Orders of the Day

Committee of Supply

ESTIMATES: MINISTRY OF
ATTORNEY GENERAL

(continued)

The House in Committee of Supply (Section B); R. Chouhan in the chair.

The committee met at 1:43 p.m.

On Vote 14: ministry operations, $470,469,000 (continued).

J. Yap: Just before the break — I appreciated the debate with the minister — we established that, yes, there is an issue with money laundering. But the minister agreed that based on the statistics from FINTRAC, the federal agency that tracks reporting of suspicious transactions, in fact, casinos represent, at last reporting, about 7½ percent of reported money laundering. And the vast majority, 93 percent, is in other venues, and the minister agreed.

I would like to just share with the House some comments that the minister made. As I’ve said earlier, he has been vocal publicly about the problem of money laundering in casinos.

[1:45 p.m.]

For example, on January 10, 2018, the minister was interviewed on the Jon McComb Show, and he said this: “Hundreds of millions of dollars in cash that we know of that has passed through Lower Mainland casinos was unregulated and lacked oversight.”

On Voice of B.C. on March 1, the minister said this: “I’ll crack down on this. We are anticipating that there will be a financial impact, and the impact is significant. We’re talking $40 million to $60 million of impact, because there was $400 million to $600 million worth of gambling activity, apparently, that was taking place in this.” These are what the minister had stated publicly.

Given his comments and, generally, his sense of urgency about what he asserts is the problem of money laundering in casinos…. The interim report from Dr. German made two recommendations. One we canvassed just before the break: that effective immediately, meaning December 2017, there would be, on a 24-7 basis, a regulator from GPEB, the government regulator, at every casino, or at least the high-volume casinos.

We’ve heard from the minister that that has not happened. I wonder if the minister can comment on this.

Hon. D. Eby: It’s hard to know where to start to disagree with the member, but maybe I’ll start with what we agree on. I agree that there is a sense of urgency in this government that is new to government in British Columbia on this issue, and unfortunately so. The issue of transnational money laundering in British Columbia was so pervasive, so serious, that a professor in Australia who was training anti-money-laundering officials in that country, Professor Langdale of Macquarie University, taught them about something called the Vancouver model of money laundering.

I don’t know what the member’s definition of serious is. It seems like he’s trying to advance a theory that this is not a serious issue or perhaps that I have blown it out of proportion. That one fact alone about the Vancouver model, I think, should illustrate the seriousness of the issue.

In any event, the member conflates reporting with FINTRAC with criminal activity called money laundering, which is attempting to conceal the source of funds that are generated through some kind of illegal activity. Simply because you provide a report to FINTRAC does not mean that money laundering has taken place. FINTRAC collects reports from all kinds of different organizations, including casinos and gaming facilities. That does not mean, when a report’s filed, that money laundering has taken place. What it means is that the threshold for reporting has been met that requires reporting under the law.

The member said that I said a number of things that I did not say. I encourage any member that’s curious about what I did say to refer to Hansard. I disagree with the member if his thesis is that there is not a serious issue here, and I share the concern with the member that we are not yet 24-7 in the facilities.

I’ve had a conversation with the regulator. They have had a challenge in hiring people with the background required. They’ve hired three people. They are hiring two more. The necessary staff they need to deploy this, that they need to train up, is six to eight people. They’ve hired three. They’ve got offers going to two more. It has been a challenge for them to get through the PSA process and get people hired up and trained, partly due to the background that’s required for this kind of work, partly due to the fact that unemployment in British Columbia — in our economy, which is doing very well — is less than 5 percent, but not because there is a lack of urgency on this issue.

I do appreciate the member’s question about why we’re not there. I share his concern on that. We’re moving as quickly as we can. I think the member will benefit greatly by reviewing Dr. German’s report — and I’m trying to get it out as soon as possible — just to let him know, apparently, about what has been happening in British Columbia, which was the key task that I assigned to Dr. German, whose background is anti-money-laundering law and policing.

I asked him a number of questions. What’s been happening? How did we get here? What can we do to fix it? Has it affected any other areas of the economy?

[1:50 p.m.]

Here’s another area of agreement that I have with the member. We can address this issue in the casinos, but that does not mean that it will not move somewhere else, nor does it mean that it wasn’t taking place somewhere else. This type of activity can take place in parallel in different areas, in luxury cars as well as in casinos as well as in real estate, all at the same time. You can displace it from the casino and push on it like a waterbed, and it goes to other areas. So unless you’re ensuring that you have the resources to pursue it, then it will just move, and you will not have addressed the issue. People have described it as Whac-a-Mole, and I think that’s an accurate description.

The bottom line on money laundering and the transnational money laundering that has made international officials in this area concerned about what’s happening here is that we need two things. We need the provincial government to be working together to address that. We’ve got the regulator and B.C. Lottery Corp. Our service providers are all on side, all worked with Dr. German on his report, all provided him with all the information he needed to make the necessary recommendations, and all have committed to support implementing those recommendations. Everybody is on side to deal with this. That’s one piece.

The second piece is we need a strong federal partner here. To that end, I travelled to Ottawa and made a presentation to an all-party committee, the Finance Committee. I said to the federal government: “All parties. This is a non-partisan issue. We need the federal government to dedicate more resources to the RCMP. There are serious financial crime investigations. There are international crime investigations. You need to pay attention to what’s happening in the Lower Mainland.” I’m worried that the message wasn’t getting over the Rockies. “In addition, we need you to use the Canada Revenue Agency, and we need to make sure that you’re dedicating resources.”

I feel like these FINTRAC reports that the member is interested in get filled out. Everybody has good compliance on getting those forms in. Then where do they go? What happens with them then? Do they just sit in a warehouse? What good is that to anybody? I took that message to Ottawa because we need a good federal partner at the table on this issue as well.

The member asked a lot of questions or had a lot of assertions on that. Obviously, I agree with some. I disagree with others. But I am grateful for his interest in this issue because I do think it’s a serious issue and one that we need to deal with in British Columbia.

J. Yap: Thank you. I appreciate that from the minister. I heard him say that three 24-7 regulators have been hired, and I heard him say a few more are going to be hired. How many regulators will be needed with this program to ensure that, on a 24-7 basis, there will be a regulator on site at the casinos?

Hon. D. Eby: The gaming policy and enforcement branch is on their fourth posting of hiring for these positions. Part of the challenge for hiring has been that these have been not permanent positions. The reason they’re not permanent positions is…. Dr. German made an interim recommendation on this. There is certainly the possibility of restructuring, and then you’ve got a bunch of people in a position that’s going to be replaced by some other position. So the recommendation was not permanent. That has led to challenges in hiring.

The gaming policy and enforcement branch has 18 investigators currently. They have offers prepared and going out to two more additional investigators. Their target is two to three more.

[1:55 p.m.]

The actual recommendation is risk-based 24-7 rather than absolute 24-7. We don’t want somebody sitting by themselves at 5:30 in the morning at the River Rock Casino. We wanted…. When I say we, Dr. German wanted investigators to be there at the peak times and to focus on the risk-based and to be available outside of Monday to Friday, nine to five. That has been achieved. What has not been achieved is to get the gaming policy and enforcement branch to the full cohort that we would like to see to maximize that risk-based presence in the casinos. We’re on our way, but I share the member’s concern that we’re not there yet. Work continues on this important area.

J. Yap: I heard the minister confirm that we don’t have the resources yet, but I also heard the minister say just moments ago that this is not going to be the implementation as per Dr. German’s recommendation, at least from what we’ve heard. The government’s news release stated…. I’ll read it directly: “Government regulators must be seen on site at large, high-volume facilities on the Lower Mainland and available” to the service providers. Then it says here: “In the Lower Mainland on a 24-7 basis.”

I’ll read again. This is a direct quote from the news release: “Our government has made clear the urgency around addressing issues of money laundering at B.C. casinos, and we will ensure these first two recommendations are not only implemented as soon as possible but enforced on the ground.”

He goes on to say: “We can take immediate action to end criminal and suspicious activity in B.C. casinos.”

It sounds to me that, according to the minister’s news release, this was seen as an urgent matter requiring immediate action. But we’ve just heard the minister say two things: that that recommendation from Dr. German has not been implemented and, it sounds like, that it’s being changed somewhat to a risk-based basis. I wonder if the minister can confirm that’s what’s happened.

Hon. D. Eby: The gaming policy enforcement branch met with Mr. German on implementation of his recommendation. During those meetings, the discussion was about: does this mean that you need a regulator in every one of the casinos, 24 hours a day, seven days a week — every one of the five casinos that I was talking about? The answer was no. You need to be available 24-7 at the high-volume facilities.

The issue — from his perspective, from my perspective and from most people’s perspective — was that previously, a physical regulator was available Monday to Friday, nine to five. People could reach out. But this is a change in policy. That part of the recommendation has been met.

Gaming policy enforcement branch still does not have the cohort that we would hope for, so they have reassigned regional resources to make this recommendation reality. They’re trying to hire two to three more people in order to be able to fulfil this recommendation. The challenge has been that these are interim hires as we begin the work of implementing the German report recommendations on a permanent basis, not just the interim recommendations but the permanent recommendations that may have implications for these particular positions. You don’t want to hire people on a permanent basis if there’s going to be some kind of restructuring. That’s the issue.

I disagree with the member’s assessment that the recommendation has not been fulfilled. It has been. It’s not been fulfilled to the level that I would like, which is that GPEB is not reallocating resources here and there. It isn’t fulfilled in the way that the member interprets it, which is not the way that it was interpreted in discussions with gaming policy enforcement branch and Dr. German and, at first blush, it might appear in the recommendation, which is that there should be a regulator present in all five casinos, 24 hours a day, seven days a week.

[2:00 p.m.]

The recommendation, as it is understood by gaming policy enforcement branch based on their conversations, is that the regulator needs to be available and that one regulator can move between the different casinos and be available as required.

J. Yap: I appreciate the minister sharing that. That’s not what the news release says, but I’ll move on. I would like to know…. The minister has said today that there are five high-volume casinos that will have 24-7 risk-based coverage of regulators. Can the minister advise which five casinos those will be?

Hon. D. Eby: The Hard Rock, the River Rock, the Parq, the Grand Villa and the Starlight.

J. Yap: Earlier the minister mentioned that there will be…. We shared some quotes of the minister that he had made publicly regarding the impact on revenue with the implementation of the banning of $10,000 cash buy-ins. Can the minister clarify if that suggestion to ban $10,000 cash buy-ins at casinos has been implemented?

Hon. D. Eby: The recommendation was that necessary steps be taken, when someone brings in more than $10,000 in cash, to actually confirm where the cash came from — not just, “Oh, you know, I got it from here,” but actually ensure that we know where the funds came from.

I can tell the member that the B.C. Lottery Corp. prepared their projections about the impact of a policy change on the assumption that there could be a ban on cash transactions above $10,000. That was the basis for their attempt — and it is an attempt; it’s a challenge to project these things — to project the impact of a reduction in gambling activity based on additional anti-money-laundering controls.

When they had that forecast done for them by a third party, the assumption forecast a reduction in net win revenue of $60 million, which is a net revenue contribution to government of $30 million — reduction. Just to provide a little bit more detail about my earlier answer and to fill in on this answer, if the member is interested in revenue to government, the impact is $30 million net income from BCLC. If the member is interested in the reduction in net win revenue at BCLC, it’s $60 million.

These figures are all for the 2018-19 fiscal year, and they were based on an admittedly crude measurement, but the best available. It was a total ban on cash transactions above $10,000. The interim recommendation was to create an obligation to find the source of the cash that’s showing up in the facility before you accept it. It wasn’t a total ban. It was “establish the source.”

J. Yap: The minister referred to his visit to the Finance Committee in Ottawa at the House of Commons, and I’d just like to share one quote. The minister said this on the record: “Large, suspicious cash transactions continued unabated from 2009 until late 2017, when our new government instructed casinos that they…no longer accept large cash transactions when they didn’t know where the cash was coming from.” That was the minister’s comment on the record in Ottawa.

I am sure the minister knows that suspicious transactions, in fact, have dropped, from 2015 to 2017, by about 60 percent. Will the minister correct this comment that he made on the record in Ottawa?

[2:05 p.m.]

Hon. D. Eby: The member has chosen one sentence. I do believe that I expressed quite clearly to the committee that the peak, the now notorious peak under the previous administration, of $20 million in a single month in suspicious currency transactions, in July of 2015, was in fact the peak and that the average monthly suspicious cash transactions ranged between $3 million and $5 million. Some months exceeded — June 2016, somewhere in the neighbourhood of $12 million; February of 2017, somewhere in the neighbourhood of $6½ million in suspicious currency transactions.

I can tell the member about the effectiveness of the measures that we’ve taken. In February of 2018, $200,000 in suspicious cash transactions. In March of 2018, $200,000 in suspicious cash transactions. Compare that to when we took over government. It was $2.3 million in July of 2017 in just $20 bills, $5.5 million in suspicious cash transactions in that month.

We’ve gone from $5.5 million, when we took over government, to now $0.2 million in the most recent month for which we have data, in March 2018. It is an unfair comparison, I’ll acknowledge, because it’s not month to month, year over year. If you look at March 2017, $3.6 million in suspicious cash transactions. In March 2018, after we put the measures in place, $0.2 million, or $200,000. So I think we’re on track.

J. Yap: The minister has often referred to hundreds of millions of dollars laundered through B.C. casinos. I would just like to ask what evidence the minister is referring to.

Hon. D. Eby: The German report will certainly provide more detail to the member, but this issue of suspicious currency transactions has been an issue in British Columbia since 2011-2012. The issue and the public concern about it has been an issue for a while, but that is when, in my opinion, the growth really started.

I can tell the member that in 2011-12, total suspicious cash transactions, $64 million; 2012-13, $82.4 million; 2013-14, $118 million; 2014-15, $176.4 million; 2015-16, $119.1 million; 2016-17, $66.3 million; and 2017-18, $34.6 million. The peak was 2014-2015, at $176.4 million in suspicious currency transactions.

I’ll underline for the member that not all of those transactions will be money laundering. Some people just will have brought in a lot of cash to the casino. But when you add up all those totals, that’s a lot of money. And there are concerns that have been raised about bank drafts and other non-currency instruments as well. These are only suspicious currency transactions I’m giving the member figures for.

J. Yap: So the minister…. I heard him say that suspicious transactions do not necessarily mean money laundering. Is that correct?

[2:10 p.m.]

Hon. D. Eby: Yes. The mistake that the member made in his earlier question was conflating a report with FINTRAC with actual money laundering. The two are not the same. A report might be generated to FINTRAC around a currency transaction that may have indicia that make it either suspicious or meet the legislated requirements for reporting. It may not be money laundering.

Other transactions might not be reported to FINTRAC. If someone shows up with a bank draft that they bought from somebody else for cash, that might not be reported to FINTRAC. It might actually be money laundering. So it is a false equivalency to equate FINTRAC reports or suspicious currency transaction reports or any reports to FINTRAC with money laundering. They are not necessarily one in the same.

What you can do, though, is you can look at trends. You take the information from law enforcement. You take the information from the regulator. You take the information from the B.C. Lottery Corporation — the concerns that they’re raising, the issues that they’re raising, the activities that the operators are seeing and that they’re reporting to the B.C. Lottery Corporation, that they’re reporting to government. And you can say, “Okay, something’s not right here,” when someone’s showing up with this cash or when they’re having cash dropped off to them at the casino — $20 bills bound with elastic bands, the indicia of money laundering.

The challenge with prosecuting money laundering, as I’ve learnt, is that it’s quite difficult to tie the cash to what’s called the index offence. Money laundering, as the activity, is concealing the source of the funds that were generated through some sort of illegal activity. But what illegal activity? And being able to tie a bundle of 1,000 or 10,000 $20 bills to a specific crime or series of crimes or tax evasion or some other kind of illicit activity is quite difficult. And in order to prove money laundering, you have to actually prove that this cash is tied to that specific offence and, as I understand it, that the individual who’s attempting to money launder has some knowledge of that, which is a challenge. So it is difficult.

If the member’s point is…. It’s like global warming. Can you definitively prove that person X’s carbon emissions are leading to a forest fire somewhere? Very difficult to prove. But can you look at broad trends? Can you look at the information from service providers, from the Crown corporation, from the gaming policy and enforcement branch and from the police and identify a very serious issue, to the level of international concern, about what’s happening in Vancouver? Yes, you can.

I’ve given the member some of the numbers that raised the concerns, and appropriately so, within the B.C. Lottery Corporation and the gaming policy and enforcement branch and the service providers about activities that were taking place.

J. Yap: The minister referred to the suspicious cash transactions reporting, and I agree with him that a suspicious cash transaction does not necessarily mean money laundering. But it is, as he says, worthwhile tracking trends.

Again, to what we canvassed earlier, according to the FINTRAC reporting of suspicious cash transactions, the vast majority — at last report, 93 percent — of suspicious cash transactions reported have been outside of casinos. The minister did agree that there are other modes that criminal elements use. He mentioned cars. He’s mentioned real estate. But the fact is, according to FINTRAC, the vast majority of suspicious cash transaction reports to FINTRAC are from the financial institutions — from the banks, from the credit unions, from the trust companies.

Would the minister agree that, in fact, if we agree that they are a proxy for potential concerns with money laundering, the vast majority of money laundering likely happens somewhere else than in casinos?

[2:15 p.m.]

Hon. D. Eby: So a couple things. FINTRAC requires reporting from a large number of different industries — real estate, banks, credit unions, casinos, all kinds of these different industries that deal in cash. The reason why they collect the reports, I’m told, is so that law enforcement can use the information to develop intelligence about potential criminal activity and FINTRAC itself can identify trends of concern and raise those issues with law enforcement.

Now, I worry about the connect between the information that FINTRAC collects and actual enforcement activity on the ground. I’ve raised that concern many times.

I can tell the member that while I am giving him figures for suspicious currency transactions — and this is estimates; we try to give concrete numbers — what raised the concern of the B.C. Lottery Corp., the gaming policy and enforcement branch and the police with the reports that were coming in wasn’t just the fact that there were a lot…. These are big numbers. I mean, when you’re talking $5 million a month, which the member calls a reduction, in suspicious cash transactions, that’s a lot.

In any event, it wasn’t just the numbers. It was who’s involved. Are these people that are known to be associates of people involved in criminal activity? Are they people with no known source of income that would justify them bringing in this level of cash? The nature of the transaction — is the cash being dropped off in a paper bag, wrapped with elastic bands, in the parking lot of the facility? What does the cash look like? Is it coming with a bank wrapping on it, or is it coming wrapped with elastics and in all kinds of condition? What is law enforcement saying about what’s happening?

When you put all these things together, that is what raised the concern of the B.C. Lottery Corporation and the gaming policy and enforcement branch. That’s is why, when I showed up as minister responsible, I said: “Man, this is a serious issue that we need to get a handle on.”

If someone had said to me, “You know, these are standard numbers in terms of reports generated,” I’d say: “Fair enough.” But the information I was given was that there are concerns from law enforcement. There are concerns by a third party business firm that went in and did a review at a facility in British Columbia and made a number of findings of concern. There are concerns about the nature of the way this cash is coming in, in hockey bags or in boxes or in paper bags, and how it’s being passed.

When you put all those concerns together, and then the concerns of law enforcement and who’s involved, that is when the concern is generated.

I understand the member being inclined to: “Well, there are 100,000 reports from the banks, and there are only 5,000 reports from the casinos. Doesn’t that mean that there’s more money laundering at the banks?” Maybe; maybe not. Maybe they’re just doing that many more transactions involving cash.

You need to look at other indicia as well. You can’t look at just one in isolation.

J. Yap: At the Standing Committee on Finance in Ottawa, March 27, the minister, during his presentation, stated: “Gamblers could walk into a casino with illicit cash, fill out a form, buy chips, gamble and then cash out and get a cheque or walk out with chips.” Based on our research, a gambler would not be able to get a cheque that would have cleaned the money, which is what I assume the minister was alleging or suggesting.

In fact, what casinos confirmed to me…. Their practice is to ensure that what cash is brought in that remains, not the winnings, will be returned in cash, not a cheque, and that winnings, if any, could be in the form of a cheque.

Can the minister clarify his statement?

Hon. D. Eby: Absolutely, that is what should be happening. When somebody brings in cash to a casino, gambles a nominal amount and then attempts to cash out, they should get the same cash back. They should not receive a negotiable instrument.

It has been a practice to provide a cheque that is marked “not winnings” — a reimbursement or some marking of that kind — in some cases, to individuals. There has been concern about the ability of people to walk out of facilities with chips — not cash, the chips. So turn difficult-to-manage $20 bills into chips.

Some of the work of loss prevention and security and the regulator and BCLC is to try to track how many chips come and go in the facilities, and if someone shows up with a bunch of chips that we don’t know where they came from, to address that issue on the floor.

[2:20 p.m.]

If the member is asking, “Is it impossible to get a cheque in this situation?” the answer is no. The practice, when a cheque is issued, is to mark on it — let me get the exact wording: “Not gaming winnings. Return of funds.” If, let’s say, law enforcement, down the road, is doing an investigation and the person said, “Oh, I’ve just been very lucky at the casino,” they can pull the cheque, and then the cheque has the indication on it, “Not winnings. Return of funds,” so law enforcement knows those aren’t actually casino winnings.

I should tell the member that the nature of the Vancouver model outlined by Professor Langdale of how the money laundering works, because I had the same tutorial that the member did, is a very devious and a very ingenious way to get around these regulations. A criminal gang is not the gambler. The criminal gang facilitates transferring bulk cash to the gambler, who is coming from a jurisdiction where there are cash or currency restrictions that prevent them from bringing money out of the country — namely, China. So if you’re coming from China, you can’t bring money with you to gamble.

You’d like to gamble. The criminal gang provides cash to you. You transfer money to an account in the control of the criminal gang. What the gang has done is they’ve unloaded a bunch of $20 bills that are difficult to manage. They’ve managed to get that money into a bank account that they control. What the gambler has done is they’ve got the cash to gamble with. They are the ones who walk the cash into the casino. They are the ones who actually gamble with it.

I’ll tell the member — I hope this doesn’t reveal too many secrets; I hope BCLC isn’t upset — the house always wins.

Interjection.

Hon. D. Eby: Yes, yes. Don’t tell anyone. The house always wins.

They walk the money into the casino to gamble. They gamble. They lose. They actually lose some money; sometimes they win. You can always win, but in the vast majority of cases, you’re going to lose. The odds are in favour of the house. So they go and gamble. They lose some of the money.

They’re legitimately gambling. All the activity is gambling activity. They’re losing money. So it was always an understanding: “Well, how could this be money laundering if the person is gambling and losing?” If they get a cheque that says “Not winnings,” it’s not a big deal, because the person who’s gambling is not trying to fool someone about where the cash came from. They’re just trying to get some money to gamble with, because that’s what they like to do when they’re visiting Vancouver.

That is the devious and problematic nature of it, and it’s why the safeguard of marking “Not gaming winnings” may not have been sufficient — it clearly wasn’t sufficient, in my opinion — to deter the kind of activity that I’m talking about.

It’s also why BCLC, gaming policy and enforcement branch, service providers and law enforcement were concerned about what was taking place and why we needed to take the action that we did around the source of funds — the interim recommendation of Dr. German around source-of-funds declarations. Where did this cash come from? Where did this money come from, and can you prove it to a sufficient level? It’s also why we asked Dr. German to do this review and make recommendations to us.

S. Furstenau: I have a variety of questions, not too long, but I just want to ask a few things.

Last week I met with Ken Matthews. He’s the owner of Speedy Auto Glass in Duncan. They have five staff, really well-paid staff. These are people that are going to spend their whole careers in his shop.

Ken and his peers have also heard that Rod’s Auto Glass and Upholstery in Duncan were distressed when they received a letter from ICBC at the beginning of May informing them of several changes to pricing and policy. For Ken, the most difficult was the increase to the NAGS part discount, which has been 11 percent and will soon be 25 percent. He’s also concerned about the re-introduction of the best-price policy and the mould changes….

Interjections.

S. Furstenau: ICBC.

Hon. D. Eby: I’ve got a whole different set of staff for ICBC, so I don’t know if the member wants to maybe….

Interjection.

[2:25 p.m.]

Hon. D. Eby: No, the members aren’t quite done with gambling yet. So I wonder if we can just wrap the gambling questions, if the timing will work for the member. Otherwise, I’m going to need to change my staff.

J. Yap: We will be getting to ICBC momentarily, but I do just have a couple more questions.

We’ll go straight to this. The minister has, in his media work, referred to: “Our province’s reputation is in tatters.” I think that was an exact quote. He referred again today to the so-called Vancouver model. We have done an FOI to the minister’s ministry requesting information on what the Vancouver model is, but we haven’t received anything yet.

I did hear the minister refer to, I believe, an Australian professor who did a presentation and referred to a scheme with the title of Vancouver model. The minister today has referred a couple of times, maybe three times, to it. Other than this Australian professor, has any other agency or organization or any other academic referred to this scheme as the Vancouver model?

Hon. D. Eby: There is a full presentation of this individual, who has done training. This person’s job, in addition to being a university professor, is to train anti-money-laundering officials in Australia. I don’t know how many courses, training sessions, Professor Langdale has done, teaching people about the Vancouver model. I don’t know the extent of his work on international presentations at conferences and so on. I don’t know how many people have cited his work that describes this. He would be a good person to ask about that.

What I can tell the member is that I recall filling an FOI request for this — the full slide presentation that Professor Langdale uses that was identified by Dr. German and brought to my attention. Obviously, it caused me a great deal of concern. I believe that I should be able to provide the member with that presentation. I know for a fact that I am mispronouncing the name of the university. It’s Macquarie University in Australia.

I would encourage the member to check in with Professor Langdale — at times, those are a little challenging — in terms of the extent to which he has educated people about what he calls the Vancouver model. I think that the issue, though, about whether it’s called the Vancouver model or anything else…. The fact that somebody on the other side of the globe knew about it, is teaching people about it, raised concerns for me that he was not the only person, although others might call it that, and it may have been a topic of conversation at a number of international venues.

In any event, it underlined for me the reasons why we needed to take action on this, even if there’s a fiscal consequence to government, which we’ve discussed, and especially because we want gaming to be a sustainable industry in British Columbia that reinforces tourism, that is an entertaining option for British Columbians, and that British Columbians, when there’s a suggestion that a facility open in their community, can have confidence that it will be done properly.

I know we have good partners in the gaming policy and enforcement branch, in the B.C. Lottery Corporation, in the service providers and in law enforcement to make that possible. I have underlined, given the international dimensions of this, the importance of the federal government paying more attention to what’s happening here.

J. Yap: The minister has had, I understand, the German report since early April. I wonder when we would expect to see the report being released.

Hon. D. Eby: My target for releasing the report was before the end of the session. We have had some challenges around ensuring the protection of privacy rights of individuals identified in the report and ensuring that we don’t accidentally step on the toes of any law enforcement investigations. As soon as that is done, the report will be released.

[2:30 p.m.]

I don’t believe that it will be able to be released, unfortunately, before the end of the session, which is too bad, but I’m hoping to get it out as soon as we can. I’m hesitant to guess, just because it’s taken a lot longer than I thought it would to get it out to the public, but we do need to ensure that we don’t fun afoul of the law in releasing it.

J. Yap: I appreciate that. Can the minister advise if the recommendations — I believe there are 48 of them — in the report will affect the Lottery Corporation’s three-year fiscal plan?

Hon. D. Eby: We currently have staff having a look at the recommendations, and I don’t have any information yet to share with the member on any fiscal implications.

J. Yap: I actually should have mentioned earlier that I appreciate the minister offering to supply me with a copy of that PowerPoint presentation or study by the doctor in Australia, and I look forward to receiving it.

My last question on the Lottery Corporation is in regard to Dr. German’s work. How much has been spent providing resources to Dr. German to get his review done? How much more remains to be spent?

Hon. D. Eby: It’s $200,000.

J. Yap: With that, that concludes our discussion on the Lottery Corporation. If I may suggest to the minister a short recess and allow the staff for ICBC to join us.

The Chair: The committee will be in recess for five minutes.

The House recessed from 2:31 p.m. to 2:34 p.m.

[L. Reid in the chair.]

Hon. D. Eby: Joining us is in the chamber are Lindsay Matthews, interim VP, corporate and stakeholder governance, and Phil Leong, corporate controller, both ICBC; to my left, Nicolas Jimenez, acting CEO of ICBC; to my right, Richard Fyfe, the deputy minister; and in the back corner there, on the right, Doug Scott, who is the ADM of Crowns.

[2:35 p.m.]

S. Furstenau: Now that we have the right staff, I’ll come back to ICBC.

Last week, I heard from several auto glass shops in Duncan, and I went and visited Ken Matthews, who owns Speedy auto glass. They had received a letter from ICBC at the beginning of May announcing that there’d be several changes to what’s happening with ICBC, including the changes to the moulding allowance program, increase in the NAGS part discount and the reintroduction of the best-price policy. In particular, the NAGS price discount, which is currently at 11 percent and is going to 25 percent, is a great cause of concern for Ken and for the other auto glass shops in town.

I have a couple of questions on this. First of all, Ken started with raising the concern that there hadn’t been any consultation with the auto glass businesses. I’m wondering if the minister can speak to the lack of consultation and then provide an explanation for these changes that have been brought forward.

Hon. D. Eby: In 2011, there was a Competition Bureau ruling that, intentionally or otherwise, has limited ICBC’s ability…. I say limited, but it has eliminated ICBC’s ability to negotiate rates. It is illegal, on the current understanding, for ICBC to negotiate rates with material damage suppliers. That’s the industry term for autobody repair, glass repair, and so on. So ICBC is not allowed to negotiate rates.

That has obviously presented a significant challenge. There was a pre-existing agreement with the glass repair industry. It had expired a couple of years ago. The challenge is that now you’re in a position where you can’t negotiate rates, yet something needs to be done around increasing average costs for glass repair.

ICBC’s glass repair and replacement costs have increased significantly from about $40.4 million in 2008 to $96.1 million in 2017. There are two drivers of this. One is frequency. We’ve talked about distracted driving and issues around increasing claims in British Columbia. I’m sure the member has heard a lot of discussion around that. The other, though, unfortunately, is the average cost per claim, which has been going up as well. As technologies get better and as one would expect that costs were coming down, they are not.

There was a challenge in that ICBC was paying for things like the replacement of glass moulding, even when the moulding wasn’t replaced — so paying for something that wasn’t actually replaced. There were issues where ICBC was paying in excess of the cost charged by the original equipment manufacturer for a windshield, and the windshield is available from the original manufacturer for less than the replacement windshield is available. One would expect that a replacement windshield is cheaper than the original manufacturer’s replacement windshield.

These issues needed to be dealt with. I know the member is aware of the financial challenge that we face at ICBC. Nobody is excited about these kinds of things. They have real impacts. The member has named a couple of auto glass repair firms in her community. There will be additional reforms dealing with auto body repair that will similarly raise concerns as we cut costs at ICBC.

[2:40 p.m.]

We have had a lot of concerns raised by the Trial Lawyers Association around the reforms related to how we treat minor injuries — that it no longer will go to B.C. Supreme Court. They’re going to go to this tribunal. They’re going to have a limit on the pain and suffering awards.

All of these savings are meant to go to two things. First of all, to get ICBC back into the black. The second is to ensure that we can provide affordable insurance to British Columbians, because the costs at ICBC have gotten out of control.

That is the key policy change, in particular, and also why we’re making the changes. I can say to the member that I am very regretful that ICBC is not able to meet directly with material damage suppliers to negotiate rates, because I think that would be a huge advantage for everybody. The federal government’s Competition Bureau decision and the implications of that limit their ability to that.

There’s also a group called the Automotive Retailers Association, and they engage government on behalf of material damage suppliers. There was a meeting of their glass replacement members with ICBC yesterday.

Discussions can take place between ICBC and service providers, but unfortunately, negotiation about rates cannot. That may be a distinction without a difference, or it may be all of the difference in the world if all you want to talk about is the rates and ICBC tells you that they’re not allowed to do that under the law. I find it very frustrating, but that is the state that we are operating in right now.

S. Furstenau: It’s interesting to note that the meeting with ARA happened yesterday. Ken of Speedy Glass just recently got their ARA certification for their business.

I appreciate the minister’s comments about not being able to negotiate rates. In the discussions with ARA, is it possible to look at other ways to mitigate these costs and to address these problems that the minister has identified? Also, is there some consideration for the impacts of these changes and how they’ll affect smaller businesses quite a bit more than they might affect the larger businesses? Can there be any plan to mitigate those impacts to the small businesses, such as the ones that we’ve been hearing from?

Hon. D. Eby: On these policy changes, the policies are the policies. And that is not all. There are additional reforms ICBC is looking at. We have worked with PricewaterhouseCoopers Canada around an operational review of ICBC that identified that its collision repair supplier program could be refined to improve savings to ICBC and service to customers.

ARA, the New Car Dealers Association and ICBC will be in discussions on this. One of the considerations that ICBC will be looking at is the rural versus the urban situation, which would include considerations that maybe in a rural area it’s more likely to have a smaller, independent shop. That’s on the table for that tiering discussion.

[2:45 p.m.]

In terms of this specific auto glass policy, though, that is the policy for ICBC going forward. Just so the member knows, I’ll go into a little bit of detail about the policy changes specifically. There are two main changes. One is around glass material sourcing and discount; the other is around the moulding allowance policy.

For glass material sourcing and discount currently, ICBC pays for replacement glass based on an industry-established after-market price index minus an 11 percent discount. Suppliers can source replacement glass from any number of sources, and they can purchase it at significantly discounted rates — well in excess of 11 percent — which assists them in running their business.

Currently ICBC pays more for glass replacement than other Canadian insurers, including some B.C. private insurers. So not just an insurer out in Saskatchewan, but B.C. private insurers are paying less for glass than ICBC. In fact, more than half the time, the current policy at ICBC allows glass suppliers to charge ICBC more for after-market glass, as I said earlier, than the same glass from the original vehicle manufacturer.

The new policy is going forward. ICBC will only pay the lesser of either the after-market price or the price set by vehicle manufacturers. It won’t pay the higher price; it will pay the lower of those two prices. At the same time, they’ll adjust the current discount that applies to the after-market price from 11 percent to 25 percent, which aligns more closely with what the private insurers are paying, some whom are using pricing structures that result in discounts of 30 percent, actually. So ICBC is not even at that level.

ICBC is also aware of some large glass suppliers in B.C. that have an agreement with a rental vehicle supplier to do windshield replacement, materials and installation, for 250 bucks, regardless of the vehicle make and model. When they looked at ten claims involving that supplier, it showed that ICBC paid 126 percent more — that’s $331 per claim — than the supplier. So hopefully, this will address some of that.

On a number of occasions…. I can tell the member that I receive letters on a regular basis where people express concerns about the difference between, when they tell somebody that the windshield is being replaced through ICBC, what the cost is versus what the cost is if they’re paying out of pocket, and the cost gaps are significant.

The second big policy change is around the moulding allowance policy. Currently if the national glass-pricing calculator that suppliers use indicates that a new moulding may be required to complete the replacement, ICBC will pay an allowance of $45.26 even if the moulding isn’t replaced. Going forward, ICBC will no longer pay for the moulding if it’s not actually replaced, which seems like a good, commonsense type of policy — for ICBC to only pay for the moulding if the moulding is actually replaced.

Those are the two big policy changes. The projected savings from those are relatively modest in the scope of ICBC’s financial concerns. It’s about $9 million annually. But we are looking at items, big and small, to get costs under control at ICBC.

S. Furstenau: Just one more. I really appreciate the explanations here and that the minister expresses some concerns about some of the practices that have been happening in ICBC — price inflation and this kind of thing. But sometimes what happens when we introduce policies to address some poor practices is it can really impact businesses that aren’t engaging in those kinds of poor practices, and they suffer because of maybe the bad behaviour of others.

I’m hoping that there can be some recognition of that impact to, particularly, the small family-run businesses and ways to ensure that they remain viable and able to continue their operations, as they are so important — in our small towns, in particular. I’m not sure if the minister has anything that he can add or provide or any thoughts on that, but I’d appreciate it.

Hon. D. Eby: That is something that could certainly be canvassed as part of the tiering discussion taking place with the New Car Dealers and with the ARA and ICBC.

M. Lee: I just wanted to acknowledge something that the Attorney said when we started estimates this morning. I just wanted to say that it’s come to my attention now, unfortunately, that there was a bit of a gap in communication between our two offices. The lineup for today was clearly spelled out but not for yesterday. So apologies for that.

[2:50 p.m.]

In terms of ICBC, I just want to start off at least this set of questions by asking the Attorney to walk us through, from ICBC’s perspective, the process under which the revenue requirements application was filed on September 15, 2017, ultimately to get to a decision by the BCUC on January 12, 2018.

First of all, could the Attorney please comment on how long it typically takes for the BCUC to conduct its process review?

Hon. D. Eby: In a typical BCUC revenue hearing, it’s an eight- to nine-month period that the Utilities Commission considers evidence from intervenors, asks questions of ICBC and asks for reports and numbers — quite a lengthy process. When you think about the fact that this is for an annual rate, the fact that it takes almost the year to do it…. It’s a thorough process.

The result of that is, actually, that the Utilities Commission approves an interim rate because it takes them so long to get to approval of the actual rate for the year because of the process that they engage in. They approve an interim rate, and then it’s either confirmed or changed following the end of the hearing.

So ’17-18 was an unusual year in that the fiscal crisis at ICBC led our government to pursue some very significant policy reforms. The first is in relation to minor injuries and the treatment of what are called non-pecuniary damages or pain and suffering awards — essentially, an award from the court for the fact that you were injured to recognize your injury.

The second was a reform around minor injuries. So where those disputes over insurance benefits — definition of minor injury, and so on — would take place. Getting them out of the B.C. Supreme Court process, which is quite a lengthy process and a far more costly process, into a lower-overhead tribunal process still independent of ICBC and still independent of government — the civil resolution tribunal. These two pieces — major impacts on ICBC’s costs.

[2:55 p.m.]

In addition, when we inherited government, we found a very different fiscal reality on the ground than had been projected in the previous government’s budget documents, not the least of which was that ICBC was supposed to be revenue positive this year. It’s still astounding to me. A number of complicated calculations to arrive at these remarkable budget projections. In any event, it took us some significant time to really get to where we had a firm understanding of where ICBC’s true finances were at.

As a result of all those moving parts, for the 2017-18 rate hearing, we did a directed rate, which was not a full rate hearing. We went to the BCUC and said: “Look….” We didn’t say this, but essentially, the government said, “This thing is a huge mess. We’re doing these huge policy reforms. If we just go with an undirected rate hearing and present all of this, the rate increase for an average British Columbian is going to be somewhere in the neighbourhood of $400, and British Columbians can’t afford that. We’re going to do these reforms. We’re going to get a handle on where ICBC’s finances are at. For 2018-19, we’ll go to a full rate hearing, the eight to nine months. Everyone come and kick the tires on ICBC’s projections, on their finances, where they’re at. Ask your questions, interveners,” and so on.

The member asks about 2017-18. It’s an unusual year. It’s not a good year to take an understanding of how long this process takes. Far better to look at previous full rate hearings involving the B.C. Utilities Commission, which are typically around eight to nine months and which will be taking place for the 2018-19 fiscal year, an eight- to nine-month hearing process.

M. Lee: I understand that the special direction IC2 that the Attorney General signed by Order-in-Council 602, ’17 stated, in connection with the 6.4 percent rate increase, that the panel make no determination whether or not the change in basic insurance revenue needed to pay for expected future costs of KY2017 is 20 percentage points, as stated by ICBC.

The panel, in connection with its hearing, stated that, as a result of this order-in council, it does not allow the commission adequate time to fully explore all the components that contribute to the rate change to fully cover costs, including ICBC’s actuarial rate level indication analysis and including operating expenses and allocation information and investment matters.

As the Attorney General has just summarized, the oversight from the regulator for ICBC, its management team and the organization itself, was truncated in this year. I’d like to ask, in connection with that, the Attorney: what obligation does ICBC have to report to the BCUC any changes to its financial position that might come to its attention during the rate review process?

Hon. D. Eby: ICBC advises me that they do quarterly filings with the B.C. Utilities Commission.

[3:00 p.m.]

To the member’s earlier introductory bit of his question, though, about the full hearing that the Utilities Commission, in the member’s opinion, did not get to engage in, and mine too, it was a directed rate hearing. The rate that was directed was at the high end. Well, it was the maximum under the previous government’s rate-smoothing framework. Even had the thing gone to a full hearing, it was the maximum amount that the Utilities Commission, under the existing law of B.C. at the time, could have increased rates.

I agree with the member that there is great benefit to the public to know that ICBC has had intervenors come and that there have been people looking at the books and all these kinds of things. But the ultimate point of the rate hearing is to set the rate, and government directed a rate at the maximum rate that ICBC could set for that process.

One of the challenges — and the member will surely see this — is that for the regulator to need eight to nine months to go through this whole process and get a sense of the books and where ICBC is at and all those kinds of things…. The challenge, obviously, for our government on coming in was acting quickly, recognizing the financial crisis at ICBC without having a full knowledge of what the finances were at ICBC, what the true state of affairs was at ICBC and what we needed to do.

That’s why we did the directed rate hearing. I agree with the member that it wasn’t ideal. That is why, though, we are going to a full hearing for 2018-19 on this. It’s so that the public can get the transparency, so they can see the projections, so that projections can be tested around the legislative reforms that we put in place around minor injuries, around the benefit increases and transitioning to a care-based system for those minor injury files, so people can get the support that they need.

It’s been a challenging transition, but I can see…. I’m not sure I want to put that on the record. I feel like we’re headed in the right direction is what I’m going to say. I’m looking forward to ICBC having the opportunity to show up in front of the BCUC and be tested on all of these things — rigorously, internally. Certainly, I am challenging them, the government is challenging them, and they are providing us with a huge amount of information so that we can ensure that we’re all on the same page. I’ve been very grateful for their support and cooperation in that. There’s been a lot of work over a very short period of time.

The member is right to identify, yes, ’17-18. Would it have been nice to have a full hearing? Yes. It takes a lot of staff resources to do that, as well, and the staff were working hard on major, major reforms, the biggest reforms to insurance law and policy in British Columbia in a long, long time. We’re slowly getting there.

M. Lee: Prior to coming to this House, I was a lawyer with a law firm in Vancouver that represented other Crown corporations, like B.C. Hydro, in front of the BCUC. I didn’t do that work directly, but I do appreciate the level of complexity and rigour that the Attorney is speaking to in this House.

Of course, that length of process, the eight to nine months, with the intervenors, the various submissions and the forecast assessments, is an important role that that commission plays. With that oversight, it gives British Columbians some confidence in what a Crown corporation is reporting and what and how the rates are being set.

With that in mind, again I’d like to ask…. Specifically in the context of this period from September 15 to January 12, 2018, there was a mention that there was or there have been quarterly reports filed by ICBC with BCUC. Specifically, which reports were filed, and when?

[3:05 p.m.]

Hon. D. Eby: On the directed rate hearing, which was 2017-18 — which is, as I say, when we were in, and still are, this very challenging transitional period — there was a quarterly report. Now, the rate hearing was September to November. There was a quarterly report just before, in July. There was one just after. So it started in September. There was one in October. Then there was another one just after, in January. They happen quarterly. So the member has an idea now — July, October, January, April every year.

Those quarterly reports, as they were filed with the Utilities Commission, were getting progressively worse, in terms of ICBC’s projections about where the finances were going, and it reflected some of the challenge that we face with a Crown corporation.

Now, just for the member’s information, the way the B.C. Utilities Commission sets rates is that they’re set for a point in time. So they’re set for the application, which was done for September. As things get progressively worse…. If things get much better or if they get much worse over the year, you’re stuck with the same rate for the year. They’re set for a point in time. You don’t get to cherry-pick a point that’s worse or a point that’s better in the year and go from there. The start of the hearing is the start of the hearing.

While the Utilities Commission is kept up to date about where things are going, they’re setting the rate based on that point-in-time information. Of course, in this circumstance, they weren’t setting the rate. The rate was directed in ’17-18 so that we could free up staff to do the important work on the reforms that we were rolling out.

The full hearing for ’18-19, which will be the eight-to-nine-month process, will have those quarterly reports happening. But it’ll still have that same issue of the rate being set for the point in time, as opposed to over some other point during the year or some average or something like that.

M. Lee: Thank you to the Attorney for walking us through that. I think it’s fair to say that judging from when the January quarterly report was provided…. Perhaps I could just confirm whether that quarterly report was provided before the January 12 decision.

Hon. D. Eby: It would have been after the decision.

M. Lee: As the Attorney General has indicated, it was certainly less than ideal that there wasn’t a full revenue requirements application process. Without that fullness, there wasn’t the kind of oversight that would typically be the case over ICBC.

[3:10 p.m.]

Could I just ask one other question in respect to BCUC? In the submission — and there may be some other points we come to later on in this questioning — what was the purpose of ICBC proposing to discontinue certain performance measures, like the average cost of bodily injury claims, litigation costs, BI claims, paid loss amounts and the costs of litigation in future applications?

The Chair: Hon. Members, the member for Courtenay-Comox seeks leave to make an introduction.

Leave granted.

Introductions by Members

R. Leonard: I’m afraid I won’t be able to stay in the House long enough for three of the classes from Mark R. Isfeld high school, who are arriving and are in the precinct this day. They’re grade 10, 11 and 12 students. I asked them particularly what they would like me to say about them, and they mentioned that their girls rugby team came third in the province. That was something they’re pretty proud of this week.

I also would like to acknowledge that one of the students, a grade 10 student, Jaylene Kwo, is a volunteer in my constituency office, where she’s contributing to democracy. She’s very much appreciated by my staff and by the public that comes in.

I would ask the House to welcome them as they come in, all three of them, over the next couple of hours.

Debate Continued

Hon. D. Eby: There are a number of explanations for various measures. The information itself, with these various measures, may still be present in the filings to the Utilities Commission. The request is that the Utilities Commission no longer require it to be bundled up into a separate report to them, which takes staff time to do. It’s still in the report. Or for some of the measures, there might be a better measure or, in ICBC’s opinion, a better measure of the same thing. And there are other measurements there that ICBC doesn’t use, produced solely for the Utilities Commission and have no bearing on how ICBC sets rates or addresses the subject matter in front of the commission.

What it’s an attempt to do is to improve efficiencies at ICBC. What it is, in actuality, is a request to the Utilities Commission to consider these things. If they still want them, they’ll still get them. But if they don’t need them and if ICBC can convince them that there are better ways or the information is available elsewhere, these can be some more efficiencies for ICBC, which the member will know is something we’re driving towards.

Now, the member shares my regret about the lack of a full rate hearing in ’17-18. I’m going to have to say that the member was done a favour, frankly, by not having the full hearing. It was not intentional. I didn’t set out to do the previous government a favour by not having the oversight of a full Utilities Commission hearing about how ICBC ended up in the state that it did, how it could possibly be that ICBC was projected to make money this year and how it could possibly be that the projected loss was so small. I have some idea about how that took place. None of it is particularly inspiring in terms of confidence around the previous government’s decisions.

So the member should be careful what he wished for in terms of ’17-18 oversight by the commission. The reason why we directed that was to free up as much staff time as possible to haul on the wheel of the ship to get it turned around, because the situation is quite dire. It was not for a lack of wishing that a third party could come in a very public way and expose some of the decisions of the previous administration and the state of ICBC’s revenues.

[3:15 p.m.]

The Chair: Hon. Members, the member for Abbotsford West seeks leave to make an introduction.

Leave granted.

Introductions by Members

M. de Jong: We’re joined in the gallery by, I think, about 25 students from one of the great schools in the Abbotsford school district, Bradner Elementary. They are here with their teacher Ravinder Sandhu and some parents that are accompanying them. They are also the hosts of one of the great May Day celebrations, which is a time-honoured tradition in Abbotsford. I hope that the House will make these students, grades 4 and 5 students from Bradner Elementary, very welcome here.

Debate Continued

M. Lee: Well, I just had to comment on the last comment made by the Attorney there. Obviously, it’s not a case of what I wish for. British Columbians need to have that oversight through the BCUC. It is this abbreviated form, the decision made by this government, that abbreviated the review by the BCUC. That’s the reason why we just went through that discussion. I think that’s a concern.

I want to move forward now into governance of ICBC. I’d be asking the Attorney General to comment on a quote that the current chair of ICBC stated at the end of January, on January 29. She stated, in respect of a media interview, that ICBC is the insurance company that carries out the policy directions or decisions of the government of B.C. ICBC is the vehicle that delivers government policy so that it would be government that would make the changes, and then ICBC would implement them. I would ask the Attorney if the Attorney agrees with that statement.

Hon. D. Eby: I would definitely need more context for that statement, and I would encourage the member to address the chair of ICBC for clarification of the context of those remarks and whatever she was saying.

M. Lee: Let me ask the question differently, then. Does the Attorney believe that ICBC should be politically directed or that it is an instrument of government policy?

Hon. D. Eby: I know that one of the concerns over the years in relation to ICBC has been “political interference” with the operations of the insurer. So when we look at things like rate design…. Here’s something that is done in every other jurisdiction in Canada in a very different way than it’s done in British Columbia, which is how do you address this big-picture problem of incenting good drivers to continue their behaviour and incenting people who are higher-risk drivers to stop engaging in their risky behaviour, causing at-fault accidents, multiple serious infractions, and so on.

The way it’s done in other jurisdictions is very different than here, in that good drivers subsidize bad drivers far less than they do in B.C. Why is it that that’s the case? The reason for that is that the governments of the day decided that it was too politically challenging, too risky, to address this issue in the way that it needed to be addressed.

Now, I understand that policy decision. But that is an example of why people say there has been political interference in the operation of the Crown insurance company. There are many examples that I could give about this. But there is another layer, which is: does ICBC serve the public interest in British Columbia? I get letters from people who say: “Well, if ICBC is losing a lot of money, why don’t you just sell? Why don’t you privatize it? That would do us a lot more favours here in British Columbia.”

When people say that to me, I say, well, the issues that we face in B.C. are definitely management failures — and, specifically, in my opinion, government failures in the previous administration. I’m happy to go into detail if the member wishes about why I believe that.

When I look at Ontario, which has a fully privatized model of delivery of insurance…. Here’s a province that gets none of the benefits that we get from the public insurer in terms of administration of drivers’ licences and a close tie between insurance and drivers’ licences to minimize the number of uninsured drivers.

[3:20 p.m.]

They don’t have a tie between insurance and government to be able to do things — like realize for the insurance companies to fund road safety improvements that reduce insurance costs and increase road safety, that provide a net win for everyone in British Columbia. And they have higher insurance rates than we do in British Columbia.

Now, there are people from Ontario who say: “Hold on a second. I moved to B.C., and now I’m paying way more in insurance than I did in Ontario. That’s not true; Ontario has cheaper insurance.” They do for good drivers, because they have this system that recognizes people who are lower-risk drivers and incent them with better rates that we don’t have in the same way here in B.C. But overall, Ontario has higher insurance rates than we do. They don’t have those public benefits, and they have a fully privatized system.

When I look at Saskatchewan, Manitoba, public insurers deliver huge benefits to their communities — significant revenues and great success in the work that they do in ensuring that people receive good benefits if they’re in a crash, that they’re looked after, that they have adequate benefits. Not only that, but they deliver revenue to the treasury and deliver affordable car insurance.

Now, I acknowledge the difference between the Prairies and British Columbia in terms of driving environments. There are a lot more challenges here than they face in the Prairies. But the idea that a private insurer is a better vehicle for providing savings or net benefit to British Columbians is not borne out by the examples in Canada that we look at.

I went down that rabbit hole, and I have completely lost whatever the member’s original question was. So if that didn’t address the question, I’d ask the member to ask me again, because I’m quite….

Interjection.

Hon. D. Eby: Oh, the political interference, right.

There are two levels. The political interference question about ICBC not taking necessary steps…. The member asked me about auto glass: why are we paying to replace mouldings that aren’t actually replaced? It’s because it’s politically difficult to have a small family auto glass business come to your office and say: “Why did you stop paying for this?” That’s politically difficult. “Why did you not rein in minor injuries like every other province in Canada?” It’s because it’s politically difficult to have the trial lawyers saying that you’re taking rights away from people and organizing against government. So there has been political interference in ICBC.

Also, ICBC delivers public benefits that do require political decisions around allocating ICBC’s scarce resources and how and when and why ICBC should be involved in public interest matters like road safety, driver’s licence administration, collection of fees or fines for people who aren’t paying their child support or aren’t paying their tickets or whatever. Those are political decisions, so there’s political involvement.

I wouldn’t call that interference. If there’s political interference, then it interferes with the good operation of the insurer, and not always in a positive way. It’s a complicated answer because it’s a complicated subject for a Crown corporation like ICBC and its history.

M. Lee: Well, I mentioned earlier that I had practiced law with a law firm in Vancouver. There was a time where I was the acting corporate secretary for B.C. Hydro and very much understanding the nature of governance between a Crown corporation, a deputy minister, a minister and the executive team and the board, of course. With that in mind, I take it from the Attorney’s answer that he is mindful and sensitive to political interference and political direction.

Can I ask the Attorney General if he could describe for us the reporting structure on finances between the ICBC executive team, the board and the minister?

Hon. D. Eby: On a monthly basis, actual claims results and forecasts on any new emerging risks or developments are reviewed by the ICBC executive.

[3:25 p.m.]

On a quarterly basis, claims forecasts are updated based on experience and reviewed by the ICBC executive and ICBC’s independent actuary, Eckler and associates. Also on a quarterly basis, actual results for the quarter, as well as updated claims forecasts and the outlook for other expenses, are reflected in ICBC’s quarterly results and outlook for the current and future years and are presented to the ICBC executive and government, in accordance with Crown agencies and board resourcing office guidelines. They are reviewed and approved by ICBC’s audit committee of the board and board of directors. Also on a quarterly basis, an actuals and outlook report for the basic line of business is filed with the B.C. Utilities Commission.

On an annual basis, ICBC’s annual audited consolidated financial statements…. With respect to those, ICBC’s external actuary, Eckler, provides an opinion on the fairness of the policy liabilities and/or unpaid claims reserves. In addition, ICBC’s external auditor’s actuaries — that’s PwC — review the policy liabilities, unpaid claims reserves, as part of the annual audit before signing off on ICBC’s financial statements.

Finally, also on an annual basis, there’s an annual basic revenue requirement application with the B.C. Utilities Commission. As part of the filing, ICBC’s external appointed actuary, Eckler, reviews and signs off on ICBC’s actuarial assumptions and claims forecasts, supporting the requested basic rate increase. The B.C. Utilities Commission engages an independent actuary, Oliver Wyman, to review ICBC’s actuarial assumptions and claims forecasts supporting the requested basic rate increase.

Because 2017-18 was such a mess following the previous administration, we took additional steps. Given the significant loss forecasted in quarter 3, the following reviews were undertaken. Government retained PwC to review ICBC’s assumptions and methodology. The review found that ICBC’s assumptions and methodology were reasonable and with some conservativism, which is reasonable, given the risk to government’s fiscal plan.

Government is also engaging a peer review of PwC’s review — so this is a review of the review, because PwC is the auditor of ICBC — to ensure an independent review of that actuarial forecast.

As a result of a report from the Trial Lawyers Association, ICBC also requested that ICBC’s external actuary review two of the Trial Lawyers Association claims, which were concerns raised by that organization but ultimately found not to be…. Well, frankly, they were dismissed. I’m trying to find a nice way to say that, because I do appreciate the TLABC raising concerns about that — about anything where they find a concern around the financial numbers.

For the member’s information, I was provided that information by ICBC as their understanding of their financial information accountabilities and reporting processes. For my purposes here today, I adopt them as my own.

M. Lee: Well, thank you for that summary. It sounds, in ordinary course, like regular monthly, quarterly and annual reviews. During this period of time between July and January 2018, were there any additional points in time where that typical review and reporting structure was not followed, meaning there was some special reporting made available to the Attorney General in his capacity as minister responsible for ICBC?

Hon. D. Eby: Nothing beyond what I described to the member, in terms of the exceptional review by PwC, then the review of the review by an external auditor and then a review of the TLA’s concerns by an independent actuary, as well.

M. Lee: In the course of this period of time in question, when there was something that came to the attention of the executive and the board — meaning a reclassification of types of claims and losses — was that not reported to the Attorney General?

[3:30 p.m.]

Hon. D. Eby: In terms of ICBC’s work to understand the impact of the large losses and the change in the Q2 to Q3 revision, that was reported as according to the quarterly reports that I laid out for the member. In addition, I was briefed in detail about that in January. Obviously, not happy news, but I was briefed about that by ICBC.

M. Lee: There is a progression, which my colleague the member for Richmond-Steveston will be getting to in a moment, of changes in the financial position for ICBC over this period of time, statements made in July, September, November, January. At these particular junctures, when the Attorney General received this reporting, what process did the Attorney General follow, in terms of whether it’s review or dealing with this loss discovery as it has been portrayed? What actions did the Attorney General take in terms of ensuring that those losses would not further progress from the period in time where it was being commented on in July, again, to September, to November and then January?

[R. Chouhan in the chair.]

Hon. D. Eby: I laid out the quarterly reporting schedule and the fact that the Q2 to Q3 change…. I received a briefing in January, and it was reported Q3, according to the outline that I laid out for the member.

I don’t think the member has a full appreciation of the scenario of what happened when we took over government. We were dealing with projections that were based on, among other things, a fire sale of ICBC’s assets, both real property and things as bizarre as selling ICBC.com and booked savings for a report that government had not even received yet. The government had commissioned it but not received it. They booked the savings for that, not even knowing the content of the report. It’s just examples of the challenge of trying to get to what ICBC’s actual financial state was.

I do appreciate the member holding me to account for government providing the public, the B.C. Utilities Commission and others, in terms of my responsibility for ICBC…. I do appreciate that, because I really recognize that, boy, we should have been looking really carefully at those numbers when government presented them. I don’t say this to challenge the member doing his job, because he should be doing these things.

But I do point out that for the opposition now to say, “Why this sudden escalation, and why the losses? You presented the losses in this way,” and so on, when, on the way out the door, they had presented numbers that were based on, let’s say, optimism…. That the report would be something that they could implement, that there would be savings that would result in a certain amount and that they’d be able to sell these assets — ICBC’s domain name, and so on — and get a certain amount of money for these various things was based on, at best, a hearty optimism about what would happen going forward, including their ability to implement these things on the schedule that they projected.

It took some time to figure out the true financial state of where ICBC was and a painstaking review by ICBC of the files to give us a bottom-line number of where they’re at — in terms of many older files at ICBC, large loss claim files — to provide the public with that accurate report.

[3:35 p.m.]

Understandably, the opposition, me, the Trial Lawyers, people outside of ICBC, were looking at the escalating loss and saying, “How could it be that this is growing so quickly? How could it be so different from the previous government’s projections?” Absolutely important questions. That is why I didn’t just take ICBC at its word. I engaged PwC to do a review of the actuarial projections to assure me that I could have confidence in them. But although it’s a different arm of PwC, because PwC’s other arm does ICBC’s audits, it’s not enough that PwC does this review. I want somebody else to come in and review PwC’s work so I can have absolute certainty in these numbers.

Certainly, the charge has been made by some personal injury lawyers that the numbers have been inflated to create an artificial crisis to force the minor injury changes. I’ve seen absolutely no evidence that that is the case. What I’ve seen evidence of is that there was a systematic effort before the election to optimistically — it’s the best face I can put on it — project ICBC somehow making money this year, which is astounding to me, facing a $1.3 billion deficit. But here we are.

M. Lee: I will turn this over to my colleague, the member for Richmond-Steveston, in a moment. But just to respond to this. Obviously, I am a new member of this House, as the Attorney knows. But when you look at this and you rely on what the government has been saying, the focus that the Attorney General put in his release on January 28, 2018, focused on the mounting losses. The Attorney is referring to other things here. I appreciate what I’m hearing, but the focus was on the loss.

We know that, of course, ICBC, as a Crown corporation, has the oversight of a board, has a management team that’s been in place, looking at and monitoring — with audit reviews by PwC — the regulatory oversight by BCUC. So the questions that we are asking here today…. It’s to really get a better understanding as to how these sudden changes could occur from July to September to November to January.

With that, I’ll just ask and invite the member for Richmond-Steveston to continue.

Hon. D. Eby: Maybe I’ll just answer the member’s question. How could this happen? Let me give the member an example of how this could happen.

If you retain an independent, third-party business firm to provide you with an opinion — where are things going at ICBC? What should government be concerned about? What should we be thinking about? — and they provide you with that report, with recommendations, and then you take pages out of that report before giving it to ICBC and releasing it to the public, that is how oversight fails. The member wonders: how does oversight fail? That is how oversight fails. That is not how oversight fails. That is how oversight actually failed at ICBC under the previous administration.

J. Yap: Can the minister tell us what changes have been made to the executive team since he took over? Has the team largely remained on board?

[3:40 p.m.]

Hon. D. Eby: There have been some changes in the executive team. I do want to point out that it is my personal opinion that the losses and the failings of management at ICBC lie squarely with the previous administration, but I will point out that there have been changes in the executive team.

The CEO, Mark Blucher, is no longer in that position. Nicolas Jimenez is in that position as acting CEO. The VP of human resources, Barbara Meens Thistle, is no longer in that position, and now Leslie Mitton is in that position. The VP of corporate and stakeholder governance, Steve Crombie, is no longer in that position, and the current person in that position is Lindsay Matthews, who I introduced to you earlier, as the interim.

J. Yap: Can the minister confirm for us the following? Nicolas Jimenez, the interim CEO, was previously VP of insurance and joined ICBC in 2003. Bill Carpenter has served as chief actuary since February 2015 and has added the title CFO in June 2016.

Hon. D. Eby: The member is correct with those bios.

J. Yap: Can the minister confirm for us that the executive team has largely stayed the same?

Hon. D. Eby: That’s a very subjective judgment. I’ve outlined for the member the changes that have been made.

J. Yap: On January 30, in an interview with Mike Smyth on CKNW, when asked if he had faith in the former CEO and the other members of the executive team at ICBC, this was the minister’s answer: “In short, no. I was completely blown away by the fact that things got so much worse so quickly. I want somebody to explain to me how that happened.”

Is the minister willing to tell us what actions he took with the executive team with regards to accountability, turnover or anything if he did not have faith in them?

Hon. D. Eby: Absolutely. I took a number of steps. I asked the corporation to retain an independent third-party business firm to do an operational review of the organization and make recommendations for me. It was PwC. I also asked for an independent actuarial review of ICBC’s work. Then, given the fact that we were forced, because of various conflicts of interest, to retain ICBC’s auditing firm to do that, I asked for another actuary to review that work as well.

I have to say that that quote absolutely reflects where I was at, at the time. I have to say, as well, how astounded I have been as I peeled back the layers to discover how the financial projections for ICBC that were in the government’s books were arrived at, how it was that a third-party business report that was released to the public was not complete in that the complete report wasn’t even released to ICBC itself, how it was that key policy changes — like should we pay for a moulding that’s not replaced? — went unaddressed for two years.

I have come to the inescapable conclusion that the previous government’s work resulted in the crisis that we face, and it was work to do it, to prevent the public from knowing where things were going. I find it disturbing, and I’m obviously not happy about that. But, you know, onward and upward.

[3:45 p.m.]

We are making changes that should have been made a long time ago. We’re going to get ICBC back on track. Obviously, there’s a major hit to government’s fiscal plan. Obviously, it is a lot harder to do this in a constrained time period than over the years that the previous government had available to make these changes. But we will make those changes, and we’ll get ICBC back on track. We’ll deliver affordable insurance to British Columbians, and I have absolute confidence in the management team that’s in place and the board that is in place to, first of all, provide me with candid and appropriate information. I hope that British Columbians have confidence in this government to act on those recommendations where legislative or regulatory reform is needed.

J. Yap: Does the minister have any faith in the board, as well, given that they signed off on numbers that simply did not hold weight at the end of the day?

Hon. D. Eby: I can advise the member…. I’ve already explained where I personally assign responsibility for this, but in any event, the board is completely changed except for one member.

J. Yap: On July 24, 2017, the minister stated: “ICBC, as described to me by senior bureaucrats, is on the path to insolvency.” What indicated to him this was the case? What did he do to correct this? And why did he only project a $225 million loss in September, which was a marked improvement over March 2017 and would suggest a reverse trend?

Hon. D. Eby: The member is going to have to provide me with the source for the numbers that he provided there, because they don’t jive with the numbers that have been reported. I’m just curious. Maybe I misheard him.

The member asks: “You’ve got this big problem. What changes have you made? Enough with the media. Enough with the dumpster fire.” I get it. That doesn’t help drive down insurance rates for British Columbians. It doesn’t address the fiscal problems at ICBC.

I made the comment that ICBC was on the road to insolvency. That has a legal definition. Basically, what I was saying was that ICBC’s expenses were vastly in the billions of dollars, exceeding their revenue intake. That is not a sustainable position for the Crown corporation to be in. It has reserves. It has assets. You can sell off the assets. You can liquidate the reserves over time.

But clearly, ICBC was in dire financial circumstances, and I have a critical role to play to communicate that to British Columbians so they understood why we were taking these very dramatic policy reforms that will impact individuals and businesses in the province. Law firms in British Columbia that do personal injury work, families that are dependent on the revenues from those law firms, will be impacted by the changes we’ve made. Autobody repair firms, glass repair firms — we’ve already heard a member talk about it — will be impacted by the changes that we’re making.

People need to understand why we’re doing this. We’re not excited about doing it. This is essential and necessary for us to do.

The member heard me go through, in some detail, a very minor piece — the glass repair changes. The big piece is certainly the treatment of minor injuries, the limit on these non-pecuniary damages, the pain and suffering awards — getting them out of B.C. Supreme Court, getting them into this tribunal process, the civil resolution tribunal. It’s independent of government, independent of ICBC, to resolve any disputes, proportionate to the injuries. Major, major reforms.

And that’s not all. The PwC operational review of ICBC made a number of recommendations around potential savings within the corporation that they advise could result in savings of up to $57 million a year. We’re implementing those recommendations.

[3:50 p.m.]

We have additional work to do on the material damage side. These are the autobody repair expenses and policies that ICBC…. ICBC is engaging right now with the New Car Dealers, with the ARA, and insuring that the reform of the tiering, as best as possible, has as minimal impact as possible on their businesses but also delivers necessary savings that we believe are there.

Finally, we need to have a serious conversation about the fact that there are an increasing number of accidents in our province. The member has heard the very significant changes that we put in place around distracted driving penalties, treating it akin to driving while under the influence of drugs or alcohol, in terms of the penalties for your second time distracted driving.

I’m working with the Minister of Transportation and with the Solicitor General on a number of initiatives — with the Solicitor General, in terms of these red-light cameras, which have the ability to measure speed as you’re going through the intersection as well. We’ve got great big signs. We’re turning the things on 24 hours a day. Great big signs: “If you speed through this intersection or if you run a red light, you’re going to get a ticket.”

At each of these intersections…. There are 140 of them. If I’m way off, I’ll let the member know, but there are about 80 accidents a year at each of these intersections. That’s the number I remember. If we can reduce the number of accidents by putting up a sign saying, “Don’t speed through the red lights, don’t speed to make it through a red light, and don’t go through a red light,” then we can improve road safety.

The Minister of Transportation is identifying dangerous roads and intersections under the control of the provincial government and trying to find ways to address road safety through engineering and other initiatives. In addition, we’re working with our partners in municipalities. We talk about the revenue from infractions related to people driving through these red-light cameras, speeding through these red-light intersections, and the increased revenue. Could municipalities, potentially, dedicate that to safety improvements on their roads in their communities to reduce the number of accidents?

Everything from road safety to cracking down on distracted driving to cleaning up operational efficiencies at ICBC to addressing escalating autobody repair costs to addressing escalating legal costs — this has been a very ambitious and aggressive reform agenda the government has been on. It is absolutely necessary, given the losses ICBC is posting. We will not be turning to British Columbians for the $400-per-driver increase that would be necessary if we just left things the way they were.

M. Lee: I just wanted to clarify with my colleague from Richmond-Steveston. The figure that the member for Richmond-Steveston was referring to, of course, is from the service plan filed by ICBC in September 2017. On page 15, it’s just the summary financial outlook, which would show, for the 2017-18 budget, a net loss of $225 million. That is the figure that the member for Richmond-Steveston just cited.

In the context of statements that…. At the end of July, the Attorney General was indicating that ICBC was on the path to insolvency. Well, in the context of that, looking at what was put out in that service plan, that’s what I believe our member for Richmond-Steveston was driving at.

Hon. D. Eby: I take it, I guess, that the member’s argument is that I was early in my assessment. I’ll take his criticism; $1.3 billion is a lot of money for a Crown corporation to lose.

J. Yap: Who got the numbers wrong here, then? Was it government or ICBC that did not see that the losses would grow?

Hon. D. Eby: I tried to explain to the member the challenges that we faced getting to the bottom of the numbers at ICBC. There are a number of different factors at play. One was the previous government’s efforts to put the best face possible on ICBC going into the election, which was a serious one.

[3:55 p.m.]

The second piece was the fact that we had to ensure, from our perspective, given what we discovered on opening the files here, that it didn’t go deeper. ICBC did a full review between Q2 and Q3 to give us the absolute bottom-line number of where they were at financially on the large case loss files and to give us that information on older files so we know exactly where we stand.

I hope that that provides some information for the member about where we’re at. But I can tell the member that if he wants to point responsibility somewhere, he might do well to look around the opposition benches there to find some folks who could take some accountability.

J. Yap: Can the minister tell us what the projected loss at ICBC was on the date of September 5, 2017? And when did he first become aware of this loss?

Hon. D. Eby: What I’ve endeavoured to do, what the government has endeavoured to do, is provide the public with as accurate information about the finances of ICBC as possible. The member read a quote, appropriately, from the media in a certain time period when my confidence, quite frankly, was shaken in the ability of ICBC to provide me with accurate information. I brought in PwC, and I brought in an auditor of the auditor, and there was an external actuary to provide me with information.

I don’t have the final report yet. But I can tell the member that I haven’t seen any indication that there was some sort of incompetence on the part of ICBC or some sort of malice in what happened. What I can tell the member is that I saw a lot of assumptions that went into the government’s fiscal plan that (a) made it hard to know the true financial state of ICBC; and (b) were based on what can only be described, in my opinion, as irrationally optimistic views about the sale of assets and the savings, from a report that hadn’t even been received yet.

So it has been complicated to get to the bottom of ICBC’s finances. I understand the member’s interest and, frankly, my own interest in having somebody independent come through and start at the date that the members opposite received that report, which they removed the pages from before providing it to ICBC and to the public, and, from that point on, do a real accounting of exactly who knew what when about ICBC’s finances.

If the member is interested in that, we can have a conversation about who a good person would be to appoint to do that review and provide us with dates and provide the public with a full reporting about that. That would be a very interesting exercise.

What I can tell the member in terms of estimates and the numbers and ICBC’s financial state is, first of all — every piece of information I’ve received to date — that the $1.3 billion projected loss is an accurate projection based on actuarial best efforts. Secondly, the reforms government has put in place will begin the long and difficult process of turning ICBC around, but there’s a long road yet to go.

J. Yap: Can the minister tell us…? At any point during his media availability that day, September 5, did he use any different numbers when speaking about the projected losses at ICBC?

Hon. D. Eby: It’s possible that I was using EY, Ernst and Young, projected loss numbers from the report, as opposed to ICBC quarterly report numbers. I have to admit that I don’t recall the interview. But in any event, I appreciate the member drawing it to my attention.

J. Yap: I’ll help the minister. Can he confirm for us that during his September 5 appearance on CBC’s All Points West, he stated the following: “ICBC had its biggest loss in the organization’s history in the last 12 months — period. They lost over half a billion dollars in just 12 months. They are projected to lose, even with today’s rate increases, over $300 million”?

[4:00 p.m.]

Hon. D. Eby: The member and I were referring to the 2016-17 losses in the Q2 report numbers.

J. Yap: Can the minister further confirm for us that on CKNW that same day, September 5, he stated: “Next year’s loss at ICBC was projected to be just $25 million. The actual loss is projected to be 14 times that”?

Hon. D. Eby: Oh, to be that person again who thought that it would only be 14 times that. The actual loss is projected to be $1.3 billion.

J. Yap: Can the minister confirm that on CBC’s On The Coast on that same day, September 5, he stated: “The projection that was in the Budget 2017 documents was a loss of $25 million. The actual projected loss for ICBC, even with today’s rate increase, is $360 million for next year”?

Hon. D. Eby: Again, what a wonderful time that was to think that we only had to make up a $400 million loss when, in reality, the loss is $1.3 billion, a loss that has been confirmed not by one but by two separate actuarial reviews and is in the process of being reviewed by a third actuary.

J. Yap: Can the minister confirm for us that on CHNL, on September 5, he stated: “The revised projection for next year’s losses in the base case with existing rates is almost $500 million — a $450 million loss. That’s a loss that is 18 times higher than projected”?

Hon. D. Eby: The member is pointing out an admitted challenge doing math in my head. I prefer to use a calculator. If he’s pointing out that I may have said 15 times or 18 times, I can tell the member that whichever multiplier I used, I was woefully inadequate, unfortunately, in my projections on the media that day.

J. Yap: I appreciate the minister referring to his math skills. But why so many different numbers to different news outlets and programs on the same day?

Hon. D. Eby: I was attempting, in the media, to convey to the public the very serious financial state of ICBC. I appreciate the member pointing out that in some interviews, I might have given slightly different numbers. I will point out to the member that every one of those numbers was incorrect, because the state of the insurer was much worse than I believed at that time.

J. Yap: We’re trying to understand that. Recall, as I mentioned, these are all media availabilities on the same day, September 5. The minister said over $300 million on one outlet, 14 times higher than originally projected, then stated $360 million on another, then switched the number to $454 million on three other outlets on the fifth and sixth. I have the transcripts, Minister. What were the real numbers, and why did you use, on the same day, so many different numbers?

Hon. D. Eby: I’ve conveyed to the member the difficulty of knowing ICBC’s finances. When he says, “What was the real number…?” What was government’s understanding of ICBC’s losses on September 5? Excellent question. Hard to know what that has to do with anything when you’re talking about a corporation that, I can tell you, has had not one but two reviews and is in the process of having a third, by an independent actuary, to confirm a $1.3 billion loss.

I take the member’s very thoughtful reviewing of transcripts on September 5, and I might point out that he has distracted himself a little bit from the issue of concern to British Columbians, which is a Crown corporation that is losing more than $1 billion this year.

[4:05 p.m.]

J. Yap: Our intent is to find exactly what the motivation was during this time when the minister made these public comments about ICBC and the numbers kept changing. What was the final global number that the minister signed off for the quarterly report?

Hon. D. Eby: Just for the member’s clarification, I don’t sign off on these quarterly reports.

The member asked for the Q2 quarterly report loss, which was $364 million. I point out to the member that the previous report was $225 million, which was the September quarterly report. Then the Q3 quarterly report was the $1.3 billion loss. What the member is seeing in those numbers is, as ICBC is drilling down to give government the bottom-line number of where they’re at financially, the work progressing on that.

The member wants to know my motivation. Why was I in the media talking about the losses at ICBC? I’ll point out that, even at my worst in those numbers, I was well closer to ICBC’s true financial state than the previous government was.

The reason for doing that was to let British Columbians know some things that they did not know before the election, which were that the Crown corporation that they own, that is the public’s, was in deep financial trouble; that there had been a concerted effort to prevent them from knowing that; that key assets of the corporation had been listed in the financial reports, essentially, as sold, even though they hadn’t been put up for sale, everything from the URL at ICBC to land owned by ICBC; and that savings had been booked from a report not even received by the previous government.

The member can see why I might have had to go out to the media to say: “Hey, British Columbians. There’s some real trouble here that you might not know about.” I can also understand why the member would be unhappy with the fact that I had done that because it was his government and he was there when the previous government tried and, ultimately, clearly failed to prevent British Columbians from knowing the true financial state of the insurer. So if the member wants to know my motivations, I’m glad to put them on the record for him.

J. Yap: I’m certain that the minister was doing his job in doing the media availabilities that day. We’re just canvassing the fact that the numbers kept changing on that same day.

With that in mind, the final figure was $364 million. Did the minister do anything to ensure proper oversight to stop further losses after that date?

Hon. D. Eby: I’ve outlined for the member a number of policy initiatives and oversight initiatives undertaken by the government to address the financial crisis at ICBC.

J. Yap: Let’s fast-forward to November of 2017, when the minister stood in this House, on November 7, and told the House: “ICBC is projected to lose $364 million this fiscal year, ’17-18.” Can the minister confirm that?

Hon. D. Eby: That is the Q2 ICBC number.

J. Yap: Can the minister tell us when he was made aware of the revision to the loss?

Hon. D. Eby: It was in January of 2018.

[4:10 p.m.]

J. Yap: Can the minister confirm for us that on November 7, he did an interview with CHNL where he stated, in reference to ICBC, the following: “They’re on track to lose another half a billion dollars this year.”

Hon. D. Eby: I can’t recall the interview, so I’ll take the member’s transcript or whatever he’s using to cite that. I have no reason to doubt that that’s incorrect.

The quarterly reports, as I went through with his colleague, from ICBC are October and January at that time of year, if that assists the member at all.

J. Yap: Through you, Chair, I don’t want to be unparliamentary, but British Columbians want to know. Was the loss $364 million, or was it half a billion? Which was it?

Hon. D. Eby: I have patiently attempted to explain to the member the evolving scenario that we were dealing with on taking over government when ICBC was projected to be turning a profit — as I stand here in the Legislature, which still boggles my mind — to the state that we actually find ourselves in on this day in the Legislature, which is ICBC facing a $1.3 billion loss. The Q2 report from ICBC was a $364 million projected loss.

This was during a time that ICBC was doing an extensive review to provide government with their bottom-line financial of where they were at. I provided the Legislature and British Columbians with the best information I could about the significance of the loss faced by ICBC and its financial difficulties. There’s an evolving situation in the Q2 report, reflected as a $364 million loss, and in the Q3 report, reflected as the number that’s in front of the Legislature and in the budget, which is the $1.3 billion loss.

J. Yap: I’m confused. And I do appreciate the minister’s patience. I do appreciate it.

We have five numbers here that describe the projected losses at ICBC. First it was over $300 million in September, followed by $360 million, followed by $454 million — all on the same day. Then in November, in estimates, it was $364 million. But in the media on the same day, it was half a billion dollars. Five different numbers, and no clarity on what the actual numbers were. Can ICBC, through the minister, clarify which of the five numbers is accurate?

Hon. D. Eby: I provided the member with the Q2 number, which was not an accurate number. It was ICBC’s number provided to government on the best information available to them at the time. It was during a process that they were doing an exhaustive financial review. The Q3 number, which is from when that review was complete, was $1.3 billion — which is, in fact, the accurate number and which is, in fact, the number that’s in the budget and which is the number in the budget that’s in front of the Legislature and in front of us in this estimates process here today.

It’s $1.3 billion. So I was off — depending on the interview, according to the member opposite, and I’ll take his word for it — on a factor of anywhere from four to just over 2½. Again, I’m trying to do multiplication in my head. Maybe not a great idea. In any event, I was attempting to convey to British Columbians the seriousness and the escalating nature of the situation.

The Q2 number that ICBC provided was not accurate, but it wasn’t not accurate out of malice. It was not accurate out of the best information that they had available. They were doing an exhaustive financial review at the request of the board, and they provided the bottom-line financial number to government — which is the number that the member should use and rely on, and I encourage him to do so — which is the $1.3 billion loss.

[4:15 p.m.]

J. Yap: Can the minister tell us what oversight functions were put in place to stop any further losses at that time? We’re talking the November time frame, when we had a situation where in the House, the minister said the loss was $364 million and then in a media interview said it’s half a billion.

Hon. D. Eby: The member asks…. The specific question was about….

I just want to take a second. I’m trying to read my own handwriting about which high school just joined us, because the member for Courtenay-Comox took the time to recognize these high school students and the success of their girls’ rugby team. I’ve written a note, and I cannot read my own handwriting about which high school it is.

Anyway, I wanted to recognize that we’re joined by a number of high school students from the member for Courtenay-Comox’s riding and welcome them here to the Legislature.

The member has asked a number of times about what mechanisms were put in place. From the very earliest days, when it became immediately apparent that ICBC was in deep financial difficulty, the discussion was about which policy reforms…. What are we going to do?

There were a number of options on the table — everything from full, no-fault insurance, which was advocated in the report that had been left for us by the previous government, to do nothing and increase rates by $400 for each driver across B.C.

Obviously, we were not going to do nothing. What we settled on was an attempt to preserve the best elements of the tort system that we have in British Columbia for the most serious injuries. For other injuries, more minor injuries — although they can be quite serious for people who find themselves facing them — we would have an expedited process, a tribunal process independent of ICBC and government, to resolve disputes instead of the full B.C. Supreme Court system.

We would have a limit on the maximum pain and suffering award. This is an award by the court that recognizes someone’s pain and suffering, but it’s not their out-of-pocket expenses. We would use the savings from that to get ICBC back on its feet and be able to increase benefits.

Now, I do want to note that that is not all we are doing. The member wonders about what steps were taken. I believe, at that point, we had already retained PwC. They were already in the process — if not, we were in the preparatory stages of retaining PwC — to do an operational review of ICBC to provide us with recommendations about efficiencies inside the corporation.

ICBC was also well aware of my concern about correspondence that I received from many members of the public expressing concern about the difference in costs that they were asked to pay by auto body repair firms or by auto glass repair firms, depending on whether the work was being done on behalf of ICBC or whether it was being done and paid for out of the person’s own pocket. The gap between those two numbers made them very unhappy, because they believed that ICBC was being taken advantage of.

ICBC was aware of my concerns on the material damage side, as well, and the need to review policies and address any policy issues that that might be causing — and we’ve discussed some of those here today — and also to crack down on fraud.

I saw incredibly troubling video out of Ontario of some of the activities taking place in that province. Thankfully, in B.C., there are some safeguards to prevent some of those excesses. But in others, we may be vulnerable.

I wanted to be sure that ICBC had the cohort necessary to address fraud and, also, that ICBC had the cohort of staff necessary to be responsive to members of the public when they call, when they have an accident — to access the benefits they need, to have the support that they need so they don’t have to hire a lawyer, which is something that increased costs for ICBC as well.

The member is asking what steps were taken. We continue on a course of identifying every possible saving at ICBC, because we know that for every dollar we save at ICBC, there are two possible outcomes. One is there are reduced problems for government’s fiscal plan. It provides, potentially, ICBC to be in a revenue-positive space, which could result in reduced car insurance premiums for British Columbians. It could, in a virtuous cycle, allow for increased investments in road and traffic safety in the province to even reduce accidents further.

We are aggressively pursuing all savings, not just to get ICBC back into the black but also to, hopefully, reduce costs and make life more affordable for British Columbians.

[4:20 p.m.]

J. Yap: Let’s go to January of 2018. Minister, can you tell us, through the Chair, what files you and the board and the executive team looked back on that led to an additional $1 billion in liabilities?

Hon. D. Eby: There were two sets of files, or two factors, that ICBC looked at. One was the large-loss files that they reviewed, hundreds of files, to provide more accurate projections about potential costs at ICBC, to give government a bottom line about where we were at. The second factor that ICBC looked at was the closure rate. In the previous year, there had been a record high number of file closures. When ICBC looked at files in the October-November period, they identified that suddenly files were not closing.

The implications of files not closing is that they last for a lot longer when someone is making an accident claim. The longer the files last in the system, that is closely associated with escalating costs for ICBC. So when you see that the files aren’t closing, that is a red flag that costs are about to go up when those files ultimately do close. Not only are you getting new claims in the door, but the old claims aren’t closing, and you know actuarially that the longer they linger around, the higher the costs tend to go over time.

It was those pieces — the physical file review of large-loss files, to provide more actuarial certainty, and also this issue of files not closing — which caused a great deal of concern that the losses associated with those files would be much higher than expected.

M. Lee: As we continue on into January and what was reported, can I just ask, as we’re looking at financial reporting and the reviews…? The $225 million forecast loss and the $364 million forecast loss — those two periods. Is there an actuarial review at that juncture before those numbers were released?

Hon. D. Eby: I can tell the member that quarterly reports’ claims forecasts are updated, based on experience at ICBC, and they’re reviewed by the ICBC executive and ICBC’s independent actuary, Eckler and associates.

M. Lee: Earlier the Attorney General mentioned that his confidence was shaken in terms of the kind of financial reporting that he was receiving from the team at ICBC. With that concern in mind, what changed?

[4:25 p.m.]

Hon. D. Eby: An independent third-party firm was retained to come in and review the actuarial assumptions at ICBC and the jump in the projected loss. That review, because it was done by the firm that is also ICBC’s auditor, although it’s done by separate arms of that firm…. That review process will be reviewed by a separate, additional actuarial review that we’re engaging in.

There will be the ICBC internal review, the Eckler and associate review, the PwC review and then the review of the PwC review. There will be four levels of actuarial review just to illustrate to the member the depth of my concern and also my desire to provide some certainty to British Columbians around these numbers.

M. Lee: With that in mind, in terms of how the Attorney has just laid that out again, has it been determined at this juncture that there is an issue in respect of how the internal actuarial process has been conducted in the past, over some years, the buildup — that we’ve gotten to this stage?

Hon. D. Eby: The reviews that have been done provide me with absolutely no indication that the $1.3 billion number is an inaccurate number. ICBC, when they did their file review, identified opportunities for them to refine and improve their actuarial forecasting to reflect the trends, and those are now baked into their actuarial work going forward, so they can more accurately project that. All of those actuarial assumptions and changes have been reviewed by PwC and will be reviewed by a second independent actuarial review as well.

M. Lee: When was the last review done? We hear that on an annual basis. Presumably, on that annual basis, the internal actuarial report provided to the audit committee and the board of ICBC was reviewed internally and externally. Can the Attorney General confirm when that last was done and what the figure of loss was at that point?

Hon. D. Eby: The PwC review is complete. It was complete in April. We won’t be releasing that until it is itself reviewed by a second actuary. There’s a full annual audit process that’s underway at ICBC. They’re expecting to report to their board as soon as next week on that, and then it will be government’s intention to release that audit report as soon as possible. So there are two separate processes that are actively underway, the most recent completed in April, which was the PwC report.

I’d like to thank Marcus of Vale High School for stopping by.

M. Lee: Thank you for that clarification in terms of what’s coming, but I was asking what was in the past. When was the last annual audit conducted, and what was the figure at that time?

[4:30 p.m.]

Hon. D. Eby: The last annual audit was released in May. It was a 15-month period because ICBC was transitioning to a fiscal year. The loss was $913 million. I’m not totally sure what the question is directed at, but it may be useful for the member to know that, quarterly, the claims forecasts that are released by ICBC are reviewed by an independent actuary as well. So there’s the annual audit process and then the quarterly audits that are reviewed by an independent actuary, as well as ICBC’s internal processes.

M. Lee: That’s where I wanted to get to. There’s a quarterly external independent audit report, and that would have confirmed the $225 million and the $364 million. So when the Attorney General continues to talk about a greater loss forecast number, what was missed in these two quarterly audit periods — either by the internal actuary process or the external?

Hon. D. Eby: Again, for the member, it wasn’t missed. There were ongoing processes in place to provide government with accurate information about the true state of ICBC’s processes, and what the member has seen, the quarterly reports, is the evolution and the progress of that. The number of the $1.3 billion loss is…. If the member is seeking the number around ICBC’s projected loss, that’s the number that he should be looking to.

M. Lee: If it was a continuum from successive quarters, what triggered the initial review, then, and concern regarding loss characterization or determination going from minor to larger, complex loss claims?

Hon. D. Eby: What has informed this whole process is ICBC’s monitoring of various trends — everything from the cost of autobody repair to the cost of managing claims to accident frequency, the number of large claims that are settled either through a court process or independently. So it was an escalation.

[L. Reid in the chair.]

They identified an increasing trend of the size of claims that were being resolved. It caused concern, and that resulted in them doing a detailed review of their files to try to give government as accurate a fiscal picture as possible around the financial state of the corporation.

M. Lee: When did that detailed review of files start?

Hon. D. Eby: That specific piece of work began in the fall of 2017. But concern about ICBC’s losses and where the corporation was, from my perspective, began in July 2017 when I was sworn in as minister and briefed about the true financial state of the corporation, and when we reported a $913 million loss in the 15-month fiscal period.

[4:35 p.m.]

J. Yap: Just to recap. We’ve heard a number of numbers over the course of the September through November and then January period, with the loss going from $300 million to $1.3 billion between November and January. Can the minister give us his rationale for how we went from $300 million to $1.3 billion?

Hon. D. Eby: I’ve tried to explain to the member the challenge of getting to the financial bottom line at ICBC, given the activities of the previous administration and given these trends around file closures and so on. If the member is looking for a number that he…. The bottom line in terms of the ICBC’s loss for the fiscal period — $1.3 billion would be the appropriate number. I’ve said that a few times now.

J. Yap: The chair of ICBC is Ms. MacPhail, and the minister would be aware that she was previously the minister responsible for ICBC in the 1990s. During that period of time, she tried to bring in no-fault insurance. Now, I know this predates the minister’s time, but can the minister confirm that he knows what happened when that attempt to bring in no-fault insurance was tried by the minister of the day?

Hon. D. Eby: Depending on the year, I was either in high school or in first- or second-year university — I’m not sure which — and I was living in Ontario.

J. Yap: Let me ask this way: what would the current minister believe would be the reason that the minister of the day, Ms. MacPhail, would have wanted to bring in no-fault insurance?

Hon. D. Eby: A very good question for Ms. MacPhail. As I told the member, I was probably in high school.

J. Yap: What is the minister’s current perspective on no-fault insurance?

Hon. D. Eby: Glad to share it with the member. My father was a personal injury lawyer. He had a personal injury practice in Ontario, did a number of automobile-related claims. In the 1980s, the NDP government at the time introduced a version of no-fault insurance in an attempt to address escalating car insurance costs, as far as I understand. I was quite young at the time.

It devastated his practice, had significant financial implications for our family. So I do understand the seriousness of the changes that we’re undertaking here in terms of the implications for people who are dependent on those who are engaged in personal injury law in British Columbia.

From that age, I had quite a clear understanding of no-fault insurance as something that, frankly, was not that attractive, based on my family’s experience. I had, absolutely, a perspective on our courts and the independent judiciary and the ability of council representing people to deal with disputes independently of government and the benefit of the court process. I also have an understanding of the costs that are attendant in that process and that there is a need for the justice system to be proportional.

That is why, when I took over the responsibility for ICBC and was advised about the massive losses of the corporation, I reviewed the policy options around the table and discussed them with my colleagues and with the Premier that the road ahead — which is actually, I think, the name of the report — the solutions, frankly, did not seem immediately obvious to me, weren’t necessarily no-fault.

Ontario had implemented a no-fault system yet had higher insurance rates than British Columbia. Yet I could also see that having multiple experts on both sides in B.C. Supreme Court to resolve a minor injury claim didn’t make a lot of sense either, which is why other provinces had moved to address minor injuries.

[4:40 p.m.]

What we’ve done is we’ve tried to introduce a proportionate system that preserves some elements of the tort system, an independent adjudicator making decisions about disputes — not independent in the sense of the independent judiciary and all the safeguards there but not beholden to government or to ICBC, not an adjudicator appointed by ICBC but someone independent to resolve disputes, which we’re doing with the civil resolution tribunal — and also recognizing that a 266 percent increase in the pain and suffering awards over a decade for minor injuries was not a sustainable trend.

We could maintain that, but we would have to go to British Columbians and say: “We’re going to increase your car insurance in order to pay for increased pain and suffering awards.” This isn’t a person’s out-of-pocket expenses. This isn’t their cost for physiotherapy or anything like that. This is an award to recognize the fact that they’ve been injured. We also put a limit on the maximum pain and suffering award someone could receive of $5,500. If they are a victim of an accident, they are entitled to receive an award up to that point.

I don’t see no-fault, as some people do, as a panacea. I’ve seen the harms that it can cause people who are dependent on the existing system on a very firsthand basis. I’ve seen the benefits of the tort system for accident victims through my father’s practice, through the practice of my colleagues and the practice of law as a lawyer before coming to government.

I also see that the justice system needs to be proportionate in resolving disputes, the adjudication of disputes needs to be independent of government and ICBC, and not every injury needs to go to the B.C. Supreme Court. We can have the benefits of the full tort system for more serious injuries, and we can receive significant cost savings and pass them on to British Columbians through a more efficient process for more minor injuries.

I’m sure that the member was just dying to hear my perspectives, philosophical and otherwise, on no-fault insurance. I hope that’s instructive.

J. Yap: Well, perhaps not no-fault but no fault–lite for now.

To the minister, would it be safe to say that a massive problem, a projected loss of $1.3 billion, if unearthed, would enable government and ICBC to implement at least a cap on minor injury claims, which, of course, is what the government is doing or will do?

Hon. D. Eby: The work started on day one. Boy, I’m glad we started the work on day one. In the previous fiscal period, the 15-month loss was $913 million. Even if you reduce that to a 12-month period, a massive loss at ICBC.

Two things I wish: (1) that the previous administration had acted sooner so there was more time and we had more opportunity to address road safety issues and long-tail reforms that would drive down costs at ICBC and may have avoided some of the steps we’re going to have to take to get ICBC back in check, and (2) overall, that ICBC was not in this financial situation.

When I got into politics, it was not aspiring to do significant automotive insurance reform in the province of British Columbia. I can assure the member of that. But coming here, I do understand the connection between ICBC’s fortunes and British Columbians’ fortunes in terms of (a) road safety, (b) effective administration services, (c) the impact of ICBC’s performance on revenues for the province and social programs as a whole and (d) as the collective property of all British Columbians, a Crown corporation, the need to treat that with respect and responsibility.

With all of those concerns going forward, we are putting the reforms in place to get ICBC back on track. It is not as a result of the $1.3 billion loss, which is a terrifying number. It is as a result of the loss that was apparent from my very first day on the job, which was not something that British Columbians were aware of before the election.

J. Yap: This NDP government has finally got caps on minor injuries.

To the minister, if the loss had been, say, $300 million projected, as ICBC originally projected, do you think it would have been harder to put caps on minor injuries in place, given that there was upward improvement, year over year, and also with respect to the concerns of the legal community?

[4:45 p.m.]

Hon. D. Eby: I don’t know how the member could have been here all afternoon and suggested that there is upward improvement, year over year, here. This is quite a dire situation that gets worse as time goes on.

The loss figure for the first fiscal period, the portion for which I was minister responsible, was $913 million. So I’m not quite sure why the member would think that that wouldn’t be an indication to government to take some fairly dramatic action to get things under control at ICBC — keeping in mind, as well, that depending on how you do your comparisons, insurance in British Columbia is either the second or third most expensive in Canada.

Big losses and high insurance rates. Something had to change, and significant changes were necessary. If the member is saying that he would have come in and not thought that those changes were necessary, I believe that, because the previous government did not make these changes. In fact, when they were told that these changes were necessary, they cut the pages, seven pages, out of a third-party business report that advised exactly these changes to avoid these losses that we’re now experiencing. They cut them out before giving it to ICBC and before releasing it to the public. I mean, I won’t speculate about the motivations, but they did take that step.

We did not cut pages out of reports. We did not propose to sell a bunch of ICBC’s assets to put a rosy face on an escalating, problematic situation. What we did was we introduced legislation in this place to do very significant reforms to get things under control at ICBC. There is a marked departure between the two approaches. I am proud of our approach.

J. Yap: To the minister: would you say that one of the weaknesses of the NDP brand, historically, has been its inability to be seen by the public as good fiscal managers? I look back to history, in 2001, when the government, the NDP government, was decimated for the so-called fudge-it budgets of the ’90s. As a result of that election in 2001, Joy MacPhail and one other MLA, Jenny Kwan, were left with seats in the House.

To the minister, this must still be a source of much rankle. It must really annoy your colleagues, especially given the history of that period. So here we are 16 years later, and the NDP government is in power for the first time since 2001. Would it not be beneficial to your party to demonstrate in some way that the B.C. Liberals were not as good at managing the economy or fiscal matters as everyone thought?

Hon. D. Eby: I appreciate the member’s understanding of my ability to…. What I understand from his question is that the NDP has alternately wiped $913 million last fiscal period and $1.3 billion this fiscal period off of the public books — $2.2 billion, just wiped it off the books — fooled auditors, fooled PwC, fooled independent actuaries and tricked everybody. The Auditor General sits on the audit committee for ICBC.

We have done this for two reasons. One is to sneak in no-fault insurance, which failed in the ’90s, and I, the son of a personal injury lawyer whose practice was devastated by no-fault insurance, am enacting the NDP’s goals of finally achieving no-fault insurance.

As an added benefit, I am hurting the B.C. Liberal record of being such profoundly wonderful fiscal managers, because they turned over a corporation to us that was — I’m trying to remember in the government’s projections — only going to lose $25 million in the fiscal period, when they lost almost $1 billion, and was actually going to make money this year.

It’s a wonderful theory. It has elements of art, it has elements of creative spirit and tenacity, and it has every element of fiction.

[4:50 p.m.]

J. Yap: If ICBC were shown to have massive losses in the year that the NDP were returned to power, they could, as you have done multiple times over and over again in the media and in this House, blame it on the B.C. Liberals. Is that not correct?

Hon. D. Eby: I’m trying to figure out who else would be responsible for the $913 million loss last fiscal period and the $1.3 billion loss this fiscal period than the government that literally cut seven pages out of an independent business review of ICBC — literally took the pages out before giving it to ICBC or the public. Those critical seven pages…. By the way, the previous member responsible has still not given consent for public release, although it was on the front page of the Vancouver Sun. Literally cut the pages out before releasing it.

The member is concerned that I am assigning responsibility to his government. Those seven pages that detailed exactly the changes that we’re making to keep ICBC on track — the government would rather cut the pages out than make the changes. Well, we’re making the changes now. It’s going to get ICBC back on track as was projected for the previous government by the third party, which they paid a healthy sum of money to, to give them exactly that advice. Instead of cutting out pages, we’re doing the work that the previous government should have done.

I am shocked and amazed that the member doesn’t understand why I assign responsibility to his government for the mess we’re in today.

J. Yap: So, then, if the numbers — especially the numbers on the prior year estimates, because we are talking about a projected loss of $1.3 billion — suddenly swing from a loss of around $1 billion by a positive swing of, say, $600 million the year after, the NDP and ICBC, under Chair Joy MacPhail’s leadership, would look like heroes, wouldn’t they?

Hon. D. Eby: I’ll tell you this, hon. Chair: I would much rather be in a position of having $1.3 billion on government’s books to spend on schools, hospitals, social programs and not reflecting a loss at ICBC. You want to talk about heroes, hon. Chair? Let’s talk about that scenario, because wouldn’t that be something.

The members opposite — their previous administration — their neglect, their cutting out of pages of reports, their reporting savings from reports they hadn’t even received, their reporting of the sale of icbc.com and other assets to prevent people from knowing, before the election, the true financial state of ICBC…. Let me tell you. I would much rather have the $900 million from the last fiscal period and the $1.3 billion from this fiscal period for all of the crying needs in this province.

If the member is suggesting that we would take $2.2 billion out of public accounts, depriving schools, hospitals and others — homelessness, any social issue that you can name — let alone….

Let’s talk about tax cuts, about funding the reduction of income taxes or other fees for British Columbians. Let’s talk about heroes. I would much rather be the hero that was doing that than the person who has the trial lawyers protesting out in front of my office, that has the trial lawyers leafletting and advertising for the reforms that we’re making, than to hear from the member down the way about the small glass repair shop in her community that is impacted by the necessary reforms that we’re having to make.

If the member thinks that this is the stuff that was generated in order to look good, I think the member should consider the alternate scenario and which situation government would rather be in and how the province of British Columbia and the Crown corporation got in this state and who is responsible for that.

J. Yap: Minister, did you or Chairperson Joy MacPhail instruct the ICBC executive to expedite the resolution of losses on files as much as possible before the end of fiscal year 2017-18 to ensure you had as much of the losses or claims resolved on this fiscal year so you could show a remarkable improvement in fiscal 2018-19 and fiscal 2019-20?

[4:55 p.m.]

Hon. D. Eby: The member is suggesting an orchestrated fraud on the public by the chair of ICBC, myself and many members of government with the complicity of, variously, PricewaterhouseCoopers, the Auditor General, who sits on the audit committee for ICBC, the board of ICBC and the ICBC executives.

Let me just tell the member that we introduced and passed whistle-blower legislation in this place. If any person at ICBC has information about an organized fraud on the public that wiped $2.2 billion off the books of the province of British Columbia, there is a brand-new whistle-blowing process. They can go straight to the Ombudsperson and provide that information.

The member knows very well that he would not make such suggestions outside of this place. Although he is protected from defamation inside this place, to suggest such an orchestrated and organized fraud in order to obtain benefit, political benefit or otherwise…. It is such a fanciful notion that that would be more political benefit than spending $2.2 billion on something other than a loss at ICBC. I mean, literally…. Clearly, I’m not speechless, but I’m very close.

J. Yap: Does this in any way speak to management incompetence as to why this massive loss on the outstanding claims wasn’t found or acted on sooner? The minister is on record as saying that he had no faith in management, and he described the sudden increase in the outstanding claim values as management “screwed up.” If that is the case, why has no one been disciplined or let go as a result of this financial debacle?

Hon. D. Eby: I thank the member for his question, and I’ve heard it before. I’ve also answered it before.

J. Yap: I’m not surprised that the minister is refusing to answer. When asked on January 30 if he had confidence in ICBC management, after the $1.3 billion projected loss was announced, the reply was: “In short, no. I was completely blown away by the fact that things got so much worse so quickly. I want somebody to explain to me how that happened. That’s why I brought in a third party to do this review.”

We’re asking: why has the minister not acted upon his statement? If he has no faith in ICBC management, why has he not taken action in this regard?

Hon. D. Eby: We have crossed over to the absurd. The member will be shocked when he reads Hansard and realizes that he asked exactly this question when he talked about the Mike Smyth show, when he talked about my quote, when I provided the answer about the actions the government has taken to identify how the actuarial projections changed so dramatically, about the multiple levels of review, about the steps that we’ve taken since then.

I recommend to him very highly that he go back to the Blues as soon as they’re available and give it a little read. He’s going to have a chuckle.

J. Yap: The vice-president of claims, under whose watch this outstanding claims fiasco transpired, is now the acting CEO of ICBC. Is that correct?

Hon. D. Eby: That is not correct.

J. Yap: How is the general public to have any confidence that the same level of mistakes could not be seen in the forecast going forward? In other words, how is the public to be assured, reassured, that the same mistakes won’t happen again?

Hon. D. Eby: When this happened, I asked for a couple things. I asked for PwC to do a review. ICBC had their own internal reviews, and their independent actuary did a review then. PwC did a review of that, and I’ll be engaging an independent actuary to do a review of that actuarial review.

To answer the member’s question, it’s why I’m doing that — so the public can have confidence in that. It is exactly the same answer as I gave the last time he asked the same question.

M. Lee: I just wanted to come back to a question that we were talking about earlier, which was that the Attorney and the board chair of ICBC ordered a review of outstanding claims after they received the projections of $300 million of loss. It sounds like that trigger or that order was in the fall. Could I ask the Attorney General: when exactly was that review ordered?

[5:00 p.m.]

Hon. D. Eby: ICBC undertook the review, on seeing escalating claim trends, and there was an ongoing review of ICBC’s operations and their fiscal operations on my taking responsibility for this file, including and not limited to independent reviews by third-party business firms, independent actuarial reviews by PwC, reviews of the reviews and on and on.

I think that the member’s questions…. I recognize the critically important role of the member to poke at this. If the member’s concern is what the actual financial state of ICBC is, it is a $1.3 billion projected loss this year, a $913 million loss last year and absolutely no indication, without the reforms that we have put in place, of the turnaround of the corporation, which is why we put those legislative reforms in place.

M. Lee: Thank you for that response. I would like to ask: to the Attorney General’s knowledge, has management at ICBC previously proposed any review of these claims?

Hon. D. Eby: ICBC reviews trends when they materialize, when they identify issues. My role in this has been to ask for not one but two independent reviews of those assumptions and ICBC’s reviews.

M. Lee: Well, I know that we’ve been quoting from various media comments that the Attorney has made. There have been many, of course, through this period as he, as he has described, uncovers more of the financial loss projections and changes, despite the fact that there’s been consistent internal actuarial reviews and external reviews being conducted.

Something clearly has changed here, to the point where on February 1, the Attorney General is quoted on CFAX Radio as saying: “The projections that I initially got from ICBC were in the neighbourhood of $300 million for loss for this year. The board and I sent them back and said: ‘Tell us exactly what the financial position is on open files that you have.’ They came back and said: ‘We screwed up. There’s an extra $1 billion here of liability that we had not accounted for.’” We’re now at $1.3 billion.

We have spent several hours now going through, with the Attorney General, the nature of how this came about. The Attorney General has made comments regarding the previous government. What we are focused on, though, here is the period in time where the reports at 225, 341, escalating financial losses…. I ask again to the Attorney General, what triggered this change in approach?

Hon. D. Eby: I guess it depends on what the member refers to as a change in approach. In terms of the policies around minor injuries and the reforms and everything that’s been debated in this session and passed, thank goodness — although not with the support of the opposition, for some reason — we’ll get ICBC back on track. That started immediately from day one, when it was apparent that ICBC was going to lose close to $1 billion in the fiscal period.

The core of the member’s question, I guess, is: “Maybe things weren’t so bad and then, all of a sudden, they got bad. How did that happen?” But the problem with the premise is they didn’t start at not so bad. They started from day one that I was on the job as this thing described as a dumpster fire.

[5:05 p.m.]

It was like: “How can it be this bad?” That was my question. How can it be this bad? In the previous government’s pre-election report that the loss would be somewhere around $25 million, the pre-election budget report to the people of British Columbia…. Then, when I get the file, it’s a $913 million loss for the fiscal period. How could it be this bad? That’s from day one.

I can only take, from the member’s question, that the premise of it is that there was this sudden escalation in losses. “And now you’re using it to ram through all of these legislative reforms.” Not true. Absolutely not the case. The reform work started on day one, because it was so obvious that ICBC was in deep, deep financial trouble.

The news didn’t get better. The news got worse. And when it got really crazy, then I asked for two separate reviews, an actuarial review by PwC, and then a review of that review, because some concern was raised: “Well, PwC is ICBC’s auditor, so they’re not independent, so we’ll do a review of that review too.”

I say that just so that the member knows the $1.3 billion is absolutely not connected with government’s decisions around reforms — absolutely not. Because we didn’t know that number. We didn’t know the financial state of the coming year until we were there. What we knew was the state when we took over on day one, which was a $913 million loss in the fiscal period — which, if that wasn’t evidence enough to act, I don’t know what would be.

M. Lee: Well, with respect, we have understood, both in Finance estimates yesterday afternoon and in these estimates this afternoon, that government was signing off on financial reports. That at a time where we’re hearing that there’s more and more concern, the terms that have been used to describe this situation have been inflammatory, to say the least, particularly when we see the numbers and the way that they’ve come about.

I’d like to ask the Attorney General…. This, presumably, is the work that has been done by PwC and the further external actuary firm as to: how do the older, smaller claims evolve into more larger and complex claims, as they come in this particular period, as described in the news release?

Hon. D. Eby: It’s helpful to know the process. When someone has an accident and they call up ICBC to make a claim, what happens next? The way it works is you start your claim. You report it to ICBC. They might not hear from the person who is making the claim for up to two years. They go out and retain counsel, and they take their advice, and ICBC might not hear from them for two years.

When ICBC gets the initial report, they set aside some­thing called a reserve. This is how much we think the claim is worth. If they don’t hear from the person from that period, they have no idea what’s happening. It may be that, you know, the person’s initial report to ICBC is complete or not. It doesn’t matter.

The adjustor takes the best information possible to set aside the reserve, and then there’s nothing for as long as two years. Then the person shows up again and says: “Here’s my claim. I’m filing in B.C. Supreme Court, and we’re going to resolve this.” And it turns out that the reserve is woefully inadequate.

Those are the mechanics of how the reserve that is set out for a particular accident claim may be insufficient.

[5:10 p.m.]

M. Lee: That suggests, though, that how those claims were being first…. Obviously, appreciating that there are different types of claims in nature of severity, but in the category of minor claims shifting to more complex major losses, is it suggested that there are approximately, from what our understanding might be, 800 claims in this category that have shifted in this manner, all in the same four-month period of time?

These are claims that are dating back to 2010. I appreciate that none of us are professional actuaries here, but just so that we can understand, how does this all occur in such a short period of time when we have the same management team that has been advising and running ICBC under the previous government — same management team, same approach. What has changed here?

Hon. D. Eby: A couple things. First of all, what’s changed? The management team is not the same, as the member suggested. It’s not correct. The board is an entirely new board, except for one member. The legislation that we’ve passed has a number of major reforms in place, one of which will expressly address this issue that I talk about, where there’s an initial opening of the file and then you don’t hear anything for two years.

You won’t be able to, under the reforms, access accident benefits for things like physiotherapy, counselling, acupuncture, occupational therapy and massage therapy — whatever. You won’t be able to access that unless you’re actively engaging with your care team, your family physician, and part of that requires contact with ICBC, so that black hole doesn’t happen anymore in terms of knowing what’s happening. What has changed? The management team, the board, the law, the policy — and the government, I will note, as a significant factor — have changed, in terms of ICBC’s prospective future.

The last piece. The member is wondering how many claims. Is it only 800 claims, and, if so, how could they have such a profound impact? It’s just the law of large numbers. If you have 25 claims move from what are initially assessed at a lower level to major claims, that’s 10 million bucks right there. That’s 25 claims. They have an outsized impact on the finances at ICBC, so we need to account for that.

Part of that, actually, is part of the legislative reforms that we’ve brought forward. Part of that treatment plan that is being developed in consultation with Doctors of B.C. and best practices around basic stuff — you know, you ice your sprain; you do basic things, nothing unusual or out of the ordinary — is to try to prevent this situation where someone has a more minor injury and they don’t treat it.

[5:15 p.m.]

Then, over time, it becomes a far more serious claim. Currently there’s no way to really account for that. In fact, there are incentives for people not to treat their injuries, because the current benefits for accidents don’t cover those out-of-pocket expenses. You might not go to see your physiotherapist because you’ve got to pay an extra $25 or $50 out of your pocket to top up the meagre benefit that you currently get from ICBC. So you don’t go to physio, and when you don’t go to physio, then your accident injury gets that much worse instead of getting better.

What we’re trying to do, by covering the market cost of things like physio, counselling, acupuncture, massage therapy and other things, is get people to do two things: one is to be in touch with their physician, who’s going to guide their treatment; then by paying the benefits at the level that the market charges, they can actually access those services and get better, and the minor injuries won’t get worse.

So what has changed? A lot of things have changed — the government, the board, the management team, the law, the policy, the emphasis on getting people better. I appreciate the member’s question, because there are a lot of changes that have been made in a very short period of time.

M. Lee: Well, as the Attorney mentioned as well, what changed was the government, of course. That’s the challenge, I’d say, when the Attorney introduces topics in the media around pointing fingers at who’s responsible.

We have an Auditor General who’s on the audit committee, PwC as external auditors. We have professionals, of course, running ICBC as a corporation. Many of those executive members have not changed. There have been some changes. In response to a question from the member for Richmond-Steveston, that was responded to.

Let me say this. In the last 18 years, what has been the average amount of prior years’ claims adjustments at ICBC?

Hon. D. Eby: I’m going to have to undertake to get back to the member on that.

I will note, though, in the 2016-17 service plan, February 2016, that the previous government in the 15-month fiscal period projected an $11 million loss at ICBC. That necessitated a very significant revision, because we didn’t sell a bunch of assets, and we didn’t book the savings that the previous government did from a report that hadn’t even been received, let alone implemented through legislation. The member has seen the challenge and the complexity of the legislation and the process to pass it.

I wish that the previous government would at least apologize to British Columbians for cutting those seven pages out of that report, not releasing it to the public and not releasing it to ICBC.

The member wants to point the finger at the executive team at ICBC, and I understand that sentiment. I’ve pointed the finger myself. Let me tell you, though, that the team is only as good as the information they get. When that report was not provided to the executive at ICBC, I think that it is pretty rich for the people on the other side to be pointing fingers or to suggest that they bear no responsibility for the state of ICBC currently.

[5:20 p.m.]

There are many, many policy initiatives that were put off for political expediency, everything from the auto glass repair policy that I was talking about, a savings of just $9 million, to the rate design project that’s underway right now, put off for a decade, to the minor-injury reforms put in place by other provinces as early as a decade ago — all of them enjoying the benefits of that necessary reform that was recommended specifically to the previous government.

The member doesn’t like that I assign responsibility there. That’s fine. But I do. And for him to accuse the executive team when the previous government didn’t even do them the courtesy of providing them the reports that the government commissioned about ICBC in their entirety is a difficult thing to hear.

M. Lee: Well, I mean, there’s a lot of political rhetoric that’s been flying around about ICBC, including during this estimate process. There have been comments made before around how the previous government had orchestrated things in certain ways. But we’re talking about the same professional management team, the same external auditors, the same Auditor General, at least in terms of function.

Just as the Attorney has challenged the member for Richmond-Steveston to repeat comments outside of this chamber, the same challenge could be made to the Attorney, respective of how he’s seeing this.

Let me say that my understanding is that the report that the Attorney has referred to was actually made available to ICBC, the corporation, in entirety. Secondly, the recommendations that were stated in that report, other than the adoption of a no-fault system and the endorsement of soft tissue caps…. All of the other recommendations were implemented by the previous government.

I know that my colleagues, including the member for Surrey–White Rock, yesterday in Finance estimates, went to the extent of again indicating the amount of investments and decisions that the previous government made to deal with what we appreciate is a challenge for ICBC and other insurance corporations across North America. Those include $3 billion worth of expenditures to deal with this situation. So to suggest that the previous government had not been doing that is not correct.

What we’ve been focused on is this tremendous transition, under the current government’s watch, from a $225 million reported loss to $364 million to $1.3 billion. I find it very challenging to appreciate and understand how 800 claims from 2010 on, recorded in different instances of time over that period of time, have all come home to roost, so to speak, in this four-month period to drive a loss, as the Attorney stated on February 1, from $300 million to $1.3 billion.

I’ve asked about prior claims adjustments figures, and I appreciate that that figure is not available, but I’d suggest that when one looks at that reporting, this prior year’s claims adjustments of $442 million is completely different and off the charts from what has been there over the 18-year history of ICBC. I appreciate that ICBC management will look at that figure, but that’s what my understanding is.

In the whole history of this corporation, they have never had such a scale of magnitude of a prior year’s claim adjustment. What happened in this four-month period? I don’t understand how British Columbians, as the member for Richmond-Steveston has indicated, can have confidence in what exactly is going on at ICBC during this period of time. That is a concern. It’s a concern as to why we are talking about product reform, booking those revenues and savings, when they haven’t even been implemented yet. They haven’t even been made effective yet.

[5:25 p.m.]

With respect, I’m asking the question regarding how it’s possible, and perhaps I can narrow the question at this point to just say…. In terms of the criteria that are being utilized to transition from a minor claim to a more complex claim, what criteria of analysis are being utilized by PwC and the second actuary firm?

Hon. D. Eby: I take the member at his point. He does not give credence to the prior years’ claims adjustments. Fair enough. He is welcome to that position. The challenge for him — if the argument is, then: why do the reforms? — is that ICBC’s loss, independent of that, is still hundreds of millions of dollars for this fiscal period — and for the previous fiscal period, $913 million in their audited financials for the loss for the year. I can understand that the member disagrees, and that’s fine. He’s welcome to do that.

It does not address the underlying issue of the fact that ICBC is losing hundreds of millions of dollars and that from day 1. That loss was apparent. It was obvious. It was a crisis, and we went into action immediately with the reforms that were passed in the Legislature this session — and more to come — and the retention of a third-party business firm and all these sorts of things.

You know, I think if the member has concerns about the $1.3 billion figure, which is based, in part, on this prior years’ claims adjustment, then maybe when he receives the audited financials for ICBC, he’ll have more confidence in that. I’m not sure. But this idea that if this wasn’t a thing, then ICBC would be in good financial standing and there wouldn’t be an issue here, is not accurate. I think that we might be missing that point, and I wanted to clarify that for the member.

J. Yap: Why do ICBC’s projected premium taxes and commissions drop so dramatically in this fiscal year?

[5:30 p.m.]

Hon. D. Eby: The apparent drop is due to the fact that the previous fiscal period was a 15-month fiscal period, and the current fiscal period is a 12-month fiscal period. I’m advised that there’s not a material change in the numbers when you look at a sort of monthly total.

J. Yap: My understanding is that for premium deficiency adjustments to be negative, as shown on page 19 of the service plan, this would indicate that ICBC believes that it’s collecting more in premiums than it needs to cover costs. How is this possible when the corporation expects expenses to outpace revenue in every year in its current fiscal plan?

[R. Chouhan in the chair.]

Hon. D. Eby: I just got a quick lesson in premium deficiency adjustments as an accounting treatment. The member is correct that this is the premium deficiency adjustment. This is the deficiency in premiums. So the larger that number is, the bigger trouble you’re in financially, from an accounting point of view. The reason…. It is a technical accounting treatment, so what you want to see in that column is a smaller number.

For the 2018-19 budget, what the member can take from that number is that that is a positive development. But this is a technical accounting treatment that reflects, when you see that number grow between ’16-17 and ’17-18, that that is not good news in terms of the projections of the profitability of ICBC. You want to see that number get smaller. Over time, as you look at that across the column, you’ll see that number getting smaller as our work to address the drivers of rates — the material damage claims, the legal costs, the administration costs within ICBC, and so on — start to take effect.

[5:35 p.m.]

J. Yap: What accounts for the sudden and dramatic drop in premium deficiency adjustments, which have changed by $350 million, between ICBC’s September and February updates?

Hon. D. Eby: The explanation for it is the product changes that have taken place as a result of the legislation that has passed in this place. So ICBC has a rate and is selling insurance right now at that rate, yet when the product change becomes effective, the actual cost of administering that claim is going to go down quite dramatically. That accounts for the significant impact in that year that the member sees, because this is when the product change effect is seen in terms of the accounting treatment.

I’m getting the nod.

J. Yap: I just heard the minister refer to the product changes. My understanding is that product changes won’t come into effect until next fiscal.

Hon. D. Eby: This is a forward-looking accounting treatment. As of the fiscal year-end, it looks forward to what the deficiency will be for the coming fiscal year. The member is right. The product reform takes place and begins implementation April 1, 2019. So on March 31, 2019, when the premium deficiency number is set, it’s looking forward to the next fiscal year when the product reform takes place. That’s why it reflects the product reform.

J. Yap: It’s quite a sizeable amount, $400 million. Can the minister explain: where did the $400 million in ICBC commissions and premium taxes go? And with regard to what we’ve heard today with the changing numbers, what confidence can we have that ICBC’s numbers won’t be revised in this area with considerable negative impact, as has been seen in recent trends?

Hon. D. Eby: I am sensing from the staff here a bit of frustration about the way in which our Legislature handles estimates, which is that they attempt to explain a highly technical accounting treatment to me, and then I attempt to relate that to the member in a way that satisfies his queries.

What I’d like is to offer the member a briefing on this line item from ICBC, where they can provide this information to the member directly and, hopefully, address any questions he may have about it. It is an accounting treatment, and it’s a complex accounting issue. They’re doing their best to pass it through me, but I’m afraid I’m not doing it justice, clearly, in terms of what the member’s level of detail is that he’s interested in here.

J. Yap: I appreciate the offer of a briefing, and I will take the minister up on his offer. The next question will be from my colleague from Chilliwack.

L. Throness: I have a couple of questions for the minister that have been nagging me for some time. They’re taken from the Affordable and Effective Auto Insurance independent report from last year.

I note that table 13 gives B.C. accident rates per 100,000 population. In 2005, B.C.’s accident rate was 676. In 2011, it was 426. That’s a 37 percent decrease in six years. I’m wondering to what the minister would attribute the decrease in the accident rate by nearly 40 percent in those six years?

[5:40 p.m.]

Hon. D. Eby: The member has asked a challenging question. There are a number of potential factors at play here. What I’m advised by staff from ICBC is that this a trend line that was common in many jurisdictions in North America. There is some speculation that it might be related to economic activity.

The member will remember that there was a very significant economic issue in the United States related to sub-prime mortgages around 2008 that led to an extended period of economic uncertainty. There is a correlation between employment rate and economic activity and driving. If people are not employed, they drive less and don’t have as much money for gas and so on. But it’s really difficult to make those kinds of generalizations here. There may have been a….

Well, there’s no point in me just freewheeling here about what it might be. Nobody has a very definitive explanation for why that happened, and there are some more cogent explanations for why it’s increasing. But the decrease over that period turns out to be more challenging to explain.

L. Throness: Just one follow-up question. Since then, of course, the situation has turned just the opposite way. The report says: “Approximately 20,000 additional crashes per year have been taking place in B.C. since 2013.” That’s a 23 percent increase. It goes on to say: “The recent accident rate increase in B.C. is unique compared with most other Canadian provinces or territories, which continue to show a downward trend to 2014.”

My question is: is it possible that there has been some kind of organized and systematic fraud perpetrated against ICBC? Has the minister ruled this out, and what kinds of investigative resources has he applied to this question?

[5:45 p.m.]

Hon. D. Eby: The trend line of increasing accidents has been seen in other jurisdictions in North America. It’s attributed here, in part, to an increase in distracted driving, and congestion has a one-to-one relationship to frequency. It’s directly related to frequency, particularly congestion in the Lower Mainland.

I can tell the member that there are a number of steps that ICBC has taken to address fraud. They use something called the NetReveal program to try to identify patterns of conduct and other types of circumstances that might reveal fraud. It’s industry-leading software to identify data patterns that would reveal fraud.

They have doubled the number of inspectors that review and prevent fraud, detect fraud, on behalf of the corporation. They have generally taken a hard line on fraud. Certainly, it’s been a concern of mine, and I hear that it’s shared by the member, that we make sure we address and prevent fraud on the corporation and that they pay out for legitimate claims and that they pay out appropriate amounts when repair work is done. It is an ongoing project. I thank the member for his question.

S. Bond: I would like to ask the Attorney if he is aware of the changes that ICBC has implemented regarding the auto glass industry.

Hon. D. Eby: I believe I am aware of the changes of which the member speaks. There were changes related to the treatment of mouldings and the payment by ICBC of the lesser of the OEM replacement part cost versus the replacement part from some other provider. If those are the policies she’s referring to, then yes. If she’s referring to other policy reforms, she’ll have to be more specific, and I will advise her of my level of awareness of them.

S. Bond: Obviously, the Attorney is aware of those changes. I’m not certain, though, that he’s aware of the potential impacts of those changes. I’ve had the opportunity, over the last couple of days, to speak to two highly respected auto glass companies in my community. The concerns they have are significant. The biggest concern that I have is that apparently, there was absolutely no consultation with the association or, in particular, these businesses.

Let me just read a quote from one of the letters that I received: “The proposed changes will cost an average auto glass business $100,000. That means I need to reduce my business costs by that much. It means that people will be laid off. My business, like most others, will go from needing more skilled people, due to high demand of work, to cutting jobs because of the financial burden an extra 16 percent discount has on my business.”

I’d like to ask the Attorney General: while changes may have been necessary, why on earth would he have not had ICBC consult with the industry where these jobs exist in local communities?

Hon. D. Eby: I thank the member for the question. The challenge is a 2011 Competition Bureau ruling that prohibits ICBC from discussing rates with service providers like autobody, auto glass — negotiating rates with them. It’s a legal prohibition. It’s a frustrating one, I will acknowledge.

There is an opportunity for engagement. ICBC, based on a third-party business review that we undertook with the corporation…. The third-party business review identified opportunities for ICBC to improve the tiering program, the sophistication of the tiering program that they operate in relation to autobody repair, material damage, auto glass repair, and so on. There will be an opportunity for engagement at that point. But unfortunately, there is a prohibition on ICBC engaging, as they had in the past, with service providers on this kind of thing.

[5:50 p.m.]

I’ll point out specifically the two changes which are projected to save $9 million to ICBC and, by extension, to the motoring public. The first change is that ICBC will no longer pay to replace the moulding if the moulding is not actually replaced. The second change is that ICBC will pay for the lesser of two costs. One is the cost of the original manufacturer automobile glass, and the other is the cost of third-party-supplied replacement glass. They will not pay the higher cost when the lower-cost piece is used, which is what the current policy allows.

I understand, because I have had conversations with trial lawyers and with the material damage suppliers, and so on, about the impacts of these changes, they are not happy changes. I wish we had the time that the previous government had to make the road safety changes, to do the long-tail reforms that are necessary. The member asked about increasing accidents and addressing that through road safety reforms. I wish we had that time. We don’t. ICBC lost over $900 million last fiscal period, $1.3 billion projected for this fiscal period.

This is a small change. There are much more significant changes that are impacting law firms that do personal injury work for automobile collisions. Unfortunately, I can advise the member, there will be additional changes, because there are few options. One is we reform the cost side around ICBC, and the other is, if we don’t do that, then we increase rates for British Columbians, and British Columbians are already paying very significant rates for automobile insurance in this province. So we’re doing the reforms that are necessary.

It’s unhappy work. I’m not excited about it. And it’s necessary. I think as a basic point, though, ICBC shouldn’t be paying for the higher-priced part when a lower-cost price is used. They shouldn’t be paying for replacing a moulding that isn’t actually replaced. The changes here, although the savings are relatively modest, are an example of us trying to leave no stone unturned in terms of identifying savings.

S. Bond: With all due respect to the Attorney, I’m no expert in whether or not negotiations are permissible, but conversation certainly is. This government has been consulting on everything under the sun. For the minister to suggest that he leaves no stone unturned and that this is a minor move with a lot more pain to come….

These businesses are small businesses located in communities right across British Columbia. As of June 4, they got a memo in the mail that said that, by the way, they’re going to increase the parts discount to 25 percent, meaning 16 percent less for glass parts.

The minister references the changes to the moulding allowance program. Well, there’s history in terms of why that program was created in the first place. This reverses that decision, which was a process that ICBC put in place to help actually manage that particular issue. From the glass companies’ perspective, it shows that, apparently, there was a lack of understanding of what the program was actually designed to do.

No one here is disputing that ICBC has fiscal challenges. In fact, every single quarterly report that we did made it clear that there were challenges and that they were big ones. But to download, through a policy memo, on small businesses that are the heart of British Columbia, significant costs — $100,000 for this one company…. That doesn’t even include the potential impacts of the employer health tax and all the other things.

Is the minister telling me that there was no way to have a conversation? As I recall, before the last election — I’m happy to be corrected — there was a series of tables created with an agreement that there would be discussion held with the auto glass industry. Apparently, that didn’t continue. Is the minister saying that there was no way he could have had at least a discussion, a reasonable conversation, with small businesses on whom he has now downloaded, in a period of two months — well, a month from their notice — significant costs that will result in job loss?

[5:55 p.m.]

Hon. D. Eby: I am telling the member that. I’m telling the member that it is our understanding that it is illegal for ICBC to negotiate rates with suppliers, according to the Competition Bureau ruling. I appreciate that the member wishes it were not so. I can tell her that it is. And I can tell her, to her concern, that there is a round table and there will be a round table with the ARA, who represent some of these auto glass shops, and the New Car Dealers Association around the tiering process and improvements to that. Those conversations are taking place, but there is a prohibition on ICBC discussing rates with suppliers.

I understand the member’s frustration too. Nobody is excited about this. I have to say that I disagree with the member’s characterization of the previous government’s understanding and the public’s understanding of the state of ICBC and steps taken to address the very deep, deep financial crisis that was apparent to me from day one in taking over the job.

We’ll have to agree to disagree on that, but I can tell the member that I take very seriously the massive loss at ICBC, the implications for British Columbians’ automobile insurance rates.

I will point out to the member a couple of things. One is that private insurers in British Columbia currently have a 30 percent discount at automobile glass replacement firms, for some insurers. The member, maybe when she was the minister responsible for ICBC, maybe received correspondence like I receive where people get one price if they are paying for themselves out of pocket and another price if ICBC is paying for it. I get correspondence like that all the time.

The reason why people write to me about that is because they believe that that is not right: there should be one price to replace a windshield, and ICBC should pay the same price as they would pay if they were paying out of pocket. I tend to agree with them about that.

Now, I’m not saying that these firms that the member is talking about have any involvement in that kind of practice, but I am saying that there’s an issue here that needs to be dealt with. It is unhappy, but it is necessary.

S. Bond: I know the critics need to move on with their questions, but I’ll simply close my comments with this perspective.

While the letter of the law would suggest that negotiation of rates is not possible, I think respectful conversation and dialogue with an association where literally hundreds of people are employed across British Columbia, including in my community and many other small communities, who are going to be impacted by this decision…. To receive a memo on May 1 and have the impacts put in place as of June…. In fact, in this one business’s case, it’s $100,000. That may be insignificant in the totality of the issue with ICBC.

We will not continue to debate whether we did anything or not. All the minister has to do…. His staff is well aware of all of the initiatives that we took, including literally billions of dollars of effort to work on the issue at ICBC. The minister can choose to ignore that or deflect it. That’s his prerogative. But the documents and the facts speak for themselves.

My point is that a respectful way to have worked through this would have been to have a dialogue, a conversation, with these small business owners all across British Columbia. It may be small potatoes when it comes to the issue that the minister is dealing with at ICBC. It is not to small businesses across the province, and I’m sure this is not the last that the minister will hear about this issue.

I’ll return the floor to my colleague.

Hon. D. Eby: I’ll just rise to say that there are a lot of third-party suppliers to ICBC, people engaged in work with ICBC, whether it’s defence counsel or plaintiff counsel or auto body repair firms or glass repair firms. This is not going to be a happy time, and I accept the members passing on the unhappiness. I regret very much that this is the situation that these firms are facing. I also know that we have an obligation around a Crown corporation that is in deep financial trouble, and we will take the steps necessary to address that.

I thank the member for her comments.

J. Yap: I appreciate the minister’s participation in today’s estimate debates. What we have learned, I think all sides can agree, is that ICBC serves the public of British Columbia.

[6:00 p.m.]

We have known that changes are needed at ICBC. The previous government was already on a path to make changes. Clearly, the new government is on a path to make substantive changes.

I think it’s been useful during today’s discussions to hear that even during the time of the new government, there were challenges in pinning down numbers. Numbers were changing, but in the end, here we are — a projection of a very substantive financial loss, $1.3 billion. We look forward to the government’s plans and, we hope, ICBC’s plans to set ICBC on a path to financial sustainability.

I do appreciate the minister’s offer of a couple of briefings. We’ll follow up with him on that. I do sincerely appreciate the minister’s…. He said, on the record, that he was trying to be patient, and I do appreciate his patience.

I do have a couple of questions which the minister may or may not be able to answer right away — if not, of course, he can follow up in writing to us — and that will complete our discussion with ICBC. The first one is from a constituent of mine, who asked a very good question. That is this: why does ICBC require an individual’s home address to be on the certificate of insurance, which is kept, typically, in the vehicle in the glove compartment?

There’ve been recent reports in the media of car thieves who’ve been able to break into the car, get hold of the address and break into the house. I couldn’t explain to my constituent why this is a requirement and why ICBC customers are not given the option of opting out of having their address on the certificate.

Hon. D. Eby: The Motor Vehicle Act requires the address of the insured to be on the certificate and for that to be provided to law enforcement on demand. What it doesn’t require is that somebody keep the certificate in the glove compartment. They could keep it in a locked compartment elsewhere in their vehicle.

I take the member’s point about why it is the Motor Vehicle Act requires that. At first blush, I’m advised that law enforcement and the insurance company require that information, but I appreciate the member raising the issue with me. We’ll have a look at that and see — because I do understand that that is an issue — if there might be some other way to address it. But, in any event, I appreciate him raising it.

J. Yap: I appreciate the minister’s response.

This is a question that’s arisen, actually, from my colleague from Prince George–Mackenzie. It’s with regard to a new form that ICBC is now requiring of service providers who help those who need to recover their ID, their identification. For example, the homeless, who go into a service provider, a not-for-profit, and the form requires….

I’m told it’s a great form, a great system, but here’s the catch. The form requires the last name and birthdate of the staff at that service provider to be in the form. This service provider, perhaps many, has an understandable policy of not giving out that kind of information.

Can the minister advise if that form can be revised so that legitimate charities and not-for-profits who help people recover their identification do not have to give that kind of personal information?

Hon. D. Eby: That is one that I’m going to have to get back to the member on. We’ll have to identify the specific form that he’s referring to. It would assist greatly if he has a copy or a specific reference in relation to the form. We’ll try to identify it on our own, but it might expedite things if he could provide a copy, and we’ll provide a response to him about that.

J. Yap: Thank you to the minister for that. And perhaps a very brief recess to allow the staff from LDB to come in for the next phase of estimates. My thanks, on behalf of our caucus, to the staff from ICBC.

The Chair: The committee will be in recess for five minutes.

The committee recessed from 6:05 p.m. to 6:09 p.m.

[R. Chouhan in the chair.]

J. Yap: Good to see the staff from LDB join us.

To the minister, can he tell us what the status is of the Hicken review of liquor policy?

[6:10 p.m.]

Hon. D. Eby: I’m pleased to be joined here by Blain Lawson, GM and CEO of LDB; Roger Bissoondatt, CFO; and Michelle Carr, who is ADM and general manager of LCLB.

The member asked about the liquor policy review. The review was largely completed with the implementation of the new Liquor Control and Licensing Act and regulations on January 23 of 2017. I can tell the member that a review of the penalty schedule is presently underway, and there are some specific recommendations that are not currently underway: No. 6, warning labels; No. 21, standardization of non-liquor products; No. 33, manufacturers’ off-site stores; No. 44, annual permit; No. 55, stadiums; and No. 68, growlers.

I can tell the member, as well, that since the member’s liquor policy review, we retained lawyer Mark Hicken to do an engagement with industry and with public health, now that the liquor policy review is largely complete, on: what outstanding work is there? What priorities does industry have? And public health officials engaged, as well, to have a conversation about how, obviously, if you increase the availability of alcohol or reduce price or other initiatives, it has a public health cost — to make sure we’re fully informed about that, costs to people’s health and wellness but also, potentially, financial cost.

That process is underway. There have been a number of productive meetings and engagements, and I look forward to releasing Mr. Hicken’s report with industry’s recommendations for focus of government attention.

It’s been a much lower-key process than the original liquor policy review intentionally. This is aimed at more technical advisory matters, things that would make life a little bit easier for industry.

J. Yap: I appreciate the update on the liquor policy review, which was undertaken by the previous government. I was more interested in referring to the technical report and review that was done, I understand, by Mr. Hicken. I understand that that work has been done and a report has been submitted. Can the minister tell this House what the status is of that work and the recommendations from Mr. Hicken?

Hon. D. Eby: The recommendations have been received by government. There is policy work being done, and I look forward to releasing that report to the public and to the member as quickly as we can.

There were a number of constraining factors that we asked Mr. Hicken and industry to consider in making recommendations to government. One of which was we needed to ensure that any measures suggested were not trade impairing. The member will recall the wine and grocery store issue that we had to put on hold which is now the subject of not one but two separate international trade challenges. So we want to avoid that kind of scenario. And we also need to ensure any public health issues are mitigated and addressed.

It’s not an easy and straightforward thing. That policy work is underway. I look forward to the member and the public having that report as quickly as possible.

J. Yap: When does the minister expect to make that technical report and the recommendations public?

[6:15 p.m.]

Hon. D. Eby: We’ve just received the report. It’s complex, but I will commit to the member to get it out as quickly as we can.

I can tell the member, though, so he doesn’t have to guess, that we’ve released a summary, posted it on line, about the business technical advisory panel and where we’re at. The information posted on line includes who provided submissions, the written submissions, the topics that were addressed.

Just for the member’s information, all of the submissions that were received, the written submissions, have been posted as well. So it will give a pretty clear picture of where we’re headed with this thing, so there are no surprises for him.

J. Yap: Can the minister tell the House if he plans to accept all of Mr. Hicken’s recommendations in his technical report?

Hon. D. Eby: It’s too soon for me to provide any assurances to the member about any of the recommendations. As the member knows well, I’m sure, liquor law and policy is a complex issue. So making sure that all consequences, intended and otherwise, are identified and addressed before making commitments around recommendations is a very important thing, and some of that policy work is happening right now.

J. Yap: What has been the financial cost of Mr. Hicken’s review, both the earlier review and then the technical review work that he did? What did his work cost?

Hon. D. Eby: Because Mr. Hicken is counsel providing legal advice, the practice of government is to provide that as part of public accounts. I can tell the member that the panel costs are going to be less than $5,000.

It raises, actually, something that’s been nagging me. I would still love very much for the PwC report that the government commissioned…. It was an $800,000 report — this will come in at a fraction of that — that was paid for by the public that still hasn’t been publicly released. We’re seeking the previous government — their appointed member, the member for Abbotsford West — to consent to the public release of that report.

I still haven’t seen it. Just to pass on to the member that that request is still outstanding. It would be instructive for the public to compare it to the Hicken report and get an understanding of why decisions were made and which direction we’re going. But of course, cabinet confidence documents — we can’t. This came to mind while I was talking about our report.

J. Yap: Can the minister advise if Mr. Hicken’s contract is completed? Is there more work to be done by him?

Hon. D. Eby: Mr. Hicken is currently retained for two more months. He is reporting to the deputy ministers committee on liquor policy to address any remaining issues in terms of policy review of his recommendations.

P. Milobar: Thank you to the minister for answering a few questions here today.

I have about a 30-year history in the liquor industry as a retailer and a bar operator. A couple of questions have come my way from rural agency stores. I have one in my riding. Recently they were told that a long-standing program was available to them, to be able to sell to restaurants and bars if they were able to find people.

These were the government agents selling under government rules on behalf of the government. They went through the proper process. They got approvals on a case-by-case basis. There are 15 rural agency stores that are now selling to restaurants and bars around the province. However, while they were awaiting, in January, some more approvals, they were starting to get told that there was a big backlog of work.

[6:20 p.m.]

Then, in April, it turned from a backlog of work to that the whole program was under review. Now they’ve been told that not only is the program under review; it has now been cancelled and that, in fact, there will be no grandfathering. The answer keeps going back and forth between whether their existing permits to sell will be revoked or not. People have made expansion plans. They’ve made expansion investments based on this.

Can the minister confirm if, indeed, grandfathering will be allowed so that businesses that have done nothing wrong…? They’ve not been cited for any irregularities, any problems, any mis-selling of product, any under-reporting of product sales. They’re now being told by the government that they will have those licences revoked.

Can the Attorney General confirm if that is indeed the case or if they will be allowed to continue selling legally as they have been doing?

Hon. D. Eby: I think I have what will be good news for the member. Those with existing permits may continue the practice of selling to restaurants and bars as they were previously. I will also note, though, that that is pursuant to policy restricted to their trading area, unless there is a B.C. Liquor Store closer. So we don’t want a rural agency store in Prince Rupert dropping cases on the bus to go down to Vancouver — that kind of thing.

The point of the policy was to facilitate, as the member notes, sales to bars and restaurants in rural areas served by that particular store. That activity will continue uninterrupted.

I thank the member for his question.

P. Milobar: That provides no certainty. What these businesses did was went out in good faith, asked for approvals before they started selling to each one of these businesses, were granted that approval — the government granting this approval knowing full well where these businesses were located and where the rural agency store was located.

Without any consultation, the government has started to change policy and has created mass confusion within the 15 rural agency stores that currently have customers by, on the one hand, saying they’re grandfathered. Then they get another phone call saying they will not be grandfathered. By the minister’s answer, the grandfathering would not actually take effect, because there is a government store closer than their customers, and there always has been a government store closer than their customers when they were first granted approval by the government to sell in the first place.

These were not cited for any infractions whatsoever. Can the minister confirm that these businesses’ livelihood, at a minimum, will be able to maintain their current customer base that had always been in place with those exact same distances as they were approved by the government in the first place?

Hon. D. Eby: To the member’s question, yes, that is the case. They will be able to continue to sell to their existing customers even if a liquor store is closer.

I just want to clarify my previous answer, which is that the policy is changing in relation to anything going forward. So for their existing clients, they keep that under the grandfathering system.

Noting the hour, I move the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 6:24 p.m.

The House resumed; Mr. Speaker in the chair.

[6:25 p.m.]

Committee of Supply (Section B), having reported progress, was granted leave to sit again.

Committee of Supply (Section A), having reported resolution and progress, was granted leave to sit again.

Hon. M. Farnworth moved adjournment of the House.

Motion approved.

Mr. Speaker: This House stands adjourned until 1:30 Wednesday afternoon.

The House adjourned at 6:26 p.m.