NDP facing Crown corp. chaos
There was an eye-catching development Wednesday in one of the twin-bill Crown corporation horror shows that the NDP government is dealing with, as cabinet agreed to freeze B.C. Hydro bills for one year. A three per cent increase set for next spring is cancelled (subject to B.C. Utilities Commission approval), at a cost in lost revenue of $150 million. It’s not clear where the money will be made up, as the utility has maxed out most of its revenue avenues.
The freeze was announced with due fanfare. Meanwhile, in the offBroadway portion of proceedings – debate on the attorney general’s budget – the ICBC thriller was playing out. And the plot twists there don’t show any sudden magical good-news announcements coming any time soon.
Here’s a brief synopsis of Attorney General David Eby’s story line. (Spoiler Alert: It ends badly.)
“Enormous multi-hundred-million-dollar deficits on an annual basis… should have been dealt with a while ago… a financial crisis… It desperately could benefit from revenue reserves that are no longer there… Difficult conversations needed to take place… They’re not comfortable conversations… The system as it stands is not sustainable. ”
There was one glimmer of good news in over an hour of morbid debate about what wretched financial shape ICBC is in. Eby said the government is not going to allow the 20 to 30 per cent rate hikes that would be needed to maintain the current system.
But that’s a bit of overselling, in terms of painting the worst picture imaginable, then reassuring everyone it won’t come to pass. Even a schedule of 10 or 15 per cent rate hikes would be profoundly bad news, and it’s going to take a sharp course change to ensure that won’t come to pass. Eby said it’s well on the way. “We are looking at dramatic reforms to ICBC to get them back on financial track.”
Among the ideas are capping the amount paid out for relatively minor injuries. It was recommended by an independent review the previous government commissioned, and Eby again confirmed he’s interested.
“We’re looking at options like that.”
He also cited a pilot project using “telemetric technology” to drive down costs by monitoring vehicle performance – sudden braking, acceleration and sharp turns, etc.
“I look very much forward to rolling out those kinds of initiatives.”
Also on the table is the idea of incentives to buy newer cars with better crash-avoidance technology, to reduce damage claims.
They’re also interested in hiring more front-line staff to handle claims. Eby said a purge by the Liberals in 2012 amounted to a “decimation” and is part of the problem. Customers who couldn’t get claims handled to their liking hired lawyers, which compounded the costs.
“It’s critically important that British Columbians, when they’re in an accident and call ICBC, that they can get a fair resolution of their dispute without having to hire a lawyer.”
There’s also a hard look coming at why it’s so expensive to fix crashed vehicles. Autobody and glass firms have been asked for ideas to drive down costs, which is going to prompt a ferocious argument by all concerned.
There were two versions of the story that led to the current mess.
B.C. Liberal MLA John Yap said the previous government worked just as hard to mitigate rate pressures. “There are a number of challenges we tried to address.” Emphasis on “tried.” Eby said the previous Liberal government raided reserve funds needed to stabilize claims costs to the tune of $1 billion and tried to cover it all up.
Projections prior to the election were for an $11-million loss, but it came in at $900 million, “90 times higher than what was available to the public before the election,” he said.
He said the eight per cent hike that took effect last week was approved “grudgingly,” but that’s “nowhere near what it should have been.”
Yet another independent consulting firm has been hired – the second in a year – to come up with the promised drama.