PROCEEDINGS IN THE
BIRCH ROOM

Committee of Supply

ESTIMATES: MINISTRY OF
ATTORNEY GENERAL

(continued)

The House in Committee of Supply (Section C); S. Chandra Herbert in the chair.

The committee met at 1:36 p.m.

On Vote 15: ministry operations, $490,716,000 (continued).

T. Redies: Just before the break, we were being treated to, I guess, what would be best classed as a diatribe from the Attorney General with respect to the actions of the previous government and ICBC. In fact, I don’t believe the Attorney General actually answered my question. It was, again: what reasons was the Attorney General given, from ICBC, as to why ICBC was not hitting its forecasts and was sustaining much higher losses than what they had indicated they would?

Hon. D. Eby: Yes, it does sound like a diatribe, absolutely, when I talk about the previous government’s work on this file, and I would say with good reason.

I’ll do my best to answer the member’s question, although it may start to sound familiar to her. The reasons for ICBC being in the financial shape it’s in….

In 2013, the rate required for ICBC was…. The increase to the rate that was required that year, in the submission to the Utilities Commission, was 11.5 percent. The request for the rate increase from government was 4.9 percent. What was approved was 5.2 percent.

In order to facilitate that, government issued an OIC to exclude something called the lost cost variance. The lost cost variance is the difference between the previous year’s projections and the actuals. What they did was suppress that. It was the first year of something called the rate-smoothing framework, and the revenue gap was $190 million that year.

In 2014, the indicated rate was 5.2 percent, and that was the rate that was approved. Then in 2015, the indicated rate was 11.2 percent, and the rate approved was 5.5 percent. Again, there was an OIC to exclude the 2015 lost cost variance to facilitate that. The revenue gap that year was $147 million.

In 2016-17, the indicated rate was 15.5 percent. The rate approved was 4.9 percent. To facilitate that, there was an OIC facilitating an income transfer from optional, the $300 million. The revenue gap there — $298 million.

The first year that we had authority and responsibility for ICBC, in July, the indicated rate was 20 percent. The rate approved, under the rate-smoothing framework, was 6.4 percent. We announced something called RAAP, which is our reforms to ICBC to get this mess under control. The revenue gap was $415 million.

In 2019-20, the indicated rate is 6.3 percent. We’re awaiting a decision from the Utilities Commission about the 6.3 percent rate increase. In other words, this is the first year in a long time when government is actually applying for the rate that’s indicated and necessary to meet revenue.

Why is it that ICBC is losing so much money? Why is it that the forecasts are getting worse and not better? There are a number of factors, many of which were contained in a report that the previous government commissioned and then cut the pages out of before they released it to the public.

[1:40 p.m.]

The first is there were rising injury claims. When you look at the rate of crash injuries, you see that for 2017-18, there were 406 injuries per 1,000 crashes. That was up 23 percent from 2001-2002. Much of the growth in injuries has been driven by an increase in minor injuries. This class of injuries, increasingly, has involved, as well, legal representation, which also adds an increase in settlement time and associated costs.

There’s a rising number of crashes. From 2006-07 to 2014-15, there was a general decline in crashes. That started reversing in late 2014, and the crash rate began to accelerate. It’s not immediately obvious why it is that the crash rate has increased, although it’s something that’s been noted North America–wide. Distracted driving certainly shares some of the blame, as well as increasing congestion in British Columbia as a likely factor.

There’s a rising cost of minor injuries. So along with a rising number of crashes and injury claims rates, the cost of minor injury claims, in particular, are also rising. The average cost per person per total injury claim settlements has increased 44 percent since 2007-2008. The average cost per person for minor injury claims settlements has increased 89 percent since 2007-2008. The average cost of a minor injury claim settlement has almost doubled in the last ten years, while the average cost per person per total injury claims for minor and non-minor injuries has grown less over the same period.

There’s an emergence of older, large, complex claims. There was a significant unexpected spike in the number of large, complex bodily injury claims — these are claims worth over $200,000 — in 2017-18. Claims from as far back as 2010 that originally presented as minor injuries are now emerging as more complex costly claims. In many cases, these injuries took longer to heal, and the lengthy legal process resulted in full information on the size of the claims only recently provided to ICBC.

Claims that remain open longer cost more on average than claims that resolve sooner. ICBC expects this number of large, complex claims to continue to grow. This is an indicator. In the 2017-18 outlook, there were 2,873 large claims. That’s up 163 percent from 2006-2007. The average claim cost is $478,000, up 7 percent from 2006-2007.

Basic rates not covering growing costs. I went through the record of why we’re in that situation. Basic rates were not increased to the level required to address the rates, and simultaneously, actions were not taken to address the underlying issues.

Lower investment returns are also a factor. The members will know that insurance companies use investment earnings to help offset rising claims costs and mitigate rate increases. While investment earnings did strengthen from 2012 to 2015, returns weakened after that for multiple years and have set a record low in 2017-18. ICBC is doing work to improve our investment returns through a revised investment strategy.

Capital reserves deterioration. You heard about the revenue gap between the indicated rate and the rate that was approved by the Utilities Commission. It was subsidized by the use of ICBC capital reserves, and also the previous government took $1 billion out of ICBC’s capital reserves.

As of March 31, 2017, ICBC had about $17.5 billion in assets, including over $15 billion in investments. However, the reduction in the capital reserves, which is well documented…. The members can find it in the budget and fiscal plan, the three-year fiscal plan for ICBC. Page 63 shows the remarkable decline in optional and basic capital levels.

We have a number of reforms in place to address all of those issues, except for the issues of the past, which we can’t address. But we have policy reforms, legislative reforms and the biggest overhaul of car insurance in a generation underway right now. We’re quite proud of that.

T. Redies: Thank you for that lengthy answer, Attorney General, detailing the issues with ICBC, which I believe, actually before the break, you were saying were obvious trends that the previous government should have seen.

I guess my question, really, is not so much about the trends. It’s really about the lack of accuracy in the forecasts of ICBC. That was my question. My question was: why…? What were the reasons…?

[1:45 p.m.]

If these trends were so obvious and so well-known and ICBC has such a robust process for determining its forecast and working with internal actuary and external actuary, what reasons did ICBC give the Attorney General for missing the forecasts in such a big way? What did they miss? What did everybody miss?

Hon. D. Eby: I outlined to the member the remarkable trends that have not been mitigating, as one would expect, but instead have been accelerating. It’s everything from the number of collisions — we set a record last year for the number of collisions — the number of injuries per crash, the number of claims and the cost of claims per crash, the level of legal representation, the length of resolution of claims where people are legally represented and the decline in investment revenue.

The member, I understand, doesn’t want to take my word for what happened under the previous government, but maybe she’d listen to the Fraser Institute. “Previous B.C. governments failed to act when it came to difficult decisions at ICBC, and that inaction has led, in large part, to the current financial crisis, which has been years in the making,” says a senior Fraser Institute fellow. “Faced with exploding costs, the previous B.C. government had a choice: contain the costs, take the unpopular decision to increase rates substantially or enact large-scale reform of the basic auto insurance system in the province. In the end, the government chose to do nothing.”

It sounds very similar to what I said about the previous government, but maybe from the Fraser Institute, the member will accept it.

In terms of the forecasts and the gap between the forecasts and where we are, these are worsening trends. I went through all those trends — which are setting records, frankly. Hopefully, that explains why we’re taking the actions that we are.

I had the opportunity to read a remarkable op-ed from the opposition where they criticize the government for taking these actions that were years overdue, that were recommended in reports that they commissioned — and then cut the pages out, of course, but that they commissioned. Maybe the member will understand now a little bit about why we’re taking those necessary and long-overdue actions.

T. Redies: What I find actually quite remarkable is the Attorney General, who’s had this file now for two years, continues to blame the actions of the previous government. Frankly, as a former CEO, if I had six or seven quarters of missed forecasts and I turned around and blamed the previous CEO for those forecasts, I don’t think it would have been a happy meeting in the boardroom. I find this quite astounding, that the minister can’t even take responsibility for the fact that ICBC has missed several forecasts in a big way through this process.

Maybe just to clarify. I get that the trends were worsening. Is the Attorney General saying that ICBC misforecast those trends and that’s why the financials are so much worse than what was forecast?

Hon. D. Eby: I don’t know how much more clear I can be that I am really unhappy with the forecasting. I commissioned a third-party business firm to come in and do a review. I commissioned an independent actuary to come in and review the work of the third-party business firm. I’m profoundly unhappy that the forecasts are getting worse. Simultaneously, I also understand why they are getting worse. It’s all the trends that I listed for the member.

I guess it depends on whether the member is here or whether she’s on the radio, in terms of whether she agrees with what government is doing. She told CBC: “The current government has made a number of steps that I think are in the right direction.” I appreciate that. In terms of what her government did: “We left it for the Attorney General to deal with, as we were going out of office.”

Well, that’s exactly what we’re doing. I think that an overhaul of the insurance system in 18 months, a generational overhaul of how rates are set, an entire reworking of how claims are adjudicated…. About 80 percent of claims will be going to the civil resolution tribunal instead of the B.C. Supreme Court. A huge amount of work in 18 months.

I’m incredibly proud of the work of the Ministry of Attorney General team that’s been working on this, ICBC providing the support to turn this thing around. It’s been a huge challenge. And I accept the member’s criticism that it would have been nice if the forecasts were closer in terms of government budget forecasting. I have taken multiple steps to try to improve that.

[1:50 p.m.]

It’s hard for me to say that ICBC should have predicted the worst year ever for accidents in 2017, a massive increase in the number of large and complex claims, when no disclosure was provided by plaintiff counsel in the window waiting for trial, until the 80-day rule before trial, when suddenly everything shows up. I don’t know how you forecast for that.

They built in contingencies. The reviews found that contingencies just simply were not enough. So they are identifying those trends and trying to build them in.

The good news is that we’re projecting about $1 billion in savings. I agree with the member as well. Here’s the challenge. Will it be $1 billion in savings? We’re facing some significant headwinds. We have legal challenges from the trial lawyers, not on one front but on two separate fronts, alleging that the reforms are unconstitutional. We don’t believe so, but they do.

We have remarkable behaviour from plaintiffs’ counsel that we haven’t seen before, in terms of expert report expenses, the cost to adjudicate claims, settlement demands as they see the end of the old system and the transition to the new system.

We continue to have issues around road safety despite increasing driver penalty points, introducing intersection cameras, which I understand the members on the other side oppose, in terms of measuring the speed of cars that go through intersections — big signs saying: “Don’t speed through these intersections.” They don’t like it. That’s okay.

We’re trying to get the accident rate down in the province, so we’re taking steps on multiple fronts to address this issue. I wish only that the work had begun many years ago, because we wouldn’t be standing here talking about how many billions of dollars ICBC had lost. We’d be talking about a sustainable Crown corporation, as they enjoy in Manitoba and Saskatchewan. Quebec has a sustainable auto insurance program. But here we are.

T. Redies: Thank you, Attorney General, for that answer. I would say, with respect to the CBC interview, that I did say it was good that steps were being taken. I don’t think I said the subsequent statement that the Attorney General mentioned, but we’ll leave it at that.

I think where we’re going here is, again, not so much to the trends. I think those are established, and obviously there are some very worrying trends. Our concern is, again, with the forecast and the robustness of the process around the forecast because, of course, the budget of the government this fiscal year is heavily, heavily dependent on ICBC more or less breaking even.

I guess maybe my question would be…. In the six-month mark, ICBC announced that it lost $584 million, which was about 85 percent of what it had forecast it would lose in the entire year. At that point, can the Attorney General explain how the process was changed around forecasting, if at all? I think that’s where we’re trying to get to. What, specifically, has changed so that the Attorney General, the Finance Minister and the rest of government — and the taxpayers, frankly — can feel some degree of confidence in the go-forward forecast?

If the Attorney General could just explain to us what was being done previously and what is being done now to ensure a more robust forecast that is reliable.

[1:55 p.m.]

[The bells were rung.]

The Chair: Division has now been called in the main chamber, so this committee will be in recess.

The committee recessed from 1:58 p.m. to 2:10 p.m.

[S. Chandra Herbert in the chair.]

Hon. D. Eby: The member has asked what measures have been taken. We’ve been here for two years. What on earth have we been doing? It’s a good question, so let’s just go through what was already taking place.

ICBC’s internal actuaries prepare the forecast. Those are then reviewed by a third-party actuarial firm that’s retained by ICBC. The Auditor General, on an annual basis, reviews these forecasts and the forecasting process. Then the whole package goes to the B.C. Utilities Commission for public scrutiny and review, and scrutiny by the B.C. Utilities Commission, which then retains yet another external actuary to review those forecasts yet again. So that’s three separate layers of actuaries, plus the Auditor General and the B.C. Utilities Commission public process. That’s what’s happening right now.

What has changed in terms of the forecast? First of all, the future forecasts all include the significantly worsening trends that we’ve seen over the last year or two and going back to 2006. They include the significantly worse trends year over year. In addition, although this is not the intention, the cap on pain and suffering awards for minor injuries will improve the prediction of costs for ICBC because there is a top limit on what could possibly be awarded, and we won’t see escalation in awards or settlements related to that that we’ve seen year over year across categories.

So the new trends are included. There’s increased predictability because the damages awards are increasingly predictable and stabilized. That’s what’s been going on in the forecasting side.

I’ll say this. The forecasting is one piece. But the forecast of a very bad situation…. I want to say that…. I want our forecasts to be better. We’re working with ICBC to get them better. We bring in external people to get them better. But in 2012, there was a government review of ICBC, and part of the review looked at forecasting. It said: “Look. Volatility is part of the insurance system, and swings of 5 percent are reasonable.” As part of that, they found that the actual results for ICBC had been within that 5 percent margin over the previous ten years, 2002 to 2012, and that was reasonable.

Well, a 5 percent swing on $14 billion in liabilities is about $700 million. So even though my hope would be that we would be better than 95 percent accurate, accepting the standard of the previous government of 5 percent is a $700 million swing in either direction. Just to give some indication about some of the challenges in relation to forecasting, especially when trends are worsening the way that they are. I thought that might provide some context in relation to forecasts.

The final note, that a forecast of a bad result that swings 5 percent either way is still $1 billion or half a billion dollars…. It’s not good news. That’s why we’re addressing the underlying issues that lead to these terrible forecasts.

I just want to thank the private insurers of Canada — the Insurance Bureau of Canada — for writing to me and saying that they commend our government on the speed and direction we’re taking in this area: “The initiatives identified to date will help improve the long-term viability of auto insurance in the province, particularly as it relates to the basic product.” “These changes are long overdue, and pricing auto insurance based on driver risk in an effective way to incent better behaviour on the roads.” I am very appreciate to get that pat on the back from both the Fraser Institute and the private insurers.

T. Redies: That’s actually a very interesting answer — the 5 percent swing of $700 million. Is the Finance Minister aware that ICBC could have that big a swing, and has that been part of that budget exercise? Because we could be talking…. I guess on that basis, instead of a more or less break-even perspective, we could be looking at a $700 million loss this year.

[2:15 p.m.]

Hon. D. Eby: I think I recall that I went through, with the member, that Ministry of Finance staff are involved throughout this process to stay right up to date. Each quarter, ICBC looks at where we are in relation to the forecast and where we’re going and looks at whether it needs to revise the forecast. That is information that’s immediately conveyed to the Ministry of Finance. I’m not sure how many different ways to say that.

I’ll say that the 5 percent standard that was acceptable to the previous government — something they accepted as reasonable — is not something I accept as the go-forward. I would like our forecast to be as accurate as possible, and we’re working with ICBC on that. There are a number of different measures that I outlined for the member that we’ve taken to try to improve that. I hope that’s been helpful for her.

T. Redies: Just one final question on the forecast, because what we were actually trying to understand was what had changed in the process around the forecast to give the Attorney General, the Finance Minister, government and taxpayers confidence that ICBC will meet its forecast of more or less breaking even this year.

I believe the minister said that they have the internal actuary, the third-party actuary. The AG reviews it. The BCUC reviews it, and they also retain another actuary. But other than the changes in the product reform, etc., there has been no change to the process around forecasts. Am I right on that, or has there been additional process added to provide some better assurance that these forecasts are going to be met?

Hon. D. Eby: That’s not correct. We’ve taken a significant amount of variability out of the forecast with the cap on pain and suffering awards for minor injuries, an area that was escalating far in excess of inflation. There have been significant changes that lead to improved predictability.

Please don’t take this as me saying that I am not nervous about this situation. I am nervous about this situation. The reason I am nervous is we have put in significant reforms in an 18-month period. Two major reforms are under challenge at the B.C. Supreme Court right now. The expenses related to litigation have gone through the roof since we announced the product reform that limits the amount of money that ICBC spends on legal expenses and overhead related to B.C. Supreme Court.

I won’t spend a lot of time talking about what the motives might be and why that might be happening, but I certainly can speculate that one of the reasons is that the system is changing dramatically for a group of lawyers that worked in the old system and are working hard on the remaining cases that they have under the old system to get the best results they can for their clients, which is their job.

That means, because it is very difficult to predict, that there are issues and challenges with our costs for ICBC. ICBC is facing increased expenses relating to expert reports. They’re facing increased demands for settlement, well above and beyond even just the previous year’s demands, which were over the previous years before that. I went through some of the numbers, the double-digit increases that we’re seeing. The whole scheme is subject to a court challenge.

If the member wants me to stand up and say, “Hey, no problem. We’ve solved this forecast problem,” we have not. There are big challenges in predicting insurance outcomes. Major private insurers face this challenge. As the previous government noted in their review, a 5 percent swing is reasonable. That means $700 million either way in a normal year, and this is not normal. We have done dramatic changes in a very short period of time.

I think we’ve set ICBC on a good road. The private in­surers think we’ve set ICBC on a good road. The Fraser Insti­tute thinks we’ve set ICBC on a good road. But that doesn’t mean that there aren’t challenges ahead in terms of where we’re going, in terms of providing stability for ICBC.

S. Bond: Well, the reason that we’re here asking questions about the Attorney General’s approach to managing this file is because the stakes are pretty high. He’s talked about a $700 million swing. We’re here because this government’s budget assumes that the Attorney General and ICBC will be successful in doing what would be a fairly miraculous turnaround.

[2:20 p.m.]

Let’s look at the last two years. I know that the minister has taken a lot of time this afternoon to read from a variety of reports, but let’s just look at forecasting — what ICBC is saying and the government has actually based their budget on. The Finance Minister told us that it was all about prudence, making sure there was enough prudence in the budget. There’s not enough prudence in the budget if ICBC does not hit this target.

Let’s be clear. ICBC is now forecasting that it will more or less break even — this after losing $2½ billion in two years while forecasting they would lose $900 million. That’s a pretty big miss. It’s not just now about ICBC. It’s actually about the government’s budget.

I’m wondering if the minister can give us a sense…. Today he has, actually, very carefully laid out a map that has pointed out, almost tacitly, that they’re not likely going to hit that target. He talked about headwinds and all kinds of words that would allow people to assume that maybe the target isn’t as sure as, at least, the Finance Minister was about…. You know, her budget is based on it.

Could the minister tell us, first of all, what the probability is that he believes ICBC will have in actually meeting the forecast in the next fiscal year? Secondly, has the minister actually asked the very, very hard questions about whether or not there should be consequences at ICBC, whether the executive team will be able to deliver on the commitments that have been made by this government? The sustainability of this government’s budget depends on the ability to deliver on this forecast. The track record over the last two years has been stunningly varied. In fact, they haven’t delivered.

Has the minister had a conversation with the Finance Minister about the basis for her budget, and were there difficult conversations about whether or not the team at ICBC can deliver on this forecast?

Hon. D. Eby: I’ve gone through, in some detail, the work that has been done, externally through external reviewers, external actuaries, looking at ICBC’s forecasting model and working with ICBC — the exhaustive process that the internal review goes through.

In a word, yes. The Finance Minister is well aware of the challenge that ICBC presents. I wonder how many times ICBC was mentioned throughout the budget documents as presenting a challenge and a threat to the government’s budget. Yet despite being handed a file where the previous government did everything they could to prevent the public from knowing how disastrous the financial situation was at ICBC and what reforms were needed, to the point of literally removing pages from a third-party report, and despite walking into a 15-month fiscal period with a $1 billion loss, the Finance Minister returned a balanced budget. Then she did it again. And she’s doing it again.

To say that the Finance Minister hasn’t delivered, despite the remarkable, as I say, headwinds, challenges, problems at ICBC, left for us from the previous administration…. I don’t think that’s a fair characterization of what happened.

And yes, I have had many difficult conversations with the Finance Minister, with my colleagues in government and with ICBC about this situation, to the point of bringing in third parties to review what they’re doing so that I can have confidence that they’re doing everything they can to make sure that the forecasts are as accurate as they can be in this environment and that at the same time, they’re not just focusing on the forecasts but addressing the underlying concerns leading to these hundreds of millions of dollars in losses and, I’ll note, the half a billion dollars in losses under the previous administration — just the gap between the rate that it should have been and the rate that the previous government set.

We’re doing the work. We’re addressing the underlying issues. We’re making changes that improve predictability. We’re making changes that address fair settlements for people. We’re making changes that address them being able to access the services they need to get better if they’re in a collision. These are big, big changes. Importantly, we’re also linking insurance rates to driver behaviour in a way that has never been done before in British Columbia.

It’s a challenging time. It’s an important time. There’s a lot of pressure on to get ICBC back on track, but we’re getting there.

[2:25 p.m.]

S. Bond: Well, thank you very much to the Attorney General, again, for the walk down memory lane. I am asking a question about the past two years and the significant miss in forecasts. And they matter. The budget of British Columbia’s government is based on what would be a miraculous turnaround at ICBC.

The question I asked the Attorney General was, first of all: what is the probability…? Again, we’re just hearing a long laundry list of the reasons why the forecasts might be missed, including the potential for a $700 million swing. There is not enough prudence in this government’s budget to actually face that kind of a swing.

The question, once again, to the Attorney, is: what is the probability that ICBC will actually meet that forecast, and has he built in consequences for the executive team at ICBC should there be another gigantic miss?

Hon. D. Eby: The member’s question assumes that the problems at ICBC have been related to the executive team at ICBC, yet the evidence points in the direct opposite direction.

It points to a political problem, political interference with ICBC that led to a gap between the rate that was required, which the government was told was required, and the rate that the government asked the Utilities Commission for, under the rate-smoothing framework — and multiple OICs transferring cash, excluding certain types of losses to get to that number — resulting in hundreds and hundreds and hundreds of millions of dollars of losses.

In addition, reports were commissioned by the previous government that said that all of these things were going to happen, which actually did happen, and the previous government not only didn’t take any action, but they cut the pages out of the report.

The member’s asking: do I have confidence in our executive team at ICBC? I absolutely do. We have a new executive team at ICBC. We have a new board at ICBC. They are doing a huge amount of work to turn this thing around, and I’m incredibly grateful for the time and energy they’re putting in to turn this thing around.

The Ministry of Attorney General oversight external to ICBC: checking their numbers, making sure that we can rely on what’s happening, hiring third-party business firms to come in and review what ICBC’s doing so that we can have confidence from insurance experts that they’ve retained to assist us.

I can tell the member that the reason why we’re in this situation of vulnerability around the ICBC losses…. She calls it a trip down memory lane — 24 months ago, a trip down memory lane. The history of the corporation under the previous government is one that led us here. She may not agree with that. But their friends at the Fraser Institute agree with that assessment. Their friends at the private insurers agree with that assessment. Everybody who has looked at ICBC agrees with that assessment.

Our government, in 18 months, has taken massive steps. Eighty percent of claims will no longer be going to B.C. Supreme Court. Instead, they’ll be going to the civil resolution tribunal. We put a limit in place on pain and suffering awards.

Why did the previous government not do this? The obvious, obvious answer is that it’s hard work politically. There are lots of people invested in the current system who are really angry with these changes. I get it. It’s difficult work politically, but it’s important if you believe in the Crown corporation, and I do. It can make money for British Columbians. It can provide affordable insurance for British Columbians.

When I look across the country at other provinces and the struggles they’re having with their private insurers — in Alberta, Ontario, Newfoundland, New Brunswick, with record increases, crisis, not writing policies for people — I’m very glad that we have a public insurer, and I think it’s worth saving.

S. Bond: Well, thank you very much for those…. I won’t describe how I feel about those comments. But I can assure you that I disagree with them.

We should be clear about what happened over the past two years under this Attorney General’s watch. The forecasts that were missed were enormous, in terms of ICBC’s forecasts. Let’s just remind the minister, for the record, that when you look at the projections, there was a wide miss.

The question I asked the minister…. The ironic part of that answer was the minister has spent the last half-hour listing all the reasons why the forecast targets might be missed. It’s hard to attribute confidence to the minister’s comments about hitting the forecast target when he has actually read into the record a litany of reasons why…. He is, in essence, giving us the list of reasons…. When the target is missed, he’ll certainly have been on the record projecting why that will have happened.

[2:30 p.m.]

My last question before my colleague asks another series of questions. Can the minister explain how his team analyzed the projections of $1 billion savings against the initia­tives that he has put in place? As I’ve suggested, it is a $1 billion turnaround. We’d like to know….

The minister had the temerity to talk about political interference. Well, let’s talk about political leadership. Let’s ask what this Attorney General has specifically done to look at the $1 billion turnaround built into this government’s budget. Line by line, perhaps he can explain what kind of analysis has been done on his part.

Hon. D. Eby: The estimate of benefits from the product reform was prepared, first, by ICBC internal actuaries and then, again, by an external expert, Ernst and Young.

Ernst and Young conducted a closed claim study to supplement ICBC’s costing analysis. The closed claim study reviewed a large population, more than 1,000 closed claims, and was used as a supplement to EY’s costing analysis itself to assess the reasonability of Ernst and Young’s independent estimates and to confirm certain assumptions, such as the minor injury mapping of costs. The claim count reduction due to product reform was also selected from the results of the closed claim study.

The anticipated savings from product reform have been included in the 2019 revenue requirements application to the B.C. Utilities Commission. The B.C. Utilities Commission, as part of this application, does a review by external actuaries. I’ll note that without these savings that are projected, ICBC’s 2019 basic insurance rate increase application of 6.3 percent would have actually been almost 40 percent.

As part of ICBC’s revenue requirements application proceedings in front of the B.C. Utilities Commission, the actuarial estimates of future claims costs, including the benefits from product reform, are reviewed by the B.C. Utilities Commission actuaries as well as external actuaries. B.C. Utilities’ final commission regarding the 2019 revenue requirements application is pending right now. The members, I imagine, will be watching that with interest.

I note that the estimates were also reviewed. In addition to Ernst and Young doing their own independent costing plus the closed case study, ICBC’s internal process was reviewed by their appointed external actuary as well.

[2:35 p.m.]

T. Redies: I’d now like to turn to the, dare I say, explosion in the number of ICBC executives and senior staff that are being paid more than $100,000 since 2016. There’s been a significant increase. In 2016, there were two people making more than $300,000. In 2018, there were six. In 2016, there were nine people making between $200,000 and $300,000. In 2018, there were 26. Quite remarkably, in 2016, there were 359 people making between $100,000 and $200,000 in ICBC. By 2018, that number was 643.

Could the Attorney General explain what is happening there? That seems to be a significant increase in a number of higher-paid staff in the organization at a time when the organization is experiencing significant financial distress.

Hon. D. Eby: I’m happy to provide the member with the numbers. The last year the previous government was responsible for ICBC, there were seven $300,000-plus earners; in 2018-19, four. There were 36 $200,000-plus earners in the last year of the previous government; there are now 21. There were 158 $150,000-plus earners in 2016-17; now there are 93. In 2016-17, there were 1,036 $100,000-plus earners; now there are 564. The total earners over $75,000 in 2016-17, 2,512; in 2018-19, 1,780.

[2:40 p.m.]

That’s not totally fair. You can look at either year of our government, and there have been decreases across all categories except for one. There’s been an increase of 5 percent from our 2017-18 year of the total earners over $75,000, but across every other category — $100,000-plus, $150,000-plus, $200,000-plus, $300,000-plus — there are decreases.

I do want to note and I want to thank the hard-working folks at ICBC, because I understand the realities of a public insurer versus a private insurer. At Liberty Mutual, if you were the CEO, you’d get $17 million. If you were just the CEO, you’d get $17 million. If you were at AIG and you were the CEO, you’d get $20.9 million. If you’re at Intact and you’re the CEO, you get $6.8 million. If you’re at Manulife and you’re the CEO, you get $15.3 million in a year. And if you’re at Economical, their target is $3 million for their CEO. I want to point out that that is more than the entire executive team at ICBC.

I know that there’s a big focus on executive compensation overall as a cost of the corporation. As a proportion of all costs at ICBC, it’s 0.04 percent.

T. Redies: Well, I guess…. I don’t know. We’re taking these numbers from the schedules to ICBC’s annual financial statements. I’m not sure where the minister is getting his numbers from, but that’s where we got our numbers from.

Perhaps I’ll give you an example. We have an individual — I’ll pull out this individual’s name — a carpenter who was making $259,182 in 2016-17. They are now making $331,950, an increase of $72,768, or 28 percent.

Can the Attorney General provide some clarity as to why that person would get a 28 percent increase when, as we’ve been talking about, the company is in significant financial distress?

Hon. D. Eby: The reason the member doesn’t have the 2018-19 compensation numbers is because they haven’t been released yet. That’s the point of estimates. It’s what we’re going through.

A decrease of three from 2016-17 in $300,000-plus earners; a decrease of 15 in the $200,000-plus earners; a decrease of more than 60 in the $150,000-plus earners; a decrease of almost 500 in $100,000-plus earners; a decrease of about 700 total earners over $75,000, comparing 2016-17 to 2018-19.

I understand the member wants me to talk about Mr. Carpenter, or maybe Ms. Carpenter. I don’t know who that is. I didn’t bring individual employee records, nor would it be appropriate for me to talk about individual employee compensation at ICBC. But what I can say is that it’s certainly something that we are monitoring and tracking.

You’re seeing a decrease in executive compensation. In fact, executive compensation is at its lowest level…. We have a small executive team. Executive compensation is flat. I think it’s at its lowest level. I’ll have to have a look at my chart. But we’re headed in the right direction, and certainly, we’re doing much better than the private companies that the opposition is so enamoured with.

M. Morris: Just a different flavour here. I’m asking a question on behalf of the Progressive Heavy Collision Association and the truck dealerships that we have throughout the province, specifically up in Prince George. They’re complaining that they’ve gone about three or four years now without a rate increase. They’ve had some substantial increases to the cost of supplies, equipment and whatnot that they use here, so they’re significantly underfunded when it comes to an ICBC claim.

They have written before to ICBC. They haven’t got a response from it yet. On average, their costs have gone up about 7½ percent per year over the last four years, and they’re just wondering whether the minister can comment on whether or not they can look at a rate increase down the road here to help them out. Some of them are saying they’re going to have to pull out of the ICBC program.

[2:45 p.m.]

Hon. D. Eby: I thank the member for raising this issue. ICBC’s material damage suppliers are a key partner for us and for ICBC. We’re incredibly grateful, especially to the highly specialized tradespeople who know this heavy-duty repair work, the big rig repair, and the specialized skills that they bring and, by bringing those skills to the work that they do, ensuring that ICBC can remain providing a high-quality service to customers that are insuring heavy-duty vehicles. So I wanted to thank the member’s constituents for raising this important issue.

ICBC has confirmed that they have received the letter. The reason why they haven’t received a response yet is that ICBC is seriously considering the issues that they’ve raised in the letters. ICBC, the member may know, is doing a review of all service agreements and fees that are provided to various service providers, including material damage suppliers. That work is underway.

On the consumer side — pleasure vehicles, and so on, regular cars and trucks — there’s a tiering discussion that’s going on with material damage suppliers. These heavy-duty repair shops would not be part of that. They’re a separate category, and ICBC is looking at that separately.

They’re taking the letter and the correspondence seriously because these are important partners for us, and your constituents should be expecting a formal reply from ICBC, with thanks, again, for them bringing this to our attention and you raising it in estimates.

J. Yap: I appreciate the minister, in our discussions to date, going through some of the changes that have happened — historic changes, massive steps, was how he described it — to turn things around. So even with these historic changes, why is ICBC still continuing to forecast continuing underwriting losses?

I will just quickly summarize what is being planned in the three-year service plan. For 2019-20, underwriting loss of $505 million; for 2020-21, $527 million; for 2021-22, $517 million. ICBC is projecting to cover these, of course, from investment income, but the underlying business of the insurance company is still forecasting, through underwriting operations, continuing losses. Can the minister explain why this is the case and if he feels this is a sustainable way for the corporation to operate?

Hon. D. Eby: It’s easy to forget, but in the basic model of ICBC, the intention is to break even. That means taking into account income from all sources, including rates, investment income and other income streams for ICBC, against all expenses for ICBC, including claims payouts, vendor contracts, staff costs, operational costs, and so on. That why the member sees that ICBC is working toward a break-even model.

[2:50 p.m.]

Our goal is to be less reliant on rate increases to cover those gaps. Increasing and improving our income in investment returns is a key part of that strategy. It’s actually a key part of insurance business strategy generally. It’s a key part of the model, which is a not insignificant reason why, public or private….

When you look across the country, it’s all public except in Manitoba and Saskatchewan, but public included, when you look at British Columbia. When you look at insurers across the country, one of the reasons why they’re struggling is the low-interest-rate environment. A key part of their business model is based on investment income, when they take the premiums from folks but they don’t have to pay out for multiple years as the claims work their way through the various systems in each of the provinces.

The reason why the member sees an apparent loss in these years in the core business, as he describes it, of writing insurance policies — and then that’s made up through investment income — is that that’s actually how, ideally, things work. Investment income that ICBC receives by holding insurance premiums helps offset the need for rate increases for drivers.

J. Yap: ICBC is forecasting investment income, which the minister acknowledges is needed to balance the books at ICBC, to rise 48 percent to $804 million in 2021-2022 from the current level of $544 million for 2018-19. That’s the 48 percent rise in investment income.

With the state of the investment markets…. There’s been a bull market for the last ten years, approximately. Commentators say that we’re due for a downturn, especially with the headwinds in the global economy, with the trade war seeming to continue between the U.S. and China and other economic threats. So a downturn is very possible in the investment markets. Does the minister see this forecast of rising investment returns as realistic?

Hon. D. Eby: Every quarter ICBC is revisiting and revising their forecasts as they see trends evolving, whether something happens in the international market, the United States does something, the trade war between China and the United States…. All these macrofactors in the economy can influence investment returns. Interest rates might go up; they might go down.

ICBC has to revisit these assumptions that they make every quarter going forward. What they do is use prudent and reasonable assumptions about where investment income is going, what kind of compound returns they’re going to be seeing on their investments on a go-forward basis. That’s what these numbers are based on.

If, as the member says, we see an international trade war that depresses economic returns, or we see declining interest rates continue — whatever it is — then ICBC needs to revise that, and the member will see that in the updates coming forward from ICBC.

I definitely agree with the member. Trying to look three years out and predict where investments are going to be can be challenging, but ICBC has a mixed portfolio that includes long-term bonds and things like that that have more predictable rates of return. So there is some ability to predict these things accurately, and there are also unpredictable aspects in relation to what’s happening in investment markets around the world.

I agree with the member. That’s why ICBC is revisiting these things as they go forward. It is challenging as you go to the outer years — absolutely. And investment income is one part. I just finished a good conversation with his colleagues about accident rates, trends, liabilities. As you get to the outer years as well, they’re quite difficult to predict.

[2:55 p.m.]

J. Yap: Earlier in our estimates debates, the minister, I recall, made a reference to a change or a shift in the way that ICBC is managing its investments. I may have heard the minister say a new strategy, a new investment advisor. Can the minister advise what this new investment strategy and new advisor look like?

Hon. D. Eby: ICBC’s board and executive have just completed a one-year review of their investment strategy. They have made a conscious decision to take on additional risk in the investment portfolio in the hopes of seeing better returns.

The general approach of ICBC’s investments to date has been extremely conservative, investing in high-yield bonds. The advice that they received and the decision taken by the board and executive was to take on an additional level of risk in order to improve returns. This does, of course, come with some additional risk of lower returns, as anyone would know from their own personal finances. It’s a similar idea.

The ICBC board has an external advisor assisting them with this process and went through that process. There has been a shift in the mix of assets that ICBC is holding as part of the investment fund.

J. Yap: Last summer ICBC announced rate design changes that will take effect on September 1, including the new requirement that drivers list all potential operators of their vehicles. This includes friends, co-workers and neighbours, for whom 25 percent of the vehicle premium would be based. ICBC defended the creation of this new requirement by stating that it is common industry practice across North America and beyond. What other jurisdictions use this practice?

Hon. D. Eby: What I can do is get a list to the member.

[3:00 p.m.]

I can tell him that when I turned 16 in Ontario, my parents weren’t especially pleased. They had to tell their car insurance company that I was driving the family car, and their insurance went up quite dramatically as a result. At least in Ontario, you have to do that. At least you did in the late ’80s, early ’90s in Ontario. I don’t know what the situation is there now.

[N. Simons in the chair.]

I can tell the member I got a letter from the Insurance Bureau of Canada dated September 10, 2018, where they wrote to the government saying: “The government also recently announced rate design changes to better align auto insurance premiums with driver risk to make rates fairer for B.C. drivers.” Those are the changes the member was asking about. The IBC goes on to say: “This change mirrors the way auto insurance is priced in other provinces and, as stated when announcing these changes, goes a long way in levelling the playing field between good drivers and bad drivers.”

Now, I don’t want to overreach in terms of the IBC saying that this mirrors other provinces. They did point out…. They raised a concern about the $50 unlisted driver charge. And it wasn’t just the IBC that raised that concern. We heard from British Columbians the concern about it. So we got rid of that. It only applies if you lend out your car to someone who’s not listed and who’s not part of your household. If you lend out your car to someone and they get in a crash, then you’re going to have to pay an additional 50 bucks the next time you go in. Because you’ve loaned your car out to somebody who was involved in a collision, you’ll have to get that unlisted driver protection.

I don’t want to overreach in terms of what the IBC was saying, but certainly, it was their understanding in September of 2018 that this approach mirrors other jurisdictions. I’ll get a list of those jurisdictions as best as I can for the member.

J. Yap: I appreciate the minister endeavouring to answer the question, but we actually understand from the insurance bureau that, in fact, this change as proposed in rate design is unique in North America. But I look forward to the minister confirming that.

The $50 fee which he referred to for unlisted driver protection. Did I hear the minister say that that is now off the table? Could he confirm that?

Hon. D. Eby: Yes, that’s correct. We issued a release a couple of weeks ago to say that that was no longer going to be a fee for British Columbians, that we looked at it and have eliminated it. However, if you loan your car to someone outside your household and they get in an accident, their insurance will go up because they’ve been involved in a collision, but you will also be asked to buy the unlisted driver protection, which is $50. But you get one free crash, essentially, lending your car out to someone who’s not a member of your household.

M. Lee: Well, it’s a long way back to last Thursday afternoon, but I just want to pick up the discussion where we last left it with the Attorney General. There are a couple of things to check in on. One was that there was a request in terms of historical complex claims, information relating to any changes in approach, the assumptions, qualifications respecting that. I just ask the Attorney General: is that material yet available?

Hon. D. Eby: This may answer the member’s question. He’s right. Thursday feels like a lifetime ago. So I apologize. I don’t remember exactly the question that he asked, but I think that the staff who are here do, and they’ve prepared a note for me that I’ll just read into the record for him. Hopefully, it addresses his concern.

A large loss is an injury claim over $200,000, with an average amount of $500,000. These are all tort claims made by the not-at-fault party. Large losses can include catastrophic injury such as paraplegia and amputation, brain injuries, losses to higher-wage earners or roles in certain industries like health care and construction, where high physical functioning is required, and to those with prior claims and/or medical histories.

[3:05 p.m.]

Large losses were relatively stable through 2012-13 to 2016-17. They were growing about 15 percent a year through this period and averaged about 120 claims per month. In 2016-17, ICBC started to recognize some early signs of older claims starting to emerge as large losses, although large-loss increases were still within historical norms. These are claims that initially looked minor when first reported, sometimes many years before, but settled at higher large-loss amounts.

A predictive model for large losses was created, and a deep file review conducted. As a result, in 2017-18, it was determined that large losses had grown from the previous year by 80 percent. Small swings in the number of large losses can have a profound financial impact. Ten large losses equals $5 million at the $500,000 per claim level. ICBC is now seeing about 250 large losses a month.

The circumstances that led to this included higher crash rates starting in about 2014-15, leading to more claims; more bodily injuries reported per claim; more claims being represented by counsel; ICBC slow to add new claims staff through this period to respond to growing claims levels, resulting in more claims being open longer — claims open longer results in more expensive claims; the increased use of expert reports to build claim amounts higher; asking for higher amounts for future care and wage loss; and presenting differently than initially reported.

ICBC undertook a comprehensive plan to respond, in­clud­ing more staff and better analytics in order to catch up on this growing number of large loss claims for 2018-19. ICBC also added a provision to its financials, assuming even more large losses would be identified. ICBC assumed the continued emergence of large loss through 2018-19 and experienced a first quarter with predictable results. In quarter 2, ICBC started to see claims close at a lower rate and higher demands from plaintiff counsel, with even higher use of medical experts. This trend became more established in Q3, resulting in an even higher loss than originally anticipated.

I hope that assists the member. If not, I’d be glad for his clarifying questions.

M. Lee: I know this time last year we were talking about prior year adjustments and looking at the variation on that. I understand that in the previous year of 2017-2018, there was the largest…. I think it was a $400 million adjustment.

Has there been any variation on that adjustment since then?

Hon. D. Eby: There is going to be a prior year adjustment. ICBC is going through their internal processes for approving it. It must be released, by law, by the end of August of this year. As soon as we’re able to release that number and ICBC has the approvals internally to release it, we will.

ICBC does prior year adjustments every year. This year is no exception. I can tell the member that of the projections for ’18-19, there’s $1 billion set aside for prior year adjustments, primarily related to large claims.

[3:10 p.m.]

M. Lee: Also, in the last session, on that Thursday, we were talking about the August 31, 2018, ICBC Litigation Review report, which I think was released by the Attorney General in January of 2019. What we confirmed is that this was before what the Attorney General referred to as the reformed policy around settlement offers at ICBC. The report itself said: “ICBC is not responsible in any observable, systematic way for making inappropriate offers or inappropriately pressing cases to trial and thus unnecessarily generating legal costs.” I think it was one of the conclusions of that report.

Since then, I’d like to ask the Attorney General what the reform policy is around settlement offers at ICBC. What has changed?

Hon. D. Eby: ICBC noted that since March 2017, the value of settlement demands by plaintiff counsel has increased by 30 percent, and the average cost of closed litigated injury claims rose by 19 percent, from $105,936 in the first nine months of fiscal 2017-18 to $125,619 in the first nine months of fiscal 2018-19. Obviously, this is an unsustainable trend. Simply because somebody demands 30 percent more than they demanded the previous quarter, it doesn’t mean, necessarily, that it should be paid out.

In order to ensure that ICBC was responding to this, and in order to get settlement payouts back in line with the 2016-17 trend lines, ICBC updated their guidelines to ensure a consistent approach, for adjusters, to evaluating injury claims. They’re continually updating these tools to support their adjusters to make consistent and fair offers.

ICBC has brought on a significant number of additional adjusters. The benefits of that are faster responses when people make claims. The challenge of that is that people have less experience as adjusters. So ICBC has also established settlement teams with senior adjusters. When more junior adjusters need to depart from the guidelines, they have the support of a senior adjuster working with them to determine a fair and appropriate settlement amount, customized to the needs of the individual claimant. For larger claims, ICBC has a more senior adjusting team that works on this as well.

[3:15 p.m.]

The member is asking: “What is the changed approach, given these trend lines?” The first is a revised team structure within, to provide support to more junior adjusters. The second is updated guidelines, to ensure that the settlement offers are consistent with the trend lines from ’16-17. Finally, for more serious and catastrophic claims, there’s a senior adjuster review team.

M. Lee: Well, thank you for that response.

In terms of the number of new adjusters that were hired, how many was that?

Hon. D. Eby: ICBC has hired over 650 new front office full-time-equivalents over the last three years. This is adjusters, claims legal staff and material damage estimators. There were some fairly significant issues that people dealing with ICBC were finding.

First of all, they were having trouble getting adjusters to respond to them in a timely manner. Or they were seeing a changeover between adjusters, which resulted in them hiring legal counsel, which also increased the cost of administering the claims for ICBC. It provided a bad service experience, frankly, for people who were calling in. This is something that has been identified by ICBC as a factor that was driving costs. What we wanted to have was an immediate response for people when they called in to ICBC.

The second is: for material damage claims, there were insufficient staff to go and test the estimates that were being put forward by material damage suppliers to ensure that they were reflective of the actual cost of repairing the vehicle.

This is important because the previous government disassembled the claims centres for ICBC, where people would bring their vehicles in, and reduced them, changing over to a system where the autobody firms would provide their own estimates. Well, when you do that, you need to put money into going in and testing those estimates to make sure — as the vast majority of autobody repair material damage suppliers do — that the claims are fair and appropriate. There are, just like in all industries, challenges related to fraud that ICBC needs to detect and prevent.

That is what these folks are working on, and that is a very significant change over the last three years.

M. Lee: Just with the trend line going to 30 percent increase in terms of what was being sought. What’s been the change in guidelines in response by ICBC in terms of dealing with those sorts of claims?

[3:20 p.m.]

Hon. D. Eby: There was a lot of conversation there about whether we could draw anything out from what’s happening right now.

I can tell the member that, broadly, the closures are slowing down — the closure of files — but also that severity is going down as well. It is way too soon to tell what the implications are going to be, because we’re about two months and a bit into this new approach to settlement at ICBC.

These are both expected, and they were anticipated outcomes of the changes — that claims would be more slow to close. One of the goals that ICBC had been pursuing earlier, which led to the increase in the settlement amounts, was closing files. If you close a file sooner, it reduces the overall cost of the file. However, there does come a point where that is uneconomic, where you’re paying too much to close a file. That’s what these guidelines are attempting to address.

Closures are slowing, but then mitigating that, severities — the amount paid out per file that is closing — are coming down as well. These are counterbalancing factors. Again, I want to underline that it is too early to tell what the overall result is going to be, because we’re just a couple of months into this.

M. Lee: With closures slowing down, that would suggest that there are less settlements being reached. Is there a number there that the Attorney General can share with me in terms of how settlements, percentage-wise, have changed over the last period of time — this fiscal year versus the previous?

Hon. D. Eby: I’m advised that a six- to nine-month period would be an actuarially sound basis on which to draw conclusions about what’s happening right now in the approach to settlement. That would be Q3, when ICBC will be doing a review of the outcomes of this approach.

That’s where we are right now. It’s simply too soon to make any definitive conclusions about what’s happening. These are just trends that were both predicted and are being observed.

M. Lee: Assuming that this new approach, of the timing of closing out claims, includes complex claims, what is the level of risk that ICBC assigns to the concern around what we started this discussion about — historic complex claims and how, if they build up over time, the ultimate dollar amount can be quite high? That’s the trend line that the Attorney General described as what broke through in 2016-2017. What’s the level of risk here that ICBC is working with in this changed approach?

[3:25 p.m.]

Hon. D. Eby: The existing forecasts for ICBC do not incorporate any benefits from this strategy. I think that’s right. It’s just simply too early to know whether or not the anticipated outcomes of bending the curve back to 2016-17 trend lines for settlement amounts will be realized or not. The existing forecasts assume no benefit from this approach.

M. Lee: We talked last time, on page 18 of the service plan, about the “Net claims incurred” line. We look at the forecasts for 2018-2019 being $6.437 billion. I believe the figure I was given, when I asked the question about what the budgeted figure was, was $5.96 billion. We went through this last time, in what accounted for that $500 million difference.

To the Attorney General, I just wanted to go back this way, in confirming the suggestion that the new product reform was causing a lot of this increase in claim amounts being incurred. Is this trend continuing? Are there expectations that this trend may continue through the rest of this period? Secondly, is this also viewed by ICBC to be a transitional concern?

Hon. D. Eby: There are still significant inflationary pressures, despite the fact that we have brought in the cap in relation to minor injuries and the civil resolution tribunal process. I’ll just give the member some idea of those. First of all, built into the forecasts are erosion of the cap, which has been seen in other jurisdictions. The example that I often use is Alberta, where they failed to include TMJ, which is a jaw strain injury, in their minor injury cap, and suddenly they became the capital in North America for TMJ injuries, because it got you out of their minor injury cap and into the full tort system in Alberta.

That’s called erosion — where the claims that you would hope would have ended up under the minor injury cap, because they’re actually minor injuries, go into the full tort system, with additional costs. Here in B.C., that would mean going to the B.C. Supreme Court system, with all the attendant costs, instead of the civil resolution tribunal and outside of the minor injury cap on pain and suffering awards. That’s one example.

[3:30 p.m.]

The mitigation measure for erosion is to monitor the cap, monitor the cases that are going forward and address, through statutory amendment or regulatory amendment, the minor injury definition in order to capture minor injuries that are developing and that are somehow evading the cap system in the CRT system.

Another is material damage claims. We’re seeing escalating autobody repair costs. So, you know, when somebody has a camera in their bumper versus if they just have a regular bumper, and someone rear-ends them, there’s significantly more cost to replace the bumper that has a camera in it versus one that doesn’t. The same thing for windshields where you have a lane-assist device that’s built into a windshield. The calibration for that and the expense of installing the windshield goes up as well. The expertise and equipment that’s required goes up as well.

These types of pressures on material damage costs are also placing pressures on the budget, and they are built in, in forecasts, as well. In addition, there are 40 percent of claims that are not captured under the minor injury cap. So 20 percent of those will be in the CRT and 20 percent of those in B.C. Supreme Court.

The member will have seen our amendment to the rules of court around expert reports as an attempt to mitigate some of the trends that we’re seeing in terms of the use of adversarial expert reports — out of the Ministry of Attorney General. In addition, there’s a larger review of court rules taking place to identify ways…. Jurisdictions like the United Kingdom have specialized motor vehicle rules for court in order to provide and facilitate this unique type of claim, so that’s something that we’re looking at as a possibility.

These pressures don’t go away just because these other changes have been made. Cars are getting more complex to repair. Road safety needs to be addressed. Rules of court need to be responsive to the realities on the ground. So that’s where we’re at currently.

The Chair: Members, if it’s all right with everyone, we’ll take a six-minute recess.

The committee recessed from 3:31 p.m. to 3:41 p.m.

[N. Simons in the chair.]

M. Lee: Just before the break, the Attorney General was mentioning about erosion of the minor injury cap — or definition, in effect. Can I ask whether there are other considerations ongoing as to further inclusions under the definition of minor injury?

Hon. D. Eby: No, there are not.

M. Lee: In the process of consultation around minor injury, there were a number of stakeholder groups that were in consultations. Was any level of support provided to…? Does the government provide any level of support to these stakeholder groups, particularly around brain injury or concussions? Many not-for-profit societies are in this province doing good work for those individuals who are injured by brain injuries or concussions.

Hon. D. Eby: There was no compensation for participating in the consultation, nor was there compensation related to anything that I’m aware of related to insurance reform.

There are a number of disability groups that receive various forms of government compensation — gaming grants, Rick Hansen Foundation. ICBC does have grants for some brain injury groups through RoadSafetyBC, where they provide support to people who have been brain-injured through accidents or through collisions. But there was nothing connected with those consultations, if I’ve understood the member’s question properly.

M. Lee: With respect to the stakeholder groups that the Attorney General just described for ICBC-related purposes: has there been any change in the level of funding that they receive?

[3:45 p.m.]

Hon. D. Eby: I’m just learning about this myself. ICBC — not the insurance side but other parts of ICBC’s business — has a grant system for some organizations that would provide support to people who have been injured in collisions. They’re small grants. They’re paying a number like $500, $1,000, $5,000 — that kind of neighbourhood. There’s an application process for that. There’s been a fixed amount of money going to those grants. That amount hasn’t changed, to anyone’s knowledge here. If we find out that it has, I’ll let the member know. But there haven’t been any major changes to that program.

If there are organizations that have found there’s been a fluctuation in the amount of money available, it may be that more organizations have applied for those grants. But no one here is aware of any changes to that program. Of course, the people who are here are mostly from the insurance side, so we may have to endeavour to provide additional detail to the member about this granting program.

M. Lee: We, by way, of course…. We’re, through the B.C. Liberal caucus research team, doing various FOI requests. There was an FOI request for some material relating to minor injury. I’m sure the Attorney General and deputy minister are aware that there was a note that was prepared back in September of 2018 that outlined, for decision by the Attorney General, in respect of expanding the definition of “minor injury” to include concussion and, in effect, minor brain injuries.

Certainly, on the options to consider including concussions in the minor injury definition, erosion of the minor injury cap and related projected claim savings was certainly one part of it, and that’s what the Attorney General spoke to. But in terms of the concerns relating to this change, there were two points that were made.

One was that of being inconsistent with previous communications on the topic and risks of potentially alienating some stakeholders, including disability alliance groups who provided public support for product reform. Second­ly, the other con was that it may unintentionally capture some concussion claims that have significantly impacted the injured person.

Just to speak to the first con…. I’m happy to hand this note over if you want to see it, just to refresh, but it’s exactly how I read it. How has the Attorney General thought through the process that went through with all these stakeholder groups, who certainly were given one impression? There have been communications by government, as well, when these pro­duct reform changes were being made that concussions would not be included in the minor injury definition. So what is the view of the Attorney General in terms of that level of consultation and the change that’s happened here via regulation last November?

Hon. D. Eby: I appreciate the member sending over the note. I recall the decision point, because it was a difficult one. The advice that we received from the medical community was that there are concussions that resolve within a four-month period. You should be able to identify within a four-month period whether or not they’re going to resolve and, therefore, be a minor injury. And there are concussions or brain injuries that are going to go beyond the four-month period that should no longer be considered a minor injury. So we included that in the definition.

I absolutely, in discussions with various disability stakeholder groups and in presenting them with various proposals for their feedback, had advised them — and I think I advised the member opposite, actually, in some discussions; whether on the record or not, I don’t remember — that it was not our intention to include concussions originally.

We received that advice, we looked at it, and I made a decision that we should be including concussions that resolve within four months as minor injuries. This means that someone who has a concussion from a collision that resolves within four months doesn’t get to go to B.C. Supreme Court.

[3:50 p.m.]

There is a limit of $5,500 on the pain and suffering awards. There’s not a limit on compensation for lost wages, housekeeping, other therapies or necessary treatments, but there is a limit on the award made by the court in recognition that the person has certainly been injured by the collision. I hope that clarifies for the member that point, which is a very valid one.

The decision to include concussion was inconsistent with statements that I had made earlier to the member and to the disabilities community, because we received medical advice that it would be a mistake not to include that. The intent was to capture minor injuries within the definition. I believe that we’ve done that.

Now, I’ve also heard feedback from some brain-injury advocate groups that this, perhaps, sends a message to people that concussions are not serious or that they are more minor injuries and people maybe don’t need to treat them very seriously. That is obviously not the intent.

I’ve said that if there’s one big change that I could make to this whole process if we were starting again, I wouldn’t call these injuries “minor injuries,” because I think that for people who experience the injuries that fall within this category, they’re very serious. They potentially alter their lives for an extended period. There’s a long period of recovery — for physical injuries, a period of up to a year. Their experience of them is not minor.

I accept the critique of the brain-injury community for saying that a concussion that resolves within four months is a minor injury. In a statutory definition, we could have found another term — maybe “non-catastrophic injuries” or something like that. In any event, what is, is. It’s the “minor injury” definition, and here we are. It’s a dialogue back and forth with the brain-injury community and with other disability groups as we work our way through this difficult field.

M. Lee: I appreciate the response, in terms of working through that. The other aspect that is in that decision note is what the Attorney General just touched on, which is severity, and whether, inadvertently, individuals under this current framework who might suffer from a concussion might have more serious impacts.

Just because the Attorney General mentioned this, in terms of the medical advice and input that he and the ministry received in connection with this change, is it the case that…? I’ve certainly received — and there are, I’m sure, other letters — copies of letters that have gone to the Attorney General in psychological and concussion, brain injury–type situations, where of course they’re not simple. The Attorney General acknowledged that. They may be case-specific, but the actual symptoms and the complications may not occur until after what, in effect, would be that four-month period.

Has the Attorney General received advice in terms of constraining this level of injury to this framework as being a workable time period, in respect of seeing those symptoms reveal themselves in the first four months?

Hon. D. Eby: One of the things that’s not changed is limitation periods. It doesn’t matter whether you’re talking about a civil resolution tribunal or the B.C. Supreme Court.

If you have a head injury and the advice that you’re getting from your physician is…. You think that you’re on the mend, but your physician is saying, “Well, you know, things might get worse,” or so on, “and you might want to wait.” You don’t have to settle your claim. You can wait and see whether you’re recovering as expected, or not. It’s the exact same issue pre–April 1 under the old system as now under the new system. The possibility that someone would settle a claim with a head injury of some kind before they fully knew the ramifications of that injury or any other kind of injury is as much a possibility under the old system as under the new system.

[3:55 p.m.]

I do want to note one important difference. For both psychological and concussion injuries under the “minor injury” definitions, these were treated differently, because the advice we received was that these are tricky. It’s a four-month period that’s captured under the definition for both of these types of injuries, as compared to a year for physical injuries. That’s based on the advice that we received and the unique nature of these types of injuries.

M. Lee: I’m reordering some of my questions here just because, thematically, we try and keep it together here.

In terms of the CRT…. I know that in terms of the initial website, there were avenues provided to claimants to get additional assistance if they were having a challenge navigating the on-line platform. Can the Attorney General share any data in terms of where there are exceptions made to navigating that on-line platform? For someone who suffers from a concussion or some other psychological or other mental capacity type of injury, that might give them some challenges. Have there been other avenues that the CRT has made available, either in person or on the phone, for that claimant to make their claim?

Hon. D. Eby: The CRT can accommodate any type of disability or language barrier that someone may be facing. Typically, this is done in one of two ways. Either the individual reaches out directly to the CRT to request assistance — either through a form that they’re completing with the CRT to indicate that they need that support or through an email to the CRT — or contacts the CRT by phone.

The second piece is that the CRT may identify that someone needs assistance proactively through materials that have been submitted. Then they reach out to the individual. They put a flag on the file so that all future contacts with that individual take place through the desired mechanism.

There are about 200 languages for which the CRT offers translation. When someone calls, they can have a translator on the phone in one of those languages within two minutes.

They have the usual means of communication — the teletype or other means of communication — available to support people that are hearing-impaired.

There are a number of different mechanisms. Certainly, if the member identifies any challenges that people are having dealing with the CRT because of some type of barrier…. I know that the CRT is very open to receiving that type of feedback directly. Also, you can feel free to forward it to our office, and we’ll get it off to the CRT. They are interested in ensuring access to people regardless of their personal circumstances.

M. Lee: Recognizing that it came into place on April 1, has there been a pattern established yet in terms of the length of time that it takes to get through the process? Are there time parameters at this point?

Hon. D. Eby: Well, I wouldn’t describe the current number of claims at the CRT as a tidal wave. There has been one accident benefit claim, with a damages fault claim, that was received on April 30 at the CRT. It’s in progress right now. I would say that claims currently take at least a month — N equals one — so take that with a grain of salt.

[4:00 p.m.]

The CRT is really expecting very few claims for the first few months. This change was implemented on April 1. All collisions that take place after April 1 need to go through ICBC first, and then they go to the CRT.

In terms of the person having an assessment of what their injuries are, for example, what their claim is, first of all they have to have a dispute with ICBC — because the CRT is a dispute resolution mechanism — about whether or not it’s a minor injury, or the amount of the offer isn’t sufficient. That dispute has to arise through that process. The person has to provide all that information to ICBC. The dispute has to arise, and then they go to the civil resolution tribunal.

Long story short — one claim so far, not resolved, filed April 30.

M. Lee: I just wanted to go back over something we’ve canvassed before in either the bill stage or estimates. We’ve talked before in session that on average, injury claims opened by ICBC in 2016 were 110,000 and, in 2017, just over 95,000. So the average of those two years is 100,000. If that’s the number that we utilize for discussion purposes and the representation rate is 51 percent — I guess the question would be if that was the case, whether it’s 51 or 60 percent representation — then you’re looking at about 55,000 potential disputed claims in that two-year period.

To clarify, though, given the jurisdiction of the CRT…. It does have four distinct areas where it has jurisdiction — that is, determining whether an injury is a minor injury; part 7 accident benefits; liability determination, who’s at fault; and also in terms of all other related aspects, as long as the claim is ultimately under $50,000.

That would suggest that there may be separate applications for each issue. That may multiply disputed claims by four. Is that the way that the government has planned on capacity for the CRT?

Hon. D. Eby: The member is correct that there are multiple areas where disputes could arise. There could be a dispute about part 7 benefits or about fault in a collision or about whether it’s a minor injury definition or not. They don’t have to be separate parts, the claim. They could all be bundled together in the same claim.

[4:05 p.m.]

Regardless, the member is right. There are different categories. If you had a part 7 claim, which means that maybe you were in a one-car collision with a moose, you wouldn’t be having, really, a fault adjudication. So maybe that’s a separate category of people, and that’s bringing people in that have disputes that wouldn’t otherwise have had a dispute. So maybe that means more people.

ICBC has looked at these categories of jurisdiction for the civil resolution tribunal, the number of claims, and their estimates are that about 25,000 claims should be falling, in this fiscal year, under the jurisdiction of the civil resolution tribunal, that will be disputed in some way. Those claims may be made up of more than one person, so there are actually 37,000 anticipated exposures. That’s what the insurance industry term is, which is that there’s a claim for multiple people in the same unifying claim. That’s the wrong word — that there’s a demand or that there’s a request for resolution from multiple people within the same claim.

That’s how you end up with 25,000 claims going to the CRT but 37,000 anticipated exposures. Those are the numbers that the CRT is working with in terms of staffing up around adjudicators.

M. Lee: What is the current staff complement now for the CRT?

Hon. D. Eby: I know the member’s time is precious in estimates; I remember being in opposition doing estimates. We’re working on that answer, and while staff are working on that answer, if he has another question, maybe we can efficiently double up here.

M. Lee: I appreciate that very much. Time is precious, at least as we get down near the end of this process.

Just in terms of the 37,000 exposures expected for this fiscal period, given what the Attorney General indicated in terms of the takeup to date, what is the trend in terms of expectation over the next three to six to nine to 12 months? Is it expected that that 37,000 exposures would be back-end-loaded? What does that trend line look like?

[4:10 p.m.]

Hon. D. Eby: I have two answers at once. The modelling is that there will be about 10,000 claims in the civil resolution tribunal this fiscal year, despite the appearance of a very slow start of one claim. About 10,000 should be underway this fiscal year. Hopefully, there’s only one — that they’re all resolved informally. But I suspect that won’t be the case.

That 37,000 exposure number is over the full maturity of the collisions that take place this fiscal year. There might be a collision the day before the end of the fiscal year, and it’s going to take some time before there’s a dispute and it needs to go to a CRT for resolution. So we’re just trying to get the time period for maturity of that 37,000 exposure number.

In terms of the staffing at the CRT, dedicated to automobile collision disputes is 55….

Interjection.

Hon. D. Eby: Oh, I see.

All staff at the CRT…. These are the clerks who are reviewing materials as they come in, contacting people if they need support going through the system, mediators supporting people through to resolve their claim in advance of full adjudication, back-end technical support, and so on. There are 58, and there are 14 full-time adjudicators currently within the CRT. That seems both simultaneously too high, given that there is one claim, and way too low, given that there are 10,000 claims expected.

What the member is seeing here is the steady staffing up of the CRT for the anticipated demand, but we are still too early for that demand to be showing up and manifesting at the CRT. But as this goes on, obviously we’ll be seeing more and more members coming on the CRT.

That’s all CRT staff — 58 staff and 14 full-time members. They have jurisdiction over strata disputes and non-profit housing and so on, small claims under $5,000, which they’ve already been working on and which those staff would be working on right now.

M. Lee: Just going back to where we were before about the number of new adjusters that have been brought on, I wanted to ask about legal counsel in terms of how that splits up, both internal and external. Has that legal resource increased in terms of that level that deals with what has been an increase around claims and settlements?

[4:15 p.m.]

Hon. D. Eby: The member heard me explaining the increase in the number of claims, represented claims and the number of claims per collision. That is reflected in the hiring of claims legal staff at ICBC, internally. In 2015, there were 179 claims legal staff. That’s lawyers and paralegals. In 2016-17, there were 199. In 2017-18, 269. In 2018-19, 305. The plan is for 2019-20, 345.

I will also note that those are the internal lawyers and paralegals to ICBC. ICBC has also secured the services of 76 law firms, which includes 627 lawyers and 392 paralegals, around the province. These external firms handle some claims where it’s efficient for the external firms to handle those claims on behalf of ICBC. So you can see there’s a very significant expense associated with disputed claims.

M. Lee: As the CRT comes on stream more and gets through their process in the way that they are framed, is there, on the forecast, an expectation that there will be a decrease in that legal requirement, in terms of internal or external?

Hon. D. Eby: The big pile of claims that soldier on under the old system will continue moving through the system. But as that book of claims gets resolved one way or the other, either through settlement or litigation, there will be a reduced need for counsel. The expectation is that we will see fewer and fewer defence counsel or lawyers and paralegals needed for ICBC on a go-forward basis, as the majority of claims go through the civil resolution tribunal process.

M. Lee: On that old book of claims, as you just termed it, with the longer process to get to resolution, either settlement or resolution itself, is ICBC, from their legal group, seeing more claims having to go to trial?

[4:20 p.m.]

Hon. D. Eby: The overall picture here is that 0.2 percent of ICBC’s injury claims went to trial last year, and 99.8 percent settled without the need for a trial. That works out, in real numbers, to be somewhere between 150 to 200 claims going to trial last fiscal year out of about 120,000 open claims.

In terms of bending the curve back to the 2016-17 settlement trend lines, there is an expectation that there will be more cases potentially going to trial in the short term as a result of that approach to settlement. We don’t have any numbers on that, but that is the expectation — that in the short term, we will see more trials going ahead. However, that will still be just a fraction of a fraction of the overall book of open claims at ICBC.

M. Lee: Does the Attorney General have any concern, in terms of the impact that that will have on the court system and just in terms of the increased level of cases going through the courts?

Hon. D. Eby: Certainly, if the court needs additional resources, that’s part of the responsibility of the Ministry of Attorney General — to ensure that they have the resources necessary.

I’ll note that with the reforms that have been brought in, 80 percent of matters that would’ve previously gone to the B.C. Supreme Court registry are now going to the civil resolution tribunal. Our hope is that that will certainly free up significant resources within the superior court judiciary to be able to take on the matters that we expect them to take on and to be able to do so in a way that everybody hopes for, in terms of timeliness and access to justice.

There are a number of measures, in short, that the government has brought in to actually alleviate pressure on the registry and on the B.C. Supreme Court system through the reforms that the member is very familiar with.

M. Lee: Just to comment on that. I think, as we talk about this transition, it’s going to be that the book of claims that are under the old system, pre-CRT — the 150 to 200 claims that we’re speaking about — will likely add some challenge to court resources.

In terms of the earlier mention by the Attorney General of the review of procedural rules. There was, of course, the three-expert change, which went through some process, or some concern about the process, and then was paused.

What’s the expectation, in terms of involving judiciary and other members of the bar on rule changes to court? And what’s the process that the Attorney General is following, going forward, on the further review of changes to court rules?

[4:25 p.m.]

Hon. D. Eby: In any changes to the court rules, there’s an obligation on the Attorney General, under the Supreme Court Act, to consult with the Chief Justice of the B.C. Supreme Court.

There is a rules committee that’s made up of members of the judiciary and members of the Ministry of Attorney General public service. I sit on it, although, admittedly, I’m not at every meeting. There are also senior counsel, representatives from the trial lawyers, CBA and Law Society on this committee. The committee looks at proposals around rules and provides feedback on those proposals.

There are a number of mechanisms, both direct consultation with the chief justice as well as the rules committee process, that any revisions to the rules go through.

The member will note that in relation to the rules proposal that was introduced recently related to experts and the use of adversarial experts, I issued a statement to clarify. I wanted to be clear that that proposal and the responsibility for that proposal came from my office and from me personally, as opposed to the rules committee initiating that process or somehow, either tacitly or overtly, approving that rule, although it was the subject of many discussions at rules committee and it was the subject of consultation, as is required under the Supreme Court Act.

M. Lee: I appreciate hearing from the Attorney General the clarification, including with the rules committee, on how that worked. Is it his expectation, as to what level of consultation will occur in terms of future considerations of changes to court rules, that the rules committee will be fully consulted? What level of involvement will they have in terms of what might be seen as a unilateral approach that the Attorney General may have been seen to have taken on the previous expert role proposal?

Hon. D. Eby: Just to clarify, it was not a unilateral decision. I consulted with the chief justice, as is required under the Supreme Court Act, and the matter was discussed at a number of rules committee meetings. Changes were, in fact, made based on those discussions. But I did want to clarify that at the end of the day, responsibility for the rule lies with me and my office.

The process that would be followed for any rules amendment would be that it would be going to the rules committee for discussion. The chief justice would certainly be consulted, as is legally required in British Columbia. So that process would take place. There are terms of reference for the rules committee in terms of how that happens, and we would be following that process.

M. Lee: Thank you for that clarification.

I just want to turn now to the website for the CRT. It has certainly been brought to my attention that…. The CRT, of course, is intended to be that neutral arbiter for disputes over minor injuries. But there are, presumably from a language use…. Just to draw the Attorney General’s attention to a couple of statements on the website.

One is around serious impairment. There’s the shorthanded way that it’s referred to on the website — that a serious impairment is where you’re substantially unable to work, go to school or care for yourself for more than 12 months after the accident. This is in contrast to the actual definition, which, as the Attorney General knows, is a physical or mental impairment that results in a substantial inability to perform essential tasks of employment, training or education.

I’d just ask if the Attorney General could comment on the way that the website has been positioned in this manner.

Hon. D. Eby: The CRT has autonomy over the material that they put on their website. I know that they did go through a process of reaching out to various stakeholders to get feedback on the content and the design of the website. I’m hopeful that if anyone has concerns about particular material that’s on the website, they would be bringing those to the attention of the CRT.

I know that the trial lawyers did have some concerns. Unfortunately, they didn’t provide them earlier to the CRT when they were invited to provide feedback. I do understand why. I mean, they don’t like the process. I understand why they don’t like it.

[4:30 p.m.]

Fortunately and happily, they have ultimately provided their feedback to the CRT in terms of wording on the website that they had issues with. I think there was some kind of dialogue — I don’t know — and there were likely amendments. But again, this is a process that happens at the CRT and that the Ministry of Attorney General is not involved in.

M. Lee: Just one other point to make. I appreciate the Attorney General’s response.

Another example that I see in the “Frequently asked questions” section of the CRT’s website is a statement like: “You might get a faster resolution if you negotiate a settlement with the insurer.” That, taken out of context, would suggest that one should continue to go through that process as opposed to seeking your relief from the CRT.

Let me just go to another point. That is in terms of the care model on part 7 benefits, which, in effect, would result in an individual not necessarily getting the full amount paid for their treatment. Can the Attorney General please clarify the way this has been presented to British Columbians in the past versus the way it is currently, in terms of part 7 benefits going forward, that effectively has a specific amount designed for specific forms of treatments, which may result in an injured British Columbian not having full recovery of treatment?

Hon. D. Eby: I just want to clarify. I said it was in the B.C. Supreme Court Act, but actually my obligation to consult with the chief justice is contained in the Court Rules Act, which makes sense. Section 6 is the relevant section. I thank staff for bringing that to my attention. I wanted to put that correction on the record.

I wonder if the member could provide me with a little bit more context for the changes to part 7 benefits that he’s talking about. I’m not sure that I’m familiar with exactly which initiative he’s talking about that might reduce benefits to people under part 7. In fact, we’ve increased benefits to people under part 7, including lifetime benefits.

M. Lee: I certainly appreciate the overall increase that’s been spoken to. What I’m referring to is the specific amounts for designated treatments, like acupuncture, $88; chiropractic, $53; counselling, $120; physiotherapy, $79. These are examples of various forms of treatment that would be covered under part 7. But that may not cover the actual full amount that the physiotherapist, massage therapist or occupational therapist might charge, which means that the injured British Columbian would actually be out of pocket as a result.

Hon. D. Eby: I thank the member for the clarification. That assists a great deal.

Some of the categories of claims that the member mentioned were not previously covered under part 7 benefits. For example, acupuncture was previously zero dollars for treatment, and now it’s covered. The coverage levels, the per-appointment rates that are listed, were developed in consultation with the service providers of these various sectors, whether it’s physiotherapists, acupuncturists, counsellors, and so on. ICBC went out and said: “Okay. What’s market rate for these kinds of things?” They provided their feedback, and the rates were set in consultation with them.

In addition, those rates are tied CPI, so the idea is that they increase every year with inflation. And then also, there’s a five-year review of the fees to make sure that they’re still in sync with market rates. There might be a sudden shortage of physiotherapists or some other specialty in the rehabilitation world, and their fees suddenly go up dramatically as a result. There will be a review after five years to make sure that those amounts are still properly covered.

The reason for both the CPI and the five-year review and the engagement was that we recognized these rates had not increased since the ’90s, the rates that were being paid under part 7.

[4:35 p.m.]

If you had a collision where either you were at fault or you ran into a moose or some other object that you couldn’t assign fault to and you were under the part 7 section, you weren’t getting adequate compensation for basics to get better, whether it was physiotherapy or acupuncture or counselling or anything else.

This is a very important piece, and it was a very important piece for the disability community, especially the lifetime benefit. Because if you ran into this moose that I used as an example and you were rendered quadriplegic, you had a $150,000 lifetime limit on the amount of part 7 benefits that you could access. We’ve doubled that to $300,000.

In some ways, maybe, that’s unfortunately still not where we would like it to be ultimately, but it’s what we were able to do. When you’re rendered quadriplegic, you’ve got to buy a chair, you’ve got to retrofit your house, you have to get a special van, and so on. You can eat through that money in a real hurry. Then, once you hit the end of that road, that’s it. So that $150,000 was grossly inadequate. We’re proud to have doubled it, and certainly, there was a lot of relief and happiness in the disability community when we announced that that was our intention, because they see an unfortunate number of people that fall into that category of exhausting those benefits.

The happy news, for the member, is that it’s just the opposite of his concern. Treatments that weren’t previously covered are now covered. They’re set at market rates, they’re tied to inflation, and they’re reviewed every five years to make sure that they’re relevant and connected to actual market rates for these services.

M. Lee: Perhaps I just have a different understanding. Certainly, I recognize, as the Attorney General is indicating, that there may be some treatments that were previously not covered. But for those that were covered — like physiotherapy or chiropractic care — as I understand it, under the previous system, ICBC would cover some costs related to those treatments under part 7 up front, and the rest would be at the end of the claim. In any event, the full amount used to be paid, whereas under this current fee schedule, this may result in not the full treatment cost being paid. That’s my concern, and that’s what I was inviting the Attorney General to comment on.

Hon. D. Eby: I think we’re honing in on exactly what the member’s concern is. I’ll try to paraphrase it, and see whether we’re headed in the right direction. The concern is that previously, if you were not at fault in a collision and you were reliant on part 7 benefits, you could claim the difference between what part 7 benefits were and what the charges were from your preferred physiotherapy service provider, acupuncture service provider or whatever as part of your tort claim, whereas now that’s no longer something that happens.

I can advise the member that in terms of the level of the part 7 benefits, they are market rates for those services. You are able to go to the market in British Columbia and access services at these rates right now. So there’s no British Columbian that will be in a situation, at these rates, where they’re not able to access services. Certainly, we’re monitoring that. If people have concerns about being able to access a certain type of service, I’m sure that we could have a look at that. The big gap, and the big reason for that concern, was when these rates hadn’t changed since the ’90s.

[4:40 p.m.]

The amount of money for a physiotherapy appointment was somewhere in the $23 or $25 range, when you just can’t get service for that anywhere in the province, or even for double that. The gap has been closed. The rates are currently at market rates. Those rates were set in consultation with actual service providers offering services at those rates. They were, certainly…. When I was talking to an acupuncturist the other day, I was hearing from him how thrilled he was that acupuncture was being covered. He wasn’t complaining to me that the rates were inadequate. He was thrilled that acupuncture was being recognized.

I think we’re getting there, and I acknowledge the member’s concern. All in all, I’m for British Columbians — that they’re able to access these services across the province right now at these rates.

M. Lee: Just in terms of another area of expense reimbursement…. That is, the CRT limits claimants to $5,000 in total reimbursements for any medical reports or disbursements that they might need to prove their case. For those claimants who are able to afford more than $5,000, they may take the chance, of course, of incurring greater than $5,000 in costs in order to mount their proceeding through the CRT.

Is the Attorney General concerned at all that this creates, in effect, a two-tier legal system where those who are unable to afford won’t get the same level of ability to present their case through the CRT?

Hon. D. Eby: I’ll note that $5,000 in disbursements is 10 percent of a $50,000 claim. So it’s a fairly significant amount of disbursements to resolve a claim. I’ll also note that under the current system, where you’re incurring fees to advance your own claim, typically, the arrangement is….

The vast majority of people can’t afford to front the significantly expensive expert reports and so on. The law firm will arrange for them a private line of credit, on occasion funded by another law firm, at significant interest rates. So people end up, at the end of the multi-year claim process, with a significant debt related to disbursements, accruing interest, which is paid for out of their award.

I guess what I’m saying is…. The current system is not one that is particularly ideal in terms of maximizing the return to the injured party of the full amount to which they’re entitled, given the cost of disbursements and the structure around loans related to disbursements.

The limit is a limit. It’s $5,000 on disbursements. If a law firm wants to arrange a personal line of credit for someone to access this, just as they do under the current system, they can do that. But that person is taking a risk, as the member says, that they may not be able to recover. And $5,000 in disbursements to resolve a $50,000 claim should be a reasonable amount of money in order for someone to be able to do that. It’s 10 percent of the value of the claim.

M. Lee: I just wanted to now turn to the health care report for accidents after April 1. That’s under sections 28.1 and 42 of the Insurance (Vehicle) Act.

There is a particular requirement that the health care practitioner needs to provide a report to ICBC including information in respect of the nature of the injured person’s injuries and the diagnosis, condition, treatments and prognosis. This report needs to be provided in the form required or established by the corporation.

[4:45 p.m.]

There are requirements, as I understand it, in terms of further guidance given to health practitioners, including non-physician health practitioners such as psychologists. It indicates that if the patient consents to the psychologist sending the approved form of report to ICBC, they are paid $340. If the patient does not consent, the psychologist does not send a report and is paid only $195. But ICBC will send a written demand for a report, and according to this guidance, it has the statutory power to demand the report. The form of report that psychologists are required to provide by ICBC includes any pre-accident history of substance abuse and any family history of mental health concerns or substance abuse.

I’ve certainly heard from psychologists and others who are struggling with this new framework and this requirement. I understand that as they deal with ICBC staff in terms of these reports and what comes across and what comes back…. If, for example, a psychologist or other mental health practitioner feels uncomfortable, under their ethical duties, filling out and providing portions of the report, it’s not a complete report, and it gets sent back, and they aren’t paid the fee. That sort of thing.

My question for the Attorney General is: what is the consideration that’s been given in terms of the ethical standards and the ethical difficulties that this puts on these health care practitioners who are being required to provide this report without their patients’ consent?

Hon. D. Eby: I can tell the member that we did consult with the Psychological Association on the forms specifically, but that’s all I can tell him right now. We’re just trying to get a little bit more detail about that. Certainly if the member has specific concerns about the form, he can feel free to forward them over, and we’ll have a look and see whether there are modifications that are required to address concerns. But we’re just trying to get a sense, from the staff who are involved, about what the extent of the consultation was.

It’s taking a little longer than I thought. I don’t know if he has another question he wants to ask while we’re putting that material together.

[4:50 p.m.]

M. Lee: I appreciate that. One example of another question I would be asking is what the determination on relevance of…. To ICBC, what is the relevance of asking for or seeking this information for any family history of mental health concerns or substance abuse in respect of that individual claimant? Obviously, there’s a concern relating to this level of information being provided and being required — and whether it’s prejudicial, of course, to the rights of the individual claimant and then going from that, in terms of the use of information — to government or a government entity.

Let me just, actually, go to another question with the time that I have left on this topic area — and that is, when the product reform was coming forward by the government, there was a special order to BCUC , under a letter of direction dated February 13, 2018. That really directed…. I guess the actual order-in-council was on March 5, 2018. But the letter to the board of ICBC informed them of this directive that the capital and operational costs of the product reform being brought forward by ICBC, all of those costs, would be allocated to optional insurance.

As we know, BCUC has the jurisdiction over the basic level of insurance and does the rate review, in terms of premium rates, for basic insurance, whereby ICBC is required to provide detailed financial information in respect of that rate application. But that same level of authority in jurisdiction and line-of-sight transparency does not occur on the optional side of ICBC’s insurance business.

What was the rationale for, effectively, putting behind optional all of the costs of the product reform, such that BCUC does not have the ability to review that cost structure and financial forecast?

Hon. D. Eby: The transformation project of the previous government was done on the same basis, and I imagine that the philosophy behind it was the same. The idea is that the costs of the project shouldn’t be borne by basic policyholders, that it should be priced into the optional market where ICBC is in a competitive environment, competing with additional people.

The member should know that the B.C. Utilities Commission will be reviewing the outcomes of this project through the rate review process. That will be reviewed, so it’s not being exempted from review, but the costs of the implementation are on the optional side because the costs shouldn’t be borne by the basic policyholder.

[4:55 p.m.]

M. Lee: What is the actual budgeted cost for the project transformation?

[S. Malcolmson in the chair.]

Hon. D. Eby: The capital cost for 2017-18 actuals was $3 million for the RAAP project. In ’17-18 for non-capital expenses, I guess, was $2 million. The outlook for ’18-19 on capital is $44 million and for non-capital expenses is $25 million.

[5:00 p.m.]

To get the total spent to date in terms of the actuals last year and the outlook for ’18-19, you have to add those together, so $47 million in capital and $27 million in project expense. I’d advise the member that that will not conclude the program. There will be additional expenses in ’19-20 and ’20-21 going forward, as there’s depreciation, and so on, of capital that’s been purchased — but a pretty successful return on investment, given that it’s expected to return about $1 billion in savings this year and on a go-forward basis.

M. Lee: Well, just before we take a break, and the time being quite short here, this will be my last question on ICBC.

I know that members of this House…. The Attorney General has had submissions from, among others, the B.C. Police Association regarding concerns around their own safety, the safety of their officers, in terms of…. This is the licence plate confidentiality through the system. Could the Attorney General just make a comment in terms of what the status of any consideration might be of that request to keep their licence plates out of the system so that they’re not easily identifiable by others who might seek them out?

Hon. D. Eby: This is, obviously, a serious concern for law enforcement officers. There are officers that are at increased risk. The process for ICBC is that where a chief constable or a commander identifies an officer of being at risk, there is a process where they contact ICBC, provide the information for that officer to ICBC, and then ICBC can conceal the identity of that member’s plate. So if the goal is for ICBC to ensure that this is a risk-based assessment, the people best placed to conduct that risk-based assessment are the chief or commander of any particular detachment or police force, and they have that process in place right now.

M. Lee: Just one clarification on that. Is that…? Presumably, what the B.C. Police Association is looking for is a broader approach beyond just the special request approach. Is ICBC able to address that consideration just to ensure, of course, greater safety for our law enforcement officers in this province?

Hon. D. Eby: The proposal, as I understand it, is a significant broadening of that, but by default, police officers would have their licence plate concealed. It brings in concerns related to sheriffs, transit police, other people involved in law enforcement across the province. The challenge for ICBC is it creates a parallel system for licence plate registration and identification. They have currently been focusing on a risk-based approach where those officers that are particularly at risk as a result of the work that they’re doing — for example, in relation to organized crime, or otherwise — are identified by the chief or commander, and then their information is protected with an extra layer of protection.

The Chair: I recommend we take a five-minute break. We’ll return to work at ten after five.

The committee recessed from 5:04 p.m. to 5:10 p.m.

[S. Malcolmson in the chair.]

S. Bond: Good afternoon to the minister and his staff.

There is a significant prompt payment issue in B.C.’s construction sector. Today one of my colleagues introduced a private member’s bill, but of course, there’s never a guarantee that government will move those private members’ bills forward.

I know the Attorney is familiar with this issue. The construction association and, in fact, a large number of organizations wrote to the minister. There’s a significant issue. Prompt payment is a fundamental requirement of successful business operations. Obviously, all sectors and representatives of the B.C. construction industry are united in their agreement and have written a very constructive letter to the minister, seeking a partnership and an opportunity to work with the minister.

The Attorney General did respond to their request. However, it was almost a year ago. It was July of 2018. The Attorney General, at that time, said that ministry staff were working “to determine the appropriate entity to conduct a consultation. It is anticipated consultation will begin after the British Columbia Law Institute concludes,” etc. I’m wondering if the minister could provide me and the construction association, a large number of organizations that are very interested in seeing some progress on this file….

Hon. D. Eby: Yes, I am familiar with the prompt payment proposal. I can’t say I’m familiar with the private member’s bill that’s been put forward. I haven’t had a chance to look at it yet or to receive any feedback on it from staff. But I’m familiar with the concept, broadly, and the advocacy that’s been taking place around it recently in British Columbia.

Ontario, in 2017, introduced prompt payment legislation. The benefit that British Columbia can realize from this is monitoring the implementation in Ontario so that we don’t repeat any mistakes that they may have made — unintended consequences, and so on. We are watching Ontario carefully. I’ve advised the stakeholders that are interested in this legislation that that will be our approach in relation to prompt payment legislation.

I will also advise that, related to but separate from this issue, the B.C. Law Institute is providing a report to government, by the end of June, related to builder’s liens and the builder’s lien system. The member will know that builder’s liens were identified as being problematic and challenging for a number of reasons, not the least of which was that they were being used for alleged money laundering in British Columbia. There is a review underway by the B.C. Law Institute related to potential reform of builder’s liens, as well, which is related to the payment of builders, obviously.

That work is underway. As I say, we expect the report from the B.C. Law Institute at the end of June. We continue to monitor the situation in Ontario with their very new legislation around prompt payment to ensure that it is achieving the goals as intended.

S. Bond: Perhaps the minister could be a bit more definitive. In the letter that he sent back to the group that sent the request to him, he noted that the goal is to have prompt payment consultation conclude before the end of 2019.

Since that time, I know that other governments, as was noted in my colleague’s private member’s bill this morning, have continued to make progress, including Saskatchewan and other jurisdictions. Has the government actually begun consultation, and is the minister still expecting consultation on this issue to conclude before the end of 2019?

Hon. D. Eby: As I’ve indicated and as the member saw in the letter, it is our intention to continue to monitor the situation in Ontario, to engage on this issue. I can’t say that this is the biggest piece on our radar. What is the biggest piece on our radar on this issue is around builder’s liens and the B.C. Law Institute report that’s coming back to government.

[5:15 p.m.]

I definitely appreciate the submissions, feedback and information that I’ve received from the various parties that are advocating for this change. They will be engaged with as part of the process that we’re looking at implementing by the end of 2019, as the member has said. But as I say, currently we’re looking at monitoring the situation in Ontario. We’ll definitely be engaging with these parties going forward, in relation to builder’s liens and a host of other issues, including prompt payment legislation.

S. Bond: I thank the minister for his time and for his answers. I would urge the government to make this a priority. What this does is that it places a financial burden on small businesses in British Columbia. It actually stops cash flow in the economy. It’s absolutely critical. The concern, especially from the B.C. Construction Association, is this would allow millions of dollars to flow into the economy and make sure that small contractors, who are actually the backbone of the industry, can pay their staff, pay their bills and manage their business.

It makes good sense. It’s obviously being looked at and implemented broadly across Canada. I want to thank the minister for his answers, but I do urge the minister to make this a priority. The letter to the minister arrived in July of 2018. We’ll soon be in July of 2019. I just want to bring this matter to the minister’s attention, and I appreciate his answers this afternoon.

J. Thornthwaite: I have a few questions to the minister about sexual assault policy and services that are available to victims or survivors of sexual assault. Just as a preamble for the minister, one in five of sexual assault cases substantiated by Canadian police end up in court, with only one in ten resulting in a conviction, according to Stats Canada. These numbers do not include the number of unreported cases or even the number of cases that police have not substantiated.

Research says that two-thirds of women sexual assault survivors do not have confidence in the Canadian justice system. That’s because, and I’ll quote what I’ve said in the House before: inappropriate questions, a complete disregard and lack of understanding for the immediate as well as the long-term effects of surviving — and a systemic tendency to blame the survivor — all lead to what advocates call “the second rape.” That’s our judicial system.

My question to the minister. Is there anything he is considering that forces police, lawyers and judges to get proper education on cases involving sexual assault victims?

Hon. D. Eby: We’re just going to get the head of the prosecution service up here to assist us with this question. If there’s something that the member wanted to ask while we’re waiting, to avoid any downtime — just noting the time and trying to get as many questions in as possible — I’m glad to take additional comments while we’re waiting for him to come up.

J. Thornthwaite: I’ve got another question. I’m not too sure whether or not the minister has to wait.

I’m sure the minister is familiar with the case, which was reported on May 15 of this year, of the RCMP officer that was in Kelowna, in the Okanagan. The videotape was released. He was interrogating this Indigenous teen and asked very inappropriate questions. I’m going to just quote a few. “Were you at all turned on during this at all, even a little bit?” the officer is quoted as saying in the video. One of the federal ministers called the incident disgusting and said it demonstrates the need for judicial training about sexual assault.

[5:20 p.m.]

In Calgary, there was a case…. And there are lots of these. There was a judge that deemed that rough sex between a girl and three males was consensual. In actual fact, the girl was gang-raped, and he deemed it consensual.

I’ve spoken numerous times in the House about a case that was very close to me. One of my constituents, who was a youth, was actually convicted of aggravated sexual assault and forcible confinement. Because the perpetrator, the rapist, was a youth at the time, he was charged as a youth and ultimately ended up getting two weeks of a sentence. Advocates have said that’s shorter than what people get in environmental protests outside the Trans Mountain pipeline. This young boy is obviously a risk, and we know that when youth get away with one instance, there’s an increased chance of it happening again and again and again. In fact, research has indicated that that is the case.

The reason why I wanted to bring that up, and perhaps the minister does have…. I’ll nuance my question again. What is British Columbia doing to train and provide education for those who come into contact with sexual assault survivors?

Hon. D. Eby: There are a number of different actors in the justice system. The member has listed a number of incidents involving various actors — judges, lawyers, police officers, and so on. For our ministry, within the Ministry of Attorney General is the independent prosecution service of British Columbia. I’ll introduce Peter Juk, who is the ADM responsible for the independent prosecution service. He has advised that there is training of prosecutors that takes place in multiple ways.

[5:25 p.m.]

Groups of prosecutors will attend training. There’s every­thing from lunch and learns to dedicated and discrete training events related to sexual assault issues, but the discrete training events would be a more dedicated training session. Their resource counsel are particularly expert in the areas of sexual assault law and working with victims of sexual assault. They offer training to counsel within the Crown counsel office.

The Solicitor General’s office is currently pulling together a trauma-informed practice curriculum, in partnership with the Ministry of Attorney General, for people who are in contact with those who have been involved in some type of trauma. Sexual assault is certainly included in that, and rape is included in that.

What I would do is a couple things. One is I’d advise that, certainly in terms of the prosecution service, there’s an active training program that includes sexual assault training within our ministry. But I would also advise that, in relation to police and overall victim-related programming to minimize trauma to victims going through the criminal justice system, the member will find the most satisfactory answers within the Ministry of Solicitor General. I understand those estimates are yet to come, so I would encourage her in that direction.

I’d also advise the member that in relation to the education of federal and provincial court judges, judges are responsible for — and guard their independence on this, quite necessarily, because they’re an independent branch — their own training and their own process. But certainly, my experience with our provincial court chief judge and associate chief judge is that they’re very open to meeting with folks and talking about these kinds of issues and open to improving practice at the provincial court level. So if the member is interested in an introduction to the Chief Judge of the Provincial Court, I would be happy to facilitate that.

It’s an independent branch, so I can’t guarantee a meeting. But I think, in my experience, the chief is very willing to meet with folks to talk about issues that they find important in terms of the justice system and the judicial branch of the justice system.

J. Thornthwaite: I will definitely take up the minister on the offer for a connection.

My question, then, expands on the original one. I’m sure the Attorney General is familiar with the federal Bill C-337 that has actually passed unanimously through the federal parliament but is stuck right now in the Senate, going nowhere. The implication is that Rona Ambrose, the MP who sponsored this bill, is assuming the reason why it’s held up is because it’s a bunch of old boys in the Senate that are protecting their friends and their other old boys.

I guess my question to the minister, then, is…. I’m glad that he’s looking into this, but would this trauma-informed curriculum and training be mandatory? What I’ve heard is that the people that go and attend these types of professional development things are, essentially, speaking to the converted already. The ones that really need the trauma-informed curriculum and the sensitivity training and a true understanding of what happens to sexual assault victims are the ones that aren’t actually showing up at these professional development sessions.

The minister had mentioned these exercises that are available. But my question, of course, is: does anybody actually have to take them?

Hon. D. Eby: The member will be familiar with the Crown counsel policy manual, which is available on line. It does have a sexual assault policy. All Crown counsel are required to adhere to the policy, to know the policy and be familiar with it. I would encourage the member to review it and to ensure that that meets with her expectations around minimum requirements for Crown counsel.

As I advised the member, there are resource counsel with particular expertise in this area that would be asked to take on particularly sensitive cases and to support counsel that are taking on these cases or are required to take on these cases through their work. There are resources within the ministry, as well as expectations around knowledge of Crown counsel and adherence to policy.

[5:30 p.m.]

J. Thornthwaite: I’ll move on to another question. I just wanted to ensure that…. This issue is very, very important to me and many, many other people. Certainly I’ll be pursuing it and taking the minister up on his offer with regards to the individual that he recommended I contact.

My other question is related also to sexual assault victims and survivors. It’s about legal support services. There are now five Canadian jurisdictions — Nova Scotia, Alberta, Newfoundland, Ontario and Saskatchewan — that actually offer free legal advice. That is allowed to all survivors. It’s advice if the survivor chooses to continue on with a charge or not.

I’m wondering whether or not B.C. could provide access. What is B.C. doing to provide access to the legal knowledge that sexual assault survivors need to make informed decisions? In these five Canadian jurisdictions that I’m aware of, the service ranges between two and four hours where a survivor is able to actually talk to a lawyer. I’m wondering whether or not British Columbia has that or better for victims of sexual assault in British Columbia.

Hon. D. Eby: I’m happy to report to the member that we have a pilot in place at three locations in British Columbia, modelled on the Ontario initiative, in which the provincial prosecution service has partnered with Women Against Violence Against Women, WAVAW. They are working with local lawyers in the communities to provide support to victims of sexual assault through the process.

We’re very hopeful that that pilot proves to be successful in achieving the goals that we want, which are that victims feel supported throughout the process and that they have a more positive experience through what must be an incredibly traumatic and difficult process overall. To the extent that we can make it a more welcoming environment for victims of sexual assault, we’re trying to do that.

What I can do is provide additional information to the member about the timing on the pilot’s reporting out and that kind of thing. But we’re still in relatively early stages on that.

In addition, government is funding clinics across the province. These are not squarely focused at sexual assault or support for victims. These are much more broad. They are providing legal support to people who cannot afford a lawyer generally and legal support for people who may be in the criminal justice system or other aspects of the justice system — the family justice system or so on. We’ll be opening these clinics over the next year in eight locations across the province.

In addition, we’ve partnered with the First Nations justice council around wraparound services for Indigenous people across the province. There are three clinics that we’re hoping to open this year in partnership with them in First Nations communities.

[5:35 p.m.]

As the member will know, Indigenous women and girls are particularly disproportionately victimized by violent crime, including sexual assault, rape and other types of violent crimes. It is our hope that providing these supports — wraparound services in Indigenous communities that include legal advice, certainly, but also additional services — we will be able to better support Indigenous women and girls in the justice system, as well as Indigenous communities as a whole in the province in their contacts with the justice system.

J. Thornthwaite: Thank you to the minister for that answer. Yes, I’m very familiar with WAVAW. In fact, WAVAW is credited with potentially saving the life of a very dear person in my life. They helped her survive the second rape of this survivor, who was abused again from the judicial system after she was violently sexually assaulted. So I am a fan of WAVAW.

I do know that WAVAW is the — I don’t know what you’d call them — contracted community-based victim services in Vancouver. But we do not have enough of these community-based victim services provincewide. According to the Ending Violence Association of B.C., only 64 of the community-based victim services are actually funded provincewide — 64.

There was a report a couple of months ago. The Victoria Sexual Assault Centre was pleading for funding. I asked the question, actually, to the Health Minister — whether or not, in fact, funding to keep that centre open was actually a Health issue or an Attorney General issue. I wasn’t too sure, exactly, where the money was coming from, so I asked the question. He said he was going to get back to me on that.

Apparently, the Victoria Sexual Assault Centre is quite well respected because all the services are there under one roof and, if anybody has to come and talk to a victim or a survivor, they actually come there, as opposed to her getting passed from one person to the next to the next. So I think that the Victoria Sexual Assault Centre is a good model, but we only have that one here in Victoria, and it was threatened with having to be shut down.

My last question, then, to the minister, is: are there any plans to bump up the funding to give services to these community-based victim services and expand them across the province from the 64 that are already funded?

Hon. D. Eby: I do apologize to the member that she’ll have a similar experience that she had in Health. The correct ministry for funding of victim services is the Ministry of Public Safety and Solicitor General.

I could read off the website the information that’s available there. It wouldn’t be particularly helpful to the member because she could do that herself to get the information about the budget for these programs and where they’re going and the specific question about Victoria. Fortunately, those estimates haven’t happened yet. I would encourage her to speak with the Solicitor General about that.

M. Lee: I had the opportunity to ask some questions to the Minister of Environment, in the context of his estimates, on the Professional Governance Act. The Attorney General, with the appointment of the superintendent, will be taking over that responsibility in terms of the further implementation of that act. Could I ask the Attorney General for an update on the status of that project?

Hon. D. Eby: In terms of the Professional Governance Act and the implementation, I can provide the member with some detailed information.

[5:40 p.m.]

I’m going to read it into the record, rather than try to paraphrase.

“The Professional Governance Act is being implemented in phases, starting this summer. Phase 1, regulation, focuses on establishing the office and providing some statutory authority to the superintendent, which requires a merit-based nomination process for council elections, repealing ’advocacy’ from the five current professional statutes and bringing those five statutes and the Professional Governance Act under Ministry of Attorney General, which is taking place with oversight by the superintendent.”

I’ll note that this is beginning in June of 2019, so I can be a little more specific than just summer.

“Phase 2 of implementation” — this timing will be determined by the superintendent — “will bring the majority of the act into force — at a minimum, all sections required to enable the professional regulators to operate under the PGA and the full authority of the superintendent. It will bring the five professional regulators under the PGA” — I’m saying PGA; I mean Professional Governance Act when I say PGA — “and will repeal the current five professional statutes. Although phase 2 will not be delivered this fiscal year, it will be implemented within the time that Treasury Board has provided funding for the office, funding until fiscal year ’21-22.”

In addition, the final phase of implementation, phase 3, will bring in the remaining aspects of the act that aren’t implemented in phase 2. They may still be implemented within this three-year horizon, so the timing, of course, as I say, will be determined by the superintendent once the superintendent is in place.

That’s the full update in terms of the timeline of the implementation of the office.

M. Lee: In terms of the superintendent, has that appointment been made yet?

Hon. D. Eby: There has been no successful candidate announced yet. The successful candidate will start in June. I understand there is a final candidate, but that person hasn’t been announced yet.

M. Lee: I appreciate the responses. That’s helpful to get that update.

In terms of phase 2, with all of the governance that will need to transition in respect to the five professional organizations, that process will…. Just to clarify, how long will that process take under this plan?

Hon. D. Eby: The short answer is that the acts will be repealed next fall, is our expectation.

M. Lee: When that occurs, at that time, each of these organizations will be having to have their own governance processes align with the act. Is that correct?

Hon. D. Eby: As of the date of the repeal, they’ll then be under the authority of the new act and the superintendent.

M. Lee: Last year we had the opportunity around this time in the process, at the very end — this won’t be quite the end — just to talk about the implementation of UNDRIP and the view of the government. We confirmed with the Attorney General — and the Premier, in the Premier’s estimates, as well — that UNDRIP is viewed by this government through the lens of section 35. I wanted to ask the Attorney General whether there’s been any change in approach in respect of that position.

Hon. D. Eby: That’s correct. It’s certainly something that we view through the lens of the Canadian constitution, including section 35 related to Indigenous rights and title.

[5:45 p.m.]

M. Lee: In speaking with my colleague, the member for Skeena, I guess in some of the recent interaction that he’s had with the minister through Indigenous Relations and Reconciliation, there has been some dialogue that’s in Hansard that generally suggests that there continues to be a focus around, in title-related matters, some relationship-building and unity-type language that’s being utilized. I think that’s raised, at least in my colleague’s mind, questions around the approach.

Would the Attorney General comment on the use of the terminology about unity and relationship-building? The title does vary in certain circumstances. If that’s the language that the Attorney General’s heard from other colleagues in his government, is there any comment on how that’s being framed?

Hon. D. Eby: Well, I would say that reconciliation and relationship-building is central to government’s approach to Indigenous peoples in British Columbia. It’s reflected in the approach of our ministry around the First Nations justice council and our work on the justice system, co-designing our justice strategy for Indigenous people and building relationships along the way that will hold us in good stead, regardless of who is in government.

It’s certainly a central part of this strategy, and certainly not prohibited by, limited by, either section 35 or UNDRIP. This is something that we hope will continue for many, many years as we all endeavour to do the work of reconciliation with Indigenous people.

M. Lee: I certainly understand and agree with the Attorney General on that point. There probably is just a bit of a lack of clarity that was happening there in the discussion. I’ll leave that to others to clarify. But I appreciate the first response from the Attorney General in terms of UNDRIP being interpreted through the lens of section 35.

Let me just turn quickly to a few other topics in the time that I have. In terms of legal aid, there was the interim announcement that the Attorney General had made with a go-forward plan. I’d like, as well, to ask the Attorney General at this point, in terms of the update around the framing of the negotiations to come, if perhaps he could first provide that update, and then I’ll have a subsequent question.

Hon. D. Eby: The member will likely know one of the core challenges that legal aid lawyers on the defence side have really faced is that, unlike many other actors in the justice system, whether it’s judges or Crown counsel or sheriffs or you name it, they didn’t have a unified organization that they were negotiating with government for in relation to compensation. For lack of a better term, really a bargaining unit, but it’s not. Even just an association — they didn’t have that.

The establishment of the Association of Legal Aid Lawyers represents a fairly significant shift in how legal aid lawyers organize themselves. Government is treating them as, in some ways, the voice for legal aid lawyers in our discussions and negotiations related to compensation for legal aid lawyers in the province.

For our initial response, as the member correctly noted, we reached an agreement with the Association of Legal Aid Lawyers delaying any service withdrawal actions until mid-November. The Association of Legal Aid Lawyers had proposed that their members would begin withdrawing services, stop accepting legal aid clients, and so on. We reached an agreement with them to delay that until mid-November.

That gives us time to negotiate with them a longer-term agreement in relation to compensation for legal aid lawyers as well as have important discussions about how legal aid is delivered in the province. That work and engagement with the Association of Legal Aid Lawyers on even just the negotiation framework and this long-term proposal for legal aid funding is underway right now.

[5:50 p.m.]

Because it is the first time that legal aid lawyers have organized in this way, and the first time they’ve negotiated with government, the structures and how that goes forward is a challenge. There’s no framework for it, except for government’s negotiations with other similar, but different, groups. We’re working with them to avoid the possibility of a service withdrawal in mid-November and to find a fair arrangement for compensation for these lawyers.

That’s the update. That’s where we are right now. There is a great deal of work taking place on the Association of Legal Aid Lawyers side, as well as on the government side, to come up with a fair arrangement for everybody.

M. Lee: Just given where we’re at in terms of the discussion, can the Attorney General provide some indication as to the level of options that is being looked at under this negotiation? Obviously, increasing the tariff rate would be one.

Is keeping the current model, whether it’s more inside, perhaps government delivering legal aid, or this continued model that’s in place today…? Is there a different direction that the Attorney General is also considering in terms of looking at this?

Hon. D. Eby: It’s a difficult piece because we’re in bargaining right now, essentially, with the Association of Legal Aid Lawyers. So those discussions need to take place at the table with the Association of Legal Aid Lawyers. Government mandates in relation to negotiations are confidential, for obvious reasons — as are, I imagine, the mandates for the Association of Legal Aid Lawyers — so trying to find that unity of interest between our two entities and to resolve a couple of pieces.

One is improve access to justice for British Columbians, and the other is to provide fair compensation for people that have worked very long and very hard to provide that access to justice for British Columbians across the province, without a matching recognition, through an increase in their compensation for many, many years.

We’re headed on the right path, but in terms of the bargaining mandate for government and the bargaining mandate for the Association of Legal Aid Lawyers, those are necessarily confidential as part of that discussion back and forth between us.

M. Lee: Just switching to another topic. In the area of court challenges, could the Attorney General give an indication as to the overall cost that has been expended in respect of the multiple court challenges with other provinces and the federal government?

Hon. D. Eby: The practice of government under the previous administration and under our administration is that legal fees are privileged until the matter is concluded.

With that said, the member is interested in payments to counsel in relation to various actions, and I assume he’s referring to external counsel. Those payments are included in the annual public accounts, so you can track some of that.

It’s not until a matter is concluded that we release the total for legal fees, and we don’t have a total for all provincial actions related to other provinces or the federal government. There are many.

M. Lee: At the recent Justice Summit, there was a discussion in respect of use of data, whether it’s the Ministry of Attorney General or Solicitor General — the multiple players that we have in our legal system, including our court system, judiciary. What progress does the Attorney General see that can be made in respect of the use of data and measures across our justice system?

[5:55 p.m.]

Hon. D. Eby: There are a number of initiatives underway. I’m glad the member was able to attend. I think he’s been at every Justice Summit so far. He’ll know that the recent discussion around metrics is one that’s been taking place for a while with the various actors in the justice system, including the judges, government, police and others — everybody collecting their own data in their own way. There’s great interest from the bench, from the bar and others in better data and better metrics about our court system.

Just this week an RFI for proposals from tech firms was issued by court services branch, Ministry of Attorney General, asking for feedback from technology firms that may be able to improve the experience in the justice system through technology, including data measurement. That just closed. I understand that more than 40 different responses were received under that RFI, for lack of a better term, that went out from justice services branch. It’s publicly available.

In addition, the Ministry of Attorney General is working with a centre for excellence at the University of Victoria called ACE, which is around access to justice and metrics in relation to access to justice. Also involved with this is Access Pro Bono British Columbia and the Ministry of Attorney General. We’re working with them on a fairly significant metrics program that they are looking at delivering in relation to access to justice.

So there are a number of moving pieces on this. The member would have seen at the Justice Summit some of the pinch points and some of the challenges around this.

One of the organizations that I think does a very good job of measuring metrics is our civil resolution tribunal. They’ve really built it into their entire system, and I know that the head of that tribunal, Shannon Salter, does regular presentations on the metrics that they collect and the information they have about their process.

From the tribunal side and the tribunal transformation project and measuring some of the outcomes there to the justice system side — our work with the University of Victoria, our work with technology firms and the judiciary, as the member saw through the Justice Summits — we’re trying to get to a better place of measuring outcomes from our justice system, although it is definitely a challenging field. I’ll acknowledge that.

M. Lee: I think we’ll use whatever remaining time just to touch a little more on money laundering. We had the discussion yesterday in respect of gaming area. The recommendations that come out of the German 1 report…. Yesterday the Attorney General gave an indication as to the budget that is within the Ministry of Attorney General in respect to that, including a secretariat being established.

Can the Attorney General comment on whether there are additional budgeted items within his ministry in respect of the initiatives that the government might be considering, in view of the German 2 report specifically?

[6:00 p.m.]

Hon. D. Eby: The member’s question, I understand, is directed at the second German report. The biggest additional cost attached to that report is it led, in part, to a public inquiry into money laundering in British Columbia. Public inquiries responsibility — for public inquiry resources, and so on — falls within the Ministry of Attorney General. That is the biggest piece that came out of the second Peter German report, as well as Maureen Maloney’s report prepared for the Ministry of Finance.

As far as that second German report related to specific policy initiatives, we’ve had it for, I guess, somewhere around eight weeks now. The policy work on that report, as well as Maureen Maloney’s report, is underway. There aren’t currently any budgeted items in terms of this budget that relate to that report. These amounts were set before the report was received. So any impact or any request to Treasury Board or others that will come from proposals that are identified as a result of the report has not taken place yet. I can tell the member that currently, aside from the public inquiry, the answer is: nothing.

However, I don’t expect it to remain nothing. There were a number of issues that he identified that will impact different ministries, not the least of which is the PST program in the Ministry of Finance related to luxury automobiles. I know that Public Safety and Solicitor General is doing the policy work on the luxury car sales sector and the concerns that were raised about people alleged to be involved in organized crime being involved in the resale of luxury automobiles. Those are just a couple of examples.

In addition, today the Ministry of Advanced Education is writing to all public or private institutions, asking for their policies on accepting cash, because Dr. German identified that there were issues with students attempting to pay significant amounts in cash or in excessive tuition amounts — using the post-secondary institution as a type of bank. These issues are being worked on, and there may be costs associated with these kinds of things. But we’re just too soon into the process, having received it just about eight weeks ago.

M. Lee: Is there an expected cost for the public inquiry?

Hon. D. Eby: One of the benefits and, simultaneously, one of the challenges of a public inquiry, in terms of government plans around costs, is that the commission is entirely independent of government. It’s run by the commissioner. The costs of the inquiry will be defined by the decisions the commissioner takes and feels the commissioner needs to take in developing staff and accessing resources to get to the truth of the matter around the commissioner’s terms of reference.

To just give you an idea about the variation in costs of various public inquiries, the Davies Inquiry was $3.29 million. That was in relation to the death of Frank Paul. The Braidwood Inquiry was $5.29 million, in relation to the death of Robert Dziekanski at Vancouver Airport. The Oppal Inquiry, in relation to murdered and missing Indigenous women and girls, $9.89 million. So there’s a significant range there.

Our best estimate at this stage is $10.7 million. As I say, that’s just an estimate. It is government’s estimate. It is not necessarily the commissioner’s estimate. It is very dependent on where the commissioner’s lines of inquiry lead. What we’ve committed to is that the commissioner will have the resources the commissioner needs to do this important work for British Columbians.

[6:05 p.m.]

M. Lee: I appreciate that response and that indication. Just in terms of the initial announcement on the inquiry, both the Premier and the Attorney General commented on the level of cooperation that they understand they will be receiving from the federal government. Is there a point person on the federal government side that will be liaising with the commission?

Hon. D. Eby: The contact that we’ve had has been Minister Blair, within the federal government. If the commission requires and finds that they’re meeting a wall, in terms of federal issues, I imagine that the commission will be in touch with the Ministry of Attorney General. I would be contacting Minister Blair and having those conversations at that point — or whoever is the minister at the federal level responsible for public safety, and failing that, the Minister of Justice.

These discussions have been taking place at a very high level. There is not currently, to my knowledge, anyone in the public service that has been appointed on the federal government side. The discussions have been taking place at the ministerial level.

M. Lee: That level of cooperation, presumably, in terms of the powers of the commissioner under the Public Inquiry Act…. Is it expected that for federal agencies involved with FINTRAC or the RCMP, they will be compellable in the same way that others would be, here in this province?

Hon. D. Eby: Really, it’s up to the commissioner, in terms of individuals or organizations the commissioner wishes to be in touch with or records that the commissioner feels the commissioner needs to complete this work. Where that work overlaps with federal jurisdiction or federal records or so on, the commitment that we have from the federal government is that they will be cooperating with the inquiry process.

We’ll have to wait and see, in terms of specific issues that the commissioner may run into in relation to federal jurisdiction bodies or individuals and what that cooperation necessitates in terms of a federal government response. I can’t say that I know the federal tools available as well. Certainly, it goes up to and includes a parallel federal public inquiry — although hopefully that’s not necessary — under which the commissioner could then be appointed, and then the commissioner could compel people to attend, using federal compulsion powers.

I’m just speculating here. Really, our hope is that the federal government makes any records or individuals available to the extent that they’re able to.

M. Lee: In the German 1 report, near the end of the report, there was some comment given…. Sorry, I think I’m probably mixing up the three reports at this juncture. Near the end of one of these three reports, there was a comment that’s provided about the concern around another vulnerable sector to money laundering, and that’s the marijuana sector.

I’d ask whether there has been any consideration of that as another sector of review, given where we are with the legalization of that industry and distribution of that product, both federally and provincially.

Hon. D. Eby: Yes, certainly I can say that the government has been alive to that concern from the beginning, around cannabis legalization. It has led to a rather challenging balance. On one hand, you want to get as many folks into the legalized system as possible to end the grey and black markets around cannabis. On the other hand, you want to have a very thorough process to make sure that organized crime does not infiltrate the cannabis trade in British Columbia on the legal side.

We’ve come to a place where there is a very thorough and extensive background check process for any individual that will be involved in a cannabis retailer in British Columbia. The federal government is handling the production side of things and the licensing side of things. In terms of retail in British Columbia, it has led to a challenge.

[6:10 p.m.]

Some of the member’s colleagues came to these estimates and raised those concerns — around the length of time that it is taking to get licences approved, especially in more complex arrangements such as franchises or corporate structures that involve multiple individuals that have to have very extensive financial and background checks in order to be able to participate.

The analogy, and the closest match in British Columbia, is the gaming sector, where individuals who want to work in casinos or be service providers offering casino services, for example, go through extensive financial and background checks. We’re treating it like that, in terms of the background checks for individuals going into the cannabis sector. We’re very aware of the vulnerability.

Simultaneously, we’re aware of the cash-based illegal dispensaries that are operating right now because they can’t get banking services. We want to bring them into the legalized market, or we want to have a legalized market that displaces that. The Ministry of Solicitor General has a community enforcement team that’s been making visits to the illegal dispensaries as we transition over to a legalized market.

It is a challenging piece of work, and the balance that we’ve struck has been one that is inconvenient to licence applicants — they have to go through these extensive and lengthy background checks — but is protective of British Columbians to ensure that we’re keeping organized crime out of the legal cannabis trade in British Columbia.

M. Lee: Yesterday in estimates, we canvassed in the area of enforcement and what that looks like within the gaming sector. Obviously, there continue to be gaps, and various areas have been identified by these reports in terms of their reinforcement, particularly with federal agencies. What is the Attorney General’s current plan around that, in terms of gaining greater resources dedicated to enforcement?

Hon. D. Eby: The good news, I guess, is that on the gaming side, this is one of the few areas where there’s a dedicated policing team working on anti-money-laundering, financial crime, and so on. We have JIGIT, which is a policing team. I had the opportunity to go through, with the member and his colleagues, the support provided by the gaming policy and enforcement branch in their partnership with the police and the intelligence group that they’ve established. They meet every week, reviewing unusual cash transactions and suspicious transaction reports that are going to FINTRAC, looking for trends and looking for issues that need to be investigated.

On the gaming side, that’s pretty good. But the problem is that once you get outside of the casino, that’s where the enforcement really trails off. The big problem is that, as the member canvassed during the gaming portion of the estimates, we’ve seen a significant decline in large cash transactions at casinos. We know the money isn’t coming in, in the same way, to casinos. It’s going somewhere. How do we follow that money? How do we make sure we follow it through the enforcement side?

We heard the shocking news from Dr. German’s second report that, at least at the time of the report, there were no dedicated federal RCMP officers working on anti-money-laundering in British Columbia. So that policing capacity outside of casinos, at the federal level, is very attenuated and obviously problematic, given the scope and scale of the issue that we face here in British Columbia.

I’ve raised this issue in discussions with Minister Blair. He and his government have committed an additional 160-some-odd-million dollars in the federal budget. A couple caveats: that’s over five years, and it’s spread across all the provinces in Canada, so it starts to get pretty thin on the ground. But we’re engaged in regular conversations with him to pull as many of those resources to B.C. as possible.

It’s our hope to partner with the federal government. We’re currently developing a proposal in consultation with police, in partnership with the Ministry of Public Safety and Solicitor General, around a dedicated policing team that can follow that money, because we feel that we can’t wait for the federal government on this. But we’re hopeful to have a good partnership with them on it and getting that up and running.

M. Lee: I thought we had seven minutes, but it turns out we have two. I have one more quick question. In the Maloney report, on page 48 or thereabouts, there’s a comment that when they look at jurisdictions around the world in which large sources of money laundering are coming into Canada, the United States and Mexico contribute, so to speak, $4.8 billion.

[6:15 p.m.]

In Europe, it’s $4.3 billion, and East Asia, I think, is in the same sort of category with about $4 billion. The expectation is that…. Sorry. That’s not right. It’s $750 million, actually, from East Asia.

The comment that was made in the report is: “The results for eastern Asia seem surprisingly low, given the perception in B.C. that a lot of dirty money in the province flows from China.” That probably is an indication of the global…. The United States, Europe, Mexico — all of the drug cartels, the organized crime that we know has been dating for many, many years in this region and in this country.

Does the Attorney General believe that the German 1 report or German 2 report had the right focus in terms of where the money is coming from?

Hon. D. Eby: Well, I guess the big challenge is knowing where the money’s coming from, period. We know now what we didn’t know before: that Middle Eastern organized crime, that the largest cartel in Mexico — the Sinaloa cartel — and that Asian organized crime are active in British Columbia. I think that when we have blinders on for one particular group of people, they can act just that way. They can make us blind to areas of activity that we should be focusing on.

The proposals that are put forward aren’t for the Mexican cartel and aren’t for any international organized crime groups. They’re for everybody. The measures are disclosure on beneficial ownership of real estate, disclosure around beneficial ownership of companies and a ban on cash transactions where you can’t demonstrate where the cash came from, in excess of $10,000, at our casinos. These apply across the board, and they are equally effective regardless of which organized crime group you are coming from. I think that that is the necessary response for government.

Part of the challenge that the Maloney group and German’s group faced is that when someone’s trying to hide the source of the money, it makes it really difficult to know where it originated. There was an alleged loan fraud out of India associated with a property on Saltspring Island — a $90 million loan fraud out of India.

We need to be responsive to dirty money no matter where it comes from in the world, even if it’s generated here in British Columbia through the sale of fentanyl. That’s what our responses are aimed at.

M. Lee: Just to say thank you for the…. We could certainly go on. There are more questions to be asked, but I appreciate the cooperation of the Attorney General and his team in the days that we’ve had here.

Hon. D. Eby: I thank the member and his colleagues for their thoughtful questions and staff for their assistance throughout this process.

Vote 15: ministry operations, $490,716,000 — approved.

Vote 16: judiciary, $80,984,000 — approved.

Vote 17: Crown Proceeding Act, $24,500,000 — approved.

Vote 18: independent investigations office, $9,400,000 — approved.

Hon. D. Eby: I move that the committee rise and report resolution and completion of the Ministry of Attorney General and ask leave to sit again.

Motion approved.

The committee rose at 6:19 p.m.