August 26, 2009

British Columbia Safety Authority

Construction industry questions timing of proposed rate hikes

RICHARD GILBERT

staff writer

The BC Safety Authority (BCSA) is seeking public input on proposed increases to the 2010 fee schedule, but some in the construction industry don’t like the timing of the plan.

The authority held 2009 fee rates at 2008 levels, due to the impact of the recession on the industries they regulate.

However, a consultation process was launched by the BCSA on Aug. 11 to receive public input on a plan to increase fees in 2010.

“The concern of the Independent Contractors and Businesses Association (IBCA) is that the BC Safety Authority should look at cutting costs, before asking industry for more money,” said Philip Hochstein, president of the ICBA.

“The labour costs and the fees of the BC Safety Authority have gone up in the last few years. If they were a private business, they wouldn’t look at increasing fees for clients. They would look at making cost savings.”

Trevor Fedyna, vice president of corporate services and CFO of the BCSA argued that the small increase in 2010 fees is necessary for several reasons.

He said that many of their core costs, such as office rent and a recent collective agreement with our union, are fixed and will rise.

Also, key safety education, research and enforcement initiatives need to proceed to increase safety in B.C. and that safety does have a cost.

Lastly, he maintained that the authority’s agreement with the province requires it to operate with a cost recovery model.

However, it isn’t enough to sway some.

“They must operate more efficiently like every other business and not raise prices,” said Hochstein.

“All regulatory authorities need to understand that there is a limit to what the people they are serving can afford.”

Fedyna said the BCSA has been making an effort to control both core costs and capital purchases.

“We’re working on a reduced budget and have streamlined some of our administrative programs,” he said. “We are not making cuts to our core safety program because safety is our mandate.”

According to Fedyna, some of these cost-cutting measures include cutting back on casual labour, not replacing all vacant positions, travel restrictions, cancellation of employee events, moving a service online and moving to lower-cost suppliers.

“We are also pushing our Enforcement program to level the playing field for those participating in the safety system,” he said.

Hochstein pointed out that 60 per cent of the BCSA’s revenue comes from activity in the construction industry.

Fedyna explained that installation permits, which are closely related to construction activity, accounted for 62 per cent of the BCSA’s revenues in 2008.

“While our volumes are shrinking 20 to 25 per cent, so should the BCSA workload, yet its labour costs are increasing by over $4 million – an increase of 18 per cent from 2008 to 2010, he said.

“Our industry’s challenges and those of all our clients are not expected to be any less daunting in 2010 as they are in 2009.”

For this reason, Hochstein argued that this is not the right time to increase fees because construction activity will probably decline this year and 2010 may be as bad as or even worse.

“We understand how the economic environment has affected our clients in the construction industry which is why our proposed three per cent fee increase is subject to a consultation process,” explained Fedyna.

“No decisions have been made. We’re only in the consultation process and want to hear from our clients. This process has been extended to allow more of our clients to provide their thoughts and opinion on the matter.”

According to Hochstein, the BCSA fees have increased an average of 35 per cent since 2006 and the authority has high inspection fees.

“Our philosophy has been to provide our clients with predictable, small incremental adjustments instead of a steep increase,” said Fedyna.

“Generally, our fee increases have been quite stable.”

He said most adjustments have been small, at four per cent in 2007 and 2008.

In 2009, the BCSA froze their fees and kept them at 2008 levels to support their clients in a volatile economic environment.

“We did have a major fee table restructuring in 2006 when fees were unfrozen and redesigned to ensure the financial sustainability of the new organization and have fees that better reflected the costs in regulating a specific industry,” said Fedyna.

Hochstein also pointed out that the BCSA has a cash reserve of over $10 million, despite being a regulated monopoly with virtually no risk.

“Yes, we have actually dipped into our reserves, but this is subject to change depending on the uncertain economic environment,” said Fedyna.

The authority is encouraging interested parties to provide feedback by email to feecomments@safetyauthority.ca or by fax to 778-396-2064.

The BCSA regulates seven technologies:

• Amusement devices (including amusement rides, ziplines and waterslides)

• Boilers, pressure vessels and refrigeration systems

• Electrical equipment and systems

• Elevating devices (elevators and escalators)

• Gas appliances and systems

• Passenger ropeways (including tramways, gondolas and ski lifts)

• Railways

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