The Nova Scotia Legislature

The House resumed on:
September 21, 2017.

HANSARD

NOVA SCOTIA HOUSE OF ASSEMBLY

COMMITTEE

ON

PUBLIC ACCOUNTS

Wednesday, May 19, 2010

LEGISLATIVE CHAMBER

Workers' Compensation Board

Printed and Published by Nova Scotia Hansard Reporting Services

PUBLIC ACCOUNTS COMMITTEE

Ms. Diana Whalen (Chairman)

Mr. Leonard Preyra (Vice-Chairman)

Mr. Clarrie MacKinnon

Ms. Becky Kent

Mr. Mat Whynott

Mr. Maurice Smith

Hon. Keith Colwell

Hon. Cecil Clarke

Mr. Chuck Porter

[Mr. Allan MacMaster replaced Hon. Cecil Clarke.]

WITNESSES

Workers' Compensation Board

Ms. Nancy McCready-Williams, CEO

Ms. Elaine Sibson, Chair - Board of Directors

Mr. Leo McKenna, Chief Financial Officer

In Attendance:

Mrs. Darlene Henry

Legislative Committee Clerk

Ms. Ann McDonald

Assistant Auditor General

Mr. Gordon Hebb

Chief Legislative Counsel

[Page 1]

HALIFAX, WEDNESDAY, MAY 19, 2010

STANDING COMMITTEE ON PUBLIC ACCOUNTS

9:00 A.M.

CHAIRMAN

Ms. Diana Whalen

VICE-CHAIRMAN

Mr. Leonard Preyra

MADAM CHAIRMAN: Good morning everyone. I'd like to call this meeting of the Public Accounts Committee to order this morning. We have witnesses from the Workers' Compensation Board, and we're very delighted to have them with us today. Just to start the meeting off, I'll begin with introductions.

[The committee members introduced themselves.]

MADAM CHAIRMAN: Just to begin the meeting this morning, as is our custom, we have offered the opportunity for an opening statement to the Workers' Compensation Board. So I'm going to turn it over to Nancy MacCready-Williams, who is CEO of the Workers' Compensation Board. Good morning, Nancy.

MS. NANCY MACCREADY-WILLIAMS: Good morning and thank you, Madam Chairman. I'd like to turn it over to Elaine Sibson, who is our new chairman of our board of directors. Elaine will make a few opening comments and then I'll add some of my own. Thank you.

MADAM CHAIRMAN: Very good. Ms. Sibson.

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[Page 2]

MS. ELAINE SIBSON: Thank you, Madam Chairman, and good morning to the members of the committee. As was said, I am Elaine Sibson and I am newly appointed - I have only been in the office for a month now. With me today are Nancy MacCready-Williams, who is our CEO; and Leo McKenna, who is our Chief Financial Officer.

We appreciate the opportunity to come here today and discuss the WCB's unfunded liability. It is an issue we take very seriously and we're pleased to answer any of your questions. In a moment Nancy will provide some general remarks and background, but before she does, I thought it would be helpful to give you some background on the WCB and how it is governed.

The WCB is an independent agency; it operates at arms' length from government. A stakeholder board of directors makes up an equal number of the workers and employers, along with the chairman who is independent - myself - and a deputy chairman who is also independent. It is appointed by government and we are appointed by government to oversee the WCB.

Employer and worker organizations play an important role in the selection of the board members. The Nova Scotia Federation of Labour and designated injured worker associations have a role in nominating members to the board of directors, as do employer representatives. The makeup of the board is critically important because it ensures a balance of interests between both workers and employers, those who are served by the WCB, and they consider all the decisions to be made. Workers and employers have a direct voice at the boardroom table where they can share diverse and legitimate points of view and influence policies. After my first meeting, I can surely attest to that.

The board has spent a lot of time in the last couple of years working with an external government expert to formalize the WCB approach to governance. Our governance framework is detailed in a governance manual that is available on the WCB Web site and available for anyone to read. My own area of expertise includes governance and finance, and I look forward to working with the board to further these areas over the next few years.

In terms of our discussion today, I think it is also important to appreciate that the WCB is funded entirely by employer premiums - workers, taxpayers, or government do not contribute financially to the WCB system. In return for this employer-funded insurance, workers give up their right to sue their employer over workplace injuries. The historic compromise between the workers and the employers is one of the founding principles of the workmen' s compensation in Canada.

Like its caring and compassionate employees, the board of directors is also very proud of the role they play in governing the WCB. WCB has had a long history in Nova Scotia. In fact there was workmen's compensation long before public health care, employment insurance, or the Canada Pension Plan.

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Over the years WCB has had its critics, as many people did not believe it was always meeting the needs of its clients, but the reality is that WCB has changed in the last number of years. The evolution began back in 1996 with the introduction of the new Workers' Compensation Act. The Act moved Nova Scotia away from a system where injured workers were paid based on their injury to a system now based on the amount of compensation lost. It was replaced with a more modern system that considers the impact an injury has on the workers' ability to earn a living.

While the introduction of the earnings loss system is a vast improvement, the reality is that many of the workers who were injured before 1996 continue to have small pensions based on the old system.

The WCB was only 27 per cent funded back in the 1990s, which essentially means that one-quarter of every dollar of liability was available to pay for future commitments. Simply put, the WCB back at those times was almost bankrupt. At that time everybody recognized the seriousness of the WCBs financial situation, and that was the primary reason workers who were injured before 1996, were not able to be transitioned into the new system.

History is important, but in spite of the many positive improvements that have been made at the WCB in past years, our progress is often obscured in the public eye by these challenges that were created a long time ago. In particular, the low level of permanent benefits that were offered before the system was overhauled in 1996, and the ongoing financial challenges we face due to the unfunded liability that originated over 30 years ago.

The board of directors is very clear in its focus to eliminate this unfunded liability and the WCB has made significant progress with the long-term funding strategy. Until the recent economic downturn which we are all well aware of, we were headed to eliminate the unfunded liability more than 20 years earlier than was originally planned. We will continue on that path to financial stability one step at a time.

I appreciate the opportunity to meet you and I look forward to meeting with you over the next five years in my role as chairman of the board.

MADAM CHAIRMAN: Ms. MacCready-Williams.

MS. NANCY MACCREADY-WILLIAMS: Thank you, Elaine and good morning, Madam Chairman and members of the committee.

Last year, over 28,000 Nova Scotians were injured on the job. If you put all of these people together in one place, it would form the third largest community in this province. Keeping in mind that we only cover about 70 per cent of the workforce, the actual number of injuries taking place in this province is much higher. Of those 28,000 Nova Scotians,

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7,000 workers were injured severely enough that they lost time from work, they could not go home to their families at the end of the day. Think about that.

In one year, 7,000 Nova Scotians could not go back to work because of injuries that they suffered on the job. These are good, honest people who only want to earn a living so they can support their families. They are members of your community, they are your neighbours, your friends, your constituents. Seven thousand lives interrupted and changed - often drastically - and sometimes they are changed forever because every year, too many Nova Scotians lose their lives as a result of a workplace injury. To my mind, this absolutely has to change. This human and economic cost of workplace injuries is simply not acceptable in this day and age, and I believe that all workplace injuries are preventable. Many Nova Scotians would disagree with me.

Many people believe that accidents happen and that's just the way it is. In fact, 52 per cent of Nova Scotians believe that workplace injuries are an inevitable part of life and there's really nothing that can be done about it. That's where we need to make some changes, that's where change needs to begin.

If you recall, it wasn't so long ago that parents piled their children into the back of a station wagon without any seatbelts, passengers lit up cigarettes on airplanes, and driving home after a night of heavy drinking at the party was the norm. These behaviours all seem incredibly irresponsible and dangerous to us now, but that wasn't always the case. It took a long-term commitment to changing attitudes by government, community groups, and many others. It took time, co-operation, and a lot of hard work, and we need to take that same approach to workplace safety.

Last year marked a turning point for us as we began to take steps to even further improve our service. As a first step we introduced large, integrated workplace teams who are spending more time in workplaces across the province to help remove barriers to injury prevention and return-to-work. Of course, we have not forgotten about smaller workplaces whose needs are very different from the large workplaces, and we're going to be rolling out service enhancements, particularly e-lines of business later this year for small businesses.

We also supported and encouraged the establishment of safety associations around this province, most recently in the health care, fishing, and retail automotive dealer sectors. We work very closely with leaders in these and other safety associations to understand the specific needs of their industries, and we help create tools and address injury-prevention and return-to-work challenges that are specific to that industry because strengthening relationships with workplaces and safety associations is a key part of our strategy to create a safety culture in this province. We regularly involve stakeholders in the development of our policies and programs, but we know it isn't enough. We know that workplace safety is everyone's responsibility and that all of us should do something - no matter how small - to

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prevent injuries from happening, and that's the message behind our current social marketing campaign.

I'm hoping most of you are familiar with our ads featuring a bucket, a ladder, and a nail. This campaign was created to inspire Nova Scotians to take action - to move that bucket, fix that ladder, and remove that protruding nail before someone gets hurt. That's all it takes. Something so simple can have an enormous impact.

We're also taking our safety message into the classroom. Last year, the WCB partnered with our colleagues down at the Department of Labour and Workforce Development and the Department of Education to include mandatory workplace safety learning in the Grade 9 curriculum. After being piloted in six schools across the province this year, it's going to be expanded to all Grade 9 classrooms throughout the province this Fall. All of this effort is contributing to progress in creating a workplace safety culture in Nova Scotia.

I mentioned earlier that there are 28,000 Nova Scotians who were injured at work - that's an 11.5 per cent decrease from the year before. I also mentioned that 7,000 people were seriously injured on the job last year. It's a staggering number but you know, it represents a significant improvement. For the first time in over a decade, the number of serious injuries fell below 8,000. Each and every Nova Scotian should celebrate this reduction in injuries, because we recognize that it's the effort of a lot of individuals, employers, and workers across this province that is contributing to these results. At the same time, we have the responsibility collectively to make sure that there's even more progress made. As long as people die at work, our job is not done.

In addition to these very human aspects of our work, there are significant financial implications associated with fewer workplace injuries and a safer and more timely return-to-work. Like other kinds of insurance, the premiums paid in workers' compensation by employers who fund our system completely are directly tied to claim costs. The higher the cost of claims in their workplaces and in their injury, the higher the premiums they pay. While we have made progress, Nova Scotia still has an unacceptably high rate of workplace injury and it takes longer for injured workers to go back in Nova Scotia than virtually anywhere else in Canada. This combination of a high injury rate and long claim durations means Nova Scotia employers pay among the highest assessment rates in Canada. At the same time, injured workers receive amongst the lowest benefit levels.

Elaine noted the WCB was only 27 per cent funded in the early 1990s. At that time, a strategy to bring the WCB to full funding was put in place. That strategy strikes a balance by adding a top-up to employer premiums to help pay for this unfunded liability and not increasing benefits for injured workers. It's a long-term strategy and we have made steady improvement, and today we are 62 per cent funded.

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[9:15 a.m.]

In 2007-08 we experienced significant financial losses - as did many other pension funds - primarily due to our investment returns, and this has implications for our funding strategy. The economic downturn hit many pension funds hard, including the Public Service Pension Plan. It's a problem that is certainly not unique to the Workers' Compensation Board, and one I am sure that you can all identify with. Had we not experienced these significant investment losses, we would be much closer to our goal of eliminating the unfunded liability by 2016. Given our current situation, meeting that goal will be challenging, but our investment portfolio is well-diversified in order to optimize returns and manage risk. We are monitoring our investment performance closely to confirm that our investments support our liabilities. As we do, each year our Board of Directors will consider the funding strategy in June and make any necessary adjustments.

Now, when considering the funding strategy, there are basically three choices that our board of directors can make. We can change the level of benefits for injured workers, change the rates for employers or change the amount of time it will take to eliminate the unfunded liability. The board will not make a final decision on this until next month.

I've spent most of my time today talking about what we need to do to reduce the number of work place injuries because that is what drives our organization. Simply put, too many people are getting hurt on the job.

Take Lewis d'Entremont, for example; he was a fisherman who was thrown overboard while trying to give slack to a malfunctioned cable. Lewis died that night - his wife will never be the same and his children will grow up without him. Or Larry MacKay, who called his wife to let her know that he cut his hand at work; the wound became infected and when it healed, the pain of rehabilitation was overwhelming. Doctors told Larry that working with his arm - his livelihood - was making the pain worse and he would have to give it up.

These are real stories about real Nova Scotians and new stories like these are happening in our province every single day. We have to learn from them. We need to take all the necessary steps to make Nova Scotia's workplaces safer and we're working to make sure that these stories of tremendous pain and suffering are not repeated.

We have a sound financial plan in place to ensure that workers and employers of tomorrow are not saddled with the financial challenges that we have to face. Through injury prevention, we can save the lives of Nova Scotians and contribute to the betterment of our community. Thank you. We have created a hand-out that basically summarizes our comments and I think at this time we would be pleased to take questions.

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MADAM CHAIRMAN: Thank you, Ms. MacCready-Williams. We will, as is our custom, begin with the Liberal caucus. Just before I do that, I would like to welcome Becky Kent and Allan MacMaster who have joined us in the interim. We will begin 20 minutes with the Liberal caucus and Mr. Colwell.

HON. KEITH COLWELL: Good morning and it is a pleasure to have you here as always, and hopefully, my questions won't be too tough today. I know it is a very tough challenge that the board does face with all the injuries and with all the things that are happening. What is your unfunded liability at of today?

MS. MACCREADY-WILLIAMS: Our unfunded liability is $600 million.

MR. COLWELL: Do you anticipate that is going to grow in the coming year?

MS. MACCREADY-WILLIAMS: Well, our unfunded liability - just to describe what an unfunded liability is, it's the difference between the benefits that we owe to injured workers as a result of injuries they've always had . . .

MR. COLWELL: Could you please just answer the question - do you think it will grow this year? I understand where it comes from, I just wanted . . .

MS. MACCREADY-WILLIAMS: Yes, we're hoping that our unfunded liability does not grow and that the difference between our assets and our liabilities continues to reduce.

MR. COLWELL: Good, thank you. You mentioned that your goal of 2016, to address the unfunded liability - is that still reasonable or do you think that you're going to have to make some major changes to get to there? That's quite a lot more unfunded liability than you had a few years ago.

MS. MACCREADY-WILLIAMS: That's exactly the question that our board of directors will consider at their board meeting in June.

MR. COLWELL: Okay, is there enough leeway in the decisions that they're going to be able to make - with the tools that they have to work with, I should say - that indeed it could be possible to hit 2016 without being too harsh on any individual organization including employers, employees, or whatever?

MS. MACCREADY-WILLIAMS: Yes, 2016 is possible, but it is challenging because of the investment returns over the past couple of years, so the board will need to weigh up all the various factors to determine if 2016 is still reasonable.

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MR. COLWELL: There is an expected 7 per cent annual growth in the current benefits' liability. What is the major impact of this growth? Is that going to increase the unfunded liability more or is that going to be able to be handled in other ways?

MS. MACCREADY-WILLIAMS: If I could just explain what the unfunded liability is and then how the benefit liabilities line up with our assets, I think it might be helpful to answer that question. Our unfunded liability is the difference between, again, the benefits that we've promised injured workers and what we have in the bank. We have in the bank assets of approximately $1 billion. We owe benefit payments to injured workers of approximately $1.6 billion. The difference is our unfunded liability.

Because injuries happen every year, our benefits liability will grow. It will grow by 7 per cent every year just owing to the time value of money. So our assets, which is essentially our investment portfolio, needs to grow by that much just to stay the same. So we have a very aggressive, but - nonetheless we believe - doable strategy of reducing the cost of workplace injury insurance in this province. Shrinking the amount of money needed to pay for Workers' Compensation benefits by focussing on injury prevention and return-to-work. Those very aggressive goals, combined with a sound sort of long-term investment approach, will see us fully funded.

MR. COLWELL: As you go through this process - and I firmly believe in the approach you're taking on injury prevention and going in the schools. I think that's a very positive step forward but, indeed, you're still faced with that unfunded liability that I know the board is going to have make some pretty hard decisions on and, hopefully, they will be able to do it with the least amount of impact. As you're fully aware - I think we're still in a recession here in Nova Scotia. We seem to react slower than everywhere else in the world, which is good news - I mean that is good news for us.

So if companies were to be hit with a substantial increase in their fees that they have to pay to Workers' Compensation, it would be devastating to say the least. I mean, there has been the new HST that has been imposed on the province; that's going to stall it. Every time something increases slightly to an employer, it makes a huge difference to the bottom line and to what they're going to do whether they're going to expand or maintain staff, or hire new staff, and indeed they may have to reduce staff. When that happens, of course, it has a negative compound effect on our whole economy. So I'm a little bit concerned about that and, hopefully, the board doesn't have to go in that direction.

At the same time we have, I see, on an ongoing basis a lot of people who have issues with getting proper compensation from the board and we see appeal after appeal - that seems to be a waste of time. I'll just give you one example, I had a gentleman in my office this week and he made a simple request of Workers' Compensation - he already has a file that has been there for 15 to 20 years - and Workers' Compensation sent him out a whole new application. I cannot understand where this came from, but anyway we're helping him fill

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it in and will send it back. What it's requesting is something he has already had. So it seems like there's, maybe, some management changes you should make internally to address some of these issues. I think that's costing us a fortune internally.

I've talked about this before here, about the Canada Pension disability system works so slick, and it's too bad that the Workers' Compensation couldn't work as well as that works. I think you would cut down a lot of your expenses in processing the claims, and a lot of aggravation for people, but that's just an observation. I know you've taken it into consideration before, so I hope you will address that again.

The other thing is, too, the workers. When you look at the workers who have issues collecting compensation, and when you look at the doctors' reports - which I do in detail when I look at these files for individuals - it seems like there's a disconnect between what you see from a private doctor and the doctor at the Workers' Compensation Board. There doesn't seem to be a connection there. Whereas, if you look at Canada Pension, as long as you have a credible specialist that says an individual is in this condition, it's accepted. It doesn't seem to be by the Workers' Compensation Board. Why is that?

MS. MACCREADY-WILLIAMS: Physician education around occupational medicine is an issue in this province. We are working closely with Doctors Nova Scotia to provide physicians with training in disability management. For example, right now doctors can graduate from the medical school without any training whatsoever in dealing with a Workers' Compensation claim when it comes across their desk.

So there are opportunities to ensure that the same kind of training that our own medical advisors have around occupational medicine and best practice - in terms of return-to-work management - is shared with physicians around the province. In fact, we've brought the College of Occupational Medicine up from the States, working collaboratively with Dalhousie University, with Doctors Nova Scotia and provided continuing medical education around best practice when it comes to return-to-work medicine. It's in everybody's best interests - workers and employers alike - that we use best practice in terms of return- to- work management.

MR. COLWELL: I'm going back to unfunded liability again. There was a strategy in place that 16 per cent of the 2008 assessment revenue and 18 per cent of the 2009 assessment revenue was to be put directly on the unfunded liability. It appears that only $34.6 million of assessments went in 2008 and $33.4 million in 2009. Where did the remaining $2.9 million and $7.6 million go?

MS. MACCREADY-WILLIAMS: If you could just bear with me, this is a complex question and I just need to share with you a little bit of information about where money moves in our system.

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There are two sources of revenue that comes into our organization. One is the assessment premiums paid by employers around this province. The second is what we make on our investment portfolio. That's where the money comes from and it goes out in four different directions.

It goes to fund the WCB, our administrative costs. It goes to fund every other participant in the workplace safety and insurance system including OHNS, the Appeals Tribunal, Workers' Advisor Program, Injured Workers' Associations - all of those organizations are funded out of the accident fund. Those are fixed costs, we know what those are. Workers' Compensation and those others, we call them legislative obligations.

The third place where the money goes is to cover the costs of workplace injury - in other words, the benefits that go out to workers directly, the payments to health care providers on their behalf. That will be either greater or lesser than what we assume at the beginning of the year based on how many injuries take place. That's a variable cost that we experience as the year goes through.

The fourth place the money goes is to retire the unfunded liability. It is what's remaining after the administrative costs and the benefits are paid. So we always target at the very beginning of the year what we'd love to be able to put against that unfunded liability, but things will transpire during the year in a way that we didn't anticipate. Investment returns may be less than what we had hoped, so not as much money is coming in so therefore there won't be as much money to put on the unfunded liability.

[9:30 a.m.]

If, in fact, and we've had this experience in the past, we've had better returns than anticipated, we've been able to make a more significant contribution on the unfunded liability than originally anticipated. The same goes with the benefit liabilities. They will be greater or less depending on how many injuries actually take place during that year and what's left over, at the end of the day, the moving piece, is what goes to retire the unfunded liability. So what you're seeing is a target - sometimes we're ahead of it and sometimes we're behind it, depending on how our experience unfolds.

MR. COLWELL: What have you done to reduce administration costs to make that number better?

MS. MACCREADY-WILLIAMS: We take a look at our administration costs every year - our board of directors does, certainly our stakeholder board. We take a look at becoming, obviously, the most efficient and effective as possible. We compare ourselves across Canada to other Workers' Compensation Boards. We're about in the middle if not a little bit above middle which is understandable given the fact that we have a very aggressive injury prevention/return-to-work agenda. We don't have the economies of scale, given the

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small size of our organization compared to some of the larger Workers' Compensation Boards so those administrative costs can't be shared across a greater group of employers, but this is something our board looks at every year. It's on our balance scorecard and we have targets in terms of administrative costs.

MR. COLWELL: We've already talked about this. Again, it goes back to the administrative costs. I mean, I see so many - appeal after appeal after appeal. It doesn't seem like - when you look at the file, the backup information isn't satisfactory in some cases. Like I say, there is an issue with some doctors not putting down the proper information that you require, and you can see it quite easily when you review some of the cases, which is very unfortunate. Sometimes it's old information so it's impossible to get it updated, or indeed the intent of the original information brought forward, whether it's positive or negative for the employer or the employee. Has there been any move to streamline this system to make it simpler and better for the worker and for the staff?

MS. MACCREADY-WILLIAMS: There's an initiative underway right now. We're working collaboratively with the players in the appeal system - the Appeals Tribunal, the Workers' Advisor Program. The intent is to resolve issues, earliest place possible, in the system. So we had a pilot at the Appeals Tribunal last year and Tim McInnis - whom you know, our client relations officer - was seconded there for a year to see if there were sort of non-adversarial ways to resolve issues early on. That pilot was very successful, but what we learned as a result of that experience is that it makes sense to have that kind of early issue resolution process earlier. I mean, ideally making the right decision at the right time out of the claims area, but have some sort of early issue resolution process in the internal appeals area. So that's what we are piloting right now.

There is a system liaison officer who can receive calls from the Appeals Tribunal, can work with internal appeals, can work with the Workers' Advisers Program, where there are appeals moving through that somebody thinks, you know, something can be done here early to resolve this thing - that individual, Claudia Legacy, will get involved. So we're piloting that, but we agree, early issue resolution is the answer for everyone.

MR. COLWELL: I don't see a consistency with claims officers, I guess - I don't know what the proper name for it is - dealing with a particular case. There seems to be a lot of different people working on one case in the files that I've reviewed, and that doesn't seem to be very efficient. If someone has the knowledge and someone else has to learn the knowledge and they have to interpret the information, they may interpret it differently than the first person. It just doesn't seem to be efficient at all. Is there any move to get that straightened out?

MS. MACCREADY-WILLIAMS: That has been a challenge for us. We're a unionized environment and there are many opportunities to move around within the organization. Our caseworkers often do not stay for any particular length of time in any one

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particular role, but we have made changes last year in going to an integrated service team concept. So we focus initially on the large workplace as that accounts for, quite frankly, the majority of the claims activity in this province, by sheer virtue of their size. We put teams of people - caseworkers, prevention consultants - together so that there will be continuity of understanding about what's happening on a particular claim, what's happening in a particular workplace.

These are all industry-based teams, so they get a very good understanding of what's happening in that industry, what's happening in that workplace, with one point of contact for the workplace - a relationship manager who can help resolve issues right out of the gate. So that issue has been one we've wrestled with for a number of years, and we believe that going to this integrated team concept will address that lack of continuity when individuals move around within the organization.

MR. COLWELL: We all read, all Nova Scotians - you knew I was going to ask you this question today. There seems to be a huge retroactive wage increase for some of the senior staff, including yourself, and they put down plush new offices. I haven't seen your offices so I can't comment on whether they are or not. It seems quite upsetting that at this time of constraint and the recession and all of the other things that everyone else has to deal with, that you and six of your key managers - with only 400 employees - received substantial raises and retroactive back to 2008. Can you explain why you've done that? I mean, this doesn't seem appropriate at this time.

MS. SIBSON: Just from the point of view of the board, I referred to what the board went through back over the last couple of years in terms of governance, and it was decided at that point in time that the board's role in reviewing these types of things would be that the board would set the CEO's salary and would set broad principles for the CEO to determine salaries and wages of everybody below the CEO level.

If you look at the governance structure on the work site, you'll see a clear delineation between the board and the CEO. The increases, other than the CEO's salary, were at the discretion of the CEO and I will let Nancy address that. The CEO's salary was set a number of years ago - back in 2007, I believe, when Ray Ivany was the Chair - and it was a replacement at that point in time and just cost of living increases for the next few years. The amount that you see increased in one year over another was related to a SERP plan. The board decided we would not participate in the SERP plan so the amount was added to the CEO's salary and so it shows a disproportionate increase in one year.

MS. MACCREADY-WILLIAMS: So it was a refund of contributions and that's in the footnote to the salary disclosure at our annual report. In terms of the three VP salaries, the Board of Directors put in place a management compensation strategy in the Spring of last year. Part of that strategy ensures that we pay management salaries and benefits at market.

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There had been significant organizational changes and responsibilities for vice presidents in 2008.

Based on that foundational compensation strategy that was put in place by our board, we contracted with Robertson Surrette and did a market survey in Atlantic Canada of public sector salaries. It resulted in an adjustment for three of our four VPs, a one-time only adjustment, and that's what you see reported in the annual report.

In terms of retroactivity, we treat management salaries the same as we would union salaries. All employees, if reclassified, have retroactivity paid to the date their job responsibilities changed, so that principle held for the management compensation review.

MADAM CHAIRMAN: Mr. Colwell, I'm afraid your time is just up now, we'll have a second round. I would like to turn the floor over to Mr. MacMaster for the Progressive Conservative caucus for 20 minutes.

MR. ALLAN MACMASTER: Thank you for the opportunity to ask a few questions today. The first question is just to confirm, what does the insurance cover for people? I know that it covers lost income, short-term, and then if the injury is longer term in nature, they would get long-term disability benefits, but I think it also covers the injury diagnosis and treatment, is that true?

MS. MACCREADY-WILLIAMS: Yes, it covers everything with respect to workplace injury, so we're a first-payer in the system. We pay for every hospital bed, every health care practitioner and we pay short-term and long-term benefits. The long-term benefits include a portion for a lost wage that flows from the injury, as well as a permanent impairment, so a loss of functional impairment as a result of an injury.

MR. MACMASTER: If somebody was hurt on their own outside of the workplace, the diagnosis and treatment would be covered by MSI.

MS. MACCREADY-WILLIAMS: That's right.

MR. MACMASTER: Does the WCB pay the same fees as would be paid under MSI to the physicians and to the health care system?

MS. MACCREADY-WILLIAMS: We actually pay a little bit more to physicians around the province through a contract that we negotiated with Doctors Nova Scotia and the reason is that we expect different information than what one would expect from the public health care system. We are looking for specifics, not just a diagnosis. We're looking for return-to-work information, we're looking for the doctors to spend more time with the injured worker than one would anticipate in the regular public queue. So it is as a result of actually asking for different actions to be taken by the doctor as well as increased paperwork.

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We have very high expectations in terms of the quality and the amount of information that they provide to us on a timely basis, so based on those different expectations, we pay them a little bit more.

MR. MACMASTER: Thank you, and I've seen the paperwork, so I'm sure that it does cost more for physicians to put that together.

One thing that was brought to my attention and maybe you could comment on it - in Prince Edward Island, the fees seem to be quite a bit lower than in Nova Scotia. Now, maybe, that has to do with we have more stringent reporting requirements that we ask of physicians but have you ever looked at other provinces to see if we're on the same - with respect to the injuries, are we paying the same rates as other provinces?

MS. MACCREADY-WILLIAMS: That's a good question. I'm not familiar with what they're doing in Prince Edward Island.

MR. MACMASTER: Okay. I guess I would make that as a comment and it may be worthwhile to look at that to ensure that Nova Scotians are getting good value for their premium dollars.

The loss over the last couple of years, and I appreciate your comments about the investment climate and whatnot - for 2009, would it be safe to say that we would be looking at about $100 million loss for this year?

MS. MACCREADY-WILLIAMS: For 2009, we're actually ahead of the game, we had a surplus of $12 million. So, we were certainly in a much better financial position than we were the year before but our investment returns didn't, sort of, recoup what we had lost the year before. But we're in a positive position for 2009.

MR. MACMASTER: I was looking at a Statement of Operations and Comprehensive Income and it was year to date, March 31st, 2009, and I was thinking it was for one quarter of activity and I saw a total comprehensive loss of $55 million and that's what I was seeing. Can you explain a little bit what that means?

MS. MACCREADY-WILLIAMS: I might ask Mr. McKenna, our Chief Financial Officer if he can think back to Q1 of last year.

MR. LEO MACKENNA: March 31 would have been our first quarter of operation and the markets had only just started to improve at that point, so yes, it had run a straight extrapolation multiply that 55 by 4, you would be thinking well, you're heading for a $200 million loss. As a matter of fact, the markets improved pretty significantly in the last three quarters of the year so, as Nancy said, we ended up with a $12 million surplus as opposed to a loss.

[Page 15]

MR. MACMASTER: Good, thank you. So that would have helped, I guess, with your overall unfunded liability, because it would have reduced it by that amount.

Here's a question, what happens to workers who are over the age of 65 when they get injured? Is there any compensation available for them?

[9:45 a.m.]

MS. MACCREADY-WILLIAMS: Yes, there are rules in the legislation, depending on how old they are and there are rules to receive compensation on a temporary basis beyond age 65. Our long-term benefit, a long-term earnings loss award ceases at the age of 65, as it is based on sort of historic assumptions that CPP, et cetera, will kick in at that point. So, given our aging workforce, there are provisions in the legislation on a short-term basis. But there is a component, as I've said earlier, of the long-term benefit that is payable for life. That is not the earnings loss portion, that is the permanent impairment benefit, that relates to the loss of body function that a worker suffers as a result of an injury and that's lifetime award.

MR. MACMASTER: So, the CPP would kick once they've reached the age of 65, would that mean that they would no longer have to pay worker compensation premiums once they hit age 65?

MS. MACCREADY-WILLIAMS: The worker doesn't pay workers compensation premiums at all; it is all paid for by the employer.

MR. MACMASTER: Well actually, it's - sorry, I guess I should have asked, does the employer have to pay for employees who are 65 or older?

MS. MACCREADY-WILLIAMS: If they're employed by them and they're entitled to receive benefits, if injured on a temporary basis, yes.

MR. MACMASTER: Okay. Would there be a reduction in that fee, given that if there's an injury, that people over 65, the temporary benefits would be there, but the longer term benefits wouldn't be there, so there would be a reduction in cost? Does that mean there would be a corresponding reduction in the premium for the employer?

MS. MACCREADY-WILLIAMS: If an employer's claim costs are going down, typically it is because of fewer injuries in the workplace - more safe and timely return-to-work - that drives whether their assessment premium goes up and down. If their claim costs go up, their premium will likely go up. If their claim costs go down, their premium will likely go down.

[Page 16]

MR. MACMASTER: Isn't there a component, though, in the formula when employers pay their premiums, based on the number of employees?

MS. MACCREADY-WILLIAMS: Yes, it's based on the number of employees, but it looks at historical claim costs experience. Again, if an employer's claim costs experience is going down just like your car insurance, you will likely see a reduction in the amount of premium you're going to pay.

MR. MACMASTER: I guess the question I wanted to get at was, if the benefit isn't there, then perhaps there shouldn't be payment for benefits. It sounds to me like you look at a lot of factors, you roll them together and you look at it in a more comprehensive basis when you determine the premium for a specific employer.

MR. LEO MCKENNA: I think the question is, do we charge less for the older worker, given that worker may be entitled to fewer benefits over time and the answer is, no, we do not. But we average - we actually charge on the basis of payroll, regardless of age. We don't also charge more for the 19-year-old who, if injured, may draw benefits for many years.

MR. MACMASTER: Okay, thank you very much. I'll give you an opportunity - I know that you've been active in the past to try to speak with employers and speak with workers about reducing the incidents of injury. What are we doing right now to try to reduce the incidents of injury?

MS. MACCREADY-WILLIAMS: That's a great question. We have a five-year strategic plan that our board of directors approved last year as a result of broad stakeholder input across the province. So 2010 is year one of our strategic plan. The two pillars of our focus are injury prevention and return-to-work.

So one of the things on the prevention side that I had mentioned was lining up and relating to the large workplace in a different way. We know that there are about 370 employers in this province that account for about 60-70 per cent of the costs in the system. Just by virtue of their size, they're larger. We put in place workplace teams that provide one point of contact and that focus, in those workplaces, on prevention and return-to-work; both services provided by one team.

We had piloted that concept with the manufacturing and health care sector before we rolled this out broadly to all large workplaces across Nova Scotia. We saw a significant improvement in their injuries going down, and more safe and timely return-to-work. That's a big focus of ours; we call it the new service delivery model. But we recognize we cannot do it alone, it's not the Workers' Compensation Board that will change this single-handedly. We work co-operatively with our colleagues at Occupational Health and Safety, which is the enforcement arm, down at Department of Labour and Workforce Development. We work to put safety associations in place and support the existing safety associations.

[Page 17]

Through a number of concurrent activities by many different players in the province, we have started to see that reduction in injury that we need to see. Again, there's much more to be done to change what is the perception in Nova Scotia that workplace injury is just part of the deal; 52 per cent of us believe it's inevitable when you go to work, so we need to change that.

MR. MACMASTER: I know some large companies all across Canada, I'm sure, look after their own compensation benefits. They're large companies and I guess they try to run their own workers' compensation in-house. Are there any companies in Nova Scotia that are doing that currently?

MS. MACCREADY-WILLIAMS: Workers' compensation is mandatory in Nova Scotia for most high-risk industries. There are some employers who are self-insured but still they ask us to - essentially the government - administer workers' compensation on their behalf. While they may have teams directed to manage workers' compensation injury and return-to-work in their workplaces, it's all being administrated by us.

MR. MACMASTER: Are you seeing any trends in injuries? Are there certain types of injuries that are increasing or, I guess, what would be driving the injury cost equation?

MS. MACCREADY-WILLIAMS: That's a great question. Last year, 53 per cent of what came in the door was soft tissue injury, so by far, sprains and strains are the majority of the nature of injury that we see. Back injury accounted for about one-third of time-lost injuries. There's a huge opportunity in terms of education around ergonomics, lifting. For example, the health care sector accounts for one-quarter of the claim costs in this province, a huge opportunity to work with the new safety association Aware Nova Scotia for the health care sector to help them address the issues that are happening in their industry. Sprains and strains have over the years been the most common nature of injury that we've seen.

MR. MACMASTER: From my own personal experience with a physiotherapist, I think strengthening the core muscles in your abdominals does wonders to help your back.

Do larger employers have a lower incidence of injury? I know some large employers often put up signs for their workers, so many days without lost time due to injury. I know they're very conscious of the potential cost to their operations and they probably have more resources to help their employees to ensure that they're educated and the proper setting is in place so they don't get injured.

MS. MACCREADY-WILLIAMS: Many workplaces around this province are best practice leaders when it comes to occupational health and safety, not just large ones. There are many small and medium- sized businesses as well that focus and celebrate going over a period of time without a lost-time injury. We think that's terrific, it's a leadership-based model. What's important for the CEO and the senior leadership team of any organization is

[Page 18]

going to be important for the rest of the organization. If they're celebrating injury prevention and safe and timely return-to-work, that's a good thing.

MR. MACMASTER: You mentioned in your earlier comments the number of factors that lead up to the unfunded liability. Is there anything though that stands out as a highlight as to what caused the unfunded liability if you look back over the history of the last 10-20 years?

MS. MACCREADY-WILLIAMS: The unfunded liability actually was created in the 1970s and 1980s when assessment rates were managed by the government. It was before there was a Board of Directors, the stakeholder Board of Directors put in place in the early 1990s. It was all done with the intent of encouraging economic growth in the province and so Workers' Compensation assessment premiums rates were held virtually constant. We had the lowest rates in Canada but at that same time, economic activity grew and as there was economic activity, the claim costs associated with that economic activity did not keep pace with the premiums coming in the door to cover those costs. That's what created the unfunded liability. So when the brand new Board of Directors was appointed in the early 1990s and the size of the unfunded was assessed, the board was 27 per cent funded at that point.

MR. MACMASTER: I think you mentioned this earlier and I missed it, what is your target rate of return for the investments that you have?

MS. MACCREADY-WILLIAMS: It's a long-term view that we have so over the long term, we're looking for a 7 per cent rate of return over the long term. Some years we're ahead of that, other years, as the past couple of years, we're behind that.

MR. MACMASTER: Okay. What do you think would be a stable range for the unfunded liability?

MS. MACCREADY-WILLIAMS: We'd love to be fully funded, that's the goal. We're one of a couple of jurisdictions in Canada that still have an unfunded liability. When we reach that, I'm optimistic that we will become fully funded. The range of what is considered to be fully funded is something that will have to be considered by our board of directors. Different jurisdictions that are fully funded across Canada use different ranges.

MR. MACMASTER: What cost-control measures have we in place? I'll just let you comment on that.

MS. MACCREADY-WILLIAMS: Cost control in terms of administrative costs?

MR. MACMASTER: It could be administrative, it could be right through the system to try to keep premiums down for employers.

[Page 19]

MS. MACCREADY-WILLIAMS: Sure. Our stakeholder board of directors approves our administrative budget every year based on the plan that they approve, the outcomes they want to see represented on our balance scorecard. So from an administrative cost perspective they are sort of the shepherds, and use due diligence in terms of their fiduciary responsibility, to make sure that our administrative budget is tight.

Take a look at our health care providers, there are various contracts that we've put in with our key areas of health care cost drivers - physicians being one, physiotherapists being a second - where we've tied remuneration to outcomes and action. Even though we pay physicians a premium - as I indicated, because we are expecting a lot from them - if they do not comply with their contractual obligations, we will reverse their fee; the same with physiotherapists.

Our audit and risk oversight committee of our Board of Directors also takes a look at various things like management board expenses. Annually they take a look at whether we are getting value from these kinds contracts that we have in place, that are designed to help manage spiraling health care costs. Those are sort of the strategies that come to mind right now.

MADAM CHAIRMAN: Mr. MacMaster, your time has just elapsed, so you can come back in the next round. I'll turn the floor over to Mr. MacKinnon, with the NDP caucus, for 20 minutes.

MR. CLARRIE MACKINNON: I'd like to begin by talking about your client services and the service that I have gotten as an MLA over the last number of years. I see Tim McInnes is with you today in the balcony. I just want to say that he has given some excellent service to me and my constituency office.

MS. MACCREADY-WILLIAMS: Thank you for that.

MR. MACKINNON: What I'm doing in that constituency office is giving up my office for a day, or part of a day, and we have had as many as seven clients coming in and each one has about an hour with the client service people who come in. Tim has been the one who has come in most often, so I want to comment on how good that service has been. Having said that, we agree that there are steady improvements being made in relationship to injuries. We also agree that too many people are still dying and being hurt on the job.

You talked about the strategic plan and that's just being rolled out now. What are the projections for the conclusion? I must comment as well on the TV ads which are very good, okay, but there are some in-depth things taking place and I'm wondering if you could give us a picture of what you hope will occur at the end of the strategic plan?

[Page 20]

MS. MACCREADY-WILLIAMS: Our strategic plan takes us to the end of 2014 and it's linked directly to our elimination of our unfunded liability, which right now is set at 2016. So it's all designed to reduce injury and ensure more safe and timely return-to-work through various strategies.

What does success look like? When our board put our previous strategic plan in place - so this is not the first strategic plan, it's just the launch of a new one - back in 2006, we set some very aggressive goals. At their conclusion that would see - and conclusion looked like around 2016 with success, so we would be fully funded, and because a big piece of their strategy of becoming fully funded is reducing the injury rate and getting more people back to work in a more safe and timely way, we looked to reduce the amount of time off work by approximately, on average, 35 days per person. We looked at reducing the number of people injured on the job by almost 15 per cent. What one would see at the end of that period would be 6,800 fewer people being injured on the job - a significant improvement in workplace safety in this province - so some very, very aggressive goals that would turn around the trajectory that we've seen over decades of just more and more people getting injured on the job.

MR. MACKINNON: We've heard that serious injuries fell below 8,000 for the first time in over a decade. Now, we know that there are fewer people involved in heavy industry. There are fewer people involved in farming, forestry, and the fishery, and also mining is very limited within the province.

MS. MACCREADY-WILLIAMS: Is there correlation between the numbers? Yes.

MR. MACKINNON: We have adjusted rates in all kinds of different situations - you know, seasonally adjusted this and that and the other thing - but have you actually factored in the changes that have taken place within the workforce? We have so many increases in service industries, which have very few accidents.

MS. MACCREADY-WILLIAMS: Yes. Obviously, there were some impacts from the recession. There were fewer people working, and therefore fewer injuries associated with that, but even taking that into account, we saw a reduction in the injury rate because our assessable payroll held virtually constant, so the risk we were insuring stayed virtually constant. As we saw the manufacturing sector contract, we saw the health care sector expand, so even holding that impact of the recession constant, we still saw a reduction in injury.

MR. MACKINNON: Now, I would really be remiss if I didn't ask a couple of local questions.

MS. MACCREADY-WILLIAMS: Sure.

[Page 21]

MR. MACKINNON: Certainly one of the nails in the coffin as far as TrentonWorks was concerned was very high premium rates. That was based on five years of performance, and even though things were getting better as the company got closer to demise, that five-year basing is in existence and it has been for a long time. If a company is improving over the last two or three years, is there any recognition of that?

MS. MACCREADY-WILLIAMS: It's a great question. As part of our strategic plan, our board will be taking a look at our experience rating model to determine whether, in fact, it incents the right kinds of behaviours because what we've heard from employers is that they want the model to be responsive. They want to see their rates move in the right direction if, in fact, they are experiencing a reduction in their number of injuries and they're getting people back to work. So if their claim costs are going down, they want to see their rate go down as well.

TrentonWorks was a unique situation because it had a very, very high injury rate and a very challenging return-to-work experience. As you've indicated, this five-year history stays at an industry level with that particular employer and so that is exactly what we're going to look at - do we need to tweak the model? Does it still represent the right incentive program for employers to embrace workplace safety.

MR. MACKINNON: Thank you, I think perhaps some tweaking would be helpful. My concern is that Daewoo has no experience in getting involved in Trenton. We're very excited about that and I don't think there is any history in wind turbine construction in Nova Scotia and I'm very hopeful that the rates for Daewoo will not be overly high. How do you look at a new industry coming in without any history? Do you look at other jurisdictions?

MS. MACCREADY-WILLIAMS: Yes, that's exactly what we do. We look at other jurisdictions both north and south of the border to see what their experience is with that particular industry and the nature of their industry, based on the climate, what their claim cost experiences have been. Because we are, essentially, a monopoly across Canada, the sharing of information is very wide and deep, so we look to our neighbours to see if they could provide some assistance.

MR. MACKINNON: Workers compensation - in the old days when my father was working in the pits for 33 years until he was smashed up very badly and had to deal with workman's compensation, back in those days - which was very sexist, the situation is that. I'm wondering, I have several questions and I guess I had better - how do you change the safety culture within the province. I know that big industry is policed very closely, but there are small contractors out there and apartment building owners who hire people to work at fairly high heights and what have you, what is being done to work with those partners?

MS. MACCREADY-WILLIAMS: Safety associations play a key role, so what we've seen - just by way of example in the construction sector - in the forestry sector where we

[Page 22]

have seen a history high injury, high cost, right now it is safer to work in the forest than it is to work in a nursing home. So, safety associations have worked with their specific industries to provide tools and education and training to both small, medium and large business; they play a very valuable role. We also create materials and on-line products, training materials - tools that any size business can use.

Changing the workplace safety culture is about changing those attitudes around safety so that we feel about workplace safety just the same as we feel about drinking and driving and wearing seatbelts. It is just something that is top of mind 24/7. So, it is us working in partnership with others around the province that will make that change.

MR. MACKINNON: I had several questions relating to the fishing industry but I have to share time, so I'm going to leave those, perhaps, to ask privately. However, the chronic pain issue is one that is prevalent in my constituency and others where heavy industry has existed in the past. What is the latest on the chronic pain issue?

MS. MACCREADY-WILLIAMS: Chronic pain is compensable in Nova Scotia as a result of Supreme Court of Canada decision back in 2003. At that time we were required to go back and re-adjudicate over, essentially, 25,000 claims for over 7,000 claimants who were looking for compensation for chronic pain. We've worked through that work and it has been booked on our financials - it has cost $200 million for chronic pain in Nova Scotia. Chronic pain is dealt with as any other injury in this province. People do not file claims for chronic pain; they file claims if they have an original injury that goes on to develop a chronic pain scenario, and the vast majority of claims we see start out as soft tissue injuries.

So keeping the nexus with work, making sure that we take what we call an holistic approach - a bio-psycho-social approach to the injured worker so that we provide the right supports, whatever they are, to that individual so they can get back to work in a safe and timely way. Work is a prevention strategy for chronic pain, safe and timely return-to-work, and insuring that all those supports are in place so that the worker is able to go back to full function.

MR. MACKINNON: I will share my time with the member for Antigonish.

MADAM CHAIRMAN: The honourable member for Antigonish.

MR. MAURICE SMITH: I just have some general questions, I guess, I wanted to start with. You talked about a 7 per cent likely increase in the cost of claims annually. Did I hear you say that?

MS. MACCREADY-WILLIAMS: Essentially our liabilities, which are benefits promised to injured workers increases year over year, yes.

[Page 23]

MR. SMITH: It's about 7 per cent?

MS. MACCREADY-WILLIAMS: On average, 7 per cent, yes.

MR. SMITH: And you're saying that the investment - the billion dollars in the bank, to put it that way - you're optimistic that it would return about 7 per cent a year.

MS. MACCREADY-WILLIAMS: That's right, over the long term, yes.

MR. SMITH: What is long term?

MS. MACCREADY-WILLIAMS: Long term is as long as Workers' Compensation is in business.

MR. SMITH: I understand that. So my question is really - unless we're very fortunate, we're going to be actually - in terms of at least the underfunding, if your income from your billion dollar fund isn't going to be at 7 per cent every year and your claims are going to be at 7 per cent, nothing from those funds are really going towards reducing the unfunded liability, are they?

MS. MACCREADY-WILLIAMS: Would you like to add to that one, Leo?

MR. MCKENNA: The number is entirely correct. When your assets are smaller than your liabilities, you would anticipate most years to have a shortfall. We'll have years when we'll have exceptionally high investment returns and it'll be to the good, but your question is at the nexus of exactly why we are charging higher rates to employers than you would just based on current year costs. We need to charge a surcharge and it varies by year, but it's roughly 15 to 20 per cent of the premium that is in excess of current year costs that we're using to offset that shortfall between investment revenue and increases in our liabilities.

MR. SMITH: So that $12 million that we had a sort of surplus in this year, did that actually go on the unfunded liability or were there any reductions in the amount that the employers had to pay because of that? Where did that $12 million go?

MR. MCKENNA: It is simply a reduction on the unfunded liability.

MR. SMITH: These are just questions that came to me when you people were answering other questions, so I don't know if I'll ever get to my own questions. You talked about the Workers' Compensation administration, that there are fixed costs. Have you any idea what percentage that fixed cost is, or what the fixed costs are for administration for the board?

[Page 24]

[10:15 a.m.]

MS. MACCREADY-WILLIAMS: Our budget is in the vicinity of $50 million and so when I say it's fixed, it is known in advance when the board approves its funding.

MR. SMITH: So administration is how much on an annual basis?

MS. MACCREADY-WILLIAMS: It's approximately $50 million.

MR. SMITH: Do you know what percentage that is of the total monies that are administered? I'm not sure I'm asking it the right way, but where are we with that? How much does $50 million represent of the total monies that the board is looking at?

MR. MCKENNA: The administrative costs are about 20 per cent of our operating budget. The balance would be for benefits.

MR. SMITH: Government agencies over the last year, as I understand it, were asked to come up with a 1 per cent savings. I know you said you were a stand-alone, independent, arms-length agency - were you subject to that as well?

MS. MACCREADY-WILLIAMS: We've been asked by our board of directors - and it is subject to approval next month, but we've been asked by our board of directors to look at a 1 per cent only increase in our administrative budget over 2010 - I'm talking about our 2011 budget. Due to salary costs, increments, and just regular non-salary fee increases every year - just to keep the lights on - it is 4 per cent to 5 per cent year over year, so we're looking at a fairly significant budget decrease for 2011.

MR. SMITH: So you were asked to hold it at 1 per cent this year. Were you asked to try to save anything in the last year? In the year gone by, did anyone subject your organization to a . . .

MS. MACCREADY-WILLIAMS: Right. I'm hesitating just because our board approves our 2010 budget in the summer of 2009. Do you specifically recall any parameters?

MADAM CHAIRMAN: Mr. McKenna, would you like to answer that?

MR. MCKENNA: Nancy is right. Our budget is approved six months in advance of our fiscal year, so there wouldn't have been the opportunity for that kind of direction to be given. We wouldn't typically receive that sort of direction directly from government, but we're very much aware of what's going on in the environment. Our board would have been talking to us on a quarterly basis as they review financial statements, asking us exactly those kinds of questions.

[Page 25]

MR. SMITH: When someone gets injured and they go to their physician and they're asked to complete a medical form for WCB, does the physician charge their patient and the claimant? Is there a cost?

MS. MACCREADY-WILLIAMS: No, essentially they charge us for that.

MR. SMITH: Okay. I've often heard people say they can't afford to go to the doctor to get the medical, so that's just a misunderstanding?

MS. MACCREADY-WILLIAMS: That's a misunderstanding. Workers don't pay anything in relation to Workers' Compensation.

MR. SMITH: I'm just going to ask you a question that I'm going to make up. I have someone coming to me, they were in the woods and they get an injury, their arm is hurt or their back is hurt, and they come to the Workers' Compensation Board. What does the board do to try to get them back to work?

MS. MACCREADY-WILLIAMS: First of all we assess whether this is what we'd call a low, medium, or high-risk injury based on our experience, based on the nature of the injury - "risk" is really about how severe is it. So a high-risk injury would be one that is a severe injury, would require us to coordinate a multitude of health care services - physical, psychological, et cetera - to ensure a safe and timely return-to-work, typically involving a fairly lengthy recovery period.

So it's almost like a triage process. We would immediately send it in the direction of - if it's someone in the woods and it's a fairly serious injury, we would send that to one of our integrated service teams if it's a large employer. Our caseworker works with the worker, the family physician, the employer, and any other health care professional whose services we need to pull in to ensure that worker recovers from the nature of their injury and is integrated back into the workplace as soon as they're medically able.

What we know to be true is the longer someone is off work, the less likely they are to return to work - 2 per cent return to work right after a year off work, and that's across Canada. That's just a stated fact. Keeping the nexus to the workplace, keeping the employer involved, the worker understanding what the recovery plan is and understanding what the likely return-to-work date is if that all goes well, are very important, and that everybody be on the same page.

MADAM CHAIRMAN: I have to interrupt you now. Sorry, the time is up, Mr. Smith. I'll return to the Liberal caucus. I've got 12 minutes for the final round, if you would like to begin, Mr. Colwell.

MR. COLWELL: Would you table all the salaries of your senior executives?

[Page 26]

MS. MACCREADY-WILLIAMS: We have them in our annual report now. We put our senior executive compensation there and we have been doing so for many years to be open and transparent.

MR. COLWELL: From the information received all Nova Scotia, it appears that the average salary at the Workers' Compensation Board is $69,216. That's up 4 per cent from 2008. What is the reason for that big increase?

MS. MACCREADY-WILLIAMS: There would have been a 2.9 per cent cost-of-living increase that would have been negotiated with our union, for example. If there are any increments that some particular individual would have gone through, in terms of their salary scale, that would have been factored in. Those would be the two drivers of that.

MR. COLWELL: You are aware, of course, that most industries are cutting wages or holding wages, including the government and everyone else. Doesn't it seem unusual in a time of recession, especially with the unfunded liability you have and the issues you're facing - those are a little bit excessive?

MS. MACCREADY-WILLIAMS: The 4 per cent again is largely negotiated as part of a collective agreement with our union and our contract would have required us to pay that.

MR. COLWELL: As I go through this thing, it always seems to me that it's a battle to maintain good employees and also good service. While I'm talking about that, I want to thank you for bringing Tim McInnes back. He was sadly missed when he was gone. I'm very pleased to see him back - he provides excellent service to us in our constituencies and I just want to put that on the record.

MS. MACCREADY-WILLIAMS: Thank you.

MR. COLWELL: Has the minister responsible for the Workers' Compensation Board said anything to the board about the pretty substantial increases in wages?

MS. SIBSON: No, I haven't spoken with the minister or the deputy minister on that issue.

MR. COLWELL: There's been no correspondence from the minister or anything like that?

MS. SIBSON: Not to my knowledge.

MR. COLWELL: Okay. Also, you indicated a couple of minutes ago, your administration costs are about 20 per cent. Doesn't that seem a little bit high?

[Page 27]

MS. MACCREADY-WILLIAMS: Our board of directors every year takes a very comprehensive look at our administrative costs and we compare ourselves to other jurisdictions, other WCBs across Canada. We find ourselves in the middle of the pac - a little bit ahead of the middle of the pack - and the board has decided that is the place to be. They've invested in resources because of the transformational change journey we're on with workplace safety in this province.

Again, because we're a small jurisdiction, we don't have the economies of scale that other large jurisdictions would have. So we find ourselves in that place and our board, including employer reps, are comfortable with that.

MR. MCKENNA: The one other point I think is important to note is that 20 per cent does cover the cost of the Workers' Compensation Board. It also funds the other significant operating agencies in the Workplace Safety and Insurance system and one of the larger ones, the Occupational Health and Safety division of the Department of Labour and Workforce Development. The other two are the Workers' Advisor Program and the Workers' Compensation Appeal Tribunal.

MR. COLWELL: We talked a little bit about medicals done by doctors and earlier you talked about doctors not being up to speed on what they really should be for compensational injuries. From just myself working with these cases and reading the files and going through them, the information the doctors provide sometimes isn't adequate, quite frankly. Sometimes it is and sometimes people are refused even though it is accurate. Stating what you said earlier - that really there was no training for doctors on this and very few doctors in the province - why on earth would you ever pay for a medical by a doctor that isn't qualified to do it?

MS. MACCREADY-WILLIAMS: Well, doctors play a very significant role in our health care system. I'm very pleased to say that over the last year, with a new Dean of Medicine, Dean Tom Marrie, there have been significant steps taken with respect to the curriculum around Occupational Health and Safety. Our own Dr. Jamie Cox is working with the Dalhousie Medical School to revise the curriculum to include in it a specific curriculum related to occupational medicine.

There's also a chair in occupational medicine that is going to be situate at the Dalhousie Medical School site in Saint John, New Brunswick. That person, when they're hired and in that role, will look to education of physicians in the Atlantic community around best practice around return-to-work management.

There's progress being made. But those are the physicians we're dealing with now and we're trying to give them the tools and the education so that they can be successful in working with their patients.

[Page 28]

MR. COLWELL: Yes, it's good to see that in the future that will happen with new doctors coming out, but we have a lot of doctors who have dealt a lot with Workers' Compensation. I know when you're going through this, there are certain things that doctors should be looking for for your purposes and for the employee's purpose. Has there been any kind of information dispensed to doctors who have been out in the field for a long time, letting them know what you're looking for, what the employee needs to have if indeed they are disabled - or not disabled, but injured - so when the information comes back to your office, it's the information you want?

MS. MACCREADY-WILLIAMS: Yes.

MR. COLWELL: Either it's positive or negative for the employee - is there any instruction out there for that? I think that's essential.

MS. MACCREADY-WILLIAMS: Yes, that's a great point you raise because we need to be clear with physicians about the expectations, what information we need to do our job. That has been set out in a contract with Doctors Nova Scotia, what information we're looking for from the treating physician so that we can do what we need to do - and the family physician works in conjunction with the physiotherapy community who provide the physician, and the employer, and the Workers' Compensation Board with information about what this worker is able to do functionally shortly after the injury. So it's about ensuring that all the relevant information that's needed as soon as possible is sought from the most appropriate place, with the family physician being a key piece of that.

MR. COLWELL: I'm a big supporter of family physicians because I think they have a tremendous impact on our health of our province, but I'm lost with this thing because earlier you said that typically the family physicians don't have the expertise that your doctors have, the medical advisers and the board, and now you're telling me that you direct it through the family physicians, and when I look at the files that I see come across my desk from working with constituents and people I do in the province, as Party Critic, it doesn't add up. It just doesn't add up, what you're telling me; you're telling me one thing and another thing - so what is it?

I mean, really the issue is here if you can get better information from family physicians that you will accept - will accept, because a lot of times you won't accept that information - it would save a ton of money, a ton of aggravation for people in the system. It would save employers a lot of money, it would help to reduce your administration costs on some of these things, and it would overall improve the whole system with a group of people who are highly educated, very capable of doing this work, but they've got to know what you want.

MS. MACCREADY-WILLIAMS: Yes, so that's what we've set out by way of contract. There's certain information that we need to see returned to us within a certain time

[Page 29]

frame and, if they don't, we don't pay their fee. There has been education around the province, and we've worked with Doctors Nova Scotia so that we're all on the same page, the ultimate goal being return-to-work, and what information and role each person plays in the system. Our injured workers are able to choose the physician that they want to go to, so we work with the physicians in the community where the injured worker has that relationship.

Our own medical advisers do not treat these injured workers. Just like when you're dealing with a bunch of lawyers, you can have various differing opinions - and I can say that because I'm a lawyer by training - you can have multiple different opinions on any one issue. Many times the medical evidence on a particular file is grey and oftentimes there are competing opinions.

[10:30 a.m.]

So caseworkers who are helping to sort of manage that can reach for an independent opinion from one of our own medical advisers to kind of help sort out what's going on here, and oftentimes our medical advisers will call the family physician if there are areas of grey and we're not getting the information we need from those family physicians, because it's about making the family physician - giving them the tools and supports they need to be successful, because we don't want to interrupt the relationship with the injured worker. That's typically a very long-standing relationship but they need to have very clear expectations about what the goal is in terms of return-to-work after a work-related injury. They need to provide us with certain types of information that we're paying a premium for, and they need to provide that to us on a timely basis. So we've been very clear in our contract that that's what's expected.

MR. COLWELL: How long has this contract been in place?

MS. MACCREADY-WILLIAMS: Oh, my goodness, 2006, I want to say we put our contract in place with Doctors Nova Scotia, yes.

MR. COLWELL: And how successful has it been so far?

MS. MACCREADY-WILLIAMS: Well, we've seen a huge improvement in the amount of information we're given, the clarity of the information we're given, and the timeliness of the information we're given. We're also seeing an alignment between the worker, the employer and the treating physician on the ultimate goal of return-to-work. What we do know is if a physician tells a worker, with respect to a soft-tissue injury, that they need six to eight weeks of bed rest, that's a very difficult place to be because that's not best practice in terms of return-to-work management. So it is ensuring that the physicians have the training they need around occupational medicine, the tools they need to be successful and

[Page 30]

that we're all on the same page in terms of what the ultimate goal is and having that worker go back to work when they're medically able.

MR. COLWELL: My time is just about up. Could you table the information on what training and exactly what the contract is, or the terms of the contract, with the doctors in the province? I would just like to see that because I think it's a very important factor to resolving a lot of these issues that come across my desk and I know, across your officers' desks in your department. I think my time has expired.

MADAM CHAIRMAN: It has, but thank you. I'll turn the floor over to Mr. MacMaster for the Progressive Conservative caucus.

MR. MACMASTER: If I may ask just a quick question. There was a case that came to my attention where there was a gentleman who was injured, deemed 93 per cent disabled and he's getting benefits. He has a spouse and there was some question about lawn care and getting a driveway plowed in the wintertime. Is that a benefit covered by Workers' Compensation or is that something that is expected to be covered by the recipient of the benefit through their benefits?

MS. MACCREADY-WILLIAMS: That individual would likely be receiving service from our extended benefits team. There are a number of services they need to reach to ensure quality of life for that individual. These are individuals serviced by our extended benefits team who are not going back to work as a result of their work-related injuries. We have guidelines and policies in place with respect to the nature of the benefits and services that will be provided in those situations. Essentially, the caseworkers reach to those policies about lawn care, those kinds of things.

MR. MACMASTER: If it's okay, I might direct a letter to you about a specific case just to have it looked at, to make sure that it's being addressed.

MS. MACCREADY-WILLIAMS: I would suggest you direct that to Tim McInnes - he's certainly the individual who can help you out.

MR. MACMASTER: I'll do that, thank you. The next set of questions I was going to ask you about - and I was looking at the statements - one of the expenses in operations that is significant is health care. I presume this would be where the physicians are paid for their work to make diagnoses and provide treatment; that's a significant cost, which would be expected. It's funny, we just had a discussion in this province about auto insurance and one of the big drivers in auto insurance, of course, is the injury. Is it a legitimate injury? How do we compensate people when they are injured?

One of the things that they did in Alberta was they structured a very clear set of diagnostic protocols and treatment protocols and this would help physicians when they are

[Page 31]

making their assessments, so there's some kind of background they can reference to make determinants about diagnosis and treatment. If we can control those costs, presumably we can get closer to funding the liability and we can also - maybe some day- look at stabilizing or maybe even reducing premiums that employers pay for the compensation. Is that anything that the Workers' Compensation Board has looked at? Have you looked at diagnostic and treatment protocols to provide to physicians?

MS. MCCREADY-WILLIAMS: Yes, just speaking to health care costs generally, we know that physicians and physiotherapists, in the past, have been the key cost drivers; pharmaceuticals is up there as well. We pay everything as first payer in relation to health care support for injured workers.

You make an excellent point about everybody involved in the system, in particular in the return-to-work plan - sharing the same guidelines, being on the same page about what's expected. There are medical disability guidelines, essentially, that are considered by the American Medical Association and the Canadian Medical Association as best practice. Essentially what they say is if the worker is in sedentary-type work, with this kind of injury, this is the period of time over which one would generally expect a safe and timely return to work.

Okay, obviously, if it is a heavy labour type of role, that return date might be different. Our doctors use that, it is part of their contract to actually use those medical disabilities advisor guidelines as well as our physiotherapy community. Our employees have those on their system, electronically, so we're sort of using the same guidebook. It is a guide - each case needs to be dealt with individually and there may be individual factors that would require someone to be off a longer time off work or someone may come back to work sooner. But it is just sort of high level getting on the same page. So we do use those now in our system.

MR. MACMASTER: Okay. I noticed that you had earlier in your presentation about, or in answering some questions about - one of the issues that you face, if you look at all the physicians across the province, they have various specialties. Some of them may not up to speed or they may not have the same degree of knowledge as others would, to make a diagnosis or a treatment for a particular injury. That creates uncertainty and probably creates a lot of inefficiency. That is why I raised the point today - it might be something worth looking at. I know you have measures in place already but I would draw your attention to the Alberta definitions for minor injuries as something you might look at.

MS. MACCREADY-WILLIAMS: Right, thank you for that.

MR. MACMASTER: The other thing is, you mentioned before that a lot of the injuries are soft tissue, which is similar to auto insurance as well and that issue there, which is driving up the cost there.

[Page 32]

One thing I noticed is the age of injury date. I know that injuries seem to start to occur more frequently beginning at age 35. I often think, nowadays, a lot of people when they get into to their mid-30's, they're really starting to have families, so they may be carting the kids around to soccer or something. They're starting to enter the peak of their careers, so there is more time demand on them from work, there is less time for physical activity. When you have less time for that, if you start losing your conditioning, just like an athlete, you're more susceptible to injury. Would you say that's the case in the workplace as well?

MS. MACCREADY-WILLIAMS: Yes, it is. We are an aging workforce, we have the oldest working population in Canada in Nova Scotia. What we know to be true, based on our experience, is that it starts in the 30's and 40's but the older someone is when they're injured, the more challenging it is to effect a safe and timely return to work. It just takes longer and I will include myself in there too, it takes longer for us to recover from injuries, the older we are.

So, prevention is key. Individual responsibility for their own personal health and safety prevention is important. I've heard Chris Power, the CEO of Capital Health, say generally about Nova Scotians - based on what she sees in our hospitals - that we eat too much, we smoke too much, we drink too much and we don't exercise enough. So that is just generally speaking. That does present challenges in this province.

MR. MACMASTER: I can appreciate your organization is focused on providing benefits to the injured and that is the focus. I know you mentioned earlier about going into the schools and talking about injuries but is there any talk about - and I think about back injuries, specifically, in there - is there any encouragement or discussions with other departments in government about trying to promote physical activity or wellness as a means to be preventative?

MS. MACCREADY-WILLIAMS: Absolutely. It is a great point. We've worked collaboratively with Health Promotion and Protection, in the past, as part of their broad Injury Prevention Strategy that they rolled out a couple of years ago. We've worked with the various chambers around the province, in terms of wellness generally in the workplace. These are all factors that if we take care of ourselves and we act safely in our personal life, that will transfer over into our professional and working lives and vice versa. So it all needs to be connected and we have worked collaboratively with those organizations in the past and continue to have a working relationship with them.

MR. MACMASTER: We've talked a bit about administrative costs today. Would that 20 per cent include the cost of paying physicians for their assessment of injuries?

MS. MACCREADY-WILLIAMS: No, it would not. That would be part of our liability. Those are paid out of the accident fund.

[Page 33]

MR. MACMASTER: One thing I've seen over the years is that people who are injured may go to more than one physician. Sometimes it's legitimate if an injury may not be picked up or assessed, so the person may have a legitimate injury, but I've seen cases where people have gone to eight physicians. I can only imagine the increased costs that must add to the system.

MS. MACCREADY-WILLIAMS: We do see that, but that's not the norm, and our own medical advisors in-house try to work with those physicians to understand what's going on with that. That's not what we see in the majority of cases.

MR. MACMASTER: That's good to hear. What are you hearing from employers right now?

MS. MACCREADY-WILLIAMS: On anything Workers' Compensation-related?

MR. MACMASTER: Yes.

MS. MACCREADY-WILLIAMS: I think employers are telling us that they'd love some rate relief, but they also want to see the unfunded liability eliminated because there has been sort of a social compact in place since 2006 where employers have seen their rates held constant, so no rate increases. Workers have seen their benefits, other than chronic pain, held constant, all with the goal of eliminating our unfunded liability, because at that point, employers' assessment rates can come down and benefit levels can come up. As Leo McKenna said, each employer pays a little bit extra to help retire that unfunded liability. It is an albatross that needs to be retired.

MR. MACMASTER: I suppose it relates back to the premiums for the employers, as well. They're probably seeing the sooner it's addressed, the less risk there is of increased premiums.

Just quickly, can you mention about your investment policy? Do you have an in-house management team for that?

MS. MACCREADY-WILLIAMS: We have a sub-committee of our Board of Directors, a Finance and Investment Committee, that meets quarterly to take a look at what's happening with our investments. They also have an external financial investment advisor who sits as part of that committee from Towers Watson - used to be Towers Perrin - and there is a Statement of Investment Principles and Objectives that the board approves. It speaks to the asset class that we're going to invest in, geographically where we're going to invest, the asset allocation, and the targets in terms of objectives. It's very comprehensively managed, but we rely on external managers to manage our equity portfolio - Canadian, American, international equities, bonds, and real estate.

[Page 34]

MADAM CHAIRMAN: Your time has elapsed, thank you very much. The honourable member for Halifax Citadel-Sable Island.

MR. LEONARD PREYRA: Thank you very much for coming. It's been, again, very stimulating to see the overall policy objectives of the Workers' Compensation Board. I know you were at the very moving ceremony at Province House for injured workers, and I had a chance there to talk to some of the families that were there. Most of my questions really revolve around some of their questions, so I can put it on the agenda and give you a chance to respond. In particular, I want to look at this pie chart that you presented, which says, "Where Does The Money Go?"

[10:45 a.m.]

Now, the pie chart here - and I know you've been asked earlier about administration costs - says that 80 per cent of this money goes to workers. In recording this 80 per cent, you have attributed the unfunded liability as a benefit to the workers. I'm wondering if that's a fair treatment of that unfunded liability, given that the workers themselves will not see any great benefit from it. In fact, it really causes them a disability, in a way, in terms of future benefits, and if it means that future benefits will be reduced as a result of this unfunded liability, I'm not sure how it could be seen as a benefit to them.

MS. MACCREADY-WILLIAMS: It is a benefit in that the unfunded liability are future benefits. The $600 million of unfunded liability has actually been promised to workers as benefits for injuries they've already had. The challenge is, we have a benefits liability of $1.6 billion, so that's money that has been promised to workers in terms of benefits, to be paid to them over time. It is a portion of the benefit costs that are paid.

MR. PREYRA: What that really is - it's an amortization cost and some of those costs will be administrative costs, as well, over the long run. If it's a benefit, it's a benefit right across the board to the whole organization, is it not?

MS. MACCREADY-WILLIAMS: Leo, did you want to add anything to what I've said? No?

MR. PREYRA: I also had a question about the administrative cost itself. I understand that 20 per cent of the administrative cost is not particularly high when you consider that it covers the Appeal Tribunal, injured workers and the Workers' Advisors Program. If you look at the breakdown of that 20 per cent, about 15 per cent of it goes to administrative reasons proper. I guess my question is, why is that pie allocated in that way?

I must say the earlier comments about the Workers' Advisors, Mr. McInnes and Jennifer Beckwith, are just excellent, the service was just wonderful and whenever I had cases, and some of them not relating to Workers' Compensation, I'd often call them and ask

[Page 35]

them for advice, so this is not a comment on the service, the line support. Why is it that just 1 per cent goes to the Workers' Advisors Program, which I think we've unanimously said is a pretty strong program that offers lots of benefits, but so little of it, overall, is targetted to actually assisting front-line injured workers and front-line staff?

MS. MACCREADY-WILLIAMS: It really goes to the size of the relative organizations. We have over 400 employees at the Workers' Compensation Board and 80 per cent of our administrative budget goes to salary, so we are by far the largest participant in that administrative cost piece. The Workers' Advisor Program has about 12 people there, OH&S would be the second-largest to us, but nowhere near the sheer number of employees that we have. We are 14 per cent of the 20 per cent, just by sheer virtue of our size.

MR. PREYRA: I understand that, but part of my question is, how do you decide that you're going to allocate this much to administrative costs and this much to the Workers' Advisor Program, which is really quite a strong program? One would expect that a program like that - I would see the Workers' Compensation Board as a not-for-profit, which is there to serve the needs of its clients, and if so small a percentage of it is actually going to advise front-line workers, shouldn't there be some reallocation of resources there?

MS. MACCREADY-WILLIAMS: As I said earlier, we get 28,000 claims filed annually; it was 32,000, just the year before that. There is a huge volume of claims that need to be administered by front-line caseworkers. Of that 28,000, there are fewer than 2,000 that will go through the appeal system every year, so it's a very small portion of the actual work. The vast majority of individuals, of the 400 employees we have, are there to service workers and employers; they're front-line delivery individuals helping with those 28,000 who filed claims.

The Workers' Advisors Program, the Appeal Tribunal, really only kicks in on a very small number of - the Appeal Tribunal will deal with fewer than 700 claims a year in their work.

MR. PREYRA: Part of the concern, even there within that administrative unit, is that the proportion of caseworkers to cases has, in fact, increased. You might as well say there are fewer caseworkers dealing with more cases. Those caseworkers themselves are not able to support the workers, to support the process in any significant way. Do you track, or do you have any data that talks about what those proportions are?

MS. MACCREADY-WILLIAMS: Yes, we haven't seen a reduction in our caseworkers. What we've seen is a reduction in our claim volume, so caseloads are not growing. Because of what we require in terms of health-care information to affect a safe and timely return to work, their jobs are much more complex. It's our responsibility, as we move forward, to hopefully see further reductions in claim volumes that our administration cost to manage that is managed appropriately. The board of directors is asking these exact kinds of

[Page 36]

questions around, do we see reductions in employees over time that relate to the reduction in claim volume and we have seen positions leave the organization for that very reason.

MR. PREYRA: I just want to move on to talk about the board and I welcome Ms. Sibson to her new role. Most of my questions don't relate really to your personal appointment so much as the governance relationship between the board and the CEO.

I was struck on an earlier question when we were talking about executive compensation - you seem to be saying that the board makes a decision about the CEO but then the CEO makes decisions about the rest of the compensation package. I'm wondering what is the proper relationship that you see between the board and the CEO and the senior administration in terms of governance, in terms of executive compensation and the allocation of resources within the program itself? I know you don't want to micromanage that unit. But given that this unfunded liability is there, given that there are big concerns about benefits and future benefits and employer premiums and all that, what is the role that you see the board playing in this future relationship?

MS. ELAINE SIBSON: It's a very fine role, a very difficult role, and many boards face this. The terminology that is quite often used is, nose and fingers out. It's very important to understand from a high perspective but not get involved in the day-to-day decisions. Otherwise, you're undermining your CEO.

With professional advice, and this was before my tenure - the board got professional advice and they clearly set out what the roles and responsibilities should be and how to divide it. That is the basis that they've been acting on. Coming in with my governance background, I may have a different view and as time evolves, you know, we may adjust those governance policies. When you look at salaries being presented in financial statements, yes, maybe from an overview perspective the board should have some involvement in terms of at least approving and understanding. Then again, as I say, the board in the past has been working on good governance policies developed on the basis of a good governance professional who has assisted.

So up-to-date, clearly and always the board's responsibility is to deal with CEO compensation. When it gets down below the CEO compensation, quite often it's a matter of judgment. It may also change based on the nature of the organization. In some organizations where salaries are often looked at more strategically, such as public companies, yes, the compensation committee of the board would have a role.

MR. PREYRA: I'm glad you're reviewing that because the Legislature and the government, you know, transfers a fair amount of autonomy to the board and treats it as an arm's-length agency to a certain extent. We expect a certain level of accountability, transparency and efficiency in the operation of that. A lot of that has been delegated to the board as the oversight body, not to say that we're not responsible for it but we do transfer a

[Page 37]

lot of authority. I think the public and the Legislature, in particular, would like some reassurance that there is this oversight being performed given the concerns that various groups have expressed about administration, benefits, future premiums and about the unfunded liability.

MS. SIBSON: I just want to add, I've only had one exposure to the existing board and I can tell you every one of them is very diligent, very concerned, and very proactive. They read the materials very carefully and are very anxious to do the right thing. So I can assure you that on a go-forward basis, we'll take very seriously our role of oversight and responsibility.

MR. PREYRA: If I have one minute, I would like to just put two questions, two issues and cases related to my constituency, on the record. One of them relates to disputes between workers' compensation doctors, physicians, and private family physicians and other medical health professions. If workers' compensation could find a way of resolving some of those disputes, it would be very helpful because there's a feeling that the workers' compensation physicians are in a conflict of interest. In a way they're trying to reduce costs, they're trying to reduce benefits, and they behave in a way that's very typical of insurance companies. In a way they're trying to protect the taxpayer and the liability of the board itself. So it's not a criticism so much but if there is a way to deal with those disputes, that would be very helpful.

The second question relates to lump sum payments versus ongoing benefits. There seems to be many workers asking for lump sum payments and the board decides in its wisdom - and again I'm not questioning the wisdom, that should continue, and it would be useful to find some way of resolving those disputes. Some ways you have to act to protect the interests of the worker too, and so it's not criticism but it would be helpful to see those disputes resolved in an amicable way.

I think I've run out of time.

MADAM CHAIRMAN: Pretty much, yes.

MR. PREYRA: Well, if I have time, I'd be happy to . . .

MADAM CHAIRMAN: Well, there really isn't time, but there is time for a closing remark - not very much. We gave you quite a long opening, so I would like to turn it over to you if you just had any final summation, Ms. Sibson.

MS. SIBSON: Since I wasn't able to participate very much today, I get the honour of giving the closing remarks. We appreciate very much the opportunity to come and discuss the WCB's underfunded liability, as well as a number of other issues today.

[Page 38]

We've talked about a number of issues pertaining to Workers' Compensation. It's a very complex topic; in fact, in all my career of being a CA, I can't say I've seen a more complicated set of financial statements. Today's discussion has been very helpful to me as well because it has highlighted for me some of the areas that you're concerned about and therefore the people of Nova Scotia are concerned about. I've made good notes and can take them back to the board to address.

Through all our discussion today, I hope you understand that the unfunded liability has really been an albatross for the WCB. We're working very diligently to try to deal with it and we've gone from 27 per cent to 62 per cent, which I'd say is not bad. We recognize it continues to be a source of frustration for both, workers in terms of the benefits available to them as well as employers in terms of the rates they have to deal with.

We have a commitment to try to eliminate the deficit over a period of time and, as Nancy said, in June the board will be getting together to look at what our options are. I think after the discussion today you can realize our options are pretty much limited - its benefits, its rates, or its dealing with the time it's going to take us to deal with the liability. I think what's important is that the need to address workplace safety in Nova Scotia is critical and its impact on our financial situation is also critical.

There's reason for optimism - workplace injury is avoidable and by working together with our partners, workers, employers, and government and the community, we hope to make the workplace safer and a reality.

We thank you so much today for listening to us. From your questions, I know you really do understand where we are and what we're trying to head towards.

MADAM CHAIRMAN: Thank you very much, Ms. Sibson. Certainly, we've learned a lot today and gotten some more detail of the unfunded liability, which was our primary concern. As MLAs we're all concerned about the impact on the business community, the employers, and also trying to do the right thing for injured workers, which is so important.

I know you walk that balance every day and we appreciate that you were here today to talk to us about it. There was one request for information, that was the contract information with regard to your contract with Doctors Nova Scotia. That can be sent to our Clerk, Ms. Henry. Thank you very much.

For the committee, there is no business today except that you've received some feedback, extra information, from the Environmental Monitoring Compliance Unit about the Sydney tar ponds. There's also the information on the annual conference, the conference of the Canadian Council of Public Accounts Committees. The chairman and vice-chairman generally attend and we are planning that - there's also a member from the Third Party that is able to attend. That conference is August 29th to the 31st, so the information is before you.

[Page 39]

Thank you very much, and with that I'll have a motion to adjourn.

AN. HON. MEMBER: So moved.

MADAM CHAIRMAN: We are adjourned.

[ The committee adjourned at 11:00 a.m.]