This article was published in Vancouver Sun and authored by Vaughn Palmer
Image: POSTMEDIA NEWS FILES / PNG
VICTORIA — Labour Minister Harry Bains was nearing the end of a media briefing last week when he fielded a question that would cause him no end of trouble.
What did he think of the B.C. Liberal proposal that WorkSafeBC use its surplus to help businesses buy personal protective equipment for employees during the COVID-19 pandemic?
“Good question,” replied Bains. “Every business has their own suppliers, and they should work with them. And if they need support from WorkSafeBC, they should approach WorkSafeBC.”
The briefing moved on. But once it was over, Bains called Rob Shaw of The Vancouver Sun, who’d asked the question, to provide an important detail.
He disclosed that the WorkSafe surplus, the one referenced by the B.C. Liberals, had been pretty much vaporized by the novel coronavirus pandemic-driven downturn in the stock market.
“WorkSafeBC is not immune to COVID-19 either,” the labour minister told the reporter.
“Their investments have sunk to almost zero when it comes to the surplus money they are sitting on. Almost all of the surplus has been wiped out a couple weeks ago because of our stock market, and that’s where the money was invested.”
The WorkSafe surplus had been reported at about $2.9 billion in its last public report. Now, said Bains, it was “almost all gone.”
The news, when reported in The Vancouver Sun Saturday, caused a stir.
WorkSafe was the lead agency in overseeing the reopening of the provincial economy, providing guidelines and oversight to businesses on how to keep employees and customers safe.
Yet it was unable to help those same businesses help their employees because of the giant hole blasted in its own surplus accounts.
Never mind that the rules would likely have precluded the surplus being used for the purposes envisioned by the Liberals.
Or that the New Democrats wanted to tap the surplus to top up benefits for injured workers. The money was gone for those purposes as well.
The B.C. Liberals lost no time pouncing on what looked like a case of mismanagement.
“The people of B.C., and especially the people who paid premiums to WorkSafe, are entitled to know who lost $3 billion in a matter of weeks,” charged Opposition leader Andrew Wilkinson. “Where is the accountability? The NDP need to answer for this immediately.”
Though the news story made clear that the loss had been confined to WorkSafe’s surplus funds, the labour minister was forced to clarify that there was no effect on the reserves used to pay current and future claims.
“B.C. employers and workers should be absolutely confident that WorkSafeBC remains on firm financial footing, and are able to maintain operations, pay benefits, protect workers,” Bains said on Sunday. “I regret that my recent comments may have caused confusion about their financial position.”
Not content with the minister’s effort to clarify the waters he had muddied, WorkSafe put out a statement of its own.
“WorkSafeBC retains a reasonable level of assets over liabilities,” it read in part. “Prior to the pandemic, WorkSafeBC was in a very strong financial position, and we remain financially sound. Currently, WorkSafeBC continues to exceed its target funding level, despite the volatility.”
But having said that, the organization admitted the minister had not pulled his comment about the surplus out of thin air.
Rather, he’d seized on a worst-case scenario generated by WorkSafe actuaries in gauging the impact of “widely varying economic forecasts” on the surplus.
“Current year-to-date investment losses are estimated to be approximately five per cent or $1 billion on an asset base of approximately $20 billion,” the agency reported. But in the worst case, it could be three times as great.
“It is impossible to know at this point what the actual final results will be,” the statement continued. “We will not know the full impact of COVID-19 on our financial position for some time.”
But a decline of even $1 billion would constitute a significant hit on the surplus.
The multibillion-dollar gap between the labour minister and WorkSafe on the surplus prompted a follow-up letter from Opposition leader Wilkinson to Premier John Horgan.
“British Columbians urgently deserve a full and up-to-date financial accounting of the money they have entrusted to WorkSafeBC,” he wrote Tuesday. “Your government must engage the auditor general to promptly report on the financial position of WorkSafeBC and provide an explanation of the minister’s comments.”
Not likely. But it is worth noting that in neighbouring Alberta, the government-owned investment manager has enlisted outside experts to investigate a reported $2 billion loss attributed to pandemic-related fluctuations in financial markets.
Here in B.C., government-owned ICBC recently admitted the decline in its equity investments could “exceed $1 billion depending on the length and scope of the market downturn.”
All of which prompted reporter Shaw to request a status update from B.C. Investment Management Corporation, which manages public sector pension plans along with investments for ICBC and WorkSafe.
“BCI had been anticipating and prepared for a market downturn by defensively positioning and diversifying our clients’ portfolios,” said the statement in reply.
“Client portfolios entered 2020 in a solid financial position, and the (pension) plans remain well funded.”
As with WorkSafe and ICBC, BCI was only speaking of the situation up to the March 31 end of the financial year.
But thanks to labour minister Bains, the public has now been alerted to the possibility of more discouraging scenarios to come.