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Associations, Government

Industry Perspectives: Make Ontario truly ‘open for business’

Patrick McManus
Industry Perspectives: Make Ontario truly ‘open for business’

By all indications and based on recent performance, in 2018 the Workplace Safety and Insurance Board (WSIB) will accomplish a monumental task that has been decades in-the-making: it will officially eliminate its unfunded liability (UFL).

Eliminating this debt, which peaked over the last decade at approximately $15 billion, will come almost a decade earlier than what was required by legislation in 2012.

The UFL has plagued the WSIB for more than three decades.

In 1984, with a debt of $2.7 billion, the board designed a 30-year funding strategy with the objective of eliminating the UFL by 2014.

In an attempt to accomplish this goal, the WSIB (then the Workers’ Compensation Board) introduced a rolling surcharge on all employer premium rates. While the initial surcharge was set at 33 per cent of the overall premium, over the years it has increased to account for up to 50 per cent of the premium rate charged to some employer rate groups (i.e. construction).

Despite introducing this significant employer surcharge, the UFL steadily grew until the provincial auditor general was compelled to make a public announcement in 2009 questioning the WSIB’s ability to meet its financial obligations.

Following this warning came a genuine attempt by the WSIB to eliminate the UFL, as new measures were launched to address this runaway debt.

More specifically, under the steady guidance of successive board chairs Steve Mahoney and Elizabeth Whitmer, in tandem with presidents David Marshall and Tom Teahen, the administration managed to successfully steer the organization to greater financial security.

As a result, mid-way through 2018, the WSIB is expected to reach 100 per cent funding for the first time in more than a generation.

While the WSIB leadership deserves credit for this accomplishment, such success would not have been possible without the co-operation of employers in the province.

For 34 years, Ontario employers have been carrying artificially inflated premium rates and have received regular rate increases over much of the last 10 years, despite a steadily declining lost-time injury rate.

As a result, the WSIB was able to collect billions of dollars in excess revenue every year since 2010 and ultimately payoff its UFL.

This approach did not come without consequences. When compared to other jurisdictions, employers in Ontario pay disproportionately high premium rates, which has driven up the overall costs of operating a business in the province and made it less attractive for investment.

Nevertheless, the current generation of employers absorbed this burden for the betterment of the long-term business environment in the province.

So, now that the target has been reached, it’s time for the WSIB to completely remove the debt surcharge that Ontario employers have been paying since 1984.

With full funding achieved, it is no longer necessary to over-tax employers. It is a sign of good faith that the WSIB recognizes and appreciates the role employers in the province have played in this important endeavour.

This adjustment will also demonstrate the board’s confidence in their reformed administrative processes and its ability to insulate the WSIB from further debt.

Removing this surcharge from the 2019 premium rates is not only essential from a fairness perspective, but also to help ensure Ontario can resume its position as an attractive destination for business operations.

A UFL-free premium rate equates to $2 billion a year being returned to Ontario employers, and would place the province amongst the lowest average insurance rates in the country.

Considering the eradication of the UFL, the inflated rates employers have been paying for decades, and the significant benefit that removing the surcharge will have on the province, such reduction is indisputable.

All of this can be accomplished without compromising the WSIB’s financial position.

Why wouldn’t we do this?

Patrick McManus is the director of government relations and communications with the Ontario Sewer and Watermain Construction Association and the Greater Toronto Sewer and Watermain Contractors’ Association.

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