ISSUE:
The Workplace Safety and Insurance Board (WSIB) has become a vast provincial government bureaucracy that is quickly becoming a danger to the Ontario government, taxpayers, businesses and insured workers. In fact, over the course of the last 25 years, the WSIB have had significant challenges fulfilling its obligations.
BACKGROUND:
In the 2009-2010 Annual Report of the Auditor General of Ontario, the Workplace Safety and Insurance Board (WSIB) was identified as being severely underfunded. As a result of WSIB’s current financial position, it will be unable to reach its longstanding target of full funding by 2014.
As of December 31, 2011, the WSIB unfunded liability (UFL) topped $12.1 billion. To help put the size of the unfunded liability into perspective, if it were added to the projected 2011-12 provincial deficit, then the total would balloon from $15.3 billion to $27.4 billion – an increase of 44%.
The Auditor General (AG) has traced the Board’s UFL to a political “balancing act” on the part of government. The AG pointed out that the Board’s internal governance function is constrained by the government’s political agenda, which has caused benefits to steadily outstrip revenues over time. As a result, the AG concluded that significant structural changes are required to ensure that the Board adheres to principles of good governance.
As a trust, the WSIB has been overlooked when the auditor general prepares his report, but given the unique economic situation and recent public management challenges with the WSIB, it is time to review its role, structure and overall success.
There are three ways to address the liability: raise premiums, reduce benefits, or increase investment income. At the same time, it is obvious that increasing premiums or reducing benefits will continue to prove difficult since experience has shown the inherent political, social and economic sensitivity of implementing changes to either.
Similarly, the third option – increasing investment income – remains a sensitive issue. In the wake of the 2008 market meltdown, the WSIB lost 15.5% of its investments.
What is clear is that the continued practice of shifting money from investments toward paying ongoing benefits is unsustainable. In fact, Section 1 of the Workplace Safety & Insurance Act states that the WSIB is to administer the system “in a financially responsible and accountable manner.” It is time the Ontario government directly addressed the problem by passing legislative changes to reduce benefits and employer premiums and refocus the system on prevention and an early return to work.
It is important to promote safe workplaces in Ontario and broad insurance coverage for workplace-related injuries and illnesses. However, a legislated monopoly for the WSIB on workplace insurance is not the only best answer for enhancing workplace safety and protecting worker’s income. The Ontario Chamber of Commerce supports competition in the marketplace and the ability for employers to choose from a range of options to achieve these results. If the WSIB model truly represents the best coverage at the lowest price, employers will choose WSIB coverage over others. Competition, flexibility and choice are the hallmarks of a good system.
RECOMMENDATIONS:
The Ontario Chamber of Commerce urges the Government of Ontario to:
1. Approve legislation that prescribes the reduction of benefits and employer premiums and compels the Workplace Safety and Insurance Board (WSIB) to focus on prevention and worker rehabilitation;
2. Ensure that the Workplace Safety and Insurance Board (WSIB) is included in all subsequent annual auditor general reports;
3. Immediately initiate a study to determine the benefits and consequences associated with privatizing the Workplace Safety and Insurance Board (WSIB);
4. Withdraw the current law that will require all construction-related businesses to pay for Workplace Safety and Insurance Board (WSIB) coverage beginning January 1, 2013, and reinstate the current policy of allowing employers the option to participate where there is equal or better coverage, to allow for competition in the marketplace; and
5. Ensure the Workplace and Insurance Board adopts established principles of good governance to achieve an internal culture of financial sustainability.
OCC COMMENTS:
The resolution was amended following discussion with the Productivity, Innovation and Human Capital Committee. The Productivity, Innovation and Human Capital Committee supports the resolution.
NOTE
If approved, this resolution will replace the 2010 resolution, “Fixing the WSIB.”