Local 793 business manager Mike Gallagher has been chosen to serve as a public appointee on the Workplace Safety and Insurance Board (WSIB).
The Standing Committee on Government Agencies of the Ontario Legislature voted on Gallagher’s appointment at a meeting March 25.
He appeared before the committee and its chair, Lorenzo Berardinetti, to answer questions from all three political parties.
Gallagher spoke for about 10 minutes then took questions from members of the committee. Afterwards, Rick Bartolucci, the Liberal MPP for Sudbury, moved concurrence on Gallagher’s appointment.
Chair Berardinetti then asked if there was any discussion. There was none and the motion carried.
Below is a transcript of the committee proceedings:
MR. MICHAEL GALLAGHER
Review of intended appointment, selected by official opposition party: Michael Gallagher, intended appointee as member, Workplace Safety and Insurance Board.
The Chair (Mr. Lorenzo Berardinetti): Okay. We’re moving on now to the selection of the official opposition, Mr. Michael Gallagher. Mr. Gallagher, can you please come forward.
Miss Monique Taylor: See? Wasn’t that easy? Good morning, Mr. Gallagher. How are you?
Mr. Michael Gallagher: Good morning. Beautiful day.
The Chair (Mr. Lorenzo Berardinetti): All right. Mr. Gallagher, just to explain to you, you can speak as long as you want, up to—after 10 minutes, we rotate and the three parties can ask you questions. If you want to go forward, the Clerk will keep time, and you can speak for up to 10 minutes, so please go ahead. Any time that you speak will be subtracted from the government side. Please proceed, and good morning.
Mr. Michael Gallagher: Good morning, Chair Berardinetti, and members of the committee. Thank you very much for the opportunity to appear before you. It’s a great privilege to be here before you to speak to my intended appointment to the WSIB. I’m not concerned about the delay, as I understand that the business of the government is very important and I respect the process that you have to undertake to do the government’s business.
I would like to explain as briefly as possible—because you have, I believe, my CV in front of you—to give you as much time for questions as possible, why I’m qualified to serve on the board of the WSIB.
I have been a labour leader in the Ontario construction industry for 18 years. I’ve been elected five consecutive times to the top position of my organization. Operating Engineers Local 793 is a provincial organization but also encompasses parts of Nunavut.
I sit on three boards of the union. We have a $1.8-billion pension fund and we also manage a training trust fund and a health and welfare fund. Those are all jointly trusteed with management and labour, and I understand the requirements of working on a trust and the fiduciary responsibility that’s involved when managing the money of our members who contribute. I believe that my experience on these boards certainly will help me with respect to the contribution that I would like to be able to make to the WSIB.
I understand that the board of the WSIB has quite a challenge before it with respect to the unfunded liability, which I believe was at about 50% with respect to that fund, although there has been some progress made by the board, and I commend the chair, Elizabeth Witmer, for spearheading that change. I understand that the unfunded liability was reduced by $2 billion, from $12 billion to $10 billion, in just over a year. I think that good work needs to be continued, although there are a number of challenges that are before it.
When I was first elected to the manager of the operating engineers, I had been the labour relations manager for the local for a number of years. I first started working for the union in 1987 as a business agent, for which I travelled all over the province representing members. I was selected within my organization and promoted to the position of labour relations manager.
In about the mid-1990s, our local had run into some financial difficulties because of the economy of the time and we entered into a period of international supervision, following which I was elected as the business manager, following supervision.
I understand the challenges of an organization that is in financially difficult times. I was able to manage our organization over the next 18 years, to oversee its growth almost double the members we had when I was taking over. We currently have 13,000 members out there.
I also understood the challenges that face trustees with respect to pension funds. As we all know, in 2001 and 2008, pension funds right across North America became quite challenged, including our own, because of the turmoil in the markets. Despite that, we’ve been able to manage the liabilities on that plan so that we have not had to reduce the benefits that are paid out to the members and reduce the solvency issue with respect to that plan.
Last year, in 2013, I received the great honour of being awarded the Roy A. Phinnemore Award, which is the highest award given in the construction industry for health and safety. I know there were probably many others who could and should have been recognized as well, but I found it to be a great privilege to receive that honour.
I have always worked very hard on behalf of the members on issues of health and safety, and the construction industry is one area where we have to be particularly attuned to the challenges that that sector provides.
I believe that my experience in construction—I do not believe that there is anybody on the board right now representing labour who can speak to the specific challenges that exist within the construction industry because of the high mobility and seasonal nature of the work. So I believe that I will be able to bring that perspective as an individual who started work in construction when I was 16 years old, working in the utilities sector, moving on to the heavy road and sewer and water main construction. I have worked right across this country, including building highways in Alberta in camp jobs. I do know what takes place in the construction industry, and I know the risks that are involved with respect to workers.
I’m encouraged by the current enthusiasm or determination of the chair of the board on the issue of prevention. Most recently, Elizabeth Witmer, chair of the board, appeared at the IHSA, which is the successor to the Construction Safety Association of Ontario, a body that I was chair of for one year in 1994-95. I found it quite interesting that when Elizabeth Witmer appeared before the IHSA to the construction industry, she talked about youth at risk and initiatives that are taking place on prevention and working with the chief prevention officer, George Gritziotis, to reduce accidents in the first place so that they don’t come before the board, and I certainly would be in a position to support that.
With our own organization, the operating engineers, we became a compulsory trade in 1978. In fact, we were the last compulsory trade to be declared under a Conservative Bill Davis government. The minister of training at that time was Bette Stephenson, I believe—and education. That decision was very, very wise because we are now world leaders in Ontario in terms of training heavy equipment and crane operators.
We’re recognized around the world. It used to be that a crane-related death due to operator error happened every 11 weeks in the province of Ontario—
The Chair (Mr. Lorenzo Berardinetti): Mr. Gallagher, you have about a minute left.
Mr. Michael Gallagher: Yes—now, that has been reduced by about 80%. That’s because of investment in training. I believe that type of experience can be applied in other sectors of the construction industry.
I am running out of time and I don’t want to take away any time from the government or the members of this committee to afford themselves the opportunity to ask me any questions about my experience. So at this point, I’d like to wind up and afford the members of the committee the opportunity to question me on my qualifications.
The Chair (Mr. Lorenzo Berardinetti): Okay. Last time we did an appointment, the Conservatives went first, so the third party goes first for questioning—up to 10 minutes.
Miss Monique Taylor: Ten minutes?
The Chair (Mr. Lorenzo Berardinetti): You have up to 10 minutes. Yes, Miss Taylor.
Miss Monique Taylor: Thanks, Chair. Thanks, Mr. Gallagher, for being here with us today. Again, I apologize, but you know what? You were a really good strong-arm and helped us push that through. Thanks for sticking it out and for being here with us today.
I’m quite interested in the fact that you come from labour; you come from a unionized environment. You know the importance of WSIB coverage. In Mr. Arthurs’s report, it said that employers that are not covered are getting a free ride because they do not contribute to the health and safety functions of the WSIB and the ministry. What are your thoughts on that, on having a broad coverage of workers across the province paying into WSIB?
Mr. Michael Gallagher: I believe that’s the direction that the government has gone in with the WSIB, where the independent operators were recently included with the exception of home renovation, which I think was still excluded. But that, according to the numbers I heard from the paperwork that I had looked at from Elizabeth Witmer, has added 90,000 more covered individuals by covering the independent operators.
Personally, I think that that is a good move. I believe that the more people who are covered, the more affordable it is for all of the participants in the industry. I believe that was supported by the unionized construction industry as well. I think that’s moving in the right direction.
Miss Monique Taylor: Okay, so that’s the construction industry, but we still have so many sectors across this province that are not, to my knowledge, being covered. We’ve heard from developmental service workers who are not covered under WSIB, and they’re really at severe risk in different circumstances. What are your thoughts on that?
Mr. Michael Gallagher: Construction is my area of expertise. I can’t claim to understand the service industry. But if you follow the logic of it I believe what I’ve been saying is that the more coverage, the better.
There are always going to be circumstances where it’s inappropriate for somebody to be covered because they are perhaps a CEO of a company or are not at the same risk. But I do believe, generally speaking, that the more coverage there is, the better it is for the board and for all payers.
Miss Monique Taylor: I’m happy to hear you say that. I hope that you use your ability of sitting on this board to push that state forward.
I’m looking at the financial update that we received from research. It said that there was an operating surplus in 2011-12 because—the improved figures are due to the new medical strategy and return-to-work programs.
That, to me, is very troubling because I know in my constituency office back in Hamilton, I’m hearing from folks who should be getting WSIB and they were not getting WSIB because new overseeing doctors were speaking over what their family doctors had been saying for years. Now we’re finding that people are being cut off under different circumstances. They’re not getting the medications they used to get. They’re not getting the treatment they used to get. This is more injury to an injured worker. What are your thoughts on this?
Mr. Michael Gallagher: Well, again, speaking with regard to our own experience, my organization has a department that is well populated with staff to handle appeals and applications of members for WSIB. One of the biggest changes that has been made that I think is positive and that we support as an organization is the worker reintegration project, which is to assist workers to return to the workplace with their previous employer without a loss in any wages.
In construction, which I can speak best to, it has been a little bit of a challenge for us to get them back to their previous employer after the six-month mandatory period expires, so then we end up—there’s a lot of acronyms, it seems, in WSIB. We end up in the SO department, which is suitable other type of occupation.
I’m in favour of making sure there are no gaps and no workers end up not getting the coverage they should otherwise have, and also that careful calculations are made for widows, for example. After a worker has passed away, if there’s a recalculation that ends up having them lower the amount of money they receive, I think that’s very troubling, especially when you look at things like mesothelioma, an occupational disease which has a latency period of 20 years or more. That worker might have been actually working their last number of years when they were sick, so I think that has to be considered.
Miss Monique Taylor: On the return to work, do you think that the WSIB board should have the right to overrule a doctor’s—what’s the word?
Mr. Rosario Marchese: Assessment.
Miss Monique Taylor: Assessment. Thank you.
Mr. Michael Gallagher: I understand that, first off, it goes through the WSIAT, which is another panel that considers the appeals at some point. They must get the advice from their own doctor-practitioners and whatnot on any particular case.
I think the job of the board is to ensure that the system is well managed and that the coverage is complete for people who are injured or become sick.
Miss Monique Taylor: I’ll just say thank you for your time today. I appreciate the fact that you come from a union background and that you know the plight that injured workers in this province feel. I hope you will use that to the advantage of injured workers in this province because we know they’ve definitely been feeling the brunt of the misuse, I think, of WSIB funds, and that has put us in the deficit that they’re in. So thank you.
Mr. Michael Gallagher: Thank you very much. Should I be fortunate enough to receive the appointment, I will do my very best.
The Chair (Mr. Lorenzo Berardinetti): Thank you. Since you spoke for 10 minutes, the rotation will—that consumes the opportunity for the Liberals to ask questions, and we then move for 10 minutes.
Mr. Rick Bartolucci: The only thing we want to say is that we certainly support this appointment and we thank you for your years of experience that you’re bringing to the WSIB, especially so that it’s going to reflect the unique challenges of the construction industry. If the appointment goes through, we just want to say thank you for the effort you’ll expel.
Mr. Michael Gallagher: Thank you.
The Chair (Mr. Lorenzo Berardinetti): Thank you very much. We’ll move to the official opposition: Mr. Yurek.
Mr. Jeff Yurek: Thank you, Chair. Thanks, Mr. Gallagher, for coming out today. Just a few questions to ask.
It’s obvious that we’re not on the same page with regard to WSIB and Bill 119, which causes the independent contractors and owners to pay into the WSIB. We’re not on the same page, and now these employer groups or the owners themselves no longer have the option of going to their own private insurance to get better coverage than they do with the WSIB.
I just want to know how you’re going to make sure that the WSIB becomes a place where people who are entitled to benefits do get a fair and transparent process and it’s quick and very effective. How are you going to deal with that now that we have people on WSIB who really have no choice but to be there?
Mr. Michael Gallagher: Well, should I be appointed to the board, I’ll be one board member bringing my own experience to bear, through all my adult life in the construction industry. The board obviously has some challenges before it. One of the biggest challenges is the unfunded liability, I think, which is at 50%, but they have reduced it by $2 billion in the last couple of years.
I know that the construction industry anyway, and COCA, for example, had taken the position, I believe, that they were expecting a larger increase to the rate premiums than what actually occurred. The rate increases were, I think, 2.5% and 2% in 2011-12, 2012-13, and then in 2014 there was a rate freeze, I believe.
I would be working with the committee to find the solutions to deal with the unfunded liability, but at the same time to make sure—I think everybody is on the same page with wanting to make sure that the compensation system survives.
In the Harry Arthurs report, he had mentioned that at 50% funded, it was at a tipping point, in terms of the compensation system, so I don’t think there’s anyone who wants that tipping point to go the wrong way. So they have to continue the work laid out in the Harry Arthurs report, and I believe there was another report, the Douglas Stanley report, that came up afterwards, and it really talked about that the rate system itself has to be looked at. There are 156 rate groups, and perhaps there are too many.
In the last 15 years, coming out of the Harry Arthurs report, it said that there was $2.5 billion—so going back to around 1995—that was given back in rebates to employers, versus surcharges. I don’t think that that’s really appropriate at a time when there’s an unfunded liability, so I think that whole issue of the rate groupings has to be looked at.
Even speaking from the employers’ side that I’ve talked to, what they want is certainty. In the construction industry, for example, when you’re bidding on a job, you need to know exactly what it is that you have to pay the workers, what all your costs are and everything else, when you’re putting in a bid on the job. It’s not helpful to know that you might have a rate swing of 35% between a surcharge or a rebate. So I believe that there is some work that still needs to be done there.
Mr. Jeff Yurek: Further to your response to the third party with regard to mandatory WSIB coverage for, basically, owners and independent contractors, are you in favour of expanding that outside of the construction industry into other industries throughout the province?
Mr. Michael Gallagher: I would have to really say that that’s not my area of expertise and that I would have to go with an open mind. But, having said that, in the construction industry—I was on the board of the Ontario Construction Secretariat, and we found that the underground economy was about $2 billion a year in the residential sector, and I think they have somewhat left that, even with some of the changes, by leaving home renovation excluded. And now you have also, I think they call them temporary employment agencies which are out there. They’re sometimes given more at-risk types of work, it came out in the report. So I don’t think we want to off-load those employer responsibilities.
It’s something I think I would have to keep an open mind about and get up to speed on and understand a little bit better when it’s outside of construction.
Mr. Jeff Yurek: Okay. You’re talking about home renovation, but I’m talking about your average pharmacy owner, your mom-and-pop convenience store owner. Are you for expanding it into that type of operation, the small business of Ontario?
Mr. Michael Gallagher: I understand what you’re saying, but personally I believe that the more payers there are, the better it is for everybody who is part of the system. Otherwise, the burden is unfairly put on one sector, one industry or one group of people. So if there is a cost that happens, there has to be some coverage for people if they do get injured or something happens to them so that they’re not free riders.
Mr. Jeff Yurek: However, if they’re not paying into the system, they can’t get access to WSIB; therefore, they wouldn’t be free riders. Right?
Mr. Michael Gallagher: Somebody is going to have to pay society in some way or another for the person who has become ill or sick or injured.
Mr. Jeff Yurek: Most people carry their own private insurance. They’re paying into a system where they wouldn’t be the free riders, because they would—
Mr. Michael Gallagher: I understand what you’re saying, but I also believe that the best system is the government system.
Mr. Jeff Yurek: Do you have any questions, Doug?
Mr. Douglas C. Holyday: How long do I have?
The Chair (Mr. Lorenzo Berardinetti): Right now you have about three minutes and 40 seconds.
Mr. Jeff Yurek: Doug will have it.
Mr. Douglas C. Holyday: I have a couple of questions. WSIB premiums are a significant component of the cost of labour, and bringing them down is an essential part of attracting jobs to Ontario. What priority level would you assign to premium reduction, among other policy objectives?
Mr. Michael Gallagher: I don’t believe that premium reduction can really occur until after the unfunded liability is dealt with completely. When you’re at 50% unfunded liability, it’s not appropriate, in my judgment, to be reducing premiums.
Speaking, again, about construction, right now we’re going through the most sustained period of economic activity and growth that we’ve had in a very long time: almost full employment with many, many trades. I believe that that would be the time to ensure the financial well-being and health of the WSIB. Naturally, though, we want to have a cost-effective system, so I don’t think that premiums should be increased gratuitously. They need to be maintained in order to keep the competitiveness of the employers out there bidding on work.
Mr. Douglas C. Holyday: Do you think that an educational component or some method of trying to reduce injuries in the workplace might lead to premium reduction and we might be able to actually meet a couple of goals?
Mr. Michael Gallagher: Thank you for your question. I do believe that the board is in the right direction with respect to that right now. They’ve already seen that some costs have initially been lowered as a result of work reintegration and returning workers to work as quickly as possible. I believe that prevention is another part of that. I feel very, very strongly about prevention and I think that training, in the experience we’ve had, is the best way to eliminate errors happening. In our trade, operator error was reduced by 80% by having compulsory certification and mandatory training.
My experience in construction is that young workers are the most vulnerable, because when they go out on the job, they’re most eager to please and they sometimes get themselves into trouble.
Mr. Douglas C. Holyday: Thank you very much. My last question: Since 2007, the local, of which you’ve been the business manager, has given in excess of $53,000 to either the Liberal party or Liberal leadership candidates. Can you verify that or is that inaccurate?
Mr. Michael Gallagher: It might be low. To be honest with you, we do participate in the political system, as employers do, and we always make sure that any donations that we make are within the provincial election rules. I wouldn’t desire to go over that.
Mr. Douglas C. Holyday: Thanks very much.
The Chair (Mr. Lorenzo Berardinetti): Thank you, Mr. Holyday. That now ends the time for questioning.
Mr. Gallagher, that concludes the time allocated for this interview. Thank you very much. You may step down.
Mr. Michael Gallagher: Thank you very much to all parties that questioned me as well.
The Chair (Mr. Lorenzo Berardinetti): We’ll now consider the concurrence for Michael Gallagher, nominated as member, Workplace Safety and Insurance Board. Will someone please move concurrence?
Mr. Rick Bartolucci: I move concurrence in the intended appointment of Michael Gallagher, nominated as member of the Workplace Safety and Insurance Board.
The Chair (Mr. Lorenzo Berardinetti): Thank you. Any discussion? None? All in favour? Opposed? The motion is carried.