; it's a crisis that's being invented.
What exactly is the unfunded liability? Is it a debt? Well, it's not a debt. You've heard this before. The WCB has never been in debt, it's never borrowed a penny. Have you ever heard of a WCB debenture bond? There aren't any.
So what exactly does the WCB have? The WCB has, as of March 31, 1994, $6.8 billion in assets. That's almost $7 billion. What it represents really is $7 billion that is not in the hands of the employers to generate jobs and to generate income and profits for themselves. It's a pool of capital that the board is investing, in fact, all over the world; it is not investing it in the jobs. Certainly it is not in the hands of Ontario businesses to be invested in their companies.
So what is the unfunded liability? Well, I think the proper way to characterize it -- there are a number of ways to characterize it, and one of them is that it's simply an accounting of how much employers owe workers of Ontario. It's also an accounting of how much employers are keeping in their businesses and not paying up front.
Employers have a choice. When a worker gets hurt and there are damages and he's injured, there's going to be loss of income in the future, there are damages for loss of use of their body, they have a choice: They can pay it all up front or they can pay it a little bit at a time. They can pay a little bit this year to meet this year's costs. They'll pay a little bit next year to meet next year's costs and so forth. It's a sensible system, it's an economical system and it works best. To characterize it as a debt is really irresponsible.
There are other mythical debts that are being created here. I read in Hansard Cam Jackson, the minister responsible for the WCB, indicating that the board in fact did not have an operating surplus of $130 million last year; that it was sham accounting by the WCB. Well, I'm sorry, I think either he needs a lesson in arithmetic or he should check the annual report. In fact, there was a $130-million surplus. They did not draw into the investment fund. He simply didn't count the amount from investments. He simply said yes, there was so much from employers, but he didn't count the amount that the board earned on its investments, and that's how the surplus was created. But this is typical.
Now, is it true that the employer assessments are skyrocketing? Not at all. Actual assessment rates, once the experience rating off balance has been taken into account, are at their lowest level in 10 years, and I should mention how much employers received as bonuses through experience ratings: $359 million. This is net. This is after the surcharges were taken out. That's $359 million that leaked out of the system. For what? Simply as a reward for employers to obey the laws of the province. I'd like to be rewarded for legally conducting my affairs.
There's also the problem of the accounting of the unfunded liability. It's based on really unreasonable actuarial assumptions. Most important is that the inflation rate will never rise above 4%. This is of course absurd. Certainly we can expect that over a number of years into the future it will exceed 4%, and whenever it does, any difference in that will mean a huge windfall for the fund. So this is another example of cooking the books, if you will.
If there is a crisis at all, the crisis is that the board is not enforcing what it should be enforcing; namely, employers who don't pay assessments, employers who don't register, employers who falsify or underreport their assessable payroll. This is the crisis in compensation, not the worker benefits.
Thank you very much.
The Chair: Thank you. I think if truth be known, unless Mr O'Toole can pose his question in about 30 seconds --
Mr O'Toole: Just a quick question. How do you explain that? If I may, through the Chair, how do you explain the Provincial Auditor's report that makes a very important point about this unfunded liability? I would expect as a true auditor and an objective auditor that his statement of the real future cost of existing claims is real, and expanding at an alarming rate. How do you explain that?
Mr Spano: My colleague Dave Wilken will answer that.
Mr David Wilken: I'm not sure which report you're exactly referring to.
Mr O'Toole: It's the Provincial Auditor's report.
Mr Wilken: From what year?
Mr O'Toole: For 1995. Just published a couple of weeks ago.
Mr Wilken: I'm not familiar with the details of that report.
Mr O'Toole: It's been the subject of the last two auditor's reports. Not only that, I take that as being an objective, sound financial statement that the province should have some concern with, and most of your argument or presentation today has indicated -- it's liberally dismissed this as not a real number.
Mr Wilken: There are several concerns with respect to this. The last one that Sebastian was speaking about, the actuarial assumptions, I don't know whether or not the auditor went behind those in making those determinations, because while it should be said that a 4% annual inflation rate is a good historical benchmark, using that to calculate the amount of the unfunded liability ignores the fact of the cap and the partial indexing formula. If you didn't have that cap there, that would be a fine way of calculating the unfunded liability. But given the cap, in years when inflation goes over six and two thirds per cent, there will be an incredible windfall to the accident fund and that windfall will continue to grow over subsequent years as workers fall farther behind in inflation indexing.
This is a problem that, as far as I know, has not been addressed anywhere. The only costing that was given to us by the Ministry of Labour on the savings from de-indexing used this assumption of 4% inflation each and every year as the maximum, so that that cap would never come into play.
The Chair: Thank you, and with that, I'm afraid we're out of time.
Just to comment or respond to Ms Gemma's comments at the start of your presentation, we certainly do appreciate those who were able to find the time to come out the first day. We know it was on short notice. If you do have an opportunity to prepare a written brief, however, we have till December 6 to assimilate that.
I should note that only two speakers after you we have a group that's come all the way from Ottawa, so we will have many deputations, I'm sure, that will be from outside Toronto, but thank you again for this group taking the time to come and see us today.
CANADIAN AUTO WORKERS
The Chair: Our next group up is the Canadian Auto Workers, national office. Good afternoon. If you'd be kind enough to introduce yourselves to the committee. We have 15 minutes to be divided as you see fit between presentation and questions.
Ms Cathy Walker: Thank you very much. My name is Cathy Walker. I'm the national health and safety director of the Canadian Auto Workers. With me is my colleague Nick De Carlo, who works in the health and safety department with me, who has prepared the brief that we'll present to you this evening.
We want to begin our presentation by strongly protesting the manner in which these hearings have been organized. First of all, there's been little notice. We were informed only last week that these hearings were taking place. Only on Thursday of last week were we informed of the hearing schedule. As it stands now, the committee has scheduled only three days of hearings on this most important bill, all of which are to take place in Toronto. This makes it almost impossible for a true cross-section of unions, injured workers, advocates and community organizations to make presentations to this committee. Most will not be able to travel to Toronto or to make presentations. Let me emphasize that our CAW local unions in communities throughout Ontario have their own points of view, their own experiences with the WCB, and must be heard.
It's apparent that there is no real intention to consult with working people in Ontario, those who are most affected by this legislation. This is not democracy. Moreover, the government of Ontario, which has a responsibility to protect the interests of the people of Ontario, has consistently acted in an undemocratic manner. From the moment of taking office in June until convening the Legislature at the end of September, the government cut spending and reduced social programs in this province like never before, without opportunity for a response from or a debate with the opposition. This is not in the democratic tradition.
Upon convening the Legislature, Bill 7 was forced through without debate or public hearings. This was an unprecedented disruption of the democratic process. Now we're having public hearings on Bill 15 that allow for only token public input. Moreover, Bill 15 is, in its very content, in full disrespect of the laws of Ontario and the rights of its citizens.
Previous to Bill 15, the Occupational Health and Safety Act and the Workers' Compensation Act defined the structure and the makeup of the board of the Workplace Health and Safety Agency and of the Workers' Compensation Board. Without changing the law, and in direct contradiction to it, the government of Ontario fired both boards. Now, after the fact, Bill 15 proposes to outlaw any lawsuit or civil proceedings against the government for these violations of the law. You have them in quote there.
Never have we seen in Ontario a government that has acted so unilaterally, with so little regard for the traditions of parliamentary democracy in this province. This is not what the people of Ontario voted for.
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. Profits have been soaring in private industry. But health and safety enforcement has been deteriorating, and health and safety for workers has declined. According to statistics from the Ontario Ministry of Labour, critical accidents have increased almost 80% from 1991-92 to 1994-95. Complaints are up 37% in the same time period. Workplace inspections are down 55%. Orders issued have decreased almost 50% in the same time period.
The situation is already unacceptable, yet by reducing health and safety inspection and limiting the right of workers to refuse unsafe work, a measure already under active consideration by your government, the government of Ontario will be acting to reduce enforcement of safety standards, worker training in health and safety, and the workers' ability to protect themselves. By reducing the right to compensation, the government of Ontario will drastically reduce the protection for workers injured on the job.
This action by government, based on the CSR agenda, will increase the number of workplace injuries. Government legislation will remove basic rights to safety and security at work: security for the workers themselves and for their families. This is not what the people of Ontario voted for.
The introduction of Bill 15 and the announcement of plans to reduce the budget, staff and resources of the Ministry of Labour inspectorate signify the fundamental transformation of health and safety enforcement in Ontario. Health and safety enforcement is necessary to protect the safety, health and livelihood of Ontario workers, but we are going from a recognition of the need for the government to enforce health and safety standards in the workplace to a system of voluntary compliance. This has never worked and it will never work. The truth is that employers are, as a whole, pushing to make greater profits at lower costs in wages and benefits to workers. This has always meant increased injuries in the workplace. The statistics above show that is exactly what is happening today. Enforcement of health and safety in the workplace has been deteriorating and injuries are rising.
The Workers' Compensation Board recognized 233 work-related deaths in 1994, nearly one for every working day of the year. The reality is a figure much higher. Several years ago it was estimated in a study by Dr Analee Yassi, commissioned by the former Conservative government, that 6,000 workers die every year in Ontario from occupational diseases. Nothing indicates that this number has been reduced.
Bill 15 enshrines in law the dismissal of the Workplace Health and Safety Agency. Workers will no longer be represented at any level in the application of health and safety in Ontario. The board will be replaced by a single executive director. Democracy with input from the workers and their representatives is eliminated in favour of the old boys' club.
Health and safety training for workers has been severely reduced and even eliminated in non-union workplaces as a result of the curtailment of certification training. Funding has been reduced for the Workers' Health and Safety Centre, while funding for employer groups has gone untouched. It is clear that the government is intent on removing workers from a position of influencing health and safety while employers are gaining more freedom to disregard safety violations.
Continuing on the CSR path will cost workers' lives. We have no choice but to resist. We submit and indeed demand that Bill 15 be withdrawn, that funding be maintained for the Workers' Health and Safety Centre, that the health and safety inspectorate and resources allocated to it be expanded, that the enforcement of health and safety laws be strengthened.
The basic concept of workers' compensation has always been that a worker injured at work in the service of his or her employer is entitled to compensation for the injury and the right to return to gainful employment. The responsibility rests with the employer to pay the cost of compensation. In return, workers gave up the right to sue the employer. These are the fundamentals of the Workers' Compensation Act, first proclaimed in 1914 under a Conservative government. The act was based on a report by Chief Justice of Ontario Sir William Ralph Meredith.
Meredith rejected the concept of contributory premiums paid by workers and/or financing from government revenues. Why should this be so? Because the injured worker has given his or her health in the service of the employer for the benefit of the employer. Because the employer is ultimately in control of the safety of the workplace and therefore responsible for injuries that occur.
The crux of Bill 15 and of the planned changes to workers' compensation announced by the Minister of Labour is to reverse this concept and replace it with a vision of workers' compensation as a form of insurance. No longer will workers be able to expect full employer-funded compensation for their work-related injuries. Instead, they'll have little protection.
The Ontario government is laying the basis for this by emphasizing the unfunded liability of the board of $11.4 billion. They say that the workers' compensation system is "on the brink of financial crisis." They imply that workers are responsible for its financial shortfalls due to fraud. The government is manufacturing a crisis in order to influence public opinion to justify dismantling the compensation system as we know it, in order to justify instituting draconian measures against workers.
The unfortunate truth is that the Ontario government is deceiving the people of Ontario. The workers' compensation system is not in crisis. Last year, the board made a declared surplus of $130 million after paying $359 million in rebates to employers. Far from being broke, the board has over $6 billion in investments.
The bottom line, however, is that the unfunded liability is not a debt or a deficit: it is a cost to employers to cover workplace injuries, a cost that is rising because of the increase in injuries. It represents the cost the employers will have to pay in premiums for current and future injuries. Rather than addressing this cost by moving to reduce workplace accidents and toxic exposures, the Harris CSR agenda chooses to reduce workers' security and protection from accidents while allowing employers more freedom to work unsafely.
Is that what the Harris government means by more democracy in the workplace? This is a cruel and vicious ruse on the people of Ontario designed purely to increase profits to business. Why the drive to increase profits? The issue here is not the competitiveness of Ontario businesses. In 1994, there was an $8.8-billion investment in the manufacturing sector of Ontario, the most for any single year in Ontario's history. Executive salaries are up 18% over last year. The average wage of a chief executive was $632,000 last year.
No, the real issue here is greed, pure and simple. Business wants more profits and the government is going to give them to it. How? By reducing employer costs for health and safety and workers' compensation. Thanks to the high level of unemployment, there are plenty of unemployed to replace workers injured on the job. The Harris agenda is a sham.
What are the changes to workers' compensation, both promised and being considered, by Minister Witmer? You know them very well, and we are opposed to these proposed changes. All of these proposals would take place while premiums for employers would be reduced by 5%. Employers' costs would be further reduced by cutting off thousands of workers from benefits.
Bill 15 sets the stage for the fundamental restructuring of workers' compensation in Ontario. It removes the input of workers' representatives, formerly half the board, from the board's system. No longer will workers have a say in the compensation of injured workers.
Instead, government will add representatives of the private insurance companies, both at the board and management levels. This will happen despite the fact that private insurance companies are not stakeholders. They're not covered by workers' compensation in Ontario. They don't pay any premiums to the board. Employees who work for private insurance companies are not covered. The real agenda here is to eliminate the influence of workers, the real stakeholders in workers' compensation.
Ultimately, there is the real threat of the introduction of a law to privatize workers' compensation in Ontario, and we are completely opposed to this.
Bill 15 criminalizes workers. While companies are defrauding the workers' compensation system -- more than 55,000 employers owe the board $430 million in outstanding assessments and penalties -- the government is targeting workers. Among other things, a worker who fails to inform the board of a "material change" in connection with his or her entitlement is guilty of an offence. We are opposed to this proposed change.The definition of "offence" is wide open to interpretation. It's completely unclear what such a material change will mean.
Finally, the new purpose clause makes "financial accountability," contained in the first sentence of the clause, the overriding principle of the act rather than full compensation for injuries. This is entirely unnecessary.
Eliminating worker input, criminalizing workers, manufacturing a financial crisis and importing private insurance companies into the WCB system are the key pieces to the new direction in workers' compensation under the Harris agenda. These changes, combined with the cutbacks outlined above, make for a compensation system that penalizes workers for being injured. These changes, like others, attack the most vulnerable in our society.
We demand that workers' compensation remain an employer-funded, publicly administered system and that it be designed to fully compensate workers for injuries caused by or related to the workplace, or to provide a return to work at the pre-injury job or its equivalent.
We demand that costs of compensation be reduced by preventing injuries, not by penalizing workers.
Finally, we demand that the Harris government live up to its responsibilities to the workers of Ontario to ensure safety and security in the workplace.
The Chair: Thank you both. Your timing was excellent. Actually, you went about 16 minutes, but we appreciate the presentation and your taking the time to come and see us on short notice.
FEDERAL EMPLOYERS TRANSPORTATION AND COMMUNICATIONS ORGANIZATION
The Chair: If we can proceed to our next group, the Federal Employers Transportation and Communications Organization, we are grateful you've made it all the way down from Ottawa to see us this afternoon.
The Chair: Let's see if we can get as much in as possible. If anything, we'll grant a couple of minutes' consideration. We should just note that there is going to be a vote in the House at 6 o'clock and all committee work must cease for the time of the vote, but hopefully it's only a five-minute bell. So with your indulgence, if we could get at least partway, if you don't see that as a major dislocation, we'd like to get as much of your presentation in and then we can reconvene as soon as the vote's over. Could you introduce yourself to the committee and for Hansard.
Dr Roger Rickwood: Good afternoon. I'm Dr Roger Rickwood. I'm chair of the Federal Employers Transportation and Communications Organization, and with me is Madeleine Meilleur, the manager of WCB liaison with Canada Post Corp. We're both based in Ottawa.
Good afternoon, Chairman and members of the committee. The federally regulated transportation organization, FETCO, is pleased to appear before you this afternoon to support the Bill 15 amendments to the Workers' Compensation Act and Occupational Health and Safety Act.
FETCO represents 19 major transportation and communication firms across Canada; that is, Canadian Pacific, Canadian National, Bell Canada, Canadian Airlines International, the CBC, the Canadian Trucking Association and Canada Post Corp.
FETCO has established a standing committee on workers' compensation matters to monitor legislative and adjudicative developments and to make constructive representations to responsible decision-makers such as yourselves. FETCO firms are mainly members of schedule 2, but some of our subsidiaries are located in schedule 1 in Ontario. Some of our members are treated as if they were members of schedule 2 but in fact fall under the provisions of the federal Government Employees Compensation Act, GECA, whereby Labour Canada contracts with the WCBs for adjudication and administration of claims by injured workers in the public service and crown corporations. Canada Post Corp and the CBC fall into that category.
FETCO has been a strong and continuous supporter of WCB reform in Ontario, as the current Ontario system is not financially sustainable and is fractured by conflicting lines of accountability. Past failure to institute strong corrective measures has compromised Ontario industries' ability to compete in the North American marketplace. We understand that many of these corrective measures will be canvassed in the phase 2 review to be undertaken by the Honourable Cam Jackson, minister responsible for workers' compensation reform. These measures are the appeal, adjudication, restructuring, ban on chronic stress, benefit adjustments and assessment rate reductions. FETCO will make appropriate submissions on these matters at that time. Some of the necessary corrective measures, however, have been incorporated by the Minister of Labour, the Honourable Elizabeth Witmer, into Bill 15, and we would like to speak to them today.
With regard to the purpose clause, the list of the purposes is the same as in Bill 165, passed by the previous government. However, there are two new objectives: "To prevent or reduce the occurrence of injuries and occupational diseases at work," and, "To promote health and safety in workplaces." Although FETCO firms fall under federal health and safety jurisdiction, FETCO supports the broadening of the act to include these matters, as the current provincial jurisdiction needs to be more legislatively integrated if it is to be effective.
FETCO also submits that the purpose clause applies equally to the Workers' Compensation Appeals Tribunal, WCAT, as to the Workers' Compensation Board. If this is not the intention of the Legislature, FETCO submits that it should be the case. The requirement that the WCB board of directors act in a financially responsible and accountable manner is now found in subsection 58(2) of the act by virtue of section 7 of Bill 15. We believe this kind of financially accountable statement should also apply to WCAT, and we're a bit concerned that, by making an inclusion and by repealing a section, people understand that this clearly does apply to WCAT.
The governance structure: Because of the financial crisis at the WCB and the breakdown of the bipartisan governing process under Bill 165, FETCO supports the emergency governance amendments of Bill 15, allowing a WCB president appointed by the Lieutenant Governor to exercise the powers and duties of the WCB board, chair and president until a multi-stakeholder board of directors is in place. FETCO recognizes the complexity of finding just the right person to discharge these duties and hopes the government can recruit a qualified person, whether he or she, before the end of 1995. In the meantime, FETCO will fully cooperate with the interim WCB president, Mr Ken Copeland.
FETCO supports the composition of the new WCB board of directors as set out in Bill 15 at subsections 6(2) and 9(1) and (2). The new board would consist of a chair, president and three to seven other members who are representative of workers, employers and others, as the Lieutenant Governor considers appropriate. FETCO does not have strong views on just what professional backgrounds the others should have, except that they should be persons qualified with good governance skills and experience, with a strong sense of the public interest and with no conflicts of interest. As for the employer members, FETCO submits that at least one member be either from or have significant knowledge of the schedule 2 deposit account community. We don't want all the members just to come from or have knowledge of schedule 1.
FETCO recognizes that the positions of partisan vice-chairs are no longer serving a useful purpose, but it is not certain that a functional vice-chair to oversee the complex area of occupational disease policy development is not in order. This is, however, a matter that should be more properly reviewed by Minister Jackson, and we will take up the matter there.
FETCO notes that, by the new Bill 15 configuration of the WCB board of directors, the chair of the WCAT will no longer be a non-voting member. The presence of the WCAT chair on the WCB board probably served a useful purpose in the mid-1980s in facilitating coordination between the newly organized corporate board and the nascent tribunal, but this presence has come to be seen by the employer community as an impediment to full review of controversial WCAT decisions by the board. Accordingly, FETCO sees deletion of the WCAT chair as a step towards a more searching WCB review of WCAT decisions. The future of WCAT as an independent agency external to the WCB will be canvassed by Minister Jackson, and FETCO will be able to give him the benefit of our experience with more streamlined appeal procedures in other provincial jurisdictions such as New Brunswick and Alberta.
With respect to policy directions from the minister, the statutory power of a minister to give direction to a WCB is a very rare institutional arrangement in Canada, with its long tradition of corporate autonomy. Our one experience with such a device has been in Saskatchewan, where the Minister of Labour may give direction on a new matter not previously determined by the WCB. The previous government imported this device into Ontario as a temporary measure. The present government plans to continue it, presumably as an emergency power to facilitate a fundamental re-engineering of the WCB in the face of unwarranted resistance or bureaucratic impasse. FETCO has confidence in the Minister of Labour to use this power sparingly, but submits the provision should continue to be time-limited by a predetermined expiry date, eg, two years. A newly revitalized board of directors, committed to financial sustainability and management culture change, as contemplated by the minister, will make the use of this provision, however, largely theoretical.
I will turn to my colleague Madeleine Meilleur to handle the rest of the presentation.
Ms Madeleine Meilleur: Value-for-money audit, section 16 of Bill 15: FETCO endorses the proposed amendment in Bill 15 to require the WCB board of directors to review at least one board program annually for its cost, efficiency and effectiveness under the direction of the Provincial Auditor. FETCO agrees that the Minister of Labour should have the power to choose which program gets the value-for-money audit. FETCO acknowledges that the WCB has done value-for-money audits before, but applauds the government's determination to make it a regular and consistent practice.
Dr Rickwood: Bill 15 requires the WCB and the minister to enter into a memorandum of understanding every five years, in terms directed by the minister. The MOU will require a strategic plan for the next five years, an annual statement setting out proposed priorities for administering the act and regulations, and an annual statement of investment policies and goals. FETCO supports these MOU requirements as a means to impose strict, businesslike discipline on the board's management and to prevent internal negotiations dragging on for years between MOL officials and various factions within the board.
Ms Meilleur: Fraud prevention: FETCO strongly supports the anti-fraud provisions contained in Bill 15, which the Minister of Labour hopes will counteract current losses estimated at over $150 million a year. FETCO has promoted such provisions for years but the reception, prior to this government's initiative, was at best lukewarm, if not arctic cold, at the ministry and the board.
FETCO believes the compulsory employer registration provision within 10 days will be strictly enforced and the situation of registered employers having to cover unregistered employers will be quickly eliminated.
FETCO supports the requirement for workers or other benefits recipients to notify the board of material changes in circumstances in connection with his or her entitlement to benefits within 10 days of the material change.
Overpayment and collection of debts: FETCO supports the new provisions to recover benefit overpayments and collection of debts. These provisions bring WCB practice in line with normal business overpayment and collection practices.
Offences: FETCO notes Bill 15 introduces penalties for those who get money or benefits from the WCB by deliberately providing false and misleading information and makes it an offence for an employer not to register with the board. Abusers could thus face jail terms and stiff fines under these new rules. This would be a change from the present practice under the Criminal Code, where enforcement was infrequent because the system was lengthy, expensive and convictions rare. FETCO believes the new enforcement measures are necessary to serve as a deterrent to abuse, although resorting to them will likely be rare, due to the better management and monitoring of claims files and outreach communications.
FETCO thanks you for listening to our comments on Bill 15, and we hope we can answer any questions you may have about the presentation.
The Chair: Extraordinarily good timing, as the bells start. With the indulgence of the committee, if it meets with everyone's approval, I would like to suggest we adjourn for the vote and return to allow --
The Chair: Oh, there is no vote. Okay, so much for that. We can proceed with questions now. It was a false alarm. This time it would be Mr Duncan, the opposition parties.
Mr Duncan: In terms of the governance structure, you've presented a case around your support of what the government hopes to achieve. Would you support amendments that further refine the bill to read that the number of representatives from labour and management in their totality be equal inside of the multi-stakeholder model?
Dr Rickwood: I think the government has crafted a very useful number of people here on the board of directors. I could see there being two employers and two employee representatives on the board of directors, but with three other representatives. What this will force the --
Mr Duncan: Well, it's between three and seven.
Dr Rickwood: There's a seven-person board and two extra members; it could be nine members in total. That's my understanding of it.
Mr Duncan: That's correct, so between three and seven appointments over and above the chairman and the president.
Dr Rickwood: We see the full seven being appointed: two employees, two employers, plus three other members.
Mr Duncan: So then you would support an amendment saying two and two?
Dr Rickwood: With the balance being controlled by these three other members.
Mr Duncan: But a multi-stakeholder model envisions that. All I'm saying is that under the present circumstance, you could have a situation where you could appoint one employee representative and six employer representatives and still be acting within the confines of the act. What I am suggesting is, would you agree with a refinement to that that would say the number of employee and employer representatives must be equal?
Dr Rickwood: I think two is adequate to accomplish the purposes of the act. There's a question of balance here. You have to have at least two employers or employees to be present, because it could be a situation where none would be at the table, and yet they're subject to the impact of regulations and decisions being made. So there has to be provision so that one can always be there.
The next thing is, I think that by having only four and three others, it means the employers and the worker members have got to cooperate together to make sure that things are done right. They're being compelled to negotiate and work together so that the power doesn't fall into the hands of the other independent public interest members.
Mr Duncan: One other question, if I might: Over the years, various employer groups, and it depends again on the government that's in power, but employer groups in the past have had a real concern with the minister having a direct ability to influence the day-to-day workings of the WCB. I'm really curious about the business community's present-day support for this, in light of the business community's concerns in the past about government interference with the operations of the board.
Dr Rickwood: I think the concern in the past was hidden interference. We didn't know when it was happening but we did know it was happening. The structure, by having the minister give direction to the board, makes it an open-ended process so that we're aware that this direction is being offered.
We recognize that this is an unusual procedure, and we only know of one other act in the country that allows that, which is in Saskatchewan, but we think the impasse, the difficulties that we've got into in Ontario, needs some means to kickstart the process and get things moving along. Therefore we're prepared to have the minister perform this function at this time, and we have confidence in the minister to act in a credible manner.
The Chair: With that, I'm concerned that we get our last deputation in today. I appreciate very much the specifics you've brought to us, Doctor, and Madame Meilleur. Thank you for taking the time from your council duties to come down to us today. We appreciate the comments you've brought.
Dr Rickwood: We appreciate the opportunity to be down here out of the snow and into the beautiful rainy weather of Toronto.
Ms Meilleur: And back in the storm.
The Chair: Hope the roads were well cleared.
ONTARIO PUBLIC SERVICE EMPLOYEES UNION
The Chair: Our last presenters today are the Ontario Public Service Employees Union. We certainly apologize for the slight delay in having you come forward and I appreciate the committee's indulgence.
Ms Diana Clarke: And it's just raining now.
We welcome the opportunity to address the committee, frankly on pretty short notice, so we have provided you with a brief of basically the summary of what we feel is our position around Bill 15.
Earlier this fall, the Minister of Labour requested by letter submissions from employers and workers and other interested groups around certain issues. It's with great interest to us that the board only chose to address the dismantling of the bipartite board of directors and the financial viability areas. We're making the assumption that a lot of these bigger issues -- and we believe these are huge issues -- should have been left with the Workers' Compensation Secretariat as now established to look at these issues.
From OPSEU's perspective, the bill does very little in improving service delivery in the workers' compensation system for workplace parties and other service providers. In lieu of the current work of the Workers' Compensation Secretariat, it would appear to be unnecessary and cumbersome legislation in a time when the whole system is being studied.
It is our intention to focus on four significant areas proposed in Bill 15: the financial viability; governance; offences and penalties; and overpayments.
With respect to financial viability, the government has expressed an interest in improving the financial viability of the board and proposed several sections of the bill to address the question. However, we believe that the financial concerns at the board have rested with the chronic underassessment set each year to employers since 1984 and the lack of assessment collections from employers. There are significant financial concerns about income collection from employers and reallocation of revenues to employers.
Some significant figures, and I'm sure you've heard some of them earlier, are: In 1994, the board paid out $280 million more in unplanned rebates back to employers than it imposed in penalties. There were 55,000 employers owing about $400 million in unpaid assessments and penalties, and as many as 20,000 employers have not legally registered their businesses with the board and thus are not contributing to the accident fund at all.
Average assessments for employers are continuing to decline, and yet the board in 1994 showed a $130-million operating surplus, for the first time in 14 years. This improvement is well before what was predicted in the board's original 20-year financial plan, put out in 1985. Frankly, the board's in a better position than what was predicted.
The board's funding ratio has improved to 37.4% in 1994 from 31.8% in 1985. Compared to private insurance schemes, that's a pretty healthy margin, and in the next few years the ratio is expected to really increase on a steady basis.
What we want to note here is it means that if you put all your moneys in reserve to pay for everything in future, there's not as much money left to use for business purposes. The reserve is there and you've still got $6 billion and we're showing an operating surplus. The board's in a better position than it's ever been before.
The current legislation gives the board significant power to collect outstanding employers' debts to the system, yet the board has not focused its energy on these collections. The government has declared that it's open for business. However, good business practices dictate that any business meet its legal requirements. If bad employers are not paying their share, deal with it appropriately and responsibly.
As to other sections of the bill with respect to financial viability, the proposed amendments have little impact.
Section 1: Well, since as far as we're concerned it's already dictated to the board of directors to show responsibility to do with financial viability, it doesn't seem appropriate to put it in the purpose clause as well. The purpose clause in the current act does nothing to change, improve, address further, financial accountability. Basically, any purpose clause is to address the purpose of the legislation and not the method for implementing it or administering it.
Section 13, with respect to the memorandum of understanding clause, will require the board to enter into a new agreement with the Minister of Labour every five years and shall contain "only such terms as may be" dictated "by the minister." The board is responsible for the day-to-day operations of the Workers' Compensation Board. The Workers' Compensation Act sets out the memorandum of understanding for the board to administer the system and benefits and services entitlement. By changing it, you're establishing unprecedented political control over a government agency.
Section 16, to do with the value-for-money audits amendment, we believe is unnecessary. The board has been conducting regular value-for-money audits on several different programs for years, with emphasis particularly on new programming. Why is it necessary to place in the act the need to conduct one audit of one program a year as determined by the government each year? The selection of one program audit a year, as ordered by the government, appears to be due to political pressure and not necessarily a true value. If the board of directors is responsible for the financial and administrative activities of the Workers' Compensation Board, we would submit that the board be allowed to do its job, working with workplace parties and in consultation with government.
In fact, we would probably submit that the secretariat is doing the largest value-for-money audit right now, which is the entire program. So why would you need to only have one a year? You might have more. Why build it into legislation?
Governance: Financially, as well as from an administrative point of view, the board was improving under the joint governance model. Strong emphasis has been put on early return-to-work efforts, better and workable policy development, financial review and preventive occupational health and safety initiatives.
This government did announce that it had established a WCB secretariat to review the entire system by next year. In the meantime, the bipartite board of directors was to continue to perform its duties with its responsibility and accountability. Instead of waiting for the outcome of the WCB secretariat's report, which should have included the review of the merits of the current governance model, it chose to fire the existing board before the passage of this bill and replace it with an interim board structure again.
As noted under the financial viability section, the board has continued to improve financially in spite of collection problems under the interim and bipartite board of directors in the past three years.
What the workers' compensation system required was stability during this time of rapid board changes under Bill 165 and external review, and not an interim board structure with appointments of people not experienced in the workers' compensation system.
With respect to offences and penalties, we just believe that section 27 will not work. It's an administrative nightmare and redirects the efforts of the board staff from administering the benefits and services that the board offers, to becoming assessment and benefit cops. This system is already burdened with a very complicated workers' compensation legislation.
All workers, employers, representatives and service providers will be subject to possible prosecutions for each offence, up to $25,000 and possibly up to six months in jail, if they know and do not inform the board of a possible material change in circumstances and/or knowingly make a false or misleading statement or representation which might affect benefits within 10 days.
Frankly, what is a material change?
Secondly, it's very difficult to prove that the individual or corporation charged knowingly made the statements. Beyond evidence concerns, this is a very high legal test and thus the board would have to prove such a high legal standard. It would be easier simply to proceed to a fraud charge under the existing Criminal Code as it stands today. The board's current policy on fraud is sufficient to cover the extreme circumstances of fraud situations.
How does anyone inform the board of a material change in circumstances? Frequently the board is difficult to reach, and even if you fax something to the board today, it would take 10 days before it got to someone to look at it, rather than to acknowledge that they even received it. There are many people, both employers and workers, who call and it takes three weeks for them to contact someone at the board to even acknowledge the phone call.
Perhaps the most significant negative feature of this section is that it makes the system even more litigious. Every representative, corporation and service provider will have to take out liability insurance to protect themselves from possible court actions. Workplace parties will be very wary of dealing with board officials and each other. This only further burdens communication problems and it will slow down the adjudication and return-to-work efforts.
The act already contains a number of offence sections which have never been fully used because they are not efficient. They were unenforceable and, if attempted to be enforced, only put a heavy burden on the provincial courts, which can't handle what they've got now.
The board also has expended further costs in administering this system, and yet the return of investment is very poor. It's our position that basically you're going to put a lot more staff in to spend a lot more time policing the system. If you look at the types of costs we're looking at, for instance, the total amount of temporary total benefits that were paid to workers last year, the weekly amount, was $217 million, somewhere around there in the annual report, and yet employers got more in rebates than the workers ever received in weekly benefits last year. All this effort, and for what?
We would submit that the better use of the board's resources would be to direct its efforts to the collection of outstanding employers' penalties and assessments and improving service delivery to workplace parties.
Thus, we recommend the deletion of that section in the bill.
With respect to overpayments, the board already cuts off workers' benefits immediately if it believes the worker owes an overpayment and will take action to collect first from the worker's other WCB entitlements if the worker does not dispute the overpayment creation. Collection of outstanding debts follows any other government agency or civil law system, as it stands now. What this section does introduce is an unnecessary and cumbersome clause and condition to an overpayment process that is working now. By adding this section, it would only make it more cumbersome.
So we recommend the deletion of sections 3 and 14.
In conclusion, we believe that the introduction of any bill was too premature and should have waited for the outcome of the WCB secretariat's recommendations. We are greatly concerned at the way the government is proceeding on this bill.
It is our position that in light of the cancellation of the Royal Commission on Workers' Compensation and the mandate of the WCB secretariat, the bill should be withdrawn at this time.
Our workers want real input into any proposed changes to the workers' compensation system and want the right to public hearings before the WCB secretariat. The government has kept the secretariat's intent and work behind closed doors. Injured workers want the right to real input to a system that was set up to allow full benefits and services to injured workers in exchange for giving up their litigation rights.
The Chair: Thank you, Ms Clarke. The first question goes to the third party.
Mr Christopherson: Thank you for your presentation. I'd like to focus on your section dealing with financial viability. Both employee and employer representatives here today have spent a great deal of time talking about this, and I've asked other groups the same question.
The government, at the same time that it's making financial viability a cornerstone of its rhetoric, is also proposing a 5% cut in the assessment rates that employers pay. For some of us, we have some difficulty finding the common sense in that. Can I ask what your thoughts are as to the appropriateness of a 5% cut in assessment rates. If you're not satisfied that this is where they ought to be looking, what would you make the priority in terms of financial viability?
Ms Clarke: With respect to the 5% cut in assessment rates, if you look at how assessment rates are determined, you look at what costs are going to have to be put out during that year, including your legislated costs, which is the Office of the Worker Advisor, WCAT, all those different costs, you look at what it costs to administer the act and actually the financial amount of money that you have to pay out to administer the act, everything that you have to pay out. That's how the assessment rates are normally set, and then they just take a look across the board and they figure out according to class how much you're supposed to pay.
If you cut at 5% -- if you set your assessment rates on what you have to pay out, why would you cut them 5%? Then you're only putting yourself at 5% more debt. I don't understand that logic --
Mr Christopherson: We don't either.
Ms Clarke: -- if you really, really look at the assessment. I'm going to say too that many employers in this province received a 300% increase, and 5% is not going to satisfy those employers. Those were employers who often had very, very high accident rates and they were the ones who have been pushing for this decrease in amount.
In fact our position is that what you do is, you pay for what the debt is. Now, the debt is going down and the cutbacks that took place with respect to Bill 165 and other initiatives are going to bring it down a lot more. What you're finding is that every year from now on, the board will make more and more money, and it already has $6 billion sitting there if it needs to call on it. Why would you cut 5%? I don't think that's financially viable and I don't think it's financially responsible. So my priority isn't that; my priority would be to endorse good health and safety, to endorse good return-to-work practices for both parties and ask them to participate.
Thirdly, for the people who should have paid the bill all the way along, because the bad employers are the one that hold it up for the good employers, they should pay the debt, like they should have all the way along.
The Chair: Do you have a supplementary?
Mr Christopherson: Yes. Thank you for the opportunity. Also a lot of discussion around the governance model, and we've heard -- I wish I'd had a chance to ask one of the other presenters a question because they talked about it -- the new legislation will force employers and employee representatives to work together and to find compromise and to work their way through problems. I would have thought that was the best argument there was for a bipartite board. Perhaps you can give us your views on the potential effectiveness of a bipartite board and also what it means for workers when they have their numbers reduced to what Bill 15 proposes.
Ms Clarke: What I'm surprised at, frankly, is that the board has been bipartite and operating as a bipartite board for the last three years, and the return-to-work policies in particular that came out and the efforts around Bill 165 to get workers back to work and to work out compromises at the workplaces are happening right now. A lot of the financial improvement packages were agreed to by both sides and were seen as necessary to stabilize what was going on out there.
I don't understand the need to remove the bipartite board when it actually was doing what it was supposed to do, and had done for three years. I think people should realize that in fact it was functioning and it was working in consultation with the government in trying to move the board further and forward, because a lot of what the board is about is policy setting, and that's where it happens. It happens on how you get people back to work fast so the costs go down for everybody and that people are working as fast as they can. Only 5% of workers who claim comp are on comp a year later. In fact, 80% or more are off workers' compensation within three months of a claim, and that's all costs. To me, it was doing its job.
Mrs Barbara Fisher (Bruce): I do, first of all, agree with many of the comments you've made in your presentation today in that you have taken into consideration some of the same concerns and weaknesses within the system that we have also been sharing. However, some of our intent is obviously to move ahead to help with those areas the weaknesses exist in.
One of the things that you do address in here relates to offences and penalties. Our concern is that there continues to be, from whatever perspective you might share, either an offence because the employer is not paying the premiums or an offence by a worker who's maybe not claiming as should be done. How would you do it?
Ms Clarke: How would I do it?
Mrs Fisher: Yes.
Ms Clarke: I've been practising workers' compensation for 17 years, so this isn't new to me. I think the problem with offences as drafted out now in terms of employers is that the idea was that we were supposed to have a no-litigation system. It was supposed to be, you paid and then benefits were paid, and there was a third group, a board, that administrated it fairly. That was the way it was supposed to be done.
If you're going to ask employers who are already not paying, or violating the act as it is, the board could simply collect off them now, and should have a long time ago. Now we're also hitting them for up to $25,000 each time. We can't even get them to pay the debts that they owe. I hate to say this, but this is a really unnecessary additional burden into the system that isn't needed to be there.
For service providers, I find it surprising that doctors and all the medical care -- they rely heavily on the board, so why would they suddenly try and rip the board off? I hate to say this, but the board will cut you off, and it doesn't pay for the services until after the services are completed. So in a sense, the offences don't really work.
As to workers, the board has a very aggressive overpayment policy now. It basically says that if they declare an overpayment, you have to challenge the merit of that overpayment if you disagree with it. If not, the board immediately assumes to collect money where it can from the existing benefits that you have. Secondly, if they can't, they go like any other collection agency and say, "What can we do to work out a reasonable overpayment that doesn't put the person into bankruptcy?" They do that now, and if there really were a large amount, they would go to the courts, sue and pick it up like anyone else. The offences only add another layer to what's there already. To me, I wouldn't add anything, because all you've got to do is implement what you have. They do it very well and they've been very aggressive in the last year.
Mrs Fisher: I guess the question would be then, it seems to us like that's been in place, bipartite's been in place; it's not recovering what you're saying. The increase in accidents -- the NDP was encouraging us to keep the Workplace Health and Safety Agency. What happens is, numbers go up. We're trying to correct the system. So I'm not saying that we're too far apart in terms of critiquing the system in where it's not working. I'm suggesting, however, the proposals we have before us are a new approach on how we can make it happen. Would you comment on that?
Ms Clarke: I don't think it would make a difference. I think a lot of times the board has been quite frankly intimidated by employers' lobbies and very intimidated by the process in the sense that if you went after an employer, the employer would cry foul and the board would back off. I've seen it again and again and again where they don't pay. A lot of employers just simply shut down and open up under another number. So my problem is, how do you deal with that situation? It's not going to be one that you can easily answer by saying that this is going to do it, because this isn't going to do it; what does is getting aggressive about collecting what you've got. If you could get that, we'd be well into correcting the system that we now have. Unfortunately, in the last 10 years people have been really soft on it to try and deal with it.
The Chair: Thank you, Ms Clarke. I appreciate your patience and the committee's patience. Thank you for your indulgence on this, our first day of hearings. If there's nothing else for the committee, we stand adjourned until 3:30, December 4.
The committee adjourned at 1823.