Open letter Craig Tuton, chair of the Yukon Workers’ Compensation Health and Safety Board:
Craig Tuton you’ve mentioned the report I wrote for the chamber was “riddled with errors in fact as well I as in methodology.”
If there are errors in fact, Tuton, they are errors your board provided to the Association of Workers’ Compensation Boards of Canada (AWCBC) because that is where I got the facts.
I only used information your board provided to your national association.
In your comments to both the legislature and to the press you brought forward specific items you stated were incorrect. I would like to respond to some of those points, including:
Â¥ The benefit levels injured workers would receive.
Â¥ The base cost of the system.
First, the Yukon has the highest benefit levels in Canada. While the board maintained a healthy surplus position, it was admirable that injured workers received generous benefits from the surplus.
However, this is no longer the case and, with the pending requirement of the board to follow the new International Financial Reporting Standards, the actuary will be required to ensure the best estimate discount rate assumptions are consistent with the expected performance and future strategies of the investment portfolio.
Assuming a full recovery of the losses sustained in the investment portfolio in 2008, the 2009 five-year average return will be approximately 3.75 per cent. After taking into consideration inflation of two per cent this leaves a real rate of return on the investments of 1.75 per cent.
The actuary will be required to ensure that the current discount-rate assumptions for the calculation of the benefit liability will be in line with the investment return reducing it down from the existing four per cent to approximately 1.75 per cent. This change to the discount rate will force the Yukon WCB to increase the benefit liability by approximately $37.5 million to $152 million so as to ensure that there are sufficient funds available to cover all future cost of existing injured workers.
There is however, as stated by the board, only approximately $120 million in the investment portfolio. The existing compensation system in the Yukon is no longer sustainable without dramatic changes to either the benefits received by injured workers, employers’ assessments paid or both. The longer that decisions are delayed, the worse it could be for both injured workers and the employers.
Yes, by utilizing the BC Act, injured workers would see their benefits reduced from 124.4 per cent of the weekly aggregate wage down to 104 per cent of the wage. This would still be greater than what injured workers are receiving in NWT or Alberta which is 94 per cent and 98 per cent of the aggregate weekly wage. I would personally hate to see injured workers only receive 79 per cent as is the case in Newfoundland Labrador.
Tuton, you can ignore the pending changes, or be forthright about them and provide employers and injured workers with a specific action plan that outlines how you are going to ensure that the compensation system remains viable. I would remind you that you are dealing with employers and injured workers’ money, not the government’s.
Now let us move on to the last issue. Tuton, in the legislature you mentioned; “The base cost of the system here is 35 cents per $100 of payroll. Every other penny is driven by claims costs.”
According to the AWCBC, Administration costs per $100 of Assessable payroll is calculated as the administration costs in thousands of dollars excluding (OHS, workers advocate, appeal tribunal, act review, and prevention) divided by (the assessable payroll for assessable employers in millions of dollars times 100).
For 2008, the board’s total administration costs were $10.65 million and excluding the OHS etc., costs of $3.12 million and the net administration costs were $7.54 million.
Assessable payroll, according to the annual statements, was $814.8 million.
Based on the information from your 2008 annual statements, the administration costs per $100 of assessable payroll when you report it will be 92.5 cents, the highest in Canada.
The AWCBC states the national average is 30 cents per $100 of assessable payroll.
Since the base cost of the system per $100 of payroll is not a recognized measure of the AWCBC, what are you trying to state? Were you expecting us to compare apples to oranges? And if so, what is your motive for creating a new measure instead of using the national standards?
Tuton, there are long-term promises to injured workers and dependents as well as long-term solutions to most problems.
Short-term decisions/solutions may make short-term gains; however, in a long-term system, long-term impacts must be considered. From your recent conduct, it would appear that you have lost your objectivity toward a long-term view of the problems and, as such, maybe you have been the chair to long and it is time for you to step down and allow a person to take over who does not look at short-term gains, but looks at the long-term solutions to the board problems.
See More letters pages 14 and 16 to 21.