Fifth Session, 41st Parliament

(2020) REPORT OF PROCEEDINGS

(HANSARD)

COMMITTEE OF THE WHOLE

Virtual Meeting

Friday, July 31, 2020

Morning Meeting

Issue No. 1

The HTML transcript is provided for informational purposes only.

The PDF transcript remains the official digital version.

CONTENTS

Committee of the Whole

Bill 23 — Workers Compensation Amendment Act, 2020

(continued)

J. Martin

Hon. H. Bains

M. Lee

FRIDAY, JULY 31, 2020

The committee met at 9:32 a.m.

[S. Chandra Herbert in the chair.]

Committee of the Whole

BILL 23 — WORKERS COMPENSATION

AMENDMENT ACT, 2020

(continued)

Section 16 approved.

section 17.

J. Martin: Chair, good morning to yourself and to everybody else joining us

at this particular point in time.

section 17, the return of the dual-pension system, has the

minister calculated the costs of increasing WCB assessments?

[9:35 a.m.]

Hon. H. Bains: Good morning to everyone.

Member, overall, Bill 23 does not have a significant cost that

will materially affect the accident fund. While the proposed amendment

will create some incremental increase in the annual cost, we anticipate

that WorkSafeBC will remain in a position to keep the average premium

base rates stable.

To specifically answer your question, there will be a one-time

impact of this particular proposal. That is estimated to be a $50

million increased liability on the accident fund. That is one time. Then

the annual cost impact has been estimated to be $4.5 million. As I said,

WorkSafeBC expects that they will be able to manage this over the

smoothing of the rate, and it will not impact the employer’s

premium.

J. Martin: Given the times that we’re in, with the pandemic, what

considerations were there to postpone adding any additional costs

whatsoever to the employer?

Hon. H. Bains: Yes, of course we looked at the times we are going through — also

considering that it has been 20 years since any increase to the benefit

to workers has taken place.

There were three reports that were commissioned by the board and

by the Attorney General. One was the Parr report, which was a final

report combining all those reports and doing the

consultation.

[9:40 a.m.]

Yes, his report came to us before COVID. The package that he

recommended, after consultation, was much, much richer. It would have

cost a lot more money to the accident fund and potentially would have

raised the premium for the employers. That’s why, considering the times

that we’re going through, we took very a measured approach, a very

modest package that we are moving with.

This package itself has a modest cost to it. But I’m advised, and

my expectation is, that for the next couple of years, at least, the

premiums for the employers will not rise as a result of this package. So

I think it’s a right approach. It’s a measured approach. It’s a modest

package that we are moving forward.

The workers have been complaining. I’m sure every member that is

watching right now or is present has seen those complaints and has heard

those complaints from those workers about WorkSafeBC. They have told us

that the system isn’t fair for them, the system isn’t working for them

and how the system is letting them down. Many stories about suicide

because they were so frustrated with the system. All those stories are

there.

That’s why we took a package that is very, very modest. Also, the

expectation is that it will not raise the premiums for the employers for

at least a couple of years.

J. Martin: Is it the intention of your ministry to re-address assessments

beyond two years?

Hon. H. Bains: Member, the ministry does not do the assessment when it comes to

determining the premium for the employers. It’s the WCB board that will

determine that. They do it on an annual basis, and they look at a number

of different factors.

As you well know, there is a healthy surplus, a position that

they’ve been in for the last number of years for reasons of a good

economy and a lot more premiums coming in as a result of that, and a

good return on their investments. They were in good shape, and they

continue to be in good shape. So they will determine the premiums. And

as a result, in the past years, the premiums have been subsidized

because of a good, healthy surplus sitting in the accident

fund.

You probably know that the cost of claims is $1.68 per hundred

payroll. But the employers, this year, are paying $1.55. My expectation

is that they’ll continue to pay $1.55 for a couple of years and that

this package will not cause the rise in those premiums.

J. Martin: The minister has said that the costs of changes will be smoothed

out over the next two years. I gather that the terminology is intended

to be reassuring. Can the minister operationalize that for us? What does

“smoothed out” actually mean?

[9:45 a.m.]

Hon. H. Bains: Member, it’s a quite complicated and complex system that the board

uses to, what they call, smooth rates. It’s averaged over five years to

avoid the shock of rate increases year over year. But it’s a

five-year.

I can also tell you that WorkSafe’s long-term planning, including

the setting of assessment rates, is based on a smoothed approach to

financial situations and projections, meaning that significant

investment gains or losses are generally taken into account over a

period of years rather than having the immediate impact that the

fair-value financial statements might suggest. This is demonstrated in

the publication of WorkSafeBC smoothed and funded level in the

organization’s annual report.

That’s the way it is worked out. My expectation is that, as a part

of this package, and them using smoothed average five years, this

package will not impact the premium for employers at least for a couple

of years — this year, next year or the year 2022.

J. Martin: What impact, though, might this have on the accident

fund?

Hon. H. Bains: I think we canvassed this before, but here it is.

There’s a $27 million one-time cost to the accident fund and about

$14 million on an ongoing annual basis. Again, through smoothing out of

the rates and the healthy position of the accident fund, my expectation

is, and that’s what the board’s expectation is, that they will be able

to maintain the current rates that the employer enjoys, and $1.55 will

continue.

J. Martin: Given the extraordinary times we’re in right now, why was there

not consideration to revisit the five-year formula and maybe do the

adjustment more toward the back end when employers have had an

opportunity, hopefully, to recover?

Hon. H. Bains: Member, those are vested exclusively with the board. They’re the

one that has a duty to manage the accident fund as best as they can and

what they are expected to under the act and under fiduciary

responsibility that they carry with it. Therefore, they look at the

investment return. They look at the premium income coming, and I think

that’s how they look at and smooth the average over five years to avoid

the shock from year to year.

Like I said, for the first couple of years — this year, next year

and the year 2022 — the board’s expectation is that the premiums will

continue as they are today.

[9:50 a.m.]

J. Martin: What is the makeup of the one-time $50 million cost that the

minister indicated?

Hon. H. Bains: The one-time cost is…. As you full well know, claims can reopen

from time to time for a variety of reasons. When the claim is reopened,

when they do the recalculation of benefits, then a new rule could apply.

That’s why this $15 million — 15, one-five, million — is a one-time

cost. On an ongoing basis, there will be a $4.5 million cost.

I also must say that Jeff Parr, when he consulted stakeholders,

found out that the threshold for when the loss-of-earnings method is

applied has actually declined over time. The threshold has declined. The

result is that an increasing number of loss-of-earning awards are

already being issued. He estimates that these changes will result in

about 25 percent more LOE awards going forward.

That’s why the one-time cost of $15 million and $4.5 million

annually going forward.

J. Martin: In the 2002 Alan Winter report, it says: “The growth in the number

of pension awards, but more strikingly the growth of the pension reserve

for both LOE and functional awards, is of particular concern for the

long-term viability of the system.”

Does the minister feel that the long-term viability of WorkSafeBC

is safe, given the changes in this section?

[9:55 a.m.]

Hon. H. Bains: The short answer is no. The cost is only $4.5 million going

forward.

You talk about Alan Winter, the quotes back in 2002. You may also

remember that there was one person hired to rewrite the WCB without any

consultation. That’s what took place at that time. Again, there may be

some reasons. I’m not going to dump over anybody here, but I mean, that

is a fact. You talked about it, Member, and others have talked about the

lack of consultation.

We have consulted widely. All four of those reports that I

mentioned consulted widely. Jeff Parr put them together and consulted

again. He came back with a package that was much richer. It would have

cost a lot more, especially to the premiums.

I will tell you…. He was looking at the financial situation of the

board at that time, which wasn’t all that great. A number of measures

were taken. The pensions used to be lifetime at that time, not for 65.

Again, loss of earnings was considered. The higher of the two were

considered, as is this particular

section we are talking

about.

He looked at all of that and how much savings they could come up

with, and they did. I can tell you, going back to, I would say, 2006 or

2007, that WorkSafeBC’s financial situation has been very good. As a

result of that, the good return, the good economy, even under the

previous government, the premiums for the employers were kept low.

Actually, they were subsidized.

The financial situation of the board improved, and the employer

benefited from that, which I don’t begrudge. That is the right thing to

do in order to keep the economy going. At the same time, workers did not

see any benefit coming out of the good financial situation that the

board was in. The employer has enjoyed to the tune of over $1.6 billion

in subsidies coming from the accident fund, but the workers did not get

any benefit improvement.

I think that’s why…. The situation that we are in right now is

very healthy — the accident fund the WCB is enjoying right now and low

employer premiums. This is a modest approach to give workers, as well,

an important benefit improvement and to protect their health and safety,

as part of Bill 23.

J. Martin: For the $50 million one-time expenditure, how many claims are

expected to be reopened to get to that figure?

Hon. H. Bains: No one will ever know how many claims will reopen year to year,

Member. It depends. As I have said, the one-time cost of possibly

reopening certain claims is $15 million, but I could give you

numbers.

[10:00 a.m.]

In 2019, 971 loss of earnings awards were issued, and they’re

expecting that the increase will be 25 percent more LOE awards. They

have costed out a one-time cost of about $15 million, and ongoing costs

for the future would be $4.5 million. That’s going on year to

year.

Also, when you calculate that into the premiums of the employer —

if it were to pass on to the employer — it’s 4/10 of a cent. That’s how

much this particular

section will cost. As I said, the board is

smoothing out a process over five years. They expect that the premiums

for employers — subsidized premiums, I might add — that they’re enjoying

right now will continue this year, next year and the year 2022, at

least.

J. Martin: In 1990, LOE pensions accounted for roughly 10 percent of total

awards and 44 percent of pension reserves. However, under the dual

system, it grew to 17 percent of awards and 62 percent of total pension

reserves, outgrowing all other liabilities.

What is the minister doing to ensure the long-term viability of

WorkSafeBC beyond the one or two years the minister claims that costs

will be under control?

Hon. H. Bains: As I’ve said a number of times before, it’s a very modest package.

The board has calculated that it is manageable within their accident

fund — the healthy accident fund that they’re enjoying right

now.

Also, their expectation is that the employers’ premiums will not

be impacted for this year, next year or the year 2022 and that it has a

very small impact on the accident fund going forward. The cost, as I’ve

said, is a one-time cost of $27 million, and the ongoing cost is $14

million. We are talking about a fund that is sitting around $19 billion,

$20 billion.

J. Martin: In our capacity as members of the Legislative Assembly — I’m sure

I can speak for all 87 of us — some of the most difficult and

frustrating files that come into our constituency offices are with

respect to WorkSafeBC. How is this particular

section in the amendment

legislation going to help to address that?

Hon. H. Bains: Member, I think that’s a very good question. Although, like I

said, these are modest changes in the package that we’re talking about,

they are important. Some of the heart-wrenching stories that we hear in

our offices come as a result of injured workers’ experience with

WorkSafe. They believe that they have been let down.

[10:05 a.m.]

I’ll give you an example. The 1917 historic compromise talks about

workers giving up their right to sue when they are injured at the

workplace or become sick at the workplace, which benefits employers.

It’s long-term liability. In return, employers agreed to a no-fault

system that they would fund to ensure that the workers’ health and

safety are protected at workplaces and that, when they are injured, they

will be looked after, whether it’s medical support that they need or

rehab provisions for return to work.

Now, when you look at the historic compromise, the workers were

promised that they would not lose out from this system. Right now the

system is that if you are injured, you get 90 percent of your net

income. So you’re losing 10 percent to begin with when you’re injured.

That is not keeping up with that compromise, a promise that was made.

Now, we’re not touching that, because it’s costly.

Then you talk about loss of earnings. When you are permanently or

partially injured, a permanent partial disability award is calculated.

Somebody makes a decision on what your likely loss is versus what your

real loss is.

Like I said, a majority of the cases, in the past, were “likely

loss” — that’s how they were worded — and the workers were not

compensated based on their real loss of work. That’s how it will help

the workers — that this is being recognized. Their loss of earnings will

be considered, and they will be compensated accordingly, at a very, very

minimal cost, like a 0.4-cent cost when you compare that to the premiums

for the employer — 4/10 of a cent over a $100 payroll.

I think that’s how it’s going to benefit the workers. They will

get the real loss of earnings, as compared to the likely loss of

earnings. Many of those cases that you mentioned, Member, came into our

offices, basically, from frustration of those injured workers, saying:

“How is it that I was making $20 an hour, but my PPD award is based on

$15? I’m getting only 90 percent of the lower value, not the real loss

of earnings.” I think that’s what’s behind this.

M. Lee: I just have a series of questions on this

section 17.

To carry on from my colleague the member for Chilliwack, as to the

questions that he raised, regarding the timing of these changes and

whether there was any re-assessment done of these changes, we’ve heard

from the minister that the consultations, of course, and the reviews

took place prior to COVID-19. As we know, COVID-19 has changed

everything for this province. We’re in the midst of the pandemic and of

all the good work that the Minister of Health and others have done to

try and manage all of that challenge, but clearly, in the economic

recovery, much, much more needs to be done.

With the timing of these changes…. The minister continues to refer

to them as modest, with minimal impact. This

section 17, in the view of

our opposition caucus, remains one of the most concerning sections of

this bill. It does take, opens up — rebalances, as the minister

describes…. It’s very important, at this committee stage, that we get

the level of clarity, transparency and understanding of the impact of

this change. Appreciating the responses that the minister has provided

to date to the member for Chilliwack, I just had a few clarifying

questions to start.

[10:10 a.m.]

When the minister talks about reopening…. We know that under

section 35 of this bill, which we will come to in this committee stage,

the transitional element around

section 17 as it would amend

section 196

of the act would relate to claims that have been “made, but not finally

adjudicated, before the date this

section comes into force, and…that

involves an injury, occupational disease or mental disorder that

occurred before the date this

section comes into force.”

Could I ask the minister, please, to clarify what he meant by

reopening?

Hon. H. Bains: Member, I think I tried to explain it to you.

Considering the times we are going through, we came back with very

modest…. I’ll tell you how that qualified as being modest. When Parr

came back with his report — combining the other three reports, he did

the consultations — he came back with recommendations that would have

cost $1.5 billion, a one-time cost, and $70 million on an annual basis,

ongoing costs on top of that. Now, yes, that was before the COVID-19

pandemic.

We looked at that report, and we looked at the times that we are

going through. This package now has scaled back from a $1.5 billion

one-time cost to a $27 million one-time cost. That’s why I call it

modest. And from $70 million on an annual basis, now this package talks

about $14.5 million annually.

We did the analysis, we looked at the report that was presented to

us with the recommendations, and then we looked at the times we are

going through. The employers are going through tough times, workers are

laid off, and employers need help. That’s why we are going with a

package that is modest. It will improve certain benefits for the workers

at a very, very modest cost. At the same time, it ensures that the

employers’ premiums will continue on at a subsidized rate that they

enjoy today, this year, next year and the year 2022.

Now, you talk about reopening of the claims. So $15 million is if

any claim gets reopened for a variety of reasons. They happen all the

time. When the claim is allowed to reopen, then the new rules will

apply. The new calculation will take place. That’s why the $15 million

is costed out for that particular area of this package. Then the new

claims that will come in are costed at $4.5 million on an ongoing basis,

on an annual basis.

M. Lee: I appreciate the response from the minister.

[10:15 a.m.]

The minister’s point of reference is based on all of the reports

that have been received by government to date. We know, from the

employer community, about the challenges around at least some of those

reports, in terms of how they were formulated — including the Patterson

report, for example — and concerns around apprehension of bias and all

of that.

But putting all that aside, what my colleagues have indicated

during second reading and in question period has been a lack of

understanding, it appears, from this government, for recognizing that

things have changed so fundamentally. In the absence of any clear,

comprehensive economic recovery plan from this government, the Minister

of Labour is bringing forward what he continues to describe as modest

changes. But they are still significant, for the reasons that we will go

through in a moment, for example, in

section 17.

We’ve said that this continues to raise much uncertainty and

additional costs. So that’s the reason why. The point of reference for

the minister is the changes that could have occurred under the previous

reports. The point of reference that I would suggest the minister should

really appreciate is our point of reference currently for everyone

involved in this province. We’re in the middle of this COVID pandemic,

as everyone knows, and from an economic recovery point of view, we don’t

see the leadership from this government in terms of the way

out.

I recognize that there are continued challenges. I understand

that. But this is not the time to be adding additional costs to the

employers that make the jobs and continue those jobs, create the jobs,

maintain the jobs for those who need to continue to be employed. We’re

talking about adding additional costs and uncertainty to employers and

businesses — small businesses, medium-sized businesses — all over this

province, on top of, of course, the additional costs that this

government has put forward over the last three years.

Again, putting that aside, we’re talking about COVID-19. We’re

talking about the special session of this House. That’s the reason why

we’re doing this committee session on a Friday here.

Having said that, I just wanted to come back to the minister’s

comment about reopening. I would suggest that the reopening language

that the minister continues to use….

Section 35, in terms of the

application and transition of this

section 17, is that…. It’s for claims

that have not been finally adjudicated. Those are claims that are

currently still in process. Certainly, for new claims, one would expect

that

section 17, if amended under this bill, will utilize that new

framework, as the minister has described.

I still do not see where existing claims that have been finally

adjudicated are being reopened. Could I, again, clarify? Is the minister

suggesting that there are existing claims that have been finally

adjudicated that will be reopened by virtue of

section 17?

Hon. H. Bains: I will not engage or answer the political rhetoric that the member

has thrown around. I think much of that is baseless, but I will talk

about the facts of the

section in front of us.

The short answer is that claims will not be reopened just as a

result of

section 17 passed here today.

[10:20 a.m.]

Claims can reopen. Some of the members may have some experience in

WCB claims. The member may have that as well. Claims can reopen for a

variety of reasons — for example, the recurrence of the injury for the

worker. The medical condition may change. Those are some of the reasons

why a worker will apply to reopen their claim. When that happens, then

the new rule will apply. But they would reopen for those reasons, not

because we have passed

section 17.

When that happens, the new rule will apply, and they have costed

out at a one-time cost of $15 million. So that’s the cost. Then ongoing

basis…. When the claims are still in the process, when they are

determined, then the cost would be $4.5 million year over

year.

I think that’s what the real meaning of this

section is. Cost is

$15 million one time, to deal with in the event the claims got reopened

for a variety of reasons, but not because of

section 17.

Then the claims that are still in process, haven’t been decided….

The cost to deal with them would be $4.5 million every year going

forward.

M. Lee: Just to clarify, when the minister refers to $27 million and then

$15 million…. Previously, he referred to $50 million, but I think he

readdressed that. Could the minister please clarify the difference

between the $27 million cost and the $15 million cost?

Hon. H. Bains: I want to clarify. That’s why I keep on saying, in order to

correct, I think, the member for Chilliwack…. I may have heard wrong,

but he was mentioning $50 million. That’s not what I said. I said $15

million.

That is the cost of this particular section, one time. There is

another

section that will cost $12 million on a one-time deal. So the

total cost of this package is $27 million one time. Then the ongoing

cost for this particular

section — again, I want to be clear — per year

is $4.5 million. But the total package that is before you, the total

cost on an ongoing, year-by-year basis is $14.5 million.

Again, let me repeat. The total cost of this package, one time, is

a $27 million cost to the accident fund. On an ongoing yearly basis,

annual basis, it will be $14.5 million.

M. Lee: I appreciate the response, Minister, to clarify that. I think the

member for Chilliwack and myself misheard you then. We heard $50

million.

Because the minister mentioned it, Mr. Chair, could I ask at this

juncture, when the minister refers to $12 million, a one-shot deal

increase, what is that other provision in this bill that will incur that

additional one-time expenditure of $12 million?

Hon. H. Bains: Member, we’ll get to it very quickly, as soon as we pass this one.

It’s in

section 20, actually.

M. Lee: Thank you to the minister for that indication.

Just coming back, the minister did refer to the increase going

forward of $15 million.

[10:25 a.m.]

What I’ll do is I’ll just ask the minister to clarify what the

minister was indicating. So it’s a $15 million increase for loss of

earnings awards in 2019. What I heard the minister say was that the

number of awards was 971. It’s the ministry’s expectation, with the

passage of this bill, if it passes, that the increase in costs, by

virtue of

section 17, will be a 25 percent increase. That would, by

estimation, be an additional 242, approximately, number of loss of

earnings awards, to bring it to about 1,213. That would mean the average

cost of loss of earnings awards, for the purpose of this estimate, is

about $62,000.

Is that correct?

Hon. H. Bains: I think the member can do the math, but I can tell you…. I’m

relying on the calculations that have been done by the experts. They

used those numbers. So 971 LOE awards in 2019. They are estimating that

these changes will result in 25 percent more LOE awards. As I have said

before, they are moving towards that currently, anyway, because the

threshold has been lowered over the years.

Again, what the total award, on average, awarded before 2002 was….

Today they are much lower. The calculations they have done for the cost

of this particular section…. I have said that before. The one-time cost

is $15 million, and ongoing costs will be $4.5 million. That’s how….

They calculated the number of claims that they have, how many they think

will be reopened and then, ongoing, the difference between LOE versus

the loss of function. They are figuring that that’s the cost, which I

have mentioned a number of times.

M. Lee: Thank you to the minister for that response.

As I mentioned previously, it’s a significant

section of this

bill. My questions are with a view to create and understand and receive

more clarity around the cost impacts of this section. With that in mind,

as the minister just referred to, in terms of numbers of LOE pension

awards…. Could I ask, just as a point of reference, how many permanent

pension awards have been granted since 2002?

[10:30 a.m.]

Hon. H. Bains: Member, we don’t have those numbers going back, since 2002. I can

tell you that in 2019, there were 6,296 awards that were a loss of

function, and 971, as I mentioned, were LOE awards.

M. Lee: I would suggest that it’s important to understand the progression

of LOE awards that have been granted in that context.

The minister has indicated that with the threshold lowering, there

has been an increase in LOE awards over the last number of years. I

think for the purpose of this discussion at this committee stage, it

would be very helpful if your ministry team was able to provide further

information as to what the progression has looked like in terms of the

total number of permanent pension awards since the change was made in

I would request the minister, if it would be possible for his team

to do the quick request, to share that number with us.

Would that be possible, Minister?

[10:35 a.m.]

Hon. H. Bains: Member, I don’t see any relevancy of the information you’re asking

for, going back to 2002. I can tell you that if you read Parr’s report,

which was made public, on page 34, he talked about it in

there.

What has happened since 2002, when the change was made? In 2002,

you were looking at almost zero LOE awards after that change was made.

Today, as I said, in 2019…. Now LOE awards have gone up to 971, if that

helps you, Member.

He also made reference in his report that the level of LOE awards

now is the same as it was prior to the change in 2002. But the cost of

each claim is much lower — about 40 to 41 percent less now — because of

all of the changes that were made in 2002. The lifetime pension was

taken away, the wage loss calculation — 90 percent net versus 75 percent

gross — and a number of others.

If that information helps you, Member, that’s the best I can do at

this time. Giving you numbers, year by year…. I don’t know how that is

relevant to what you’re talking about. I’m giving you enough, I think.

Almost zero in 2002 and 971 last year, of LOE awards, when we do the

comparison.

The Chair: If I might remind the minister to please direct comments

through the Chair, as opposed to directly to the member. Thank you,

Minister.

The member for Vancouver-Langara.

M. Lee: Thank you, Mr. Chair. Thank you, as well, for that reminder to

myself.

I appreciate the response from the minister and, certainly, will

come to the Parr report. I certainly have read, many times, pages 33 and

I wanted to, then, ask…. Let me just say this first. The reason

why this is relevant is that we, I would expect, need to establish an

understanding as to what the baseline has been. This will change under

section 17, this provision, in terms of how LOE awards would be dealt

with.

This is a change that, going forward, has been a transition, let’s

say, in terms of what has been referred to as the “so exceptional” test.

The language under the current provision, under

section 196…. As the

minister has indicated, that has resulted, in terms of the thresholds

being applied by the board, in an increase of LOE awards since

Just so I have a better understanding of the trends here, could I

ask…? It would appear, based on the minister’s responses…. The range of

LOE awards since 2002 has ranged between zero and about 15 percent,

based on the figure the minister provided of 971 out of 6,296 total

awards. Has there been any year since 2002 that has seen LOE awards

being more than 15 percent of total awards?

[10:40 a.m.]

Hon. H. Bains: Thank you, hon. Chair, for the reminder.

Member, I think I have answered this question in many different

ways. The experts have looked at all of that, the question that you are

raising. They figured that the total cost…. In the event of the

reopening of the claims — going forward, how many claims they’re

handling today and how the trend is going, based on all of that

information — they have calculated that the one-time cost would be $15

million to the accident fund and that ongoing costs would be $4.5

million annually.

I think that’s the best information that I could give you. They

have calculated that. They estimate that the LOE awards may increase by

25 percent because of this change, and then I’ve given you the costs as

a result of that as well.

M. Lee: The minister referred to page 34 of the Parr report, which

includes the statement: “The total number of LOE awards is now similar

to levels prior to the 2002 amendments.”

Through this discussion here with the minister, Mr. Chair, there

is a clarification that I would like to address with the minister, which

is that when Mr. Parr was looking at the difference between prior to

2002 and now, that’s been based on, of course, the current wording of

section 196, which includes the “so exceptional” test, which does frame

the threshold.

Once this “so exceptional” test is effectively not operational by

virtue of

section 17 — the effect of it — we would expect that there

will be a significant increase, potentially, of loss of earnings awards

because the “so exceptional” test is no longer a threshold.

Does the minister agree with that?

Hon. H. Bains: Member, I’m not an expert — I don’t know who else is an expert and

watching here; maybe some of you are — but I can tell you that the

experts have estimated that by making these changes, the increase in LOE

awards will be by 25 percent. I have said that many times.

M. Lee: I still have some questions on

section 17. Thank you to the

minister. The discussion we’re having, of course, is on the legislation

and the wording in the proposed bill. I am asking questions relating to

the wording of the proposed changes in Bill 23 relating to sections of

the act, as is my colleague the member for Chilliwack.

When the minister refers to “experts,” you would expect that the

Minister of Labour is the lead on this bill, which the minister is. I

would suggest that the strong leadership team around the minister, in

the ministry, should be able to provide to the minister some assistance

with some of the responses to the questions that I and my colleague the

member for Chilliwack are asking in this committee stage.

[10:45 a.m.]

My question that I asked around the lifting of the “so

exceptional” test is one which is based on the current legislation.

Again to the minister, when Mr. Parr, who delivered a report to this

government and to the minister, makes statements in his report which the

minister is taking on face value, that is his prerogative. But I do

think it’s important, at the committee stage in this bill at the least,

that we have the opportunity, as members in this House, to ask questions

about statements that are made in reports that the minister clearly is

relying on.

In the absence of a complete understanding of the trend lines

around the number of pension awards that have occurred under this

operative

section of the act, the number of increased LOE awards that

would occur, there are other considerations around this section, which

I’ll be coming on to.

I do think that, conceptually, the minister should have a view,

with the lifting of the “so exceptional” test as a threshold — which is

clearly spelled out in subsection 196(1) of the act, as all members of

this House can read — that once you lift that restriction in the manner

in which

section 17 of this bill is amending

section 196, it would stand

to reason that there will be an increase in the loss of earnings awards

beyond what has been seen since 2002.

Again, does the minister agree that that will be the

case?

Hon. H. Bains: Let me give it one more try. The changes that we are dealing with

now — removing or not utilizing the “so exceptional” test — and putting

in the language that we are discussing now…. The board engaged

actuaries, professionals. They have their financial people. They can

look at the historical trends. They came back with, by doing all of this

— that the LOE awards will be increased by 25 percent.

I have said that many times. Yes, the LOE awards will be going up

by 25 percent. That’s the estimate.

M. Lee: Let’s try this line of questioning in a different manner, then, in

view of the minister’s responses. If we just establish a baseline

understanding here in this committee stage…. What is the current WCB

policy relating to chronic pain as it relates to loss of function

awards?

[10:50 a.m.]

Hon. H. Bains: Member, the board does have a policy on chronic pain that flows

from

section 134. All of that is considered by the board when we talk

about increase in LOE by 25 percent, as per the changes recommended in

section 17.

M. Lee: Is practice directive C3-1, relating to chronic pain, the current

policy of the board?

Hon. H. Bains: The board has a policy on a number of different scenarios and

situations, which is over 1,000 pages. When we talk about increase of

LOE awards by 25 percent, they have considered all of their policies

that exist. How they calculate LOE awards versus loss of function

awards…. They looked at all of that, and then they came back with the

numbers that the LOE awards could increase by 25 percent.

M. Lee: Thank you very much to the minister for that response.

Is it correct, then, that the ministry team has considered that

under the general principles on that practice directive by the board,

workers with chronic pain that is permanent and disproportionate to the

associated physical or psychological injuries may be granted permanent

disability benefits under

section 195(1) of the Workers Compensation Act

equal to 2.5 percent of total disability?

[10:55 a.m.]

Hon. H. Bains: We could mention any policy in the WorkSafe policy manual. As I

have said before, they have looked at all of that — how this

section 17

will impact any different policy that they use in order to determine LOE

versus LOF awards.

They have come back that there’s a possibility of LOE awards to be

increased by 25 percent, and then they came back with the cost

implications. I have said that before. The one-time cost will be $15

million, and ongoing costs will be $4.5 million.

M. Lee: Thank you to the minister for that response.

As I said earlier, it…. The minister continues to bring us back to

the overall assessment done by the ministry, as he indicated earlier to

my colleague the member for Chilliwack and throughout my exchange with

the minister.

Just to have a fuller understanding of the impact of the proposed

change under

section 17…. That is what I continue to try and gain some

understanding of. I am providing one avenue here, currently for

discussion, relating to chronic pain and citing what is a limitation,

under the board’s own practice directives, at 2.5 percent.

The reason why I’m doing that is because…. In

section 17(c), there

is a slight wording change. That wording change says: “If the Board

makes a determination under subsection (1)” of

section 196 of the act,

“the Board may….” That wording, “the Board may,” will be struck out and

substituted with the words “The Board must.” Well, that change in one

word would mean, in effect…. By passing this legislation, the government

is saying to the board that it no longer can apply practice directive

C3-1, as I cited.

Is that correct?

Hon. H. Bains: We pass the act, if this passes here. Then I will leave it up to

the board to determine how they apply this act through their policies.

They have done that in the past, since 2002. When those changes were

made, they made those changes, and they came up with the policies to

comply with the act that was given to them.

[11:00 a.m.]

Now we are making some changes here. We are saying the

“exceptional” test shall be removed. Now they will be…. The PPD award

will be based on the higher of the two: loss of function versus loss of

earnings. This is to look at the real loss for the worker, so that we go

back to the commitment that was made to the workers in 1917, as per the

historical and great compromise.

Member, we’re talking about workers now. These are the people that

help run the economy, working with the employer. When the workers are

using the workers compensation system, they expect that they will be

looked after. Their medical, their rehab and their earnings will be

looked after, at least close to what they are losing. That was the

promise made to them, and I think that’s what we are trying to do

here.

They’re not going to get more than what they’re entitled to or

what they’re losing. At least they should be getting close to what

they’re losing. That’s the whole purpose behind it. These are the

workers that help run those companies and help build those businesses.

That’s how we build our economy — workers and employers working

together. When you have a healthy, happy workplace, you have a

productive workplace.

We have heard…. As the member for Chilliwack had mentioned before,

some of the most heart-wrenching stories in our MLA offices are the ones

from the injured workers, that the system isn’t looking after them when

they’re injured or they become sick. These are small steps that we are

taking to help them rebuild their confidence in the system — both by the

employer and by the workers — without costing the system a lot of money,

considering the time that we’re going through.

Again, WorkSafeBC has looked at this. The actuaries have come up

with the numbers and the costs. We are talking about the numbers that

I’ve given you before — one-time costs and then ongoing costs. WorkSafe

and the experts have looked at the changes that we are recommending, and

they have put the cost to it. That’s what the cost is, and I believe

those are the right numbers.

If that’s what you want me to say, absolutely, I believe those

numbers, because you’re relying on those experts. I think it will help

the workers with a very modest cost to the accident fund and, at the

same time, give the workers some very important benefits that they have

been lacking.

M. Lee: In response to the minister’s statements, just to be clear, I

believe all members of the House recognize that we’re all in this

together, that employers and employees all over this province need to

continue to work through this COVID-19 pandemic and continue to expect

the kind of leadership we would expect from the government to set out an

economic recovery plan in the midst of this, not make a change for which

there’s no clear understanding of the cost and the increased uncertainty

this will create under this bill for employers and employees. Additional

costs and uncertainty are not what employers and employees need to

maintain those jobs.

Just coming back to the minister’s statements in response to my

question…. My understanding of what the minister indicated is that this

bill, this section, is intended to, with the passage, if it does pass….

The board will come on and develop or reassess its policies to deal with

chronic pain. But as I quoted, the change in this bill, as set out in

section 17…. You’d expect that when the legislation currently says “the

Board may,” that is consistent with what the minister

expressed.

[11:05 a.m.]

What’s not consistent, though, is to suggest the board has that

latitude, because the change says: “The Board must….”. With that one

change of one word — from “may” to “must”…. This is legislation that

we’re reviewing, in this committee stage, that changes how loss of

function and loss of earnings awards will be dealt with. I clearly

recognize the importance of ensuring that the system works for workers

and employers. What we’re getting at here, though, is an understanding,

a clear understanding, of the impacts of this change and the impacts of

this bill.

Again, to be clear, this

section 17 changes the approach that the

board currently uses for chronic pain, where it is restricted to 2.5

percent. With that change, what is the expected increase in the number

of awards for chronic pain that will relate to loss of

earnings?

Hon. H. Bains: Member, you can read it any which way you want to read it. The

wording changes are the wording changes. With the wording changes that

the member has mentioned, the change will cost the accident fund $15

million, one time, and ongoing costs will be $4.5 million. The increase

in LOE awards is estimated to be by 25 percent. That’s what the impact

is of the changes that we’re recommending, from what it used to

be.

M. Lee: We had some earlier discussion, of course, in terms of the nature

of the increase of LOE awards. The minister has shared with us the

projections around the increase in number. Can the minister also share,

in terms of the makeup of the number of increased LOE awards, the nature

of them, how many will relate to chronic pain or other issues that

workers have?

[11:10 a.m.]

Hon. H. Bains: WorkSafeBC may keep that data. They looked at, historically, what

categories they get LOF and what categories and how many in each of the

categories they get LOE awards, out of those 971. They have that

information.

We proposed these recommendations and changes through

section 17.

They looked at all of that. They looked at what their estimate is to

have each and every category increase. But overall, they calculated that

it will increase by 25 percent. And then they put a cost to

it.

They considered chronic pain versus a broken leg or the loss of a

limb. They have looked at all of that. They came back that the overall

increase will be 25 percent and that the cost, considering all those

different categories that the member is asking, will be $15 million a

year and $4.5 million going forward each year.

M. Lee: I appreciate the response from the minister and the continued

overview of the ministry’s analysis. That analysis, though, one would

expect, would be based on a review, as the minister mentioned earlier,

of the many policies of the board, of which we are discussing,

currently, just one, relating to chronic pain.

Is there a breakdown that the ministry has in terms of the makeup

of the increased number of loss of earnings awards that is expected with

this change?

Hon. H. Bains: This change got presented to WorkSafeBC. They looked at their

data. They looked at the information that they work with. They put costs

to it. They estimated how many new claims could be moved into LOE. They

calculated that would be by 25 percent total. They may have looked at

each different category for how many they would expect. But overall,

it’s 25 percent. That’s the number that they were given.

M. Lee: Thank you to the minister for that response.

Obviously, here at the committee stage, I am attempting to get a

clear understanding of the nature of the review, the analysis done on

the impact of this change. That is, clearly, asking questions, by way of

example, to understand the nature of the analysis that’s been done of

this particular section. I am not receiving a clear understanding of

that analysis beyond the overall numbers.

Let me just ask this question. Does the minister agree, though,

that with this change under

section 17, the effect of this change will

be that where, under current board policy, that practice directive

C3-1…? The loss-of-function awards is limited up to 2.5 percent of the

total disability? That with this change under

section 17, and in the

absence of any further board policy — which, as the minister referred to

earlier, the board may or may not be doing; again, we’ve had this

discussion about “must” — it is possible, with this change, that chronic

pain awards could be as high as 100 percent of total

disability?

[11:15 a.m.]

Hon. H. Bains: I’d like to answer the member’s question. The chronic pain

calculations are done through 195(1). It does talk about 2.5 percent.

But this

section is amending 196.

The board will be making a decision to calculate the higher of the

two. That could happen today, under exceptional circumstances. What this

does is…. The board have looked at that. They looked at what the

possibilities are of higher awards than 2.5 percent under chronic

pain.

They have looked at all of that. They have come back with a

recommendation that…. Their estimate is that the claims for LOE would

increase by 25 percent, and then they put a cost to it. They have

calculated all of that. They will be developing their policies to

determine how chronic pain calculations are done under 196 and how they

are conducted under 195(1). Then they’ll make a decision. But their

policies develop based on these changes.

M. Lee: I appreciate that response from the minister.

To come back to the statement I made earlier about

section 17(

c) set out in this bill…. To clarify, in view of the minister’s last

response: what is the intended effect of the change in

section

17(c)?

[11:20 a.m.]

Hon. H. Bains: The

section of change that we’re talking about, Member, is to

provide that for a permanent partial disability, the amount of workers

compensation paid to the injured worker must be based on the higher of:

the worker’s likely loss of earnings, based on the nature of their

injury, known as the loss of function calculations; or the worker’s

actual loss of earnings; or an estimate of the actual loss, known as the

loss of earnings calculations.

The current loss of earnings approach can be used only in

exceptional circumstances. That’s the change.

M. Lee: What other policies of the board that have been reviewed will need

to change, meaning new policies of the board will need to be established

by virtue of the change under

section 17 of this bill?

Hon. H. Bains: That’s vested in WorkSafeBC. They will be looking at the changes,

if they pass here, and then they will be devising policies on how they

apply the changes that we make in this legislation.

M. Lee: I appreciate the response from the minister. I would have thought,

though, that with the analysis that’s been done to derive the estimation

of a 25 percent increase in LOE awards, that review would have taken the

place of all current WCB policies, including the one that we’ve been

discussing here at length relating to chronic pain. Has that analysis

been done?

[11:25 a.m.]

Hon. H. Bains: Of course, the board, with the anticipation of the changes being

proposed, did their analysis. That’s how they came back with those

numbers that I’ve been repeating, time and again, and the cost

implications and the policy implications as a result of these changes,

if they pass here. Those are the numbers that we were relying on, after

the analysis was done.

It’s not just recently. Paul Petrie was hired by the board to do

their policy and procedure review. He recommended that there are issues

with this particular policy, where workers are undercompensated during

these circumstances when they calculate PPD awards. That’s why we’re

recommending these changes.

M. Lee: Thank you to the minister for that response.

Just to come back to the minister’s previous response relating to

the current subsection 196(1), which clearly sets out the “so

exceptional” test. Under subsection 17(

a) of this Bill 23, this section,

of course, will be deleted and repealed and substituted with the wording

that’s set out in subsection 17(a)(1) of this bill.

With that change…. The minister has referred previously to the

lowering of the threshold, which has resulted in an increased number of

LOE awards. What is the current threshold that is being applied under

the “so exceptional” test?

Hon. H. Bains: Member, a WorkSafeBC practice directive stipulates that a

significant loss of earnings “exists” where there is a difference of at

least 25 percent between the worker’s pre-injury earnings and the

combined total of post-injury earnings and the amount of the LOF award.

A “significant loss of earnings” does not exist when the difference is 5

percent or less. However, WorkSafeBC staff have the discretion to take

into account the individual circumstances of each case to determine if a

significant loss of earnings exists.

[11:30 a.m.]

In practice, the threshold has declined over the years, as we

said. An increasing number of LOE awards already are being issued for

claims where the difference is less than 10 percent. In some instances,

LOE awards are issued when the difference is less than 5

percent.

M. Lee: I appreciate that response. Just to follow on that response,

recognizing that the minister has indicated, previously, 971 awards in

2019…. Of the 971 awards, how many of those awards would be under 10

percent and under 5 percent?

Hon. H. Bains: We don’t have those numbers. I question the relevancy of the

question to

section 17.

M. Lee: The relevance is, as we have discussed…. The elimination of the

“so exceptional” test effectively brings the threshold down to zero. Is

that correct?

Hon. H. Bains: Member, I will draw your attention to the Parr report again, on

page 34. This is what he said on that question:

“Given that the number of LOE awards is now similar to pre-2002

levels and that the costs of those awards have dropped by almost 40

percent, the cost implications of this proposal are less than many would

think.

“If the threshold is set at 5 percent, the annual cost would be

approximately $2.5 million, the average premium rate would increase by

about 2/10 of a cent per $100 payroll, and the one-time increase in

liabilities would be approximately $7.6 million.”

That’s if you consider the threshold at 5

percent.

“If the threshold is effectively set at zero, the annual cost is

estimated to be no more than $4.5 million, the increase to the average

premium rate would be about 4/10 of a cent per $100 payroll, and the

one-time increase in liabilities would be approximately $15

million.”

I have repeated those things time and again. That’s what Parr also

confirmed.

M. Lee: Just as the minister refers back to the bottom of page 34….

Earlier, of course, through this exchange, we’ve been talking about the

analysis that has been done by actuaries.

Was there any utilization by Mr. Parr of any actuarial analysis to

make the statements that the minister just quoted?

Hon. H. Bains: WorkSafe provided that information to Parr. We independently

received those numbers from WorkSafeBC ourselves.

[11:35 a.m.]

M. Lee: I would like to ask if the minister could explain the rationale

for the deletion and the repeal of subsection 196(2).

Hon. H. Bains: It means that the “so exceptional” test is no longer applicable.

They both go hand in hand.

M. Lee: I would like to turn to another example with the minister. We

know, of course, with the increased awareness and supports that are

necessary across the board, in terms of mental health and mental

disorders, that it is a very large focus for all members of the

House.

Could I ask the minister…? What is the number of compensation

cases for what is currently

section 135, mental disorders, over the past

ten years?

Hon. H. Bains: This

section amends

section 196. I think we’ve passed

section 12,

which amended 135. The board has looked at all different scenarios,

whether it was chronic pain, mental health pains or others. That’s how

they came up with a total number of additional claims that may come and

fall under LOE awards. They came back with a total of a 25 percent

increase, and the cost thereof.

M. Lee: As the minister acknowledged, in terms of the types of claims and

the nature of them, we’ve only covered one type: chronic

pain.

I am now asking questions relating to mental disorders. Because of

the nature of them for some — for those workers who suffer from severe

mental disorders — under

section 17, one would expect that there will

be, potentially, loss of earnings awards for those, such as teachers or

front-line workers, for challenges within the workplace. They are not

able to return to the workplace, and there’s a significant impact on

their loss of earnings.

[11:40 a.m.]

This is the reason for why I am asking questions relating to

mental disorders. Clearly, mental disorders, as a category, was not as

much of a focus prior to 2002. When Mr. Parr refers to the number of

expected LOE awards as being similar to the total number prior to the

2002 amendment, of course, we’re talking about a different legislative

framework. We’re talking about an increased focus, an increased need

around mental health and mental disorders that are coming forward to the

board.

The minister has not been able to provide data or information

relating to claims dating back anywhere beyond 2019. That raises a

concern in terms of the nature of what we’re discussing here. I think

the trend lines are important to understand, and the impacts on cost —

which is what I’m trying to understand, as well as the member for

Chilliwack.

If we just pick 2019, what was the number of claims relating to

compensation for

section 135 mental disorders in 2019 versus the number

of accepted claims for that same reason?

Hon. H. Bains: I have said this many times before. Let me repeat that again. I

don’t question the analysis done by the experts. It seems to me that the

member is suggesting that they may have missed something, that they may

not have considered certain parts of these LOE awards that have been

awarded within the 971 cases.

I’m suggesting that the experts looked at the trends. They looked

at what’s before them. They looked at the data. They came back with the

numbers that suggest that there would be a 25 percent increase. They

looked at the chronic pain cases. They looked at the mental health

claims. It’s not that the mental health claims were going to start next

year. They already had them; they calculated that. As to loss of limbs

and all the other different scenarios the member can come up with, they

have looked at all of that, and they have that data.

They did the analysis, and they came back that, by making these

changes that we are suggesting, if they pass, it would cost the accident

fund $15 million one time and then $4.5 million on an ongoing basis.

That’s what the analysis is, and that’s what they have done. They have

looked at each and every category, as I expected them to do, and then

they gave us those numbers. I believe in those numbers.

M. Lee: As we have these exchanges, I do, at least for one point, have

some level of increased understanding as to the process in which this

bill has been presented. Thank you to the minister for that further

response.

[11:45 a.m.]

There are a few points that can be discussed, based on that

response. The first question would be just to make this observation.

Certainly, in terms of the Parr report, which is dated February 2020,

there are a few pages — pages 33 and 34 — devoted to this particular

topic area. The level of category analysis — as the minister generally

referred to it just now — as I understand it, was not included in the

report or the analysis itself.

That’s the reason why, of course, at committee stage we are, as

members here, presented with both the bill and the related documents to

the bill, which we find, cobble together and refer to. Certainly, the

Parr report is one of those documents. That’s the information basis on

which we are having this discussion, which is the reason why, again, I’m

asking these questions.

This is another area that is beyond an emerging trend. It is a

crisis as well. We’ve seen challenges throughout our province. So one

would expect that it would have a significant increase in the number of

loss-of-earnings awards for mental disorders. That’s the reason why I’m

asking these questions, again, to gauge the level of analysis, the level

of consideration of the cost impact of this change under

section 17.

That is the reason why I’m asking these questions.

Was there any further analysis of a category impact nature

provided by Mr. Parr? Are there additional documents or additional

analyses that are not included in this report?

[11:50 a.m.]

Hon. H. Bains: The information we are using is used by Mr. Parr, and the WCB

provides us that directly. That’s the information we have, based on the

analysis that I did and the cost implications.

M. Lee: That is mostly consistent with what previous responses he

provided. If I’m to understand that, then, WorkSafe has provided the

basis of information which Mr. Parr worked with, and that has been

reviewed and concluded upon, in Mr. Parr’s recommendations, as the

minister quoted from the bottom of page 34, in terms of the ministry’s

analysis relying on the work done by WorkSafe.

This would mean, just to come back to the category analysis…. In

the review that’s been done, which forms the basis of the Parr report as

well, what category analysis has been conducted?

Hon. H. Bains: My expectation is that we consider all categories.

They came back with the numbers that I shared with the member,

through you, Mr. Chair. Those are the numbers, and the numbers haven’t

changed. They gave those numbers to Mr. Parr. They gave those numbers to

us, based on their own analysis, looking at all different categories and

different scenarios, different illnesses. If anything has changed, they

would have advised us. They have not advised us if there’s any different

information than what they’ve already provided, which I am sharing with

you.

M. Lee: The minister did anticipate a further question there in his last

response. Just to ask the question…. Obviously, COVID-19 has put a

tremendous burden on many workers in this province, for a variety of

different reasons. Has there been any increase in claims filed for

mental disorder under

section 135 over the last four months?

Hon. H. Bains: I don’t know if I understand the relevancy.

[11:55 a.m.]

To answer the question, overall claims in the last four months may

have been down, I was advised, because of the COVID-19 and not very many

people are working. But the mental health claims have been on the rise.

When we look back, the trend has been there.

What we are talking about here is the PPD award, going forward.

The PPD award, you know — the higher of the two, between the loss of

function versus loss of earnings: that’s what this

section is all

about.

What the trend and the claims, overall claims…. Whether there are

mental health claims higher in the last four months or lower or the

same, I think it’ll be determined how many of those end up being in the

category of determining the PPD awards. Only time will tell how many of

those will end up in that category. But again, based on the data that

the board had available to them, looking at all of that — what I just

mentioned — and different categories, they came back with those numbers

that I shared with you already.

I move that the committee rise, report progress and ask to sit

again.

Motion approved.

The Chair: Thank you, Members, and thank you, Minister.

This committee stands adjourned.

The committee adjourned at 11:56 a.m.

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