12/30/2011 10:49 EST | Updated 02/29/2012 05:12 EST

Critics say WSIB changes will kill construction jobs, fuel underground economy

TORONTO - Critics warn changes to Ontario's Workplace Safety and Insurance Act will kill construction jobs and fuel an underground economy, but supporters say the new rules will help protect more workers.

Independent operators and small business owners in construction have to register to begin paying WSIB premiums for office staff, managers and business partners starting Jan. 1, 2013.

The amendments were approved by the legislature several years ago, but were never proclaimed into law. The Liberal government has decided to do that on Jan. 1, 2012.

The Canadian Federation of Independent Business said the change will cost the average small construction company $11,000 a year, and could force them to raise prices, cut jobs or even go out of business.

"My heart, frankly, goes out to a lot of these small business owners because some have already said that 'look, we're going to have to shut down, there's no way that we can absorb the additional costs, particularly in this sort of an economy. It's just not realistic,'" said Satinder Chera, Ontario vice-president of the small business lobby.

"It's very frustrating."

The WSIB said the new rules will improve health and safety in the construction sector and "ensure everyone is paying their fair share under the collective liability system."

"Mandatory WSIB coverage in the construction sector will contribute to improving health and safety, levelling the playing field and helping to combat the underground economy," the board said in an email Friday.

The change amounts to a big tax hike on small companies that will have to pay WSIB premiums for workers who may never set foot on a construction site, said Progressive Conservative labour critic Randy Hillier.

Third-quarter figures provided Friday by the WSIB showed the fund has a $12.3 billion unfunded liability, down from $14 billion.

The WSIB is trying to find new sources of revenue to trim the huge liability and decided to target small construction firms, said Hillier.

"Forget all the pretext of safety or whatever," he said.

"The real purpose here is to capture more people within the WSIB net and take on people who have a very low likelihood of ever making a claim — but the premiums are very, very high — and reduce the unfunded liability that way."

The CFIB also believes the WSIB's huge unfunded liability is behind what it says is a huge tax grab on small businesses.

"That's the only reason they are doing it," said Chera.

"We're quite frankly worried that if they do it in construction, why won't they go after every other small business owner in every other sector?"

However, NDP critic Taras Natyshak — a former construction worker — said it's only fair that small construction companies play by the same rules as the big ones, especially when the goal is worker safety.

"When all is said and done, construction as a whole is a difficult industry, the nature of it puts you into scenarios where you are at risk almost every day," said Natyshak.

"It doesn't seem fair that smaller firms should be treated any differently, and back to the workers, that they should be precluded from any additional coverage through WSIB."

Independent owner-operators in construction already pay for private business insurance, but will now be forced to pay for workplace insurance too, said the CFIB.

"Do I give up my business liability insurance and now buy government insurance, but if I do that I’m only covered from 9-5, whereas my private insurance covers me for 24-7?" said Chera.

"So why am I being forced to pay for this additional insurance product that I don’t need and I don’t want?"

Meanwhile, the WSIB will increase premiums for everyone by two per cent Jan. 1. 2012, from $2.35 to $2.40 for every $100 of insurable earnings.

WSIB benefits will also increase for the fifth year in a row, by 0.5 per cent. WSIB benefits have increased by more than nine per cent since 2007.