Attorney General David Eby might be talking his government into a deficit with all the warnings about ICBC’s financial crisis.
The government auto insurance plan is charting new depths when it comes to losing money. The only ways to fix it are to radically redesign the coverage at the expense of customers, or jack the rates up by a staggering amount. Eby is insisting a massive rate hike is not on, so the first option is the priority. But he stressed that will take time to show up on the bottom line.
So a big bailout of the corporation might be in order. B.C. is operating with a surplus margin of a few hundred million, and it would take more than that to set ICBC straight. Eby deferred questions on the impact of such a rescue mission to Finance Minister Carole James. She is likely well into the calculations. If the situation is as bleak as he insisted Monday, it isn’t hard to imagine the NDP slipping into the red ink to cope with the mess the B.C. Liberals left at ICBC.
It would be a stark contrast with the multibillion-dollar surplus the B.C. Liberals marked before they were pushed out the door. But the NDP is intent on putting an asterisk beside the Liberal surpluses, by noting how much money was siphoned from ICBC and other Crown corporations during rosier times to accomplish the trick.
An independent watcher of Crown corporations, Richard McCandless, has calculated there was a point about nine years ago when ICBC had so much money in the bank it could have offered free insurance to everyone for a year. Those days are gone.
Now the corporation has plunged headlong into a runaway deficit.
The financial moves are always bewildering, but there’s no confusion over the fact the public auto-insurance plan is a mess. It was brought on by hugely expensive accident claims, rocketing legal costs and the time-honoured political meddling designed to protect politicians from having to cope with the blow-back from imposing huge rate hikes. Even with the previous government doing everything it could to avoid raising rates, they went up eight per cent in September.
Eby said the Crown corporation’s books are a “financial dumpster fire.” So he pulled the fire alarm again Monday with abandon. It’s no coincidence that nearly everyone he fingered for the fiscal nightmare happens to be running for the Liberal leadership, to be determined this weekend.
He has been ringing the bell ever since he was handed responsibility for the mess last summer. The latest panic seems aimed at getting Liberal Party voters as rattled as he is. They start casting ballots on Thursday.
He went out of his way to lay an especially lurid picture of the disaster at the feet of former ministers Todd Stone and Mike de Jong. ICBC obliged its minister by posting an interim financial statement — on a Sunday afternoon, no less — that set up his Monday news conference.
The corporation confessed to a $935-million net loss over nine months ending Dec. 31, and projected it would grow to $1.3 billion by the end of the fiscal year March 31. That compares to the absurd estimate a year ago of a paltry $11-million loss.
The new projection might be hyped by Eby’s directive to the corporation to go back in the files and itemize all the outstanding claims for “potential liabilities.” But it’s not likely overestimating by much.
The worsening financial picture is one thing. Eby said the coverup is another.
“They knew the dumpster was on fire, but they pushed it behind the building instead of trying to put the fire out.”
The Liberals said they had an independent report ready before the change of government, and Eby is just deflecting from the fact he hasn’t done much in seven months.
There would be some cosmic irony in the government having to hand over a big chunk of cash to ICBC, because usually it’s the other way around. The Liberal government extracted more than $1 billion from ICBC over the years in “dividends” when it was on a much sounder footing.
What goes around comes around, and the taxpayers/drivers see it coming and going.